Legal Advisory

Liquidations and Dissolutions

A limited liability company cannot be automatically cancelled but has to be liquidated, dissolved and struck-off from the company register in an orderly fashion. Under Maltese law, such procedure can be initiated as follows:

  • Through the court, by a third party application;
  • Through the court when decided by the shareholders;
  • Voluntarily, when decided by the shareholders.

While all the above would result in company ceasing to exist, the implications of each form of liquidation and the process would vary greatly.  

Winding up by the Court

The court, upon application, may move to dissolve the company if:

  • The Business of the Company is suspended for an uninterrupted period of 24 months; or
  • The Company is unable to pay its debts

In addition the court is bound to dissolve the company if:

  • The members of the company is reduced to below the minimum prescribed by law;
  • The number of directors is reduced to below the minimum prescribed by law:
  • When there is a fixed lifespan for the company in terms of the Memorandum and Articles of Association of the Company;
  • The court is of the opinion that there are grounds of sufficient gravity to warrant dissolution of the company.

The court would in all the above cases appoint a liquidator to manage the liquidation and shall have general power and authority to oversee the process until it is finalised.

 

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