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The liquidation process for Maltese registered companies involves a step by step process one needs to follow to ensure the company is liquidated/dissolved in the proper manner and all public authorities are informed accordingly.
CSB Group provides assistance to clients throughout the entire liquidation process and ensures timely, cost-effective and confidential advice on liquidations and company dissolution procedures.
Liquidation/Winding-Up of companies: What the process entails
It is important to distinguish between 2 types of Liquidations being Members Voluntary and Creditors Voluntary Winding Up.
If a declaration of solvency and statement of affairs are submitted then the winding up is a members’ voluntary winding up. Otherwise if no declaration of solvency is submitted, the winding up is a creditors voluntary winding up.
Members’ Voluntary Winding Up: Process and Timeframes
In addition to the modes of dissolution referred to above a company may be dissolved and wound up by the court in the following cases:
- An extraordinary resolution by the members needs to be drawn up and executed whereby the members resolve to wind up the company and appoint the particular person as liquidator. The dissolution date is also selected.
- Accounts, Audits and Tax Returns need to be brought up to date so that the company is in good standing with the Authorities.
- Liquidation forms including Form B(1), Form B(2), Form L and Statement of affairs would need to be submitted to the Malta business Registry within 14 days of the Dissolution Date.
- Once the latter documents are submitted the company is marked ‘in dissolution’ on the Malta Business Registry (MBR).
- The liquidation accounts & scheme of distribution are prepared, signed by the liquidator and audited.
- The auditor of the liquidation accounts & scheme of distribution shall not be a person who has held the office of auditor of the company at any time during the last three years immediately preceding the date of dissolution.
- The liquidator shall thereupon call a general meeting of the company for the purpose of laying before it the accounts & scheme of distribution, together with the auditors’ report.
- Within seven days after the meeting, the liquidator shall send to the Registrar a copy of the accounts and of the scheme of distribution, together with the auditors’ report, and shall make a return to him of the holding of the meeting and of its date.
- Once the documents referred to in number 8 are submitted and vetted by the MBR, they are uploaded and a notice in the government gazette is issued – on the lapse of 3 months from the effective date on the notice, the company will be officially struck off.
Creditors’ Voluntary Winding Up: Process and Timelines
- Directors of the company call a meeting of the creditors.
- Directors present.
A full statement of financial position of the company.
A list of creditors of the company.
Estimated amount of claims.
3. Person nominated by the creditors to be liquidator
Winding up continuous for more than 12 months. The liquidator shall summon a general meeting of the company and a meeting of the creditors and at each successive period of 12 months.
Implications of Dissolution
Upon being placed into liquidation, the company shall cease to carry on any business, unless it would be beneficial for the company to continue its business during the winding up (for example to dispose of any inventory or fixed assets).
Once put into liquidation, the directors and company secretary lose all their powers over the company and the duty to administer the winding up of the company is assigned to a liquidator.
No share transfer can take place after the date of dissolution without the written consent of the liquidator.
Duties and Powers of the Liquidator
The liquidator can be an accountant, lawyer or a person deemed fit by the Registry to act as liquidator. At CSB Group, we can assist as well in the appointment of a liquidator for your company.
One of the main duties of the Liquidator is to look into the affairs of the company and to see whether the debts of the company can be paid within the period set out in the declaration of solvency.
If the liquidator believes that company cannot pay its debts within this period, the liquidator shall call a meeting of the creditors and lay before its creditors a statement of assets and liabilities and dissolution and winding up shall be deemed to be a creditors’ voluntary winding up.
In the case of a members’ voluntary winding up, if the winding up process takes longer than 12 months, the liquidator has the duty to call a general meeting of the company at the end of every 12 month period.
The meeting must be held within 3 months from the end of the 12 month period and the purpose of the meeting is for the liquidator to provide the shareholders with an account of his actions and dealings during the period and also present a summary of income & expenditure.
VAT considerations when Liquidating a Company
It is important to point out that if the registered person is classified as a taxable person, he shall be deemed to have, immediately before the cancellation of his registration, supplied to himself all the remaining business assets that belonged to his business. In this regard he must account for the VAT due thereon in his last VAT Return.
Prior to cancelling an Article 10 registration, taxable persons should dispose of any goods in respect of which input VAT was claimed at the market value obtained at the time.
Subsequent to the above, the company would need to submit the VAT deregistration form after ensuring all its prior VAT returns have been submitted and payments made to the VAT department.
Tax considerations when Liquidating a Company
The liquidator of a company which is being wound up shall not distribute any of the assets of the company to its shareholders unless he had made provision, for the payment in full of any tax which he knows of or might reasonably expect to be payable by the company and in default, such liquidator shall be liable personally and jointly and severally with any other person responsible therefor, for payment of the tax due.
The dissolution or winding up of the company does not halt the tax refund process, as the tax refunds are due to the shareholders and not to the company. Therefore the liquidation process can proceed even though tax refunds have not yet been received.
From an FSS perspective, one needs to ensure all pending FS5s, Fs3s and FS7s are submitted, and all outstanding taxes and national insurance contributions are settled. The company’s PE number would also need to be de-activated, if applicable.
Closure of Bank accounts
Before the company is struck off the Register, any company bank accounts should be closed. Remaining funds are deposited temporarily in a liquidator’s client account. Upon striking off, remaining funds are distributed to shareholders (following expiration of three month period).
CSB Group’s dedicated & experienced team in liquidation processes, will ensure that all the above are taken into consideration and each step is followed to put your mind at rest that the liquidation process is as smooth and accurate as possible.
"We have worked closely with CSB Group since February of 2015. They have been instrumental in helping us establish our Malta office and continue to aid us with their stellar legal and accounting services. Malta has proven to be an excellent location to establish our business, however, setting up a company with many international shareholders has been a complicated task. CSB Group has guided us along this process and we are quite satisfied with the results."
We’ve been using CSB services for four years and they have been a great asset to our business. We’ve been very impressed with their friendliness and responsiveness and with the staff constantly producing quality work in every aspect of their business – from book keeping to tax preparation. We’re glad to have CSB as part of our team.