Types of Cyprus entities

Entities in Cyprus may be registered and take the following legal forms:

1.1 Limited Liability Companies
1.2 Partnership
1.3 Branch

1.1 LIMITED LIABILITY COMPANIES

Limited Liability companies make up the vast majority of business entities registered in Cyprus. The liability of the company’s member is limited either by shares or by guarantee. If a company is limited by shares, the liability of its members is limited to the nominal value of the shares subscribed by them and if the shares are fully paid up, then the shareholders are not liable to contribute further. If a company is limited by guarantee, the liability of its members is limited to the amount to which they have agreed to subscribe in the case of liquidation. That amount is specified in the memorandum of association which is part of a company’s constitution.

The Companies Law of Cyprus provides for private and public companies. It is simple to register and is effected by filling with the Registrar of Companies the company’s Memorandum and Articles of Association and other pertinent information.

A Private company is one which by its articles:

Restricts the right to transfer its shares
Limits the number of its members to 50
Prohibits any public subscription to shares or debentures
Prohibits the issue of bearer shares
The word Limited at the end of the name

A Public company has the following characteristics:

Minimum 7 shareholders
At least 2 directors
The company may invite the public to subscribe for any shares / debentures
The company must issue a prospectus or a statement in lieu of a prospectus before the invitation
A trading certificate is needed by the Registrar of Companies
At the end of the name, they must add the words Public Limited

Limited liability companies are obliged by law to maintain proper books of account in respect of their income, expenses, assets and liabilities. Financial statements are drawn up in accordance with International Financial Reporting Standards and must be audited annually by auditors who are licensed, under the Companies Law, to carry out audits in Cyprus.

Amendments made in 2003 to the Companies Law as part of the EU accession process included the following changes:

- Every company must prepare a full set of financial statements in accordance with International Financial Reporting Standards, and every parent company that has one or more subsidiaries, other than a company which is itself a wholly owned subsidiary, should present consolidated financial statements.

Under article 120, every company must complete an annual return within a period of 42 days from the date of its Annual General Meeting and must file immediately with the Registrar of Companies a copy of the annual return, signed by a director and the company secretary. Under article 121, the annual return filed with the Registrar of Companies must be accompanied by the full set of financial statements.

1.2 PARTNERSHIPS

The Law

The law governing partnerships is the Partnership and Business Names Law, Cap. 116. This is identical to its English counterpart.

Registration procedure

The registration of a partnership in Cyprus is effected by submitting a return to the Registrar containing the name, object and duration of the partnership, as well as the names and addresses of the partners and their authority to bind the partnership.

Definition

The legal definition of a partnership is the relationship between two or more persons carrying on business in common with a view to profit. Joint ownership, however, does not amount to partnership. There are two types of partnerships as described below.

General Partnership

With a few exceptions, any form of business may be carried on in Cyprus by a partnership. A partnership may not, however, consist of more than 20 persons. There is no requirement that all or any of the partners be Cypriot nationals and a corporate body may be a partner.

Partners and Liability

In general, the partners are jointly liable to the creditors for the debts and obligations of the partnership firm, and each of the partners is also personally liable for all the debts of the firm not satisfied by the partnership assets. Their rights and obligations are governed by the partnership agreement and by the above law

Limited Partnership

The law also provides for a limited partnership with one or more general partners, who manage the firm’s business and have unlimited liability, and one or more limited partners who invest a fixed amount of capital in the firm and are not liable for its debts and obligations beyond the amount of the capital. Limited partnerships are not common.

1.3 BRANCHES OF FOREIGN ENTITIES

The Law

A branch of a foreign company may be registered in Cyprus under section 347 of the Companies Law, Chapter 113.

Local branch of a foreign company
International business branch of a foreign company

A local branch of a foreign company is a branch carrying out operations in Cyprus and offering services to locals.
An international business branch is a branch carrying on business outside Cyprus and offering services to non-residents.

Branch registration

Overseas companies may establish a branch in Cyprus by applying directly to the Department of the Registrar of Companies and Official Receiver, within one month of such establishment. The overseas company must file with the Registrar of Companies within one month of establishment the following documents:

A certified copy of the Memorandum and Articles of Association of the company or the charter, or any other instrument defining the constitution of the company.
Particulars of Directors and Secretary of the company
The name of at least one person resident in Cyprus authorized to accept on behalf of the company any notices required to be served on the company.
With regard to the certification of the above documents, the documents must be legalized and “apostilled” in the country of origin. Alternatively, legalization is required both by a notary public and the consul of the Republic of Cyprus in that country.

Branch documents

A full set of documents, normally comprise.

Certificate of registration
The charter of the overseas company or other instrument defining its constitution
List of directors and secretary of the company,
The name of at least one person resident in Cyprus authorized to accept on behalf of the company any notices required to be served on the company.
Any other information and documentation pertaining to the activities of the branch and to the date of its establishment.
In the case of international business companies and partnerships, it is advisable that the manager of the branch is provided with a full set of documents, properly legalized and translated into English or any other language.

Effect of registration

By registering a Cyprus branch of an overseas company, no new incorporation is effected since there is an already incorporated company abroad which is simply establishing a place of business in Cyprus.
The name of the branch is the same with the name of the overseas company.

Annual Financial Statements

The branch must file with the Registrar of Companies, a certified copy of the balance sheet and profit and loss account of the parent corporation.