Introduction
Cyprus is one of the most favorable locations to establish a new company or expand operations. The country has double tax treaties with up to 65 countries of the world and the 12.5% corporate tax in Cyprus is also one of the lowest in Europe. Incorporating a company in Cyprus is fast and straightforward.
We have identified the steps involved below:
Type of legal entity
- Branch of a foreign company;
- General Partnership.
- Limited partnership; and
- Private limited liability company by guarantee;
- Private limited liability company by shares;
- Public company;
- Re-domiciliation of a foreign company;
The most common form of a legal entity established in Cyprus is the private limited company by shares which this article discusses extensively.
The procedure of setting up a company
Approval of company name
The first step is the approval of the company’s name by the Registrar of Companies (the “Registrar”). The name approval application is subject to the examination of the Registrar, after which the submitted name is either rejected or accepted. The process takes 3-5 business days. The general rule is that the proposed name must not be too common or pre-existing in the name of any other registered company.
Company’s memorandum – Objects of the company
Our firm provides a standard memorandum specifying the objects of the company. The wide terms of the memorandum mean it can be drafted to cover several objects. However, the company can have us draft a customized memorandum that pursues only the object(s) of interest.
Share capital
There is no minimum or maximum requirement for the share capital of a Cyprus private limited liability company. Most Cyprus private limited liability companies start with a capital of 1,000, divided into €1,000 shares of the nominal value of €1 per share. The arrangement can be modified in the future to reflect the wishes of the client. Conversely, a public company is expected to have at least €25,629 as share capital.
Shareholders
A private company limited by shares is expected to have a minimum of one and a maximum of 50 shareholders. Conditions for being a shareholder in a private company include being a physical person or legal entity from any country of the world. In addition, the company can keep the details of the beneficial owners private by allowing our nominees to hold the shares as individuals or trustees of the trust.
Board Members
It is highly recommended that the majority of the directors live in Cyprus, as this is practical and allows favorable tax planning. The company is also required to have a secretary, preferably a Cyprus resident.
Our firm can provide nominee services for these positions.
Registered Office
The registered office of the company must be any address located in Cyprus. Our firm can provide an address for the registered office.
Articles and Association
We offer standard forms of the articles of the company. Alternatively, at the client’s request, we can draft a unique copy that specifically addresses the client’s wishes, subject to the Cyprus law provisions.
Compliance and Know Your Client (K.Y.C)
Cyprus firms and service providers must adhere to comprehensive K.Y.C. procedures, in line with local and international anti-money laundering requirements. Once you provide us with certain documents, we can manage the entire process on your behalf and ensure your Cyprus company follows the stipulated client identification procedure as part of the formation process.
The standard documents required for the initial stage are the below:
- Bank reference for the ultimate beneficial owner/owners of the company.
- Copy of passport of the ultimate beneficial owner/owners of the company.
- Curriculum vitae for each individual.
- Curriculum Vitae of the ultimate beneficial owner/owners of the company.
- Recent utility bill on the name/names of the ultimate beneficial owner/owners of the company.
Filing of the documents at the Registrar
After the approval of the name, the company’s memorandum and articles of association shall be submitted to the Registrar. These must be accompanied by all the necessary forms that confirm the company’s officers and its registered office address.
The Registrar takes about 7 – 8 business days to issue all the statutory documents of the company and provide the unique company registration number.
The statutory documents of the company include the following documents which are issued upon its formation:
- Certificate of incorporation;
- Certificate of directors and secretary;
- Certificate of shareholders;
- Certificate of registered office address;
- Memorandum and articles of association.
Moreover, our firm arranges for the company stamp as well as its filing records.
Responsibilities of a Cyprus company
Keeping up-to-date accounting books and preparing financial statements are some of the responsibilities of every Cyprus company. The company must also file its financial statements alongside the annual return (form HE32) to the Registrar. In addition, there is a levy of €350, payable annually by every company to the Registrar of Companies. The company must also file its income tax return every year. Finally, companies may have to file V.A.T. returns every quarter, subject to their activities.