Formation Of A Cyprus Company

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The Cyprus Private Limited Liability Company has been very popular lately as a vehicle in International Tax Planning, mainly due to the low taxes that apply and the plethora of Treaties that Cyprus is bound by.

In order for the management and control concept of a Company for tax residency purposes to be established in Cyprus, it is important that the majority of the directors are residents of Cyprus, even though it is not required by Law. The Companies are managed and controlled by the Board of Directors (at least one Director), who may be physical persons or legal entities. The company secretary is the second officer of the company, and as its name suggests, its duties are of a secretarial nature, like maintaining the Corporate Register of the company, receiving and sending notices, dealing with the Registrar and calling for meetings. For practical reasons it is recommended that the secretary appointed, whether a physical person or a legal entity, is Cypriot as all statutory filings are made in Greek.

There is no minimum or maximum share capital requirement for Cyprus Companies; however, it is recommended that a company should have a minimum share capital of EUR 1,000 or the equivalent in any other currency, which can be divided in any number of shares. It is required however, that each Company has at least one registered shareholder, who can be either a physical person or a legal entity, of any nationality, and who can also be a nominee shareholder (holding the shares for the Beneficial Owner), allowing thus anonymity when desired.

All Cypriot companies must have their registered office in Cyprus, to receive and maintain all official documentation related to them. The registered office address can also be used as the business address.

It common practice that local service providers who undertake the incorporation and setup of the Company to also provide for nominee Directors/ Shareholders, Company Secretary, Registered office, even actual offices and employees if the structure calls for substance, for a fee on an annual basis.

The incorporation procedure is quite straight forward, simply by submitting the Memorandum & Articles of Association (M&A) of the Company signed by the subscribers of the Company to the Registrar of Companies, accompanied by a sworn declaration by a qualified lawyer, member of the Cyprus Bar Association. As with all documents submitted to the Registrar, these are in Greek too; however it is possible to apply for a translation file in any foreign language. Beside the Incorporation Certificate that the Registrar will issue, the M&A is probably the most important document issued for the Company, as the Memorandum specifies the company’s share capital and objects, which can cover a wide range of activities, and on the other side the Articles of Association specify the rules governing the internal management of the company, such as powers of directors, general meeting procedures, voting rights of members and transfers of shares. Upon incorporation of the company, the Company Secretary prepares the Share Certificate, sets up the Corporate Register and calls a meeting of the Board of Directors to decide the formation of the company and its statutory details.

Angela Katchies
Manager - Legal Department