Member’s Voluntary Liquidation of a Company Expedited by the Court
The liquidation of a company can be achieved either compulsorily by its creditors or voluntarily by its creditors or its members (a shareholders’ voluntary liquidation). The procedure of a voluntary liquidation is regulated by the provisions of the Cyprus Companies Law Cap. 113, Part III (“the Law”), in which the involvement of the District Court is optional.
According to the Law, the procedure requires a shareholders’ special resolution, which is filed with the Registrar of Cyprus Companies. The liquidation procedure begins from the date the shareholders’ resolution is approved. From that date onwards, the company shall terminate all its activities except those that are associated with its liquidation.
The Directors of the company shall make a declaration of solvency assuring that the company is able to repay its total debts within a period of twelve (12) months starting from the date of liquidation. At a general meeting, the shareholders of the company appoint a liquidator who is responsible for the distribution of the company’s assets to its existing creditors and/or shareholders in accordance with the Law and for summoning the final general meeting of the company. The liquidator essentially replaces and discharges the directors of their duties.
The liquidator summons the final general meeting via a publication in the Cyprus government gazette one month in advance. At the final general meeting, the liquidator presents the balance sheet of the company as of the finalisation of liquidation giving detailed account of how the company’s assets were distributed, which is then deposited in the Department of Registrar of Cyprus Companies. Three months after the final balance sheet had been registered, the company is considered to be liquidated.
In addition to the above described procedure, the shareholders of the company have the right to apply to the District Court asking for the continuation of the voluntary liquidation under the supervision of the Court. Notably, the liquidator remains in charge of the liquidation procedure. Having said that, the involvement of the Court has the benefit of expediting the liquidation procedure and giving assurances to minority shareholders and/or creditors that the liquidation proceeds in accordance with the Law.
Lawyers of our firm are licenced insolvency practitioners dealing with liquidation of companies, including liquidations under the supervision of the Court.