The Maltese liquidation process

Liquidating a company may be necessary if the company is insolvent, no longer needed as a consequence of a restructuring project, or has served its purpose as a result of a termination of its business operations. The process of winding up a company’s affairs helps settle outstanding debts and distribute any surplus assets to its shareholders, consequently dissolving the company. Liquidations are complex processes which involve meticulous navigation through various pre-liquidation and post-liquidation stages. It is crucial to follow all applicable procedures to protect stakeholder interests as well as making sure that all mandated steps are seen to thereby avoiding legal, financial and reputational repercussions.

The types of Maltese liquidations

In Malta, there are three main types of liquidations, namely:

This is a type of voluntary liquidation that is applicable when a company is solvent, and able to meet its obligations. This type of liquidation is usually initiated through a decision by means of an extraordinary resolution of the shareholders resolving to dissolve the company and appoint a liquidator. This resolution would represent the beginning of the dissolution and subsequent winding up of the Company.

This is applicable when a company is insolvent and hence unable to meet its debts. This type of liquidation is usually initiated by the company’s creditors, following a creditor’s meeting whereby a decision to liquidate the company is made. In this case, the Declaration of solvency is not issued and so the company is required to undertake a Creditors' winding up but, to a certain extent, would pretty much follow the approach as adopted in the event of a Member's voluntary winding up.

Unlike the previous types of liquidations, this liquidation is not a voluntary liquidation, it is imposed by the court, and is usually commenced through an extraordinary resolution for dissolution and consequential winding up by the court.

This type of liquidation can also be commenced if a company's business is suspended for an uninterrupted period of 24 months, if the company is unable to pay its debts, or in the event of a resignation of a company's directors and no further directors are appointed within a period of 6 months.

The voluntary winding up process

At PwC we focus on voluntary winding up procedures. However, it is important to understand what happens once a company is placed into liquidation, as well as the role of the liquidator.

Once a company is placed into liquidation, it ceases to operate, and all powers and duties of the directors, company secretary and legal and judicial representation are vested with the liquidator. The liquidator’s role is pivotal in the liquidation process, from overseeing the distribution of assets, to settling obligations, preparing the company’s winding up accounts, and ensuring all steps are adhered to in a compliant manner relative to the applicable laws and regulations.

The applicable timeframe for voluntary liquidations varies based on the complexity of the company’s affairs but generally takes around 12 months to be finalised considering the steps to be seen in terms of local legislation.

How can we help?

At PwC, we excel in delivering top-tier assistance with Maltese voluntary liquidations, ensuring a seamless and professional experience. Our seasoned team is dedicated to supporting you and the Liquidator at every stage of the liquidation process.

Reach out to us today to learn more about how our services can benefit you.

Contact us

Stefan Diacono

Director, Tax, PwC Malta

Tel: +356 7975 6998

Natasha Parnis England

Manager, Tax, PwC Malta

Tel: +356 7973 9077

Daniel Fenech Grech

Manager, Tax, PwC Malta

Tel: +356 7973 6372

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