Cypriot and European citizens can carry out the necessary procedures and register their boat in the Ship Registry. However, non-European citizens wishing to register a ship under the Cyprus flag are required to incorporate a Cyprus Shipping Company. The Cyprus Incorporated Shipping Company will acquire the ship on your behalf. In this article, I will provide basic information on forming and maintaining a shipping company in Cyprus.
The shipping company is registered as a private company with limited liability under the provisions of the Cyprus Companies Act. For the formation of the company, it is mandatory to present the deed of incorporation and the statutes in Greek to the Registrar of Companies. The bureaucratic procedure required for the constitution of a company is approximately 3-5 days from the presentation of the necessary documentation. Please note that the process may be expedited for urgent cases. It can be deduced that the constitution of a shipping company requires adequate legal and administrative support.
Memorandum and Articles of Association
The memorandum must contain objects of the company. In the case of shipping companies, the ordinary objects are the ownership and operation of ships, loans, mortgages, etc. On the other hand, the articles tend to adopt Table A of the Companies Act with some changes or additions if necessary.
Company Name and Registered Address
A primary requirement is that the company name end with the word “Limited” or “Ltd.” The Registrar of Companies must approve the name. Approval usually takes two days, but in urgent cases the procedure can be expedited. The registered address has to be in Cyprus. In many cases it is located in the offices of the lawyers who have incorporated the company in Cyprus. Note that the secretary keeps the records and minute books.
Social capital
The capital stock of the shipping company can be nominal or the real amount to be deposited by the promoters to carry out the undertaking. It can be presented in its entirety or by call, in cash or the shares can be assigned by value. All classes of shares and with different voting rights and dividends are accepted. Please note that all shares must be registered and bearer shares are not acceptable.
Shareholders and Security of Beneficial Shareholders
The incorporation and maintenance of a private Cyprus company requires a shareholder, regardless of their nationality. Under the provisions of Cyprus law, all shareholders of the shipping company may be foreigners residing abroad. The transfer of shares from one foreigner to another is allowed.
Cyprus law recognizes the trust relationship both by statute and in equity. We can provide you with the necessary support for the preparation and compilation of security documentation that includes the following:
- trust deed;
- the original share certificates issued in the name of the nominee shareholders;
- stock transfer instruments executed blank;
- resolutions of directors approving the transfer of shares (in case proprietary directors are appointed);
- undated letters of resignation from nominee directors;
- irrevocable dividend mandates for the payment of dividends to beneficial owners or an account designated by them.
meetings
Annual general meetings must be organized every year. The first general meeting must take place within 18 months of the incorporation of the company. General meetings can take place abroad and written resolutions must be signed by all shareholders and this will suffice instead of a meeting.
Directors and Auditors
One or more directors may be appointed regardless of their nationality. The nationality of the directors does not influence the status of the company. Consequently, it is not mandatory to have local directors, unless it is more convenient to establish a local administration for tax or other purposes.
Shareholders decide on the appointment and removal of directors. The board meeting can take place anywhere in the world.
The directors’ agreement can be adopted in one of the following two ways:
- at a board meeting duly convened and held
- no meeting since the resolution is signed by all directors
The auditors are approved and removed during the general assembly. Otherwise, the directors have the authority to add auditors until the convention of a general meeting. Books can be carried in any currency.
Secretary
The directors of the company appoint and remove the secretary of the company. The nationality of the secretary is not important and does not influence the status of the company. However, it is recommended that the secretary be a company or natural person resident in the country where the directors reside. In addition to this, it is recommended that an undersecretary be appointed in Cyprus who will attend to the annual procedures of the company in the country. The latter will ensure that all the annual declarations of the company are duly signed and filed with the Registrar of Companies by the secretary. It should be noted that a director can also be a company secretary. This does not apply in the event that there is only one director and if the company has only one shareholder.
returns
Annual declarations must be submitted to the Companies Registry. The names of the shareholders must appear in the annual declarations.
Subsequently, the annual declarations are open for public inspection.
Procedure for the incorporation of a Cyprus shipping company
In the case of the formation of a shipping company in Cyprus, law firms in Cyprus require the following: data.
- Company Name;
- the amount of authorized capital stock;
- whether the shareholders will sign the memorandum and articles of association themselves or through Cypriot representatives;
- whether the shares will be held in trust by Cypriot nominees;
- names, addresses, nationalities and occupations of beneficial owners;
- name, address, nationality and occupation of the directors;
- name and address of the secretary.
costs
The fees for the incorporation of a company contain the Registration Fee (a fixed amount of €102.52) adding 0.6% of the nominal capital. It is noteworthy that in Cyprus no annual fees are charged for the maintenance and operation of the company. However, there is a stamp duty of €17.09 that corresponds to the presentation of the annual declarations.
Trade and Taxation
After the issuance of the certificate of incorporation by the Registrar of Companies, the shipping company can start its activities and proceed with the registration of a vessel in its name.
Taxation is one of the most considerable advantages that make Cyprus an attractive destination for ship management. In summary, until December 31, 2020, income tax will not be charged, taxed or collected on:
- Income earned by shipowners owning a Cyprus vessel from the operation of said vessel. This provision does not include fishing companies based in Cyprus.
- Dividends paid to the shareholder or members of a corporation, acquired from the profits from the operation of a Cyprus vessel.
Proceed with the registration of a Cyprus shipping company
Registration of a Cyprus shipping company does not involve complicated bureaucratic procedures. However, registration of a Cyprus shipping company requires proper collection and preparation of the necessary documentation and appropriate legal backing. As a result, individuals wishing to incorporate a Cyprus shipping company and register their vessel under the Cyprus flag should seek appropriate legal advice and support.