Cyprus in Offshore
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Company Formation in Cyprus
EU citizens are able to start up a business in Cyprus quite freely, and now do not require a Cypriot business partner or a definitive minimum investment. The financial services industry does however how strict stipulations so you cannot enter the profession freely in Cyprus without first meeting this criteria.
It is advisable to contact a well-established local lawyer in Cyprus who will be able to give you information and legal advice. He will also be familiar with the local business environment in the country and be knowledgeable about company incorporation. The lawyer will ensure that your operations will be legal and also will help you come up with a financial report to present to a bank or financial institution. He will provide assistance with paperwork and help you register a company name. For this, he will generally charge you between 1,200 Euro and 1,500 Euro. You will be penalised for any violations of the legal requirements of company incorporation, so although it is a personal decision, it may be wise to invest this money in a lawyer who will provide you with assistance where you need it.
It is important to guarantee you have enough capital to survive before you establish a business in Cyprus.
Buying a Business in Cyprus
You may decide to go for the easier option of buying an already existing business. It is certainly less risky and the paperwork is generally simpler. It is wise to obtain an independent valuation, or even two in order to gain a second opinion, and also employ an accountant as auditor. It is advisable not to sign anything you don't completely understand.
Types of company in Cyprus
The following types of companies can be formed under the Companies Law, Cap 113.
Company Limited by Guarantee with or without Share Capital
This type of company is usually established for non-profit making purposes. The liability of the members of this type of company is limited to an amount agreed by the members.
A company limited by guarantee may apply to the Registrar of Companies to have the word 'Limited' removed from its name and can apply to the Council of Masters in order to obtain charitable status.
Public Company Limited by Shares
There is no restriction regarding the number of members this company may have and the shares of a public company are freely transferable.
Private Company with Limited Liability by Shares
The liability of the members of this company is limited to the value of the subscribed shares. The articles of association of a Private Company restrict the right to transfer the company's shares and also stipulate that there must be no more than 50 members in the company. The company's articles of association also prohibit the public to subscribe to any shares or debentures of the company.
A private company limited by shares is the most commonly used type of company.
A company's memorandum and articles of association combine to form the legal charter of the company and is prepared by a local advocate in Greek and then translated into English. These must be filed with the Registrar of Companies.
There are certain regulations that every company needs to follow and these are:
- The minimum number of shareholders must be at least one (and no more than 50 in the case of a private company limited by shares)
- The company must have at least one director
- The company must have a secretary, according to the stipulations of the Companies Law, Cap 113
- The company must have a registered office
- A qualified auditor must be appointed
The Companies Law, Cap 113 imposes reporting requirements on companies:
- Annual Audited Accounts must be prepared by authorised accountants, qualified to practice the profession, and copies need to be filed with the Department of Inland Revenue
- An Annual Return must be filed with the Registrar of Companies. It must contain details of the share capital, registered shareholders, directors, secretary and registered office address and the address of the register of members of the Company, for the relevant year. It must be accompanied by the Company's audited accounts for the same year
- Any increase of share capital, allocation of shares, changes to the Company's structure or the Company's officers, and changes in the Company's assets, must also be filed and registered with the Registrar of Companies
You must apply to the Registrar of Companies in order for them to authorise the proposed Company's name. It must always contain "Limited" or "Ltd".
Branch of Overseas Company
Any foreign company can establish a branch in Cyprus. Within one month of setting up a branch, it is essential to file the following documents (in Greek) with the Registrar of Companies:
- A certified copy of the Memorandum and Articles of Association
- A record of the directors and secretary
- The names and addresses of those residents in Cyprus who are authorised to accept all notices on behalf of the Company
A branch must file annual accounts, including a certified Greek translation.
In 2003, Company Law amendments meant that the following condition had to be applied to branches:
- Every foreign corporation that operates a branch in the Republic of Cyprus is required to submit copies of its financial statements every financial year, published according to the laws of the country of incorporation. EU corporations that publish audited financial statements in the countries in which they registered and submit these to the Registrar of Companies are exempted from submitting separate branch financial statements.
Partnerships fall under the Partnerships and Business Names Law Cap 116, which is similar to the equivalent English legislation. It is necessary to register a partnership with the Registrar of Partnerships within one month of formation, providing details of names, purposes, place of business, full details of the partners etc.
A general partnership can have between 2 and 20 individual members (up to 10 only, if conducting banking business). Partnerships do not need to file accounts or to be audited.
This type of partnership has one or more general partners with unlimited liability and one or more limited partners (whose liability is limited to the amount stated in the partnership return filed with the Registrar of Companies).
A Sole Proprietorship falls under the Partnership and Business Names Law Cap 116. It is largely subject to the same conditions as a General Partnership. A sole proprietor has unlimited liability for his debts, and any business name must be registered with the Registrar of Partnerships.
Organisations that can assist with Cyprus
Sovereign offers a range of advisory and support services to assist companies of all sizes to establish successful business operations in foreign markets
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 150+ countries around the world.