Members Voluntary Liquidation

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Members Voluntary Liquidation

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Members Voluntary Liquidation

FOREWORD

Below we set the procedure for the members’ voluntary liquidation for a Cyprus company with references to the Cyprus Companies Law Cap. 113 (the “Cyprus Companies Law”) followed by a practical step by step procedure of the actions necessary to complete such a liquidation.
LSTS members are licensed liquidators under the Cyprus Insolvency Practitioners Law, 64(I) of 2015 and can be appointed as liquidators in relation to Cyprus company liquidations.

 

PROCEDURE FOR THE MEMBER’S VOLUNTARY LIQUIDATION

In accordance to the Cyprus Companies Law a company can be wound up voluntarily provided that the company resolves under a special resolution that the company be wound up voluntarily (Article 261 (b)).

A resolution shall be a special resolution when it has been passed by a majority of 75% of the members and giving at least 21 days notice for such resolution.  Such notice shall be less than 21 days if the majority of the number of the shareholders representing 95% or more of the nominal value of the voting shares. (Article 135(2)).

The above resolution is passed at an Extraordinary General meeting convened by the directors at the request of the members holding not less than 10% of paid up share capital having the right to vote at such meeting. Such request must be signed and sent by the members to the registered office address of the company.  The directors must within 21 days of such request proceed and convene the Extraordinary General meeting (Article 126).

Prior to the Extraordinary General Meeting the directors will need to prepare the Statement of Assets and Liabilities and a Statutory Declaration of Solvency which must be sworn before the Registrar of District Court by the majority of the directors, stating that the Company can pay off all its debts within 12 months from the start of the liquidation. The declaration must be delivered to the Registrar of Companies before the date of the resolution for the winding up (i.e. the Special Resolution) (Article 266).

At the Extraordinary General meeting the company will approve the winding up of the company and also appoint the liquidator in order to settle any outstanding business and distribute the assets of the company. The company may also determine the remuneration of the liquidator. It should be noted that upon the appointment of the liquidator all the powers of the directors will cease. (Article 268).

Provided that the company approves the winding up at the Extraordinary General Meeting (by Special Resolution) it will need to provide to the Registrar a copy of such Special Resolution, within 15 days of passing such Special Resolution, so that this is published to the Government Gazette. (Article 262)

Along with the above mentioned resolution and within 14 days of his appointment the Liquidator must publish in the Government Gazette (form HE43) and deliver to the Registrar for registration the notice of his appointment (form HE41) (Article 288).

Once the winding up and the affairs of the Company is completed the Liquidator must prepare an account showing how the winding up took place and how the company’s property was distributed, and calls for a final general meeting to present such account prepared and provide explanations in relation to this. Such final General Meeting is convened by the Liquidator by publishing a notice in the Government Gazette setting the date, time and purpose and has to be published at least 1 month prior to such meeting (Article 273).

Within 1 week after the final General Meeting the Liquidator has to deliver to the Registrar of Companies a copy of the accounts prepared along with a return for the holding of the meeting and the date of such meeting.

The Registrar of companies registers the accounts and the returns received by the Liquidator and after the passing of 3 months from such date, the company is deemed to have been dissolved.

 

STEP BY STEP PROCEDURE ON THE MEMBERS VOLUNTARY LIQUIDATION

  1. Shareholders notify the company of their intention to proceed with the voluntary liquidation

Shareholders send a letter to the registered office of the Company and addressed to the Directors of the company declaring their intention to proceed with the members voluntary liquidation.

  1. The Directors convene an Extraordinary General Meeting within 21 days of receiving the above notice
    1. The Directors prepare the following to sign before the Registrar of District Court (sworn affidavit):
      1. Statement of Assets and Liabilities
      2. Statutory Declaration of Solvency
    2. The Directors hold a Directors meeting whereby the declaration of solvency and statements of assets and liabilities is presented and approved and resolve to:
        Convene an extraordinary general meeting with the following subjects:

      1. The voluntary winding up of the company and
      2. The appointment of the liquidator
    3. The Directors send the notice of the meeting giving at least 21 days notice (or less if such notice is waived by the shareholders).
    4. The shareholders provide a proxy to a person to attend and vote on their behalf (optional)
    5. The shareholders provide the consent to hold the EGM earlier than the required notice (optional)
  2. Holding of an EGMThe shareholders hold an EGM whereby they vote (personally or through the proxies) on:
    1. Winding up of the company (Special Resolution)
    2. Appointment of liquidator (Ordinary Resolution)
    3. Authorisation to the liquidator to distribute the assets among the shareholders (Extraordinary Resolution)

    A Greek translation, certified as true copy of the original by the Secretary, must be prepared and delivered to the Registrar within 15 days of such EGM.

    The Registrar will proceed and publish this EGM in the Government Gazette.

  3. Appointment of the LiquidatorWithin 14 days of the Liquidators appointment (date of the EGM), the Liquidator must provide the following documents to the Registrar:
    1. Notification of appointment to be published in the Government Gazette (HE43)
    2. Notification of appointment to be kept by the Registrar (HE41)
  4. Preparation of the statement of distribution of assets When the liquidation finishes and the liquidator distributes all the assets to the shareholders, the liquidator prepares a statement showing such distribution (if applicable).
  5. Notice to the Final EGMThe liquidator calls for a final general meeting to present such account prepared and provide explanations in relation to this.

    The notice of such meeting has to be published in the Government Gazette at least 1 month prior to such meeting.

  6. Final EGMThe shareholders hold the Final EGM at the date set and whereby the liquidator presents the final accounts and the shareholders approve such accounts.
  7. Delivery to the Registrar of the final documentsWithin 1 week after the final General Meeting the Liquidator has to deliver to the Registrar of Companies a copy of the accounts prepared along with a return for the holding of the meeting and the date of such meeting.

 

HOW CAN LSTS ASSIST YOU

LSTS may assist in:

i.)  Being appointed and act as the liquidator in the members’ voluntary liquidation of Cyprus companies.

ii.) Providing you with guidance on the process of the liquidation.

 


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