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Economic activity in Cyprus may be conducted by means of the following organizational – legal forms:
- general partnership or limited partnership
- private or public “corporate” company (limited company)
- company’s branch
- European Company (EC)
The main division is the division into partnerships and limited companies:
I. Partnerships. (partnerships).
There are two types of partnerships in Cypriot law:
- general partnership
- limited partnership
General partnership – does not have legal personality. It may have from 2 to 20 partners (however, no more than 10 – if the company wants to operate in banking).
Establishment of the company must be reported to the Registrar of Partnerships and Business Names within one month from its establishment. The registration document should include the name of the company, goals of its activity, place of running the activity, details concerning partners. The company does not have to present financial documents, nor be the subject to mandatory audit.
Limited partnership – it is the equivalent of Polish limited partnership (general partner- komplementariusz, partner – komandytariusz).
Each general partner (there may be many of them) is liable for company’s liabilities in an unlimited manner. Limited partner (one or several) is liable by amounts listed in the registration document of the company submitted in the Registrar of Partnerships and Business Names. The partners of limited partnership may be natural persons or legal persons (body corporate as partner).
II. “Corporate” companies (limited liability companies)
Corporate companies have legal personality.
The advantage of corporate companies is restricted liability of the partners for company’s liabilities and the possibility to divide the capital (shares) between a greater number of the partners.
Private limited liability companies are the most common legal form of foreign companies registered in Cyprus (referred to as IBCs – International Business Companies).
Legal form of the private limited liability company owing to its relatively convenient legal and administrative parameters related to its establishment and functioning is the most adequate for small and medium companies.
Every corporate company is obliged to provide the appropriate Financial Control Institutions with the annual return. Cypriot law provides the possibility to establish the following types of corporate companies:
- Private company limited (the partners) by shares legal form particularly attractive for small family companies. In the company of this type, the shareholders (the number of which must not exceed 50) have limited possibility to gain shares. The resources of the company are subject to legal limitations concerning the transfer of shares and sale of bonds, and they cannot be e.g. gained in public offer.
- Private company limited by guarantee – the partners are liable to the declared amount of the guarantee in case of insolvency of the company. Companies of this type are rather rarely met in Cyprus and the form is considered to be suitable for charity business and other businesses in the area of the non-profit business.
- “Exempt” Private Company(Private (Limited Liability) Company can be exempt from some reporting and information obligations, which other companies are subject to. Such a Company has a specially marked name as: an exempt private company must comply with some specific terms of transparency and safety of turnover (e.g. restrictions of the proprietary and management share for legal persons, restriction of bonds emission to 50 people).
- Public limited company by shares limited liability company, in which the partners are liable for its liabilities only to the amounts of their initial shares. It can gather the capital by way of shares/stocks emission in public offer that later may be the subject of market quotations. At least seven partners are required to register such a company. In its structure, this company reminds the Polish public limited liability company.
III. Branch of foreign company
A branch does not constitute an independent legal unit. The activity of the branch should be registered in the Registrar of Companies within one month from its establishment by submitting an appropriate application (in Greek) supplemented with the specified appendices relating mainly to the parent company.
Foreign companies, having their branch in Cyprus are obliged to submit their annual financial statement to the Registrar of Companies (authenticated translation into Greek). Companies registered in EU countries that annually publish their audited financial statements in the country of their registration, and which shall provide such financial statements to the Registrar of Companies are exempt of the obligation of prepare and submit separate financial statements concerning their branch.
IV. Sole proprietorship
The principles of registration and operation in the case of self-employment are similar to those binding in general partnership. The economic activity established in Cyprus by EU citizens (thus also by Poles) within the framework of self-employment is not discriminated.
Business operations (on the basis of sole proprietorship) can be conducted under own surname or under a business name which should be registered in the Registrar of Partnerships, stating the usual information (the proposed commercial name, the place and character of conducted operations, surname, address, nationality and occupation of person applying). Undertaking operations on the principle of sole proprietorship shall be the basis for obtaining the right of residence in Cyprus for a period of 5 years (if activities are continued after this period, the right of residence will be automatically extended).
A person running business operations on the basis of sole proprietorship has unlimited liability to one’s obligations. Before making the decision to run business operations on the basis of sole proprietorship it is recommended to check in the Department of Labour of the Cypriot Ministry of Labour whether the intended business operations are not specified in Cyprus as a regulated profession or occupation (as defined by relevant EU regulations).
The so-called All National Focal Point (in the Ministry of Labour and Social Insurance) provides information on this matter e-mail: firstname.lastname@example.org
V. The European Company (EC)
Registration of such companies takes place in accordance with the Regulations of the European Council No. 2157/2000. The main objective is the attempt to overcome practical and legal problems resulting from the fact that companies operating within the area of the EU are governed by different (national) legal systems. This will be particularly helpful in cases of mergers, creation of holdings and affiliated companies (branches)