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  Professional offshore incorporations and offshore banking services since 1996

Company Incorporation
Cyprus

(page 2)

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Types of Activity
The International Business Company (IBC)refers to any legal entity whose beneficial ownership and business activities lie outside Cyprus. Since   the introduction of the first incentives in 1975, Central bank has issued over 40.000 permits for the registration of IBCs in Cyprus.

International Business Companies may be registered in Cyprus under the following legal forms:

  • Company incorporated in Cyprus

  • Branch of an overseas company

  • General or limited partnership.

There are deferent types of International companies which someone may incorporate in Cyprus. We intent to analysis in detail the more important or popular ones in the other pages of our side but if a client wish to establish a company which is stated in the table underneath or something more exclusively then he may request more information by contacting us.

Types of International Companies

Trade, Marketing & Distribution

Ship Management & Maritime Operations

Commercial & Merchant Banking

Business & Professional Consulting

Investment, Holding or Royalty Cos

Partnerships

Trusts

Agencies

News Agencies & other Media

Life, General & Captive Insurance

Third-party Financial Services

Engineering & construction Services

International Collective Investment Companies (Mutual Funds)

Headquarters

Branches

All the above forms acquire the status of an International entity by permission of the Central Bank of Cyprus

 

Business Company
T
he law governing the registration of International Business Limited Companies is CAP113 of the Companies Law. This form of International Entity is considered the most well known and popular International legal entity in Cyprus. In order to register an International Business Company in Cyprus the following are required:

Registration of Company Name. The company name must be registered with the Registrar of Companies. It is necessary and advisable firstly to ascertain whether or not the proposed name of your choice is acceptable by the Registrar of Companies. In cases where subsidiary companies propose to adopt or use the name of the parent companies, a written consent is required by the parent companies. This procedure usually takes about 2-3 days provided that the name is available. However, in order to speed up the registration process of your company you could also select a name from our pre-approved list.

Name, Address, Occupation, Nationality and Percentage of each shareholder. Each shareholder is obliged to obtain from his bank a confidential bank reference regarding his trustworthiness. However, if the shareholders wish to remain anonymous then nominee shareholders may be appointed and in such a case only the Central Bank of Cyprus will know the true identity of the shareholders. For more details regarding the bank reference letter and the subject of nominee shareholders please contact us.

Share Capital. If the company is going to establish offices (fully fledged offices) in Cyprus and employ expatriate staff the minimum issued and paid up share capital is £10.000. However, if the company is not going to maintain offices in Cyprus, then it will require a minimum issued and paid up share capital of only £1.000. The amount has to be deposited to a Company’s bank account as soon as the registration is made. However, the amount of money deposited to the company’s account may be used to pay company expenses.

Names, addresses, occupation and nationality of the Directors. A minimum of one director is required who takes office from the date of incorporation. It is not necessary to have local director(s) but in most of the cases it is advisable, so as to show that management and control is made from Cyprus. A company's sole director cannot also be the secretary of the company.

Name, address, occupation and nationality of the Company’s Secretary. The company Secretary should preferably have legal Knowledge. Our Law Firm usually acts as the Company Secretary to handle all the secretarial work (the statutory book, the minute book, keep the Seal under safe custody, etc) of the company.

Company’s Register office. Under the law the company is required to have a register office to handle all its legal correspondence with the government’s authorities (writs, summonses, notices, orders and other official documents can be served upon the company). Our Law Firm usually acts as the registered office of the company.

After the above information is provided, our Firm undertakes to immediately complete the required documents and submit them with the Memorandum and Articles of Association to the Registrar of Companies. The Memorandum of Association includes the name of the company, the objectives of the company and the number, value of the shares issued. The Article of Association includes the internal rules of the company.

In addition to the above requirements, the approval of the Central Bank is needed. The approval can be obtained provided that:

  • The activities and aims of the company are confined solely to business outside Cyprus

  • All local expenditure of the company is provided by funds from external sources

  • The company will obtain all its financial sources from abroad, and

  • The company submits its annual audited Financial Accounts to the Central Bank of Cyprus.

Usually an International Business Company can be registered in 2 weeks. The process can be expedited to 5-7days at a higher cost required by the Registrar of Companies.

Obtaining Work & Residence Permits.

Expatriate directors, managers, employees, members of their family, of all kind of International entities are required by the Cyprus Aliens Law to obtain the necessary work & residence permits in order to work and reside in Cyprus.The maximum number of an I.B Entity is eligible to employ expatriate in executive positions is 3, unless the Central bank is persuaded that a greater number is justified. An expatriate who wishes to be employed in an executive position on the island must:

  • be at least 24 years old

  • have suitable qualifications

  • receive appropriate remuneration (yearly income over CYP£12.000 approximately €24.000)

These permits are  granted by the Migration Office at the Ministry of Interior and the Central Bank of Cyprus will demand them as an essential prerequisite ingredient for granting the permit of the registration of an International Entity

 

Bank representative offices
Bank representative offices by foreign banks, require an exchange control permission from the Central Bank of Cyprus. Additionally, they have to register their name with the Registrar of Companies. The parent bank must enjoy a good reputation internationally and must have been formed in countries where adequate banking supervision takes place, including the facility of lending of last resort.

Criteria for granting an exchange control permission:

  • The offices must be used exclusively to facilitate contact between the represented bank and the rest of the world

  • The Central Bank of Cyprus may at any time request information regarding the activities of the offices

  • All expenditure must be covered by external sources

  • No banking business may be carried on by the representative office

 

Offshore Banking Unit
C
urrently there are over 30 foreign banks carrying offshore banking activities from Cyprus. The policy of the Government of Cyprus through the Central Bank is encouraging the incorporation of International banking units (IBUs). In order to establish an IBU in Cyprus the following requirements have to comply:

  • The IBU must operate under the provisions of the Banking Business Law, CAP124.

  • The branches or subsidiaries of banks must enjoy an excellent reputation on an international level and must be established in countries with banking supervision and lenders of last resort facilities.

  • A letter of reference from the parent bank (where the IBU is a subsidiary of a foreign bank).

  • The IBU must have fully staffed units.

  • The IBU have to pay annually a fee of €15.000 as costs for the supervisory function from the Central Bank.

The IBU as all internatinal companies are required to operate on an International basis, i.e. deal with non-residents in currency other than Cyprus pound, unless special permission is granted by the Central Bank of Cyprus. The IBU will be required by the Central Bank to supply information regarding their activities from time to time in order to be satisfied that the banking practice is well exercised.

As far as the taxation of an IBU is concerned this will vary according to whether

  • The IBU has been incorporated as a subsidiary of a foreign bank in Cyprus then it is taxed at 4.25%

  • The IBU forms a type of a local branch of a foreign bank and management and control is exercised from Cyprus then it is taxed at 4.25% otherwise is not taxed at all.

The advantages for an IBU setting up an operation in Cyprus are enormous. Apart from the geographical location of Cyprus, IBU is entitled to all the benefits of International entities, to finance to joint ventures in countries with which Cyprus has double tax treaty agreements. This can further reduce the payable tax amount


Company Branch

E
xisting established Companies abroad sometimes may wish to register an International branch in Cyprus in order to enjoy the advantages and incentives provided by the Double Tax Treaties.

In order for a foreign company to receive the approval by the Central Bank of Cyprus, firstly satisfactory bank references are required. After obtaining such approval, the following documents and information is needed to be submitted to the Registrar of Companies.

  • A certified copy of the overseas corporation's charter (the Memorandum and Article of Association) translated in Greek

  • Names, addresses, occupation and nationality of the Directors and Company Secretary.

  • A certified copy of the certificate of incorporation translated in Greek.

  • Name and address of at least one person resident in Cyprus who is authorized to accept services of notices on behalf of the company.

International Business Branches of overseas corporation's as stated in the tax incentives page are taxed at 4.25% on the net profits only if management and control is based in Cyprus, otherwise see Tax incentives

Financial Company
T
he aim of this type of company is to provide International or Offshore financial services. The term “financial services” refers to investments, managed investments, fund investments as well as provision of investment advice. The term “investment” refers to shares, debentures, warrants, certificates representing securities, government and public securities, options, fund units, futures and contracts differences.

The International Financial Services Company enjoy the same advantages and benefits as all the International entities and its profit is subject to tax at 4.25%. In order for an International financial services company to provide services within Cyprus, prior application for permit by the Central Bank is required. The person who applies for such a company, natural or legal has to be professional and expertise to provide such services to the satisfaction of the Central Bank of Cyprus. For determining this, the applicants have to answer a questionnaire and after that have to attend some interviews.

Furthermore, the applicants must provide reasons for wanting to provide such services from within Cyprus. In addition, audited annual financial statements, letters of guarantee, etc are also required by the Central Bank. The International Financial Services companies may take one of the three forms:

  • International branch of an overseas corporation (company) registered in Cyprus,

  • International company incorporated in Cyprus,

  • International partnership registered in Cyprus

 

Insurance Company
T
he law governing the registration of an International Insurance Companies is the Insurance Companies’ Law. The procedure for registering such a company is a 2 step process;

  • The registration of the International Insurance Company with the Registrar of Companies and afterwards

  • Obtaining the required permit by the Superintendent of Insurance.

Similar to all the previous offshore companies, this form of company has to be owned by foreigners and all the activities of it must take place outside Cyprus.

The requirements for granting such a license under the law are the following:

  • The share capital of the company that has to be paid up should not be less than £200.000.

  • The class of insurance business in respect of which application is made will conduct in accordance with insurance principles

  • The company must be insured by another insurance company in respect of policies issued

  • The solvency margin of the company must be such in order to be deemed that it can pay it’s debts.

  • The company’s name should not be identical with that of an existing one

  • The Superintendent shall not provide a license to a company if any director, manager, controller or any principal of the company does not satisfy the above criteria.

  • The proposed insurance company is obliged to deposit to the Central Bank of Cyprus the amount of £300.000.

The application to the Superintendent of Insurance for a license must be accompanied with the following documents:

  • A guarantee supplied by either the parent company or one of its associates or a bank guarantee issued by the applicant of the company’s invested capital.

  • A business plan of the company’s intended operations for the first three years, information relating to the administrative structure of the company’s head office and branches, the approximate number of agents or intermediaries, the applicable average commission. Also they should submit information containing the revenue account.

  • The classes of the insurance business that the company is going to apply.

  • Specimens of contracts that the company will adopt in its business.

Furthermore, apart the International Insurance Companies, there are also the International Captive Insurance Companies. These are companies operated by a non-insurance parent in order to provide insurance cover for companies within a multinational group where such cover normally would not be obtainable and if is obtainable, would be very costly. Further information on International Captive Insurance Companies can be obtained upon request.

 

Trustee company
A
n International Company or Partnership entity can offer International trustee services. The Central Bank of Cyprus is required to license the International entity to offer International trustee services to the public. The following information is required for the application:

  • Information relating to the nature and scale of trust business with methods of operation,

  • Information relating to the applicants, their professional expertise, business affairs and other relevant information.

In the case of a legal person, a letter of authorization or reference by the principal beneficial shareholders of the applicant is required.

The Central Bank of Cyprus in order to grant a trust license decides on each application on its own merits since there are no rigid criteria. Usually a trust license will be granted with possibly accompanied by a number of conditions (e.g. annual submission to the Central Bank of the number of trusts and the total value of the assets managed).

 

Public Company
I
n order for an international public company to be incorporated in Cyprus, it must form part of a collective investment scheme.   International public companies may be registered only if their capital is in foreign currency and over €1 million.

In order for a legal entity to qualify as a public company it must, among other requirements:

  • have a minimum of 7 members

  • issue a prospectus or a statement in lieu of a prospectus

  • have at least 2 directors plus a secretary

  • file the consent of directors, if they are appointed by its articles

An existing public company, it must:

  • hold a statutory meeting, submit a statutory report and obtain a trading certificate from the registrar of Companies, before commencing business

  • appoint auditors who are qualified accountants as provided under the Companies Law

  • file a profit and loss account and a balance sheet together with its annual return to the registrar of companies

Public companies are under stricter control by the Registrar of companies. the number of IBCs which have legal form of a public company is small. However, many are subsidiaries or branches of well known international corporations whose shares are traded on recognized stock exchanges abroad.

Partnerships
P
artnerships are governed by the Cyprus, Partnership and Business Names, Law CAP 116. A partnership may consist of 2 to 20 natural or legal persons carrying on a business in common with a view to profit.

The procedure of establishing, International Partnerships is similar to that of national Partnerships. International partnerships apart from having exactly the same benefits, advantages as the other offshore entities, their net profits are completely exempted by the Cyprus Income Tax.

The law distinguishes two categories of Partnerships:

  • General Partnership, every partner is liable severally and jointly with all the other partners for all debts and obligations of the firm incurred while he is a partner. In case of a death of partner his estate is also severally liable for such debts and obligations in the due course of an administration, in so far as they remain unsatisfied subject to the prior payment of his separate debts.

  • Limited  Partnership, consists of one or more persons who are general partners liable for all debts and obligations of the firm, and one or more persons who are limited partners. The limited partners must, at the time of entering into such a partnership, contribute to its capital or property valued at a stated amount, but are not liable for debts and obligations of the firm beyond amount so contributed. A limited partner may neither take part in the management of the partnership nor bind it. There is no general principle of law that prevents a company from being a partner with another company or with individuals provided that it is authorized by its articles, otherwise this may considered ultra virus (beyond the company's powers). A limited partnership may be very beneficial from the tax point of view.

Prior, consent is required by the Central Bank in order to establish an International partnership. Such a permission is usually granted after satisfactory bank references for the partners are submitted. After permission is granted the following information in Greek has to be submitted to the Registrar of Companies:

  • The Partnership's name

  • The name, addresses, occupation, etc of the partners

  • The objects and duration of the partnership

  • The extent as to which the partners are authorized to bind  themselves into the partnership


Trust

T
he law of Trust was enacted in 1955 and in 1992 was amended with the only aim to encourage investments from abroad.There are a numerous advantages and benefits for the incorporation of International Trusts in Cyprus. The most important ones are the following:

  • Cyprus trust may in certain cases be used to gain some benefits from the application of the double taxation treaty(see Tax Incentives page as well)

  • It may provide asset protection, if this is required

  • International trusts in Cyprus are exempted from income tax and any other form of tax if their income and profits derive from sources outside Cyprus

  • From the exchange control provisions they have complete freedom

  • They are allowed to participate in local business and investments, provided that all the income that arises from such sources is taxed at the normal tax rates

  • The incorporation of Cyprus International companies, International partnerships or International branches can consequently take advantage of the beneficial status available to such entities.( For this see Tax Incentives & Types of International Companies pages as well).

The theory behind offshore trusts, is that, settlers residing in high taxation jurisdictions is possible to minimize their taxation on income or wealth by transferring property to a Cyprus offshore Trust.

The criteria to establish an international trust are:

  • The settler must not be a permanent resident of Cyprus

  • No beneficiary other than a charity is a permanent resident in Cyprus

  • The trust property does not include any real property situated in Cyprus

  • There must be at least one trustee resident in Cyprus at all times

Since the establishment of the trust, it can remain in force for a period of one hundred years

 

 


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Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.


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