Different liquidation of Cyprus Companies

Liquidation means when a company chooses to dissolve and materialize its assets. It happens when the firm is marked insolvent, i.e., incapable of paying its debts. Hence, it materializes its assets to meet its liabilities and eventually ends it.

The liquidation of Cyprus companies can be compulsory or voluntary. The Companies Law, Cap. 113 deals with the processes and needs for the liquidation of Cyprus firms.

Voluntary liquidation can take place under these circumstances:

• Through extraordinary resolution when the firm cannot continue its operations and liquidation is suggested
• Through special resolution when the firm demand voluntary liquidation
• When special events occur leading to the dissolution of the company
• When the company’s duration marked by Articles of Association expires

Different liquidations done by a Cyprus company

Members doing voluntary liquidation

A single or more member of the firm may choose to dissolve it only if they are solvent shareholders. Here the director should make a declaration that the firm should clear its debt within 12 months from the date of the dissolution notice.

The company’s members may organize a general meeting to vote for a special resolution suggesting the voluntary liquidation of the company by hiring a liquidator who will assess the company’s assets and pay the creditors.

The surplus amount is given to the shareholders. In this liquidation process, the company is dissolved in a period of three months from the date of returns filing.

Creditors performing voluntary liquidation

In case a company is insolvent and fails to clear its liabilities, it can only work with a voluntary liquidation through its creditors.

The shareholders and creditors can meet and choose a liquidator. They may organize an inspection committee if suitable and arrange the liquidation process.

Once the company is liquidated, the creditors are paid their estimated claim amount, bringing an end to the company.

Compulsory liquidation

A creditor, shareholder, or any other party can apply to the court for the company’s liquidation. As per the Article 211 of the Companies Law, the court can liquidate a company under these situations:

• The company fails to clear its debts
• The court thinks it is unfair and in accordance with leniency law to dissolve the company
• If it is a public company and the member count falls below seven.
• The company doesn’t commence its activities within a year from its incorporation
• The company hasn’t submitted the statutory report to the Companies Registrar
• The company chose to liquidate by special resolution through the court

Here the court chooses a liquidator who prepares the liquidation papers, details of assets and liabilities, information of creditors, and other securities details. The liquidator should locate the assets, materialize them, prepare the payments and receipts statement, and submit them to the Registrar of Companies.

So, these are the types of liquidation of Cyprus companies. However, a liquidated company can be restored when a member or creditor files a petition. The application should be submitted to the court in twenty years from the date of liquidation. If the Registrar of Companies is satisfied, they will restore the company.