Whether a company is thriving, facing challenges, or simply reaching a natural conclusion, understanding the available options and the necessary procedures regarding company closure ensures a smooth transition and protects all parties involved. This article outlines when a company should consider closing, the different exit strategies available, and the legal and accounting requirements for a voluntary
liquidation in Malta, including best practices for a seamless closure.
When a company should consider closing
A company may start planning its closure in various scenarios, including:
- Retirement or a desire to pursue new opportunities
- Consistent lack of profitability or changes in the market environment
- Disagreements among partners or shareholders
- Receipt of a favourable offer to purchase the company
- The need to safeguard personal or family assets
Early planning allows greater flexibility during the closure process and minimises potential risks and common pitfalls.
Alternative exit strategies
There are several exit strategies a company can choose from, aside from closure, each with distinct considerations. For example, a company may be sold to new owners or to management and/or employees, merge with another company, be transferred to other family members as part of a succession plan to ensure continuity or it could simply be liquidated. This is a process where the company ceases all operations, the assets are sold and debts are settled.
Legal and accounting requirements for voluntary liquidation
A voluntary liquidation in Malta involves a structured process, which includes:
- Board and shareholder approval
- Appointment of a liquidator
- Notification of the Malta Business Registry: Prior to the notification, the company needs to make sure that all statutory obligations are met (audited accounts, annual returns, tax and VAT returns are all up to date and submitted) and trading activities have ceased
- Settlement of all debts
- Preparation of liquidation accounts and final scheme of distribution
- Striking off: when the company is officially removed from the registry’s records.
Companies must strictly adhere to these steps to ensure the liquidation is properly finalised, and to avoid future legal complications such as the company not being properly liquidated.
How to ensure smooth liquidation
To facilitate a seamless company closure, in addition to early planning, it’s important that best practices are observed. This includes seeking professional guidance as necessary to navigate the complex legal, tax and corporate compliance aspects, maintaining up-to-date and accurate documentation and accounts, as well as communicating transparently throughout the process with all involved parties.
2025 Simplified dissolution process
During 2025, an amendment was made to the Companies Act which introduced a Simplified Dissolution Process, which represents a major advance in reducing the administrative and financial burden companies faced during the full liquidation process highlighted above. Previously, companies faced lengthy, complex, and often costly liquidation steps involving the appointment of liquidators, additional auditors and other extensive administrative duties. The new mechanism offers a streamlined, quicker, and cost-efficient way for qualifying companies to be liquidated and struck off the registry’s records without such burdens.
Conditions for application
To qualify for simplified dissolution, strict requirements must be met, namely:
- The company must be an unregulated private limited liability company, registered for at least six months
- In the prior six months, the company must not have traded, changed its name, pledged shares, entered contracts (other than those with service providers), or employed anyone except officers
- All liabilities must be settled or written off
- There should be no pending court proceedings
- Total company assets must not exceed €5,000
- All bank accounts should be closed
- VAT deregistration, if applicable, should be completed
- There must not be outstanding filings or penalties with the Registrar.
Required documentation
To apply for the process, companies must prepare the prescribed application forms and statutory declaration, collectively signed by directors, confirming that all eligibility conditions are met. A resolution of shareholders approving the dissolution must also be prepared, as well as confirmation that bank accounts have been closed and that records of beneficial ownership and financial documentation will be retained as per law.
Procedure
Following the submission of required documents, the Registry will publish a notice stating the intention to strike off the company from its records after three months, which gives any potential creditors time to come forward. If no valid objections are lodged, the company is struck off from the registry’s records. The current directors and company secretary retain their office and responsibilities until the company is officially struck off.
How can CSB Group help?
CSB Group offers comprehensive and tailored support for companies in Malta considering liquidating or other exit strategies. Our specialist accounting, corporate, legal and tax advisory teams can assist with the co-ordination of the entire liquidation process, including the appointment of the necessary third parties, liaising with the authorities and submitting the necessary documents, ensuring full compliance throughout the entire process.
About the Author
This article has been authored by Assistant Manager - Client Accounting,
Paulina Zolnik.
