By: ELTC
Key Amendments to the Companies Law in Cyprus: 2024 Updates and Implications
The Companies Law in Cyprus (Cap. 113) has undergone several significant amendments in 2024, aimed at improving corporate transparency, modernising business operations, and ensuring alignment with EU standards.. Below, we break down the key amendments and their implications.
Abolition of the Annual Levy
One of the most notable changes is the abolition of the €350 Annual Levy payable to the Registrar of Companies by all registered entities. Announced on 21 February 2024, this measure was part of a broader government initiative to support the Cyprus economy. On 29 February 2024, the House of Representatives approved the abolition, pledging to refund entities that had already paid the levy for 2024.
Entities with outstanding Annual Levies for the years 2011–2023 must still settle these payments, including penalties for late payment. The penalty structure remains as follows:
- 10% surcharge for payments delayed by more than two months after the 30 June due date.
- 30% surcharge if payment is delayed beyond three months after the initial penalty.
While this change removes an annual financial burden for companies going forward, non-compliance for prior years will still be penalised.
Cap on Late Filing Fees for Annual Returns
A further amendment, effective 5 March 2024, introduced a cap on late filing fees for annual returns with reference dates from 2021 onwards. Under the new framework:
- A €20 late filing fee is charged for minor delays.
- An additional €50 is charged for the first day of delay, followed by €1 for every subsequent day, capped at a total of €150.
- For annual returns with reference dates before 2021, the late filing fee remains €20. Companies that paid late filing fees under the previous regime, which had a cap of €500, are entitled to a refund for amounts paid in excess of €150 after 5 March 2024.
Facilitating Cross-Border Conversions
As of 15 March 2024, Cyprus companies can engage in cross-border conversions, mergers, and divisions within the EU under the provisions of the EU Mobility Directive (Directive (EU) 2019/2121). This allows companies to move their domicile to or from Cyprus without the need for dissolution or liquidation.
To proceed, companies must draft detailed conversion terms, ensuring protections for shareholders, creditors, and employees. These terms are subject to approval by the Registrar of Companies and, where necessary, review by the Cypriot courts. This change provides greater operational flexibility for companies wishing to expand or restructure internationally.
Strengthened Powers of the Registrar for Record Accuracy
Amendments enacted on 26 July 2024 granted the Registrar of Companies additional authority to improve the integrity of corporate records. The Registrar can now correct, update, or delete inaccurate information in the official register, often in collaboration with other government bodies, while respecting data protection regulations.
Companies are required to confirm or update their registered information periodically. Where inaccuracies are identified, businesses are given a 30-day notice period to object or provide evidence before corrections are finalised. However, clerical errors by the Registrar can be amended without prior notification.
Updates to the UBO Registry
Significant changes to the UBO Registry framework aim to refine compliance requirements and impose more proportionate penalties:
The initial fine for non-compliance is reduced to €100, with daily penalties set at €50, capped at a total of €5,000 (down from €20,000).
Penalties now apply solely to the company rather than to individual directors or secretaries. However, directors may still bear joint and several liability for payment.
The deadline for submitting UBO data has been extended to 31 January 2025, while annual confirmations are due by 31 March 2025.
Following a 2022 ruling by the Court of Justice of the European Union (CJEU), public access to UBO information has been restricted. Only competent authorities, obliged entities, and individuals with legitimate interests can now access this information.
Insolvency Law Updates
Changes introduced under Law 80(I)/2023 clarify the process of appointing insolvency practitioners. The law now allows creditors or examiners to apply for the appointment of an insolvency practitioner at the same time as a winding-up order is issued, provided the court deems it just and proper.
Previously, courts were limited to appointing the Official Receiver as liquidator upon issuing a winding-up order. The new provisions streamline the process, enabling the timely appointment of insolvency professionals, which can accelerate the liquidation process and reduce costs. This change is expected to lead to more efficient asset realisation and distribution to creditors, ultimately enhancing creditor recovery.
Seeking professional advice can help businesses navigate these reforms effectively and leverage the opportunities they present.
