Cypriot and European citizens may proceed with the necessary procedures and register their vessel on the Registrar of Ships. However, non-European citizens who wish to register a ship under the Cyprus flag they are obliged to incorporate a Cyprus Shipping Company. The incorporated Cyprus shipping company will acquire the ship in its name. In this article, I will provide some basic information concerning the formation and maintenance of a Cyprus shipping company.
The shipping company is registered as a private company with limited liability following the provisions of the Cyprus Companies Law. For the company formation, the filing of the memorandum and articles of association in Greek with the Registrar of Companies is obligatory. The bureaucratic procedure required for company formation is approximately 3-5 days since the filing of the necessary documentation. Note that the process might be accelerated for urgent cases. It could be deduced that the incorporation of a shipping company requires an adequate legal and administrative support.
Memorandum and Articles of Association
The memorandum should contain company’s objects. In the case of shipping companies, the ordinary objects are ship ownership and operation, money borrowing, mortgages, etc. On the other hand, the articles tend to adopt Table A of the Companies Law with some changes or addition whether it is required.
Name of the Company and Registered Address
A primary requirement is that the name of the company should end with the word “Limited” or “Ltd”. The Registrar of Companies should approve the name. The approval usually takes two days but in urgent cases the procedure may be accelerated. The registered address has to be in Cyprus. In many cases it is situated at the offices of the lawyers who have incorporated the company in Cyprus. Note that the secretary keeps the registers and minute-books.
The share capital of the shipping company can be nominal or the actual amount to be deposited by the promoters for the implementation of the venture. It can be submitted in full or by calls, in cash or the shares can be allocated per value. All classes of shares and with different voting and dividend rights are acceptable. Note that all shares should be nominative and bearer shares are not acceptable.
Shareholders and Security of Beneficial Shareholders
The incorporation and maintenance of a Cyprus private company require one shareholder, regardless of nationality. Based on the provisions of the Cyprus law all shareholders of the shipping company can be foreigners residing abroad. The transfer of shares from one foreigner to another is permitted.
Cyprus law recognises trust relationship both by statute and in equity. We may provide you the necessary support for the preparation and collection of the security documentation that includes the following:
- trust deed;
- the original share certificates issued in the names of the nominee shareholders;
- instruments of transfer of shares executed in blank;
- directors’ resolutions approving the transfer of shares (in case nominee directors are appointed);
- undated letters of resignation of the nominee directors;
- irrevocable dividend mandates for payment of dividends to the beneficial owners or an account designated by them.
Annual general meetings should be arranged every year. The first general meeting must take place within 18 months since the incorporation of the company. General meetings may take place abroad and written resolutions should be signed by all shareholders and this will be sufficient instead of a meeting.
Directors and Auditors
One or more directors regardless of nationality could be appointed. The nationality of the directors does not influence the status of the company. Consequently, it is not compulsory to have local directors, unless it is more convenient to establish local management for tax or other purposes.
Shareholders decide for the appointment and removal of directors. The board meeting may take place in any part of the world.
Directors’ resolution can be adopted in one of the following two ways:
- at a board meeting duly gathered and held
- without a meeting given that the resolution is signed by all director
Auditors are approved and removed during the general meeting. Otherwise, the directors have the authority to appoint auditors until the convention of a general assembly. Books can be kept in any currency.
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. Nonetheless, it is recommended that the secretary is a company or an individual resident in the country where directors live. In addition to this, it is advisable to be appointed in Cyprus an assistant secretary who will attend to company’s annual formalities in the country. The latter will assure that all company’s annual returns are duly signed and filed with the Registrar of Companies by the secretary. It should be underlined that a director can also be company’s secretary. This does not apply in the case there is only one director and if the company has one shareholder.
Annual returns must be filed with the Registrar of Companies. The names of shareholders must appear in the annual returns.
Afterwards, the annual returns are open for public inspection.
Procedure for Incorporation of a Cyprus shipping company
In the case of the formation of a Cyprus shipping company, law firms in Cyprus require the following: particulars.
- company name;
- the amount of authorised share capital;
- if the shareholders will subscribe to the memorandum and articles of association themselves or through Cypriot nominees;
- whether shares will be held in trust by Cypriot nominees;
- names, address, nationality and occupation of beneficial owners;
- name, address, nationality and occupation of directors;
- name and address of secretary.
The fees for the incorporation of a company contain the Registration Fees (a fixed amount of €102,52) adding 0,6% on the nominal capital. It is remarkable that in Cyprus there are no annual fees for the maintenance and operation of the company. However, there is a stamp duty of €17,09 that corresponds to the filing of the annual returns.
Trading and Taxation
Following the issue of the certificate of incorporation by the Registrar of Companies, the shipping company may begin its activities and proceed with the registration of a vessel in its name.
Taxation is one of the most considerable advantages that constitutes Cyprus an attractive ship management destination. Briefly, until the 31st December 2020 no income tax will be charged, imposed or collected on:
- The income acquired by the shipowners who owns a Cyprus vessel from the operation of such vessel. This provision does not include fishing companies based in Cyprus.
- The dividends paid to the shareholder or the members of a corporation, acquired from profits from the operation of a Cyprus vessel.
Proceed with the Registration of a Cyprus Shipping Company
The registration of a Cyprus shipping company does not embrace complicated bureaucratic procedures. Nevertheless, the registration of a Cyprus shipping company requires a collection and proper preparation of necessary documentation and appropriate legal support. As a result, individuals who wish to incorporate a Cyprus shipping company and register their vessel under the Cyprus flag should seek for proper legal advice and support.