Cyprus Private Company
Date of last update: 1 January 2015
In Cyprus there are two major structures of companies: Private and Public. Private Limited Liability Companies are by far the most common type of legal entity registered in Cyprus and can be efficiently used in international tax planning structures. The text below refers to the use of this type of structure.
The major characteristics of a Private Limited Liability Company are:
- The maximum number of shareholders is restricted to 50;
- The Articles of Association restrict the right of transfer of shares;
- Any invitation to the public for purchase shares is prohibited;
- Issuance of bearer shares is prohibited.
The government body which is responsible inter alia for the approval of the name, registration, winding up and maintaining the formal corporate documentation for companies in Cyprus is the Department of Registrar of Companies (hereinafter “the Registrar”). Also, the Registrar is the responsible body for issuing, upon payment of relevant fees, any corporate certificates and documents of the company such as a certificate of good standing, statutory details of the company (name, shareholders and share capital, directors, date of incorporation, registered office) as well as documents evidencing any charges on company’s assets.
A company comes into existence as a legal entity as soon as it is incorporated by the Registrar. This is evidenced by the Registrar issuing a Certificate of Incorporation which constitutes conclusive evidence that the company has satisfied all legal requirements in respect of incorporation as well as that the company is duly registered with the Registrar of Companies under the Companies Law.
Any company duly registered and incorporated maintains its own legal personality.
The primary sources of Cyprus law are the case-law and the legislative law. Cyprus Law is based on English common law that existed prior to 1960 and thus post-1960 English case law which is considered as strong persuasive authority is generally followed by Cyprus Courts. The law that mainly governs and applies to companies in Cyprus is the Companies Law Cap 113.
Following a major reform in 2003 and the accession of Cyprus to the European Union in 2004, Cyprus Companies Law Cap. 113 became fully compliant with EU law which affords the Cyprus-registered Company more prestige as well as the ability to be used as a vehicle in many structures.
Formation and incorporation of Cyprus Company
Although the procedure regarding the formation of a Cyprus Private Limited Liability Company is simple, certain requirements must be met.
Name of Company
The name of a private company must end with the word “Limited” or “Ltd”. The Company’s name must be pre-approved by the Registrar. This procedure takes about five business days. Very general names or similar with existing ones are not accepted by the Registrar.
Preparation of Memorandum and Articles of Association
All companies in Cyprus must prepare a Memorandum and Articles of Association. The Memorandum sets out the company’s name, registered office, objects (no limit on the number of activities unless any activities are such that require a licence) and its share capital. Consequently, the Memorandum is normally drafted as widely as possible to enable the company to engage in any type of business. The Articles of Association set out the rules that govern the internal management and the administrative regulations of the company; for example, the powers of directors, voting rights of members, transfer of shares and general meeting procedures. The Memorandum and Articles of Association and all other official documents must be submitted in Greek; however any required translation can be prepared. The Memorandum and Articles of Association is usually prepared by a qualified lawyer.
Application for incorporation to the Registrar
The Memorandum, Articles of Association and other corporate documents of the company must be submitted for filing with the Registrar. Upon submission, the Memorandum and Articles of Association must be accompanied by, inter alia, a sworn declaration of a qualified lawyer who is a member of the Cyprus Bar Association.
Other corporate documents
Other corporate documents that need to be prepared upon incorporation are: the Share Certificate, the Corporate Registers and the resolution of the subscribers to the Memorandum and Articles of Association as well as the first minutes of the meeting of the Board of Directors. All of the above-mentioned documents must be prepared by the secretary of the company and kept at the company’s registered office.
Opening of a bank account
Upon incorporation, a company may open any number of bank accounts in any currency with any bank in the world.
Requirements to register a Cyprus private company
A Cyprus private company must have at least one shareholder, who can be either a physical person or a legal entity of any nationality. If anonymity is desired, the shares of a company can be hold by a third party called trustee shareholder (who in effect holds the shares in trust on behalf of the beneficial owner). The use of trustee shareholders is permissible by the law and is a popular mechanism widely used in Cyprus.
Companies in Cyprus are managed and controlled by the Board of Directors. Directors may be persons or legal entities. Under Cyprus Company law, private companies should have at least one director who will be the responsible person managing the company. There is no legal requirement as to the nationality or residence of directors, however a company is considered a tax resident in Cyprus if it is managed and controlled in Cyprus. The use of Cyprus resident nominee directors is advisable if shareholders are not Cyprus residents.
Cyprus companies must have at least one secretary. A director of the Company may also act as the secretary of the company although a sole director cannot also act as secretary unless the company is a single-member company. As with directors, a secretary may be either a natural person or a legal entity. From the administrative point of view, it is recommended that the secretary of a Company is a Cyprus resident and a Greek speaker since most communications and fillings with the Registrar are required to be made in Greek language
All Cypriot companies must have their registered office in Cyprus, where all official documents of the company must be received and maintained. The registered office address can also be used as the business address of the company.
Obligations - Annual General Meeting, Accounting records and Audit
Annual General Meeting
All companies are required to hold an Annual General Meeting (AGM) of its members each calendar year to discuss for the following matters:
- Consideration and approval of the Audited Financial Statements for the year;
- Consideration and approval of the report of directors;
- Consideration of the report of auditors;
- Decision about declaration of dividends;
- Election of directors and approval of their remuneration;
- Appointment of auditors and approval of their remuneration;
- Other matters concerning the company.
The first AGM must be held within 18 months from the incorporation of the Company and thereafter not more than 15 months should pass between the date of an AGM and the next one.
The directors are required to maintain up to date and proper accounting records. The accounting records must be held at the registered office of the company and must always be available for inspection by the directors.
Companies shall prepare annual Audited Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Audited Financial Statements must be filed with the Registrar. The Financial Statements must be signed by a qualified auditor, who is a member of the Institute of Certified Public Accountants of Cyprus.
The information in this report is for information purposes only. It is not intended to constitute tax, legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. We accept no responsibility for any errors, omissions or misleading statements in this report, or for any loss which may arise from reliance on materials contained in this report.