Changes in Cyprus Company Directors Secretary share capital and others

Changes to Cyprus Companies

by | Jun 3, 2022 | Cyprus Companies

Changes in Cyprus Companies are common place and with a little help very easy to perform. 

One time or another companies require changes to be made and documents filed with the registrar of companies. These adjustments may include amongst others the following. The purpose of this article is to look at the frequently asked question regarding the following possible changes.

How to use this page:

  • Click on the matter of interest
  • When you have reached the relevant matter see frequently asked questions
  • On the right bottom corner of your screen, not the page, an arrow will bring you right back to the top to repeat the process.
Cyprus Company Change of Name

  • Change of Name of a Cyprus Company
  • Elimination of the use of limited
Cyprus Company Change affecting the registered office

  • Change of Registered Office
  • Maintenance of a registered office outside of Cyprus
Cyprus Company Amendment of Articles

  • Amendments to existing articles
  • Drafting and adopting entirely new articles

Cyprus Company Director and Officer Change

Appointment of Director in a Cyprus Company

Who may be appointed a director in a Cyprus Company?

Any person over the age of 18 and not disqualified by the articles of association of the said company and the law is eligible to be a director in a Cyprus company, more on disqualifying factors below.

What is the process to appoint a director in a Cyprus Company?

In order to initiate the appointment of a director, it is required that the director write up and address a letter to the Cyprus company’s board of directors. The letter should clearly specify the person’s intention to be appointed as a director in the Cyprus company along with the date of appointment.

Once the board receives the said letter it should examine whether, in accordance with articles, it has the power to appoint a director and what conditions should be met in order to do so. Assuming the articles allow for the appointment of a person to the position of director it shall then proceed to pass a resolution of the board appointing the director. The articles may require shareholder approval regarding the appointment however this is something to be considered on a case by case basis. Furthermore, the company secretary should record the appointment in the Company’s Corporate Register and then proceed to notify, within 14 days, the registrar of companies by completing and submitting form HE4 within 14 days to the registrar of companies.

What official documents are issued to evidence a director appointment in a Cyprus Company?

Typically business would rely upon the registrar of companies’ certificate of director however this is not the only document, the company’s corporate secretary is the keeper of the internal director registers, which show when the director was appointed. Lastly, the secretary is able to prepare and produce a certificate showing the particulars of the company along with the date of appointment and other particulars.

When are persons disqualified from being directors in a Cyprus Company?

The articles of association usually disqualify persons from being directors when such person (a) becomes bankrupt or makes any arrangement or composition with his creditors generally, or (b) becomes of unsound mind or patient for any purpose of a statute relating to mental health and the Board of Directors resolves that his office is vacated, or (c) resigns his office by notice delivered to the Company at the Office or tendered at a Board Meeting. Section 180 of the Companies Law, on the other hand, disqualifies, inter alias, persons who have been found guilty of offenses in relation to the promotion, formation or management of a company.

What is the cost to appoint a director in a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE4 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increase the cost. This provision is applicable as of 21/04/2020 and imposes a €50 fine (one-off) plus €1 a day with a maximum of €250.

How long does it take to appoint a director in a Cyprus Company?

The appointment of a director in a Cyprus company usually occurs on the day the internal rules and regulations provide. For example, if the director’s appointment requires a board resolution, and assuming the letter of acceptance is received, then the director will be appointed on the day the resolution was passed.

Local Tip!

Local practice requires the registrar of companies’ certificates to be issued as proof of the director’s appointment however no legal basis exists for this. The Company’s secretary should be in a position to record the director’s appointment with the effective date being the date the resolution was passed.

Resignation of Director in a Cyprus Company

What is the process to resign as director from a Cyprus Company?

The director prepares a letter of resignation addressed to the board of directors. Once the letter is prepared and signed the same is delivered to the board of directors. Although not a legal requirement it would be to the resigning director’s interest to use a registered post or some form of other traceable methods of delivery. This would ensure that the board has received the said letter and prepare a paper trail that may be called upon in the future if needed.

Once the board of directors receives the letter of resignation it should move to hold a meeting to discuss whether they accept the resignation or not. If the resignation is accepted then the register of directors should be updated and form HE4 prepared and filed with the registrar of companies within 14 days.

How long does it take to resign as a director in a Cyprus Company?

The date specified on the letter of resignation should be the effective date of resignation and not the date the resolution was passed.

What is the cost when a director resigns in a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE4 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increase the cost. This provision is applicable as of 21/04/2020 and imposes a €50 fine (one-off) plus €1 a day with a maximum of €250.

Local Tip!

Local practice allows the director to apply for removal from the records of the registrar of companies if the company does not remove the director within 14 days.

Removal of Director in a Cyprus Company

What is the process to remove a director from a Cyprus Company?

The removal of the director in a Cypriot company is one of two possible instances that a special notice is required. The law does not take lightly the removal of a director and that is why a special notice is required. More specifically the law requires that at least 28 days notice is served from the shareholder(s) to the company’s secretary informing them of the decision to remove a director. The secretary will then move to call a meeting of the shareholder with at least 21 days’ notice, the decision to pass a majority of the shareholders present and able to vote should be achieved (ordinary resolution). During the process, the removed director is entitled to be heard. Any vacancy created due to the removal of the director can be filled under the casual vacancy provisions of the articles.

How long does it take to remove a director in a Cyprus Company?

Due to the requirement of sending a special notice, the entire process must as a minimum be completed within 28 days. Factoring in preparation time and board availability the process can take anywhere between 30-40 days to complete.

What is the cost to remove a director from a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE4 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increase the cost. This provision is applicable as of 21/04/2020 and imposes a €50 fine (one-off) plus €1 a day with a maximum of €250.

Local Tip!

If your business allows the establishment of a two tear management structure, whereby the first line of management is the board and the second line is the respective managers, then no need exists to appoint the managers (operational) at the level of the board. This will ensure that the removal of a key individual within the management structure is performed swiftly and subject to contract law. To put in place a two tear management structure clear and precise authorities should be specified and delegated to the said manager.

Appointment of Secretary in a Cyprus Company

Who may be appointed as secretary in a Cyprus Company?

Any person over the age of 18 is eligible for appointment. The companies law prohibits a company from having the same person appointed as director and secretary unless if it is a single-member company.

What is the process to appoint a secretary in a Cyprus Company?

The, to be appointed, corporate secretary must prepare a letter addressed to the Company’s board of directors informing them that it accepts the appointment of secretary in the Company and the effective date of such appointment. The Company’s board of directors would then pass a board resolution resolving to appoint the secretary. Once the resolution is passed the register of secretaries should be updated and Form HE4 completed and submitted to the registrar within 14 days to the registrar of companies.

The function of a corporate secretary in a Cyprus company is really the executive branch of the policymaking function. In other words, the board of directors dictates and directs the policy of a company whereas the secretary come s to execute said policy. Based on the forgoing the appointment of the corporate secretary falls within the ambit of responsibilities of the directors. The board of directors is the only authorized function within a company which may appoint a secretary.

What official documents are issued to evidence a secretary appointment in a Cyprus Company?

Typically business would rely upon the registrar of companies’ certificate of director and secretary however this is not the only document, the company’s corporate secretary is the keeper of the internal secretaries register, which shows when the secretary was appointed. Lastly, the secretary is able to prepare and produce a certificate showing the particulars of the company along with the date of appointment and other particulars.

What is the cost to appoint a secretary in a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE4 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increase the cost. This provision is applicable as of 21/04/2020 and imposes a €50 fine (one-off) plus €1 a day with a maximum of €250.

How long does it take to appoint a secretary in a Cyprus Company?

The appointment of a secretary in a Cyprus company occurs on the day the board resolution is passed, and assuming the letter of acceptance is received, then the secretary will be appointed on the day the resolution was passed.

Local Tip!

Local practice requires the registrar of companies certificate to be issued as proof of the secretary appointment however no legal basis exists for this. The Company’s secretary should be in a position to record the secretary appointment with the effective date being the date the resolution was passed.

Resignation of Secretary in a Cyprus Company

What is the process to resign as secretary from a Cyprus Company?

The secretary prepares a letter of resignation addressed to the board of directors. Once the letter is prepared signed and delivered to the board of directors the resignation takes effect. Although not a legal requirement it would be to the resigning secretary’s interest to use a registered post or some form of another traceable method of delivery. This would ensure that the board has received the said letter and prepare a paper trail that may be called upon in the future if needed.

Once the board of directors receives the letter of resignation it should move to hold a meeting to discuss whether they accept the resignation or not. If the resignation is accepted then the register of secretaries should be updated and form HE4 prepared and filed with the registrar of companies within 14 days.

How long does it take to resign as secretary in a Cyprus Company?

The date specified on the letter of resignation should be the effective date of resignation and not the date the resolution was passed.

What official documents are issued to evidence a secretary resignations in a Cyprus Company?

Typically business would rely upon the registrar of companies’ certificate of director and secretary however this is not the only document, the company’s corporate secretary is the keeper of the internal secretaries register, which shows when the secretary was appointed. Lastly, the secretary is able to prepare and produce a certificate showing the particulars of the company along with the date of appointment and other particulars.

What is the cost when a secretary resigns in a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE4 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increase the cost. This provision is applicable as of 21/04/2020 and imposes a €50 fine (one-off) plus €1 a day with a maximum of €250.

Local Tip!

Local practice requires the registrar of companies’ certificate to be issued as proof of the secretary appointment however no legal basis exists for this. The Company’s secretary should be in a position to record the secretary’s appointment with the effective date being the date the resolution was passed.

The resigning secretary will be asked to complete and sign a confirmation letter declaring that the changes are in line with the company’s registers.

Removal of Secretary in a Cyprus Company

What is the process to remove a secretary from a Cyprus Company?

Although the Companies law does not prescribe a detailed process the generally accepted method to remove a corporate secretary is by way of a board of director’s resolution. No shareholder approval is required for this decision and case law provides that the Cyprus Company Secretary is effectively the executive arm of the board of directors.

The board should consider the articles of association whether any agreement is in place and ascertain if a notice period exists before termination. Otherwise, no protection is afforded to the secretary and the termination can be immediate.

Once the removal is effective the newly appointed secretary should update the secretary’s register, prepare form HE4 along with the confirmation letter and the bundle of documents should be submitted to the registrar of companies within 14 days of the change.

How long does it take to remove a secretary from a Cyprus Company?

In the absence of an agreement and specific provision in the Cyprus company’s articles of association, the corporate secretary can be removed following a board resolution effective immediately.

What official documents are issued to evidence a secretary removal in a Cyprus Company?

Typically business would rely upon the registrar of companies’ certificate of director and secretary however this is not the only document, the company’s corporate secretary is the keeper of the internal secretaries register, which shows when the secretary was appointed. Lastly, the secretary is able to prepare and produce a certificate showing the particulars of the company along with the date of appointment and other particulars.

What is the cost when a secretary is removed from a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE4 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increase the cost. This provision is applicable as of 21/04/2020 and imposes a €50 fine (one-off) plus €1 a day with a maximum of €250.

Local Tip!

(1) Local practice requires the registrar of companies certificate to be issued as proof of the secretary appointment however no legal basis exists for this. The Company’s secretary should be in a position to record the secretary appointment with the effective date being the date the resolution was passed.

(2) The removed secretary will be asked to complete and sign a confirmation letter declaring that the changes are in line with the company’s registers, get the letter signed before you kick them out.

Cyprus Company Share and Shareholder Changes

Issue of shares

How to issue shares in a Cyprus Company?

A Cyprus company’s power to issue shares is usually vested with the board of directors. Nevertheless, it is often the case that prior to the issue of any shares such shares are issued to the existing shareholders in proportion to the number of shares they hold. The reason being that Cyprus private company’s limited by shares are by their nature private. Allowing the free and uncontrolled entry of third persons might be detrimental to be the business and the other shareholders’ interest.

The process of issuing shares thought commences with an application of the interested shareholder. Such an application specifies the number of shares to be issued as well as the purchase price that such shares are issued.

The board of directors will then consider the application, assuming no pre-emption rights are present in the articles, and if found satisfactory will proceed to resolve upon this matter.

The secretary of the company will then register the issue of shares in the shareholder register of the Company and proceed to issue a share certificate within 2 months from the date of the share issue. A final step to be taken by the company secretary is to inform the registrar of companies by preparing and submitting form HE12 with all the necessary particulars.

How long does it take to issue shares in a Cyprus Company?
As explained above the allotment and issue of shares in a Cyprus company occurs upon the corporate secretary recording the allotment and issuing the shares. Assuming all the necessary documents are ready for execution the process should be completed on the same day.

This is not true for the certificate of shareholders which would evidence the notification to the registrar of companies. This would be available in a few days after the submission of form HE12 to the registrar of companies.

Can shares of different classes be issued in Cyprus
Absolutely, typically articles would specify that the shares are at the discposal of the board of directors to do as they think fit. Certain articles might require the shareholder to approve any special class of shares since their legitimate interests might be affected by the new class of shares. In short, the answer is it depends.
What documents are available to evidence the issue of shares in Cyprus?

Bearer shares have been abolished in Cyprus for many years now, accordingly, shares can only be issued in registered form. Further to this the company is required by law to have available within 2 months from the date of issue a share certificate evidencing the holding of shares.

In summary:

  1. Extract of the register of shareholders
  2. Share Certificate
  3. Registrar of Companies Shareholder Certificate
What is the cost when issuing shares in a Cyprus Company?

As of January 2020, the registrar of companies would require a €40 cost for the submission of form HE12 and thereafter assuming a certificate is needed then this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

Delay in notifying the registrar of companies will result in penalties which in turn increases the cost.

HE12, or the return as to allotment must be submitted within 30 days of the issuance of any shares. Failure to submit within the legally provided timeframes results in the company requiring to apply to the district court for relief and authority to submit the same to the registrar of companies.

Transfer of shares

How to transfer shares in a Cyprus Company?
Note

Shares in Cyprus companies are treated as the estate of the registered owner, in other words, a shareholder would ordinarily be able to transfer the shares at his own free will. This is not the case since the Companies Law of Cyprus requires private companies limited by shares to restrict the transfer of shares.

The restriction is achieved by way of introducing provisions in the Cyprus Company’s articles of association requiring the board of directors to approve the transfer of shares. Optionally the articles may include pre-emption rights. These pre-emption rights aim to allow remaining shareholders to have a first right to receive any shares proposed to be transferred.

Process
  1. An instrument of transfer is prepared and signed between the person transferring the shares and the person receiving the shares.
  2. The instrument of transfer and the existing share certificate are submitted to the company’s board of directors for review and consideration. The instrument of transfer is then presented at a board of directors meeting whereby the directors would resolve to approve or reject the transfer of shares.
  3. The secretary is instructed to update the shareholder register and issue a share certificate in the name of the new shareholder.
  4. The secretary prepares form HE57 and submits it to the registrar of companies. The legality of registrar forms has been discussed in another publication which you may continue reading by following this link…
  5. The registrar of companies can issue an additional shareholder certificate if needed in the Greek or English language
How long does it take to transfer shares in a Cyprus Company?
As explained above the transfer of shares in a Cyprus company occurs upon the corporate secretary recording the transfer in the register of members. The issue of a share certificate to the shareholder is treated as “prima facia” (on the face of it e) evidence of being registered as the holder of the shares.

Assuming all the necessary documents are ready for execution the process should be completed on the same day.

This is not true for the certificate of shareholders which would evidence the notification to the registrar of companies. This would be available in a few days after the submission of form HE57 to the registrar of companies.

What documents are available to evidence the transfer of shares in Cyprus?

In summary:

  1. Extract of the register of shareholders
  2. Share Certificate
  3. Registrar of Companies Shareholder Certificate
What is the cost when transferring shares in a Cyprus Company?

As of January 2020, the registrar of companies requires a €40 cost for the submission of form HE57 and thereafter assuming a certificate is needed this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

HE57 must be submitted within 14 days of the transfer, delay in notifying the registrar of companies will result in penalties which in turn increases the cost.

Increase of share capital

How to increase the share capital of a Cyprus Company?
Note

Increase of capital relates to the increase of the authorised share capital of a company otherwise known as an increase of the nominal capital and not the issue of shares 

Authorised Share Capital

Most company promoters place a limit on the value of shares, the class of shares that may be issued as well as the number of shares that are available to the Company’s board of directors for issue. This limit acts as a control measure stopping future dilution of a shareholder’s interest.

Process

The Companies law allows a company to increase it’s authorised share capital by the passing an ordinary resolution of the shareholders. An ordinary resolution passes when 50% or more of the shareholders present in a meeting approve the same.

Once the shareholders’ ordinary resolution passes the company’s secretary will then proceed to prepare Form HE14 of the registrar of companies.

Form HE14 must be submitted to the registrar within 21 days. If the corporate secretary requests a certificate of share capital it should be issued within 5-10 business days.

Legal Effect

In contrary to other processes the increase of capital is not completed until the registrar of companies has recorded it so. A possible complication arises when issuing shares without having increased the capital and so it is frequently the case that both forms and notifications are made on the same day.

How long does it take to increase the share capital of a Cyprus Company?
As explained above the increase of capital of a Cyprus company occurs upon the registrar recording the increase.

Assuming all the necessary documents are ready for execution the process should be completed within 5-10 working days.

What documents are available to evidence the increase of capital shares in Cyprus?

In summary:

  1. Register of Capital Operation held and maintained by the corporate secretary
  2. Registrar of Companies Share Capital Certificate
What is the cost to increase the share capital of a Cyprus Company?

As of January 2020, the registrar of companies requires a €40 cost for the submission of form HE14 and thereafter assuming a certificate is needed this would be an additional €40. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

HE14 must be submitted within 21 days of the transfer, delay in notifying the registrar of companies will result in penalties which in turn increases the cost.

Reduction of share capital

How to reduce the share capital of a Cyprus Company?
Note

Reduction of Share capital relates to the reduction of the Cyprus Company’s share capital in any way possible by invoking the provisions of Section 64 of the companies law. This may be a reduction of capital by the elimination of issued shares, a reduction of the authorized share capital or the reduction of the share premium account and any combination of the former.

Articles of Association

A Cyprus company’s articles of association would typically provide for the share capital to be reduced in accordance with the provisions of the Companies Law. This would typically require thought that a special resolution of the shareholders is passed in accordance with the articles.

Section 64 of the Companies Law

The Companies law allows a company to reduce its share capital by passing a special resolution of the shareholders. A special resolution passes when its is called as one and a majority of 75% or more of the shareholders present in a meeting approve the same.

Section 65 of the Companies Law

With the passing of the special resolution reducing the share capital of a Company, the board of directors must apply to the district court, having legal authority, for a court order confirming the reduction.

Notice to Registrar of Companies

Once the Cyprus court has approved the reduction of capital, the court order and a minute of the special resolution, confirmed by the district court is submitted to the registrar of companies.

The Cyprus Registrar of Companies is able to issue a share certificate attesting to the resulting share capital and in any case, the special resolution is attached to and forms a binding part of, the articles of association.

Legal Effect

In contrary to other processes the reduction of capital is not completed until the registrar of companies has recorded the reduction in its records.

How long does it take to reduce the share capital of a Cyprus Company?
Special Resolutions must be passed at an extraordinary meeting or if the articles allow by way of written resolution. The timeframes mentioned below will not take this notice period into account which might be 0 – 21 days.

Assuming day 1 is the day that the special resolution is signed by day 7 the court application and various confirmation (creditors) would have been received. On day 8 the application is submitted and then a court hearing is set for 14-21 days after.

Assuming it has taken 30 days to reach the court hearing date and a positive judgment is issued then the court order will be available to be picked up within 5-10 working days. Once that is received through the submission to the registrar of companies in Cyprus can be in electronic form on the same day.

The registrar will take another 5-10 days to process the request and a certificate will be issued.

What documents are available to evidence the reduction of share capital in Cyprus?

In summary:

  1. Register of Capital Operation held and maintained by the corporate secretary
  2. Registrar of Companies Share Capital Certificate
  3. Copy of the Articles of Association evidencing the recording of the special resolution
What is the cost for the Reduction of Share Capital of a Cyprus Company?

As of January 2020, the registrar of companies requires a €40 cost for the submission of the court order and €40 cost for the submission of the special resolution. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

The court application expenses vary depending on the value of the share capital of the company however should not be more than €200. The mentioned costs do not include any legal fees, courier charges, vat, and sundry expenses.

From the Video Library

Publications on Cyprus Business Law

Cyprus Annual Return HE32 for Companies

Cyprus private companies limited by shares are required to prepare and submit to the registrar of companies an annual return HE32. The Cyprus annual return HE32 must be accompanied by (1) Audited Financial Statements (the “FS”) and (2) Declaration of the Director and Secretary (the “Declaration”) confirming that the FS submitted are those presented to the shareholder at an Annual General Meeting (“AGM”)

Cyprus Company Formation

A company is formed in Cyprus by way of law. The principal legal instrument giving such right is the Companies Law, Chapter 113 of the laws of the Republic of Cyprus, however the memorandum and articles play an equal important role in a Cyprus Company Formation. These two ‘constitutional’ documents are often called upon to deal with business matters of the Company and in other times to define the rights of the various parties.

Private Company Limited by Shares

A Cyprus Private Company Limited by shares is a class of private companies incorporated in accordance with the Cyprus Companies Law, Chapter 113 of the laws of the Republic of Cyprus. It is the most frequently used vehicle in Cyprus its numbers, statistics of the Registrar of Companies, being over 200.000 and on an annual basis around 14.000 new companies are incorporated every year.

Cyprus Registrar Forms legality issues and effect

Within the Companies Law, Chapter 113 of the Laws of the Republic of Cyprus the term “Prescribed Form” (καθορισµένο τύπο) which means the Cyprus Registrar Forms is mentioned several times. Although the Companies law requires information to be submitted in the Prescribed Form this does not create automatic legality of the said action (e.g. change of director) is not implied

Transfer of shares when is it effective?

In the case of Morsa Trading the district court held that a person becomes a registered member of a Cyprus company when that person’s name is registered in the register of members. Accordingly, the transfer of shares in a Cypriot Company requires, amongst other things, the registration in the register of members.

Company Migration to Cyprus

Migrating a company to Cyprus is not without its challenges, nevertheless if the foreign countries laws allow a company may redomicile and migrate to Cyprus. After which time it will be registered under the companies law.

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