DID YOU KNOW

By virtue of Cyprus Company Law;

Register of Members
Every company has an obligation to maintain a register of members both past and present, showing the total number of shares each member has in the company, such register being open for inspection. The register of members is prima facie evidence of the true legal position relating to the identification of the owners and their particular shareholding in the company. Details of the register and any changes thereto must be disclosed to the Registrar of Companies in the prescribed manner and within the prescribed time period. Failure to comply with this important obligation may subject the company and every director to a fine, imposed by the Registrar of Companies and enforceable by the Courts.

Register of Directors and Secretary
Every company has an obligation to maintain a register of its directors and secretary, such register being open for inspection. The register must contain the name and surname, residential address, nationality, profession and all other directorships held by each director of the company and if such director is a legal person, its registration number and registered office. Details of the register and any changes thereto must be disclosed to the Registrar of Companies in the prescribed manner and within the prescribed time period. Failure to comply with this important obligation may subject the company and every director to a fine, imposed by the Registrar of Companies and enforceable by the Courts.

Register of Directors' Interests in Shares & Debentures
Every company has an obligation to maintain a register of directors’ interests in shares and debentures issued by the company or companies within the same group, such register being open for inspection under limited circumstances. Failure to maintain the register may subject the company and every director to a fine, imposed by the Registrar of Companies and enforceable by the Courts.

Register of Charges
Every company has an obligation to maintain a register of all existing charges, including all floating and fixed charges on the assets of the company, such register being open for inspection by any creditor of the company or any of its members upon request. Failure to comply with this important obligation may subject the company and every director to a fine, imposed by the Registrar of Companies and enforceable by the Courts.

Furthermore, any charge on the assets or undertaking of a company, with certain exceptions, is void against any other creditor or liquidator unless details relating to such charge are submitted to the Registrar of Companies in the prescribed manner and within the prescribed time period. The law grants the right to any party having an interest in a charge over the assets or undertaking of a company to take proactive steps in registering such charge himself with the Registrar of Companies in order to protect his interest and thereafter claiming any expenses from the company. The Registrar of Companies in turn records such registrations in its principal register and issues a certificate of registration which is conclusive evidence that the obligations of the law have been met and that the charge is valid.

Register of Debenture Holders
Every company has an obligation to maintain a register of all holders of debentures issued by the company, such register being open for inspection. Failure to maintain the register may subject the company and every director to a fine, imposed by the Registrar of Companies and enforceable by the Courts.

Annual Return
By virtue of Cyprus Company Law, every company has an obligation once a year to submit to the Registrar of Companies, in the prescribed manner and within the prescribed time period, its annual return. This comprises details relating to [inter alia] the registered office, the authorised and issued share capital, the shareholders past and present along with the number of shares held, the directors and secretary of the company. Failure to comply with this important obligation may subject the company and every director to a fine, imposed by the Registrar of Companies and enforceable by the Courts.

Annual General Meeting (AGM)
By virtue of Cyprus Company Law, every company has an obligation to hold an annual general meeting of its members (AGM), which must not be held more than fifteen months from the date of the previous meeting. The primary purpose of the AGM is to lay the company’s annual results before the members, whereupon the members can ask questions of the directors in relation to the performance of the company throughout the financial year. The AGM is considered an important tool for members to keep check on the activities of the company.

Shares Transfers
By virtue of Cyprus Company Law, no transfer of shares of a private or public unlisted company is valid in law unless a valid instrument of transfer is produced to the company or any other authorised person, notwithstanding any provisions in the articles of association of the company, such instrument to be certified by the company or any other authorised person in the prescribed manner. Such certification is prima facie evidence that the transferor of the shares has produced valid evidence of title to the shares. The transfer is then required by law to be recorded in the register of members of the company in the name of the transferee under the same terms and conditions. Not implementing such provisons could invalidate any purported transfer of shares.

Share Certificates
By virtue of Cyprus Company Law, a company both private and public unlisted has an obligation to issue appropriate title documents (share certificates) to any transferee or owner of such shares. Such share certificate is regarded by law as prima facie evidence of the legal title to such shares and further, any person entitled to receive such share certificate has a right given to him by law to apply to the Courts of the Republic to enforce such right. Failure to comply with this obligation may subject the company and every director to a fine, enforceable by the Courts.

Appropriately issued share certificates provide proof to any third party or institution that such shares are legally and validly held by the person in question, as well as aiding in substantially eliminating possible fraud by any person claiming through other means to be the rightful owner of the shares.

Memorandum & Articles of Association
A company’s memorandum of association sets out the powers of the company in relation to what business activities it is authorised to undertake as well as any ancillary powers related thereto.
The articles of association act as an internal management framework of the company and bind the company and its members in relation to the rights and obligations of the same.

These two constitutional documents are perhaps the most important documents of a company and great care must be taken to ensure that the provisions contained therein are appropriately drafted in order to validate the company’s business and legal framework. Banks and other institutions place great weight on these documents before any facilities are approved.

Miscellaneous

• It is a legal requirement that public companies have at least two directors, at least seven members, a minimum issued share capital of CYP 15,000, their financial results audited.
  
• Private companies can have just one director and a maximum of fifty members.
  
• Every company must appoint a company secretary.
  
• Existing companies may be re registered as public or private respectively.
  
• Companies can have different share classes with different rights attached thereto.
  
• All companies registered in Cyprus must have their registered office situated in the Republic.
• Every company must include on all its letters of correspondence, notifications and any other trade communication its name, registration number, registered office address and whether it is private limited or public limited.