We are pleased to present below an overview of amendments made in 2011 to the Cyprus Companies’ Act (“the Law”) by the House of Representatives. The amendments made aimed at, among others, simplifying and modernizing certain formal procedures, reducing administrative burdens on companies, providing more flexibility in certain areas and increasing the revenues of the Cyprus government.
The amendments made to the Law in 2011 were introduced by Law 53(I)/2011; Law 117(I)/2011; Law 145(I)/2011; Law 157(I)/2011 and Law 198(I)/2011 (collectively “the Laws”) and are outlined below.
Cover Pool Charge and Cover Pool Creditors:
The amendment introduced by Law 53(I)/2011 was made pursuant to the introduction of the Covered Bonds Law of 2010. The amendment was made in section 90 of the Law and stipulates that a “cover” as defined in the Covered Bonds Law is not considered a charge and accordingly does not require registration with the Registrar of companies as required by section 90 of the Law.
Further, a new section was added to the Law (298A) in accordance with which, cover pool creditors, as defined in the Covered Bonds Law, could not submit their claims individually to the liquidator, but only via the covered business administrator who shall submit their requirements before the liquidator on an overall basis.
Annual License Fee:
Law 117 (I) 2011 imposed a fixed annual levy (annual license fee) of Euro 350 on each company. The first such levy was payable by the 31st of December 2011 and by 30th of June in respect of each subsequent year. Companies are exempt from the payment of such levy in the year of registration.
In case a company delays the payment of the said levy for no more than two months from the 30th of June of each year, it is subject to an additional charge of 10% of the annually fee to be paid. If the company proceeds to the payment of the annual fee within 5 months of the deadline (after the 30th of June has passed) it is subject to an additional charge of 30% of the annually fee to be paid.
In case a company delays the payment of the levy for more than five months, the Registrar of Companies may proceed with the removal of the Company from the register (strike-off). However, if the company, within 2 years from the date of deregistration, pays the amount of € 500,00 (Five Hundred Euro), the Company is automatically re-instated to the register. If after 2 years from the removal of the company from the register, the company pays to the Registrar of Companies the amount of € 750,00 (Seven Hundred Fifty Euro), the company is automatically re-instated to the register.
In case of a group of companies, the levy is capped at Euro 20.000.
The levy will not apply to dormant companies; companies that do not own any assets and companies which own property in that part of the territory of the Republic of Cyprus which are not controlled by the Republic of Cyprus. A separate more detailed newsletter on this topic has been sent to all our clients and associates in the Fall of 2011.
A new section (37A) was inserted by Law 145(I)/2011 to simplify and modernise signature and certification of certain documents. This new section provides that every form, certification, minute or other document which is delivered or sent to the Registrar of Companies for submission or which is issued by the registrar of Companies, as the case may be, that requires, under the present Law, a confirmation, certification or signature, may be signed by means of an electronic method, as long as the Registrar of Companies approves the use of such a method, through directives it issues regulating procedural issues which shall be published on the Registrar’s website. Moreover, the new section 37A provides that the electronic signature shall be considered legally equivalent to a hand-written signature for the purposes of any criminal or civil procedure; that the person using an electronic signature is assumed to have full knowledge of the document signed by him/her and that the statutory declaration prescribed in section 17(2)/of the Law may be submitted electronically to the Registrar by a lawyer but in case of a false statutory declaration, the person submitting it shall be liable as if he/she had made a false sworn affidavit.
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This material has been prepared by professionals of Ergoserve Consulting Ltd. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Ergoserve Consulting Ltd accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.