Company Law and Company Registration in Cyprus
Information on starting and running a foreign company in Cyprus...
The main legislation governing Company Law in Cyprus is the Cyprus Companies Law, Cap.113 of 1951. Cyprus offers a very attractive base for setting up a company. The tax rate on corporate profits is only 12.5%, being one of the lowest in the EU. Moreover, Cyprus has double tax treaties with more than 40 countries. These double tax treaties ensure that there is no double taxation of income earned in either of the two contracting countries.
Legal Forms of Corporate Entities in Cyprus
- Public Companies: they require a minimum of seven founding members and they have the right to invite the public to subscribe for their shares.
- Limited Private Company: this is the most common and popular type of company.
- Company Limited by Guarantee: most commonly used for non-profit organisations.
- Branch of a Company Incorporated Abroad: a company registered abroad may establish a branch in Cyprus. This requires the translation in Greek of the basic corporate documents of the company.
- European Society: this is a public EU company. This form of company can be registered in any EU country and transfer to other member states.
Registering a Company in Cyprus
In order to register a company in Cyprus it is advised to contact a law firm. The following information and documentation is usually required from a client before a lawyer can manage the process of forming a company:
- Proposed name/names for the Company
- Line of business of the Company
- What the issued share capital of the company will be. A minimum of €1,700,00 is recommended although there is no minimum by law
- Personal details of shareholders
- Personal details of directors
- Notarised copy of the owners’ passport
- Notarised copy of a recent utility bill for the owner/owners
A minimum of one director is required. The director/directors may be physical persons or companies. It is advisable that the majority of directors are Cyprus-residents for the company to qualify as a resident in Cyprus for tax purposes. Often Cyprus law firms will provide foreign clients with nominee directors in order to execute the board meetings and resolutions in Cyprus and for effective tax planning. In this case the beneficial owner will be provided with undated letters of resignation of the nominee directors as a guarantee of the protection of his rights.
The existence of the company secretary is required by the Law. The secretary is appointed by the Board of Directors. Although not required by law, it is recommended the secretary of the company to be a resident in Cyprus for effective management and control in Cyprus. Again, law firms will generally provide a nominee secretary if required.
The minimum number of registered shareholders should be one. Shareholders can either be individuals or legal corporate entities. Nominee shareholder/shareholders can be provided by law firms to act on behalf of the beneficial owner. The nominee shareholders do not actually control the company but they merely follow the instructions of the beneficial owner.
The following documents are provided by the nominee/nominees to protect the rights of the beneficial owner:
- A declaration of trust
- Instrument of transfer (undated)
The registered office of the company must be in Cyprus. The registered office address is the official address of the company where the statutory books and the seal of the company are kept. Law firms usually offer their offices as registered office address for clients when required.
The Procedure for Registering a Company in Cyprus
- An application is filed to the Companies Registrar for the approval of the proposed name/names or the new company. The name should not be similar to the name of an already existing name. A lawyer will be able to advise as to what names would be likely to be accepted. Approval of the name usually takes around 3-5 working days.
- Once approval for the company name is obtained, the Memorandum and the Articles of Association are submitted to the Companies Registrar together with relevant forms relating to the officers of the company.
- After around 4-5 working days the Company is ready and the corporate certificates are issued.
Following registration of the Company, the client is provided by his lawyers with the following documentation (apostilled if the client is based abroad):
- Apostilled Certified Copy of the Memorandum and Articles of Association
- Apostilled Certificate of Incorporation
- Apostilled Certificate of Registered Office
- Apostilled Certificate of Directors and Secretary
- Apostilled Certificate of Shareholders
- Declaration of Trust by any nominee shareholders
- Undated, signed instrument of share transfer from the nominee (if any) to the beneficial owners
After the Company has been registered, the company can open one or more bank accounts with Cypriot and/or foreign banks. Cyprus law firms will usually be introducers to a number of banks and will be able to manage this process on behalf of the beneficial owner of the company. Banks usually require copies of the corporate documents, certified true copies of the passports of the signatory and nominees, the Board’s resolution and the signed application opening forms. Most Cypriot banks offer internet banking and fax trading.