A voluntary liquidation process commences when the shareholders pass an extraordinary resolution to close the company down. This may happen for a variety of reasons such as the objective of the company has been reached and there is no purpose in keeping the company in existence, the company is no longer meeting its objectives or there are liquidity problems to mention just a few scenarios.
The liquidation process has to be managed by a warranted liquidator who might be either a certified public accountant or registered auditor or a warranted lawyer. The liquidator takes over the helms of the company from its directors and assumes all the power and responsibilities away from the directors. The main objective 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.
The liquidators powers are wide and far reaching. Liquidators are also allowed to sell the company's assets as they see fit. Yet they still owe a duty of care towards the shareholders. Hence it is imperative for company shareholders to choose a liquidator which they can trust.
One has to keep in mind, that liquidators have to follow a certain hierarchy of payments when it comes to paying creditors versus paying shareholders. Shareholders tend to be ranked last and should only be paid when all outstanding dues to third parties have been settled unless there are special arrangements in place.
How long does it take to liquidate a Malta company?
There is no one size fits all answer to this. A liquidation is deemed to be complete after settling all of the company debts and all of the assets have been realised, any surplus in assets are distributed to the shareholders. This final distribution has to be approved by the shareholders in a last meeting.