It is Time to Redomicile Your Company to a New Jurisdiction
By: H. Priority Trust Services Ltd
Transfer of Legal Seat or Re-domiciliation, as it is widely known, is the process through which a company can shift its domicile from one jurisdiction to another, by changing the country under which laws it is registered, without losing its corporate identity.
Cyprus is included in the list of very few countries that permit the re-domiciliation of non-EU companies into and out of the Republic of Cyprus.
As much as a company can change its registered office or registered agent within the same jurisdiction, it can also “move” to a new jurisdiction. Corporate re-domiciliation is the process by which a company moves its domicile (or place of incorporation) from one jurisdiction to another by changing the country under whose laws it is registered with, whilst maintaining the same legal identity. The ease with which re-domiciliation may take place has increased in recent years.
For companies operating in a costly, high taxed, or heavily regulated environment, re-domiciliation is a viable option. In some extreme cases, a company’s activities could be deemed ‘high-risk’ and their assets could be seized, causing irreparable damage to the business and its reputation. With re-domiciliation to a jurisdiction such as Cyprus, the company’s existing legal status, goodwill, and operational history can be preserved.
A Company may choose to redomicile for many reasons, such as:
- benefit from a favorable tax environment
- take advantage of less stringent regulation and scrutiny
- align their place of registration with their shareholder base
- move to an international financial centre
- access specialist capital markets
Where an existing company migrates or re-domicile to Cyprus, the company’s existing legal status, goodwill, and operational history are preserved. This process will allow for companies who currently operate in more costly, difficult regulatory, high tax, and high-risk environments in other countries to migrate to Cyprus without triggering disposal of their assets or a diminution in their goodwill or operating history.
The procedure of re-domiciliation of a foreign company to Cyprus
As from 2006 a new law has been enacted in Cyprus as an amendment to the Companies’ Law Cap. 113, by which:
- foreign companies can be redomiciled in Cyprus
- Cyprus registered companies can be redomiciled abroad
A foreign company registered in a country that allows re-domiciliation and whose Memorandum and Articles of Association provide for the possibility of re-domiciliation, may apply to the Registrar of Companies in Cyprus to be registered in Cyprus as a continuing company pursuant to the provisions of the Companies Law Cap 113.
Companies that offer licensed activities under certain provisions of the law in their jurisdiction and for which similar licenses are required in Cyprus must produce relevant consent for their re-domiciliation by the relevant Authority of their country.
From the date of issuing the temporary certificate of continuation the foreign company:
- is considered as a legal entity duly domiciled incorporated according to the laws of Cyprus
- has the same liabilities and is eligible to exercise all powers that registered companies have according to the laws of Cyprus
- the constituent document of the amendment is considered as the Memorandum of the company and where applicable as its Articles of Association
- the registration of the foreign company is not lawful and is void if it is done for the purpose of establishing a new legal entity to damage or affect the continuance of the foreign company as a legal body, to affect the property of the foreign company, and the way this company will maintain its assets, rights, and obligations, to render ineffective any legal or other procedures filed or to be filed against the foreign company, or prohibit from any conviction, judgment, opinion, debt, order or liability against the foreign company or its officials or shareholders
Within six months from the issuance of the temporary registration certificate, the foreign company must present evidence to the Registrar of Companies that it has been struck off from the public register in the country of initial incorporation to receive the certificate of permanent domiciliation.
We always recommend that you consult a licensed formation agent before taking steps to redomicile a company. The experts at H. Priority Trust Services Ltd can assist you to redomicile a company smoothly and correctly. Please contact us today at +357 25388999