• Opening a bank account with a commercial bank and
• Opening a bank account with an electronic money institution.

The information relates to the opening of bank accounts for Cypriot private companies.

Opening a bank account with a Cyprus commercial bank.

Opening a bank account with a Cypriot commercial bank is relatively time consuming these days. It is possible though,  if certain preconditions are met.

There are four major banks that have serious international banking units (IBUs) at the moment.

Bank of Cyprus

Hellenic Bank

Eurobank Cyprus Ltd.

Astrobank

Key things to know are:

1.Physical Persons.

Full KYC details by the UBO (owner of the company)will be required. These definitely include: Passport, Utility bill, CV, Source of Wealth Declaration and Tax ID and are reviewed annually.

In addition, the Bank may ask for additional personal data like proof of ownership of shares or other property, tax declarations in the country of residence, economic profile, bank statements from existing banks, social security payments, pay slips, declaration from the employer (if any) e.t.c. The aim of the bank  is to construct a detailed economic profile of each physical person and exclude the possibility of the person being involved in any money laundering, gambling, prostitution or other illegal activity or in any other activity or business which is not acceptable by the bank.

2. About the company.

As regards the company itself the standard documents needed are:

Recent corporate certificates and a recent search by the registrar of companies.

Economic profile of the company which includes details like:

• A  concise line of business (LOB). In other words, banks will not accept LOB “consulting” or “service”. The LOB must be specific and detailed.
• Details of companies or persons that the company will do business with (often described as counterparties),
• the reason that the company wants to open the account often referred to as the “Purpose of the business relationship”.
• the annual turnover to pass through the account,
• the number and level of incoming and outgoing transactions.

The need for economic presence in Cyprus. A new parameter that is often necessary in order be accepted as client,  is that the company must have real economic presence in Cyprus. This means that the company must have physical presence or activity in Cyprus which is usually proven by renting offices and employing personnel. Thus the bank will require to see a lease agreement and an employment agreement. To effect the above the company should:

• Rent offices in Cyprus in  self contained premises or shared.
• Employ staff, even on a part time basis.
• Register with the Department of Social Security as an Employer  and pay social security contributions.

In certain situations where the company will have real economic activity elsewhere, an office and personnel in Cyprus may not be a must. For example, suppose that a business has a catering business in Greece and wants to set up a company in Cyprus to perform part of the invoicing from Cyprus. In such a case, due to the fact that there is real economic activity in Greece, the Cypriot company may not have offices in Cyprus. Of course, again there are not clear guidelines and different banks may adopt different policies on this matter. This is very unfortunate because the system, as it is now, lacks uniformity.

The need for financial statements. Each Cypriot company must maintain proper accounts and prepare and submit financial statements with the Tax Office. Commercial banks always ask for the financial statements on the annual review of the bank account. Therefore we strongly advice companies that have bank accounts in Cyprus to appoint accountants and auditors to perform this task.

3.About the process and the time required.

A bank account may take between 1 to 2 months to be opened depending on the complexity of the case, availability of personnel and other factors.

Opening a bank account with an electronic bank.

Cyprus is the base of a number of electronic money institutions (EMIs).

A good example is Revolut which is an EMI that has also acquired licence by the Central Bank of Cyprus.

The due diligence for EMIs is the same as commercial banks. In other words all the documents will need to be submitted and more information may be asked in the process.

The difference is that EMIs process applications much faster than commercial banks and they are more responsive to inquiries.

Conclusion.

The situation in Cyprus is no different that what is applicable in other European Union jurisdictions. The same rules and regulations are applied in all EU countries.

Depending on your business needs and requirements our law firm can assist you to find a suitable option for your banking needs.

To find out more about company registration click the link below:

Register your Cyprus Company now!

The post How to open a bank account appeared first on Cyprus Companies Portal.

The question offers arises how a company can be dissolved or be “killed”.

In most common law jurisdictions there two methods:

One is called “strike-off” and the other “liquidation”.

We shall examine each in turn.

Company Strike-Off.

With strike-off the company simply declares that it does it ceased carrying on any business.

The company must close all bank accounts, should not have any obligations, receivables or liabilities.
It should also have all its financial statements up to date and comply with national tax legislation.

The directors of the company pass a resolution to the effect that the company has no business activities. The Companies Law uses the terminology “defunct” which means “no longer existing or functioning“

An important thing to note is that with strike-off the company does not die but is rather put into a “coma”. This is because in the future any creditor, shareholder or director of the company may apply to the court to have it reinstated.

Liquidation.

There are two types of liquidation of a company.

A voluntary liquidation and an involuntary liquidation.

In this article we refer to voluntary liquidation.

Put simply it is where the shareholders of the company decide to shut it down. To do that there is an important pre-condition. The company must be solvent. This means it should be in a position to pay all its creditors and have no liabilities.

That is why the directors pass a resolution which is called “declaration of solvency”.

The company should also settle all its debts within 12 months from the date that the winding – up procedure started.

It is also a precondition that the company settles all its tax obligations and gets a tax clearance certificate.

If the above are satisfied the liquidator will call a general meeting, present the accounts and the liquidate the company. The liquidation order is issued by the Court.

What is the difference between strike off and liquidation?

As indicated in strike-off the company is not dissolved but it is just striken – off the register. At any time it can be reinstated following a court order.

On the contrary, with the liquidation, once the company is dissolved there is no way to revive it.

Also, in the case of the liquidation the final order is issued by the court , whereas with strike-off there is not court involved.

For more information you can contact our law firm at office@lawyer.com.cy

The post Cyprus company strike off. appeared first on Cyprus Companies Portal.

To some extent it’s something every business owner strives for.   As entrepreneurs, we all think about getting the most out of the efforts and resources we commit to a business.

How far would you go to make it possible and how could you do it?

By setting up a company, a Cyprus company to be exact. The two main reasons for setting up an offshore company are to protect assets and reduce taxes.

Every business needs to pay taxes, and the better your business is doing, the greater chunk of its profits goes towards paying taxes.  In the end, taxes can reduce your profits by a significant amount – up to 60% in some countries!  By setting up a Cyprus company, incorporating it into your business funnel and ensuring that this company is a tax resident of a country with low tax rates, you pay much less in tax and save on the overhead of your business.

Then the next question arises – what country (or “jurisdiction” – another widely used term), offering low tax rates, should you pick?

Actually, finding an ideal jurisdiction for your business is a very individual decision based on the nature of your business and the countries you are/planning on conducting business with.   The best way to approach this question is to receive a professional consultation.  We at Christophi & Associates LLC offer free consultations, so drop us a note and ask for advice.

In general, though, Cyprus is your best choice when you are looking for the perfect gateway to penetrate new markets in Europe, Asia or Africa.  Cyprus is also your best choice if besides the strategic location you are looking for the sophisticated infrastructure, fast telecommunications, modern banking network and favorable tax system.

Cyprus tax benefits include:

• the lowest within EU Corporate Income Tax of 12.5%
• double taxation agreements with over 45 countries
• tax exemption for incoming dividends
• zero withholding tax for payments to non-resident shareholders, creditors and licensors
  tax exemption for incoming dividends
• tax exemption for capital gains on the disposal of either shares or property situated outside Cyprus unless the company holds immovable property situated in Cyprus
• possibility to establish Trusts for inheritance, wealth protection, financial planning, unanimity and other purposes

As you can see, in many respects Cyprus is your best choice when you want to structure your business in the most tax-effective manner.

To learn how YOU can benefit from establishing a Cyprus company, contact us.

The post Why Would You Want a Cyprus Company Anyway? appeared first on Cyprus Companies Portal.

Note that, for tax purposes, a company is deemed a resident company if it is managed and controlled in Cyprus. A person is considered a resident if they have lived in Cyprus for more than 183 days in the same tax year.

Cyprus holding companies have a major advantage in regards to the fact that there aren’t any withholding taxes on dividends received from other Cyprus resident companies, or by a permanent Cyprus establishment belonging to a non-resident company. The only exceptions where these cases don’t apply are as follows:

1. More than half of the paying companies income are from investments.
2. The foreign tax on the subsidiary is much lower than Cyprus’s tax.

In most cases, dividends sent from an EU country, and received by a domestic shareholder, are free from withholding tax. However, if dividends are received from a non-EU country, the rate of the withholding tax will depend on whether or not there is a double taxation treaty between Cyprus and the payee’s country of residence. If there isn’t a double tax treaty, the domestic rate from the payee’s country applies.

Deemed Dividend Distribution

Deemed dividend distribution applies only to companies that have Cyprus tax resident shareholders, who are either physical or legal persons. These provisions don’t apply if a shareholder of a Cyprus company is a Cyprus tax resident, who is also acting as a nominee shareholder and holding shares for foreign persons. Deemed dividend distribution affects international investors only when a Cyprus tax resident company holds another Cyprus tax resident company. Deemed dividend distributions that aren’t exempt are subject to a 15 percent special defence contribution tax.

Questions?  Comments?  Get in touch!

The post Dividend Tax in Cyprus appeared first on Cyprus Companies Portal.

Cyprus Holding Company
A Cyprus Holding Company is a company or firm that owns other companies’ outstanding stock. Typically, a holding company doesn’t produce its own goods or services, but rather owns shares of other companies. Some benefits of a holding company include asset protection, receiving dividends from operating companies, distribution of profits to shareholders and reinvestment of capital into new projects, among other advantages.

Cyprus Financing Company
Using Cyprus’s extensive double tax treaty network, a Cyprus Financing Company provides subsidiaries interest bearing loans. The interest is tax deductible in the operating location and tax free in the recipient jurisdiction. Remaining margins are subject to a 10 percent tax. A Cyprus Financing Company can be a lowly taxed onshore company, or an offshore company, not liable to any taxation over its income.

Cyprus Trading Company
A Cyprus Trading Company can be used for the invoicing and re-invoicing of goods and services, as well as for the receipt of trading commissions, from any country to any destination. It is also used for transit trade from bonded warehouses, bonded factories and the free trade zones.

Cyprus Royalty Company
Those who receive property rights royalties might favor a Cyprus Royalty Company, as income from royalties, or royalty routing, is taxed at the low rate of 10 percent. The Cyprus treaty network and/or EU Interest and Royalties Directive provides that royalty payments are received in Cyprus with either reduced or no withholding tax. Tax withheld from the royalties received is available as a tax credit against the Cyprus corporation tax on the royalty income.

The post Four Most Popular Types Of Cyprus Companies appeared first on Cyprus Companies Portal.

In Cyprus, the M&AA must be written in Greek and signed by a qualified company lawyer. When complete, a copy is deposited with the Registrar of Companies.

Memorandum

The Memorandum is the backbone of a company. It contains the name of the company, the address of the registered office, which must be in Cyprus and, most importantly, the objects of the company. In other words, it states why this company was incorporated and what are its powers.

Additionally, the Memorandum includes special provisions concerning the liability of the company members, as well as details about share capital, including the currency, amount, price per share, names of shareholders and the number of shares held by them.

For Cyprus companies there is no minimum required amount of share capital or currency stipulations, but typical value is considered to be €1.000,00 divided into of 1.000 shares €1,00 each. For these standard companies the share capital is considered to be paid up out of the registration fees, paid to the Registrar of Companies when the company is registered/acquired.

For certain companies, such as those in the insurance industry, IBUs and others, the authorized and paid capital is higher.

Shareholders’ liability is limited up to the amounts they have paid for their shares. Members of the company can increase the authorized and paid share capital at any time.

Articles of Association

The Articles of Association contain the regulations for the internal management of a company. Included in the document are the internal constitution of a company, as well as a private agreement between shareholders and the company.

These agreements might outline procedures, powers of directors, shareholders’ proceedings and rights of shareholders, such as voting. Other provisions could include dividends, accounts and audit, the right of transfer and the procedure to transfer shares, general and annual general meetings and more.

The Articles of Association can be amended at any time by a special resolution of members with a majority vote of more than 75 percent.

The post Memorandum and Articles of Association appeared first on Cyprus Companies Portal.

During company registration in Cyprus, the name, address, occupation and nationality of the person or legal entity who is to be the shareholder or the beneficial owner is required.

Furthermore, a nominee can facilitate the company registration process, doing things such as opening bank accounts and other necessary tasks on an owner’s behalf.

Often, nominees are used to facilitate the clearance and settlement of publicly traded shares. As such, beneficial owners are given a trust deed and an instrument of transfer authorizing the nominees to hold shares in trust.

Company owners may also use nominee directors to take advantage of the Cyprus tax system, which has an extensive double tax treaty network and offers the low corporate tax rate of 12.5 percent.

However, according to Cyprus tax law, a company can only benefit from the local tax system if it is a tax resident in Cyprus, which is why international clients often appoint Cyprus nominee directors. A company is considered a Cyprus tax resident if it is managed and controlled from Cyprus.

To enjoy the full advantages of Cyprus’s tax system, companies have the majority of the Board of Directors – at least one shareholder, one director, a secretary – live and work on the island. International Business Companies are also required to have a registered office.

It is important to note, however, that disclosure of a beneficial owner’s name is required at the ultimate beneficial owners registry.

For more information about the ultimate beneficial owners registry read below

The operation of the Ultimate Beneficial Owners Registry for Cypriot Companies.

The post Four Ways Nominees Can Benefit a Company appeared first on Cyprus Companies Portal.

1.  Choose jurisdiction

This is to say where you want your company be located.  What is a “better” jurisdiction, you may ask?  Actually, this only can be determined based on the nature of your business and your objectives.

Cyprus is an excellent jurisdiction and you can find out the reasons by browsing our website.

If you are not sure what location is best for you, drop us a line and we will figure it out together.

2.  Contact person’s details

Here we need the details of the contact person for this company.

3.  Proposed company name

If you have already selected a name for your company, please note it here and we will check with the relevant authority if this name is available.

Alternatively, you may request from us a list of already preapproved names  or ready-made (“shelf”) companies.

4.  Objects of the company

This is to say what activities your company will be involved in – trading, holding, finance, etc.  You may select from the list or specify them yourself.

5.  Share capital

For Cyprus companies there is no minimum required share capital.  However, the standard companies that we establish have €1000 (one thousand euro) issued and paid up share capital divided into 1000 shares €1,00 (one euro) each.

For any other jurisdiction, please contact us and we will give you the necessary information.

 6.  About the turnover, profit and transactions of the company

It’s simply your projections.

7.  Secretary

Usually, your service provider takes on the role of your company secretary.  In our case, it is secretarial company Businessmatters Secretarial Limited.

8.  Registered  address

More often than not, registered address of your company is the same as the address of your service provider.  In our case it is:

20, Spyrou Kyprianou Avenue, Chapo Central, office 201, 1522, Nicosia, Cyprus.

However, if you want your company to be registered at a different address, please feel free to indicate it.

9.  Shareholders

Each Cyprus company has to have at least one shareholder.  It can be a person selected by you or a nominee provided by us.  For more information on who the nominees are and what they are used for please click here.

Should you choose to use nominee(s), please check off the box at the bottom of the relevant application page.  Otherwise, please provide the details of person(s) you would like us to appoint.

10.  Directors

Practically the same as shareholders.

Each Cyprus company has to have at least one director.   It can be a person selected by you or a nominee provided by us.

Should you choose to use nominee(s), please check off the box at the bottom of the relevant application page.  Otherwise, please provide the details of person(s) you would like us to appoint.

Please keep in mind that it is best that Cyprus company has Cypriot director.  For more reasoning on this subject please click here.

11.  Bank  accounts

If you would like us to open a bank account for your company, please indicate it in this section.  Opening of a bank account can be done at a later stage too.

Register your Cyprus Company now!

12.  Maintenance and management

In this section you may indicate if you would like any additional services.  If you are not sure yet, not to worry – additional services like book-keeping, accounting, preparation of financial statements, etc. can be requested later on.

Thank you for taking your time!  You are done!  Now sign your application form and send it to us either via e-mail (office@lawyer.com.cy) or fax (00357 22 662215).  We will confirm its receipt within 24hours.

In case there is still something unclear, do send us an e-mail and we will look into it together.

The post What do I need to know? appeared first on Cyprus Companies Portal.

Private companies

For private companies, limited liability refers to the liability of the shareholders towards the company and is limited up to the amount of the shareholders’ shares. For example, for a single member company with share capital of €1000, consisting of 1000 shares €1 each, the shareholder will only have to pay €1000 towards the debts of the company should the company cease to exist.

Private limited liability companies are widely used, not only in Cyprus, but all over the world. Foreign investors tend to be interested in private limited liability companies. They can be used as holding, property or general trading companies. A private company’s articles restrict the right of transfer of shares, prohibit inviting shareholders and limit its members to 50. In a public company, these restrictions don’t apply.

Private limited liability companies in Cyprus must have at least one director, and there is no minimum share capital. It is actually possible to register one-man private companies, in which the individual is the director, shareholder and secretary.

Public companies

Public companies need seven or more founding members. The company’s Articles do not restrict the number of shareholders, do not prohibit inviting shareholders, and do not restrict share transfers. A public company can be listed on the Cyprus Stock Exchange and has to conform to Stock Exchange regulations. All limited liability companies, including both public and private, require a minimum of at least one shareholder. This can be either an individual or a corporate body with residence anywhere in the world.

The post How Limited is ‘Limited Liability’ in Cyprus appeared first on Cyprus Companies Portal.

There is a simple answer and a more complicated one.

In this article I will list the basic rights of a shareholder, usually referred to as personal rights, in a private limited company.

Right to be on the register of members.

A shareholder has right to have his name and shareholding entered on the register of members and to prevent unauthorised additions or alterations being made to the entry.

Right to Vote.

An important right of a shareholder is the right to vote. A shareholder has the right to vote at meetings of shareholders and also to appoint proxies to appear and vote on his/behalf.

Right to receive dividends.

Even though the power to distribute dividends rests with the board of directors of the company, the shareholder has the right to receive dividends once a dividend is declared or has become due under the articles of association.

Right to exercise pre-emption rights.

A shareholder has the right to exercise pre-emption rights over other members’ shares which are conferred by the articles of association. So in a private company a shareholder that wishes to sell his shares must offer them first to existing shareholders before he can sell them out to third parties.

Right for return of his capital.

Once a company is wound up, a shareholder has the right to have his capital returned in the proper order of priority in the winding up of the company or on a duly authorised reduction of capital;

Right to receive notices and financial statements.

A shareholder has the right to receive notices about the meetings of the members including the drafts of financial statements to be approved on such meetings;

Right to stop illegal acts.

The shareholder has the right , under certain conditions, to stop the company from doings illegal acts or acts which are ultra vires.

Right to speak.

A shareholder has the right to have a reasonable opportunity to speak at meetings of members and move amendments to resolutions proposed at such meetings;

Right to call a meeting.

The articles of association of a company usually have provisions that allow shareholders to call an extraordinary general meeting subject to the minimum shareholding requirement;

Right to sell or transfer his shares.

A shareholder may have the right to transfer by way of gift his shares to his children or spouse. In addition he has the right to sell his shares subject to pre-emption rights mentioned above.

Right to inspect.

A shareholder has the right to inspect various documents and registers kept by the company;

Right to have a share certificate.

A shareholder can ask and obtain from the company a share certificate issued to him in respect of his shares.

How can we help?

Our law firm can offer advice and assistance as regards any aspect of your residency status in Cyprus. For more information please contact us by clicking here.

The post What are the rights of a shareholder in a private limited company? appeared first on Cyprus Companies Portal.