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REDOMICILIATION OF COMPANIES

Companies re-domicile for a number of reasons including inter alia, to take advantage of more favorable tax laws or more flexible regulatory provisions; to align their place of registration with the place where their shareholders are resident or do business etc.

The Cyprus Companies Law, Cap. 113 has been amended on 28^th of July 2006 pursuant to a decision of the House of Representatives of the Republic of Cyprus (Law 124 (I)/2006) to allow the transfer of the registered seat of companies to and from the Republic of Cyprus. This enactment, in conjunction with the existing attractive taxation system of Cyprus certainly adds to the island’s competitiveness as an international financial center.

Procedure of re-domiciliation to the Republic of Cyprus

A company not having its registered seat in the Republic of Cyprus may apply to the Cyprus Registrar of Companies to be registered in Cyprus as a ‘continuing company’ pursuant to the provisions of the Companies Law Cap. 113, provided its Memorandum and Articles of Association permit so and the country in which such company is registered allows re-domiciliation. 

An application must be submitted to the Cyprus Registrar of Companies, together with the following documents:

a)   a resolution or any other similar document of the foreign company in accordance with the laws its country, authorizing the foreign company to obtain registration in Cyprus as a continuing legal body;

b)  a copy of the amended Memorandum and Articles of Association of the foreign company in accordance with the provisions of the Cyprus Companies Law Cap. 113;

c)   a certificate of good standing of the foreign company issued by the competent authority;

d)  an affidavit from the director of the foreign company confirming the following:

-     The current name of the foreign company and the name under which it shall continue to use in Cyprus. The desired name shall need to bear the word ‘Limited’ at the end and an application must be filed with the Cyprus Registrar of Companies to receive approval of such name.

-     The jurisdiction under which the foreign company is currently registered.

-     The date of registration of the foreign company.

-     The resolution or any other similar document of the foreign company authorizing the registration of the foreign company in Cyprus as a continuing legal body.

-     The notification of the foreign company addressed to the relevant authorities of its jurisdiction, expressing its wish to continue as being registered in Cyprus (a copy of which must be attached to the affidavit).

-     That no civil or criminal proceedings are pending against the foreign company, in its country of registration.

-     An affidavit by a duly authorized director of the foreign company or the management body (as may be applicable) , confirming the solvency and financial good standing of the foreign company and that he is not aware of any matters which may negatively affect the solvency of the company for the next 12 months as of the date of the application.

-     A list of the directors and secretary and/or managers of the foreign company.

-     A list of the members/shareholders of the foreign company.

-     Any other document which the Cyprus Registrar of Companies may deem appropriate to confirm that such application is allowed in accordance with the laws of the country whereby the foreign company is registered and the parties needed to consent to such action under the laws of the country of first incorporation have so consented.

-     If the foreign company is carrying out any activities for which a permit is required under the provisions of the law in their jurisdiction or in Cyprus, then the foreign company must provide the Cyprus Registrar of Companies with a relevant consent for their re-domiciliation by the competent authority of their country and such permit shall also need to be obtained by the Cyprus Authorities. 

Note on liability: The director of the foreign company or the management body (as may be applicable) who will swear the affidavit without being aware of facts which they should have been aware of in order to make such affidavit or making a false declaration as to the solvency of the foreign company, are liable to a crime and in case of conviction are liable to imprisonment up to 1 year and a fine up to Euro 34.172,00.

Registration in the Republic of Cyprus

Upon the examination of the above mentioned documents by the Cyprus Registrar of Companies and its satisfaction that they are in accordance with all legal requirements, a Temporary Certificate of Continuation is issued confirming that the foreign company is temporarily registered as a continued entity in the Republic of Cyprus as from that date.

From the date of issuance of the Temporary Certificate of Continuation the foreign company:

a)   is considered as a legal entity incorporated in accordance with the laws of Cyprus and that it is temporarily registered in the Republic of Cyprus for the purpose of the Companies Law Cap. 113;

b)   has the same liabilities and is eligible to exercise all powers that registered companies have in accordance with the Laws of Cyprus;

c)   the constituent document of amendment is considered as the Memorandum of the company and where applicable as its Articles of Association;

d)   the registration of the foreign company is not lawful and is void if it is done:

- for the purpose of establishing a new legal entity;

- to damage or affect the continuance of the foreign company as a legal body;

- to affect the property of the foreign company and the way this company will maintain its assets, rights and obligations;

- to render ineffective any legal or other procedures files or to be filed against the foreign company;

- to acquit or prohibit from any conviction, judgment, opinion, debt, order or liability against the foreign company or its officials or shareholders.

Within six months from the issuance of the Temporary Certificate of Continuation, the foreign company must present sufficient evidence to the Cyprus Registrar of Companies that it has been disallowed from being a company registered in the country of initial incorporation.

Note:  The company must not be erased and/or removed and/or cancelled from the foreign registry any time before the Temporary Certificate of Continuation is issued by the Cyprus Registrar of Companies. Up to that time the company must be in full and proper existence. The application to cancel its registration from the foreign registry must be made only after the Temporary Certificate of Continuation is issued.

In case no evidence is submitted showing that the foreign company has been disallowed, from being a company registered in the country of its initial incorporation, the Cyprus Registrar of Companies may delete the name of the foreign company from its registry and inform the foreign authorities accordingly or to give three months extension to present the necessary documents to his satisfaction.

Certificate of continuation

Upon presentation of the certificate of discontinuance as evidence that the foreign company has been disallowed from being a company registered in the country of initial incorporation, the Cyprus Registrar of Companies issues the final Certificate of Continuation which certifies that the foreign company has been registered in the Republic of Cyprus.

Refusal of application  

The applications of foreign companies to re-domicile in the Republic of Cyprus may be rejected by the Cyprus Registrar of Companies in the following cases:

- When dissolution, winding-up or any other insolvency proceedings, settlements or writs have been commenced against the foreign company.

- When a liquidator or receiver or equivalent administrator has been appointed for the company.

- If any order and/or judgments exists limiting the rights of the company’s creditors.

- If any criminal or civil proceedings have commenced against the company in the jurisdiction of its incorporation.

Procedure of re-domiciliation outside the Republic of Cyprus

A Cyprus company can transfer its registered office outside the jurisdiction of the Republic of Cyprus provided that the laws of the country or jurisdiction it wants to re-domicile to permit so, and provided that it has obtained the approval from the Cyprus Registrar of Companies prior to the transfer. It is also a requirement that the company’s Memorandum and Articles of Association contains a provision allowing the company to transfer its registered office outside the jurisdiction of the Republic of Cyprus.

An application for obtaining the Cyprus Registrar of Companies’ consent for a company to continue its existence as a legal entity under another jurisdiction, must be prepared and submitted with the Cyprus Registrar of Companies, together with a declaration signed by at least two directors of the company authorized by the Board of Directors, or if the company has only one director, to be signed by him/her only, confirming the following:

a)  The name of the company, under which it wishes to be registered in the foreign country.

b)  The country of the proposed re-domiciliation and the name and address of the competent authority.

c)  The date on which it wishes to establish the seat of the company in the foreign country.

The Cyprus Registrar of Companies shall not grant his consent for the continuation of the company to another jurisdiction, unless the following conditions are met:

1)   A special vote from the shareholders of the company is passed approving the application for re-domiciliation, in accordance with the company’s Articles of Association.

2)   Before the general meeting of the shareholders of the company takes place, in which the approval of the re-domiciliation shall be granted, the directors of the company must submit intermediary accounts which include the registrations and any important changes of real value which do not result from registrations and which are drawn up at the date of invitation to the said general meeting.

3)   The special resolution and the interim accounts must be submitted to the Cyprus Registrar of Companies to be filed in the company’s file.

4)   The company must file with the Cyprus Registrar of Companies, a declaration confirming the solvency of the company, signed by at least two directors of the company authorized by the Board of Directors, or if the company has only one director, to be signed by him/her only, confirming that the directors are not aware of any circumstances that will affect negatively the solvency of the company within a period of 3 (three) years.

Note on liability: The director of the foreign company or the management body (as may be applicable) who will swear the affidavit without being aware of facts which they should have been aware of in order to make such affidavit or making a false declaration as to the solvency of the foreign company, are liable to a crime and in case of conviction are liable to imprisonment up to 1 year and a fine up to Euro 34.172,00.

5)   If the company carries out any activity within or from the Republic of Cyprus which requires specific permit, a consent letter from the competent authority which grants such permit, approving the continuance of the company in another jurisdiction needs to be presented at the Cyprus Registrar of Companies.

6)   If the company is a public company and its shares have been listed in a recognized stock exchange, the Cyprus Registrar of Companies needs to be presented with the consent of the Cyprus Council of Securities and Exchange Commission.

7)   The company has paid all the charges to be paid and all procedures to be completed in relation to the activities of the company pursuant to the Companies Law Cap. 113.

8)   The company has paid all charges/fees related to the application.

9)   No procedures regarding the winding up, dissolution, insolvency of the company have been initiated nor any arrangements or settlements or compromise for the execution of court orders have been initiated by or against the company in the Republic of Cyprus or elsewhere.

10) The company has not violated and/or infringed its duties or obligations under the Companies Law Cap. 113 at the time of filing the application.   

11) The company must have paid all its taxes due and custom duties (if any) owed or resulting up to the date of filing of the application to the Cyprus authorities.

Furthermore, the Cyprus Registrar of Companies may refuse to grant its consent for the continuation of the company in another jurisdiction, unless three months have elapsed from the time of publication of the notice indicating the intended re-domiciliation of the company in two daily newspapers in the Republic of Cyprus. A copy of such publication must be presented to the Cyprus Registrar of Companies within fourteen days and shall constitute sufficient evidence of publication.

During the time-limit of three months, any creditors of the company may object to the re-domiciliation of the company in another jurisdiction by filing an objection before the court indicating sufficient reason why such re-domiciliation should not be allowed. It is to the discretion of the court to issue an order approving the continuation of the company to another jurisdiction or reject such re-domiciliation or impose any conditions as they think fit regarding the said re-domiciliation.

Provided that the above conditions are met and documents are presented before the Cyprus Registrar of Companies and the three months’ time limit has elapsed without any objections being filed with regards to the continuation of the company to another jurisdiction, or if any objections were filed and the court rejected them or approved them on the basis of sufficient guarantees, then the Cyprus Registrar of Companies shall give its consent for the continuation of the company to another jurisdiction.

As soon as the certificate of continuance (or similar document) is issued by the foreign jurisdiction based on which the company continues in another jurisdiction, a copy of the same must be presented to the Cyprus Registrar of Companies in order to remove the name of the company from its registries and issue a certificate of de-registration.

Note: The Cyprus Registrar of Companies keeps a registry of all Cyprus companies that have received approval to be re-domiciles to another jurisdiction.

Author: Artemis Milidoni

Disclaimer: The above is intended to provide a general guide only and shall not be considered as professional advice. It is essential that appropriate independent advice is obtained on a case by case basis from an advocate of our law firm at corporate@sklaw-firm.com.