| Cyprus Legal Entities |
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The Limited Liability Company is the most common of all legal entities used in Cyprus. Incorporation Procedure Approval of Name Application is filed with the Registrar of Companies. Ten business days are required from the date of application, to the date of approval, and approval is subject to regulations of the Registrar concerning misleading or already existing names.
Documents to be filed Duly executed Memorandum and Articles of Association in Greek, must be filed with the Registrar of Companies.
(i) The Memorandum of Association must contain the following information:
Share Capital Standard practice is to authorize share capital of €10,000 divided into 10,000 shares of €1 each and issue 1,000 Shares. Registration fees and stamp duties are payable on authorized capital at the rate of 0.60% plus €105.
Shareholders The company will originally be set-up with local subscriber(s). The shares will then be transferred to the ultimate beneficial owner(s). If required, Seaward can provide nominee shareholders, who will hold shares in trust for the ultimate beneficial owner(s).
Appointment of Directors Directors can be either individuals or legal entities. With respect to the proposed directors, disclosure of full name, occupation, residential address and nationality is required. Local directors can be provided by Seaward in the event that, for tax purposes, the company needs to establish that its effective management and control is carried out from Cyprus.
Appointment of a Secretary The company secretary may be either an individual or a legal entity. A service company is normally provided for this purpose. Local secretaries can be provided by Seaward.
Registered Office Cypriot companies must maintain a registered office in Cyprus, with a fully updated Register of Members, as well as a record of all directors’ and shareholders' resolutions, and minutes of directors' and shareholders' meetings. In addition, companies must file annual returns with the Registrar of Companies, as well as routinely file any changes of directors, secretary or ownership of the company.
Audited Accounts/Taxation Companies in Cyprus must also submit audited accounts to the Registrar, and the Cypriot Tax Authority. Companies are also obliged to annually submit a provisional tax declaration with the Tax Authority. The corporation tax arising is payable in three installments: 1st August, 30th September, and 31st December. Failure to pay at least 75% of all taxes due by the last installment will result in penalties. For more information regarding the Cypriot tax regime click here.
Effective Management and Control Moreover, for the purpose of establishing that Cyprus is in fact the place of effective management of a Cypriot company, it is advisable that decision-making as well as management activities are seen to be performed in Cyprus. To this effect, it is advisable that the majority of the Company’s board members be residents of Cyprus. Furthermore, for ease of administration (filing of annual returns and notices with the Registrar) it is again advisable that the company secretary or the assistant company secretary also be residents of Cyprus.
Incorporation/Timing Incorporation of a Cypriot company can normally be completed within ten business days of the approval of the proposed name by the Registrar of Companies.
Registration Procedure The registration of partnerships, whether general or limited, shall be effected by submitting a statement in writing signed by all of the partners to the Registrar of Companies, within one month of the date of its establishment.
The statement should contain the following:
Every partnership must keep books of accounts. Partnerships engaged in any retail trade in which it would be a hardship or against the usual custom of the trade to keep accurate books, may be excused from this requirement. General Partnership A general partnership is defined as a relationship which subsists between persons carrying on a business in common with the view of profit. However, the relation between the members of any company or association which is:
is not considered a partnership under Cyprus Law. A general partnership may have between 2 and 20 individual members (up to 10 only, if it intends to conduct banking activities). Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he/she is a partner. In the event the partner dies, his estate is severally liable in a due course of administration for such debts and obligations. Limited Partnerships A limited partnership must be registered to avoid being deemed as a general partnership. A limited partnership must consist of one or more persons called general partners, who are liable for all debts and obligations of the firm, and one or more persons to be called limited partners, who shall not be liable for the debts or obligations of the firm beyond the amount that they have contributed. A limited partner shall not take part in the management of the partnership business, and shall not have the power to bind the firm.
Advantages of Partnerships A special advantage of partnerships worth noting is that the profits of the partnership are not taxable, either in the partnership or through the partners. The disadvantage of unlimited liability may be overcome by establishing a limited partnership with a corporation as the unlimited partner, or by having a partnership of two or more corporations.
Registration Procedure The following documents must be delivered to the Registrar of Companies after the exchange control permit has been granted, and within one month from the establishment of a local place of business:
Advantages of Registering a Foreign Branch A foreign branch registered in Cyprus can enjoy all the advantages extended to all Cyprus legal entities. However, whenever the management and control of the business of the international branch is not in Cyprus, the profits of the branch are exempt from all taxes. If the management and control of the business of the international branch is in Cyprus, then the profits of the branch are subject to a tax rate of 10%. Every overseas company that maintains a branch in Cyprus must deliver copies of financial accounts, directors’ reports and auditors’ reports to the registrar of companies every financial year. Companies located in EU member states are subject to exemption from this requirement.
European Companies (Societas Europaea "SE") Under Council Regulation (EC) No 2157/2001, companies incorporated in one Member State may have the option to merge, form a holding company or form a joint subsidiary, while avoiding the legal and practical constraints arising from the existence of different European legal systems. Nature of an SE An SE is regarded as a Public Limited Liability Company governed by the laws of the Member State in which it has its registered office. An SE may also set-up one or more subsidiaries in the form of SEs.
Share Capital The capital of an SE shall be expressed in Euro, and the subscribed capital shall not be less than €120,000. The laws of a Member State requiring a greater subscribed capital for companies carrying on certain types of activity, shall apply to SEs with registered offices in that Member State.
Registered Office The registered office of an SE shall be located in the same Member State as its head office. A Member State may, in addition, impose on SEs registered in its territory the obligation of locating their head office, and their registered office, in the same place. The registered office of an SE, may be transferred to another Member State which does not result in the winding up of the SE or in the creation of a new legal person.
Formation Merger Public limited liability companies, formed under the laws of a Member State, with registered offices, and head offices within the EU may form an SE by means of a merger, provided that at least two of the companies are governed by the laws of different Member States. In the case of a merger by acquisition, the acquiring company shall take the form of an SE. In the case of a merger by the formation of a new company, the new company shall be the SE.
Holding SE Public and private limited liability companies formed under the law of a Member State, with registered offices and head offices within the EU may promote the formation of a holding SE, provided that each of at least two of the companies:
For each of the companies promoting the operation, the draft terms for the formation of the holding SE shall be publicized in the manner laid down in each Member State's national law. Subsidiary Companies and firms formed under the law of a Member State, with registered offices and head offices within the Community may form a subsidiary SE by subscribing for its shares, provided that each of at least two of the companies:
Companies, firms and other legal entities participating in such an operation shall be subject to the provisions governing their participation in the formation of a subsidiary in the form of a public limited liability company under national law. Conversion A public limited liability company, formed under the law of a Member State, which has its registered office, and head office within the EU may be transformed into an SE if, for at least two years, it has had a subsidiary company governed by the law of another Member State.
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