When a business is not able to continue its activities, a company liquidation procedure in Cuba must be initiated.
If the period of time allocated for the development of activities in accordance with the current Cuban legislation is not extended at the date of its expiration, the joint venture, international economic association contract or foreign business will be liquidated. The proportion due to the foreign entrepreneur will be acquitted in freely convertible currency, with the exception of a specific agreement which stipulates the contrary.
Termination and liquidation legislation in Cuba
The termination and liquidation of foreign companies in Cuba are regulated by the Law 118, the Foreign Investment Act, which lists the events for such procedures. A special attention has to be paid to events of company termination which did not previously have such connotation, like change of control of the foreign upstream business which owns an interest in the foreign company in Cuba, deadlock at the Board level and incapacity to achieve corporate purpose for a period of time greater than six months. Our Cuban lawyers can offer more details on what these events for company termination and liquidation are.
Liquidation process for financial institutions in Cuba
According to the Decree-Law 173, financial institutions which must terminate their normal activities can proceed to company liquidation in Cuba through one of procedures listed below:
• voluntary liquidation;
• intervention; or
• forced liquidation.
In a voluntary liquidation, any financial institution in Cuba which disposes of enough liquid assets to acquit its obligations to its creditors can start the liquidation or dissolution of its organization after Banco Central de Cuba has issued its authorization to do so. Our Cuban lawyers can provide further advice on this matter.
In an intervention company liquidation in Cuba, Banco Central de Cuba could intervene, acquire tenure of the assets and impose the management of a financial institution in the following cases:
• if its capital has registered an important loss or misses solidity;
• if its operations are illegal, negligent or fraudulent;
• if it is not able to continue its activities in a safe manner;
• if it refuses to issue the accounts of its activities after being requested to do so by the Cuban authorities;
• if Banco Central de Cuba finds it convenient because of longer delays than allowed in liquidating its procedure of voluntary winding up;
• other cases. One of our Cuban lawyers can explain what these other cases are.
For more information about the company liquidation procedure, please get in touch with our law firm in Cuba.