The Steps to Company Liquidation and Dissolution
When a company decides to cease its operations, it is crucial that the Company follows the formal procedure of dissolution and consequently winding up process. Under Maltese Law, a limited liability company is not automatically "struck off" the Register of Companies.
There are three main steps in the liquidation process:
- Dissolution - the point in time when the company resolves to liquidate due to a variety of reasons;
- The winding up process; and
- The ultimate striking off of the company from the Maltese Register of Companies.
Dissolution of a Company
The shareholder can decide to dissolve the company ("voluntary winding up") or the Company may be dissolved by order of the court ("compulsory winding up").
Voluntary Liquidation of a Company
Once the company decides to cease its operations on a voluntary basis, it shall pass an extraordinary resolution signed by its shareholders. The extraordinary resolution shall include the liquidation date, which is the date when the company will cease its operations together with the name and address of the liquidator. The company shall within fourteen days after the date of dissolution of the company deliver a notice of the resolution to the Registrar for registration.
The Directors of the Company are bound to look into the current state of affairs of the Company and must prepare a Declaration of Solvency confirming that the liabilities of the Company will be paid within 12 months. Where the liabilities of the Company exceed the assets, then a different procedure pertaining to creditors voluntary winding up applies.
Upon receipt of the final winding up documents, the Registry of Companies will register them and upon expiration of 3 months from the publication of the notice, it shall strike the name of the company off the register, unless the court, on application filed by the liquidator or any other person who appears to the court to have an interest, has made an order to defer the date of strike off.
The company ceases to exist only after its affairs have been fully wound up and its name is struck off the Register of Companies.
The liquidator must be a qualified person such as a lawyer or certified public accountant or registered with the Registrar as a fit and proper person to act as liquidator and has not held the office of a director or company secretary or any appointment with the company at any time during the four years prior to the company's dissolution.
Upon the appointment of a liquidator, all powers of the directors and of the company secretary would cease and the liquidator shall be responsible to summon all meetings of creditors and to proceed with the liquidation procedure.
Why Choose Nexia BT?
Nexia BT provides clients with timely, cost-effective and confidential advice on liquidation and company dissolution procedures in collaboration with professional auditors and liquidators. We will assist and take care of the following requirements:
- Drafting of shareholders resolution and the Declaration of Solvency
- Preparation and submission of the necessary documentation to the Registrar of Companies to put the company into liquidation;
- Closing off the Company's bank accounts, de-registration from VAT, disposal of any assets, and payments of any remaining creditors;
- Confirmation with the local tax and vat department that there are no financial obligations with them;
- Formulation of liquidation accounts, from liquidation date till date of distribution;
- Compilation of tax return for the year in which the liquidation accounts are prepared; and
- Application with the Registry of Companies to strike off the Company from Companies register and also application with the Inland Revenue department in order to obtain tax clearance.