Navigating the Winding-Up Process of a Company in Malta

In the dynamic business landscape of Malta, there are instances when companies may need to consider the winding-up process. Whether prompted by changing business needs, financial challenges, or strategic decisions, understanding the steps involved is crucial for a smooth and legally compliant liquidation. This article provides insights into the winding-up process of a company in […]

Written By Christabel Spiteri

On December 15, 2023
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In the dynamic business landscape of Malta, there are instances when companies may need to consider the winding-up process. Whether prompted by changing business needs, financial challenges, or strategic decisions, understanding the steps involved is crucial for a smooth and legally compliant liquidation. This article provides insights into the winding-up process of a company in Malta, shedding light on the key stages and considerations.

Types of Winding-Up:

1. Members’ Voluntary Winding Up:

This voluntary process is initiated when the company is solvent and capable of settling its debts. Shareholders play a pivotal role in passing a resolution to wind up the company, appointing a liquidator, and setting the date of dissolution.

2. Creditors’ Voluntary Winding Up:

Also a voluntary process, this is triggered when the company is insolvent, unable to meet its financial obligations. The consent of the company’s creditors is crucial for initiating this type of winding up.

3. Court Liquidation:

Imposed by the court, typically at the request of a creditor, when the company is unable to pay its debts. This is the last resort and involves a legal process overseen by the court.

The Role of Liquidators:

Central to the winding-up process are liquidators. These professionals play a critical role in overseeing the distribution of assets, ensuring compliance with relevant laws, and facilitating a smooth liquidation procedure. The choice of a reputable liquidator is pivotal for the success of the process.

At ACT, we understand the importance of experienced professionals in this role. Our team at ACT can guide you through the appointment of a liquidator and provide the necessary expertise to navigate the complexities of the winding-up process.

Voluntary Winding-Up Procedures:

For companies opting for voluntary winding up, the following steps are integral to the process:

1. Pass a Resolution to Wind Up:

A majority of shareholders at a general meeting must pass a resolution to wind up the company. This resolution appoints a liquidator and specifies the date of dissolution.

2. Ensure the Company’s Good Standing:

Bring accounts, audits, and tax returns up to date to ensure compliance with authorities.

3. Notify the Registrar of Companies:

Submit liquidation forms, including a statement of affairs, to the Malta Business Registry (MBR) within 14 days of dissolution.

4. Pre-Liquidation Audit:

Prepare and audit financial statements up to the dissolution date.

5. Final Liquidation Audit:

The liquidator prepares the liquidation accounts and a scheme of distribution, outlining how net assets will be distributed after settling all remaining debts. These accounts are signed by the liquidator and audited by an independent liquidation auditor.

6. Deregistration with Tax Authorities:

Inform relevant Maltese Tax Authorities of the liquidation and deregister from VAT and tax obligations in Malta.

7. Submission to the MBR:

Once approved by shareholders at the final general meeting, submit audited accounts, scheme of distribution, and a Liquidator’s Return to the Registrar within 7 days.

8. Company Struck Off:

Following MBR vetting and publication of documents, the company is officially struck off after 3 months from the notice’s effective date, marking the completion of the liquidation process.

Timeline:

The timeline for a voluntary winding-up process varies depending on the company’s complexity. On average, it takes approximately 12 months to complete the process. However, each case is unique, and factors such as the company’s size, financial intricacies, and compliance history contribute to the overall duration.

In conclusion, the winding-up process in Malta involves a series of well-defined steps that necessitate meticulous attention to detail and compliance with legal requirements. Seeking professional guidance from experienced advisors, such as ACT, can streamline the process and ensure a successful liquidation in adherence to Maltese laws and regulations.

How can we help?  

 

For further information, please contact us on [email protected]. ACT can help you understand the changes to the income tax, accounting, corporate and VAT rules and how these can impact your business.   

 

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on +356 21378672 or send us an email on [email protected]. 

Disclaimer: This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.