Company Formation

The formation of a company, and the creation of the company structure are the crucial first steps in the incorporation process. Company formation handles the administrative procedures needed to register a new legal entity. Only after registration of the legal entity in the corporate registry, the company can officially trade. The structure of the company, its activities, and the rights and obligations of the controlling persons are reflected in the memorandum and articles of association of the company. Standard drafts of the memorandum can be too general and do not always serve the structure and purpose of the corporate activities. The formation procedures require input from the client and once fully compliant with the relevant laws, the company can be registered with the Cyprus Registrar of Companies. Depending on the interaction with the client, formation, incorporation, and registration can be done in just two weeks.

Even though the European single market enables a borderless customs union, several limitations may apply when it comes to the enjoying the benefits of a foreign company in a different member state without adverse tax consequences. The main criteria relate to substance of the operational activities and local presence of the company itself. It may be that only when requirements in terms of substance and presence are met, the company is recognized and accepted as resident in Cyprus. To overcome these challenges, but mainly to offer our clients a straightforward and compliant company structure, Cyprus Company Formations can offer legally required elements of substance and presence which can be upgraded and expanded upon request.

Cyprus companies need to have at least one director and one shareholder. Shares of the company can be held by a nominee without restrictions as to being a natural or a legal person. Yet, shareholders are disclosed in the Cyprus Registrar of Companies, and beneficial ownership is available in the records of the corporate service provider, the financial institution holding the corporate bank account, and in the future, a local register of beneficial ownership for Cyprus companies. The share capital of the company is agreed on in the memorandum and is often set at 1 Euro per share, for 1.000 Shares. It is mandatory for Cyprus companies to appoint a local secretary, i.e. the secretary must reside in Cyprus and can be a natural or legal person.

A company registered in Cyprus needs a local address. This registered address is, alongside the secretary and possible nominee positions, provided for by the incorporating lawyer or corporate service provider. The company must hold at least one annual shareholders meeting. Following the Cyprus Company Law and the international accounting standards, the annual meeting approves the annual returns and balance sheet of the company.

The financial health and status of a Cyprus company is derived from its books. These include the financial statements as prescribed by the IFRS standards and must be approved and audited by a local licensed auditor. An annual tax return and possibly periodic VAT returns must be submitted to the Cyprus tax office and depending on the activities of the company in other EU member states, further obligations might apply overseas.