The Cyprus Companies Law, Cap 113 provides for three methods for winding-up a company.
- Involuntary winding-up by its creditors
- Voluntary winding-up by the members
- Voluntary winding-up by and/or under the supervision of the Court
Alternatively, a company can be also struck-off the Register of Companies as per Section 327 of the Companies Law, Cap 113.
The 3 ways of voluntarily winding-up a company are:
Advise the Registrar that the company has terminated all activities, does not have any assets or liabilities and does not intend to carry on any business in the future. A declaration is submitted by the directors of the company where the Registrar of Companies will then publish in the Official Gazette the intention of the company to be stuck-off and within three months the company will then be removed from the records of the Registrar of Companies. Any member or creditor of the company can apply to the Court for reinstatement within a period of 20 years.
2. Shareholders’ voluntary liquidation through Court
A liquidator is appointed that replaces the Board of Directors of the company and proceeds with all the required procedures to liquidate the company. The liquidator will coordinate with the lawyers and apply to the Court obtaining its supervision for the liquidation. Once the liquidation procedure is completed, which takes about 7 months the Court will issue a Judgement approving the liquidation of the company. This is the costliest method but once the company is dissolved it is very unlikely that a Court will reinstate the company. Any member or creditor of the company can apply to the Court for reinstatement within a period of 2 years.
3. Shareholders’ voluntary liquidation
A liquidator is appointed that replaces the Board of Directors of the company and proceeds with all required procedure to liquidate the company. This procedure is not done through Court and takes around 6 months. Any member or creditor of the company can apply to the Court for reinstatement within a period of 2 years.
In all 3 cases audited financial statements need to be prepared to the date of closure and the following need to be arranged:
a. Settlement of all taxes and creditors.
b. Closure of the company’s bank accounts.
c. Settlement of any outstanding balances due to our company and its associates.
d. The beneficial owner of the company must send an instruction to the company secretary to proceed with the company’s strike off or dissolution.
e. In cases where the closing company has another Cyprus company as shareholder, the net profits of the last 5 years should be distributed as dividend prior to closing to avoid Defence Contribution Tax.