7 Things to Keep in Mind When Striking off a Cayman Company
Businesses are started with a vision to conquer the market and create value for the customers. Still, due to certain uncertainties, the management has to dissolve the company as there’s no other way out.
As you know, Company formation in the Cayman Islands requires a step-by-step procedure; the liquidation process also has specific protocols. There are two methods to dissolve a company in Cayman; voluntary liquidation and a strike-off.
The most suitable procedure can be strike-off as it can be done in a limited time & without hassles. However, strike-off is appropriate for companies that have not traded much or haven’t dealt with assets and liabilities for a long time.
In this write-up, we are going to discuss how to undertake the striking-off procedure mindfully;
What does it Means to Strike off a Company?
Striking off is a procedure where a limited company is removed from the Companies House Register. Once the company is removed from registration, it loses its identity and cannot trade further.
7 Useful Tips to Keep in Mind when Striking off a Company
- Companies can Strike-off without Legal Counsel
Only a few know the fact that most companies can strike-off their business without legal counsel. The company’s registered office in the Cayman Islands takes care of the entire process, from creating documents to filing strike-offs. Even if you hire a lawyer to prepare these documents, the registered office will be responsible for completing the formalities with the Registrar of Companies.
2. Strike-off doesn’t guarantee a clean slate for Business Liability
All the members associated with a business are liable to pay debts and accomplish obligations for up to 10 years. The Cayman Islands company strike-off does not secure creditors, so you must opt for voluntary liquidation to lay off all your liabilities.
3. Assets are Owned by the Government after Strike-off
In simple words, if you forget about one of your assets before dissolving your company, it will be used by the Cayman Islands government for the community’s betterment.
4. A Marked Down Company can be Reinstated
Another risk after the strike-off remains the reinstatement of the company. For two years after the strike-off, a member or creditor can apply to have the company restored. On the other hand, an entity removed by voluntary liquidation cannot be reinstated.
5. The fee structure is Practical
A strike-off’s expenses and fee structure are comparatively lower than voluntary liquidation.
6. The Strike-off Process is Clear & Straightforward
Businesses must comprehend that the strike-off procedure is not a shield to protect them against insolvency or paying debts. The strike-off procedures are devised to promote the speedy liquidation process without avoiding corporate responsibilities.
7. Review Deadlines when Dissolving a Cayman Entity
Whether you own a start-up or a well-established asset rich business, winding up requires a lot of time & attention. Complete all the formalities associated with the liquidation of the Cayman entity. When there are strict deadlines, the administrator may strike off on the last business days, such as March, June, September, and December, but you have to fill in documents prior to the strike-off date.
If you are unsure about choosing a strike-off, you can consider voluntary liquidation. Even though it is complex, it reduces future risks for entrepreneurs, shareholders, and other stakeholders. Also, take advice from liquidations specialists who will guide you through the entire process.
