If you are a director or shareholder of a Maltese company that is no longer required or is insolvent, you may need to consider liquidating the company. Liquidation is the process of winding up a company’s affairs, distributing its assets, and dissolving it. It is a complex process, but it is important to follow the correct procedures in order to protect the interests of all stakeholders.
In Malta, there are generally three types of liquidations:
- Members’ Voluntary Winding Up: This is a voluntary liquidation initiated by shareholders where the company is solvent and able to pay its debts.
- Creditors’ Voluntary Winding Up: This is also a voluntary process but is initiated when the company is insolvent and unable to meet its financial obligations. In this case the company’s creditors need to agree to the liquidation.
- Compulsory Liquidation: This type of liquidation is imposed by the court, usually upon the request of a creditor, when a company cannot pay its debts.
Once placed into liquidation, a company shall cease to operate, and all powers and duties of the directors and company secretary are transferred onto the liquidator.
The Role of Liquidators
Liquidators play a crucial role in the liquidation process, overseeing the distribution of assets and ensuring all steps are compliant with the relevant laws. From settling outstanding debts to preparing final accounts, their role is pivotal in ensuring a smooth and efficient winding up procedure. At Zampa Partners we can assist with the appointment of a liquidator for your company.
Voluntary Winding Up Procedures
Now, let’s focus on the voluntary winding up procedures in Malta, as they are the most common form of liquidation initiated by companies themselves.
The following are the main steps involved in a voluntary winding up in Malta:
- Pass a resolution to wind up the company. This resolution must be passed by a special majority of the shareholders at a general meeting. In this resolution, the members must appoint a person to act as liquidator and set the date of dissolution.
- Ensure the company is in good standing. Accounts, Audits and Tax Returns need to be brought up to date so that the company is in good standing with the Authorities.
- Notify the Registrar of Companies. Liquidation forms, including a Declaration of Solvency and Statement of Affairs, would need to be submitted to the Malta Business Registry (MBR) within 14 days from the date of dissolution.
- Pre-liquidation Audit. The financial statements for the period up to the date of dissolution must be prepared and audited by the company’s auditors.
- Final Liquidation Audit. The liquidation accounts & scheme of distribution are prepared by the liquidator and will determine the manner in which any net assets, after settling all the company’s remaining debts, will be distributed to the shareholders. These accounts must be signed by the liquidator and audited by an independent liquidation auditor.
- Deregistration with tax authorities. The company must also inform the relevant Maltese Tax Authorities of its liquidation and deregister from any VAT and tax obligations in Malta.
- Submission to the MBR. Once approved by the shareholders at the final general meeting, the liquidator shall submit to the Registrar a copy of the audited accounts & scheme of distribution, as well as a Liquidator’s Return, within 7 days from the date of the meeting.
- Company is struck off. Once the documents are submitted and vetted by the MBR, they are uploaded onto the website 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 and the liquidation process complete.
Timeline
The timeline for a voluntary winding up can vary depending on the complexity of the company’s affairs. However, it typically takes around 12 months to complete the process.
How Our Services Can Help
At Zampa Partners , we specialize in providing professional and efficient liquidation services in Malta. Whether you are considering voluntary winding up or require professional assistance with the liquidation process, our experienced team is here to guide you every step of the way.
Get in touch with us to learn more about our services.
Michael Agius-Vadala
Partner
