Marangos And Hadjipapa LLC

The body authorised to receive and examine applications for the incorporation of a company in Cyprus is the Registrar of Companies and Official Receiver.
Other official bodies such as the Income Tax Office of Cyprus and the Cyprus Securities and Exchange Commission, as may be the case, deal with a number of related issues, as shall be seen further below. 

Under Article 3 of the Law, a company registered in Cyprus can be public (with a minimum of 7 (seven) shareholders) or private (with a minimum of 1 (one) shareholder) but always limited, either by shares or by guarantee. The Memorandum of Association of a Cyprus registered company must always state the name of the company accompanied by the word “Limited” or the suffix “Ltd”, and the objects clause of the company.

Name of Company

 The procedure for the incorporation of a company in Cyprus begins with an application to the Registrar of Companies for approval of a name for the Company. The name may be in any language provided that it is written and expressed in Latin Characters.
It must be noted that the Registrar of Companies does not approve names which may be considered as misleading, general, connected with royalty or nationalities. Names inclusive of words such as banking, insurance, finance, trust etc, can only be used for companies which actually perform such activities and/or provide such services, and only after the necessary permit has been obtain by the relevant authority. 

Objects Clause – Memorandum of Association   

Once approval for the requested name has been obtained (or in parallel), the Memorandum of Association (“the Memorandum”) of the company must be prepared. The Memorandum contains the objects clause of the company that is the activities that the company will engage in. These activities may include trading (import-export of goods), manufacturing, holding, agency, distribution of goods, consultancy and any other activity and/or service may be legally performed or provided.
If the company is intended to provide banking activities, a separate permit is required to be obtained by the Central Bank of Cyprus and the Ministry of Finance of Cyprus.
If the company is intended to provide financial services or be a collective investment scheme then a permit is required to be obtained by the Cyprus Securities and Exchange Commission.
It should further be noted that there is no geographical limitation on the exercise of a company’s activities. The Cyprus company may exercise its activities anywhere in the world (including Cyprus) and derive income from any legal source (even a source based in Cyprus), provided that any limitations and/or qualifications imposed by any authority in Cyprus are complied with.

Authorized and Issued Share Capital

The authorized share capital of a company represents the amount that a company is entitled to issue and need not be issued in full. The issued share capital represents the amount of shares actually paid up and held by the shareholders of the company. This may change from time to time by increase and reduction but it can not exceed the authorized, unless this is also increased.
Restrictions are imposed in the case of incorporation of a company providing financial services, banking units and collective investment schemes.

The minimum amount of Shareholders for incorporation of a public company is 7 (seven) and for a private company 1 (one). The shareholders of a Cyprus company may be legal or natural persons and may be residents and/or nationals of any country.
The names of the registered Shareholders of a company are shown in the records of the Registrar of Companies, which are open for public inspection. In the case where anonymity is required, the Shareholder of a company may use the services of a nominee Shareholder, who will be the registered Shareholder of the company holding the shares on behalf of the beneficial Shareholder (owner) of the Company. Our firm provides such nominee Shareholders.
In such a case, a Trust Deed is entered into between the nominee (registered) shareholder of the Company and the beneficial shareholder of the company. The Trust Deed is a private contract between the parties and is not disclosed to the Registrar of Companies or to any other authority.
A number of requirements are imposed on shareholders in the case where the company to be incorporated is a collective investment scheme or a financial services company. In these cases, historical backgrounds, C.V’s, criminal records, evidence of financial condition, financial and tax statements (if the beneficial shareholder is a company) are also required.  

The minimum number of Directors of a company registered in Cyprus is 1 (one), provided that in the case where the company has a sole Director, the same person can not be the corporate Secretary of the Company also, except in the case where this person is also the sole shareholder of the company.
The names of the Directors are shown in the records of the Registrar of Companies and are open for public inspection. 

The important point as regards the Directors of a Cyprus company is connected with the issue of taxation:

Under the new Cyprus taxation system, the taxation of the worldwide profits of the company in Cyprus is based on whether the company is “managed and controlled” in Cyprus and incorporation in Cyprus is no longer evidence establishing Cyprus residency.
As the Cyprus Income Tax Law does not provide for a definition of “management and control”, the test may be satisfied if: a) all the decisions affecting the company are made and are shown to have been made by the Board of Directors in Cyprus; and b) the decisions are in fact made by the Board of Directors who are a body independent of any particular Director or Shareholder; and c) the Board of Directors must have a majority of Cypriot resident Directors.
Accordingly, in the case where you wish that the company be a Cyprus tax resident, then we would suggest that you appoint Cyprus residents as members of the Board of Directors of the company. Our firm provides local Directors for companies.

The corporate Secretary of the company can be a legal or a natural person and may be a resident of any country.
However, as the corporate Secretary is responsible for the annotation of the company’s records and registers and all filings to be made with the Registrar of Companies, Central bank of Cyprus and other official bodies, it is best to be located in Cyprus.
The sole Director of a company cannot also be the corporate Secretary. Our firm provides corporate Secretaries for Cyprus companies.

The Registered Office of the Company must be located in Cyprus. This is the place where all the Registers (such as Register of Members and Register of Officers) of the Company are held. Our firm provides its premises as registered office for companies.

The Articles of Association (“the Articles”) constitute a contract between the Shareholders of the Company and the Company itself as a legal person, and between the Shareholders inter se and governs the internal affairs and procedures of the Company.
Table “A” of the Law provides for a standard set of Articles though this may be amended, as may be agreed between the parties. The Articles are filed with the Registrar of Companies and are open for public inspection.
Accordingly, in the case where you wish to set out a more detailed procedure regarding the affairs of the Company, as between the Shareholders, you may enter into a Shareholders Agreement and set out any terms you consider necessary provided always that these terms and provisions do not contravene the Law.
Further, it should be borne in mind that in the case where the Shareholders’ Agreements deviates and/or contradicts the Articles, it becomes a registrable document and needs to be filed with the Registrar of Companies.

The procedure for incorporation of a Cyprus company takes approximately 2 weeks, to be completed, subject always to the particular circumstances of each case.
In the case where you choose to purchase a shelf company, the procedure for the preparation of the internal documents of the company takes 1 to 2 days to be completed only. 

The Company may open a bank account in Cyprus. This is not necessary except in the case where a company has an administrative office in Cyprus. Our firm would be happy to assist you with the opening of a bank account in Cyprus or abroad.

The company must have duly appointed independent auditors responsible for the audit of the company’s financial statements and tax compliance. The audit of the financial statements must be carried out by the auditors qualified under the Cyprus Companies Law, who are appointed by the Shareholders of a company in general meeting. Such auditors must be residents of Cyprus. The audited financial statements of the company must be ready at the end of each fiscal year for approval by the Directors and review by the Shareholders of the Company.
Further, the auditors are required by law to report to the shareholders of a company whether in their opinion the financial statements of the company have been properly prepared in accordance with the provisions of the law and give a true and fair view of the state of the company’s affairs at the financial year ends. The audited financial statements are filed by the auditors of the company with the Income Tax Office. 

The Annual Return of the company, must be prepared by the corporate Secretary or the Director of the company and be filed with the Registrar of Companies along with the audited financial accounts of the Company of the previous financial year (i.e. Annual Return of 2015 and audited financial accounts of the year ended 31/12/2014). Such audited financial accounts should be made by an auditor registered as such in Cyprus.
It should be noted that the Registrar of Companies has the power to strike off a company from its Register for failing to file its Annual Returns.

1. The applicant should submit a confirmation letter from a financial institution in Cyprus that he has deposited a minimum capital of €30.000 into an account, which will be pledged for a period of at least three years. It must be proved that the said amount has been transferred to Cyprus from abroad.

2. The applicant, together with his spouse, should prove that they have at their disposal a secure annual income of at least €30.000. This annual income should increase by €5.000 for every dependent person.  This income should derive from abroad, and may include salaries from employment, pensions, dividends from shares, fixed deposits, rents a.s.o. .

 3. The applicant should submit, with the application, title deeds or a contract of sale in his name and/or his spouse, which has been officially deposited with the Department of Lands and Surveys, for a dwelling or other building, of a total market value of at least €300.000 (V.A.T. is not included therein) and official receipts for the payment of at least €200.000 (excluding V.A.T.), irrespective of the date for the delivery of the dwelling. It should be stressed that the full payment of the value for the dwelling shall be settled in an account in a financial institution in Cyprus.

The abovementioned amounts must be proven to have been transferred to Cyprus from abroad.

It is noted that the purchase of a dwelling may be accepted even when made in the name of a Company and not in the name of the applicant, provided that the Company is registered in the name of the applicant and/or in the name of the applicant and his spouse and he/they are the sole shareholders. In the event that the shareholder of the company is another legal entity, it must be proven that the sole shareholder of the said legal entity is the applicant and/or the applicant and his spouse. 

The applicant may purchase up to two housing units (apartments or houses) which might be independent, or one housing unit and a shop of a surface of up to 100 sq.m., or a housing unit and an office of a surface of up to 250 sq.m., provided that the total market value satisfies the conditions in paragraph 2.3. In the case of a couple, these restrictions apply for the couple and not for each of the persons involved. 

The said purchase must be in relation to a dwelling (and the combinations described above) sold for the first time by a development company. In the case of acquiring two dwellings, both must be sold by the same company. As from 7/05/2013, for the purpose of this policy, applications in relation to the re-sale of dwellings will not be accepted. It should be stressed that contracts of sale in relation to a re-sale of dwellings that have been officially deposited with the Lands and Surveys Department prior to 07/05/2013 (the date of depositing the contracts of sale is to be confirmed by the Department of Lands and Surveys), shall be accepted for the purpose of implementing this policy.

The Immigration Permit issued to an applicant covers his spouse and children under the age of 18.  Unmarried children aged between 18 and 25, who may prove that they are students or undergraduates and are financially dependent on the applicant, may submit a separate application to obtain an Immigration Permit.  In such a case, the father or mother and/or both parents together must present an additional annual income of €5.000 for every such dependent child. It is noted that every such dependent child, shall submit with his application, all the documentation defined in para. 7.

 The said permit is still valid even if the holder has exceeded the age of 25 years old.

An immigration permit may also be granted to children of the applicant over the age of 18, who are not financially dependent on the applicant, provided that the market value of the acquired property attributed to each such child is at least €300.000  (excluding V.A.T.), as described in para. 2.3 hereinabove, (e.g. in the event the applicant has a child that is 30 years old and wishes to obtain an immigration permit, the applicant must purchase a dwelling valued at €600.000, if the applicant has 2 adult children, financially independent, he must purchase a dwelling valued at €900.000 etc). In such an event a confirmation of payment for the 66% of the market value of the dwelling must be submitted with the application (e.g. €400.000 for a dwelling of a market value of €600.000).

Provided that in such an event each child shall submit the necessary documentation with his application (e.g. secured annual income of €30.000, a deposit in a financial institution in Cyprus amounting to €30.000, which is bound for 3 years).

1. The applicant and his spouse must submit a confirmation of a clean criminal record from their country of residence and generally they should not be considered as a threat in any way to the public order or public security in Cyprus.

2. The applicant and his spouse shall confirm that they do not intend to be employed in Cyprus in any direct or indirect manner.

It is to be noted that the applicant and/or his spouse may be a shareholder(s) in a Company registered in Cyprus and the income from the dividends of such a company in Cyprus are not deemed an impediment for the purpose of obtaining an immigration permit.

3. The applicant and his family included in the Immigration Permit, must visit Cyprus at least once every two years.

4. All the necessary documentation, that is attached to the application for an immigration permit, including the translation of the same into the Greek or English language, must be duly certified.

1. Applications must be submitted directly to the Civil Registry and Migration Department (CRMD), personally or through an agent (relevant telephone numbers are 22-403921 and 22-403943). A fee of €500 is payable with the submission of the application.

2. Applications that are submitted in Cyprus, either personally or through an agent, shall be submitted in a standard envelope (every document of the application shall be punctured and inserted in the envelope and numbered in blue ink from the first page of the application to the last page, at the responsibility of the person submitting the application). The envelope shall also include a list of the documents submitted with the application, including any other supplementary documents, to be completed by or on behalf of the applicant.

3. The application shall be processed by the CRMD and be submitted to the Minister of Interior, through the Permanent Secretary of the Ministry of Interior (MOI). An interview with the applicant shall take place only in when it is deemed necessary by the Permanent Secretary of the MOI.

4. The Ministry of Interior shall notify the applicant or his agent and the CRMD as to the decision of the Minister of Interior.

Upon publication of the present policy, any third country national who has submitted an application for a category F Immigration Permit may, if he so wishes, submit to the CRMD supplementary details proving that the criteria in paragraphs 1 to 4 in the present policy are satisfied in a new application, so that the application will be processed in accordance with the provisions of Regulation 6(2) of the Aliens and Immigration Regulations and on the basis of the above criteria and the relevant procedure.

It should be stressed that, provided the criteria of this policy are satisfied and there are no reasons with regard to either the criminal record of the applicant or to public order and public security issues, the application shall be examined by the Minister of Interior in a positive manner and an immigration permit shall be issued.

It is estimated that the procedure described in this policy statement for the examination of the application shall not exceed 2 months from the date of the submission of the application.

The following forms are available electronically:

•  Application form (M. 67)
• Checklist of the documents submitted with the application (in Greek and English)
• Checklist of the documents submitted with the application (in Greek and English) for adult children in accordance with para. 2.5
• Affidavit as to the annual income of the applicant, with other supporting evidence (in Greek and English)
• Official declaration as to the confirmation of non-employment of the applicant in Cyprus (in Greek and English)

According to the Companies’ law (Section 203), a company may be wound up either by:

• A voluntary winding-up, which can be either a members’ voluntary winding-up or a creditors’ voluntary winding-up;
• By the Court;
• Subject to the Courts’ supervision;

A company may be wound-up voluntarily:

 (a) when the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily;

 (b) if the company resolves by special resolution that the company be wound up voluntarily;

 (c) if the company resolves by extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up.

 Before passing a resolution for the winding-up of a company, the directors will consider whether a members’ voluntary winding-up is possible.

1. For a members’ voluntary winding-up to be launched, the majority of the directors of the company should make a declaration to the effect that they have made a full inquiry of the company’s affairs and that they have come to the conclusion that the company its able to settle all its debts, with interest, within 12 months from the commencement of the winding-up; The declaration must be accompanied by an up to date statement of the Company’s assets and liabilities.  For this purpose up to date accounts must be prepared.
2. The members of the Company then place the company into members' voluntary liquidation at an extraordinary general meeting by special resolution (75% majority) at which time the liquidator is appointed.
It should be noted that this is also what Regulation 155 of the Articles of Association of the Company provides.
3. The liquidator informs the Registrar of Companies that the Company has been placed into members' voluntary liquidation, and an advertisement to this effect is placed in the Republic's Gazette.
The liquidator advertises in an international newspaper for possible claims against the company, giving the creditors, if any, notice to send in their claims.
4. The Liquidator settles all company creditors including any tax due and obtains relevant tax clearance.
Notice of one month for the company's final general meeting is then placed in the Gazette.
5. The liquidator prepares a statement of his dealings during the liquidation period, which is presented at the final general meeting for approval. Any surplus funds are distributed to the shareholders.
6. The dissolution certificate is issued, on request, by the Registrar of Companies approximately three months after the final general meeting.

If a declaration of solvency has not been done as above mentioned, the company will summon a meeting of its creditors on the same day as the day of the meeting at which a resolution to wind-up was passed or the following day. Notices should be mailed to the creditors for the meeting and these must be advertised once in the Official Gazette and once in two daily newspapers of the district where the registered office of the company or its principal place of business is situated.
The directors will prepare a statement of the company’s affairs that will be presented at the creditors’ meeting.
At the respective meetings, the creditors and the members may nominate a liquidator. If the person nominated by the members is different from the person appointed by the creditors then the one appointed by the creditors will be the liquidator. On the appointment of the Liquidator the powers of the directors shall be ceased.
The Creditors may decide at their initial or subsequent meeting to appoint a Committee of Inspection that will not exceed 5 members and that will act as representative of the Creditors and in some cases of the members, and give the liquidator the opportunity of consulting the creditors and members without having to convene formal creditors’ or  members’ meeting.

A company may be wound up by the Court if:

(a)    the company has by special resolution resolved that the company be wound up by the Court;
(b)   default is made in delivering the statutory report to the registrar or in holding the statutory meeting;
(c)     the company does not commence its business within a year from its incorporation or suspends its business for a whole year;
(d)    the number of members is reduced, in the case of a public company, below seven;
(e)    the company is unable to pay its debts;
(f)    the Court is of opinion that it is just and equitable that the company should be wound up;

A petition for the winding-up by the Court may be presented either by the company or by any creditor or creditors (including any contingent prospective creditor), contributory or contributories, or by all or any of those parties, together or separately. 

The Official Receiver may also present a petition against a company that is being wound-up voluntarily.

A contributory is anyone who is liable to contribute to the assets of the company in case it is wound-up.

On hearing a winding-up petition the Court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make any interim order, or any other order that it thinks fit. 

If a winding-up order is made then a liquidator is appointed to whom the administration of the company’s affairs and property will pass. 

The Court may also appoint a liquidator provisionally at any time after the presentation of a winding-up petition. 

Where a winding-up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be, shall take into his custody or under his control all the property and things in action to which the company is or appears to be entitled. 

When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding can be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the competent  Court may impose.

Going back to the provisions of winding up by the Court if the Court is of opinion that it is just and equitable that the company should be wound up, common law directs us to a number of possible such causes:

1. That the purpose of formation and existence of the company is gone; 

2. 2. That the company was a bubble;
   

3. 
   3. That the company was conceived and brought forth in fraud;

4. That full investigation is necessary;

5. That there is a complete deadlock;

6. That one of the principal shareholders refuses to produce accounts or balance sheets or to pay dividends;

7. That the petitioner is excluded from all participation in the business;

For the court to order the liquidation of the Company, the cause should be considered as one that either renders its function illegal or the co-existence of the shareholders impossible at a business/commercial level and or at a personal level.   

In our experience, the following matters usually lead to deadlock, where the Shareholders are 50-50% owners of a company:

        1.                  All matters relating to the reorganization of a Company either by way of merger or swap of shares with another entity or other;

2.                  All matters relating to the disposal of the company’s assets; 

3.                   The proposal of one of the shareholders to initiate a winding-up; 

4.                  A decision for the reduction of a share capital or the division of classes of shares; 

5.                  A decision for the increase of the share capital; 

6.                  The approval of the financial statements of the Company and the auditor’s report; 

7.                  The appointment of a new Director and/or Secretary in the Company in the case of resignation or removal of the sole director.

 A deadlock created in any one of the above matters leading the company to put its business on hold and pending, is a matter that raises disputes difficult to be resolved.

When a company has passed a resolution for voluntary winding up, the Court may make an order that the voluntary winding up shall continue but subject to such supervision of the Court, and with such liberty for creditors, contributories, or others to apply to the Court, and generally on such terms and conditions, as the Court thinks just.

Every shareholder (past and present) of a limited liability Cyprus company, in the case of a winding up, is liable to contribute to the assets of the company, as follows:

a)      a past member shall not be liable to contribute if he has ceased to be a member for one year or more before the commencement of the winding up;

b)      a past member shall not be liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member;

c)      in the case of a company limited by shares, no contribution shall be required from any member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member.

Strictly speaking, in the case where a company has been liquidated in any one of the ways mentioned above, as per the provisions of Part V of the Cypriot Companies Law, Cap. 113 of the Laws of Cyprus (hereinafter referred to as “the Law”), it can not be revived and restored in the Registrar’s register. 

However, following the procedure set out in Section 326 of the Law, the dissolution of a company may be declared by the Court void, in which case the company will be revived” and all procedures pending will continue as if the company was never dissolved. 

Section 326 (1) of the Law provides that: 

“Where a company has been dissolved, the Court may at any time within two years of the dissolution, on an application being made for the purpose by the liquidator of the company or by any other person who appears to the court to be interested, make an order, upon such terms as the Court thinks fit, declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.”

Upon such order being made by the Court, it shall be the duty of the person on whose application the order was made to deliver to the Registrar for registration, within seven days after the making of the order or such further time as the Court may allow an office copy of the order.  If that person fails to do so he shall be liable to a fine not exceeding CYP 25 for every day during which the default continues (Section 326 (2) of the Law).

A non-Cypriot citizen, who meets certain economic criteria, either personally or through a company/ companies in which he/she participates as a shareholder - proportionally based on the percentage of participation, or even as a high-ranking senior manager of a company/ companies that meets one of the economic criteria, may apply for the acquisition of the Cypriot citizenship through Naturalization by exception. 

A high-ranking senior manager may apply, provided that he/she receives such a remuneration that generates for the Republic tax revenue of at least €100,000 for a three year period and provided that this tax has already been paid or prepaid. 

The applicant should have concluded the necessary investments during the three years preceding the date of the application and must retain the said investments for a period of at least three years since the date of the Naturalization. 

In addition, the applicant must fulfill the Terms and Conditions set out in Part B. 

In the case where, following a periodic inspection, it has been ascertained that any condition is being circumvented, the Naturalization may be revoked.

1. Investment in government bonds: 

The applicant must have purchased state bonds of the Republic of Cyprus of at least €5,0 million; or 

2. Investment in financial assets of Cypriot companies or Cypriot organizations: 

The applicant must have purchased financial assets of Cypriot companies or Cypriot organizations (bonds/ securities/ debentures registered and issued in the Republic of Cyprus) of at least €5,0 million. 

It is noted that these financial assets can be purchased either at issuance, or subsequently by the market; or 

3.  Investment in real estate, land development and infrastructure projects: 

The applicant must have made an investment of at least € 5,0 million for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector or other infrastructure projects); or 

4  Purchase or creation or participation in Cypriot businesses or companies: 

The applicant must have made an investment of at least € 5,0 million in the purchase, creation or participation in businesses or companies, that are based and operating in the Republic. These businesses or companies should evidently have a tangible presence in Cyprus and employ at least five (5) Cypriot citizens. 

It is noted that the mandatory conversion of deposits into shares is included in this criterion; or 

5 Deposits in Cypriot banks: 

The applicant must have personal fixed term deposits for three years in Cypriot banks or deposits of privately owned companies or trusts (in which he/she is the beneficiary owner) in the Republic of Cyprus of at least €5,0 million; or 

6 Combination of the aforementioned criteria 1 (Investment in government bonds), 2  (Investment in financial assets of Cypriot companies or organizations), 3 (Investment in real estate, land development and infrastructure projects), 4 (Purchase or creation or participation in Cypriot businesses or companies) και 5 (Deposits in Cypriot banks): 

The applicant is required to have a combination of the above amounting to at least €5,0 million; or 

7  Persons whose deposits with the Popular Bank Public Company Ltd have been impaired due to the measures implemented after the 15^th March 2013: 

The applicant has incurred an impairment in deposits amounting to a total of at least €3,0 million. 

In the case where the applicant has incurred an impairment in his/her deposits under €3,0 million he/she may apply, having made an additional investment through the criteria A.1 (Investment in Government bonds), A.2 (Investment in financial assets of Cypriot companies or Cypriot organizations), A3 (Investment in real estate, land development or infrastructure projects), A.4 (Purchase or creation or participation in Cypriot businesses and companies) and A.5 (Deposits in Cypriot Banks) for the balance of the required amount of the aforementioned criteria; or 

8 Major Collective Investments: 

The Council of Ministers shall have the right on special occasions, to reduce the above criteria (Α.1 (Investment in Government Bonds), Α.2 (Investment in financial assets of Cypriot companies or Cypriot organizations), Α.3 (Investment in real estate, land development or infrastructure projects) and Α.4 (Purchase or creation or participation in Cypriot businesses and companies): 

I.         To €2,5 millions for investors, who demonstrably participate in a special collective investment scheme, provided that the total value of the investment is at least €12,5 millions. 

II.      To €2,0 millions for investors who demonstrably participate in a special collective investment scheme, provided that the total value of the investment is more than €12.5 millions. It is noted that this present provision (I), will be in force until the 1^st of June 2014. 

In addition, it is noted that for the above mentioned provisions (Ι) and (ΙΙ), the investment for the Criteria 1 until 4 may be realized through a different salesman/ provider (physical or legal entity).  

1. Clean Criminal Record: the applicant must have a clean criminal record. Furthermore, his name must not be included on the list of persons whose property is ordered to be frozen within the boundaries of the European Union. 

2. Residence in the Republic of Cyprus: In all cases listed in Part A, the applicant must hold a permanent privately-owned residence in the Republic of Cyprus, the purchase price of which must be at least €500.000, plus V.A.T.  

It is noted that members of the same family, which apply separately as investors, can collectively acquire a residence, provided that the total value of this home-property covers the amount of € 500.000 per each applicant.

In order to examine any applications the submission of the form (M127) and of the following is required: 

1.      Clean Criminal Record: 

Certificate of Clean Criminal Record from the country of origin and the country of residence (if it differs). 

2.      Residence in the Republic of Cyprus: 

(a) Contract of Sale. 

(b) Title Deeds/ Receipt for lodging the contract with the Lands and Surveys Department 

(c) Receipts for paying the agreed purchase price 

(d) Copy of the wire transfer in the Cypriot commercial banking institution in the name of the seller or the seller’s company 

As for the investment Criteria the following are required, depending on the case: 

(a) Certificate of Registration of the company/ companies by the Registrar of Companies 

(b) Certificate of shareholders by the Registrar of Companies or certificates evidencing that the applicant is the beneficiary owner of the company/ companies 

(c) Audited Accounts of the company (or companies) for the last three years preceding the year of the application 

(d) If the applicant is a high-ranking senior manager the submission of the employment contract and the receipt from the Department of Inland Revenue is additionally required. 

Any other document that might be requested either by the Ministry of Interior, or by the Ministry of Finance. 

Furthermore, depending on the case, the following are required: 

1.        Investment in Government bonds 

(a) Receipts from the Treasury of the Republic of Cyprus for the purchase of the Government bonds.  

2.      Investment in financial assets of Cypriot companies or Cypriot organizations 

(a) Title/titles and other documents regarding the financial assets. 

(b) Copy of the wire transfer in the Cypriot commercial banking institution in the name of the company or the organization 

3.      Investment in real estate, land development or infrastructure projects 

(a) Contract of sale. 

(b) Title Deeds/ Receipt for lodging the contract with the Lands and Surveys Department 

(c) Receipts for paying the agreed purchase price 

(d) Copy of the wire transfer in the Cypriot commercial banking institution in the name of the seller or the seller’s company 

4.      Purchase or creation or participation in Cypriot businesses and companies 

(a) Contract of sale. 

(b) Receipts for paying the agreed purchase price 

(c) Certificate of shareholders by the Registrar of Companies or certificates evidencing that the applicant is the beneficiary owner of the company/ companies 

(d) Copy of the wire transfer in the Cypriot commercial banking institution in the name of the company or the organization 

(e) Confirmation from the Social Insurance Department as to the insurable income of the Cypriot employees in the company 

(f) Confirmation from the Inland Revenues Department as to the taxable income of the Cypriot employees in the companies or businesses that the applicant invested in. 

5.      Deposits in Cypriot banks 

(a) Confirmation from Cypriot banks as to the fixed term deposits for three years of the applicant or the companies in which he is the beneficiary owner or of the trust in which he is the beneficiary owner 

(b) Copy of the wire transfer in the Cypriot commercial banking institution   

6.      Impairment of deposits in the Popular Bank 

(a) Confirmation as to the level and the time of the impairment of the deposits 

(b) In the case of deposits of companies of which the applicant is the beneficiary owner, the Certificate of Registration of the Company by the Registrar of Companies and/or any other evidence, along with a declaration from the trustee of the funds confirming the beneficial owner is to be attached

None of the above affect the absolute discretion of the Council of Ministers in taking a Decision. 

• Advice to the applicant in face to face meetings with him/her regarding the required criteria including discussion and advice on actions that may be deemed necessary;
  
• Thorough examination of the required documents in order to ensure that all the necessary requirements are met and that all the required documentation is of the appropriate standard;
  
• Submission of a letter by Marangos & Hadjipapa LLC addressed to the Minister of Interior accompanying the application by means of which our professional opinion would be presented and arguments will be stressed as to why approval of the particular application would constitute a benefit to Cyprus;
  
• In addition to the above we are committed to a continuous monitoring for the duration of the approval procedure and briefing of the applicant. 

There is a clear and basic obligation of a Cyprus company to file Annual Returns. Section 118(1) of the Cyprus Companies Law, Cap 113 (“the Law”), provides that every company having a share capital shall, once at least in every year, make a return containing with respect to the registered office of the company, registers of members and debenture holders, shares and debentures, indebtedness, past and present members and directors and secretary, and certain other matters contained in the Law, in the form set out in the Law or as near thereto. 

The Law also places some qualifications namely that: 

(a) a company need not make a return under this subsection either in the year of its incorporation or, if it is not required by section 125 to hold an annual general meeting during the following year, in that year; 

(b) where the company has converted any of its shares into stock and given notice of the conversion to the registrar of companies, the list referred to in paragraph 5 of Part I on the said Sixth Schedule must state the amount of stock held by each of the existing members instead of the amount of shares and the particulars relating to shares required by that paragraph; and 

(c) the return may, in any year, if the return for either of the two immediately preceding years has given, as at the date of that return, the full particulars required by the said paragraph 5, given only such of the particulars required by that paragraph as relate to persons ceasing to be or becoming members since the date of the last return and to shares transferred since that date or to changes as compared with that date in the amount of stock held by a member.

Further, Section 118(3) provides that: 

“If a company fails to comply with this section, the company and every officer of the company who is in default shall be liable to a default fine.” 

This is not the only consequence that arises from failure to file the Annual Return, as the Registrar of Companies is entitled to strike off the company, and the courts are entitled to wind it up.

In the words of Section 327 of the Law: 

“(1) Where the registrar of companies has reasonable cause to believe that a company is not carrying on business or in operation, he may send to the company by post a letter inquiring whether the company is carrying on business or in operation. 

(2) If the registrar does not within one month of sending the letter receive any answer thereto, he shall within fourteen days after the expiration of the month send to the company by post a registered letter referring to the first letter, and stating that no answer thereto has been received, and that if an answer is not received to the second letter within one month from the date thereof, a notice will be published in the Gazette with a view to striking the name of the company off the register. 

(3) If the registrar either receives an answer to the effect that the company is not carrying on business or in operation, or does not within one month after sending the second letter receive any answer, he may publish in the Gazette, and send to the company by post, a notice that at the expiration of three months from the date of that notice the name of the company mentioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved. 

(4) If, in any case where a company is being wound up, the registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company are fully wound up, and the returns required to be made by the liquidator have not been made for a period of six consecutive months, the registrar shall publish in the Gazette and send to the company or the liquidator, if any, a like notice as is provided in subsection (3). 

(5) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register, and shall publish notice thereof in the Gazette, and on the publication in the Gazette of this notice the company shall be dissolved: 

Provided that- 

(a) the liability, if any, of every director, managing officer and member of the company shall continue and may be enforced as if the company had not been dissolved; and

(b) nothing in this subsection shall affect the power of the Court to wind up a company the name of which has been struck off the register.” 

As you can see from the above, the Registrar does give plenty of time to a company to send to it its objection to the strike off, and comply with the Law by filing the Annual Returns and the accompanying documents. 

If however no such objection and compliance take place, in accordance with subsections (6) of Section 327, the company may be struck-off from the Register of Companies, such striking off taking place at least six months after the date of the letter sent by the registrar requesting such document and shall be published in the Official Gazette of the Republic.

In the case where a company has been struck off by the Registrar, and the company or any member or creditor thereof feels aggrieved by the company having been struck off he may apply to the Court before the expiration of twenty years from the publication in the Gazette of the notice. 

If the court is satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register. 

Then an official copy of the order shall be delivered to the registrar for registration and the company shall be deemed to have continued in existence as if its name has not been struck off. 

The Court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.

A struck off company cannot continue to carry on business. The effect of a strike off is to dissolve the Company (section 327(5) of the Companies Law).

The Registrar gives ample time to the company’s officers to file their objection to the strike off due to the fact that the company is carrying on business or is in operation and Section 327(5) of the Companies Law also provides that:

“(a) the liability, if any, of every director, managing officer and member of the company shall continue and may be enforced as if the company had not been dissolved; and (b) nothing in this subsection shall affect the power of the Court to wind up a company the name of which has been struck off the register”

The information contained in this summary is intended to outline in general terms the nature of a Trust, some of the potential benefits of a Trust, the various steps which are involved in setting up a Trust, transferring an asset to that Trust. 

Please note that your own circumstances may involve aspects which are not expressly mentioned in this guide. Similarly, there may be information contained in the guide, which is not relevant to your own situation. This is a general guide only.

A Trust is an arrangement whereby a person known as the ‘Settlor’ transfers ownership of property to another person or persons, the 'Trustees’ for them to hold on behalf of third persons, the ‘Beneficiaries’. The assets are placed under the control of the Trustees for the benefit of the beneficiaries or for a specified purpose.

The Settlor no longer has a legal interest in the assets transferred. This is important from a banking perspective because the basis of lending (usually the beneficiary’s income) and the ownership of assets may be separated. It has been said, “the reason a Trust is used is simple. There is no other way of safely protecting your assets”.

Advisor

The Advisor or Investment Advisor is the person or the company who advises the Trustees on how to invest the Trust property, these might be the experts on the field that the property is related with or they are experts on the local markets 

Beneficiaries

The beneficiaries are the people who can receive a benefit from the Trust property. To enable maximum flexibility most Trusts provide for “discretionary beneficiaries” who can only benefit from the Trust at the Trustees’ discretion.

Protector

A position to monitor Trust activities and to ensure that the Trust is more effectively and properly managed and that the Trustees are acting according to the Trust.

Resident

Resident in the Republic is an individual who is present in the Republic for a period exceeding 183 days in a tax year.

Settlor

The Settlor is the person or persons who set up the Trust, so typically, is the person who owns the property or assets, which will be transferred to the Trust. The Settlor appoints the trustees, gives those trustees certain powers and decides who will be the beneficiaries, all recorded in the trust deed.

Trustees

The Trustees are the people to whom the Settlor’s property or assets are transferred. They have legal ownership of such property or assets, but they can only deal with them in accordance with the powers given to them by the Settlor and they must always act in the best interests of the beneficiaries. 

You can have a number of Trustees and this can be decided in consultation with us depending on the particular circumstances. 

There are a number of reasons why people choose to set up Trusts, whether it is for risk management and asset protection reasons or for family or other reasons. It is important that individual circumstances are considered carefully because everyone’s circumstances are different. 

Some of the reasons include:

Preservation of family assets 

Invariably the primary reason behind every Trust is the genuine desire to preserve hard earned family assets for children and grandchildren

Family Protection

1. To protect assets from claims by undeserving children in certain circumstances
2. To provide for the needs of dependants without giving them the right to demand money or capital
3. To provide flexibility to cater for the needs of beneficiaries at various times in their lives (i.e. children and grandchildren) – There is no limit on the duration.
4. In your will you have certain legal obligations to next of kin and omission from a will can give rise to claims against estates under The Inheritance Law. However, if on your death, certain assets are owned by a Trust, then they do not form part of your estate and are not likely to be subject to such claims
   
   

Relationship Property matters

1. Having property in a Trust presents a more “comfortable” option to some people than the alternative, a ‘pre-nuptial’.
2. To cater for children of a particular relationship separately. A Trust can enable you to cater for those children whilst still recognising obligations to children from other or subsequent relationships
3. To ensure that the husband, wife or de facto partner of one of your children is not able to gain any interest in family assets upon the failure of a relationship
   
   

Taxes

1. To protect family assets from new laws which may introduce such taxes as capital gains tax, wealth tax, reintroduction of estate duty, succession tax and inheritance tax
2. To enable flexibility in income distribution thereby enabling effective income splitting among beneficiaries at the lower marginal tax rates (however there are new tax laws which tax ‘minors’ – children under the age of 18 years – at higher marginal rates) 

Creditor protection

To protect assets from being at risk to possible creditors and from unsecured business debts

Risk Management

Used in conjunction with companies, trusts may be used to ring fence assets such as intellectual property (patents, trade marks, registered designs, and trade secrets) by having the ownership of such assets separate from their trading activities associated with them.

Protection from user pays charges

To increase the likelihood of qualifying for certain income or asset tested benefits such as rest home subsidies, child support, student benefits etc, by removing ownership of assets and or income producing assets from yourself and putting them in the Trust

Confidentiality

Trusts, unlike companies, are not a matter of public record and do not need to be registered thereby enabling the extent of the trust assets to be kept confidential

Flexibility

1. Trusts are flexible and can therefore cater for unforeseen and differing needs of beneficiaries at various times
2. Trusts can also be used in conjunction with other entities such as companies to limit liability and channel income to beneficiaries at their respective marginal tax rates

A trustee needs to be licensed unless he is exempted. The exemption applies if the trustee is regulated by the Cyprus Bar association or the Institute of Certified Public Accountants of Cyprus. 

It is important that the Trustees understand what is expected of them, and what are their duties and obligations. Trustees must have a thorough understanding of their duties, which include:

Basically, a Trust can own any assets – real estate, shares, stock, plant, racehorses, insurance policies, boats, caravans, investment portfolios and the list goes on. It is however important to consider which assets should be transferred into the Trust. 

Generally, we would not recommend that a depreciating asset be transferred to a Trust as tax losses can not be transferred to beneficiaries. Special consideration should be given to “negatively geared” assets such as rental properties as there are income tax issues to consider.

1. 1. It is a simple contract-like document, not registrable with any authority. 

2. 2. Confidentiality: the trustee, protector or any other person involved in the operation of the CIT is not allowed to provide the names of the beneficiaries or any other information regarding the CIT to anyone except in the case of a court order issued due to pending civil or criminal proceedings. 

3. 3. Income and profits of a CIT accrued from sources outside the Republic of Cyprus are not subject to taxation in the case where the beneficiary is a non-resident of Cyprus. 

4. 4. The assets of the CIT are protected by any claims brought forward two years from the transfer of the property to the trust. 

5. 5. Unlike a will, the CIT can transfer property to persons who would have not been allowed to be granted with property due to irresponsibility or incapacity. 

6. 6. The beneficiaries may be unborn. 

7. 7. No inheritance tax is paid by the beneficiaries. 

8. 8. A CIT is not void or voidable and no claim may be raised for its assets in the case of bankruptcy or liquidation of the property of the settlor or in the case of a claim from its creditors except if it is proven in court that the CIT was formed with the intent of defrauding such creditors at the time of transfer of the assets to the trust. A claim can only be raised within two years from the transfer of the property to the trust. 

The Fiduciaries Law 196(I)2012 (the “Law”) has created Trust Registers and each of the relevant authorities, CYSEC, the Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus maintain a trust register (the “Trust Register”) in respect of the persons each supervises. 

The Cypriot trustee upon appointment must notify the relevant supervising authority by form of letter to update the Trust Registers by providing the following information: 

(i)                 the name of the trust;

(ii)               the name and full address of the every trustee at all relevant times;

(iii)             the date of establishment of the trust;

(iv)             the date of any change in the law governing the trust to or from Cyprus law;

(v)               the date of termination of the trust. 

The particulars of the settlor and beneficiaries of a trust are not disclosed in the Trust Register. 

Each trustee, resident of Cyprus, of a trust governed by Cyprus law must, within 15 days from the adoption of Cyprus law as the applicable law governing the trust, notify the competent authority that maintains the relevant Trust Register. 

Violation of delivering the above information within 15 days from the adoption of Cyprus law as the applicable law of the Trust is a criminal offense punishable by imprisonment not exceeding 5 years or by a fine not exceeding €350.000 or a combination of both.

1. 1. Assert asset protection; 
   
   

2. 2. Offer more control to settlors; 
   
   

3. 3. Give more freedom to trustees as regards investment powers; 
   
   

4. 4. Remove restrictions on the lifetime of trusts; 

5. 
   5. Allow beneficiaries residents to be taxed in Cyprus on their worldwide income.

1. 1. The settlors must not be residents of Cyprus during the calendar year preceding the year of creation of the trust. 

2. 2. The beneficiaries must not be residents of Cyprus during the calendar year preceding the year of creation of the trust. 

3. 3. Settlors and beneficiaries may take up residency in Cyprus at any time following the creation of the trust. 

4. 4. The Trust may hold movable and immovable property in Cyprus, including shares of Cyprus companies. Regarding immovable property, Land Registry fees are payable as usual. 

5. 5. Settlor has the power to revoke or modify the trust, deal with income or capital of the trust property, change the trustees or limit their rights, change the trust managers, change the directors of companies belonging to the trust and may also act as director of companies belonging to the trust. 

6. 6. The Settlors may reserve powers to themselves, retain a beneficial interest in trust property, or act as proprietors or enforcers of the trust. 

7. 7. Trusts are valid indefinitely. There is no limit on their duration. 

8. 8. Cyprus law governs the CITs and all matters arising shall be dealt with regard to Cyprus law only. Accordingly, CITs are protected against the application of foreign laws, such as forced heirship laws as a matter of public policy. 

9. 9. The Trust is also protected against matrimonial property and succession laws. 

10. 10. No reference shall be made to the laws of any other jurisdiction and no reference shall be made to either the laws of Cyprus or any other jurisdiction as regards inheritance, succession, validity, transfers and dispositions. 

11. 11. The Settlor may change the governing law. 

12. 12. Trustees may act as regards investing the trust property, freely as absolute owners of the trust property and not with the diligence of “a reasonable person”. 

13. 13. All transfers of property to the trust are deemed valid except in the case where an intention to defraud is proven. In such a case, the claimant will have to show that the he or she was a creditor at the time of the transfer. 

14. 14. Fixed Stamp Duty of Euro430.

Beneficiaries 

Where a beneficiary of the Trust is a resident in the Republic, tax is imposed on income and profit of the Trust accruing or arising from sources both within and outside the Republic. 

The beneficiaries who are tax residents of Cyprus are subject to taxation on their worldwide income in the same way as any other Cyprus resident. 

Where a beneficiary is not a resident in the Republic, tax is imposed on income and profit of the Trust accruing or arising only from sources within the Republic.