3.1 Legal Status A non-resident wishing to register a ship under the Cyprus flag must form a Cyprus Shipping Company (the “Company”). The Company will acquire the vessel in its name. It will be registered as a private company with limited liability (by shares). To incorporate the Company, one must file the memorandum and articles of association (both must be in Greek) with the Registrar of Companies. On formation of the Company, the Registrar of Companies will issue a certificate of incorporation. Upon issue of the certificate, the company may begin to trade and register a ship in its name. It usually takes 3 days from the filing of the Company’s incorporation documents to incorporate the Company. However, the process can be accelerated on request. Only local lawyers can draft the necessary documents for the incorporation of Cyprus companies. 3.2 Non Resident Status A non-resident company may buy vessels from, or sell them to, non-residents without any exchange control approval. It is not necessary to keep a bank account in Cyprus. However, the company may open an external account with a commercial bank in Cyprus (in any currency). The deposits in such an account are freely transferable and fully convertible into other currencies. 3.3 Company Formation (a) Name of company. The name must end with the word ‘limited’ and must be approved by the Registrar of Companies. Broadly speaking, very general or deceptive names or names that are likely to lead to confusion with existing ones will not be approved. It usually takes 4 days to obtain approval for the Company’s name but the process can be accelerated on request. (b) Registered address. This must be in Cyprus. Where the Company does not have offices on the island, it is usual practice for the registered address to be the address of the lawyers or accountants who act for the company on the island. The registers and minute books are kept with the secretary. (c) Share Capital. The share capital may be nominal. It may be paid up in full or by calls and this can be done in cash or for other consideration. The shares may be allotted a par value. Any class of share is acceptable (ordinary, preference and with different voting and dividend rights). All shares must be nominative. Bearer shares are unacceptable. A typical Cyprus ship owning company has a nominal share capital of CY£1000 divided into 1.000 of CY£1 each. (d) Shareholders. The Company must have a minimum of 1 shareholder. Nationality is immaterial. The shareholder/s may all be foreigners residing outside the island. Foreign individuals and corporations require exchange control permission in order to subscribe to or hold shares in a Cyprus company. The transfer of shares to and from foreigners also requires authorization. For shipping companies, such permission is usually given as a matter of course in all bona fide cases. Trust relationships are recognized under Cyprus law both by statute and in equity. The law corresponds to the regime in the English legal system. The security documentation of the beneficial owner usually comprises of: (i) the trust deed; (ii) the original share certificates that are issued in the names of the nominee shareholders; (iii) an instrument of transfers of shares executed in blank, directors’ resolutions approving the transfer of shares (where nominee directors are appointed); (iv) undated letters of resignation of the nominee directors, and (v) Irrevocable dividend mandates for payment of dividends to the beneficial owners or to an account designated by them. General meetings of the company may be held abroad and, as a rule written resolutions signed by all the shareholders will suffice in lieu of a meeting. Annual general meetings must be held every year, the first to be held within 18 months from incorporation. (e) Directors. One or more directors may be appointed. Their nationality is immaterial. There is no obligation to have local directors. Directors are appointed and removed by the shareholders. A class of shares may be given special rights in this respect. Board meetings can be held in any country. Directors’ resolutions may be taken either at a duly convened meeting or without a meeting provided that the resolutions are signed by all the directors. The names of the directors are submitted to the Registrar of Companies and are kept on a public record. (f) Secretary. The secretary is appointed by the directors and is removable by them. There are no restrictions on who may be appointed as a secretary, however, it is practical for the secretary and the directors to reside in the same country (to facilitate the holding of board meetings) and for an assistant secretary to be appointed in Cyprus to attend to the Company’s annual formalities on the island. A director may also act as secretary. (g) Returns. Annual returns showing the names of the shareholders must be filed with the Registrar of Companies. Any charges against the company must also be filed and registered. The Registry is a public record open to inspection. (h) Procedure for incorporation. A limited liability company can be incorporated in one of the following ways: (i) by the actual shareholders appearing as subscribers to the memorandum and articles of association and signing the same, or (ii) By two Cypriot nominees (usually the company’s lawyers) subscribing to the memorandum and articles of association and later transferring their subscription shares to the actual shareholders by instruments of transfer. To proceed with the formation of a Cyprus shipping company, the following information is required: (i) the desired company name; (ii) the amount of authorized share capital; (iii) whether shareholders will subscribe to the memorandum and articles of association themselves or through nominees; (iv) whether shares will be held in trust for Cypriot nominees; (v) the name, address, nationality and occupation of beneficial shareholders; (vi) the name, address, nationality and occupation of directors, and (vii) The name and address of the secretary. (i) Auditors and accounts. They are appointed at the Company’s Annual General Meeting and are removable in the same way. Any auditor who is entitled to audit an English company is acceptable. Unless a company is exempt, it must file annual accounts with the Registrar of Companies. A company is exempt if it does not have another company as a shareholder. As the Register of Companies is a public record, if a company wishes to avoid its accounts being open to inspection, then it must have physical persons as shareholders. In the case of a foreign owned shipping company, the books may be kept abroad and denominated in any currency. 3.4 Costs The fees payable on incorporation of a company are: Nominal Capital (CY£) Fee (CY£) Up to 5 000 75 5 001-10 000 125 10 001-8 000 000 125* Over 8 000 000 24 098 *Plus CY£30 for every CY£100 of nominal capital or part thereof in excess of CY£ 10 000.
3.1 Legal Status
A non-resident wishing to register a ship under the Cyprus flag must form a Cyprus Shipping Company (the “Company”). The Company will acquire the vessel in its name. It will be registered as a private company with limited liability (by shares).
To incorporate the Company, one must file the memorandum and articles of association (both must be in Greek) with the Registrar of Companies. On formation of the Company, the Registrar of Companies will issue a certificate of incorporation. Upon issue of the certificate, the company may begin to trade and register a ship in its name.
It usually takes 3 days from the filing of the Company’s incorporation documents to incorporate the Company. However, the process can be accelerated on request. Only local lawyers can draft the necessary documents for the incorporation of Cyprus companies.
3.2 Non Resident Status
A non-resident company may buy vessels from, or sell them to, non-residents without any exchange control approval. It is not necessary to keep a bank account in Cyprus. However, the company may open an external account with a commercial bank in Cyprus (in any currency). The deposits in such an account are freely transferable and fully convertible into other currencies.
3.3 Company Formation
(a) Name of company.
The name must end with the word ‘limited’ and must be approved by the Registrar of Companies. Broadly speaking, very general or deceptive names or names that are likely to lead to confusion with existing ones will not be approved. It usually takes 4 days to obtain approval for the Company’s name but the process can be accelerated on request.
(b) Registered address.
This must be in Cyprus. Where the Company does not have offices on the island, it is usual practice for the registered address to be the address of the lawyers or accountants who act for the company on the island. The registers and minute books are kept with the secretary.
(c) Share Capital.
The share capital may be nominal. It may be paid up in full or by calls and this can be done in cash or for other consideration. The shares may be allotted a par value. Any class of share is acceptable (ordinary, preference and with different voting and dividend rights). All shares must be nominative. Bearer shares are unacceptable. A typical Cyprus ship owning company has a nominal share capital of CY£1000 divided into 1.000 of CY£1 each.
(d) Shareholders.
The Company must have a minimum of 1 shareholder. Nationality is immaterial. The shareholder/s may all be foreigners residing outside the island. Foreign individuals and corporations require exchange control permission in order to subscribe to or hold shares in a Cyprus company. The transfer of shares to and from foreigners also requires authorization. For shipping companies, such permission is usually given as a matter of course in all bona fide cases.
Trust relationships are recognized under Cyprus law both by statute and in equity. The law corresponds to the regime in the English legal system. The security documentation of the beneficial owner usually comprises of:
(i) the trust deed;
(ii) the original share certificates that are issued in the names of the nominee shareholders;
(iii) an instrument of transfers of shares executed in blank, directors’ resolutions approving the transfer of shares (where nominee directors are appointed);
(iv) undated letters of resignation of the nominee directors, and
(v) Irrevocable dividend mandates for payment of dividends to the beneficial owners or to an account designated by them.
General meetings of the company may be held abroad and, as a rule written resolutions signed by all the shareholders will suffice in lieu of a meeting. Annual general meetings must be held every year, the first to be held within 18 months from incorporation.
(e) Directors.
One or more directors may be appointed. Their nationality is immaterial. There is no obligation to have local directors. Directors are appointed and removed by the shareholders. A class of shares may be given special rights in this respect. Board meetings can be held in any country. Directors’ resolutions may be taken either at a duly convened meeting or without a meeting provided that the resolutions are signed by all the directors. The names of the directors are submitted to the Registrar of Companies and are kept on a public record.
(f) Secretary.
The secretary is appointed by the directors and is removable by them. There are no restrictions on who may be appointed as a secretary, however, it is practical for the secretary and the directors to reside in the same country (to facilitate the holding of board meetings) and for an assistant secretary to be appointed in Cyprus to attend to the Company’s annual formalities on the island. A director may also act as secretary.
(g) Returns.
Annual returns showing the names of the shareholders must be filed with the Registrar of Companies. Any charges against the company must also be filed and registered. The Registry is a public record open to inspection.
(h) Procedure for incorporation.
A limited liability company can be incorporated in one of the following ways:
(i) by the actual shareholders appearing as subscribers to the memorandum and articles of association and signing the same, or
(ii) By two Cypriot nominees (usually the company’s lawyers) subscribing to the memorandum and articles of association and later transferring their subscription shares to the actual shareholders by instruments of transfer.
To proceed with the formation of a Cyprus shipping company, the following information is required:
(i) the desired company name;
(ii) the amount of authorized share capital;
(iii) whether shareholders will subscribe to the memorandum and articles of association themselves or through nominees;
(iv) whether shares will be held in trust for Cypriot nominees;
(v) the name, address, nationality and occupation of beneficial shareholders;
(vi) the name, address, nationality and occupation of directors, and
(vii) The name and address of the secretary.
(i) Auditors and accounts.
They are appointed at the Company’s Annual General Meeting and are removable in the same way. Any auditor who is entitled to audit an English company is acceptable.
Unless a company is exempt, it must file annual accounts with the Registrar of Companies. A company is exempt if it does not have another company as a shareholder. As the Register of Companies is a public record, if a company wishes to avoid its accounts being open to inspection, then it must have physical persons as shareholders.
In the case of a foreign owned shipping company, the books may be kept abroad and denominated in any currency.
3.4 Costs
The fees payable on incorporation of a company
are:
Nominal Capital (CY£)
Fee (CY£)
Up to 5 000
75
5 001-10 000
125
10 001-8 000 000
125*
Over 8 000 000
24 098
*Plus CY£30 for every CY£100 of nominal capital or part thereof in excess of CY£ 10 000.
There are no annual fees in order to keep the company in good standing and operative but there is a stamp duty of CY£7 for filing annual returns.
There are charges for the registration of mortgages against the company with the Registrar of Companies. There are also stamp duties payable for the filing of other returns, documents and charges. On winding up of a company, the official fees are CY£75.