The relevant legislation is Cyprus Companies Law, Cap. 113, which is virtually a copy of the English 1948 Companies Act. A private company is one which by its articles:
- Restricts the right to transfer its shares
- Limits the number of its members to 50
- Prohibits any public subscription to shares or debentures
The Companies (Amendment) Law of 2000 (Law 2(I)/2000) introduced single-member companies. The Companies (Amendment) (No. 3) Law of 2000 (151(I)/2000) introduced new provisions as to the validity of transactions of companies and as to the information which must be included in the official documents of companies. The Companies (Amendment) Law of 2001, Law 76(I) of 2001 provided for a new system for the certification of companies’ auditors and for the recognition of Bodies of Auditors and the grant of approval to auditors with foreign qualifications and also the recognition of accountants’ companies by the Council of Ministers.
When 100% foreign-owned, a private company used to be referred to as an ‘offshore company’, although the expression International Business Company subsequently came into favor to describe such entities. However, as from 1st January, 2003, an offshore company (IBC) no longer has a separate taxation status, and is taxed according to the same principles as a regular company. IBCs are now allowed to trade inside Cyprus. A pre-existing IBC which made an irrevocable commitment not to trade inside Cyprus until 2006 was able to claim the existing low tax rate for the three years 2003, 2004 and 2005.
In order to form a foreign-owned company, a bank reference and copy of the owner’s passport is required for the registration. The bank reference must be issued by a bank included on the Central Bank of Cyprus’s list of qualifying banks.
The following information will be required for the formation of a standard Cyprus offshore company:
- Name of the company with two alternatives;
- Objects of the company (description of principal activities of a Cypriot off-shore company);
- Capital: a minimum of (the Euro equivalent of) CYP 1,000 for a company with no offices in Cyprus, or (the Euro equivalent of) CYP 10,000 for a company with offices in Cyprus. Payment of the capital can be extended in time.
- Full personal details of shareholders will be necessary.
- Full personal details of directors (minimum two) will be necessary.
Registration of a standard Cyprus offshore company takes three weeks typically.
In Cyprus, a company’s formation documents and its annual return must be filed in Greek; the same applies to accounts when these need to be filed.
Amendments made in 2003 to the Companies Law as part of the EU accession process included the following changes:
- Every company must prepare a full set of financial statements in accordance with International Financial Reporting Standards, and every parent company that has one or more subsidiaries, other than a company which is itself a wholly owned subsidiary, should present consolidated financial statements.
- Under article 120, every company must complete an annual return within a period of 42 days from the date of its Annual General Meeting and must file immediately with the Registrar of Companies a copy of the annual return, signed by a director and the company secretary. Under article 121, the annual return filed with the Registrar of Companies must be accompanied by the full set of financial statements.
by taxlaw.com
