Offshore Companies: Cyprus
BACKGROUND | COMPANY FORMATION | SHARES, TAXATION AND OTHER MATTERS
MANAGEMENT STRUCTURE | CORPORATE HIGHLIGHTS

BACKGROUND
Cyprus is at the north-eastern end of the Mediterranean Sea at the crossroads of Europe and Africa. It covers an area of 9,251 sq km and lies 65 km south of Turkey, 96 km west of Syria, 385 km North of Egypt and some 980 km south-east of Athens.

The principal topographical features of Cyprus are the two mountain ranges running along the centre and north-east of the Island, separated by a wide and fertile plain.

Cyprus has a pleasant climate with dry, hot summers and mild winters, enjoying about 300 days of sunshine throughout the year. The light, rainy season is confined to the period between November and March.

POPULATION
The population of Cyprus is about 706,000. Greek Cypriots form the largest ethnic community representing approximately 82%. Turkish Cypriots comprise the second largest community representing 18%.

POLITICAL STRUCTURE
Cyprus became an independent Republic in 1960. The political system is modelled on Western democracies in which individual rights are respected and private enterprise is given every opportunity to develop. Under its Constitution, Cyprus has a presidential system of Government. The President is the Head of State and is elected for a five-year term of office.

The executive arm of the Government is the Council of Ministers to which the President appoints members. The Ministers are responsible for the administration of all matters falling within the domain of their ministries and for the implementation of legislation. Legislative power is in the hands of the House of Representatives, which consists of 56 elected members who hold office for a period of five years. A multi-party system operates in Cyprus and the electoral system is based on proportional representation.

The legal system is based on that of the United Kingdom and all statutes regulating business matters and procedure are based on English Law. Most laws are officially translated in to English.

Criminal jurisdiction rests in six district courts for minor offences and in six Assize courts for more serious crimes. All appeals are heard by the Supreme Court, which pronounces final judgement.

INFRASTRUCTURE AND ECONOMY
Larnaca International Airport replaced Nicosia as the main International airport in 1975 and a second international airport near Paphos became operational in late 1985. There are frequent air connections to many international destinations.

The major port facilities are those of Limassol and Larnaca, situated along the south coast of the Island. They are multi-purpose ports serving containerised bulk and groupage cargo for both Cypriot-origin and transit trades. There are also port facilities at Paphos and some oil and mineral terminals. All ports in Cyprus come under the Cyprus Ports Authority. There are a number of regular passenger services with neighbouring countries, especially in the summer.

The network of roads, most of which are asphalt two-lane carriageways, provides for internal transport within the Island. A modern four-lane motorway links Nicosia to Limassol and Limassol to Paphos and a similar motorway links the Limassol - Nicosia road to Larnaca International Airport.

Cyprus has good telecommunication links with the rest of the world. Over one hundred countries can be reached on a direct dialing system from any telephone on the Island and there are good postal and courier services.

The economy of Cyprus is based on a free enterprise system. The Government’s role is limited to regulation, planning and the provision of public utilities. During the last ten years, the economy of Cyprus has demonstrated spectacular growth and its currency has enjoyed relative stability.

Agriculture, whilst important, is no longer the principal source of income for the economy, although this sector remains the largest employer. Tourism and Services represent the largest proportion of the gross national product and the progress of the service sector has exceeded expectation. Manufacturing also provides an important source of foreign exchange.

LANGUAGE
Greek, English and Turkish are the official languages of Cyprus English is widely spoken and understood, particularly in commercial and government sectors.

CURRENCY
Cypriot pounds.

EXCHANGE CONTROL
Yes, but does not apply to offshore companies.

TYPE OF LAW
Civil code with many English Common Law influences.

PRINCIPAL CORPORATE LEGISLATION
Companies Law, Cap. 113, as amended.

COMPANY FORMATION

TYPE OF COMPANY FOR HOLDINGS, INTERNATIONAL HOLDING, TRADE AND INVESTMENT
Companies incorporated under the Companies Law, Cap 113, as amended, who have obtained Exchange Control permission from the Central Bank of Cyprus to acquire offshore company status.

PROCEDURE TO INCORPORATE
By submission of the Memorandum and Articles of Association to the Registrar of Companies, together with an affidavit before a Court and the appropriate registration fee.

RESTRICTIONS ON TRADING
Cannot undertake to the business of banking, insurance or the rendering of financial services to the public unless special permission is granted, and cannot trade with resident individuals or companies situated in Cyprus other than in relation to the maintenance of premises, banking and professional services.

POWERS OF COMPANY
The powers and objects of a Cyprus company are contained within the Memorandum of Association and have to be specific.

LANGUAGE OF LEGISLATION AND CORPORATE DOCUMENTS
English and Greek.

REGISTERED OFFICE REQUIRED
Yes, must be maintained in Cyprus.

SHELF COMPANIES AVAILABLE
Yes, but allow ten business days for receipt of documentation.

TIME TO INCORPORATE
Approximately two days, subject to name approval, plus additional ten business days for receipt of documentation.

NAME RESTRICTIONS
Any word that the Registrar considers undesirable. Any name that is identical or similar to an existing company. Any name that implies illegal activity or implies royal or government patronage, the following words or their derivatives: asset management, asset manager, assurance, bank, banking, broker, brokerage, capital, credit, currency, custodian, custody, dealer, dealing, deposit, derivative, exchange, fiduciary, finance, financial, fund, future, insurance, lending, loan, lender, option, pension, portfolio, reserves, savings, security, stock, trust or trustees.

LANGUAGE OF NAME
Names may be expressed in any language using the Latin alphabet if the Registrar is in receipt of a Greek or English translation and the name is not considered undesirable.

NAMES REQUIRING CONSENT OR A LICENCE
The following names or their derivatives: bank, trust, building society, insurance, assurance, reinsurance, their foreign language equivalents or any name that the Registrar considers may have a connection with the aforementioned.

SUFFIXES TO DENOTE LIMITED LIABILITY
Limited or Ltd.

DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES
Yes, only to the Central Banks of Cyprus where strict confidentiality is legally protected.

SHARES, TAXATION AND OTHER MATTERSS

AUTHORIZED AND ISSUED SHARE CAPITAL The share capital must be expressed in Cyprus pounds. The minimum authorized, issued and paid up share capital of a Cyprus offshore company is CYP 1,000. For companies wishing to establish a physical presence in Cyprus, the minimum is CYP 10,000.

CLASSES OF SHARES PERMITTED
Registered shares of par value, preference shares, redeemable shares and shares with no voting rights.

BEARER SHARES PERMITTED
Not permitted.

TAXATION
By virtue of special provisions in the Cyprus Income Tax Laws, the net chargeable profits of Cyprus Offshore Companies are taxed at a rate of 4.25%.

DOUBLE TAXATION AGREEMENTS
Cyprus has concluded 26 double tax treaties so far with Canada, China, the Czech Republic and Slovakia, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (including all the CIS countries except for Kazakhstan) Sweden, Syria, United Kingdom, USA and the former Yugoslavia.

LICENCE FEES
Not applicable.

FINANCIAL STATEMENT REQUIREMENTS
Audited financial statements have to be submitted to the Cyprus Taxation Authority and to the Central Bank of Cyprus annually.

MANAGEMENT STRUCTURE

DIRECTORS
The minimum number of directors is one. They may be natural persons or bodies corporate, be of any nationality and need not be resident in Cyprus.

COMPANY SECRETARY
All Cypriot companies must appoint a company secretary, who may be a natural person or body corporate. It is advisable to appoint a resident company secretary.

SHAREHOLDERS
The minimum number of shareholders is two.

CORPORATE HIGHLIGHTS

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