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. Liquidations are complex processes which involve meticulous navigation through various pre-liquidation and post-liquidation stages, including opting for the best suited dissolution process. 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 four main types of liquidations, namely:
Simplified voluntary liquidation process
The simplified procedure is available to non-listed and non-regulated companies registered for at least six months that meet criteria set by the Companies Act. To avail of such simplified process, in the last six months the company must not have traded, entered into contracts (other than with corporate service providers), hired employees (except officers), amended its name, or pledged any of its’ shares.
The purpose of these requirements is to ensure that only companies with limited recent activity are eligible for this simplified dissolution process, thereby facilitating an efficient closure procedure for those eligible.
The process for initiating such simplified dissolution procedures includes:
The submission of a statutory form and a Directors’ declaration confirming all liabilities are settled, no pending litigation exists, company assets do not exceed €5,000, and bank accounts are closed; and
A confirmation by the Directors that beneficial owner details and financial records will be retained as required by law. Alternatively, a responsible person may be designated and this is communicated to the Registrar.
The Registrar will process the application and, if the necessary requirements are met, a notice is published, triggering off a three-month period following which the company is struck off.
Unlike voluntary liquidations, directors and company secretaries retain their powers until the company is struck off from the Maltese companies register. This streamlined and simplified process offers Maltese businesses an efficient and cost-effective way to wind-down their operations without the need of having to appoint a liquidator.
The members' 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. Whether regular or simplified, our seasoned team is dedicated to supporting all parties at every stage of the voluntary liquidation process.
Reach out to us today to learn more about how our services can benefit you.
