Entrepreneurship is all about taking risks. In unfortunate cases, these risks are not mitigated and you have to terminate your business. OR you may even discontinue a brand for an expansion move. Either way, this would require you to liquidate your company, unless you want to keep paying government fees or get subject to some legal fines.
Need help liquidating your business?
Liquidation can be a complicated process. Ofcourse, if you want to skip the process and let experienced professionals handle it we can be of service.
Knowing the Rules
It wouldn’t hurt to go through the Laws & Regulations related to business to get an idea on the process and implications of liquidating a company.
You will want to have the law on your side as you would not want any future complications from the business you are about to liquidate.
This article will go through the course of liquidating a Partnership or Private Limited Company under the Companies Act 1996 of the Constitution of Maldives.
Download Maldivian Business Laws
Download Maldivian Business Regulations
Shareholders’ Resolution To Liquidate
To begin the liquidation process, the shareholders of the company must convene a general meeting for a special resolution to discontinue the business and designate a liquidator to facilitate the winding up process.
The shareholder’s resolution must be in writing and include;
- The intent of the shareholders to liquidate the company
- The venue, date and timing of the company general meeting
- The shareholders’ names, signatures and copies of their national identity cards
- The liquidator’s name, national identity card copy and remuneration
The Liquidator’s Acceptance Letter
A liquidator is a person legally empowered by a company, through a shareholders’ resolution, to act on its behalf in facilitating its winding up process. The liquidator cannot be an employee, shareholder, debtor, creditor or a partner to a shareholder of the company.
The appointed liquidator must accept, in writing, the role and the remuneration, within 07 days of the resolution and a Public Announcement must be made.
Within this 07 day period, the liquidator shall submit the shareholders’ resolution and the liquidator’s acceptance letter to the Ministry of Economic Development upon which a receipt will be issued.
Public Announcement
Within 07 days from shareholders resolution, the liquidator must make a public announcement on a registered public media notifying the company’s intent of winding up. Any claims must be verified and settled with the company’s assets.
The public announcement needs to run for 03 to 07 days and must include;
- Statement that the company (with registration number) is going for liquidation
- Liquidator’s name, national identity card number and contact number
- A Request to notify the liquidator within a certain period of time in case of any claims
Copies of the media with the announcement published are required as proof of announcement.
Finalizing the Accounts
The liquidator must then collect the company’s audited financial statements and identify the company’s assets and liabilities. All receivables must be collected and any dues must be paid. The liabilities are to be settled with the assets and any remaining amounts must be returned to the shareholders in proportions respective of their shares.
All activities pertaining to the settlement of the final accounts must be included in detail in the liquidator’s report.
MIRA’s Tax Clearance Report
The company needs to apply for Tax Clearance from Maldives Inland Revenue Authority to ensure that there are no outstanding dues or unfulfilled obligations. If there are no complications, MIRA will issue the Tax Clearance Report.
It is important not to forget to apply for the Business Profit Tax Returns Voucher from MIRA.
The Liquidator’s Report & The Shareholders’ Final Resolution
The Liquidator’s Report details; all the activities carried out in the liquidation process, how any debts were settled, along with the company’s books before and after the liquidation.
A company general meeting must again be convened with the shareholders to review the Liquidator’s Report. A written shareholders’ resolution accepting the report must be passed and the liquidator’s report must also be signed by the shareholders.
Winding Up
You now have all the documents required by the Registrar of Companies at the Ministry of Economic Development for finalizing the company’s liquidation. Submit the documents;
- Liquidator’s Report
- Copies of the Public Announcement of the Liquidation
- Tax Clearance Report from MIRA
- Shareholders’ resolution accepting the Liquidator’s Report
The Ministry will verify the documents and liquidate the company in 2 weeks. If you require professional assistance with a company liquidation, we have experienced liquidators at Achievia who would be happy to provide the service.
