To know how the liquidation process of a company in Cyprus goes, one should first know very clearly what liquidation actually is. Liquidation is a term which is used when a company decides to wind up/shut down, and sells all its assets. Usually, the reason behind this step is because the company is in debts. Now, according to the Companies Law in Cyprus, there are two ways in Cyprus a company may liquidate:
1. Compulsory/Strike-off Liquidation
This method is a simplified one as it is the easiest and the cheapest. This type is usually used for international business companies that have stopped functioning and are not willing to carry out their business further in the future. This liquidation type is performed by a court's decision.
Procedure for Liquidating a Company in Cyprus by Strike-off Method
- Preparation of financial statements of the company till the date the company ceased all its activities
- Preparation of relevant income tax return to the Cyprus tax office
- Issuance of a tax clearance certificate once the tax office reviews and approves and tax liabilities are settled
- Signing of the declaration of solvency which is also known as the affidavit by all the directors of the company
- Preparation of statements of affairs which must show that the company has sufficient funds to overcome its debts including the strike off charging fees
The procedure for strike-off liquidation costs approximately 2,023 euros, in which the registration cost is 1,700 euros, along with an addition of 19% VAT. The complete procedure takes around 4-9 months.
2. Voluntary Liquidation
This is a more formal method and is performed when a company’s fixed period expires or when a company resolves by special resolution as it may not be able to continue the business by reason of its liabilities. In this type, a liquidator needs to be appointed in order to distribute certain assets, mainly for tax reasons.
The procedure for members’ voluntary liquidation costs approximately 4,165 euros, in which the registration cost is 3,500 euros, with an addition of 19% VAT. The overall process takes around 1 year for completion.
Procedure for Liquidating a Company in Cyprus by Members’ Voluntary Liquidation Method
- A confirmation that the company is solvent for processing the voluntary liquidation
- A declaration made by directors stating that the company is able to pay off its debts
- A declaration of solvency must be sent along with statements of the company's latest assets and liabilities to the Registrar of Companies within 5 weeks
- A tax clearance certificate must be obtained
- A general meeting of shareholders is arranged in order to present the company’s full account of receipts and payments. Such meeting must be published in the Official Gazette of the Republic at least one month in advance
- A submission of the report to the Registrar of Companies stating the conclusion of the meeting along with the copy of the company's accounts
- Issuance of certificate of dissolution by the Registrar of Companies within 3 months of the filing date confirming that the company is deemed to be dissolved
How to Restore a Liquidated Company in Cyprus?
A liquidated company in Cyprus can be restored by filing a petition to the court within 20 years from the publication of the liquidation notice in the Official Gazette of the Republic of Cyprus. The filing of the petition can be done by the company itself or by any of its members or by its creditors. If the petition gets accepted by the court, then the court releases an order for its name to be restored in the same position before its liquidation. An official copy of the order must be submitted beforehand to the Registrar of Companies. The Registrar of Companies has certain conditions which must be fulfilled in order to finalize the restoration process which includes, submission of all pending financial statements, audited accounts, annual returns, and payment of any pending company levies. If the company overcomes all these conditions, then the Registrar of Companies restores the liquidated company.
Business Setup Worldwide is a platform to help you with company support services in Cyprus. We handle everything from company registration and accounting to Cyprus tax and liquidation. If you are looking to liquidate a company in Cyprus, or other business services, contact us – our business advisors in Cyprus would be glad to help you out.