PRIVATE LIMITED COMPANY
           
General Characteristics

• The liability of its members is limited up to the amount unpaid for their subscribed shares.

• The right to transfer the shares is restricted

• The word “limited” must appear at the end of the name of the company.

• The minimum number of members of the company is one and the maximum number is limited to fifty.

• Shares cannot be issued to the bearer.  In case anonymity is required this can be achieved through local nominees who sign in favour of the beneficial owner of the shares a declaration of trust as well as an instrument of transfer of shares in blank.

• Prohibition as to the invitation to the public to subscribe for any shares or debentures.

• The minimum number for directors is one and there is no maximum.  Directors may be local or foreign.  Alternate directors may also be appointed.  It is not necessary for the directors or the secretary to be shareholders.  The appointment and removal of directors is made by the shareholders.  Local nominee directors may also be used.  Corporate bodies may act as directors and secretary.

• Meetings of the board of directors can be held either in Cyprus or abroad.

• Statutory and reporting requirement are very similar to those of the Companies Act 1948 of the United Kingdom.  The statutory books required are:
  
  
- The Register of Members: containing details as to their full names, addresses etc., the number of shares held by each one, when they became shareholders etc.


- the Register of Directors and Secretary


- the Minute Book for all the meetings of directors and shareholders and


- The Register of Charges affecting the property of the company.

• Charges, debentures, floating charges and mortgages must be registered with the Registrar of Companies.

• Bank accounts of any kind may be opened, in any currency, either in Cyprus or abroad.  Those opened in Cyprus may be operated without any exchange control permission.

• The Secretary must keep the seal of the company under safe custody.

• Special kinds of shares with preferential or other rights may be issued.

• Annual returns must be filed with the Registrar of Companies at the end of each financial year of the company.  Such returns contain information as to any transfer or issue of new shares, changes to directors/secretary/registered office, registration or cancellation of any charges/mortgages etc.

• The company’s file at the Registrar of Companies is available for inspection by the public and therefore it anonymity is required, nominees must be used from the beginning.

• The company must have Memorandum and Articles of Association, both of which must be signed by their subscribers (the first copy must be deposited, together with the other statutory documents, with the Registrar of Companies).  Both documents must be printed in the Greek language but provision is also made for printing same in the English language.

Memorandum of Association

The Memorandum must contain the following:

• The name of the company.

• The address of the registered office which must be in Cyprus.

• The main objects for which the company is formed.

• The amount of the authorised and paid up share capital which can be in any currency.  The authorised and paid up capital must be a minimum of C£1,000.00 (or equivalent amount in any other currency).  For special types of Companies such as insurance companies, I.B.U.s etc. the authorised and paid up capital is higher (there is no maximum capital).  The authorised and paid up share capital can be increased at any time by special resolution of its members.

• Special provision as to the liability of the Members of the company, which is limited up to the amounts, they have paid for their subscribed shares.

• Provisions as to the various classes of shares.

• The names, addresses and description of the subscribers together with the number of shares for which they subscribe. 
  
  
  

Articles of Association

The Articles of Association contain the regulations for the internal management of the company.  In the Companies Law Chapter 113 under the heading “Table A” a specimen of certain statutory provisions regarding the regulations and the functioning of the company is provided.  This specimen may be adopted by the Articles of Association fully or partly.

The Articles of Association may be amended at any time by special resolution of the members (majority vote of over 75%).

The Articles of Association may include provisions as to the – dividends – accounts and audit – right of transfer and procedure to transfer the shares – voting rights – debentures – general meetings of the company – the appointment, removal and meetings of the directors – annual general meetings – extraordinary meetings and meetings for special resolutions – winding up of the company – loans to directors etc.

Formation Procedure

According to Cyprus Law an application for the formation and registration of a company must be carried out through a Cyprus law office.

The formation procedure of a company is, in general lines, as follow:

• Approval of the name of the company.

• Preparation and printing of the Memorandum and Articles of Association of the company in Greek and English languages.

• Filing with the Registrar of Companies the Memorandum and Articles of Association of the company in Greek language (duly signed by the subscribers), together with forms H.E.1., H.E.2., H.E.3., (duly signed by one director or the secretary) and the receipt for the payment of the registration duty.  Form H.E.1. is an affidavit by the lawyer of the company as to the legitimacy of the formation of the company.  H.E.2. Provides for the registered address of the company. H.E.3. Provides for the appointment of the first directors and secretary.

• As soon as registration of the company is effected the Registrar of Companies furnishes the secretary with the Certificate of Registration together with certified copies of the list of directors and secretary, shareholders, registered address, Memorandum and Articles of Association, a copy of the Certificate of Registration and a certificate of good standing of the company. Certified copies of the Memorandum and Articles of Association and registration of the company are given in Greek or English.  As soon as the certificate of the registration of the company is issued, the company can arrange for the first meeting of the directors for statutory matters such as appointment of auditors, appointment of legal adviser, opening bank accounts, approval of the seal of the company, and of the Memorandum and Articles of Association, appointment of the secretary etc.

• The whole application, formation and registration procedure can be completed within three to seven days.

• There are certain registration fees, which must be paid upon the application for the registration of any company.  The registration fees vary, depending on the nominal capital of the company, between C£125.00 up to capital of C£5,000.00 and C£175,00 up to C£10,000.00 capital.

For higher authorised share capital the fees payable are £0.06 of the capital.

Information needed for registration

Information needed for registration of an international business company is detailed below:

• The names, addresses, occupations and nationality of at least one person or legal entity who is to be the shareholder or the beneficial owner of the shares of the company, irrespective of whether anonymity is required to be kept and nominees shall be used.  Since the Memorandum & Articles of Association of the company must be signed by the subscribers, and in order to save time, the first subscribers of the company are usually employees or nominee companies of a law office who, upon the registration of the company, transfer their respective shares to the real shareholders.  (In cases of anonymity the nominees sign a blank instrument of transfer of shares together with a trust deed, and the Share Certificates which they pass over to the beneficiaries who keep these to safeguard their interests).

• The name of the proposed company to be registered.  It is advisable that several alternative names are given in order to save time and unnecessary correspondence.  In cases where the name of the company is not an important element law firms have available a list of approved names ready for immediate use.

• The main objects of the company.

• The proposed authorised and issued share capital and the participation of each shareholder or beneficial owner in the company.  As previously stated the minimum authorised share and paid up capital is C£1,000.00.

• The name, address, occupation and nationality of at least one person to be appointed as a director, and the same particulars for the secretary.  It is advisable, however, to appoint more than two directors, so that a decision may be easily obtained.  It is also advisable to appoint local directors if the management and control of the company must be in Cyprus.  In case of appointment of local nominee directors, they only act upon the instructions received from the beneficiaries of the company.