All the above forms acquire the status of an
International entity by permission of the Central Bank of Cyprus
Business Company
The
law governing the registration of International Business Limited Companies is
CAP113 of the Companies Law. This form of International Entity is considered the
most well known and popular International legal entity in Cyprus. In order to
register an International Business Company in Cyprus the following are required:
Registration of Company
Name. The company name must be registered with the Registrar of
Companies. It is necessary and advisable firstly to ascertain whether or not the
proposed name of your choice is acceptable by the Registrar of Companies.
In cases where subsidiary companies propose to adopt or use the name of the
parent companies, a written consent is required by the parent companies.
This procedure usually takes about 2-3 days
provided that the name is available. However, in order to speed up the
registration process of your company you could also select a name from our
pre-approved list.
Name, Address,
Occupation, Nationality and Percentage of each shareholder. Each
shareholder is obliged to obtain from his bank a confidential bank reference
regarding his trustworthiness. However,
if the shareholders
wish to remain anonymous then nominee shareholders may be appointed and in such
a case only the Central Bank of Cyprus will know the true identity of the
shareholders. For more details regarding the bank reference letter and the
subject of nominee shareholders please contact us.
Share Capital.
If the company is going to establish offices (fully fledged offices) in Cyprus
and employ expatriate staff the minimum issued and paid up share capital is £10.000.
However, if the company is not going to maintain offices in Cyprus, then it will
require a minimum issued and paid up share capital of only £1.000. The amount
has to be deposited to a Company’s bank account as soon as the registration is
made. However, the amount of money deposited to the company’s account may be
used to pay company expenses.
Names, addresses,
occupation and nationality of the Directors. A minimum of one
director is required who takes office from the date of incorporation.
It is not necessary to have local director(s) but in most of the cases it is
advisable, so as to show that management and control is made from
Cyprus. A company's sole director cannot also be the secretary of the company.
Name, address,
occupation and nationality of the Company’s Secretary. The
company Secretary should preferably have legal Knowledge. Our
Law Firm usually acts as the Company Secretary to handle all the secretarial
work (the statutory book, the minute book, keep the Seal under safe custody,
etc) of the company.
Company’s Register
office. Under the law the company is required
to have a register office to handle all its legal correspondence with the
government’s authorities (writs, summonses, notices, orders and other official
documents can be served upon the company).
Our Law Firm usually acts as the registered office of the company.
After the above information is provided,
our Firm undertakes to immediately complete the required documents and submit
them with the Memorandum and Articles of Association to the Registrar of
Companies. The Memorandum of Association
includes the name of the company, the objectives of the company and the number,
value of the shares issued. The Article of Association includes the internal
rules of the company.
In addition to the above requirements, the
approval of the Central Bank is needed. The approval can be obtained provided
that:
-
The activities and aims of the company are
confined solely to business outside Cyprus
-
All local expenditure of the company is
provided by funds from external sources
-
The company will obtain all its financial
sources from abroad, and
-
The company submits its annual audited
Financial Accounts to the Central Bank of Cyprus.
Usually an International Business Company can be
registered in 2 weeks. The process can be expedited to 5-7days at a higher cost
required by the Registrar of Companies.
Obtaining Work & Residence
Permits.
Expatriate directors,
managers, employees, members of their family, of all kind of International
entities are required by the Cyprus Aliens Law to obtain the necessary work
& residence permits in order to work and reside in Cyprus.The maximum number
of an I.B Entity is eligible to employ expatriate in executive positions is 3,
unless the Central bank is persuaded that a greater number is justified. An
expatriate who wishes to be employed in an executive position on the island
must:
These permits are granted
by the Migration Office at the Ministry of Interior and the Central Bank of
Cyprus will demand them as an essential prerequisite ingredient for granting the
permit of the registration of an International Entity
Bank
representative offices
Bank
representative offices by foreign banks, require an exchange control permission
from the Central Bank of Cyprus. Additionally, they have to register their name
with the Registrar of Companies. The parent bank must enjoy a good reputation
internationally and must have been formed in countries where adequate banking
supervision takes place, including the facility of lending of last resort.
Criteria for granting an exchange control
permission:
-
The offices must be used exclusively to
facilitate contact between the represented bank and the rest of the world
-
The Central Bank of Cyprus may at any time
request information regarding the activities of the offices
-
All expenditure must be covered by external
sources
-
No banking business may be carried on by the
representative office
Offshore Banking Unit
Currently
there are over 30 foreign banks carrying offshore banking activities from
Cyprus. The policy of the Government of Cyprus through the Central Bank is
encouraging the incorporation of International banking units (IBUs). In order to
establish an IBU in Cyprus the following requirements have to comply:
-
The IBU must operate under the provisions of
the Banking Business Law, CAP124.
-
The branches or subsidiaries of banks must
enjoy an excellent reputation on an international level and must be
established in countries with banking supervision and lenders of last resort
facilities.
-
A letter of reference from the parent bank
(where the IBU is a subsidiary of a foreign bank).
-
The IBU must have fully staffed units.
-
The IBU have to pay annually a fee of
€15.000 as costs for the supervisory function from the Central Bank.
The IBU as all internatinal companies are
required to operate on an International basis, i.e. deal with non-residents in
currency other than Cyprus pound, unless special permission is granted by the
Central Bank of Cyprus. The IBU will be required by the Central Bank to supply
information regarding their activities from time to time in order to be
satisfied that the banking practice is well exercised.
As far as the taxation of an IBU is concerned
this will vary according to whether
-
The IBU has been incorporated as a subsidiary
of a foreign bank in Cyprus then it is taxed at 4.25%
-
The IBU forms a type of a local branch of a
foreign bank and management and control is exercised from Cyprus then it is
taxed at 4.25% otherwise is not taxed at all.
The advantages for an IBU setting up an operation
in Cyprus are enormous. Apart from the geographical location of Cyprus, IBU is
entitled to all the benefits of International entities, to finance to joint
ventures in countries with which Cyprus has double tax treaty agreements. This
can further reduce the payable tax amount
Company Branch
Existing
established Companies abroad sometimes may wish to register an International
branch in Cyprus in order to enjoy the advantages and incentives provided by the
Double Tax Treaties.
In order for a foreign company to
receive the approval by the Central Bank of Cyprus, firstly satisfactory bank
references are required. After obtaining such approval, the following documents
and information is needed to be submitted to the Registrar of Companies.
-
A certified copy of the
overseas corporation's charter (the Memorandum and Article of Association)
translated in Greek
-
Names, addresses, occupation
and nationality of the Directors and Company Secretary.
-
A certified copy of the
certificate of incorporation translated in Greek.
-
Name and address of at least
one person resident in Cyprus who is authorized to accept services of
notices on behalf of the company.
International Business Branches of overseas
corporation's as stated in the tax incentives
page are taxed at 4.25% on the net profits only if management and control is
based in Cyprus, otherwise see Tax incentives
Financial Company
The
aim of this type of company is to provide International or Offshore financial
services. The term “financial services” refers to investments, managed
investments, fund investments as well as provision of investment advice. The
term “investment” refers to shares, debentures, warrants, certificates
representing securities, government and public securities, options, fund units,
futures and contracts differences.
The International Financial Services Company
enjoy the same advantages and benefits as all the International entities and its
profit is subject to tax at 4.25%. In order for an International financial
services company to provide services within Cyprus, prior application for permit
by the Central Bank is required. The person who applies for such a company,
natural or legal has to be professional and expertise to provide such services
to the satisfaction of the Central Bank of Cyprus. For determining this, the
applicants have to answer a questionnaire and after that have to attend some
interviews.
Furthermore, the applicants must provide reasons
for wanting to provide such services from within Cyprus. In addition, audited
annual financial statements, letters of guarantee, etc are also required by the
Central Bank. The International Financial Services companies may take one of the
three forms:
-
International branch of an overseas
corporation (company) registered in Cyprus,
-
International company incorporated in Cyprus,
-
International partnership registered in Cyprus
Insurance Company
The
law governing the registration of an International Insurance Companies is the
Insurance Companies’ Law. The procedure for registering such a company is a 2
step process;
Similar to all the previous offshore companies,
this form of company has to be owned by foreigners and all the activities of it
must take place outside Cyprus.
The requirements for granting such a license
under the law are the following:
-
The share capital of the company that has to
be paid up should not be less than £200.000.
-
The class of insurance business in respect of
which application is made will conduct in accordance with insurance
principles
-
The company must be insured by another
insurance company in respect of policies issued
-
The solvency margin of the company must be
such in order to be deemed that it can pay it’s debts.
-
The company’s name should not be identical
with that of an existing one
-
The Superintendent shall not provide a license
to a company if any director, manager, controller or any principal of the
company does not satisfy the above criteria.
-
The proposed insurance company is obliged to
deposit to the Central Bank of Cyprus the amount of £300.000.
The application to the Superintendent of
Insurance for a license must be accompanied with the following documents:
-
A guarantee supplied by either the parent
company or one of its associates or a bank guarantee issued by the applicant
of the company’s invested capital.
-
A business plan of the company’s intended
operations for the first three years, information relating to the
administrative structure of the company’s head office and branches, the
approximate number of agents or intermediaries, the applicable average
commission. Also they should submit information containing the revenue
account.
-
The classes of the insurance business that the
company is going to apply.
-
Specimens of contracts that the company will
adopt in its business.
Furthermore, apart the International Insurance
Companies, there are also the International Captive Insurance Companies. These
are companies operated by a non-insurance parent in order to provide insurance
cover for companies within a multinational group where such cover normally would
not be obtainable and if is obtainable, would be very costly. Further
information on International Captive Insurance Companies can be obtained upon
request.
Trustee company
An
International Company or Partnership entity can offer International trustee
services. The Central Bank of Cyprus is required to license the International
entity to offer International trustee services to the public. The following
information is required for the application:
-
Information relating to the nature and scale
of trust business with methods of operation,
-
Information relating to the applicants, their
professional expertise, business affairs and other relevant information.
In the case of a legal person, a letter of
authorization or reference by the principal beneficial shareholders of the
applicant is required.
The Central Bank of Cyprus in order to grant a
trust license decides on each application on its own merits since there are no
rigid criteria. Usually a trust license will be granted with possibly
accompanied by a number of conditions (e.g. annual submission to the Central
Bank of the number of trusts and the total value of the assets managed).
Public Company
In
order for an international public company to be incorporated in Cyprus, it must
form part of a collective investment scheme. International public
companies may be registered only if their capital is in foreign currency and
over €1 million.
In order for a legal entity to qualify as a
public company it must, among other requirements:
-
have a minimum of 7 members
-
issue a prospectus or a statement in lieu of a
prospectus
-
have at least 2 directors plus a secretary
-
file the consent of directors, if they are
appointed by its articles
An existing public company, it must:
-
hold a statutory meeting, submit a statutory
report and obtain a trading certificate from the registrar of Companies,
before commencing business
-
appoint auditors who are qualified accountants
as provided under the Companies Law
-
file a profit and loss account and a balance
sheet together with its annual return to the registrar of companies
Public companies are under stricter control by
the Registrar of companies. the number of IBCs which have legal form of a public
company is small. However, many are subsidiaries or branches of well known
international corporations whose shares are traded on recognized stock exchanges
abroad.
Partnerships
Partnerships
are governed by the Cyprus, Partnership and Business Names, Law CAP 116. A
partnership may consist of 2 to 20 natural or legal persons carrying on a
business in common with a view to profit.
The procedure of establishing, International
Partnerships is similar to that of national Partnerships. International
partnerships apart from having exactly the same benefits, advantages as the
other offshore entities, their net profits are completely exempted by the Cyprus
Income Tax.
The law distinguishes two categories of
Partnerships:
-
General Partnership, every partner is liable
severally and jointly with all the other partners for all debts and
obligations of the firm incurred while he is a partner. In case of a death
of partner his estate is also severally liable for such debts and
obligations in the due course of an administration, in so far as they remain
unsatisfied subject to the prior payment of his separate debts.
-
Limited Partnership, consists of one or
more persons who are general partners liable for all debts and obligations
of the firm, and one or more persons who are limited partners. The limited
partners must, at the time of entering into such a partnership, contribute
to its capital or property valued at a stated amount, but are not liable for
debts and obligations of the firm beyond amount so contributed. A limited
partner may neither take part in the management of the partnership nor bind
it. There is no general principle of law that prevents a company from being
a partner with another company or with individuals provided that it is
authorized by its articles, otherwise this may considered ultra virus
(beyond the company's powers). A limited partnership may be very beneficial
from the tax point of view.
Prior, consent is required by the Central Bank in
order to establish an International partnership. Such a permission is
usually granted after satisfactory bank references for the partners are
submitted. After permission is granted the following information in Greek has to
be submitted to the Registrar of Companies:
-
The Partnership's name
-
The name, addresses, occupation, etc of the
partners
-
The objects and duration of the partnership
-
The extent as to which the partners are
authorized to bind themselves into the partnership
Trust
The
law of Trust was enacted in 1955 and in 1992 was amended with the only aim to
encourage investments from abroad.There are a numerous advantages and benefits
for the incorporation of International Trusts in Cyprus. The most important ones
are the following:
-
Cyprus trust may in certain cases be used to
gain some benefits from the application of the double taxation treaty(see
Tax Incentives page as well)
-
It may provide asset protection, if this is
required
-
International trusts in Cyprus are exempted
from income tax and any other form of tax if their income and profits derive
from sources outside Cyprus
-
From the exchange control provisions they have
complete freedom
-
They are allowed to participate in local
business and investments, provided that all the income that arises from such
sources is taxed at the normal tax rates
-
The incorporation of Cyprus International
companies, International partnerships or International branches can
consequently take advantage of the beneficial status available to such
entities.( For this see Tax Incentives & Types of International
Companies pages as well).
The theory behind offshore trusts, is that,
settlers residing in high taxation jurisdictions is possible to minimize their
taxation on income or wealth by transferring property to a Cyprus offshore
Trust.
The criteria to establish an international trust
are:
-
The settler must not be a permanent resident
of Cyprus
-
No beneficiary other than a charity is a
permanent resident in Cyprus
-
The trust property does not include any real
property situated in Cyprus
-
There must be at least one trustee resident in
Cyprus at all times
Since the establishment of the trust, it can
remain in force for a period of one hundred years
