By Koulla Vrasida, Compliance and Data Protection Officer, Seamark Consultants Ltd
Transfer of Legal Seat or Re-domiciliation, as it is widely known, is the process through which a company can shift its domicile from one jurisdiction to another, by changing the country under whose laws it is registered, without losing its corporate identity.
Re-domiciliation of a foreign company to Cyprus
Cyprus has become a very popular destination for re-domiciliations over the last few years and there are very good reasons for this. Its strategic location, EU membership, extensive double taxation treaty network, strong pro-business attitude, multi-lingual and highly skilled human capital, state-of-art telecommunications infrastructure are just some of the factors for which the country has been gaining momentum in international business structuring. Combine those factors with the attractive tax and legal regimes and business incentives that the country can offer and you end up with what is probably one of the most progressive and efficient business locations in Europe and even globally.
For a foreign company to transfer its legal seat to Cyprus it should first submit an application to the Registrar of Companies in Cyprus (the “Registrar”). In order to that, the following provisions should be met:
• the laws of the foreign jurisdiction must permit such a transfer; and
• the company needs to be authorized to do so by its Articles of Association (the “Articles”). If not, the Articles must be amended to include this provision.
Furthermore, if the foreign company is carrying out a licensed activity, it will need to satisfy the equivalent licensing criteria in Cyprus for the relevant activity.
In order to proceed with the transfer of a foreign company to Cyprus, the following should be decided:
a. the name of the company – i.e. whether it will be transferred with its existing name and if not for any reason (i.e. unavailability, etc.) the new name with which it wishes to register. A name application must be submitted in advance to the Registrar to confirm that the preferred name is approved;
b. the directors and company secretary;
c. the address of its registered office;
d. the share capital, the shareholders and their stake;
e. the objects of the company;
f. the Memorandum and Articles of Association as per the Cyprus legislation.
Submission of application to the Registrar
The application must be submitted together with the following documents for the foreign company:
1. a resolution of the shareholders authorizing the company to register in Cyprus as a continued legal body;
2. a copy of the revised constitutional documents of the company;
3. a certificate of good standing (or equivalent) from the country of origin;
4. an affidavit from a director of the company duly authorized by its Board of Directors-management board (or equivalent body) stating the following:
a. the current company name and the name under which it will continue to operate once the process of re-domiciliation is completed;
b. the country in which the company is registered;
c. the date of registration of the company;
d. that the company has formerly declared its decision to re-domicile to Cyprus to the responsible authority in the country of origin (a copy of the formal notice must be provided);
e. that there are no criminal or administrative procedures pending or completed against the company; and
f. the resolution with which the Company has decided to re-domicile in Cyprus.
5. a list of directors, company secretary and shareholders of the company (in the form of certificate/s from the responsible authority in the country of origin or, if not applicable, in the form of a certificate issued by the company secretary);
6. resolution of the Board of Directors (or equivalent body) approving/consenting to the re-domiciliation of the company;
7. a document proving that an application for re-domiciliation is allowed under the Laws of the country of first incorporation (i.e. confirmation letter by the relevant authority, legal opinion by a qualified person, etc.);
8. proof that the responsible authority in the country of origin has been informed for the transfer of the seat of the company;
9. official letter by the above mentioned authority consenting to the change of seat of the company; and
10. evidence form the foreign company that there no employees, creditors or any other party who could object to the transfer.
Temporary Certificate of Continuation and Temporary Registration
Once the documents mentioned above are filed and examined by the Register, and assuming that no further information or clarifications are requested, a Temporary Certificate of Continuation is issued.
From the date the above mentioned certificate is issued the foreign company is considered as a legal entity duly incorporated on a provisional basis according to the laws of Cyprus, subject to all statutory obligations and, able to exercise all powers of a company incorporated in Cyprus.
Final Certificate of Continuation
Within six months from the date of issue of the Temporary Certificate of Continuation, the foreign company must provide the Registrar with evidence that it is no longer registered in the country of origin.
Once this evidence is delivered to the Registrar, the latter shall make a final registration of the company as re-domiciled in the Republic of Cyprus and issue the relevant certificate.
Re-domiciliation of a Cyprus company to another jurisdiction
A Cyprus company, after having obtained the consent of the Registrar, can apply to a foreign country to continue its existence, provided it is so permitted by the Laws of that country.
Submission of application to the Registrar
To obtain the consent of the Registrar of Companies in Cyprus, an application must be submitted accompanied by a statement signed by the majority of the directors of the company confirming the following:
• the name under which it wishes to be registered in the foreign jurisdiction;
• the country of the proposed registration and the address of the appropriate authority; and
• the date that it is proposed to establish a seat in the foreign jurisdiction.
The application should be accompanied by a statement of solvency attesting that the directors are not aware of any matters, which may negatively affect the solvency of the company within a period of three years.
Conditions to be met for approval of application
The Registrar will only approve the continuation of the company in another jurisdiction if the following conditions are met:
1. the application must be approved by a special resolution of the shareholders of the company;
2. before the general meeting of the shareholders, the directors must present interim financial statements reflecting the market value of the company’s assets and liabilities. The special resolution, the interim financial statements and a certificate of tax clearance from the Cyprus Tax Department, up to the date of the interim accounts, must be submitted to the Registrar;
3. if the company is carrying any activities which require specific license, it must present to the Registrar a consent by the equivalent supervisory authority/ies in the country of transfer. A consent will also need to be obtained by the competent authority/ies in Cyprus;
4. the company must provide evidence of settlement of all taxes and duties that are due or that will become due until the date of submission of the application (e.g. certificates of clearance for direct taxes, VAT, Social Insurance obligations, etc.).
5. the company must publish a notice of the special resolution in two local newspapers of wide circulation and proof of that publication must be submitted to the Registrar within fourteen days from the date of the publication.
The Registrar allows for three months during which any creditor of the company may submit an objection to the court for the continuation of the company abroad. The court may approve the continuation of the company or prohibit it.
Following the expiration of a three month period from the date of publication of the notice of the special resolution and, providing that no objection has been raised, the Registrar issues the Certificate of Consent for the continuation of the company under the national legislation of another country or jurisdiction.
The company must provide a copy of the Certificate of Continuation issued by the responsible authority in the country of continuation to the Registrar. Based on this the Registrar will delete the company from the registry and issue a Certificate of Deletion, confirming that it is no longer registered in the Republic of Cyprus.
At Seamark we have been dealing with re-domiciliations from the very first moment they become available in Cyprus legislation in 2006 and we have extensive experience on such operations, both concerning transfers to and from Cyprus. We are at your disposal to discuss any cases upon provision of specific facts and of course to answer to any queries you may have.