What is Re-domiciliation?
Stipulated in the Cypriot Companies Law Cap 113, 124(I) of 2006 it practically enables:
- Foreign companies to transfer their registered office from their home jurisdiction to Cyprus
- Cypriot companies to transfer their registered office to foreign jurisdictions.
General benefits of Re-domiciliation:
- The companies Cypriot or foreign continue to maintain their legal identity even after their transfer to a foreign country or Cyprus respectively.
- It is a less complicated procedure, no need to start the formation of the company elsewhere from scratch.
- The foreign companies become tax residents of Cyprus for corporate purposes and may benefit from Cypriot favourable taxation without much of a burden.
Benefits of Re-domiciling your company to Cyprus:
Re-domiciling your company to Cyprus is a process that combines a low financial cost and a simple procedure , offers numerous advantages:
- Obtaining tax residency in Cyprus, companies are able to obtain the benefits of the domestic tax system
- Cyprus has one of the lowest corporate tax rates (12.5%).
- Cyprus is part of an extensive double tax treaties circle.
- The following are exempt from corporate income tax in Cyprus: (i.) Dividend income. (ii.)Interest income (iii.)Profits from a permanent establishment maintained outside Cyprus
- Deducted from taxable income are all expenses incurred wholly for the production of income i.e. Interest incurred for the acquisition of a fixed asset.
- Royalties received by a connected company registered in a European Union Member State are exempt from tax.
- The Cypriot legal system falls under the umbrella of the protection and advantages of common European Union legislation as Directives and Regulations.
- The Cypriot legal system is based on the Anglo-Saxon legal system Steps/Procedure:
Foreign company to Cyprus
1.The Memorandum of the foreign company must enable it to continue under the legal regime of another approved country. 2.Shall apply to the Registrar in order to be registered as a company continuing in Cyprus pursuant to the provisions of the Cypriot Law;
- Sworn affidavit to be accompanied by
receipt of such notification.
- That no criminal or administrative
proceedings have commenced against overseas company for
contravention of the laws of its country of incorporation.
3.Its application should include the following:
Authorising resolution allowing the registration in Cyprus, List of directors/secretaries or administrative body of the foreign company, list of members, affidavit confirming its solvency, name/date/jurisdiction of the overseas company
4.The Registrar shall satisfy himself that the correct procedure was followed in accordance with Cypriot Laws and the consent of such proportion of the company's shareholders/employees/debenture holders/creditors of the company according to Cypriot Law. Temporary Certificate will be then obtained by the Registrar. It confirms the continuation of the Company's legal entity in Cyprus, on the condition that name under which the overseas will continue its activities will be altered in such a way that it avoids confusion or becomes misleading. Within a period of Six (6) months from the date of the issue by the Registrar of the temporary certificate of continuation, the overseas company shall submit evidence to the Registrar from the competent authority of the country or jurisdiction of its incorporation, that it has ceased to be a company registered in the country that it was originally incorporated. The Board of Directors will authorise the continuation of the company under the different legal jurisdiction and the Registrar shall issue a Certificate of Continuation confirming that the company continues in Cyprus. The Registrar old Companies in Cyprus shall keep a register of all names of companies and their details that received his consent to be registered as continuing in another approved country or jurisdiction.
Grounds for Rejection Rejecting an application of a foreign company to be registered in Cyprus if:
- Dissolution or liquidation of the overseas company has started or the proceedings of insolvency or an arrangement or composition or proceedings of execution of court orders or other analogous proceedings have been initiated from or against the overseas company;
- Liquidator or special administrator of the overseas company or receiver of its property has been appointed;
- Decision or order with which the creditors' rights are suspended or limited; or
- Proceedings that have commenced against it for the contravention of the laws of the country or the jurisdiction of its incorporation
Invalidity may follow registration if:
The re-domiciliation took effect in order to create a new legal entity, to cause loss or to affect the continuation of the company as a body corporate, to prevent legal/other proceeding that have commenced against it, to prevent any order/conviction/decision against it.
Cyprus company to a foreign country
- Provided that this is permitted by the Cypriot Laws or the Law of the foreign jurisdiction
- The Registrar of Companies must have granted its consent in advance.
- Will have to submit an application to the competent authority of the foreign country wishing to move its seat.
- State the intention to continue under the legal regime of that country jurisdiction.
- For the consent of the Registrar to be granted in relation to the continuation of the company in another country or jurisdiction the following requirements must exist:
A. - An approved shareholders' special resolution of the company according to the memorandum and articles of the company authorizing the said application - The company shall deliver to the Registrar for submission a declaration of solvency of the company by the directors, or any circumstances negatively affecting its solvency within a period of three years. - In case that the company is a public company, and its shares have been listed on a recognized stock exchange, the company must have submitted to the Registrar the consent of the said stock exchange and of the Cyprus Stock Exchange Commission, - The company has submitted all the fees and has completed all the proceedings relating to the company's business, according to this Law - Relevant fee submitted by the company regarding its application for the registrar's consent - No proceedings for the liquidation of the company have been initiated nor, any insolvency proceedings, arrangements or compositions, or proceedings for execution of court orders or any other analogous proceedings have been initiated by or against the company, in Cyprus or elsewhere. - At the time of filing the application for the Registrar's consent, the company has not contravened any legal duties or obligations. - The company must have submitted the total of the taxes and duties that are due or that will become due until the date of submission of the application.
AND B.In addition to the requirements above, in order for the Registrar to give its consent for the continuation of the company in another approved country or jurisdiction, three months have passed from the publication of a notice in two daily newspapers of wide circulation in the Cyprus.
6.If any creditor of the company objects to the transfer of the company's seat to another jurisdiction/ country, must explain sufficiently as to why, the court may then order the following: its continuation, that it should not continue, prohibit its continuation or approve it on the basis of sufficient guarantees.
End Result: The Certificate of continuation of the Cyprus company to the foreign another country shall be delivered to the Registrar of Companies. This signifies the company's halt as registered company in Cyprus from the date that its re-domiciliation to the other approved country or jurisdiction takes effect. The Registrar then strikes-off the name of the company from the register and issues a certificate of striking off.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
