The first step to be taken when registering a vessel under the Cyprus flag is to set up a Cyprus Shipping Company which will acquire the vessel on its name.
The company is registered as a private company “LTD” (limited by shares) under the provisions of the Cyprus Companies Law, Chapter 113. The Cyprus shipping company incorporation is undertaken by our Firm; please be aware that only lawyers can register any type of company in Cyprus.
The company can thereafter purchase or sell vessels, borrow funds (from residents or non-residents) and mortgage its vessels in favour of non-residents, etc without any exchange control approval. Furthermore, the company may do all banking operations, in any currency, as every elegal entity in Cyprus can do.
Name of the Company
Prior approval of the name by the Registrar of Companies is required. It usually takes 2 days to obtain a name approval but the procedure may be expedited upon request.
The registered address of any Cyprus company must, by law, be in Cyprus. The registers and minute books are kept with the secretary of the company. Our Firm regurarly provides the service of Cyprus registered office addresses for our international clients.
A Shipping Company’s share capital may either be nominal (e.g. 1000 shares of EUR1 each) or the actual amount to be deposited by the promoters for the pursuit of the venture. It may be paid up in full or by calls, in cash or for consideration other than cash and the shares may be allotted a par value. Any class of shares e.g. ordinary or preference, and with different voting and dividend rights, are acceptable. All shares must be nominative; bearer shares are unacceptable.
Shareholders of Cyprus Shipping Companies
Minimum one shareholder is required for the incorporation and continued existence of any Cyprus private company. The nationality and country of residence of the shareholders is immaterial; ie all shareholders may be foreigners residing outside Cyprus. The transfer of shares from one foreigner to another is allowed.
Trusts may also be shareholders in a Cyprus company.
For the benefit of beneficial shareholders, shares can be held by trustees in orders to preserve anonymity. The interest of the beneficial shareholders may be safeguarded by signing the Trust Deed. Our Firm can provide trustee services.
Shareholders appointing a nominee trustee can keep their identity confidential.
Directors of a Cyprus Shipping Company
One or more directors may be appointed. The nationality of directors is totally immaterial and does not affect the status of the company in any way. Thus, there is no obligation to have local directors, unless it is considered advisable to establish local management for tax or other reasons. Share qualifications are not required.
The appointment and removal of directors are in the hands of the shareholders, and special rights may be given for this purpose to a specific class of shares. Board meetings may be held in any country of the world. Directors’ resolutions may be taken in one of two ways:
- At a board meeting duly convened and held, or
- Without a meeting provided that all the directors sign the resolution.
The names of the directors should be disclosed to the Registrar of Companies by separate returns that are open to public inspection. Their names and nationalities (for foreigners) must by law appear on the letterheads but, in practice, this is not observed for shipping companies.
A company secretary must be appointed by the directors and is removable by them. The nationality of the secretary is totally immaterial and does not affect the status of the company in any way. However, it is advisable that the secretary be a company or a person resident at the place where the directors reside and that an assistant secretary be appointed in Cyprus to attend to company annual formalities in Cyprus. This will ensure that all company annual returns are promptly signed and filed with the Registrar of Companies by the secretary and recorded.
Annual returns must also be filed. The names of the shareholders must appear in the annual returns filed with the Registrar of Companies. Any charges against the company must be filed and registered. Once filed the returns are open to public inspection.
Procedure for Incorporation of Cyprus Shipping Company
A limited liability company can be incorporated in one of the following ways:
- by the actual shareholders appearing as subscribers to the memorandum and articles of association and signing the said documents; or, in case of anonimity in place,
- by Cypriot nominees subscribing to the memorandum and articles of association and later transferring their subscription shares to the actual shareholders by instruments of transfer (if so be the case – or may chose to continue holding the shares on trust).
In order to proceed with the formation of a Cypriot shipping company, the following particulars are required:
- Desired company name (more than one name should be given if time is of the essence);
- Amount of authorized share capital;
- Whether shareholders will subscribe to the memorandum and articles of association themselves or through Cypriot nominees;
- Whether shares will be held in trust by Cypriot nominees;
- Names, address, nationality and occupation of beneficial shareholders;
- Name, address, nationality and occupation of directors;
- Name and address of secretary.
All Cyprus companies need to be audited annually and to submit financial and tax statements to the Inland Revenue and the Registrar of Cyprus Companies.
The audit must be carried out by a Cypriot firm of auditors in accordance with the International Accounting and Auditing Standards.