You may feel intimidated by the term 'liquidation' or
'dissolution' and what it implicates. It is definitely not
an easy procedure and requires in-depth knowledge of the Malta
accounting legislation. A company should contact professionals in
the field to make sure all the required forms and documents are
compiled and filed with the authority within the required
CSB Group provides clients with timely, cost-effective and
confidential advice on liquidation and company dissolution
procedures. In collaboration with suitable Maltese auditing
professionals and liquidators, it can also coordinate the
dissolution of Maltese companies in a timely manner.
Liquidation occurs when the company's operations are brought
to an end. This can either be done voluntarily, or made mandatory
by a court ruling. Once the company is put into liquidation it
shall cease to carry out any business, unless it would benefit the
company to carry on its operations during the dissolution; as is
the case of disposing of stock or fixed assets.
Voluntary liquidation can be appropriate in a range of
Group is undergoing
the owner is retiring
cash flow problems
debtors are slow to pay causing the
company to become insolvent
it is likely that that you will not
be able to collect dues from debtors.
There are two types of voluntary winding up:
a members voluntary winding up
the creditor's voluntary
Members voluntary winding up occurs when a declaration of
solvency and statement of affairs are submitted by the directors
together with the notice of extraordinary resolution to dissolve
the company signed by all the shareholders. The resolution is to
liquidation date - the date on
which the company will cease its operations;
name and address of the liquidator -
that being the person entrusted with the company's assets and
responsible for their realisation as well as discharge of
liabilities, payment of the creditors, and the distribution of any
remaining surplus between the shareholders;
name and address of the Malta audit
firm being appointed as auditor of the liquidation accounts.
On the other hand, creditors voluntary liquidation is required
if the company is no longer able to pay its creditors and the
directors are not able to make a declaration of solvency. In this
situation the creditors may ask for the winding up of the company.
The directors of the company will call a meeting of the creditors
a full statement of financial
position of the company
a list of creditors of the
estimated amount of claim.
During the meeting a person is nominated by the creditors to act
as a liquidator. The creditors shall also fix the basis of
remuneration to be paid to the liquidator.
Apart from the required forms and documentation that are
mandatory to submit including (Form B (1), Form B(2), Form L, etc)
there are other liquidation implications.
These are listed below:
Income tax – the assets of the company cannot be
distributed to the shareholders by the liquidator unless adequate
provision is made for the payment in full of any tax which he knows
about or might reasonably expect to be payable by the company. The
Liquidator should request a tax clearance letter from the IRD
(Inland Revenue Department).
Final Settlement System Rules – a request
to the Commissioner by Malta payroll services provider is made to
cancel the registration of the payer by filling in the appropriate
Value Added Tax – The VAT deregistration form
would need to be submitted; once this is accepted, the Commissioner
shall serve a notice indicating the effective date of the
cancellation. Prior to the deregistration under Article 10 taxable
persons should dispose of any goods in respect of which input VAT
was claimed at the market value obtained at the time.
Closure of Malta bank account – before
the company is struck off the register.
Application for strike off – the
liquidator sends a notification letter informing the registrar that
upon completion of the liquidation, the liquidation accounts are
being submitted and an official request to strike off the
company's name from the register of companies is being
Notice in the Government Gazette –
published by the registrar announcing the striking off of the name
of the company in three months' time so that any person wishing
to object to the strike off may do so. In the absence of any
objection or order by the court to defer the date at which the name
of the company shall be struck off within the three month time
frame from the date of publication of the notice; the company will
be struck off from the register of companies.
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.
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