On the 18th December 2018, the Department of Registrar of Companies and Official Receiver (hereinafter “Registrar of Companies”) has announced the adoption of a number of amendments on various corporate related matters pursuant to the Cyprus Companies Law (CAP 113) (hereinafter the “Law”). These amendments are considered an important legislative reform as it promotes the modernization and reorganisation of the procedural aspects of the Department of Registrar of Companies and Official Receiver with an attempt to simplify common procedural practices of the same and to ensure that the Registrar of Companies is updated in a proper and timely manner.
These amendments, were introduced by the enactment of the following Laws and Regulations:
MAIN LEGISLATIVE AMENDMENTS, WITH IMMEDIATE EFFECT:
1. Abolition of the 0.6% variable charge upon the registration of a newly formed company.
2. The 0.6% variable charge payable on the difference following an increase in a company’s nominal capital has also been abolished.
Points 1 and 2 above are considered as one of the most important amendments that have immediately come into force. The respective amendments have as their ultimate goal, the improvement of the island’s competitiveness as an international business centre, while this decision is also expected to contribute towards the recovery of investments and the further development of business establishments in Cyprus.
3. Every company is entitled to have one secretary appointed each time. Consequently, a company (including foreign companies) may not appoint more than one secretary and may not appoint more than one person to act as the sole secretary.
4. Abolition of the obligation to attach a contract to the relevant Form (HE12) in cases where the allocation of shares of a private company are being acquired by payment in kind whether the same is in whole or in part.
5. The Registrar of Companies, now has the authority to omit and/or eliminate the word "LTD" and consequently eliminate the involvement of the Ministry of Energy, Commerce, Industry and Tourism Ministry of Energy, Commerce, Industry and Tourism in the respective process, subject to the applicable Law.
6. The Registrar of Companies, now has the authority of striking from the Registry a partnership, or a tradename, which fails to submit all documents required by the applicable law, six months following having received a notice for compliance.
7. The Court has now been granted with the authority to issue directions regarding the following matters: (a) updating the corporate registry maintained by the Registrar of Companies, (b) payment of the fees owed by the company to the Registrar of Companies, and (c) payment of the Registrar of Company’s costs, in relation to the issuance of a court order for the purposes of reinstating a company on the Register.
8. A company can by reinstated via court order by "anyone who has suffered loss" as a result of the actions of the company's operations before it was struck-off.
9. A company can be struck-off the Registrar following an application by the Directors, but only where the company has fulfilled its obligations as set out by the Law.
10. A timeframe and/or deadline of 15 days has now been set, for the submission of changes regarding foreign companies in relation to changes in: the Memorandum and/or Articles of Association, Directors, Secretary, Registered Address, and the contact details of persons representing the company and/or accepting service.
11. Over 100 Forms of the Registrar of Companies relating to companies, partnerships, tradenames, foreign companies and European Companies (SE) have been redesigned.
FUTURE PROPOSED ARRANGEMENTS
Supplementary legislative reforms that are expected to enter into force gradually:
1. Redesign of Forms
The Registrar of Companies has announced its intention of redesigning all Forms (HE) relating to companies, partnerships, tradenames, foreign companies and European Companies (SE), with the intention of simplifying the forms and making them more comprehensive to the applicant.
We outline below, a summary of the respective amendments which are intended:
a) Simplification of the completion requirements of the Forms is also expected where this is feasible. For example, the company's seal, the natural person's former name, and natural person’s profession shall no longer be required.
b) The Forms (HE) shall be enriched with explanatory notes and checklists, in order to make them more comprehensive for the applicant and reduce the error rate.
2. Simplification of Procedures
a) Abolition of the affidavit upon the commencement of a business activity, (for example: upon registration of a company, when transferring the seat of a company, when registering a foreign company, when registering a European Company and upon the issuance of the certificate of commencement for public companies).
b) Where feasible, consolidation of Forms shall be sought, (for example, the creation of a single form in order to replace the five (5) forms submitted for the registration of a company).
c) New forms shall be created, to support both, existing services (e.g. cross-border mergers), and new services (e.g. administrative recovery).
3. Maintenance of an up-to-date Registry
a) Introduction of a penalty fee, in the event of late submission of selected Forms (as required pursuant to the Law). This procedural amendment shall enter into force one year following the Registrar’s publication, namely on the 18th December 2019.
b) Introduction of publications in the Electronic Journal of the Registrar of Companies, while the obligation to publish in the Cyprus Gazette shall be abolished. The enforceability of the above is yet to be determined by the Registrar of Companies.
c) Implementation of administrative reinstatement of a company which was struck off the Registrar due to non-compliance with the applicable provisions of the Law. The enforceability of the above is yet to be determined by the Registrar of Companies.
Disclaimer: This brochure has been prepared for informational purposes and it is only intended to provide a general guide. None of the information provided herein should be construed as legal advice. For any further information and/or clarifications regarding the aforementioned amendments, please do not hesitate to contact us.