CLOSURE OF A CYPRUS COMPANY
Voluntarily striking off or closing a company in Cyprus, for whatever reason, can be a challenging and lengthy task. Without specialist knowledge you may fall at the first hurdle and it is better to close or wind up the company cleanly without leaving a stack of administrative liabilities behind you.
Currently there are two main methods of closing a Cyprus Company.
Below you will find a brief explanation of both procedures.
Members Voluntary Liquidation of a Cypriot Company
All section references in this briefing are to the Companies Law, Cap. 113, unless otherwise stated.
Putting the Company into Liquidation The Directors of the Company or, in the case of a company having more than two directors, the majority of the directors, must make a statutory declaration to the effect that they have made a full inquiry into the affairs of the Company, and that having so done they have formed the opinion that the Company will be able to pay its debts in full within such period not exceeding twelve months from the commencement of the winding up as may be specified in the declaration. This must be made within five weeks immediately preceding the date of the passing of the Special Resolution to voluntarily wind up the Company and be delivered to the Registrar of Companies for registration before that date and the Statement must embody a Statement of the Company's assets and liabilities as at the latest practicable date before the making of the Declaration (Section 266 (1) and (2)).
The Company must pass a Special Resolution in general meeting that it be wound up voluntarily (Section 261(1) (b)). The winding up is deemed to commence at that time (Section 263).
Notice of the resolution for voluntary winding up shall within 14 days after the passing of the resolution be advertised in the official gazette. (Section 262 (1)). The Directors Statutory Declaration of Solvency must be sent to the Registrar of Companies for registration before the passing of the resolution for winding up. (Section 266 (2)(a)).
Conduct of Liquidation
The liquidator should be appointed by the Company in general meeting. On his appointment the Directors powers cease unless their continuance is sanctioned by the general meeting or by the liquidator (Section 268 (1) and (2)). Within 14 days of his appointment the liquidator should:
The Company will cease business from the commencement of the winding up except in so far as required for its beneficial winding up (Section 264). Provided that the corporate state and corporate powers of the Company shall notwithstanding anything to the contrary in its articles, continue until it is dissolved (Section 264). No transfer of shares unless to or with the sanction of the liquidator or alterations in the members status may take place after the commencement of the winding up (Section 265).
If the winding up continues for more than one year, the liquidator must call a general meeting at the end of the first year (or within three months thereof) and lay before the meeting an account of his acts and dealings briefing 2 and of the conduct of the winding up during the year (Section 272).
If the liquidator is of the view that the Company is unable to pay its debts in full, the procedure in Section 271 is to be followed and the winding up will be converted into a creditors voluntary winding up.
Where the whole or part of the business of the Company which is being wound up is to be transferred or sold to another company the liquidator may, with the sanction of Special Resolution of the Company receive in compensation or part compensation for a transferor sale, shares, policies or other like interests in the transferee company for distribution among the members of the transferor company (Section 270).
Where a member does not vote in favour of such a Special Resolution as is referred to in 2.7 above he may express his dissent from it in writing within 7 days after the passing of the Resolution, requiring the liquidator either to abstain from carrying up the Resolution into effect or to purchase his interest in the Company at a price, to be determined by agreement or by arbitration (Section 270 (3)).
Termination of Winding‐up
As soon as the Company's affairs are fully wound up, the liquidator shall make up an account of the liquidation and call a general meeting of the company (Section 273 (1)).
The meeting should be called on at least one months notice by advertisement in the Gazette, specifying its time, place and object (Section 273 (2)).
The liquidator should lay his accounts before the meeting and give an explanation of them (Section 273 (1)). If this remuneration has not been decided upon by this time, it should be decided upon then (Section 273 (1)).
Within one week after the holding of the meeting the liquidator shall:
The Company is deemed to be dissolved on the expiration of 3 months from the registration of the said return with the Registrar of Companies (Section 373 (4)).
Strike-off Method
If the Company has ceased activities and no longer requires the business, the company is able to proceed with the official strike-off. It is important to remember that the company is obliged to prepare the financial statements up to the dated (the date the company ceased activity).
Once the financial statements have been prepared they are filed with the relevant income tax return to the Cyprus tax office. The Cyprus tax office will make an examination and once satisfied and any tax liabilities have been settled will then issue a tax clearance certificate.
The directors of the Company will then have to sign an affidavit, which confirms that the company has no assets of liabilities whatsoever and that there is no longer any business and does not intend to carry on business in the future. This procedure must be sworn before a notary public.
The relevant statement of affairs that is prepared needs to show that the company has adequate funds to discharge its debts and to cover the fees for the official strike-off of the company.
From the date the documents are submitted to the Registrar for strike-off the procedure normally takes around 12 months – keeping in mind the time frame can vary depending on the work load of the registry.
If you require any add additional information or clarification please do not hesitate to contact our office