Cyprus Registrar Forms legality issues and effect
Within the Companies Law, Chapter 113 of the Laws of the Republic of Cyprus the term “Registrar of Companies” is mentioned 137 times which means that for this law the Registrar of Companies has a significant role to play, another commonly used term is “Prescribed Form” (καθορισµένο τύπο) which means the Cyprus Registrar Forms. Although the Companies law requires documents to be submitted in the Prescribed Form to the Registrar of Companies automatic legality of the said action (e.g. change of director) is not implied. Nevertheless, it is worrying to read that the Cyprus courts have, in many cases considered the prescribed forms as being binding on the corporate status of Cyprus companies and creating a legal effect against the parties.
The Cyprus Registrar Forms, should not have any legal effect. For example, the shares of a company cannot be transferred from one person to the other solely because HE57 was submitted. For a transfer to take place several other provisions and actions need to take place. Nevertheless to the foregoing, the Registrar certificate is the go-to document for reliance on the particulars of a Company. Classical example is the use of the certificates by banks during the bank account opening process or the auditors requesting certificates as a means to authenticate the particulars of a company. The same is true for innocent third parties who are not required to investigate the corporate register of a company in order to ascertain the legal ownership. An innocent third party will rely on the Registrar certificates.
During the years, the practices adopted have resulted in several ownership disputes, since fraudsters transferred shares, resigned directors and generally took control of Cypriot companies simply by submitting the Registrar Forms to the Cypru- registrar of companies.
Considering all the above let us focus on the legal effect of the certain of the Registrar Forms, the cases and the companies law associated with them. Namely:
- HE4 – Notification relating to the Cypriot company’s director and secretary particulars and any change thereafter
- HE2 – Notification relating to the Cypriot company’s registered office and any change thereafter
- HE57 – Notification relating to the Cypriot company’s shareholder and any change thereafter
Cyprus Registrar Forms for Transfer of Shares
Section 73 of the Companies Law, provides that a transfer of shares or debentures is not legal unless an instrument of transfer is submitted to the Company. Section 113A(1) of the Companies Law requires any transfer of shares in a private company to be notified to the Registrar in accordance with the prescribed form (HE57), within 14 days from the registration in the register of members.
The validity of the Form HE57 was considered in a separate publication and on a stand-alone basis does not constitute a valid transfer of shares.
Cyprus Registrar Forms for Change of Director and Secretary
Section 192(4) of the Companies Law obligates every company to submit to the Registrar a report in the prescribed form (HE4) specifying the particulars captured in the register of directors and secretary as well as any change to the directors and secretary. Section 192(5)(b) further specifies that the time of submitting the report in the prescribed form is 14 days from the date of the change.
Legal Effect of Director Appointment
The legal effect of a change of director is governed by the companies articles of association which typically require a shareholder resolution or a board of directors resolution. Following such decision the register of directors is updated and then the necessary form is submitted to the Registrar. Accordingly the legal effect of an appointment is the date of the respective resolution.
Note: the previous is relevant for director appointment after the incorporation of the Cyprus company and not the initial directors who are designated by the subscribers to the memorandum.
Legal Effect of Secretary appointment
Artile 110 of Table provides that the directors of the Company appoint the secretary of the Company. Accordingly the legal effect of a secretary appointment is the board resolution and not the form.
Cyprus Registrar forms for Change of Registered Office
Section 102.-(2) (α) of the Companies Law requires notice in the prescribed form (HE2) for the place of the registered office and any change is to be submitted for registration to the Registrar within 14 days of the date of change.
The change of the Company’s registered office is typically effected by way of a board resolution. The reason for that is because such matter cannot be a part of the shareholder decisions and in general such authority is not defined within the articles of association.
None of the prescribed forms (HE2, HE4 or HE57) examined provide a right towards any third party to effect a change in the particulars of a Company. On the contrary all prescribed forms are a subsequent action of the legally required corporate actions (usually resolutions of directors or the shareholders). The uniform obligation is to notify the registrar of such change.
When seeking to rely of the particulars of a company an in depth review of the legal documents other than the certificates should be made with such review having a focus on the matters in question (e.g. shareholders, directors, registered office). Complications might arise in the instance that public information is to be relied upon by innocent third parties, however that is a discussion for another day.
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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.