Liquidation of legal entity

A company has ongoing costs and obligations while it is active, inactive companies can be sold, transferred or there is a voluntary liquidation procedure. Different jurisdictions have unique processes and procedures. Let’s use Cyprus as an example of this.

Voluntary Liquidation

Members’ voluntary liquidation:

• Company is solvent.
• Directors believe that the company can pay its debts.
• Appointment of a liquidator.
• Decision of the directors that the company does not have any further purpose and available assets should be realised and distributed to the shareholders.

Creditors’ voluntary liquidation:

• Absence of the declaration of solvency by the directors (the company cannot by reason of its liabilities continue its business).
• Appointment of a liquidator or provisional liquidator.

Effects of voluntary liquidation:

• Company must cease to carry on its business.
• Directors’ powers cease.
• Any transfer of shares is void.