Under section 227 of the Companies Law (Cap. 113), the Court may, after the filing of a winding-up petition and before the issuance of a winding-up order, appoint a provisional liquidator for the purpose of protecting the company’s assets and preserving its status. The provisional liquidator exercises only those powers expressly conferred by the Court, and the appointment is by nature temporary and protective.
In a recent appellate judgment issued on 8th of October 2025, the Cyprus Court of Appeal in case 9/2024 reaffirmed a fundamental procedural safeguard in corporate law: no provisional liquidator may be appointed without prior notice and an opportunity to be heard for all affected parties.
Facts:
The case arose in the context of a winding-up application concerning a Cypriot holding company within an international group operating in the agricultural and logistics sectors. Following the filing of the main winding-up petition, a creditor sought—on an ex parte basis—the appointment of a provisional liquidator under section 227 of the Companies Law, Cap. 113. The first-instance court declined to grant the application ex parte and ordered service of the motion on “the other side.” Despite that direction, the order appointing a provisional liquidator was subsequently issued without service on individuals whose actions were expressly impugned in the supporting affidavit.
Those individuals later moved to set aside the appointment, arguing that the omission violated the principles of natural justice and their constitutional right to be heard. The trial court agreed, declaring the appointment void ab initio, setting aside all acts taken by the provisional liquidator, and ordering a sworn statement detailing those acts.
Findings:
The Court of Appeal upheld the ruling in full. It held that:
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· When a court orders service “on the other side,” this necessarily includes any person whose conduct is challenged or whose rights are directly affected by the interim relief sought.
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· Failure to serve such parties amounts to a denial of the right to be heard under Articles 30.2–30.3 of the Constitution and renders the order null.
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· Once a provisional liquidation order is annulled, all actions taken pursuant to it must also be annulled, restoring the parties to their pre-appointment position.
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· A different judicial composition at later procedural stages does not mean the court acted as “its own appellate body.”
Principle:
This decision underscores a crucial point in Cypriot corporate insolvency law: procedural fairness is not a formality but a condition of jurisdiction. Creditors seeking urgent corporate remedies—such as the appointment of a provisional liquidator—must ensure full and proper service on all affected stakeholders, especially where allegations of asset dissipation or mismanagement are made. Conversely, for directors, shareholders, and officers, the ruling reinforces an essential protection: where the right to be heard is denied, the resulting order is void and all subsequent actions under it are without legal effect. Therefore, in corporate insolvency proceedings, due process is the first and final safeguard. Without proper notice, even the most urgent relief cannot stand.