By Koulla Vrasida, Compliance and Data Protection Officer, Seamark Consultants Ltd
Redomiciliation is the process through which a company established in one jurisdiction can shift its domicile to another, by changing the country under whose laws it is registered, without losing its corporate identity.
Redomiciliation of a foreign company to Cyprus
Cyprus has become a very popular destination also for redomiciliations 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 be re-domiciled 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 redomiciliations; 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.
A name application must be submitted in advance to the Registrar to confirm that the name is approved.
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 sworn statement declaring the solvency of the company, stating clearly that the persons signing the same do not know of any circumstances that would negatively and materially affect the solvency of the Company within twelve months from the date of application;
6. 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 by the company secretary);
7. resolution of the Board of Directors (or equivalent body) approving/consenting to the re-domiciliation of the company;
8. 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.);
9. proof that the responsible authority in the country of origin has been informed for the transfer of the seat of the company;
10. official letter by the above mentioned authority consenting to the change of seat of the company; and
11. 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 according to the laws of Cyprus and is temporarily registered in the Republic for the purpose of the Companies Law Cap 113;
• has the same liabilities and is eligible to exercise all powers that registered companies have according to the laws of Cyprus;
• has the constituent document of amendment filed with the Registrar as its Memorandum and Articles of Association.
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.
Redomiciliation 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.
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. the company must submit to the Registrar 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;
4. 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;
5. 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.).
6. 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 of Companies 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.
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.