Cyprus
Private Company Limited by Shares
The
relevant legislation is Cyprus Companies Law,
Cap. 113, which is virtually a copy of the English
1948 Companies Act. A private company is one
which by its articles:
- Restricts
the right to transfer its shares
- Limits
the number of its members to 50
- Prohibits
any public subscription to shares or debentures
The Companies (Amendment) Law of 2000
(Law 2(I)/2000) introduced single-member companies.
The Companies (Amendment)
(No. 3) Law of 2000 (151(I)/2000) introduced
new provisions as to the validity of transactions
of companies and as to the information which
must be included in the official documents of
companies. The Companies (Amendment) Law of
2001, Law 76(I) of 2001 provided for a new system
for the certification of companies’ auditors
and for the recognition of Bodies of Auditors
and the grant of approval to auditors with foreign
qualifications and also the recognition of accountants'
companies by the Council of Ministers.
When
100% foreign-owned, a private company used to
be referred to as an 'offshore company', although recently the expression
International Business Company has come into
favour. However, as from 1st January, 2003,
an offshore company (IBC) no longer has a separate
taxation status, and is taxed according to the
same principles as a regular company. IBCs are
now allowed to trade inside Cyprus. A pre-existing
IBC which made an irrevocable
commitment not to trade inside Cyprus until
2006 was able to claim the existing low
tax rate for the three years 2003, 2004 and
2005.
In order
to form a foreign-owned company, a bank reference
and copy of the owner's passport is required
for the registration. The bank reference must
be issued by a bank included on the Central
Bank of Cyprus's list of qualifying banks.
The following
information will be required for the formation
of a standard Cyprus offshore company:
- Name
of the company with two alternatives;
- Objects
of the company (description of principal activities
of a Cypriot off-shore company);
- Capital:
a minimum of CYP 1,000 for a company with
no offices in Cyprus, or CYP 10,000 for a
company with offices in Cyprus. Payment of
the capital can be extended in time.
- Full
personal details of shareholders will be necessary.
- Full
personal details of directors (minimum two)
will be necessary.
Registration of a standard Cyprus offshore company takes three weeks
typically.
In Cyprus, a company's formation documents and its annual return
must be filed in Greek; the same applies to
accounts when these need to be filed.
Amendments made in 2003 to the Companies Law as part of the EU accession
process included the following changes:
- Every
company must prepare a full set of financial
statements in accordance with International
Financial Reporting Standards, and every parent
company that has one or more subsidiaries,
other than a company which is itself a wholly
owned subsidiary, should present consolidated
financial statements.
- Under
article 120, every company must complete an
annual return within a period of 42 days from
the date of its Annual General Meeting and
must file immediately with the Registrar of
Companies a copy of the annual return, signed
by a director and the company secretary. Under
article 121, the annual return filed with
the Registrar of Companies must be accompanied
by the full set of financial statements.
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Cyprus Exempt Private Company
A
private company limited by shares is exempt
if:
- No
body corporate other than another exempt company
holds any of its shares or debentures
- The
number of debenture holders is not more than
50
- no
body corporate is a director of the company.
The
main advantages of an exempt private company
are:
- It
need not file accounts with its Annual Return
- It
is not subject to the statutory restrictions
on loans to directors
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Cyprus Public Company Limited by Shares
Any company
registered under the Act whose Articles do not
contain the restrictions applicable to private
companies is a public company. A public company
may obtain a listing on the Cyprus Stock Exchange.
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Cyprus Company Limited by
Guarantee
As in
England, companies limited by guarantee are
normally used only for charitable or non-profit-making
purposes. Apart from their share structure,
they are similar to other types of private company
and also fall under the Cyprus Companies Law.
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Cyprus Branch of Overseas Company
Any overseas
company may operate in Cyprus as a branch. Within
one month of establishment of such a branch,
the following documents must be filed (in Greek)
with the Registrar:
- A
certified copy of the Memorandum and Articles
of Association
- A
list of the directors and secretary
- The
names and addresses of persons residing in
Cyprus authorized to accept all notices on
behalf of the Company.
Companies
with branches in Cyprus must also file their
accounts annually, together with certified Greek
translations.
Company
law changes implemented in 2003 as part of the
EU accession process include the following rules
covering branches:
- Every
foreign corporation that maintains a branch
in the Republic must submit, for every financial
year, copies of its financial statements as
presented in its last AGM and published in
accordance with the laws of the country of
incorporation, except that EU corporations
that publish audited financial statements
in their countries of registration and submit
these financial statements to the Registrar
of Companies are exempted from preparing and
submitting separate branch financial statements.
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Cyprus General Partnership
Partnerships
fall under the Partnerships and Business Names
Law Cap 116, basically similar to the equivalent
English legislation. They must be registered
with the Registrar of Partnerships within one
month of formation, giving name, purposes, place
of business, full particulars of the partners
etc. Foreigners may belong, but need exchange
control consent.
A general
partnership may have between 2 and 20 individual
members (up to 10 only, if it intends to conduct
banking business).
Partnerships
do not need to file accounts or to be audited.
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Cyprus Limited Partnership
These
are similar to general partnerships except that
they have one or more general partners with
unlimited liability and one or more limited
partners (whose liability is limited to the
amount declared in the partnership return filed
with the Registrar).
Limited partnerships, used in conjunction with offshore
companies offer good tax planning possibilities.
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Cyprus Sole Proprietorship
A Sole
Proprietorship falls under the Partnership and
Business Names Law Cap 116, being essentially
similar to the English sole partnership. It
is subject to broadly the same rules as a General
Partnership.
A sole
proprietor has unlimited liability for his debts,
and any business name (other than his own) must
be registered with the Registrar of Partnerships.
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Cyprus Trusts
Local
Trusts
A 'local trust' is governed by the Cyprus Trustees
Law Cap 193, which closely follows the English
Trustee Act 1925. The settlor and beneficiaries
are normally residents of Cyprus, and the trust
and its property are subject to exchange controls, although these are vestigial
since Cyprus joined the EU.
Offshore
Trusts
Offshore Trusts are the same as local trusts,
but their beneficiaries must be non-resident,
and all the trust's activities must be outside Cyprus.
As with 'offshore' companies, the special tax
status of offshore companies has ceased with
Cyprus's accession to the EU.
International
Trusts
The International Trusts Law of 1992 brought
Cyprus trust law into line with that of other
major international trust jurisdictions. Both
settlor and beneficiaries must be non-resident,
although one Trustee must be Cypriot. International
trusts may have many tax and legal advantages.
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