Setting-up Cypriot Entities

Registration procedure

Before any other steps are taken with regard to the incorporation of a company, the Registrar of Companies must be approached to ascertain whether the name by which the company is proposed to be incorporated is acceptable. The Registrar will not accept a name, if:

• it is too similar to the name of an existing company
• it is considered to be misleading (for example if the name of a company with small resources suggests that it is trading on a great scale or over a wide field)
• it suggests a royal connection (for example names containing such words as “Royal”, “King”, “Queen”, “Crown” etc)
• it includes any of the following words: “Imperial”, “National”, “Corporation”, “Commonwealth”, “Cooperative”

Bearing in mind the above restrictions it is desirable to submit for approval to the Registrar two or three alternatives to the first choice of name, as experience has shown that this can save time.

Where the proposed Cyprus company is intended to have a similar name to that of its parent company, the Registrar will require the consent of the parent company for the use of such name.

Filing of the Memorandum and Articles of Association

To effect registration of a company the memorandum and articles of association must be submitted for filing with the Registrar of Companies.

Memorandum of Association

The memorandum must contain the following information:

• the name of the company with “limited” as the last word
• the situation of the registered office
• the objects of the company, which it is advisable that they should be as wide as possible so as to enable the company to engage in any kind of business or activity, without this being ultra vires (beyond the powers of the company) and, therefore, void
• a statement that the liability of the members is limited by shares or by guarantee
• the amount of the share capital
• the subscribers to the memorandum together with the number of shares for which they have subscribed

Articles of Association

The articles contain rules governing the internal management of the company and regulating the rights of its members among themselves. The articles may be altered or added to by means of a special resolution, which requires a majority vote of over 75 percent of the members. The articles deal with matters such as:

• general meetings of the company
• voting rights of members
• transfer of shares
• appointment and powers of directors
• dividends
• accounts and audit

Specimen memorandum and articles of association which have been prepared after careful study by lawyers can be made available, but care should be taken that the first few main object clauses are tailored to the specific circumstances and main business objects of the company.

Share capital requirementsThere is no legal requirement as to the minimum or maximum share capital of the company. It is recommended that the authorised share capital should be at least £1.000 (€1.750) which may conveniently be divided into 1.000 shares of £1 each.                     

Shareholders

Under Cyprus law, every company, limited by shares, must have at least one shareholder. If anonymity is required, the shares may be held by nominee companies in trust for the beneficial owners without public disclosure of the owners’ identity. Our trustee companies may be used by our clients to hold shares in trust for them.

Bank references for each beneficial shareholder are required. A specimen bank reference letter is as follows:

REFERENCE LETTER FROM BANK
To be typed on the letterhead of the bank

Oneworld Limited
PO Box 27171
1641 Nicosia, Cyprus

(Date)

Dear Sirs

We hereby confirm that Mr/Mrs ______________ is well known to us for ____________ years and in our opinion of good financial standing and trustworthy person in his/her business obligations.

This is given without any risk, responsibility or any engagement on our part.

(Signed) ……………………………….
Name of bank

The following information is required for each shareholder:

• full name
• residential and business address
• date of birth
• nationality
• occupation
• details of past and existing business activities and sources of income with supporting evidence
• exact description of the activities to be carried out by the proposed Cypriot company
• number of shares to be held
• copy of passport
• for corporate shareholders, copy of the statutory documents and the most recent financial statements

An additional reference from a lawyer or professional adviser may be necessary. A specimen reference letter is as follows:

REFERENCE LETTER FROM PROFESSIONAL FIRM
To be typed on the business letterhead

Oneworld Limited
PO Box 27171
1641 Nicosia, Cyprus

(Date)

Dear Sirs

Reference for (name and address)

I confirm that I have known Mr/Mrs __________ for the last {    } years acting for him/her {state capacity in which you have acted} {and also acted for him/her in relation to {give name of company} and that the above address is the address shown in our records for him/her.

I confirm that I know him/her to be a person of integrity, honesty and good character and that there is no reason why you should not act on his/her behalf or provide business services to him/her or (give name of company).

Yours truly

{Professional capacity}

Appointment of directors

The manner of appointment of directors is laid down in the articles of association. Whatever these may provide, the ultimate control for the appointment and removal of directors vests with the members of the company. The articles of association may, in certain cases, name the first directors of the company, who thus become directors from the date of incorporation. Alternatively, and more commonly, the articles may provide that the names of the first directors be determined by the subscribers to the memorandum, who in fact are the first members.

From a tax planning point of view, it is often required that the company is shown to be managed and controlled in Cyprus and, accordingly, it is recommended that the majority of the directors appointed are Cyprus residents. Board meetings should also be held in Cyprus. It is sometimes desirable that expatriate directors are also appointed, but it is advisable that the number of the intended overseas directors resident in a particular country is always below the minimum number necessary to constitute a quorum. With regard to the appointment of directors, the following particulars are required:

• full name
• residential address
• date of birth
• nationality
• occupation
• passport number for expatriate, ID number for Cypriot, registration number for company

Corporate documents

It is advisable to ensure that upon the incorporation of the company, its beneficial owners or other appropriate officials are provided with copies of all corporate documents, properly legalised and translated where appropriate, from Greek into English or any other language requested. Such corporate documents normally comprise:

• certificate of incorporation
• memorandum and articles of association
• address of the company’s registered office
• the first directors, secretary and shareholders
• share certificates
• statutory and other necessary minutes of the meetings of the directors and shareholders
• letterheads, invoices and other company stationery
• any other documents pertaining to the company’s activities up to the date of its establishment

Stamp duty

Stamp duty is payable on the registration of a company and its level depends on the authorised share capital of the company. Stamp duty payable is as follows:

Authorised capital	Stamp duty £
Fixed sum	60
Plus stamp duty of	0.6% on the amount of authorised share capital

A table showing total stamp duty payable for a sample of levels of authorised share capital is given below:

Authorised capital £	Stamp duty £
10.000	120
20.000	180
50.000	360
100.000	660
200.000	1.260
500.000	3.060
1.000.000	6.060
2.000.000	12.060
5.000.000	30.060
8.000.000	48.060
Over
Issued capital	Stamp duty £
For all amounts	10

Appointment of secretary

The appointment of the secretary is made by the directors and the articles of association should normally contain an appropriate provision to this effect. The existence of a secretary is a requirement of the law. For practical purposes, a body corporate (ie a company) may be appointed secretary. A number of secretarial companies which can act as secretaries to Cyprus companies are available and operate satisfactorily.

Registered office

Every company must have a registered office from the day it commences business or from the fourteenth day after its incorporation, whichever is earlier. The registered office is the place where writs, summonses, notices, orders and other official documents can be served upon the company. It is at the registered office where the company’s Register of Members is kept, unless the company informs the Registrar of Companies of another place.

Period needed for registering a company

The formation and registration procedures, including various administrative needs such as printing of the company’s letterheads, opening of statutory books and the opening of the required bank accounts, up to the time the certificate of incorporation is issued, can normally be completed within a period of a week.

Bankers, currency and signatories

The company may open bank accounts with any bank in most of the main currencies and money transfers can be effected without foreign exchange restrictions. Bank signatories can be provided locally, if necessary.

Certificate of Incorporation

Once the Registrar of Companies has been satisfied that the documents lodged in relation to a proposed company are in order, a certificate of incorporation will be issued, whereupon the company becomes a corporate body, having an independent legal existence quite distinct from the shareholders composing it.

Formation costs

Total formation costs for a company with an authorised share capital of £10.000 including lawyers’ and accountants’ fees, and all other out of pocket expenses such as stamp duties etc, are estimated to be £1.400 (€ 2.400). Fees for services such as opening of bank accounts, issuing powers of attorney or providing tax advice will be additional to the formation costs.

Administration costs

Fixed

The minimum annual fixed costs for keeping the company in good standing may be summarised as follows:

	£	€
Directors’ fees	250	400
Secretarial fees	150	300
Nominee fees	150	300
Registered office address	150	300
Minimum maintenance fees	Varies	Varies

Other costs calculated on a time basis

Professional fees are normally determined on a time-spent basis, which depends on the volume and complexity of the transactions involved. Fees for audit, accountancy and bookkeeping services and fees for processing
payrolls, for attending to personnel matters and other related services are very competitive.

As for audit work, our associated BDO Philippides Ltd Chartered Accountants can provide audit services for our clients. BDO Philippides Ltd is a member firm of BDO International, the 5th largest accounting network in the world.

Day to day management of the company

We, at Oneworld Ltd, through our International Business Services IBS Division  is capable of dealing with all the day to day activities of any company, such as bank account monitoring, processing of bank transfers, payroll preparation, invoicing, preparation and review of agreements, bookkeeping, preparation of management reports and statutory financial statements, company secretarial and administration, tax and financial advice and other accounting and business administration.

Other services

Oneworld Limited also provide a comprehensive package to assist clients in carrying out their administrative functions without losing valuable time in administrative matters which covers:

• immigration and government offices’ work including work and residence permits, alien registration, driving licenses, duty free applications etc
• full reporting requirements including budgeting, cash flows etc
• specialised administrative services mainly on documentation, credits, payroll and all aspects of day to day financial matters

Establishing a Cyprus entity

At Oneworld Ltd, we are experienced in setting-up and administering Cyprus entities. We suggest that you fill and return to us the attached Company Incorporation Sheet, as indicated overleaf.