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There are times when winding up a company is the right step. Whether it's part of a group restructuring, the closure of a dormant entity, or a planned exit, voluntary liquidation requires proper preparation. While legal and procedural aspects are often front of mind, the accounting work that supports a smooth liquidation is just as important.
Companies that do not prepare in advance often face delays, incomplete filings, or avoidable tax and regulatory issues. With the right accounting support, these risks can be avoided.
Closing a company requires clean and accurate financials
Before a liquidator is appointed, final accounts need to be drawn up. These should reflect the company's position as at the date of resolution, and clearly show how assets, liabilities, and reserves will be dealt with. If this step is not handled correctly, the liquidation may be delayed, or regulatory filings may be rejected.
Typical pre-liquidation accounting support includes:
- Assistance, as necessary, to terminate/assign all contracts to ensure the company ceases all trading activities
- Assistance/advice on disposals of any investments/fixed or intangible assets
- Final management accounts up to the effective date
- Closing balance sheet preparation
- Settling outstanding reconciliations
- Identifying and writing off non-recoverable amounts
- Assistance with assigning any balances due to third parties
- Resolving any outstanding tax or VAT matters including the VAT-deregistration and termination of tax number.
Where the company is part of a group, additional steps may be needed to address intercompany balances and support consolidated reporting.
Financial studies to support the decision to liquidate
In some cases, a business case is needed to support the decision to close a company. This is particularly relevant when dealing with group entities, or when a cost-benefit analysis is required to justify winding down a structure.
A financial study can assist by:
- Reviewing the ongoing administrative and compliance costs
- Assessing future obligations or contingent liabilities
- Comparing the projected cost of closure against continued operation
- Summarising financial history and tax position for internal sign-off
This work is often used to support internal governance, group decisions, or reporting to shareholders.
Supporting liquidators and scheme auditors
Once the liquidation process has started, the appointed liquidator or scheme auditor will require accurate and complete financial records. Late or incomplete information can result in repeated follow-ups or delays in submission to the Malta Business Registry (MBR) and the Commissioner for Revenue.
Accounting support during liquidation may include:
- Liaison with the appointed liquidator or scheme auditor
- Preparation of reports or supporting schedules
- Clarifying entries and classifications in the final accounts
- Assisting with tax clearance matters
- Preparing closing trial balances and reconciliations
BDO Malta works closely with legal teams, liquidators, and internal finance departments to ensure the required documents are prepared properly and on time.
Liquidation as part of a wider restructuring process
Liquidation is often used to reduce group complexity, clean up dormant entities, or realign operations. When done properly, it improves transparency and reduces unnecessary administration burden.
In these cases, valuations may be required to support internal transfers or divestments. Intercompany balances may also need to be settled or written off. We support this process by:
- Reviewing historic transactions and identifying outstanding items
- Assisting with valuation input and documentation
- Preparing entries for group elimination
- Advising on accounting treatment of final distributions
How BDO Malta can assist
BDO Malta supports businesses with voluntary liquidations by preparing the accounting and financial information required throughout the process. This includes assistance before the liquidation begins, support during the liquidation itself, and advisory input for groups planning a wider restructuring.
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.
