Oneworld Global Business Services

CYPRUS / Establishment of Cyprus Entities

Establishment of Cyprus 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” )
  • it includes any of the following words: “Imperial”, “National”, “Corporation”, “Commonwealth”, “Co-operative”
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 location 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 requirements
There 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 or approximately €1.000 which may conveniently be divided into 1.000 shares of €1 each.        
Shareholders
Under Cypriot law, every company limited by shares, must have at least one shareholder. If anonymity is required, the shares may be held by trustee companies in trust for the beneficial owners without public disclosure of the owners' identity. Trustee companies may be provided by reputable service providers recommended by ourselves.

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
(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 advisor may be necessary. A specimen reference letter is as follows:

REFERENCE LETTER FROM PROFESSIONAL FIRM

To be typed on the business letterhead

Oneworld Limited
75 Prodromou Avenue
Oneworld Parkview House
PO Box 25207, Nicosia 1307
Cyprus
Tel:  +357 22496000
Fax: +357 22493000
(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 important that the company is managed and controlled in Cyprus and, accordingly, it is recommended that the majority of the directors appointed are Cyprus residents. It is sometimes desirable that expatriate directors are also appointed, but it is advisable that the number of the intended expatriate 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 companies

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 legalized and translated where appropriate, from Greek into English or any other language. Such corporate documents normally comprise:
  • certificate of incorporation
  • memorandum and articles of association
  • address of the company's registered office
  • the first of directors, secretary and shareholders
  • share certificates
  • statutory and other necessary minutes of the meetings of the directors and shareholders
  • 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 102.52
Plus stamp duty of 0.6% on the authorized amount
   
A table showing total stamp duty payable for a sample of levels of authorised share capital is given below:
 
Authorised capital € Stamp duty €
10.000 162
20.000 222
50.000 402
100.000 702
200.000 1.302
500.000 3.102
1.000.000 6.102
2.000.000 12.102
5.000.000 30.102
8.000.000 48.102
Over  
   
Issued capital Stamp duty €
For all amounts 17

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 (i.e. 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. The registered office is usually the place 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 two weeks.

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 authorized share capital of €1.000, including lawyers' and accountants' fees, and all other out of pocket expenses such as stamp duties etc, are estimated to be EUR 3.000. 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 500
Secretarial fees 300
Nominee fees 300
Registered office address 300
Minimum maintenance fees 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.

Day-to-day management of the company

Oneworld Ltd, through our International Business Services Division (IBS), 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.

Services

Oneworld Ltd also provides a comprehensive package to assist their clients in carrying out their marketing 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 and liaison
  • 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

Cyprus Branch

As in the case of international business companies it is advisable that the managers of a Cyprus branch of the overseas company are provided, upon the registration of the branch, with a full set of documents, properly legalised and translated, where appropriate, into English or any other language. In the case of a branch such documents normally comprise:
  • certificate of registration
  • the charter of the overseas company or other instrument defining its constitution
  • list of directors and name of the person authorised to accept notices
  • letter headings, invoices and other branch stationery
  • any other information and documentation pertaining to the activities of the branch to the date of its establishment

Formation and Administration Costs

Total formation costs of a branch are likely to be in the region of €2.000. Professional fees for the administration of the branch are normally based on time spent and can be described as very competitive.

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