Cypriot and European citizens can carry out the necessary procedures and register their vessel 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 in your name. In this article, I will provide basic information on the formation and maintenance of a shipping company in Cyprus.
The shipping company is registered as a private company with limited liability in accordance with the provisions of the Cyprus Companies Act. For the formation of the company, it is mandatory to submit the articles of association and articles of association in Greek to the Registrar of Companies. The bureaucratic procedure required for the incorporation 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 company objects. 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 ends 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 social capital of the shipping company can be nominal or the real amount to be deposited by the promoters for the realization of the enterprise. It can be presented in its entirety or by call, in cash or the shares can be assigned by value. All classes of shares are accepted and with different voting rights and dividends. Please note that all shares must be registered and bearer shares are not acceptable.
Shareholders and Security of Beneficial Shareholders
Incorporating and maintaining a private Cyprus company requires a shareholder, regardless of nationality. Under the provisions of Cyprus law, all shareholders of the shipping company may be foreigners residing abroad. Transfer of shares from one foreigner to another is permitted.
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:
- deed of trust;
- the original share certificates issued in the name of the nominal shareholders;
- blank executed stock transfer instruments;
- resolutions of directors approving the transfer of shares (in the event that proprietary directors are appointed);
- undated letters of resignation from nominee directors;
- Irrevocable dividend mandates for payment of dividends to beneficial owners or an account designated by them.
meetings
Annual general assemblies must be organized every year. The first general meeting must take place within 18 months from the incorporation of the company. General meetings can take place abroad and written resolutions must be signed by all shareholders and this will suffice in lieu 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. Accordingly, 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 administrators’ agreement can be adopted in one of the following two ways:
- in a board meeting duly assembled and held
- without meeting since the resolution is signed by all the 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 assembly. Books can be carried in any currency.
Secretary
The company directors appoint and remove the company secretary. 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 an individual 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 annual company declarations are duly signed and filed with the Registrar of Companies by the secretary. It should be noted that a director can also be company secretary. This does not apply in case 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 on the annual returns.
Subsequently, the annual returns 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 the beneficial owners;
- name, address, nationality and occupation of the directors;
- Secretary’s name and address.
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 annual returns.
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, levied or collected on:
- Income earned by shipowners who own a Cyprus vessel from the operation of that 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 ship.
Proceed with the registration of a Cyprus shipping company
Registration of a Cyprus shipping company does not involve complicated bureaucratic procedures. However, the registration of a Cyprus shipping company requires proper collection and preparation of the necessary documentation and appropriate legal backing. As a result, persons wishing to incorporate a Cyprus shipping company and register their vessel under the Cypriot flag should seek proper legal advice and support.