COMPANY REGISTRATION IN CYPRUS
Cyprus offers entrepreneurs across the world several incentives to establish companies in the country, deriving for example from its very favourable tax system as well as its well integrated Company Act and Regulations. As a full member of the European Union, Cyprus has, as from 1.1.2008, adopted the Euro as its official currency and, being party to Double Tax Treaties with more than 30 countries, and with its international Business environment functioning in a favourable corporate tax regime for more than 30 years, it creates attractive opportunities for company tax planning and for benefiting from the high standard of professional services by lawyers, auditors, bankers, managers, fund managers and other professionals in the country.
A company duly registered in Cyprus either by locals, foreigners or E.U. citizens may operate in Cyprus and carry out any business activity. Companies having their management and control in Cyprus (ie ‘resident’ in Cyprus) are liable to a 12.5% corporation tax on their taxable income. This means 12.5% tax on their ‘net’ profit after deducting from their income expenses incurred wholly and exclusively for acquiring this income.
A company may open and operate bank accounts in any bank in Cyprus or overseas. After registration, the company can run its business through any such account and transfer any amount of money from Cyprus to any other country without any limitation and without any prior permit being required to that effect. Many local and offshore banks operate in Cyprus, offering banking facilities of this kind. The directors of the company may operate these accounts, either personally, if they reside in Cyprus, or through an agent in Cyprus or, by agreement, through a bank in their country of residence using special codes and orders supplied for this purpose by the bank.
Any individual or company can register a company in Cyprus.
If you are interested in registering a company in Cyprus, you will need to provide to us, in relation to any shareholder and ultimate beneficial owner, the following information and documents:
- A photocopy of the passport of the person or persons who will be the shareholders of the Company and, in the case of a shareholder who is also a company, all the necessary certificates of that company will be needed
- Full business and residential address, profession, brief description of business activities
- A Bank reference for each shareholder of the Company
- A curriculum vitae (resume) of each shareholder of the Company
The corporate work undertaken by our firm includes:
- formation and acquisition of companies in Cyprus and overseas
- corporate reorganization and reconstruction
- shareholder agreements and corporate governance issues
- capital-raising transactions
- venture-capital financing
- public and private offerings of securities and securities law compliance
- management buy-outs and earn-outs
- corporate management and domiciliation services
- partnership formation and dissolution
- company tax planning
The name of the company must always end with the word “Limited” (Ltd). Names similar to those already on the Company Register, general or descriptive names, names incorporating certain words or geographical names, are not approved by the Registrar. The name of any of your own companies outside Cyprus may be approved, subject to the consent of such company (a list of already registered companies and/or a list of names approved by the Registrar of Companies can be provided upon request).
Our Company Law is a virtual reproduction of the United Kingdom Companies Act 1948 and we have prepared a model Memorandum and Articles of Association on that basis, which we have used on nearly all international business companies we have been registering over the years.
However, we need a brief description of the general activities of the proposed company, present or future, and a specific description of two or three of its main objects, so that we may adjust the text, if necessary, to meet your own needs and requirements.
The share capital is in Euro but, of course, it may be expressed in Sterling, Dollars or any other currency. The Authorized or Nominal Capital is the total capital which the company is allowed to issue to its shareholders. Paid up Capital is that part of the Authorized Capital which has been issued to, and paid up by, the shareholders. Both the Authorized and Paid up Capital of the company may be increased at any time as provided by the company’s Articles of Association.
Every private company limited by shares may have any number of shareholders not exceeding 50. A company may have only one shareholder, who may be either a natural or legal person. Any shareholder may hold the shares in trust for another person. When we register a company in Cyprus, we use, for practical purposes, our own nominee companies. Immediately after registration, these companies either continue holding the shares as nominees for the client, or transfer the shares in the name of the client, according to the client’s directions. In the first case the client secures his anonymity and he receives an instrument of trust, the original of the certificate of shares and a blank instrument of transfer.
There is no legal requirement that a private company should have more than one director or that the company should have local directors. However, for a number of reasons (such as the safeguarding of the management and control of the company for tax purposes in Cyprus and the smooth running of the company here), local directors or alternates are also appointed. The above is not an obligatory scheme, but it is usually adopted by the clients. In discharge of their duties, the local directors will act under the law of Cyprus but within this framework they will have to take into consideration the wishes of the beneficial owners of the shares and, in this respect, they ask for a normal “indemnity” which must be signed and returned in due course.
Facilities for appointing local directors are offered by our association with the Fullserve Group.
Secretary of the Company
Each company has to have a Secretary, who may also be a director, but a sole director shall not also be the secretary, unless the Company has only one shareholder and only one director. The Secretary‘s duties are to keep and safeguard the records of the company, file Official Returns, etc. The Secretary acts under the control and the instructions of the directors, keeps the company’s statutory registers and performs certain administrative functions.
For practical reasons, it is normal to appoint as the Secretary a member of, or a company controlled by, the firm establishing the company. We provide this service through, our association with the Fullserve Group.
Each company must have a registered office, as its business address, in Cyprus, where its name and certificate of incorporation are exhibited. The registered office is the address where writs, notices and other official documents can be served on the Company. We can provide this service at the premises through, our association with the Fullserve Group.
Articles of Association and Memorandum
These form the constitutional charter of the company and are drafted by a local advocate. They are divided into two parts:
The Memorandum of Association, which primarily includes the objects and powers of the company particularly as regards its dealings with the outside world and third parties, its limited liability status and its authorized capital.
The Articles of Association which comprise the regulations under which the company operates as a legal entity and regulates the rights of the shareholders.
The prevailing method used is for a company to secure its representation by employing Cypriot nominees. Members of our firm can undertake this by registering their names in the articles of association and memorandum. After the incorporation of the company the nominees transfer their subscription shares to the actual shareholders by issuing instruments of transfer or the nominees continue to hold the shares on trust on behalf of the beneficial owner.
A nominee acts on behalf of the beneficial owner. At the same time however, appointed nominees are not actually entitled to manage the company without the approval of the beneficial owner. Holding the shares on for the beneficial owner guarantees a high level of confidentiality.
The following documents are provided by the nominee to protect the security of the beneficial owner:
- The trust deed
- Undated Instruments of transfer
- Directors’ resolution approving the transfer of shares to the actual shareholder
- The original share certificates issued in the names of the nominal shareholders
- Undated letters of resignation of the nominee directors
A company may open a bank account, in most of the main currencies, anywhere in the world. The signatories of such accounts need not necessarily be directors of the company, but appropriate resolutions must be passed by the company(following the format of the particular bank), to instruct its bankers accordingly.
Each company must have its auditors who will audit the accounts of the company and file the Official Returns. Accounts can be kept elsewhere but must be filed in Cyprus with the relevant Authorities, by local authorized auditors. We can provide this service through our association with authorized auditors.
EUROPEAN COMPANY Societas Europaea (SE) in Cyprus
The “Societas Europae” (SE) is a European public limited company which can be formed in any Member State of the European Economic Area. The formation and maintenance of an SE is governed by the European Statute which contains two parts: a Regulation and Directive on employee involvement which has to be reflected in national legislations of the Member States. The majority of the countries have already implemented the amendments to the national legislation, including Cyprus
A European Company can be set up in the following ways:
- The formation of a holding company by public or private limited companies from two different Member States.
- The merger of two or more existing public limited companies from at least two different member States
- The formation of a subsidiary from at least two different Member States.
- The conversion of a public limited company, incorporated under national law, having had a subsidiary at least for two years in another Member State.
- The formation of an SE by the existing European Company.
The European Company must be registered in the country in which it maintains its administrative head office. The incorporated company must be registered with the Registrar of the Member State and published in the European Company’s Official Journal. The restrictions on the choice of the name conformed to SEs are regulated by the legislation of Cyprus. Regardless of the currency, the SE is required to have a minimum amount of share capital of the equivalent of at least 120.000 Euro.
Forming a European Company in Cyprus has a range of advantages as such a company may conduct its activities while avoiding the legally complicated position of having to have its management complying with the regulations of different national laws. The SE can transfer its registered office anywhere within the EU without winding up and re-registertration in the different Member States. For tax purposes, the SE are treated in accordance with the national tax legislation. The low tax rate of 10% and the existence of a large number of double tax treaties make Cyprus the best choice for the formation of the European Company.