Cyprus has emerged as a popular destination for businesses, due to its favourable tax regime and business-friendly environment. Cyprus offers a wide range of corporate vehicles, each with its own unique characteristics. This article focuses on private companies limited by shares (the Companies), which are the most commonly chosen option.
Private Limited Liability Companies
Formation
The process of establishing a Company in Cyprus is a relatively straightforward process. The necessary steps include:
selecting a company name;
preparation of incorporation documents (including the Memorandum and Articles of Association);
appointment of directors and corporate secretary;
submission of the required forms to the Registrar of Companies.
General Characteristics
Constitutional Documents: Private companies limited by shares are required to have a Memorandum and Articles of Association. The Memorandum outlines the company’s objectives, while the Articles define its internal regulations and governance structure.
Registered Office: Every Cypriot company must have a registered office in Cyprus, which serves as the official address for legal and administrative purposes.
Directors: Every Company must have at least one director and it can either be a natural person or a corporate entity. There is no specific requirements regarding the nationality or residency of the director, however, this may impact the tax residency of the Company.
Company Secretary: Companies are required to appoint a company secretary. The company secretary can be either a natural person or a corporate entity. The secretary ensures compliance with legal and regulatory requirements as well as maintaining statutory records.
Share Capital: The share capital can be issued in any currency and there should be at least one share in issue. There is no requirement regarding the minimum issued share capital. Companies can issue different classes of shares, such as ordinary shares, preference shares or redeemable shares.
Shareholders: There must be at least one registered shareholder and it can either be a natural person or corporate entity.
Financial Records: Companies are obliged to maintain accurate and up-to-date financial records, including accounting books, annual financial statements and other relevant documents. These records must adhere to International Financial Reporting Standards (IFRS).
Limited Liability: the liability of every shareholder is limited to the amount of their subscribed shares.