After some delay, Cyprus has implemented the EU Statutory Audit Directive through its enactment of the Law on the Obligatory Audit of Annual and Consolidated Accounts by Legally Registered Accountants and Audit Firms. The new law introduces statutory requirements for the audit profession and a public oversight system for regulating auditors and audit firms and clarifying their duties in line with the EU directive.
A company incorporated outside Cyprus may establish a branch or representative office in Cyprus, provided that within one month of the establishment date it registers itself as an overseas company with the registrar of companies. Overseas companies intending to establish a branch in Cyprus are subject to certain regulatory filing requirements.
Under Cypriot law, any act considered to be beyond the company’s legitimate powers (as provided in its memorandum of association and articles of association) is ultra vires and void ab initio. However, directors, as the company's agents, are personally liable for any loss caused to the company through their own illegal or ultra vires acts.
Under Cypriot law, every company limited by shares must have at least one shareholder. Even though legislation does not permit the issuance of bearer shares, it is possible to obtain absolute secrecy of the shareholders’ identity through nominee or fiduciary arrangements.
The Regulation of Fiduciaries, Administration Businesses and Company Directors Bill is soon expected to become law. The new law will establish and impose strict regulations on trust and company service providers. It is of particular interest to lawyers and accountants who manage and control incorporated companies in order to satisfy tax requirements for resident companies.
In recent years Cyprus has introduced considerable changes to the Companies Law and the relevant regulations, rendering the island an attractive jurisdiction for international businesses to conduct activities using various types of Cypriot legal entity.
The fees levied for the registration of charges, limited liability companies and partnerships and business names have been revised. Although almost all the fees have been increased, the fee for the registration of charges has been reduced to a maximum of C£300, replacing the previous fee of 0.3% of the amount for which the charge was created.
Until recently, Cyprus - unlike many other countries - had no legal provision allowing a company to transfer its seat of incorporation into or out of the jurisdiction. However, foreign companies wishing to redomicile in Cyprus will soon be able to make the transfer without the need for a winding-up process; the change in law will help them to benefit from Cyprus's advantageous tax regime.
The Cyprus Companies Law 1951 (Cap 113) is based on UK company legislation. After it came into force, no major amendments were made to the law for several decades. However, in recent years changes have been made in order to harmonize its provisions with the EU Company Directive in light of Cyprus's accession to the European Union in 2004.
Since October 1 2004 a complete liberalization of foreign direct investments has applied for investments in Cyprus originating from outside the European Union. Non-EU nationals registering Cypriot companies or acquiring shares in existing companies no longer need the approval of the Central Bank of Cyprus or any other Cypriot authority.