Limited Liability Company
The Law in Cyprus governing limited liability companies is the Companies Law, CAP 113, which is based on the Companies Act 1948 of the United Kingdom. The majority of companies incorporated in Cyprus are limited liability where the liability of the shareholders is limited to the amount unpaid on their shares. Companies must have at least one director and a company secretary. Directors are considered employees of the company and are paid salaries. In some cases directors may be shareholders as well and thus can choose to some extent to be remunerated by salary or by a way of dividend. The constitution of a registered limited company consists of two documents, the Memorandum of Association and the Articles of Association.
A partnership is the relationship between two or more persons carrying on a business in common with a view to profit. The members of the partnership are jointly and severally liable for all debts and obligations, without limitation, and the partnership profits are shared by the partners as income, and taxation is paid on this income in exactly the same way as a sole proprietor.
Limited Liability Partnership
A limited partnership consists of one or more partners called general partners who shall be liable for all debts and obligations of the partnership and one or more persons called limited partners, who are not liable for the debts or obligations of the partnership beyond their fixed contribution.
The registration formalities of registering a branch are the same as the company registration. Overseas companies may also establish a branch in Cyprus provided that they file with the registrar of companies the documents listed in Appendix II.Sole Proprietorship
The owner has unlimited liability for all debts. Cypriots are allowed to carry on business in their name or under a trade name which must be registered as a business name.
All business profits are treated as income of the sole proprietor who then pays income tax according to the applicable rates in force.
Foreign investors are also allowed to carry on the same business if they comply with the immigration law and regulations.
Offshore legal entities
The Offshore legal entities in Cyprus ceased to exist on 1st January 2003. International Business Companies (IBCs) in Cyprus are essentially Cyprus registered entities owned by non-Cypriots and operating outside Cyprus. They are taxed at the same rates as local companies as indicated in Section 4 ‘Taxation’ at the rate of 10% corporation tax.
Establishment of an IBC is made in the same way as a local limited liability company.
Joint ventures can be set up in Cyprus and registered with the registrar of Companies. Their operation and treatment is similar to partnerships.
Public Limited Company
Public Limited Companies are limited companies which are listed in the Cyprus Stock Exchange. In addition to the legislation applicable to limited liability companies, they have to conform to the provisions of the Cyprus Stock Exchange and Cyprus Securities and Exchange Commission regulations.