About Cyprus Company Formation And Cyprus Company Registration
Registering a company in Cyprus is relatively easy and faster than in many European countries. Cyprus Company registration itself begins with application for registering a company, to be submitted to the Registrar of Companies. Generally, the company will be registered within one week.
Cyprus Company formation though, includes the procedures and undertakings prior to the registration of the Cyprus Company. Company formation includes the drafting of the Memorandum and Articles of the Cyprus Company, which includes the rights and obligations of the shareholders. In case where a Cyprus Company formation and registration is undertaken by a law firm or a licenced service provider in Cyprus, due diligence and compliance regarding the beneficial owners of a Cyprus Company are a mandatory for the service provider prior to company registration in Cyprus.
Cyprus company formation
An increasing monthly number of Cyprus company registration with the Cyprus Registrar of Companies reflects a growing interest in Cyprus as a jurisdiction for international business and investment. Cyprus company registration statistics show a slight but steady increase especially since the beginning of 2015.
The registration of a Cyprus company is easy and straight forward. Strictly spoken Cyprus company formation and Cyprus company registration are two different procedures, where the Cyprus company registration completes the Cyprus company formation.
Formation of a Cyprus company mainly comprises the drafting of the Cyprus company’s Memorandum and Articles of Association, the appointment of directors and company secretary, and, if desired, the drafting of a shareholder agreement. The formation of a Cyprus company legally constitutes with the signing of the Memorandum and Articles of the Cyprus Company.
However, once the Memorandum and Articles of Associaltion of the Cyprus company have been signed, the company is not operative yet, unlike in some other countries, where a company formed may act and conduct business with the status “under incorporation”.
In order to act and to conduct business, a Cyprus company must be registered with the Cyprus Registrar of Companies. Once the procedures of Cyprus company formation has been finalised, an application has to be submitted to the Cyprus Registrar of Companies, applying for Cyprus company registration.
In the context of Cyprus company registration, identification documents of shareholders, directors and the company secretary are not submitted to the Cyprus Registrar of Companies. Such identification documents of the persons involved in a company are kept with the company itself. In case that Cyprus company formation and Cyprus company registration are carried out through an authorised Cyprus service provider (such as Administrative Service Providers licenced by CySEC, or registered auditors, or law offices), the personal identification documents are safe-kept by such service providers.
Depending on the work load at the Cyprus Registrar of Companies, Cyprus company registration may take one to two weeks from the date of submission of the application for Cyprus company registration.
The importance of due diligence and compliance
More than 97% of Cyprus company formation and Cyprus company registration are carried out by licenced local service providers in Cyprus.
Unlike until some years ago, today, based on rules by the EU, FATCA, FATF and the OECD aiming the combat of financial crimes and terror financing, Cyprus company formation and Cyprus company registration require throrough due diligence and compliance to be undertaken, to be carried out by the licenced service providers in Cyprus, prior to the formation of a Cyprus company.
While the “identification” based on documents of all natural persons involved in a Cyprus company was sufficient until two years ago, now the “verification” of the identification is required, again, based on documents. Before the actual formation of a Cyprus company commences, throrough due diligence procedures apply for all licenced service providers engaged in Cyprus company formation and Cyprus company registration. Licenced service providers in Cyprus, and other countries alike, are obliged to keep records of their due diligence procedures.
The same applies for banks and other financial institutes when opening bank accounts for Cyprus companies, companies from other countries or individuals from Cyprus or abroad.
Due diligence and compliance procedures in the context of Cyprus company formation and Cyprus company registration are, by law, to be repeated on a regular basis, based on the risk classification of the Cyprus company and its beneficial owners. Various directives of the EU, such as the Anti Money Laundering Directive, for example, and various international agreements, such as the Common Reporting Standard, require at least annual updates of due diligence procedures.
For complete article, click here