The following five types of businesses may be registered under Cyprus law:
Limited liability private of public company;
General or Limited Partnerships;
Business / Trade Name;
European Company (Societas Europeas);
Branch of a foreign company.
Private or public limited liability companies are the type of businesses for which the overwhelming majority of registration applications are submitted, the reason being the many advantages in respect to the notion of “limited liability”. A company is regarded as a legal person separate from its members able to own property under its own name, be a party in a contract, sell shares and more. As a consequence, the liability of its members is limited according to their original contribution and this is also enshrined in paragraph 4 of our Memorandum of Association which states that the ‘liability of the members is limited’. This means that upon winding up of the company, Shareholders cannot lose more than what they have originally invested in the company. Only the company itself is responsible for its debts. All that the company may request from Shareholders is that their shares be paid in full.
The minimum of one director, one secretary and one shareholder is required when forming a company in Cyprus. The company’s registered office should be also based in Cyprus. To take advantage of Cyprus beneficial tax regime it is highly advisable that the majority of Directors as well as the Company Secretary are Cyprus tax residents.
Please note that company directors, shareholders and secretaries may be either physical persons or legal entities.
Director: At least one director is required. Directors serve as officers of a company. They decide a company’s structural and organizational changes, and manage daily operations. Nominee directors are also allowed, and can be of any nationality.
Shareholder: At least one shareholder is required, who can be of any nationality. The shareholder can be a corporation, and nominee shareholders are allowed.
Secretary: The Company secretary is appointed by and responsible to company directors and is recognized by law as an “officer” of a company. The secretary’s duties often differ from one company to the next, but the general role is to maintain the statutory and minute books. Nominee Company Secretary is also allowed, and can be of any nationality.
Registered Office: A Cypriot company must have a registered office. Either it needs a physical business address in Cyprus, or a lawyer will incorporate the company with registered office under its own address. Cyprus companies registered by Conspectus Services Ltd. are given the physical address of its Limassol office.
Generally all company Certificates and Financial Statements are open for public inspection. Some Resolutions passed by the Shareholders such as Resolution for a change of the name of the company are also filed at the file of the company at the Department of Companies. The names of the Director(s), secretary and Shareholder(s) are in the public domain as well. Someone can also view the Memorandum and Articles of Association of the company. However, information such as the bankers of the company cannot be disclosed.
Apart from targeting Tax benefits, many clients choose Cyprus for anonymity purposes as well. One can remain fully anonymous by appointing nominee shareholders, directors and a secretary. Where nominees are used, the disclosure of the beneficial shareholders or real directors is not a matter of public record, and the names do not need to be disclosed.
The only instance when information is disclosed regarding the beneficiary is when a bank account is opened for the company whereby the banks in complying with the applicable Anti-Money Laundering Laws, rules and regulations require all relevant information to establish the “Know Your Client” information regarding the beneficiary. However, even in this instance, in light of the applicable Cyprus Banking Law the said information will be maintained by the banks in strict confidence unless disclosure is specifically requested following a particular order issued by the courts of law in Cyprus. Such incidents are usually indicated upon suspicion of money laundering or in connection with terrorist organizations.
A nominee Shareholder is a Shareholder of a company who holds shares nominally only, that is, only in name. In such a way the identity of the actual Shareholder(s) or beneficial/true owner of the company is not disclosed thus corporate and financial privacy and anonymity is secured (the only cases when the identity of the UBO is revealed is following a court order or during the process of bank account opening). Nominee Shareholder(s) hold the shares in trust for the beneficial/true owner of the company. Thus, the nominee Shareholder is a trustee holding the ‘numbered’ shares in trust for the beneficiary who is the true owner of the company. The nominee Shareholder holds the legal title of the shares whereas the beneficial owner holds the beneficial title of the shares. A declaration of trust is signed by the nominee Shareholder indicating that he has no rights whatsoever on those shares. This Declaration of Trust is a private agreement between Nominee Shareholder and Beneficial Owner and is not open for viewing by anyone else, even the Registrar of Companies. It will only be requested by a bank if an account is to be opened. It is the beneficial owner who is entitled to income and capital gains on the shares. This safeguards the rights of the Beneficial Owner. It is also customary for the Nominee Shareholders to issue and sign an undated Instrument of Transfer in favor of the Beneficial Owner which he can use at any moment to legally transfer the shares in his name.
A nominee Director is a Director of a company which does not wish to disclose the identity of its actual Director(s). Since all company documents are open to the public, the only way confidentiality of the Directors and Shareholders of the company can be ensured is through nominees since their names will appear on the Certificates of the company kept at the Registrar of Companies instead of the names of the actual Directors and/or Shareholders. A nominee Director can be a legal (company) or a natural person.
The four typical obligations of a Cyprus Company are:
Annual Returns (HE32) All Cyprus companies are required to hold a yearly General Meeting and file an annual return with the Registrar of Companies. A return outlines changes that took place with the shareholders, director or secretary of a company. Following the meeting, companies are given 42-days to complete and file a return. However, new companies don’t need to file in the year of inception, provided that no more than 18 months elapse from incorporation to the first filing date.
Audited Accounts A company must submit its audited (by a registered auditor in Cyprus) financial statements compliant with International Financial Reporting Standards to the Registrar of Companies in Greek or English, by attaching them to the annual return of the corresponding year. These financial statements must be prepared on an annual basis, except for the first financial statements of a company which can cover a period of up to eighteen months from the date of the company’s incorporation. In the case a company has subsidiaries and it has no exception from consolidation either from the International Financial Reporting Standards or from the Cyprus Companies Law, Cap. 113, Section 142, then it is required to file with Registrar of Companies its consolidated financial statements. The only exception where this is not required is shipping companies.
Tax Returns – Every Company, that is resident in Cyprus (natural or legal) deriving income from sources both within and outside Cyprus, has to maintain books and records of any transaction undertaken on basis of which financial statements are prepared for each year of assessment. A person is legally obliged to keep accounting records for a period of 6 years. – For Companies, that fulfill exemption criteria, tax return is prepared on basis of audited financial statements.
VAT Reports Every Cyprus Company must register with the VAT department, and registered companies with a tax number must file quarterly – even if no transactions occurred during the quarter. Keep in mind that quarterly filings do not follow the calendar year, but rather the periods set by tax authorities.
Under Cyprus legislation, only a licensed lawyer is allowed to prepare the memorandum, articles of association, and the declaration form HE1 that must be submitted to the Registrar of Companies. This does not mean however that only lawyers can perform company registration services. Parties interested in setting-up a company in Cyprus can either go through a lawyer, or through one of numerous service providers regulated by law. These service providers are for example accounting firms/audit/consultancy firms, and cooperate with lawyers so as to fulfill the regulatory requirement concerning the lawyer’s role. The application for having a company name approved, which precedes the registration process, can also be done by the applicant. The usual practice however is for applicants to entrust the whole procedure to a lawyer or service provider.
By “company registration process” we mean all the steps, tasks, and parties involved from the moment the applicant starts the procedure to the moment the company is granted a certificate of incorporation by the Registrar of Companies and comes into existence. In brief, it involves the following:
The applicant engages the services of a lawyer or service provider;
The lawyer/service provider obtains approval of the company name the applicant desires;
The memorandum and articles of association of the company is discussed and agreed;
The applicant provides the lawyer/service provider with all information/documentation requested, which the latter uses to prepare and submit the registration application package to the Registrar of Companies;
The Registrar processes the application and, provided all the information and documentation submitted is complete and accurate, issues the company a registration certificate, bringing it into existence. The applicant receives the company Registration Certificate.
The average time for the incorporation of a company is approximately 10 days (2-3 days for the name approval and 7-8 days for the registration of the Company) depending always on the workload of the Registrar of Companies.
The period of name approval can be avoided by choosing an already approved name kept by our firm.
Alternatively, the quickest way to have a company is by purchasing one of the shelf companies that are made available to you by our firm.
All companies must register with the Inland Revenue Department and obtain a tax identification number.
They may also need to register for VAT, as well as with the employers’ register of the social insurance services. Even if having to register for all three above, the process should take approximately 1-2 working days, provided that the applicant submits the necessary information and documentation without errors or omissions.
From 2011 onwards the Government has also imposed an annual levy of €350 which has to be paid by 30th June each year by every limited liability company that is registered in Cyprus. A penalty is imposed if the fee is not paid within the prescribed period and it increases accordingly to the time of delay of payment. If the fee is paid within 2 months from the appointed date then a penalty of 10% is imposed which increases to 30% if the fee is paid within 5 months from the appointed date. However, if the fee is not paid within the aforesaid time limits then the Registrar of Companies will strike the company off the register. A company struck off as aforesaid may be reinstated in the register within a period of 2 years from the strike off with the payment of a fee of €500 and after the lapse of two years from the strike off with the payment of €750 .
The applicant also needs to consider whether he needs “retainer services”. Once a company is registered, lawyers and law firms can offer a variety of additional services relating to the maintenance and administration of the new entity. These include opening and maintaining the company’s bank account, dealing with legal administration/providing secretarial services, such as convening board meetings and drafting minutes, preparing and sending annual returns and other documents to the Registrar, and even accounting and auditing services through their liaisons with audit and accountancy firms. The client can choose and configure the retainer services that meet his needs and agree the fee with his lawyer.
Each company is obliged to hold an AGM every year and no later than fifteen months from the previous one. The first AGM needs to take place eighteen months of the date of the company’s incorporation.
Authorized Share Capital is the shares of the company in total. It is the maximum number of shares that a company may issue according to its Memorandum and Articles of Association. These shares may have been issued or not. The Issued Share Capital is the Share Capital which is owned by the Shareholders. This may not be all of the Authorised Share Capital.
The law does not impose minimum Share Capital requirements however in practice the usual start-up Share Capital amount is € 1,000, divided into 1,000 shares of €1 each. Cyprus tax legislation does not contain any provisions on thin capitalization meaning that the Share Capital need not be proportional to the company’s assets.
No, the Share Capital need not be paid and actually cannot be paid at the Registrar of Companies. Instead the full value of the Issued Share Capital must be shown to have been paid to the company (e.g. in its bank account) and from then on this capital must be used for company purposes only.
The whole process can take place without the presence of the client being necessary. As long as all due diligence protocols have been carried out, instructions may be given through e-mail or telephone for the incorporation and later running of the company.
There are three types of fees
The incorporation fees which are paid once
Annual Administration Fees
Other Once of fees
Please request our price list for the standard incorporation and administration services to get an idea of the associated costs.
Although a Cyprus Company is not obliged to open a bank account with a Cyprus based banking institution, it is strongly recommended to, because a bank account becomes an additional evidence of the fact that the company is managed and controlled from Cyprus.
It is important since only companies that are managed and controlled from Cyprus are considered Cyprus tax residents and enjoy the advantages of local tax system (12.5% corporation tax).
