Company Liquidation in Malta: What You Need To Know

Company liquidation is a procedure employed when a company is closed down and struck off the register. 

There are three ways of liquidating a company in Malta:

• Members’ voluntary liquidation
• Creditors’ voluntary liquidation
• Court liquidation

Upon being placed into liquidation, the company ceases to carry on any business, unless it would be beneficial for the company to continue its business during its winding up (for example to dispose of any inventory or fixed assets). Once put into liquidation, the directors and company secretary lose all their powers over the company and the duty to administer the winding up of the company is assigned to a liquidator. No share transfer can take place after the date of dissolution without the written consent of the liquidator.

Members’ Voluntary Winding Up
This is most frequent type of voluntary liquidation where assets exceed liabilities, and therefore the liquidator will have enough assets to finance the liabilities before distributing the remainder of the assets to the shareholders and striking off the company. The company is solvent, but may no longer be required for several reasons including:

• the purpose of undertaking a particular project has now been completed and thus the company is no longer required;
• the shareholders might be retiring; or
• Group re-structuring.

A company is put in dissolution via an extraordinary meeting where the shareholders pass a resolution indicating the intention of liquidating the company and to appoint an independent liquidator to assist with the process. If for any reason, a liquidator is not appointed during the meeting, the directors shall apply to the Court for the appointment of a liquidator. Upon appointment, the liquidator takes over the management of the company from its directors, assuming all the power and responsibilities previously held by the directors. The main objective of the liquidator is to settle all the dues owed by the company, collect all of its receivables and finally distribute whatever assets are left and owned by the company.

Creditors’ Voluntary Winding Up
In a creditor’s voluntary winding up, the shareholders opt to wind up an insolvent company, where liabilities exceed assets with no prospect of recovery. The shareholders are required to appoint a liquidator in order to assist with the formalities, realise any assets owned by the company and make distributions to creditors.

A meeting of creditors must be held at which the creditors can replace the liquidator appointed by the shareholders with one of their own choice. Where no person is nominated to act as a liquidator, an application to the Court for the appointment of a liquidator shall be made by the director(s) of the company.

Winding up by the court
As the name implies, such liquidations are imposed by a court order following an application by the shareholders, the directors or the creditors. A public officer is appointed to act as Official Receiver for the purpose of carrying out the necessary investigations and subsequently reporting to the court, as to the amount of issued and paid up share capital, the estimated assets and liabilities and thus if the company is insolvent, the causes of the failure and whether further investigations are necessary with regards to any matter relating to the promotion, formation or failure of the company or the conduct of the business.

How can we assist?
Company liquidations are never an easy task to accomplish. Our experienced team of professionals can make the liquidation process as smooth and accurate as possible, helping you conclude the voluntary liquidation of your company within a 12-month period.

We can assist with the preparation and submission of a liquidation audit and scheme of distribution to the Malta Business Registry and if no creditors appeal the liquidation, the company will be struck off after the 3-month notice period.

Whether you want confidential advice or assistance with a liquidation procedure, you can get in touch with Josianne Cascun-Montebello, Director of our Malta office.