Company liquidation or winding-up in Cyprus is the process through which a business’ assets are distributed to creditors (and shareholders, when possible) with the purpose of terminating it. There are several ways to close a business in Cyprus, in accordance with the grounds of liquidation.
Below, our lawyers in Cyprus present the company liquidation procedures available in this country. You can rely on us for several services associated with closing a local business.
Table of Contents
Grounds for voluntary company liquidation
In order to close a Cypriot company based on a mutual decision made by the owners, any of the following grounds can be invoked:
- the company was created for a limited period, this time was stipulated in the Articles of Association and it has come to fruition;
- when the shareholders pass an extraordinary resolution to liquidate the company;
- when the shareholders decide that because of extraordinary reasons, the company can no longer continue its activities or meet its obligations and must be closed.
Our law firm in Cyprus can review the constitutive documents of your company and advise on liquidation matters based on a thorough verification.
| Quick Facts | |
|---|---|
| Applicable law(s) |
– Company Law Chapter 113, – Civil Code. |
|
Conditions to liquidate a company |
– extraordinary resolution of the shareholders, – over-indebtedness, – termination of activities in Cyprus, – business relocation. |
|
Types of procedures |
Voluntary and mandatory proceedings are available. |
| Voluntary company liquidation | Voluntary company liquidation in Cyprus can be commenced after the shareholders pass a resolution in this sense. |
| Judicial company liquidation |
Judicial company liquidation is ruled in court at the request of one or more creditors. |
| Appointment of a liquidator in a voluntary procedure |
The liquidator is appointed by the shareholders. |
| Appointment of a liquidator in a mandatory procedure |
The liquidator will be appointed by the court of law. |
| Authorities to notify in case of liquidation |
– the Companies Register, – the Tax Department in Cyprus. |
| Requirement to notify other parties (YES/NO) |
Yes, the creditors, the employees, and other interested parties. |
| Notice requirements |
– within 14 days from the adoption of the liquidation decision in the case of voluntary procedures, – within 3 days from the decision of the court in the case of judicial proceedings. |
| Additional accounting requirements to comply with (if any) |
Drafting a final financial statement and filing it with the Companies Register. |
| Company liquidation time frame (approx.) |
12 to 18 months. |
| De-registration with the Tax Department in Cyprus required (YES/NO) |
Yes. |
| Trade Register deletion requirement (YES/NO) |
Yes, after completing the liquidation procedure. |
| Company liquidation support (YES/NO) | Yes, our lawyers in Cyprus can assist with the liquidation of a company. |
How can a company be liquidated in Cyprus?
There are two ways a company may be liquidated in Cyprus, according to the Company Laws, chapter 113, and the Cyprus Laws: compulsory or voluntary. The compulsory liquidation is performed by a Court’s decision, while the voluntary liquidation is performed by the company’s members or creditors. A compulsory liquidation can occur only after a petition is filled and submitted to the relevant Court.
This type of liquidation can start if:
- the members of the company came to this resolution and have filed an application to the Court;
- the company didn’t submit the statutory report to the Registrar of Companies or the statutory meetings didn’t take place;
- the company’s activity didn’t start for more than a year since the Cypriot company was registered;
- the number of members of a public company decreases below 7;
- the company cannot pay its debts or if the Court decides so.
The voluntary liquidation may occur if the duration term stated in the Articles of Association has expired, if the members decide so in a General Meeting and publish the decision in the Official Gazette of the Republic of Cyprus, or if the company takes the decision that there is no reason to continue the business activity and decides to wind up.
Types of voluntary company liquidation procedures in Cyprus
Voluntary company winding up in Cyprus is possible:
- through a members’ (shareholders) decision;
- through a creditors’ decision.
In order to close a company voluntarily based on the decision of the shareholders, there are a few conditions and steps to complete, namely:
- the company must be able to pay its debts in a maximum timespan of 12 months;
- where a unanimous decision cannot be made, the majority of the shareholders must vote for liquidation;
- the shareholders must also appoint a licensed liquidator to carry out the procedure;
- the liquidator must notify the Companies Register about the liquidation within a maximum of 14 days from the adoption of the resolution.
In the case of a creditors’ company liquidation in Cyprus:
- the directors hold a board meeting through which a resolution for company liquidation is passed;
- following this, the resolution must be approved by the shareholders and the creditors;
- in this type of procedure, the liquidator will report to the creditors on the phases of the process.
What are the steps for company liquidation in Cyprus?
The compulsory liquidation begins by paying a fee to the Companies Registrar and the Official Receiver before submitting the request to the Court. The liquidated company must be located within the area of the Court.
The application to the Court must be accompanied by an affidavit from a competent person who sustains the application and proves why it should be approved.
The application is set for hearing in a maximum of 30 days, but it must be taken into consideration that the judicial holiday period of the Cyprus Courts is from June to August and no activities are performed then.
If during that time no objection is registered, the Court reschedules the application for proof in a maximum of 30 days, while an announcement is made in the Government Gazette and a regional newspaper mentioning the data when the liquidation hearing is appointed.
Any interested party must give a 24-hour notice to the attorneys of the applicant before making a representation in relation to the application in Court. Any objections are resolved on a specific date, appointed by the Court. If there are no complaints, the Court will take a decision in a maximum of 3 days. The Order is submitted to the Companies Registrar and the company. The Companies Registrar must publish the decision in the Government gazette and appoint an examiner.
The liquidator must be appointed by the Court and has the bellow attributions: representing the company instead of the former management, performing any activities that may help the liquidation process, appointing an assistant advocate, paying all the creditors in full, selling (if necessary) the company’s assets in public auctions and appointing agents for the actions that cannot be performed by him. After covering all the debts, the Court decides to dissolve the Cypriot company.
In case of a voluntary liquidation, the liquidator is named in a general meeting of the shareholders and has the same attribution like the liquidator appointed by the Court.
After paying all the creditors and debts, a new general meeting is called. The results are presented during it and the minutes of this must be published in the Official Gazette of the Republic of Cyprus no longer than a month after it. No longer than a week after the meeting, the liquidator files the account to the Registrar of Companies and after three months from sending it, the company is dissolved.
A company may also request to be struck off the register in certain circumstances, such as not conducting business, or not having liabilities, assets, or creditors. The strike-off is based on an affidavit made by the directors and sworn to the Court.
How long does it take to liquidate a company in Cyprus?
The liquidation of a company in Cyprus may take from six months, in case of a voluntary liquidation, to one year in case of a compulsory decision. The time frame may vary from case to case.
On the other hand, a strike-off may take only four months, but a company in this situation may be restored within 20 years if some conditions are met: the company has performed business activities during the winding up, the creditors were not announced the strike-off or unjust actions were performed during or before the strike off. If you are interested in the procedures for company liquidation in other countries, such as Portugal and Liechtenstein, we may help you with information from our local partners.
Here is also a video on company liquidation:
Bankruptcy statistics in Cyprus
According to data gathered by this site:
- the total number of insolvencies dropped by 12% in the first half of 2023 compared to the same period of 2022;
- during the first 6 months of 2023, there were 764 voluntary liquidations registered;
- the highest number of compulsory liquidations for the same period was 31, all filed in March 2023.
Our lawyers are also at the service of natural persons who can rely on us for legal support in various matters, among which marriage registration in Cyprus. We are also at the disposition of foreign citizens interested in buying properties in Cyprus.
Feel free to contact our Cypriot lawyers for support in company liquidation matters.