Re-domiciliation of foreign companies to Cyprus is permitted and regulated by domestic legislation, and specifically by the Companies Law Cap.113 (the "Law") as amended.
Hence, a foreign company that is incorporated and operating abroad can continue its business operation process and without any interruption, change its seat by re-domiciling to Cyprus.
Located in the Eastern Mediterranean at the crossroads of Europe, Africa, and Asia, Cyprus has the perfect geographical location and has become an attractive international business centre for foreign investors who are increasingly choosing Cyprus as headquarters for businesses with its stable political environment and business-friendly government.
A highly educated and skilled population provides a high standard of professional services on a cost-effective basis thus business maintenance from Cyprus is considered economically effective.
Cyprus is a common law jurisdiction and its legal system is modeled on English common law principles. This means that the courts are bound by the doctrine of precedent, according to which the superior court’s decisions are bind subordinate courts. Thus, in the absence of Cypriot legislation, English common law prevail.
In complying with all EU and OECD AML and BEPS requirements Cyprus still maintaining its attractive corporate tax rate at 12.5% on net profits on par with numerous types of income tax exemptions, such as:
Moreover, there are no withholding taxes on payments of the following types of income from Cyprus to foreign person:
- National Interest Deduction (NID) on new capital
Over 60 double-tax treaties define Cyprus as an efficient country from economic and political perspectives and strengthen Cyprus attractiveness for international companies’ headquarters establishment and Foreign Direct Investments schemes (FDI).
These and other advantages are serious considerations for a business to re-domicile to Cyprus.
Foreign company legislation of the country of incorporation of which is allowing re-domiciliation and Memorandum and Articles of Association of which contain regulations allowing re-domiciliation to another approved country or jurisdiction, may be registered with the Registrar of Companies in Cyprus as a continuing company in the Republic pursuant to the provisions of the Law.
A foreign company in applying for the change of its seat to Cyprus should submit to the Department of Registrar of Companies relevant application along with the following documents:
- Resolution (or an equivalent document) taken by such body of the foreign company and by such majority under the law of the jurisdiction of the foreign company incorporation and following its Memorandum and Articles of Association authorizing the foreign company to register as a continued legal body in the Republic;
- A revised Memorandum and Articles of Association of the company pursuant to the provisions of the Law of the Republic and the provisions of the laws of the country of company incorporation;
- Certificate of good standing or an equivalent document issued by the competent authority of the country of incorporation of the foreign company;
- Affidavit made by the director/consultant of the foreign company authorised by the board of directors or an equivalent body of the foreign company confirming the following:
(i) the name of the foreign company and the name under which it is planning to continue in the Republic, which must comply with the provisions of the Law concerning requirements for the founding documents of the company;
(ii) the country of incorporation of the foreign company;
(iii) the incorporation date of the foreign company;
(iv) the resolution or corresponding document evidencing the decision of the foreign company to continue as a body corporate in the Republic pursuant to the Law;
(v) the Declaration providing that the foreign company has given formal notice to the competent authority of its country of incorporation of its decision to continue as a body corporate in the Republic, accompanied by proof of such notice, subject to the procedure set out in the Law;
(vi) that no administrative or criminal proceedings have been initialised against the foreign company for breach of the laws of the country of its incorporation;
(e) an affidavit by an authorised director/consultant entrusted to represent the foreign company, confirming the solvency of the foreign company. It should be noted that the signatories should be able to declare that they are not aware of any circumstances which could materially adversely affect the solvency situation of the company within a period of 12 months from the date of submission of the relevant application (subject to the Law);
(f) Detailed list of directors and secretary or the persons entrusted with the administration and/or representation of the foreign company;
(g) Detailed list of the present members of the foreign company;
(h) A legal opinion issued by a lawyer or notary in the country of incorporation of the foreign company determining among others the following matters:
(i) the re-domiciliation is permitted by the laws of the country or jurisdiction of the foreign company incorporation; and
(ii) the foreign company members’, employees’, and creditors’ consents have been obtained for the re-domiciliation as required by the laws of the country of the foreign company incorporation.
(i) A re-domiciliating company, activities of which under the legislation of the jurisdiction of incorporation requires license must present to the Department of Registrar of Companies responsible foreign authority’s consent to its registration as a continuing company in the Republic.
(ii) In addition to (i) above a foreign company that wishes to re-domicile to Cyprus and that plan to run regulated activities for which license is required (e.g. Financial Services companies, Banking Institutions, etc.) is obliged to obtain such a license from a competent authority/regulator in Cyprus before the beginning of its operations.
If the re-domiciliating company is a public company, in addition to the above it shall submit the following:
(i) The most recent invitation for registration of the foreign company’s shares / bonds offered to public or a corresponding document that meets the requirements of the Law;
(ii) Where a foreign company is a company listed on a stock exchange, it shall supply the Registrar of Companies with the competent authorities’ consent allowing the registration of the foreign company as a continuing in the Republic;
(iii) A duly certified list of the present members of the foreign company as sufficient to comply with the requirements of the Law.
- After the Department of Registrar of Companies being satisfied that the documents filed for re-domiciliation of the foreign company are in accordance with the provisions of the Law, it certifies that the company is temporarily registered as continuing in the Republic from the date of registration and produces the provisional certificate of continuity respectively.
- In case if the declared by the foreign company name under which it will continue in the Republic, in the opinion of the Department of Registrar of Companies may cause a risk of confusion with the already registered name of a company or trademark, the Registrar instructs the foreign company to change or modify its name in a manner which does not create a risk of confusion and proceeds to its temporarily registration in the Republic as soon as satisfied that all risks of the name confusion are eliminated.
From the date of the provisional certificate of continuity issuance by the Department of Registrar of Companies a legal entity is:
- Considered established under the Law of the Republic and temporarily registered in the Republic for the purposes of the Law;
- It has obligations and is capable of exercising all its rights of a company registered under the Law;
- The revised constituent document of the company shall be considered the company’s Memorandum, and where appropriate, the Articles of Association of the company.
The registration of the foreign company will be considered invalid under the Law under the following circumstances:
- If it is done for the purpose of a new legal entity creation or
- It damages or affects the company’s continuity as a legal entity;
- It affects the Company’s assets and the manner in which the Company will retain all of its assets, rights, debts and liabilities;
- It makes ineffective any legal or other proceedings instituted or to be instituted against the Company;
- It acquits or prevents any conviction, decision, opinion, decree, debt or obligation which is due or will become due against the foreign company or against any of its member, advisor, or officer.
Within a six months period from the date of the temporary certificate of continuity issuance to the foreign company is obliged to submit to the Department of Registrar of Companies evidence (e.g. a Certificate of Discontinuance or an equivalent document) issued by the competent authority of the country of the foreign company initial incorporation that it has ceased to be a company registered in the country of initial incorporation.
It should be noted that in case the foreign company does not submit the above – mentioned evidence within the time frame defined by the Law, the Department of Registrar of Companies may proceed to:
(i) deletion of the foreign company’s name from the register and inform the competent authority of the country of incorporation of the foreign company about the registration rejection in Cyprus, or
(ii) allowing an extended period of three months for the submission to the Registrar of Companies of such evidence in the event where a reasonable cause cost the delay for the evidence provided within the time frames defined by the Law.
In case if that information is not provided within the three months period, no further extension period shall be allowed and the procedure provided for in (i) above shall be followed immediately.
Upon presentation to the Department of Registrar of Companies of the described above document evidencing discontinuity of the foreign company registration in the country of its initial incorporation on par with the delivery to the Department of Registrar of Companies of the temporary certificate of continuity, the Registrar of Companies issues a final certificate of continuity confirming that the company is established as a continuing company under Laws of Cyprus.
It is noted that the content of this article and the information therein are intended to provide a general guideline to the matters discussed above to be used for information purposes only. Under no circumstances the above information may constitute a substitution for professional advice. We suggest that additional advice should be sought considering once individual characteristics and facts of the case in hand which may vary from situation to situation and the legal characteristics of each particular case. We accept no authors’ and/or publishers’ responsibility for any loss occasioned by acting or refraining from acting on the basis of this article.
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.