Winding up of a Cyprus company. Service offer

Budget for winding up of a Cyprus company (two main options):

Time frame for winding up of a Cyprus company:

Cyprus legislation has several options for the winding up of a company:

1. Strike off;
2. Voluntary liquidation by members;
3. Voluntary liquidation by creditors;
4. Voluntary liquidation subject to court supervision;
5. Involuntary liquidation by court order.

The most common options are strike off and voluntary liquidation by members. Let us inspect them closer.

It is the simplest procedure among the above. In essence, it means that the company’s activities stop, and the director reports this fact to the Cyprus Registrar of Companies. The Registrar accepts the director’s application and initiates the strike off which is completed in about a year (unless there are objections from the Tax Department; if the Tax Department objects, the company will only be struck off after it clears all the issues pointed out by the Tax Department). Even with non-objection from the Tax Department, there are cases where the strike off drags on for several years, but the average time to complete this procedure is 1 year.

A Cyprus company wound up in this way can be restored to the register within 20 years from the date of strike off.

This type of winding up procedure includes the following steps:

1) The members of the company pass a resolution to wind up its business.

2) The company clears all its existing obligations.

3) The bank accounts are closed.

4) The liquidation accounts are prepared.

For the relevant package of documents to be prepared, it is necessary to provide information about the company’s activities in the financial year up to the winding up date (copies):

• bank account statements and account closure letters;
• contracts and agreements made in the financial year;
• previously made contracts and agreements which continue in the financial year in question (for example, loan agreements);
• underlying documentation disclosing the business of the company in the financial year.

5) The director applies to the Tax Department for confirmation that the company has no outstanding tax obligations (Tax Clearance Certificate).

6) The director applies to the Registrar to strike the company off the register.

Unlike strike off, this procedure is more complicated and requires the involvement of a third party – a liquidator. After all necessary steps are taken and the final liquidation documents are submitted to the Registrar of Companies, the Registrar usually directs to liquidate the company within 3 months. The cost of this procedure is substantially higher than that of strike off, and depends on the time spent by the liquidator dealing with documents, debtors, and creditors, and on whether the liquidation will require the distribution of assets to the company’s members. To assess the cost in each particular case, it will be necessary to contact the liquidator.

A Cyprus company wound up in this way can be restored in very rare cases and only through court. Also, unlike strike off, a voluntary liquidation allows distributing the assets of the liquidated company directly to the member.

The procedure includes the following steps:

1) The minutes of the meeting of board of directors are written up where the directors decide to convene an extraordinary meeting of members for the members to approve the liquidation of the company and appoint a liquidator.

2) The company secretary gives notice of the extraordinary meeting of members at least 21 days before the expected date of the meeting.

3) Based on the accounts for the last financial year, the board of directors issues a Declaration stating that:

• the financial position of the company has been properly examined,
• the directors are satisfied that the company will be able to pay all its debts within a year from the date of commencement of the liquidation.

The secretary submits the Declaration signed by the directors to the Cyprus Registrar. The Declaration filing date must be not earlier than 5 weeks before the date of a special resolution appointing a liquidator.

4) The minutes of the extraordinary meeting of members are made where the members decide to put the company in liquidation and appoint a liquidator. Based on the minutes, a special resolution is issued where the members appoint a liquidator.

5) The liquidator publishes a notification of a special resolution appointing a liquidator in the Government Gazette.

6) The liquidator submits to the Cyprus Registrar a special resolution appointing a liquidator, Form C.41 appointing a liquidator, and a notification of a special resolution appointing a liquidator published in the Government Gazette.

7) At this stage, the company normally settles all obligations and closes bank accounts; the liquidator collects documents on the company’s activities during the period from the last financial year-end to the date of bank account closure, and based on this information, liquidation accounts are prepared. The liquidator also applies to the Tax Department for a certificate stating that the company has no outstanding tax obligations (Tax Clearance Certificate).

8) The liquidator publishes in the Government Gazette a notice of the final meeting of members 30 days before such a meeting.

9) The final meeting of members is held where the liquidator reports on the progress of the liquidation and presents the company’s liquidation accounts to the members for approval.

10) The liquidator submits to the Registrar the company’s liquidation accounts and a report on the final meeting of members.

11) The Registrar issues a certificate of dissolution of the company 3 months after receiving the liquidation accounts and the liquidator’s report.

Given all the above-mentioned deadlines to comply with and the need to prepare liquidation accounts, the voluntary liquidation of a company by members takes 1 year, on average.

Voluntary liquidation of a company by creditors also requires the appointment of a liquidator, as well as the involvement of other persons in the liquidation process (the need to resort to this particular procedure is usually dictated by the company’s insolvency).

Voluntary liquidation subject to court supervision and involuntary liquidation by court order, in addition to the appointment of a liquidator and the involvement of third parties, require the involvement of the court, which significantly increases both the length and the cost of these procedures.

[1] The fees are valid as of November 2024. The invoices may include 19% VAT on the fees for the services rendered.