Malta: What To Consider When Liquidating A Company In Malta

Last Updated: 22 June 2016
Article by Marika Tabone

Most Read Contributor in Malta, September 2017

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 timeframes.

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 situations including:

  • Group is undergoing restructuring
  • 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:

  1. a members voluntary winding up
  2. the creditor's voluntary liquidation. 

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 include:

  • 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 and present:

  • a full statement of financial position of the company
  • a list of creditors of the company
  • 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 deregistration form.

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 submitted.

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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