Closing a company is a nuanced process, and in Cyprus, businesses have two primary avenues for closure: strike off and liquidation. Each method comes with its own set of requirements and considerations, making it crucial for businesses to weigh their options carefully.
Strike Off
Strike off is an option exercised voluntarily by the company itself, typically chosen when the business is solvent and all shareholders unanimously agree to cease operations. While less complex than liquidation, specific steps must be followed to ensure a smooth process. Briefly these include:
Close all bank accounts and ensure a clean balance sheet.
Prepare audited financial statements up to the year preceding the strike off or up to the date of last activity.
File financial statements along with annual returns to the Registrar of Companies.
File all tax returns and settle any outstanding taxes.
If applicable, de-register from VAT
Apply for tax clearance.
Pass a resolution stating the company has no business activities.
File the resolution with the Registrar of Companies, requesting the strike off.
The Registrar publishes the strike off after a three-month statutory period.
It is important to note that even after a strike off, a creditor can reinstate the company. However, this option is not available in liquidation, making striking off a less permanent solution.
Liquidation
Liquidation, whether voluntary or involuntary, is a more intricate process, chosen when the company needs comprehensive closure due to various reasons.
For a voluntary liquidation, the process briefly involves the following steps:
Shareholders pass a resolution following directors' proposal for liquidation.
Prepare audited financial statements up to the date of the liquidator's appointment, ensuring assets exceed liabilities.
Directors make a sworn declaration of solvency. This is a declaration that the company can pay all its debts.
Publish the appointment of the liquidator in the government gazette and local newspapers.
Obtain a tax clearance certificate from the Department of Taxation.
Publish a one-month notice for the final meeting of the company.
After the notice period, file final minutes and the liquidator's statement of account with the Registrar of Companies.
The company is deemed dissolved after a three-month statutory period.
Choosing between striking off and liquidation depends on various factors such as company size, financial status, and legal exposures. For smaller companies without significant legal or financial complexities, striking off might be the more cost-effective and straightforward option. However, for more complex businesses with substantial agreements and liabilities, liquidation offers comprehensive closure, albeit at a higher cost.
How We Can Help: A Strategic Partnership for Closure
As an audit firm committed to excellence, we understand the intricacies of closing a company in Cyprus. Our team of experienced professionals can guide you through the complexities of striking off or liquidation, ensuring compliance with regulatory requirements and minimizing potential risks.
Closing a company is a significant step, and with our expertise, we can be your trusted partner in navigating the intricacies of closure with precision and professionalism.
Disclaimer: The information provided in this article serves as a brief summary and general guide for informational purposes only. It is not intended as professional advice, and readers are encouraged to consult with qualified professionals for specific guidance tailored to their unique circumstances. The authors and publishers of this article do not assume responsibility for any actions taken or decisions made based on the information presented herein. Laws and regulations are subject to change, and readers should verify the current legal landscape independently.
