Registering a company in Cyprus is only the first step, the quality of continued services and consulting makes the difference!
Cyprus Company formation though, includes the procedures and undertakings prior to the registration of the Cyprus Company. Company formation includes the drafting of the Memorandum and Articles of the Cyprus Company, which includes the rights and obligations of the shareholders. In case where a Cyprus Company formation and registration is undertaken by a law firm or a licenced service provider in Cyprus, due diligence and compliance regarding the beneficial owners of a Cyprus Company are a mandatory for the service provider prior to company registration in Cyprus.
An increasing monthly number of Cyprus company registration with the Cyprus Registrar of Companies reflects a growing interest in Cyprus as a jurisdiction for international business and investment. Cyprus company registration statistics show a slight but steady increase especially since the beginning of 2015.
The registration of a Cyprus company is easy and straight forward. Strictly spoken Cyprus company formation and Cyprus company registration are two different procedures, where the Cyprus company registration completes the Cyprus company formation.
Formation of a Cyprus company mainly comprises the drafting of the Cyprus company’s Memorandum and Articles of Association, the appointment of directors and company secretary, and, if desired, the drafting of a shareholder agreement. The formation of a Cyprus company legally constitutes with the signing of the Memorandum and Articles of the Cyprus Company.
However, once the Memorandum and Articles of Association of the Cyprus company have been signed, the company is not operative yet, unlike in some other countries, where a company formed may act and conduct business with the status “under incorporation”.
In order to act and to conduct business, a Cyprus company must be registered with the Cyprus Registrar of Companies. Once the procedures of Cyprus company formation has been finalised, an application has to be submitted to the Cyprus Registrar of Companies, applying for Cyprus company registration.
In the context of Cyprus company registration, identification documents of shareholders, directors and the company secretary are not submitted to the Cyprus Registrar of Companies. Such identification documents of the persons involved in a company are kept with the company itself. In case that Cyprus company formation and Cyprus company registration are carried out through an authorised Cyprus service provider (such as Administrative Service Providers licenced by CySEC, or registered auditors, or law offices), the personal identification documents are safe-kept by such service providers.
Depending on the work load at the Cyprus Registrar of Companies, Cyprus company registration may take one to two weeks from the date of submission of the application for Cyprus company registration.
More than 97% of Cyprus company formation and Cyprus company registration are carried out by licenced local service providers in Cyprus, such as Shanda Consult, for example.
Unlike until some years ago, today, based on rules by the EU, FATCA, FATF and the OECD aiming the combat of financial crimes and terror financing, Cyprus company formation and Cyprus company registration require thorough due diligence and compliance to be undertaken, to be carried out by the licenced service providers in Cyprus, prior to the formation of a Cyprus company.
While the “identification” based on documents of all natural persons involved in a Cyprus company was sufficient until two years ago, now the “verification” of the identification is required, again, based on documents. Before the actual formation of a Cyprus company commences, thorough due diligence procedures apply for all licenced service providers engaged in Cyprus company formation and Cyprus company registration. Licenced service providers in Cyprus, and other countries alike, are obliged to keep records of their due diligence procedures.
The same applies for banks and other financial institutes when opening bank accounts for Cyprus companies, companies from other countries or individuals from Cyprus or abroad. Regarding bank account opening procedures, please see our related article.
Due diligence and compliance procedures in the context of Cyprus company formation and Cyprus company registration are, by law, to be repeated on a regular basis, based on the risk classification of the Cyprus company and its beneficial owners. Various directives of the EU, such as the Anti Money Laundering Directive, for example, and various international agreements, such as the Common Reporting Standard, require at least annual updates of due diligence procedures.
Below you will find the minimum requirements of documents from beneficial owners which need to be examined by and kept with licenced service providers in Cyprus, prior to the finalisation of Cyprus company formation and Cyprus company registration.
Please feel free to contact us via the CHAT button at the lower right corner or at the bottom of this screen if you have questions regarding Cyprus company formation and Cyprus company registration. We will be happy to assist you.
Companies in Cyprus are required to maintain operative substance in Cyprus. For more information:
Companies Need Sufficient Substance to Avoid Cross-Border Tax Issues“;
Cyprus Tax Residency: Where will my Cyprus Company get taxed?.
The Cyprus Company Law, Chapter 113, based on the English Companies Act (1948)
The Department of Registrar of Companies and Official Receiver
Unlimited
The records at the Registrar and Public Receiver are open to the public and can be viewed by everybody.
Public records: shareholders (upon application), directors, secretary of company, registered office, authorized capital, Articles of Association and Memorandum.
(Discretion is possible by using nominee shareholders, directors and secretary.)
Legally, the minimum paid capital of a Cyprus Company is the smallest payable amount, which is one Euro cent. However, as such a low capital would not make much sense, the usually authorised minimum capital is generally € 1.000,00.
But: a paid capital reflecting the actual business of a company is advisable for the financial standing of a Cyprus Company.
Companies which were registered with the purpose of being sold. These companies are dormant (they have never conducted business) and have no assets or liabilities. They are immediately available.
Bearer shares are not permitted.
All kind of preferred shares, shares without voting right etc. are permitted.
We usually incorporate Cyprus Companies with 1.000 shares of € 1,00 each, if there are no specific requirements from the client.
Disclosed as shareholders through the Cyprus Registrar of Companies. If nominee shareholders are appointed, details of the beneficial owner are not yet available on public record. However, a Beneficial Owners Registry will be established in 2020 and it will be accessible for “legitimate parties”.
Beneficial owners living outside Cyprus, their address of residence and their profession have to be reported to the Central Bank through a statistical form. Those records with the Central Bank are not open to the public.
The minimum number of shareholders of a Cyprus Private Limited Liability Company is 1 and the maximum is 50. The shareholder may be natural or legal person. The is no restriction on nationality or residency. A company can be incorporated even on 100% foreign ownership. The use of nominee shareholders is allowed.
The minimum number of directors of a Cyprus Company is one. The directors of a Cyprus Company can be natural person or legal person/ corporate entity. The majority of directors of a tax-resident company has to reside in Cyprus.
A company secretary must be appointed. It can be natural or legal person and has to reside in Cyprus.
A Cyprus company must have a registered office in Cyprus.
It is a legal requirement for a Cyprus Company to held at least one annual shareholder meeting, on which the annual returns and the balance sheets are approved. Annual Meetings can be held anywhere in the world.
Cyprus Companies must maintain proper bookkeeping and must prepare a fully set of Financial Statements in accordance with International Financial Reporting Standards (IFRS). The books of a Cyprus Company must be immediately accessible for the Cyprus Tax Authorities at any time.
The accounts of all Cyprus Companies must be audited by an auditor licensed in Cyprus.
Annual tax returns of Cyprus Companies have to be submitted to the Cyprus Tax Office.
V.A.T. returns have to be submitted quarterly.
Provisional profit and corporate tax assessment returns have to be submitted till July 31 for the current year. The corporate tax expected for the current year has to be paid in 2 equal installments till August 31 and December 31.
The tax payer has the right and possibility to correct the estimated profit/tax with the second installment. The second installment will be calculated accordingly.
If a Cyprus Company conducts business with other EU countries, monthly VIES and INFRASTAT registrations may be necessary and respective returns have to be submitted monthly.
When non-residents wish to register a Cyprus Company, a local registering agent/ service provider or lawyer has to be appointed, who will furthermore act as registering agent and proceed with the preparation of all the necessary documents for the registration of a Cyprus Company, and follows up the procedures.
The first step of the procedures of Cyprus company registration is always to submit a name check/search and application to the Cyprus Registrar of Companies, for reserving a name can be done online through the official website of the Cyprus Registrar of Companies.
Formal approval to use the name is required from the Registrar before the name can be used. A name may be in any language using Latin letters.
The Registrar in principle reserves the right to object names. A name is not accepted if this is misleading.
Names which include any of the following words: NATIONAL, INTERNATIONAL (IN GREEK), REPUBLIC, EUROPEAN UNION, EUROPE, EURO, INTERNATIONAL will be allowed only in special circumstances for sound reasons and with conditions. The company names shall not include the words CO-OPERATIVE MUNICIPAL, PRIVILEGED, RECOGNISED or APPROVED. Names including the words: Bank, Banking, Investment, Trust, Insurance, Broker and similar words that may suggest a subject of business that require a special license shall be allowed only if the circumstances justify.
Once the company name has been approved by the Registrar, the following documents must be submitted for the registration of a Cyprus Company:
5-10 working days after submission of all the necessary documents to the Registrar.
Companies must be registered with the Tax Department in order to obtain TIC (tax identification) number and a VAT Registration number (if it is applicable).
All documents and information required for Cyprus Company formation and registration are based on the compliance provisions of the respective EU Directives, including the EU Anti-Money-Laundering Directive.
For Cyprus Company formation and registration, we require a company order form (our specific form) completed and signed by the beneficial owners. Additionally, the following KYC documents are needed from each shareholder, ultimate beneficial owner and other individuals that have a control over the Cyprus Company to be registered or the company or companies that might become shareholder of the Cyprus Company:
· Confirmations of Residence issued by Office for Registration of Residents.
Passport/ID copies and the address proofs need to be certified as a true copy, in English language. Documents may be certified by an independent lawyer, accountant, notary, bank manager or embassy official, who should provide their name, address, status on the certified document.
All the above required documents should be sent to us first as a scanned copy by email and subsequently the originals by mail.
For bank account opening for a Cyprus Company, additional documents may be asked by the bank. For more information regarding Bank account opening in Cyprus please read our respective article.
Cyprus is a preferred jurisdiction as place of business with a relatively low tax burden, compared with other EU countries. Cyprus tax rules provide for a total taxation of business profits with 12,5 % corporate tax, payable on taxable profit classes. As Cyprus provides the lowest overall tax burden for both businesses and individuals in the EU, Cyprus Company Formations are increasing. The Cyprus Registrar of Companies reported almost 1.900 Cyprus Company Registrations during the first two months of 2017.