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.
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.