Some important amendments to the Cyprus Companies’ Law (the ‘Law’) have been introduced recently through the Companies (Amending) Law (No.3) of 2018. Some of these changes are considered as in force as from the date of publication of the amending law, on 18 December 2018, whereas others are enforceable by the end of the year 2019 or upon relevant notification by the Registrar of Companies. The most important of these amendments are covered below.
A. Abolition of Capital Duty
As of 18 December 2018, the fee of 0,6% paid upon the registration of a company is abolished resulting to a reduction in the overall cost for the formation of a Cyprus company. As a result, no capital duty shall arise on:
· the initial authorized capital at incorporation of a new company; and
· any subsequent increase of the authorized share capital.
B. Introduction of Administrative Fines for late filings
With effect from 18 December 2019, the Registrar of Companies shall impose an administrative fine for late filing of certain notifications, as outlined below. The notifications on which this provision applies are the following:
· For the allotment of shares.
· For a change of the registered address.
· For a transfer of shares.
· The Annual Return.
· For the particulars contained in the company’s register of directors and secretaries and any changes made thereto.
· The notification(s) which must be made by an overseas company for, among other, changes made to its directors and secretary, details of authorized representatives and the address of its place of business within Cyprus.
The fine for all notifications shall amount to €50 plus €1 for every day for which the default continues, with a maximum of €250 for each default, except for the Annual Return, for which the fine shall amount to €50 plus €1 for every day for which the default continues within the first 6 months plus €2 for every day thereafter for which the default continues, with a maximum of €500 for each default.
It should be noted that for allotment of shares upon expiry of the deadline, which is one month from the date of the relevant resolution, a Court order is required for the extension of time for the filing of the allotment.
C. Amendment relating to the appointment of a Company Secretary
The Law has been amended to explicitly provide that, effective of 18 December 2018, every company shall have one secretary.
D. Amendments relating to the strike-off of a company
With effect from 18 December 2018, any member or creditor of a company may object to the striking-off of a company within 3 months from the relevant publication in the official gazette of the Republic of Cyprus (the ‘Gazette’).
Court Order to bring the company up to date upon re-instatement
The Court has been given the power to order (i) that documents and returns are filed to the Registrar of Companies to bring the company’s filing requirements up to date, (ii) that all fees due by the company are paid and (iii) that the company pays all costs of the Registrar of Companies in relation to the restoration. This measure is effective from 18 December 2018 as well.
New power to the Registrar to reinstate struck-off companies
A member or director can apply to the Registrar of Companies to re-instate a company which was struck-off on the basis that it was not carrying on a business or did not pay the Annual Levy. The Registrar of Companies has the power to re-instate the company without the involvement of the Court.
Such application must be made within 24 months from the strike-off provided that:
· the relevant company was carrying business at the time of strike-off; and
· the company is brought up to date with its filing requirements; and
· the company pays all fees, levies, penalties and fines due to the Registrar of Companies; and
· the fee of reinstatement is paid; and
· the Registrar of Companies has good reason to believe that the strike-off has caused a disadvantage to the applicant.
This provision will become effective upon publication of the relevant announcement in the Gazette.
E. Particulars of overseas companies having a place of business in Cyprus
As from 18 December 2018, overseas companies with a place of business in Cyprus are required to file additional information to the Registrar of Companies. Such information includes the following:
· Changes to the names or addresses of the persons authorized to represent the overseas company and their place of business, in third party transactions, in Court and towards competent authorities.
· Changes to the address of the place of business of the overseas company.
F. Electronic Gazette
It has been decided that with effected from 18 December 2018 an “Electronic Official Gazette” shall be introduced through the website of the Registrar of Companies, with the aim to replace the need to have certain actions or decisions published in the Gazette.
G. Amended forms by the Registrar of Companies
All statutory forms of the Registrar of Companies will be replaced by revised forms, which have been designed with the aim to modernise and streamline the relevant procedures covered. The new forms will come into effect upon notification from the Registrar of Companies.
H. Filing of pledges on shares of Cyprus companies
The Registrar of Companies no longer accepts applications for registration of share pledges. Although it has not been clarified, it is believed that this applies only to pledges over shares of Cyprus companies, considering that such pledges are exempted from the requirement for registration. A clarification by the Registrar of Companies confirming this is expected to be issued soon.