The Share Capital in Cyprus
The Share Capital in CyprusUpdated on Monday 30th March 2020
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Foreign investors are allowed to open a business in Cyprus and can choose from several types of companies. However, there are minimum requirements a foreign investor must abide by in order to register a company in Cyprus. One of the most important requirements for a Cypriot company is related to the share capital, as imposed by the local legislation based on the type of structure chosen.
The most common type of Cypriot company an investor opts for is the limited liability company, whether it is private or public. Both types of companies are subject to the Companies Law in Cyprus.
We invite you to read about the share capital requirements for opening a company in Cyprus. You can rely on our lawyers in Cyprus for assistance in opening a business in this attractive country.
What is the share capital of a Cypriot company?
The share capital is the contribution of the company’s founders, also known as shareholders, upon the registration of a business in Cyprus. According to the Company Law, all business forms are required to have a share capital which can be made of cash or kind. For certain business forms, the Company Act provides for specific share capital requirements, while for others it does not.
The following types of companies require a share capital in Cyprus:
- - the limited liability companies – for private companies there is no specific amount of money, however, the public company imposed a certain amount of money;
- - the partnership – even if no amount of money is specified by the law, the founders must contribute to the share capital;
- - the sole proprietorship – the single entrepreneur must deposit a low amount of money which will allow him/her to operate;
- - the subsidiary company – when incorporated as a public company, the minimum amount of money is of approximately 26,000 euros;
- - joint ventures popular in Cyprus and can take the form or private limited liability companies which require a share capital.
Even if the branch office is one of the most common types of structures in Cyprus, it does not require a minimum share capital when created by a foreign company.
Our law firm in Cyprus can guide foreign investors who want to open companies in this country by preparing all the documents required for incorporation.
How to establish the share capital of a company in Cyprus
While only the public company is subject to specific share capital, the other business forms are also required to have a share capital which must be stated in the business’ Articles of Association or foundation deed. The share capital must also be declared with the Trade Register in Cyprus.
In the case of limited liability companies, the shareholders have the following responsibilities in relation to the share capital:
- they must contribute with a minimum amount which will be written in the Articles of Association;
- the founders will be granted certain rights and benefits in accordance with their contributions;
- each shareholder will acquire a certain number of shares in accordance with their contribution;
- the shareholders can decide to alter the share capital of the company, by increasing or decreasing it;
- the shareholders have the right to sell or buy shares in the company they own.
Our Cypriot lawyers can offer more information on the share capital of private and public companies.
Minimum share capital for a private limited company in Cyprus
Upon registration, the owner of the private limited company is not required to pay a minimum share capital in Cyprus, but it is recommended to do so. The minimum share capital recommended when registering a company is 1.000 euros and each share must have a nominal value of 1 euro. The share capital of a Cypriot private limited company can be denominated in any currency. The minimum number of shareholders a private limited company is allowed to have is one, but there is a limit of maximum 50 shareholders. The liability of the shareholders in case anything happens to the company will be limited to the value of their contribution. It isn’t necessary for the minimum share capital to be paid upon registration, but it is required to be placed in the company’s bank account.
Minimum share capital for a public limited company in Cyprus
Unlike the private limited company, the public limited company in Cyprus is required to have a minimum share capital must be approximately 25,650 euros. The par value of the shares can be 1 euro, but the shares can be denominated in any currency. The company is required to have at least seven shareholders but there is no maximum limit to their number. The public limited company is allowed to trade its shares on the Cyprus Stock Exchange. The minimum share capital for public limited companies in Cyprus can be paid in time, but when incorporating the company with the Registrar of Companies, the issued share capital must be in the company’s bank account and it must be intended for business purposes solely.
Altering the share capital of a company in Cyprus
According to Section 60 in the Company Law, the shareholders of a Cypriot company have the right to intervene on the share capital of the business by increasing or decreasing it. They also have the right to change the value of the shares or convert them into shares of another value.
No matter the alteration to be brought the share capital, a resolution must be passed by the shareholders and the Articles of Association must be amended with the new changes.
The increase or decrease of the share capital must also be announced with the Trade Register within 15 days after the resolution was passed.
Business owners must know that the decrease of the share capital of a company is subject to the approval of a Cypriot court because in certain cases, such request is made when the business is insolvent and will undergo bankruptcy.
Our lawyers in Cyprus can offer more information on the alterations of the share capital of a company.
FAQ on the share capital in Cyprus
1. What are the types of share capital a Cypriot company can have?
A Cypriot company can have an authorized share capital and a paid-up share capital.
2. What is the minimum number of shares a founder need to contribute to the share capital?
The minimum number of shares to be contributed to the share capital is one, and the minimum value of one share is 0.01 EUR.
3. Are there any requirements when the share capital is made in kind?
A valuation of the assets is required when the share capital of a public company is made in kind in Cyprus.
4. What is the period of time in which the share capital must be deposited?
The share capital must be deposited before the Cypriot company is registered.
Investors are attracted to the company-friendly tax regime and pro-business legislation for foreign investment in Cyprus. If you plan to open a company you can contact our law firm in Cyprus for legal assistance.