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CYPRUS: WINDING OF COMPANIES – WINDING UP BY THE COURT (COMPULSORY WINDING UP)-INABILITY OF THE COMPANY TO PAY ITS DEBTS
Winding up is the process by which the company’s assets are realized, the proceeds are distributed to its creditors and the surplus, if any, to its members.
The winding up must not be confused with insolvency, as a solvent company may be wound up as much as an insolvent company.
Pursuant to Section 203 of Cap 113, the winding up of the companies may be done by an order of the Court (compulsory winding up), voluntary or under the supervision of the Court.
The Companies Law, Cap 113 has been recently amended in order to modernize the procedure of compulsory winding-up. The grounds of compulsory winding-up are provided in section 211 of Cap 113. One of the most common ground of a petition for a compulsory winding up is the fact that the Company is unable to pay its debts (Section 211(e), Cap 113).
With the latest amendments a Company is deemed to be unable to pay its debts in the following instances:
a. If a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding 5.000 Euro(in the past the amount of 500£was provided) has served on the company by leaving at its registered office a demand in order to pay the sum so due, and the Company has for 3 weeks thereafter neglected to pay the sum or to secure or to settle for it to reasonable satisfaction of the creditor or
b. If the execution, order, decree issued on a judgment of any Court in favor of a creditor of the Company is returned unsatisfied (in whole or in part).
c. If it is proved to the satisfaction of the Court that the Company is unable to pay its debts, at the time that they are payable, and for such decision the Court shall take into account the contingent and prospective liabilities of the Company.
d. If it is proved to the satisfaction of the Court that the value of the Company’s assets is less than the sum of its liabilities, taking into account the contingent and prospective liabilities of the Company.
According to the provisions of the section 22 of the Court Law the petition must be filed with the District Court of the district of the Company‘s registered office(section 209 Cap 113).
For further information on this topic please contact
Ms. Evi Lamprou (email@example.com) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
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