Re-domiciliation presents a valuable opportunity for companies seeking to transfer their domicile to a more favorable jurisdiction without undergoing the burdensome process of liquidation and reincorporation. This seamless transition maintains business continuity and allows companies to benefit from a new legal environment. Cyprus, with its robust legal framework and attractive business environment, stands out as an ideal destination for companies considering re-domiciliation.

Introduction

On July 28, 2006, the law was amended by the House of Representatives of the Republic of Cyprus (Law 124 (I)/2006) to facilitate the continuation of foreign companies into (transfer in) and out of (transfer out) Cyprus, provided the jurisdiction of incorporation allows such continuation. This process, also known as a “transfer of legal seat”, permits a company to shift its domicile from one jurisdiction to another without dissolution. The company continues as the same legal entity but is governed by the laws of the new jurisdiction.

The re-domiciliation process preserves the company’s legal identity and allows it to continue its business operations seamlessly under the Cyprus legal system. This avoids the cumbersome procedures and unnecessary administrative costs associated with liquidation and reincorporation.

Why re-domicile to Cyprus?

Transferring a company to Cyprus allows you to capitalize on the country’s favorable legal and business environment without disrupting your existing operations. Re-domiciliation to Cyprus offers a strategic opportunity for businesses seeking stability, legal advantages, and access to new markets.

Cyprus provides an exceptionally attractive environment for transferring and establishing a business. The re-domiciliation process enables companies to move their domicile to Cyprus, benefiting from its advantageous legal and business framework while maintaining operational continuity. The numerous benefits include:

• Favorable Taxation: Cyprus offers one of the lowest corporate tax rates in the European Union, currently set at 12.5%. For holding companies, some additional benefits include: no withholding tax on dividends, income or royalties; tax exemption on dividends; group relief laws.
  There is also an 80% tax exemption on qualifying profits and royalties produced by IP owned by Cyprus companies, resulting in an effective tax rate of 2.5%.
• Double Tax Treaties: Cyprus has a wide network of double tax treaties with over 60 countries, reducing the tax burden on international businesses operating in Cyprus.
• Skilled Workforce: Cyprus boasts a well-educated, skilled, and multilingual workforce, with a high proportion of English speakers, facilitating smooth operations for international companies.
• Legal Framework: The legal system in Cyprus is based on UK Common Law, providing a familiar and reliable foundation for businesses. Additionally, as a member of the European Union (the “EU”), legislation is governed by EU Directives and Regulations;
• Business-Friendly Environment: Supported by a robust legal framework, Cyprus is renowned for its business-friendly environment.
• Strategic Location: Serving as a gateway to markets across the EU, the Middle East, and North Africa, Cyprus’s strategic location enhances its appeal as a business hub.

Streamlining the transition process
To facilitate the continuation of a foreign company in Cyprus, several key considerations must be addressed:

1. Legal Recognition: The laws of the jurisdiction where the foreign company is currently registered must permit re-domiciliation.
2. Amendment of Documents: The memorandum (MA) or articles of association (AoA) of the foreign company must include provisions allowing for continuation in Cyprus. If not already included, amendments must be made to incorporate these provisions.
3. Licensing Requirements: If the foreign company conducts licensed activities in its current jurisdiction, it must satisfy equivalent licensing criteria in Cyprus.
4. Share Capital Structure: Cyprus law does not recognize bearer shares. Therefore, the company’s share capital structure must be adjusted to registered shares.
5. Naming Requirements: The company’s proposed name in Cyprus must end with the word “Limited” or “Ltd”. Approval of the proposed name is required by the Department of Registrar of Companies and Intellectual Property (the “Registrar”). Alternatively, the company may choose to retain its current name, subject to approval by the Registrar. In any case, a name application should be submitted beforehand.

Preparation of application and required documents
According to the Cyprus Companies Law, Cap.113 as amended, several documents must be prepared and submitted with the application to the Registrar, including amongst others:

• Amended memorandum and articles of association compliant with the laws of Cyprus;
  Certificate of good standing or equivalent document from the jurisdiction of incorporation;
• Confirmation that re-domiciliation is possible under the current jurisdiction’s legislation;
• Affidavit confirming the solvency of the foreign company;
• Resolution(s) or equivalent document(s) authorizing the re-domiciliation and adoption of new memorandum and articles of association;
• Official document evidencing that the competent authority of the country of incorporation is informed of the re-domiciliation;
• Confirmation of compliance with foreign jurisdiction’s laws;
• Details of director(s), secretary(ies) and shareholder(s);
• Necessary permissions or consents for specific business activities;
• For public companies or those involved in regulated activities, additional documentation such as public offer details and stock exchange consents may be required.

If the company operates in a regulated sector requiring licensing in both its current jurisdiction and Cyprus, consent from relevant authorities must be obtained.

It is noted that all documents submitted must be true copies certified with an apostille under the Hague Convention. In cases where the jurisdiction of incorporation does not participate in the Hague Convention, certification must be obtained from the respective competent authority.

These steps ensure that the re-domiciliation process to Cyprus is conducted in accordance with legal requirements, facilitating the seamless continuation of the company’s operations under Cyprus law.

Application process – Certificate of Continuation
Once the aforementioned documents are obtained, they must be translated into the Greek language and submitted to the Registrar along with the required application form(s). The Registrar will review the application and issue a temporary certificate known as the “Temporary Certificate of Continuation”. From this point onward, the company will be recognized as a legal entity incorporated in Cyprus and will be provisionally registered as a continuing company in Cyprus, with full capacity to exercise all the rights and obligations under the laws of Cyprus.

Upon issuance of the Temporary Certificate of Continuation, foreign authorities have a 6-month period to provide evidence to the Registrar that the company has been deregistered from its foreign jurisdiction. The foreign company should not be de-registered until the Temporary Certificate of Continuation is obtained. Once the company provides proof of deregistration from the foreign jurisdiction, and provided that the Registrar is satisfied that the application and the documents submitted with it are in accordance with the laws of Cyprus, the Registrar will issue the Permanent Certificate of Continuation, confirming the company’s registration as a continuing entity in Cyprus.

With the issuance of the certificate of continuation, it is certified that the company has been registered as continuing in Cyprus and, any previously issued certificates cease to have any legal effect.

It is essential to emphasize that the Registrar reserves the right to reject a re-domiciliation application for several reasons. These include, among others, ongoing dissolution proceedings against the foreign company, the appointment of a liquidator, the existence of a restrictive order or judgment, any proceedings initiated to avoid or affect debts and obligations, or indications of legal violations.

Conclusion
Choosing Cyprus as a destination for re-domiciliation offers companies a strategic advantage in navigating the complexities of global business. With its streamlined procedures and supportive regulatory environment, Cyprus provides a stable foundation for companies looking to expand into the European Union market and beyond. The country’s favorable tax regime, coupled with its strategic geographical location and robust legal framework, enhances operational efficiency and fosters sustainable growth. By relocating to Cyprus, companies not only ensure continuity and compliance but also position themselves for increased opportunities and competitive edge in an ever-evolving global economy.

Disclaimer

The information provided above offers a general overview of re-domiciling a company to Cyprus. Should you require specific guidance or consultation on re-domiciling your company to Cyprus or related matters, please do not hesitate to contact us at info@antonioulegal.com