The legal framework for the dissolution of a company consists of the Bankruptcy Act and the Companies Act.
Types of dissolution
A business may cease trading eventually for various reasons, e.g. liquidation.
- Companies Act, Chapter 113 (available in electronic form at Cyprus Legal)
When filing for bankruptcy is the only option left for a business owner, it pays to cut losses, initiate proceedings sooner rather than later, and move on to a new business project.
The Inspector of the Authority for the Supervision and Development of Cooperative Societies has the power to order the liquidation of an undertaking and may appoint a liquidator for this purpose once a majority of members decide to pursue this option.
During the liquidation process, the undertaking's capital must be used (in order of priority) to liquidate expenses, discharge company debts, and pay share capital.
Any money left over should be deposited by the inspector in a bank or registered company until a new undertaking, operating in the same area, is founded. Any remaining money is then transferred to this new undertaking to create a reserve capital.
Once the liquidation process is complete, the inspector issues an order to cancel the registration of the undertaking, which is then dissolved.