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Types of Cyprus Companies

 
Companies registered in the Republic of Cyprus are governed by the Companies Law, Cap 113, which is modeled on the English Companies Act of 1948. Any amendments made throughout the years in the Cyprus Companies Law, were mainly made in order the Companies Law of the Republic to be harmonized with the EU Law standards. 
 
The Companies Law in Cyprus recognizes the following classifications of Companies:
 
Limited by shares
Limited by guarantee
Private Companies
Public Companies
European Public Limited Companies or Societas Europaea (SE).
 
1. Companies Limited by shares
The liability of the shareholders is limited to the nominal value of the shares they have taken up or in case the shares issued at a premium, to their nominal value.
 
This is the most widely used vehicle among international investors. This vehicle can be used in a number of ways each serving a different purpose and providing a number of tax benefits to its Beneficial Owners. Examples include:
 
a. The Cyprus Holding Company
The Cyprus Holding Company is used as a vehicle which holds shares in other companies and enjoys the following main advantages :
Capital gains on sale of securities: 100% exemption;
Taxable losses carried forward indefinitely;
Group relief availability (75% holding);
Foreign Permanent Establisment profits exempt;
Possibility for establishing an SE (European Company);
Extensive Double Tax Treaty network.
No withholding tax on outward payments of dividends, interest and royalties

b.   The Cyprus Finance Company
The Cyprus Company can receive interest on loans from EU group companies with no withholding tax and can pay interest without deduction of withholding tax. Key jurisdictions where no withholding tax on interest exists include Russia and Ukraine.

c .   The Cyprus Intellectual Property Company
The protection of IP rights is dealt extensively in Cyprus. There is a comprehensive system in place that guarantees that the results of innovation and creativity are protected at a European and an International level. The legislation covers patents, trademarks, service marks, designs, copyrights, internet domain names, formulae, know how, literary and artistic work and many others. The main tax benefits of a company holding intellectual property rights include the following:
- An 80% exemption on royalty income and capital gains upon disposal of IP;
- No recapture system for previously generated losses - losses can be carried forward indefinitely;
- Gross IP income reduced by expenses incurred for the production of IP income;
- Competitive amortization provisions over a 5 year period;
- Wide range of qualifying IP rights;
- Effective Tax rate of 2% or Less!
 
d.   The Cyprus Ship Owning and Management Company
Cyprus has the 10th largest merchant fleet in the world by registrations. Specific tax exemptions apply to companies owning ships or managing and employing crews working in international waters. Cyprus has a very competitive tonnage tax regime
 
2. Companies Limited by guarantee
The liability of the members is limited to the amount so agreed and stipulated as a clause to its memorandum to be contributed in the event the company goes into liquidation. 
Such companies are usually incorporated as non-profit organizations with or without share capital.
 
3. Private Companies 
A Private Company is a Company which by its Articles of Association:
- Restricts the right to transfer of its shares and
- Limits the number of its shareholders to 50 and
- Prohibits invitation to the public to subscribe for its shares or debentures
 
Any person may incorporate and register a private company and subscribe for all its shares. Therefore a single shareholder may become a director and secretary of such a company.
 
4. Public Companies 
A public Company must have:
- At least 7 shareholders
- At least 2 directors
- Obtain a trading certificate by the Registrar of Companies before the commencement of its business
- Issue a prospectus before issuing any shares or debentures to the public
- Minimum share capital offered for subscription is EUR 25.630 which must be present by the time that a trading certificate is requested by the Registrar of Companies.
 
5. European Public Limited Companies or Societas Europaea (SE)
A SE company is a company that must have its registered office and its head office in the same Member State of the European Union.
The SE company must have at least a minimum share capital of EUR 120.000 and it is regulated by the provisions of the Regulation 2157/2001.
 
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