Company Liquidation in CyprusUpdated on Tuesday 18th October 2016
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How can a company be liquidated in Cyprus?
There are to ways a company may be liquidated in Cyprus, according to the Company Laws, chapter 113 and the Cyprus Laws: compulsory or voluntary. The compulsory liquidation is performed by a Court’s decision, while the voluntary liquidation is performed by the company’s members or creditors. A compulsory liquidation can occur only after a petition is filled and submitted to the relevant Court.
This type of liquidation can start if:
- -the members of the company came to this resolution and have filed an application to the Court,
- -the company didn’t submit the statutory report to the Registrar of Companies or the statutory meetings didn’t take place,
- -the company’s activity didn’t start for more than a year since the Cypriot company was registered,
- -the number of members of a public company decrease lower than 7,
- -the company cannot pay its debts or if the Court decides so.
The voluntary liquidation may occur if the duration term stated in the Articles of Association has expired, if the members decides so in a General Meeting and publish the decision in the Official Gazette of the Republic of Cyprus or if the company takes the decision that there is no reason to continue the business activity and decides to wind up.
What are the steps for company liquidation in Cyprus?
The compulsory liquidation begins by paying a fee to the Companies Registrar and the Official Receiver before submitting the request to the Court. The liquidated company must be located within the area of the Court.
The application to the Court must be accompanied by an affidavit from a competent person who sustains the application and proves why it should be approved.
The application is set for hearing in maximum 30 days, but it must be taken into consideration that the judicial holiday period of the Cyprus Courts is from June to August and no activities are performed then.
If during that time no objection is registered, the Court is rescheduling the application for proof in maximum 30 days, while an announcement is made into the Government Gazette and a regional newspaper mentioning the data when the liquidation hearing is appointed.
Any interested party must give a 24h notice to the attorneys of the applicant before making a representation in relation to the application in Court. Any objections are resolved in a specific date, appointed by the Court. If there are no complains, the Court will take a decision in maximum 3 days. The Order is submitted to the Companies Registrar and the company. The Companies Registrar must publish the decision in the Government gazette and appoint an examiner.
The liquidator must be appointed by the Court and has the bellow attributions: representing the company instead of the former management, performing any activities that may help the liquidation process, appointing an assistant advocate, paying all the creditors in full, selling (if necessary) the company’s assets in public auctions and appointing agents for the actions that cannot be performed by him. After covering all the debts, the Court takes the decision of dissolving the Cypriot company.
In case of a voluntary liquidation, the liquidator is named in a general meeting of the shareholders and has the same attribution like the liquidator appointed by the Court.
After paying all the creditors and debts, a new general meeting is called. The results are presented during it and the minute of this must be published in the Official Gazette of the Republic of Cyprus no longer than a month since it. No longer than a week after the meeting, the liquidator files the account to the Registrar of Companies and after three months from sending it, the company is dissolved.
A company may also request to be struck off the register in certain circumstances, such as not conducting business, not having liabilities, assets or creditors. The strike off is based on an affidavit made by the directors and sworn to the Court.
How long does it take to liquidate a company in Cyprus?
The liquidation of a company in Cyprus may take from six months, in case of a voluntary liquidation, to one year in case of a compulsory decision. The time frame may vary form case to case.
On the other hand, a strike off may take only four months, but a company in this situation may be restored within 20 years if some conditions are met: the company has performed business activities during the strike off, the creditors were not announced about the strike off or unjust actions were performed during or before the strike off. If you are interested in the procedures for company liquidation in other countries, such as Portugal and Liechtenstein, we may help you with information from our local partners.