Popular types of companies that can be registered in Cyprus
Cyprus companies are taxed at a rate of 12.5%, which is one of the lowest corporate tax rates in the EU. No withholding taxes are imposed on shares paid to shareholders. Cyprus has a transparent and successful tax system, making it a popular destination to register a business with 15,000-35,000 incorporation's every year.
Cyprus companies are taxed at a rate of 12.5%, which is one of the lowest corporate tax rates in the EU. No withholding taxes are imposed on shares paid to shareholders. Cyprus has a transparent and successful tax system, making it a popular destination to register a business with 15,000-35,000 incorporations every year.
The most popular type of legal entity formed in Cyprus is a limited liability company. A Cyprus limited liability company may be created in Cyprus by being registered under the provisions of the Companies Law, CAP 113. Derived from the English common law 1949, the Companies Law of Cyprus regulates all aspects of a Cypriot company or legal entity from the date of its incorporation to the date of liquidation.
The following types of legal entities are recognised by the Law in Cyprus:
- Company with limited liability by shares.
- Company with limited liability by guarantee (with or without shares).
- Branch of a foreign company.
- Re-domiciliation of a foreign company.
- Societa Europea.
This article will focus on the most common type of legal entities, the public and private limited companies.
The basic characteristic of a limited liability company is that the Shareholders’ (also known as members) liability is limited to the value of the shares subscribed by them if the company is in debt. This means that in the event of the insolvency of the company, the Shareholders property and capital is safe and they will only have to repay the value of the shares they owned.
In the case of a company by guarantee, this is similar to that of a limited liability company as the Shareholders liability is limited upon liquidation, to the amount agreed upon which could be more or less than the value of their shares.
Limited Liability Companies in Cyprus can either be public or private, depending on the types of shares and the size of the corporation.
Private limited companies do not need a minimum share capital.
Incorporating a Private Limited Liability Company in Cyprus
This type of company can be founded by one or more members with a maximum of 50. The company must have a registered office in Cyprus and a local Company Secretary. The Shareholders subscribe shares, monetary or non-monetary, which are given a nominal value and have some restrictions about transferrals.
A private company is one whose articles restrict the right of transfer of shares, and prohibit any invitation to the public to subscribe for any shares of the Company, whereas in the case of a public company these limitations do not apply.
Incorporating a Public Limited Liability Company in Cyprus
The main difference between a private company limited by shares is that in the public company the shares are freely transferable and there are no restrictions as to the maximum number of Shareholders. The minimum share capital of a public company limited by shares is €25,650. A Public Limited Liability Company has the right to offer company shares to the public.
We have an article on our website: Easy guide to forming a company in Cyprus.
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