Business Entities
The most common forms of business entity used by foreign investors to conduct business in Cyprus are a limited liability company, a branch of an overseas company, a partnership and a sole proprietorship.
Limited liability Company
The governing statute is the Companies Law (Cap.113) as amended. Under it, a company may be limited by shares or by guarantee and may be private or public.
Registration formalities: After approval of the company’s name, a Memorandum and Articles of Association must be submitted to the Registrar of Companies, with details of the share capital, directors, secretary and registered office. A certificate of incorporation is usually issued within a month, unless expedited.
Share capital: There is no minimum share capital for a private company. There is a capital duty of €100 plus 0.6% of the authorized share capital.
Directors’ liability: A director’s duties are owed to the company. Common law duties include fiduciary duties (to exercise powers for the benefit of the company, retain freedom of action and avoid conflicts of interest) and a duty of skill and care, not to act negligently in managing the company’s affairs. There are also statutory duties, some imposing criminal penalties, and duties owed to creditors.
Reporting Requirements
Company Directors are responsible for keeping the books and records needed to present a true and fair view of the company’s affairs, to explain its transactions and to allow the preparation of financial statements. The directors must present a full set of financial statements according to the International Accounting Standards, to the annual general meeting of the company, accompanied by their report and the auditor’s report. If the company has subsidiaries, consolidated financial statements are required.
All financial statements must be audited by an auditor practicing in Cyprus in accordance with international auditing standards and submitted to the Registrar of Companies with the annual return. Companies are also required to notify the Registrar of Companies of any changes over their assets, changes in their Memorandum and Articles, registered office, directors, secretary, members and share capital, and to submit annual income tax returns to the Inland Revenue department accompanied by the relevant financial statements.
Branch of an overseas company
A branch of an overseas company may be registered under the Companies Law provided that satisfactory bank references are supplied, permission is obtained from the CBC and the following documents (translated into Greek) are filed with the Registrar of Companies within one month:
- Certified copy of the charter, Memorandum and Articles or other instrument defining the constitution of the company
- Particulars of the directors and secretary of the company
- Name and address of at least one person resident in Cyprus authorized to accept service of any notice on behalf of the company
- Approval of the CBC
Partnership
Partnerships in Cyprus are governed by the Partnership and Business Names Law (Cap.116). They may be either general (in which every partner is liable jointly and severally with the other partners for all the debts and obligations of the partnership incurred while a partner) or limited (in which a limited partner contributes a stated amount to the capital and is not liable for the debts and obligations of the partnership beyond the amount stipulated) and may not exceed 20 members. A company may be a general or limited partner.
Although not obliged by law to prepare audited accounts, partnerships are required to keep proper books of accounts and make them available for inspection by the partners.
Joint ventures are treated as a form of partnership.
Sole proprietorship
EU and non EU citizens may carry on business in their own name or under a business name registered under the Partnership and Business Names Law (Cap.116). Non-EU residents must secure prior permission under the Aliens and Immigration Regulations.
Trusts
Trusts can be established under Cypriot Law.
The most common forms of business entity used by foreign investors to conduct business in Cyprus are a limited liability company, a branch of an overseas company, a partnership and a sole proprietorship.
Limited liability Company
The governing statute is the Companies Law (Cap.113) as amended. Under it, a company may be limited by shares or by guarantee and may be private or public.
Registration formalities: After approval of the company’s name, a Memorandum and Articles of Association must be submitted to the Registrar of Companies, with details of the share capital, directors, secretary and registered office. A certificate of incorporation is usually issued within a month, unless expedited.
Share capital: There is no minimum share capital for a private company. There is a capital duty of €100 plus 0.6% of the authorized share capital.
Directors’ liability: A director’s duties are owed to the company. Common law duties include fiduciary duties (to exercise powers for the benefit of the company, retain freedom of action and avoid conflicts of interest) and a duty of skill and care, not to act negligently in managing the company’s affairs. There are also statutory duties, some imposing criminal penalties, and duties owed to creditors.
Reporting Requirements
Company Directors are responsible for keeping the books and records needed to present a true and fair view of the company’s affairs, to explain its transactions and to allow the preparation of financial statements. The directors must present a full set of financial statements according to the International Accounting Standards, to the annual general meeting of the company, accompanied by their report and the auditor’s report. If the company has subsidiaries, consolidated financial statements are required.
All financial statements must be audited by an auditor practicing in Cyprus in accordance with international auditing standards and submitted to the Registrar of Companies with the annual return. Companies are also required to notify the Registrar of Companies of any changes over their assets, changes in their Memorandum and Articles, registered office, directors, secretary, members and share capital, and to submit annual income tax returns to the Inland Revenue department accompanied by the relevant financial statements.
Branch of an overseas company
A branch of an overseas company may be registered under the Companies Law provided that satisfactory bank references are supplied, permission is obtained from the CBC and the following documents (translated into Greek) are filed with the Registrar of Companies within one month:
- Certified copy of the charter, Memorandum and Articles or other instrument defining the constitution of the company
- Particulars of the directors and secretary of the company
- Name and address of at least one person resident in Cyprus authorized to accept service of any notice on behalf of the company
- Approval of the CBC
Partnership
Partnerships in Cyprus are governed by the Partnership and Business Names Law (Cap.116). They may be either general (in which every partner is liable jointly and severally with the other partners for all the debts and obligations of the partnership incurred while a partner) or limited (in which a limited partner contributes a stated amount to the capital and is not liable for the debts and obligations of the partnership beyond the amount stipulated) and may not exceed 20 members. A company may be a general or limited partner.
Although not obliged by law to prepare audited accounts, partnerships are required to keep proper books of accounts and make them available for inspection by the partners.
Joint ventures are treated as a form of partnership.
Sole proprietorship
EU and non EU citizens may carry on business in their own name or under a business name registered under the Partnership and Business Names Law (Cap.116). Non-EU residents must secure prior permission under the Aliens and Immigration Regulations.
Trusts
Trusts can be established under Cypriot Law.