Cyprus has long maintained a redomiciliation procedure, enabling both inward and outward transfers of companies from and to non-EU jurisdictions. While this process remains in force, the newly enacted cross-border conversion regime now applies exclusively to intra-EU company migrations, bringing Cyprus in line with harmonized EU safeguards for shareholders, creditors, and employees.
As of March 15, 2024, the new legislative framework came into force in Cyprus, introducing a formal process for companies to relocate their registered office to or from another EU Member State.
These reforms stem from the enactment of Law 26(I)/2024 (the "Amendment Law"), which incorporates into Cypriot law the provisions of Directive (EU) 2019/2121 (the "Mobility Directive"), amending the original framework set out in Directive (EU) 2017/1132 on cross-border company operations.
Overview of the Cross-Border Conversion Procedure
The new regime introduced a structured, multi-stage process that balances corporate flexibility with increased transparency and protection of the rights of creditors, minority shareholders, and employees.
1. Preparation of the Conversion Plan
The board of directors prepares a detailed plan outlining key elements such as the company's new legal form, the proposed location of its registered office, applicable corporate documents in the destination state, employee arrangements, and a solvency declaration.
2. Directors' Explanatory Report
A comprehensive report must be presented to shareholders and employees (if any) to explain the legal and economic implications of this conversion. This must be made available at least six weeks prior to the shareholders' meeting.
3. Independent Expert Opinion
An expert appointed by the company provides a report assessing the Conversion Plan and its fairness to shareholders. This step can be waived if all the shareholders agree.
4. Registrar Submission and Public Disclosure
The Conversion Plan, solvency declaration, and relevant reports must be filed with the Registrar of Companies and Intellectual Property at least one month before the general meeting, allowing for stakeholder review and comments.
5. Shareholder Approval
The general meeting must approve the Conversion Plan via special resolution and, if necessary, approve amendments to the company's Memorandum and Articles of Association to comply with the laws of the destination Member State.
6. Creditor Protections
Creditors may, within a three-month period following the publication of the plan, raise objections or request adequate safeguards. If no objections are received or if there are no creditors, the company may proceed immediately to the next step.
7. Court Scrutiny and Pre-Conversion Certificate
A court application is filed with the District Court, which verifies compliance with the legal requirements under Cyprus law. If satisfied, the court issues a pre-conversion certificate confirming that all local conditions have been met.
8. Transmission and Registration
The pre-conversion certificate is transmitted electronically to the authorities of the destination Member State via the EU's interconnection with business registers. The company is then removed from the Cyprus register once confirmation is received that the conversion has been finalized abroad.
9. Effective Date
The exact date on which the conversion takes effect is governed by the destination Member State's national law.
Documentation Supporting the Court Application
To proceed with court application, the following items must be submitted:
- A shareholder's special resolution approving conversion and registration abroad.
- The company's most recent financial statements and interim accounts reflect its current position.
- Tax clearance certificates confirming no outstanding liabilities (VAT, income tax, and social insurance).
- The directors signed a solvency statement, confirming the company's financial soundness.
- Confirmation of government incentives or subsidies received in the last five years.
- Management accounts dated no earlier than one month prior to publication.
- List of subsidiaries and their jurisdictions, as well as the current employee count, where applicable.
Legal Coordination in the Destination State
Importantly, cooperation with lawyer/counsel in the destination EU country is a procedural requirement. Local counsel guides the process, assists with compliance under national law, and confirms whether the existing corporate documents can be retained or must be replaced in line with local regulations.
Closing Remarks
The cross-border conversion framework provides Cyprus companies with a streamlined route to relocation within the EU while reinforcing legal certainty and stakeholder protection. However, it has stricter procedural and documentary requirements than the previous redomiciliation-only approach.
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.
