Liquidation represents the closing down of a company. Once the company ceases its trading operations, it needs to follow a step-by-step procedure for its dissolution and winding up. 

The procedure commences by filing a statement of affairs showing the financial position of the company on the date of dissolution. 

During the liquidation process a company should disposal of its assets and settle all liabilities. Finally, a scheme of distribution should be filed in order to commence the strike-off procedure. 

FF International assists clients by providing a qualified liquidators and assists in all the entire stages of liquidation.

Liquidation and dissolution services include:

• Preparation and filing of statutory documentation to MBR
• Preparation of liquidation accounts
• Preparation and filing of liquidation tax returns
• De-registration services
• Preparation and filing of the scheme of distribution
• Provision of qualified liquidators
• Liquidation advisory services
• Statutory audit co-ordination of liquidation accounts 

There are three types of company dissolution in Malta:

• Members’ voluntary winding up
• Creditors’ winding up
• Winding up by the Courts of Malta. A Members’ winding up takes place when the shareholders of a solvent company decide to terminate their business and close the company. A creditors’ winding up takes place when a company becomes insolvent. Hence a creditors’ winding up and a winding up by the court involve more complex and time-consuming procedures.

Members’ Winding Up

The most common type of company liquidation in Malta is the members’ voluntary winding up. It is also the simplest type of liquidation with several steps involved.

A members’ voluntary Winding up takes place after an extraordinary resolution is passed by the members to put the company in dissolution. The dissolution, that is the decision of the company to start the liquidation process, triggers the Winding Up of the company.

In a Members’ Voluntary Winding Up, liquidation takes place under the control of a Liquidator appointed by the shareholders, and only in cases where the company is solvent.

The audited accounts and tax returns of a company must also be up to date in order for the liquidation to take place.

No business activities can be carried out once the company has been placed into dissolution.

As soon as the liquidator is appointed, the liquidator will take over the administration of the company. In order to be eligible for strike-off, the liquidator must ensure that all assets have been disposal and most importantly, all creditors have been settled.

The declaration of solvency for Malta corporate liquidation

A declaration of solvency must be signed by the majority of the Directors and must be filed at the Malta Business Registry.

The Declaration of Solvency is a very important statement in which the majority of the Directors declare that they have made a full inquiry into the affairs of the company. The directors would also have formed an opinion that the company will be able to pay off its liabilities in full within the period specified in the Declaration which should not exceed 12 months.

The declaration of solvency should be made not earlier than one month from the extra ordinary resolution taken to dissolve the company.

Such declaration must be filed at the Malta Business Registry together with the Notice of Dissolution. The Declaration of Solvency should also contain a statement of the company’s assets and liabilities.

The role of the liquidator in Malta corporate dissolutions

Following a decision for the Dissolution and Winding Up of a company, the powers of the Directors are shifted upon the liquidator who takes control over the entire company and its representation with a view to Winding Up.

During the Winding Up process the focus of the company shifts to settling the debts due, if any. The liquidator would then proceed to draw up an exhaustive list of the assets and liabilities. The main task of a liquidator would be to liquidate the assets of the company, pay the Creditors, and distribute any proceeds to the shareholders.

The liquidator of a Malta company shall not distribute any of the assets of the company to its shareholders unless he had made provision, for the payment in full of any tax. The liquidator is personally liable for any tax payable by the company.

After all creditors have been settled (including the payment of taxes), the liquidator will proceed with the closing of the bank account. Any balances on the bank account will then be distributed to the shareholder/s.

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