Private Company Limited by Shares-Post Incorporation
So your certificate of incorporation has been issued by the Registrar of Companies in Cyprus and the Cyprus company is now ready to start carrying on it’s business and activities … what do you do and which steps are to be taken ?
Upon receiving the certificate of incorporation the Cyprus Company is ready to start its business and activities. The Cyprus company will hold its first board of directors meeting as soon as possible after incorporated to consider and resolve on matters concerning the commencement of business and statutory matters of the Company.
Appointment of first directors & the corporate secretary
Common practice in Cyprus requires that the first directors of the company and the secretary are appointed by filling with the Registrar of Companies form HE 3. By extension the company’s registered office is specified by the completion and submission of form HE 2 to the Registrar of Companies.
However, relevant text books dictate that the first directors of the Cyprus company are appointed by the subscribers to the memorandum (shareholders) or named as the first directors in the Cyprus company’s articles of association and the secretary of the company is appointed by the first directors by resolution of the board. Albeit, a shareholder’s resolution appointing the first directors is seldom passed and the first directors are never named in the articles of association.
Nevertheless, at the first board meeting those named in form HE 3 accept their appointment to the office of director and secretary in the Cyprus company. Having satisfied themselves that the required quorum under the Cyprus company’s articles of association is present they proceed to consider the meeting’s business.
Examination of Incorporation Documents
The directors will consider the certificates of the Registrar of Companies and the certified copy of the memorandum and articles of association to satisfy themselves that everything is in order.
Creation of statutory books
The directors meeting must instruct the company’s secretary to create the statutory books of the Cyprus company, amongst these:
- the register of directors;
- the register of secretaries;
- the register of shareholders;
- the register of chargers and mortgages;
- the register of director and shareholder decisions;
Once the statutory books are created the board of directors must resolve to adopt these as the Cyprus company’s statutory books and the same is maintained and updated diligently throughout the existence of the company and up to 5 years or 25 years after it is dissolved
Recent amendments to the Companies Law, Chapter 113 allow companies to keep statutory books in electronic form. Nevertheless, the secretary must make the required entries in the statutory books at the first meeting.
Recent amendments to the Companies Law, Chapter 113 have rendered the use of a seal optional, Cyprus companies may or may not have a seal, the decisive factor in applying the companies seal is the regulations contained in the Cyprus company’s articles of association. However at this stage I would just like to say that although the Companies Law, Chapter 113 has been amended; several other laws have not, and in this connection it is highly recommended that the Cyprus company’s articles of association continue to require that the company has a corporate seal.
Under the Companies Law, Chapter 113 every company it applies must maintain up-to-date accounting records of the company’s affairs. Accordingly it is imperative that the directors resolve from a very early stage who will keep the Cyprus company’s accounting books and appoint the Cyprus company’s first auditors which will hold this office until the first annual general meeting of the company.
Commonly the directors at their first meeting resolve to open a bank account in a certain currency or currencies and with a certain bank, however the bank account forms provided by our local banks take this into account and provide these resolutions along with the documents required to open a bank account and accordingly it is questionable whether such a resolution is actually required, with the express qualification that copies of the board resolutions provided by the banks are kept on record by the secretary.
The secretary and the director must have ready for delivery within two months from the day of incorporation a share certificate evidencing the shares a person holds in a Cyprus company. Subject to the regulations contained in a Cyprus companies articles of association the use of the company’s seal in any situation requires the sanction of the board of directors.
In this connection once the directors have sanctioned the issue of the share certificate the secretary will prepare the same and countersign along this director.
Registration with the Cyprus Income Tax Authorities (Inland Revenue Department)
Recent amendments to the Cyprus Income Tax require every company registered under the Cyprus Companies Law, Chapter 113 to register with the office of the income tax authorities where the registered office is situated and procure that it is assigned a tax identification code. Although required by law it is recommended that the directors resolve on the registration with the Cyprus Income Tax authorities as soon as possible after incorporation and in any case no later that 6 months.
Thank you for your time