The servicing of documents to a Cyprus company & failure to act

A Creditor may apply to court for the issuance of a liquidation order against a company that does not comply with a demand notice to pay any outstanding debts. The notice of demand is served to the registered office of the company, who then has 21 days to pay the fine; failure to do so may result in the liquidation of the company deemed unable to pay its debts by the creditor who can apply to legally dissolve the company.

The servicing of documents to a Cyprus company & failure to act

The documentation required for the liquidation of a Cyprus company is as follows:

  • An affidavit in support of the application.
  • A statement of account stating the debits and credits signed by the debtor company acknowledging the debt and/or by invoices issued and signed related to the account.
  • The demand notice of payment.
  • The certification of the service.
  • The relevant publications in the official Gazette and a daily newspaper.

The court can then issue the liquation order during a short trial where the debtor company is typically unable to substantially dispute the claim. Arbitrary refusal to pay even if the company has the funds is grounds for the issuance of the liquidation order.

A Judge of the High Court in Cyprus examined the above case whereby a company was being sued by a creditor who stated the company owed him a specified and liquidated debt of over €5,000. Cyprus legislation states that a written notice of demand can be legitimately served to a company by delivering it by hand or posting it to the company’s registered office.

The lawyers of the debtor company responded that they will file an appearance in the procedure without raising the issue of notification of service. The court held that the company intentionally and improperly notified the Registrar of Companies of an amendment in the company’s registered office at a time prior to the service of the application, and in the knowledge that the application for liquidation had already been filed.

The court further held that the company did not raise the issue of validity of service at the appropriate time when amending the address of its registered office, with hindsight indicated that the company had tried to avoid the charge. Therefore, the service of the claim and application at the company’s office was in good form to which the debtor company must have taken notice of the claim as a burden of proof on the balance of probabilities.

The high court also furthered that even though the written notice of demand for a debt is not a judicial document however, non-compliance allows the company to be liable for judicial procedures. In this case, Cyprus Case Law suggests that such a fact was not proven, however it was held that the company took actions with ulterior motives to abuse the valid document servicing. The existence of the debt and its non-payment is sufficient proof on its own and fulfilled the necessary requirements, therefore the court issued for the company’s dissolution.

Eltoma Corporate Services can help you with any legal assistance required regarding your rights in the event of a served notice of payment or dissolution. Contact us for more information. 


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