The global economic situation has forced many companies to liquidate or enter into insolvency. Cyprus is an attractive international business destination, however, company owners should be informed about the legal provisions and the regulatory framework for the company liquidation procedure in Cyprus.
Corporate liquidation is the process of collecting and distributing the company’s assets to settle the liabilities towards its creditors. Any remaining assets are afterwards distributed to the company’s shareholders. Our Cypriot company formation experts can guide you throughout the company liquidation procedure and help you settle any debts to existing creditors.
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Compulsory liquidation in Cyprus
According to law, a company can be liquidated compulsory or voluntarily. Compulsory liquidation is ordered by court, whereas voluntarily liquidation is ordered from within the company. A liquidator is usually the individual who will conduct the liquidation procedure.
A petition needs to be filed to begin the compulsory liquidation procedure. This petition can be filed by the company, a creditor or a contributory. The court issues the liquidation order of the company is unable to pay its debts, if it fails to submit statutory reports or hold statutory meetings or if the company does not commence any business activities within one year after its incorporation. Other grounds for issuing a liquidation petition can apply. Our Cypriot company formation specialists can give you detailed information.
Voluntarily liquidation in Cyprus
Voluntarily liquidation can be requested by the company’s shareholders or by its creditors. The procedure varies according to the party that has initiated the liquidation.
When requested by the company members, a voluntary liquidation procedure starts with a declaration of solvency, meaning the shareholders undertake that the company will pay all its debts within one year from the commencement of the liquidation procedure. Moreover, the shareholders must hold a special meeting to show that the company will be liquidated voluntarily and appoint a liquidator. The appointed liquidator will collect the assets and use them to pay the creditors.
Voluntary liquidation by creditors applies when the company is insolvent. The company creditors hold a special meeting on the same day when the company members announce the decision to wind up the company. During this meeting, the creditors will approve the liquidation, appoint a liquidator and may also decide to appoint an inspection committee.
Regardless of the type of liquidation, the company’s priority is to settle all its debts. If you want to know more about the liquidation procedure in Cyprus, you may contact our Cyprus comany formation representatives.