November 8, 2010, 1:03 pm
Setting up a company branch in Cyprus
There are plenty of entrepreneurs who start up their business in Cyprus, either by setting up companies, or establishing Cypriot branches or subsidiaries of foreign companies. A Cypriot branch is not a separate legal entity, the parent company disposing of the branch's profit and holding full liability for its debts and obligations. The establishment procedure of a Cypriot branch is the same as registering a new company.
In order to set up a branch in Cyprus and be able to develop business activities the company must be registered with the Official Registrar of Companies of Cyprus. However prior to that the documents required for application must be prepared. The articles of association of the parent company must be notarized. Also the branch must register its name, which should not differ from the parent company. A representative must be authorized through power of attorney in order to carry out the incorporation procedures. Opening a bank account is an important procedure and obtaining a deed certifying the capital deposit is mandatory.
The company branch in Cyprus must register with the Official Registrar of Companies of Cyprus in order to be able to engage in commercial activities. This step is mandatory and requires submitting an application. The documents required for registration include the company's notarized articles of association of the parent company, the names of the company's directors and secretary. Also a proof of existence of the parent company should be provided. Usually it consists of a certificate of registration issued by the relevant institution of the respective country. A representative of the Companies Section of the Registrar of Companies is available at the one-stop shop at the Ministry of Commerce. However in many cases the registration procedures are carried out at the Registry itself. In case no additional information is requested, the Registry issues in the name of the applicant a Certificate of Incorporation, Certificate of Directors and Secretary and the Certificate of Registration. The process usually requires no longer than two, three days.
After obtaining the certificate of registration, the company branch must register at the Ministry of Commerce for tax. The application requires a copy of the registration certificate, along with a list of names of directors and secretary. Also the object of activity of the parent company must be fully detailed. Simultaneously the company branch must register for VAT and the whole process is completed in no more than one day. Also if the company branch hires employees, each one must be registered for Insurance Fund, Pension Fund, and Health Fund etc.
The state of Cyprus allows establishment of foreign companies, furthermore encourages foreign investment. However in order to set up a company branch on the territory of Cyprus a resident representative must be authorized through power of attorney to manage and set up the company branch. Also proof of a registered office in Cyprus must be provided.
Usually the establishment of a company branch in Cyprus is a straightforward process. The procedures are simple and completed in a maximum of three days, including the registration process. However some delays may intervene, as notaries have different schedules, as well as banks. Usually a company branch in Cyprus is set up in 14 working days.
Setting up a subsidiary in Cyprus
Another type of business that an entrepreneur can set up in Cyprus is a subsidiary of the parent company. It has the same status as any regular Limited Liability Company and has its own share capital, having the foreign parent company as sole or main shareholder.
To register a subsidiary company in Cyprus, the business entity must be registered with the Companies Section of the Department of Registrar of Companies. In order to do that, the founders must choose a name for the company, reserve it and get it approved by the Registrar of Companies. The articles of association of the parent company must be available at the beginning of the process, containing the company’s name, the shareholders names and addresses, the board of directors, the headquarter address and activity object.
A Cypriot private company limited by shares (LDT) is founded by one up to 50 partners. It must have a registered office in Cyprus and the shareholders subscribe monetary or non-monetary shares that are given a nominal value. The members are liable to the company debts and obligations to the extent of the value of their shares. There is no minimum required capital.
To incorporate a public company limited by shares in Cyprus meets the same requirements of the private kind of company, but the shares are freely transferable and the maximum number of partners it is not limited. In this case, there is a minimum share capital of CYP 15.000.
Both types of companies set up as subsidiaries in Cyprus need to obtain several certificates: Certificate of Shareholders, Certificate of Incorporation, Certificate of Directors and Secretary and a certificate of the Registered Office Address. In order to do that, the subsidiary representative must fill in a form for the Companies Section of the Department of Registrar of Companies in Cyprus to set out the secretariats and the directors, another for the registered office, a declaration of a lawyer for the conformity of the articles of association of the parent company and the memorandum of the parent company.