Before relying on anything in this Blog please read the disclaimer
Company migration to Cyprus is possible. Under the Companies Law (the “Law”), nonetheless migrating a company to Cyprus is not without its challenges.
Cooperation for the Migration of Companies to Cyprus
The migration of a company to Cyprus requires strong cooperation between the local advisers and the foreign advisers. The advisors are tasks with ensuring that the process and procedures required at a national level, in Cyprus and the foreign jurisdiction are followed. Ultimately though, the registrar of companies in each jurisdiction will approve the Company migration to Cyprus or not.
Crossborder differences in the migration of companies
With the migration process being at the discretion of each jurisdiction, often I have seen that this leads to competing requirements:
- Foreign law requiring that the company is de-registered in foreign jurisdictions before it is registered in Cyprus;
- Foreign law requiring that the company is migrated to Cyprus prior to de-registering from the foreign jurisdiction
For a smooth and successful migration to Cyprus you should:
- Examine every step of a common step plan;
- Understand how each step of the common step plan will affect the company migrating to Cyprus and the legal status at the time of the step.
Not having an excellent understanding of the flow of steps and sitting down with the foreign and local advisors coming up with a detailed step plan your risk of the cross-boarder differences negatively affecting the smooth and successful migration is imminent.
Post – Migration
A very important aspect of the company migration to Cyprus is the administrative part, the preparation of financial statements, the first-year adoption of IFRS and more importantly trying to explain to the client that Cyprus works in a different way to what other jurisdictions do.
A few pointers to have in mind:
- IFRS adoption must be undertaken in the first year
- The Company migrating to Cyprus must have management and control in Cyprus
- The board of directors must meet in Cyprus at least once a year for important business
- Taxes are paid on profits, and you can even avoid paying a penalty if you file your temporary returns
- An independent audit firm will review the financial statements and issue an opinion
- If a premium existed prior to the company migrating to Cyprus it is not automatically so under the Law
- Once the company is registered with the Registrar of Companies it has 60 days to obtain a tax identification code.
- You will need to pay the annual levy
The above and other pointers are spread out through several laws, regulations, and circulars choosing the right adviser is key to a hassle-free and successful migration.
Author - Photographer
For many years he has worked and devoted his skills and efforts towards building a successful career as a leading executive. From humble beginnings, his aim has always been to yield results; with a keen focus to attention to detail and client satisfaction. His experience has always been varied and not specific, at times he preferred it. With that in mind, he has dealt with CySEC on licensing and ongoing regulation, international private equity and credit fund managers, NASDAQ and NYSE listed companies occasional millionaires as well as self-made millionaires. His passion though is difficult transaction work organizing and deploying people for a common goal. Harris enjoys reading and studying the Cyprus law and sharing that information on this website.
Publications on Cyprus Business Law
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”)
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.
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.
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
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.
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.