A company, subject to its jurisdiction and its Articles & Memorandum of Association, can transfer its seat of incorporation. If the national legislation of the overseas jurisdiction allows the transfer of the base of a company and the Memorandum of the company enable it to continue under any other jurisdiction’s legal regime, the procedure called re-domiciliation.
It is remarkable that, the Company does not be liquidated but as an existing company transfers its registered office and address to another jurisdiction, by acquiring all benefits as an already made company there. Thus, the business of the company can continue without interruption and hence there will be a significant saving in administration and other costs.
Cyprus is included amongst the jurisdictions which allow re‐domiciliation in and out of Cyprus, by enacting an amended Companies law and a set of regulations explaining its practical application of the procedure. Based on our national legislation – Companies Law Cap. 113, as amended by the 124(I) of 2006, foreign companies can be re-domiciled in Cyprus and Cyprus registered companies can transfer their registered office in another jurisdiction. (article 354B, Cap 113).
A foreign company, subject to the above, shall consider the possibility of re‐domiciliation and may apply to the Registrar of Companies in Cyprus to be registered in Cyprus as a continuing company pursuant to the provisions of the Companies Law Cap. 113.
A Company can authorize a Local Attorney to undertake the procedure in Cyprus through the necessary application forms (ME A, ME 1, ME 2), preparation of a directors’ affidavit and submission of the relevant corporate documents i.e. the Company ought to evidence, inter alia, the jurisdiction and good standing of the overseas company, the details of its shareholders, directors and secretary (if applicable), the compliance with the laws of the foreign jurisdiction, authorising resolution allowing the registration in Cyprus, the lack of any court or administrative proceeding against the company, Notification letter (official notice) to the commercial Register of the country where the incorporation will take place regarding the intention of the company to be re-domiciled. Please note that additional documentation and requirements may occur upon receipt of the above depends on the jurisdiction, the complicated structure of the Company.
Furthermore, specific certificates will be requested if the corporation is public company or if it operates under a specific license in abroad or internationally. If it is listed in any Stock Exchange, evidence regarding consent of the Foreign Stock Exchange allowing for the re-domiciliation in Cyprus must be provided. If the Company got a specific permit to carry out its activities under the Laws of the Country of Incorporation and under Cyprus Law, the appropriated Authority in the Country of Incorporation ought to give its consent to the re-domicile in the Republic of Cyprus, and such consent must be attached to the official application. The requested documentation is listed in the articles 354C – 354D, Cap.113.
At this stage, the Registrar may suggest some minor amendments, if in his opinion the existing name creates confusion or deception risk with an already registered company name or trademark and he shall address instructions to the foreign company to modify its name.
Once the application and its accompanying documents are approved by the Department of Registrar of Companies and Official Receiver of the Ministry of Commerce, Industry and Tourism of the Republic of Cyprus, the foreign company can obtain a temporary certificate of continuity. By this certificate the Company is considered as a legal entity duly incorporated in accordance with the laws of Cyprus and will be able to continue its business activities subject to the Cyprus Companies Act, CAP 113, and domestic Tax legislations, upon confirmation of the official transfer of the company in abroad and the issuance of a certificate which indicates that it is removed from the companies’ registry in the country of origin (de-registration), (article 354Z, Cap. 113).
It is remarkable that, the above evidence from the overseas country should be submitted to the Registrar of Companies in Cyprus within a period of six (6) months from the date of the issuance of the temporary certificate. If the Corporation fails to provide such evidences within the deadline, the Registrar may proceed with the cancellation of the procedure of re-domiciliation and delete the name of the company from the register. However, if special reasons occur, the authorities may extend the deadline for three (3) more months.
Upon confirmation of the above and since the Registrar is satisfied that all conditions are met, he shall issue a Certificate of Continuation confirming that the company continues in Cyprus. The foreign company should amend all the relevant documents and records accordingly, subject to any additional requirements or instructions from the Registrar.
Such a procedure of re-domiciliation, may not be allowed by Cyprus Registry and authorities, if dissolution or liquidation of the overseas company has started or the proceedings of insolvency or composition or proceedings of execution of court orders have been initiated from and/or against the overseas company or even there are proceedings against it for the contravention of the laws of the country or the jurisdiction of its incorporation. It is also necessary to mention that the registration of a foreign company in Cyprus will be considered as void and illegal if it is done with the main purpose, amongst others, either to create a new legal entity or to prejudice the continuation as a legal entity of the said company.
Reasons and advantages for an overseas Company to re-domiciliate especially in Cyprus
It is undeniable that, foreign investors and international merchants acquire plenty of benefits by either establish a Company in Cyprus or re-domiciliate one, if we consider this option as a solution to navigate the complexities and/or difficulties of international business and industries. Cyprus’s tax and regulatory system have brought it to the forefront of SPV for financing, restructuring, holding, investment and trading. Cyprus has one of the most favorable jurisdictions and undoubtedly competitive corporate and tax law systems. The potential clients could be advantaged, inter alia by the below:
Currently, Cyprus can be the solution especially for UK enterprises and businesses. Both jurisdictions, traditionally have enhanced business and trading relationships for several reasons. In addition, since Cyprus has been a British colony till the 1960s, its legal system is based on Common Law which means that the UK companies can abolish difficulties of the adoption of a new jurisdiction’s rules. With the uncertainty that accompanies Brexit, Cyprus has all the key responses for being the EU base of UK enterprises or even international corporations originating from UK could use Cyprus companies in their structures for optimizing their taxation liabilities.
The use of a Cyprus entity in International tax planning can mitigate or eliminate completely the overall tax liability arising from an international activity. This option shall be completed business strategy for investments (especially to Europe, Middle East and Africa), as well as a global solution for financial efficiency.