Strike-Off vs. Voluntary Liquidation: Understanding the Differences

Defining the Two Approaches

Strike-off is an administrative procedure used to remove a company from the Cayman Islands register. It does not require a declaration of solvency, public notice, or creditor consultation. Voluntary liquidation, on the other hand, is a statutory process that involves formal filings, a solvency declaration, and the appointment of a liquidator.

Key Differences

• Solvency Declaration
  • Strike-Off: Not required
  • Voluntary Liquidation: Required
• Public Notice
  • Strike-Off: Not required
  • Voluntary Liquidation: Required
• Creditor Protections
  • Strike-Off: Limited
  • Voluntary Liquidation: Comprehensive
• CIMA Deregistration
  • Strike-Off: May not be accepted
  • Voluntary Liquidation: Required for regulated entities

When Strike-Off Might Be Used

Strike-off may be appropriate for dormant companies that:

• Have no assets or liabilities
• Have not conducted business
• Have no ongoing regulatory or tax exposure

Why Voluntary Liquidation May Be Preferred

Voluntary liquidation is a better option where:

• The entity has prior investor activity
• Formal tax or regulatory clearance is required
• There are residual liabilities, indemnities, or contracts to close
• Finality and transparency are important to stakeholders

Final Thoughts

While strike-off may offer a quick administrative exit, it does not provide formal closure or extinguish liabilities. Voluntary liquidation offers greater protection and is generally required for regulated funds and entities with any remaining complexity or obligations.