Starting Up
Type of Company
Based on your business’s activity and your preference, you must decide on one of five type of company options, each having different traits and serving certain economic purposes.
The types of companies are listed below:
Private limited liability company by shares has a share capital and its members’ liability is limited by its memorandum of association to any unpaid amount, for the shares they hold. Additionally, it must have at least one shareholder but no more than fifty, exclusive of any persons who are or have formerly been in the employment of the company and are or still continue to be members of the company. A private limited liability company cannot offer its shares for subscription to the public.
Public limited liability company by shares has a share capital and the liability of its members is limited by its memorandum of association, to any unpaid amount, for the shares they hold respectively. It may invite the public to subscribe for its shares and may be listed on the stock exchange. The number of members of a public company must be at least seven. The minimum authorised and issued capital of a public company, which is offered for subscription, must be €25.629.
Limited liability company by guarantee without share capital does not have a share capital and its members act as guarantors rather than shareholders. The liability of its members is limited by its memorandum of association, up to the amount that the members have undertaken to contribute respectively to the assets of the company in case of dissolution.
Limited liability company by guarantee with a share capital has a share capital and the liability of its members is limited by its memorandum of association, on the one hand, up to any unpaid amount for the shares they hold, and on the other, up to the amount that its members have respectively undertaken to contribute to the assets of the company in case of dissolution. This type of company can be either a private or public company. If it is a public company it can invite the public to subscribe for its shares.
Variable capital investment company is a limited liability company by shares. The main characteristic of this type is that, according to its memorandum of association and the rules governing its operation, its shares do not have a nominal value but rather a variable value. It can be incorporated after it receives a relevant license from the Cyprus Securities and Exchange Commission (CySec) to operate as Collective Investment Funds (CIF).
A variable capital investment company (VCIC) can take the form of either a private or a public company, depending on the type of the collective investment fund (CIF) that such variable investment company will take (UCITS, AIF, AIFLNP, RAIF). The number of members of a private company can range from one to fifty members while the number of members of a public company must be at least one.
Company Name
Your company’s name must follow the criteria provided by the Registrar of Companies as well as be approved by it. Once your company’s name is approved, it must be visible on your office’s exterior, company’s documents, and website.
Office Address
A registered office address in the Republic of Cyprus is needed where all correspondence will be sent to and all the company’s documents are maintained. The address cannot be a mailbox.
Directors and Secretary
If you decided to set up a private company then it must have at least one director and two if you choose to set up a public company, who must be over the age of 18. The director(s) are responsible for:
-
carrying out the company’s activities,
-
the management of the company,
-
maintaining the accounting books, needed for the preparation of the financial statements,
-
submitting tax returns of the company and for carrying out all acts relating to the submission and payment of the tax levied.
Furthermore, a secretary must also be appointed, a role which can be exercised by the director if they are the only member of a private company. Along with the director(s), the secretary is responsible for the documentation and notifications relevant to the updating of the company’s particulars to the Registrar of Companies.
Members and Share Capital
The liability of the company’s members depends on the type of company which will be selected. A limited liability company with shares is the most common type of company and it may be either public or private. A private limited liability company must have at least one (1) member and cannot be more than fifty (50). A public company must have at least seven (7) members.
In the case of a variable capital investment company (VCIC), if it is a private company it may have from one (1) up to fifty (50) members, while if it is a public company, it must have at least one (1) member.
In the case of a company with a share capital, the company’s memorandum must state the amount of nominal capital with which it intends to register. The nominal capital may consist of issued and non-issued share capital. The issued share capital corresponds to the amount of the nominal capital which the company has issued to its shareholders, while the non-issued share capital corresponds to the amount of the share capital which has not yet been issued.
For private companies there is no minimum share capital requirement, while the minimum nominal and issued capital of a public company offered for subscription is twenty-five thousand, six hundred and twenty-nine euros (€25.629).
Objects
These are aimed at stipulating what nature of business your company will carry out in its activities. These objects must not go against any enforced laws of the Republic of Cyprus and, dependent on the nature of business, must obtain pre-approval by the relevant council, ministry or other relevant institution.
Memorandum of Association
A company is incorporated based on its memorandum of association, a document which includes its objects and confirms the commitment of its members to its incorporation. If your company does not have specific objects, then it can be registered as a commercial company of general objects.
Once your company name has been approved and you have taken the necessary decisions based on the points in the ‘Before Incorporation’ section, you can start the registration process for your company. This can be done either through the Registrar of Companies’ e-filing system or by hand or post.
This will be issued by the Registrar of Companies’ as long as all the requirements have been met. The certificate will include your company’s registration number and can be retrieved online, from the mail boxes at the Registrar of Companies, Points of Single Contact (PSC) or by post.
A public company may not commence business, or take out loans or other related obligations, unless it has first obtained from the Registrar of Companies the certificate of commencement of business.
Registering at the Tax Department
Withing sixty days of your company’s incorporation, you must apply for Taxpayer’s registration with the Tax Department as well as acquire a tax number.
At the same time, any natural or legal person residing or is registered in the Republic of Cyprus, that has made taxable supplies of goods and services within the last twelve (12) consecutive months or will be making such taxable supplies of goods and services over the amount of €15.600 in the next thirty (30) days, is required to submit a supplementary form for VAT Registration.
Registration at the Social Insurance Services
Every employer is required to register with the Social Insurance Services by submitting the application form for employer registration. When the employer has branches in different districts or deals with more than one economic activities, he/she must register separately for each district or activity.
Registration of Trademark
To differentiate your company’s products and services, its recommended that you register a business trademark with the Intellectual and Industrial Property Section.
Corporate Compliance
The company and every officer of the company, has an obligation to inform the Registrar of Companies of any changes to the company’s particulars, such as change of name, change of directors and secretary details, changes in share capital, change of registered office address, registration of charges over the assets of the company, amendments of its memorandum and/or articles of association, etc.
At the same time, once every calendar year, the company must prepare its annual return up to and including its reference date, and submit it to the Registrar of Companies along with a copy of the company’s financial statements.
At the end of each tax year, the company must prepare audited financial statements and submit them along with the tax return to the Tax Department.
Additionally, it should be noted that every company is obliged to pay an annual fee equal to the amount of three hundred and fifty euros (€350), by the 30th of June of each year.
The above information is based on the Ministry of Energy, Commerce, and Industry’s Companies Section website. For further details regarding the incorporation process of a company visit the Companies Section website.
Cyprus Intellectual Property
Intellectual property (IP) rights in Cyprus are divided in four different types, each aimed at different creations with differing protection periods. Overall, these intellectual property rights guarantee inventors/creators the exclusive right to exploit their creations and protect them from infringements.
Patent
Patents are used to protect inventions, such as products, methods, processes, and material. By obtaining a patent, you have the exclusive right to exploit your invention, either through manufacturing, selling, importing, or exporting it. A patent obtained in Cyprus can only protect the holder of the patent in the Republic of Cyprus’s territory for a fixed number of years, normally 20 years, except for pharmaceutical and plant-protection products which last for 25 years. Through this period, a holder has the right to assign or license their invention as well as take steps against third parties which use the invention without authorisation.
Although patents protect an invention, they do not protect its appearance and cannot be used to differentiate one enterprise from another. Such protections are acquired by an industrial design or trademark, respectively.
Trademark
A trademark is used to differentiate products or services of one enterprise from another. This is done through the use of a unique element or combination of elements. These elements can include words, letters, numbers, illustrations, colours, sounds, shape of packaging or product etc.
For a trademark to be obtained, it must include one or some of the above-mentioned elements, be able to differentiate itself from other enterprises’ services or products and determine the object of the protection provided to its beneficiary with clarity and accuracy.
The obtainment of a trademark means that the holder benefits from the exclusive right to use the mark, either by placing it on their products or packaging, supply their products or services under the trademark, using it as a part of their enterprise’s name and placing it on professional forms and advertising material. These protections are limited to the territory of the Republic of Cyprus, however, there are various avenues to protect your trademark abroad.
Industrial Design
The external design or appearance of an entire or part of a product is protected by an industrial design or model. It’s determined by a products outline, shape, form, colours, line, texture, materials and decoration.
To register an industrial design it must be new, unique and must not conflict law or morality, or the way which a product operates or component parts of a product which however are not visible during normal use of the product.
A holder of an industrial design benefits from the exclusive rights to exploit the design and oppose its unauthorised use. Provided that the renewal fees are paid every five years, the duration of protection can last for a maximum of 25 years.
The protection is limited to the territory of the Republic of Cyprus, however similar protection can be obtained abroad.
Copyright
Copyright provides exclusive protection of the work of an author, music composer, painter, designer, sculptor, computer programmer, database manufacturer etc. Unlike other IPs, copyright is automatically obtained without an application needed. Alongside copyright, there is a neighbouring right which protects performers, producers of audio-visual work, publishers etc.
An extensive array of works are protected by copyright in Cyprus, so long as they are original, were originally published, erected or incorporated in a building in the Republic of Cyprus, and the creator is a natural person and citizen of the European Union or a legal person incorporated in the European Union.
A copyright holder enjoys the exclusive benefits of exploiting their work, which includes reproducing, advertising, leasing and selling. Additionally, creators of scientific, literary, musical, and artistic work (such as films) are protected by the ‘moral right’ which allows the creator to object to their works distortion, mutilation and other modification that would diminish the honour or reputation of the creator.
If you want to protect your creation and are not sure which IP applies to it, complete the Ministry of Energy, Commerce and Industry’s short questionnaire to find out.
The above information is based on the Department of Registrar of Companies and Official Receiver’s Intellectual and Industrial Property Section website.