The Republic of Cyprus is included in the list of jurisdictions that allow the re-domiciliation process including the transfer of legal seat of non-EU companies in and out of Cyprus according to the Companies (Amendment) Law of 2006, Law No. 124(I)/2006, which is aligned with the Companies Law, Cap. 113.
The re-domiciliation of companies (also known as a "transfer of legal seat"), refers to the procedure of a company shifting its seat of domicile, from one jurisdiction to another. Therefore, the company changes the country under whose laws it is registered with. This differs from a company incorporating a subsidiary in a foreign country or setting up a branch overseas.
In accordance with the Cypriot Companies Law, Cap. 113, the re-domiciliation procedure practically permits:
- Foreign companies to transfer their domicile from their jurisdiction to Cyprus;
- Cypriot companies to transfer their jurisdiction to foreign jurisdictions.
Nonetheless, the re-domiciliation process allows the company to preserve its legal identity and continue its business unharmed, under the Cyprus legal system rather than liquidating a company and incorporating it from the beginning. This process of transferring a company's legal seat avoids troublesome procedures and unnecessary administrative costs which may possibly exist in the incorporation process.
Re-domiciliation to Cyprus: Procedures and required documents
The Procedure includes the submission of several applications i.e. ME1 and ME3 to the Registrar of Companies. These forms must be accompanied by specific documents, listed in Article 354(B) – 354(I) of the Companies Law., Cap. 113. It is important to provide the Registrar of Companies with official translation of all applicable documents into the Greek language.
- Once the Registrar of Companies examines and is satisfied that the application and all the necessary documents comply with the provisions of Law, then the Registrar will continue to provisionally register the company as a company continuing its activities in Cyprus and will issue a temporary certificate of continuation (the ''Temporary Certificate of Continuation'');
- Following the issuance of the Temporary Certificate of Continuation, the foreign authorities will have a period of 6-months to submit proof to the Registrar that the company has been de-registered from the foreign jurisdiction (the ''De-Registration Certificate''). Thereafter, the Registrar will proceed to issue a “final" Certificate of Continuation, verifying officially the registration of the company as a continuous company in Cyprus.
Once finalizing the documentation for the re-domiciliation process, a company can remain with its existing name, or even change it, provided that the name is considered acceptable to the Registrar of Companies and includes the word "LIMITED" or "LTD" in the end (no similar existing names or trademarks which could cause confusion).
Re-domiciliation into Cyprus: Is your company eligible to re-domicile?
In order to affect the continuation of a foreign company in Cyprus, certain preliminary matters must be considered:
- The Laws of the country in which the foreign company is registered must permit the re-domiciliation process;
- The documents of incorporation of the foreign jurisdiction company (Articles or Memorandum of Association) must contain a continuation provision that allows the foreign company to exist under the legal regime of another jurisdiction. If no such provision of re-domiciliation exists, then the M&AA must be amended to include such provision;
- If the foreign company carries out a licensed activity in the foreign jurisdiction, it will need to produce evidence of the license and satisfy the local licensing criteria for the relevant activity in Cyprus;
- Importantly, Cyprus Law does not recognise bearer shares, therefore the authorised share capital of the foreign company, after it's transfer-in to Cyprus will have to be registered shares;
- The name of the foreign company under which it will continue in Cyprus needs to end with the word ''Limited''. Therefore, possible names will need to be chosen with which the foreign company will be able to continue to exist once re-domiciled to Cyprus. An application will be made in advance to the Cyprus Registrar of Companies to obtain approval of proposed names. The approval would be valid from 6 months of issue.
Re-domiciliation to Cyprus: Why choose to transfer your company in Cyprus?
A few of the main benefits foreign companies enjoy when re-domiciling to the Republic of Cyprus include:
- A corporate tax rate in Cyprus of 12,5%;
- Tax exempt dividends between Cyprus companies;
- Tax exempt royalties received by a connected company registered in the EU;
- A tax exemption of 80% on qualifying profits produced by IP owned by Cyprus companies;
- Widespread double tax treaties are in force; and
- Cyprus by being an EU Member State, means that legislation falls within the ambit of EU Directives and Regulations which could benefit companies to take advantage of less stringent regulations and scrutiny;
- Lower set-up costs, lower labour costs, lower office rental costs and highly skilled support services such as, legal and accounting services at lower costs compared to other EU countries.
Re-domiciliation out of Cyprus: Procedures and required documents
For a Cyprus company to be re-domiciled out of the Republic of Cyprus, the following procedure needs to be followed:
- An application (ME2 form) must be completed, signed and submitted to the Registrar of Companies, with a several number of documents as listed to the Articles 354(J) – 354(O) of Companies Law, Cap. 133;
- Once the above documents are submitted and the Registrar of
Companies examined and is satisfied with the application provided
- Three months period has elapsed from the date of the publications referred to above
- No creditor has objected the re-domiciliation
- The company has no outstanding duties/fees/annual returns;
- Then, the Registrar will consent and approve to the continuation of the company outside Cyprus and will issue a certificate of approval/certificate of consent to be redomiciled out of the company.
- Thereafter, a certificate of continuation needs to be submitted towards the foreign jurisdiction that the Cypriot company proposes to re-domicile (''Certificate of Continuation'').
- The Certificate of Continuation needs to be submitted immediately to the Registrar, in order to remove the company from the Cyprus register and issue a certificate of deletion (''Certificate of Discontinuance''). Thereupon, the Cypriot company ceases to exist in Cyprus and its continuation is considered to be in force in the foreign jurisdiction.
- Finally, the Discontinuation Certificate will be sent to the Foreign Authority where the final stages for the re-domiciliation are put into force.
The documentation that is required for preparation is the following:
- A shareholder's resolution (special resolution) authorising the interim financial statements of the company and the re-domiciliation process. Then, the special resolution together with the accounts must be passed over to the Registrar of Companies as part of the application under the condition that a tax clearance certificate is also provided;
- Board Resolution approving the re-domiciliation procedure conditional upon the special resolution passed by the shareholders, as well as the execution by the directors of various documents which will be required to be submitted to the Registrar along with the application for the transfer;
- A Declaration of solvency (ME3 Form), which must be signed by at least two directors of the Company, duly authorised by the board of directors, unless if the board consists of one director, in which case the sole director confirms that the directors are not aware of any matters that may negatively affect the solvency of the company within a 3-year period.
A notice stating the facts of the special resolution of the Cypriot company approving the re-domiciliation must be published in two daily newspapers of wide circulation in Cyprus, as soon as the special resolution is signed, and a copy of such publications must be submitted to the Registrar of Companies within 14 days from the date of the publications.
The Registrar shall grant its consent to the continuation of the company into a foreign jurisdiction, provided that a three-months' period has elapsed from the date of the publications. Yet, during this three-months' period any creditor of the Cypriot company may file an objection against the re-domiciliation of the Cypriot company out of Cyprus.
Re-domiciliation out of Cyprus: Is your company eligible to re-domicile?
In order to affect the continuation of a Cyprus company abroad, certain preliminary matters must be considered:
- Even it is not referred to the Companies Law the memorandum and articles or memorandum of association of the Cypriot company (the M&AA) must contain a provision that will allow the Cypriot company to transfer and exist its domicile under the legal regime of another jurisdiction. If no such provision of re-domiciliation exists, then the M&AA must be amended to include such provision;
- The laws of the foreign jurisdiction must also allow the Cypriot company to be re-domiciled and continue to exist as a company registered in that jurisdiction. Also, the availability of the name that the Cypriot company proposes to use upon continuation into the foreign jurisdiction must be checked with the relevant authorities, in order to make sure that the proposed name is accessible to use;
- A permit is required from any competent authority, if the Cypriot company carries out any activity within or from Cyprus and must provide proof of consent by the competent authority for the transfer out of the company;
- The Cypriot company must be up to date with the submission of the annual returns to the Registrar of Companies and must ensure that all annual fees and other sums payable under the Law, must been paid. Further, no court cases or liquidation procedures should be pending against the Cypriot company and the company will need to obtain and the relevant applications should be filed to the Registrar for the purpose of obtaining Tax, VAT and social insurance clearance certificates.
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.