Cyprus: Strike Off vs. Voluntary Liquidation Of A Cyprus Company

Last Updated: 8 March 2017
Article by Charles Savva

The Cyprus Companies Law, Cap. 113 provides three methods for winding-up a Cyprus company:

  • voluntary winding-up (either by the members or by the creditors);
  • involuntary winding-up by its creditors; and
  • voluntary winding-up by the Court or winding-up subject to the supervision of the Court.

An alternative way for a company to cease to exist, is by way of striking-off of the Register of Companies, in accordance with section 327 of the Companies Law (Cap. 113).

The most common methods of dissolving a Cyprus private company limited by shares whose main activities is to act as a holding company is a members' voluntary winding-up and the striking-off of the register.

1) Strike-off

This is a very straight-forward procedure and is generally used for companies that have terminated all activities and do not intend to carry on any business in the future. These companies are usually considered as dormant companies, however, the financial statements of the company must be prepared until the date that the company ceased activities.

Also, it is essential to submit the relevant income tax return to the Cyprus Tax Authorities which will be examined by the tax office. All the tax liabilities should be settled and a tax clearance certificate issued. A declaration of solvency must then be signed by all the directors of the company.

The declaration is a confirmation by the directors of the company that the management accounts have been prepared up to date, confirming that the company ceased its operations, has no trading activities, no obligations, no debtors/creditors and no assets and is for all intents and purposes inactive. The statement of assets and liabilities of the company must validate that the company has adequate funds to settle all its debts, and/or outstanding liabilities including the fees charged for the strike-off.

The Registrar of Companies will then publish in the Official Gazette of the Republic of Cyprus, the intention of the company to be struck-off, and sends a notice to the company that within three months, the company will be removed from the records of the Registrar of Companies. 

The Registrar can also proceed with the striking off of a company where he has reasonable cause to believe that the company has ceased to carry on its business (i.e. if a company does not comply with its obligation for filing of the Annual Returns to the Registrar of Companies) and/or when the company omits to pay the annual levy, as provided by the Companies Law, Cap. 113.

It is noteworthy that in case where any member or creditor feels aggrieved by the striking-off of the company, they can apply to the Court for the reinstatement of the company provided that the application will be done before the 20 years' expiration period, from the publication in the Gazette of the notice.  

2) Members' Voluntary Liquidation

A company may be wound up voluntarily when the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs, on the occurrence of which the articles provide that the company is to be dissolved.

Furthermore, a company may be wound up voluntarily if the general meeting resolved the voluntary liquidation of the company either by the passing of a special resolution resolving that the company be wound up voluntarily, or by passing an extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up.

As the first step the auditors of the company should prepare the statement of assets and liabilities of the company, as at the latest practical date before the declaration of solvency.  The majority of the Company's directors swear an affidavit before the registrar in the District Court, making a Declaration of Solvency. The Declaration of Solvency must be dated on a date not preceding 5 weeks from the date of the passing of the extraordinary general meeting. The sworn Declaration of Solvency will attach the Statement of Assets and Liabilities as an exhibit.

Moreover, a decision of the meeting of the board of directors of the Company (or alternatively a unanimous written resolution of the Board of Directors in lieu of such meeting) needs to be passed, where the directors of the Company will report that a Declaration of Solvency has been made and will resolve to convene an extraordinary general meeting of the Company to approve the liquidation of the Company and to appoint a liquidator.

The Extraordinary General Meeting of the Company will mainly resolve and approve the winding up of the Company and the appointment of the liquidator.

Once the liquidation commences, the auditors should proceed with the filling of the audited financial statements up to the date of the appointment of the liquidator and it is essential to obtain the Tax Clearance Certificate by the Tax Authorities. 

Upon receipt the Tax Clearance Certificate, the liquidator should sent to the Registrar of Companies the one month notice of the Final General Meeting for publication in the Official Gazette of the Republic of Cyprus, fixing such meeting.

The Final General Meeting is held whereby the liquidator presents the final accounts of the Company for approval and then within a week the Liquidator should file with the Registrar of Companies a copy of the final accounts of the Company and a report of the Final General Meeting.

The Company is deemed to be dissolved on the expiration of 3 months from the registration of the said report with the Registrar of Companies and the Registrar of Companies will issue a Certificate of Dissolution.

Main Differences between Strike-off Method and Members' Voluntary Liquidation

Strike-off is the simplest and cheapest method, no liquidator is required and it is usually applicable to dormant companies. On the contrary the members' voluntary liquidation is a more complex and costly procedure and a liquidator is required to be appointed.

Moreover, in the case of strike-off, any person with a locus standi against the company may submit an application to the court  requesting that the company is reinstated on the register before the 20 years' from the date of the publication in the Gazette of the notice lapses, while in the case where a company has been dissolved by a members voluntary liquidation, any such  Court application can be made at any time within two years of the date of dissolution by the liquidator of the company, or by any other individual who appears to the Court, showing interest, and upon such terms as the Court thinks appropriate, declaring the dissolution to be void.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Charles Savva
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.