Liquidations/strike off of Cyprus Company

Liquidation/Strike off of a Cyprus Company

There are two main methods of dissolving a Cyprus Company.

The strike off method under Section 327 of the Companies Law Cap.113. The second method is a Members’ Voluntary Winding Up under Sections 268 to 274 of the Companies Law, Cap.113.

Strike-off Method

This is the easiest method.  The financial statements of the company must be prepared until the date the company ceased activities and must be filed with the relevant income tax return to the Cyprus tax office.  Upon receipt, the tax office examines and agrees  and once any tax liability is settled a tax clearance certificate will be issued.  All the directors of the company must sign a declaration of solvency (affidavit) sworn before a notary public. This confirms that the company has no assets or liabilities, is no longer carrying on business and does not intend to carry on business in the future.  The statement of affairs to be prepared must show that the company has sufficient funds to settle any debts including the fees for the strike-off.

Members’ Voluntary Liquidation

This is a more formal method and is used only if there is a need for a liquidator to be formally appointed in order to distribute certain assets.  In order to proceed with voluntary liquidation, the liquidator must confirm that the company is solvent. A statutory declaration needs to be made by the directors declaring that the company is in a position to pay its debts and the declaration of solvency must be sent to the Registrar of Companies within 5 weeks of passing of the resolution to wind up the company.  All the debts of the company must be settled within 12 months from the commencement of the winding up of the company.  A tax clearance certificate will also be issued.  The liquidator will call a general meeting of the shareholders and the final accounts are presented at the meeting.  A copy of the final accounts and the report of the final meeting will be sent to the Registrar of Companies by the liquidator not later than one week after the meeting. The Registrar of Companies will issue a Certificate of Dissolution within 3 months from this date of filing and the company is deemed to be dissolved.

Compulsory Liquidation

This starts with the payment of a small fee to the office of the Official Receiver which is a necessary condition for the submission of an application to the Court and noncompliance with this requirement will lead to the non-acceptance of the application by the Court Registrar.

The second step is be to file the application to the Court, which is accompanied by an affidavit from a person having knowledge of the facts of the case. Provided that the company has not registered an appearance or filed an objection, the Court will reschedule the application for proof in approximately 15 to 30 days time, in order for a publication to be made in the Government Gazette and a local newspaper mentioning that a liquidation hearing is scheduled at a specific date and that any interested party or creditor can appear in Court and make representations in relation to the application, provided they have given a 24 hour notice to the attorneys of the applicant.

If the respondent company does file an appearance and an objection to the application then a substantive hearing will take place at a time which will be scheduled by the Court.

Assuming that no interested party makes representations the proof hearing is conducted through the filing of an additional affidavit and provided that there are no complications, the Court is expected to issue a decision on the same or the next working day and the Order to issued within 2-3 days.

The Order is then served to the respondent company and to the Companies Registrar who will appoint an examiner for the insolvency and liquidation and will publish the liquidation of the company in the Government Gazette and is effective from the day that the liquidation application was filed.

Liquidation of a company in Cyprus may take from five 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 six months, but a company in this situation may be restored within 20 years if some conditions are met

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