A company must be registered with the Registrar of Companies. Under the Companies Law the procedure for the formation and registration of an international business company in Cyprus is quite simple and the following steps need to be taken:
Approval of name
Before any other steps are taken the Registrar of companies should be approached to ascertain whether the company’s proposed name is acceptable.
Approval of a name can be obtained within a couple of days, but the Registrar is unlikely to accept a name if:
- it is too similar to that of an existing company
- it is considered misleading, too general or pompous
- it suggests a royal, national or international connection
- it includes certain words such as “Co-operative”, “Insurance”, “Bank”, “Financial Services” etc unless justified by the company’s objects.
The registration of a company requires the filing of the following documents with the Registrar of Companies:
Memorandum and articles of association
The memorandum of association defines and limits the company’s powers particularly as regards its dealings with the outside world. The memorandum must contain the following information:
- name of the company with “Limited” as the last word
- address of the registered office
- the company’s objects which should be as wide as possible in order to enable it to engage in any kind of business activity, without this being ultra vires (beyond the powers of) and, therefore void.
- the amount of its share capital and the division thereof into shares of a fixed amount.
The articles of association set out the rules governing the company’s internal affairs.
The articles may be altered or added to by means of a special resolution, which requires a majority vote of over 75 per cent of the members. The articles deal with matters such as:
- general meetings of the company
- voting rights of members
- transfer of shares
- appointment and powers of directors
- dividends
- accounts and audit
Share capital requirements
There is no legal requirement as to the minimum or maximum share capital of the company. However, it is general practice that the share capital is at least €1.000. Companies intending to render insurance, banking, financial or trustee services to the public at large, are subject to additional capital or other requirements.
Shareholders
There must be at least one shareholder for whom the following information is required:
- full name
- nationality
- address
- occupation
- number of shares to be held
- copy of passport
- source of wealth declaration
- bank or professional reference
If confidentiality is deemed necessary the use of nominee shareholders should be considered. It is also useful to point out that Cypriot nominee companies may hold the shares in trust for the beneficial owners. The nominee normally prepares and delivers to the beneficial owner a trust document accompanied by the share certificate. Although the names of the beneficial owners must be disclosed to the service provider and the bank (should the company wishes to open a bank account), their identity is protected by the strict rules of the Banking Secrecy Law. The Bank is prevented by its statutes from acting as a source of information for natural or legal persons. The public records kept at the Department of the Registrar and Official Receiver show only the names of the registered owners (i.e. the nominee companies, where applicable).
Appointment of directors
The articles of association may name the first directors who thus take office from the date of incorporation. Alternatively, and more commonly, the articles may provide that the names of the first directors are determined by the subscribers to the memorandum, who in fact are the first members. An appropriate resolution signed by the subscribers is required and the persons named by the subscribers become directors on the date this resolution is signed.
From a tax planning point of view it is important that the company is managed and controlled in Cyprus and accordingly, it is recommended that the majority of the directors appointed are Cyprus residents. With regard to the proposed directors the following particulars are required:
- full name
- nationality
- address
- occupation
- number of shares to be held
- copy of passport
- source of wealth declaration
- bank or professional reference
Appointment of secretary
Every company must have a secretary, who may also be a director, although a sole director cannot be the secretary. The secretary is appointed by and is responsible to the directors and is recognised by law as an important “officer” of the company. The responsibilities of the secretary vary from company to company but they generally include the job of maintaining the statutory books and the minute books. The seal of the company must be kept under safe custody by the secretary.
Registered office
Every company must also have a registered office from the day it commences business or from the fourteenth day after its incorporation, whichever is earlier. The registered office is the place where writs, summonses, notices, orders and other official documents can be served upon the company. The address of the registered office is determined by the directors through an appropriate board resolution.
Period needed for registering a company
The registration procedures for a limited liability company can be completed within a period of 2-3 weeks maximum.
Bankers, currency and signatories
The company may open bank accounts with any bank, in most of the main currencies and money transfers can be processed without foreign exchange restrictions. Bank signatories can be provided locally.
Incorporation documents
When the Registrar is satisfied that the documents lodged in relation to a proposed enterprise are in order, a certificate of incorporation will be issued, illustrating that the company has become a corporate body, having an independent legal existence.
It is usual practice that the owners of the company are provided with a full set of corporate documents properly translated in English. The corporate documents of a Cyprus limited liability company normally comprise of:
- certificate of incorporation
- memorandum and articles of association
- certificate of the company’s registered office
- certificate of directors and secretary
- certificate of shareholders
