In light of frequent enquiries made by our clientele and prospective clients with regard to the closing of Companies, we have asked our team to contribute by simplifying the two main routes for closing down a Company.
The following is a brief description of each process:
Voluntary strike off: a process of voluntarily closing down a limited company by getting it struck off the Companies Register. When a Company has ceased to carry out business activities / operations, that Company may submit an application for its strike off from the Companies Register.
Involuntary strike off: a process by which the Registrar of Companies closes down a limited company by getting it struck off the Companies Register. The Registrar of Companies proceeds to strike off a company when the Registrar has reasonable cause to believe that a Company does not conduct business operations / activities or is not operating, or it does not comply with its legal and/or statutory filing obligations.
Voluntary liquidation: a process by which a Company is liquidated by its Shareholders and/or its Creditors on a voluntary basis (i.e., without a Court Order mandating the liquidation). A Company may be voluntarily liquidated in the following three cases: first, when (depending on the provisions of the Company’s Articles of Association) the period set as the lifecycle of the Company has elapsed, or when the Articles of Association of the Company provide for a specific event/circumstance which, when it takes place, the Company would be dissolved and such an event/circumstance has now taken place. Second, when the Company decides to proceed with voluntary liquidation by a Special Resolution, and third, when the Company decides by way of an Extraordinary Resolution that, owing to its obligations, it may not continue its business operations / activities and as a result, liquidation is advisable.
Involuntary liquidation: a process by which a Company is liquidated following a Court Order in order to liquidate its assets and repay all or part of its debts. A Company may be liquidated by the Court where the Company is unable to pay its debts, or has decided to proceed to Court-mandated liquidation by a Special Resolution, or has failed to submit the statutory report to the Registrar of Companies or to convene its statutory meetings, or does not commence its business activities within 1 year from its incorporation or suspends its business operations for 1 year. A Company may also be liquidated where the Court is of the opinion that it is fair and in accordance with the law on leniency to dissolve the Company.