Cypriot and European citizens can proceed with the necessary procedures and register their vessel in the Ship Register. However, non-European citizens who wish to register a ship under the Cyprus flag are required to set up a Cyprus shipping company. The incorporated Cypriot shipping company will acquire the ship in your name. In this article, I will provide basic information on 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 Company Law. For the incorporation of the company, the presentation of the articles of incorporation and the statutes in Greek before the Registrar of Companies is mandatory. The bureaucratic procedure required for the incorporation of the company is approximately 3-5 days from the presentation of the necessary documentation. Please note that the process could be sped up for urgent cases. It could be deduced that the constitution of a shipping company requires adequate legal and administrative support.
Memorandum and Articles of Association
The memorandum must contain the objects of the company. In the case of shipping companies, the ordinary objects are the ownership and operation of the ship, the loan of money, mortgages, etc. On the other hand, the articles tend to adopt Table A of the Corporations Law with some changes or additions if necessary.
Company name and registered address
A primary requirement is that the company name must 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 sped up. The registered address must be in Cyprus. In many cases, it is located in the offices of the lawyers who have incorporated the company in Cyprus. Please note that the secretary keeps the records and minute books.
Social capital
The capital stock of the shipping company can be nominal or the actual amount to be deposited by the promoters for the implementation of the undertaking. It can be presented in full 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 beneficiary shareholders
The constitution and maintenance of a private company in Cyprus requires a shareholder, of nationality. In accordance with the provisions of Cyprus law, all shareholders of the shipping company can be foreigners residing abroad. Transfer of shares from one foreigner to another is allowed.
Cyprus law recognizes the relationship of trust both by statute and by equity. We can provide the necessary support for the preparation and collection of security documentation that includes the following:
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deed of trust;
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the original share certificates issued in the name of the nominative shareholders;
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stock transfer instruments executed blank;
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the resolutions of the directors approving the transfer of shares (in the event that nominee directors are appointed);
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undated resignation letters from nominated directors;
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Irrevocable dividend mandates for the payment of dividends to final beneficiaries or an account designated by them.
Meetings
Annual general meetings should 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 could 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 address for tax or other purposes.
The shareholders decide the appointment and removal of directors. The board meeting can take place anywhere in the world.
The resolution of the directors can be taken in one of two ways:
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at a duly convened and held board meeting
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no meeting since the resolution is signed by all directors
The 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 saved 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 an individual resident in the country where the directors reside. In addition to this, it is advisable to appoint an undersecretary in Cyprus who will attend to the annual procedures of the company in the country. The latter will ensure that all the company’s annual declarations are duly signed and filed in the Companies Registry by the secretary. It should be noted that a director can also be the secretary of the company. This does not apply if there is only one director and if the company has one shareholder.
Returns
Annual returns must be filed with the Companies Registry. The names of the shareholders must appear on the annual statements.
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.
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company name;
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the amount of authorized capital stock;
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whether the shareholders sign the memorandum and the statutes themselves or through Cypriot nominees;
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whether the shares will be held in trust by Cypriot nominees;
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names, address, nationality and occupation of the final beneficiaries;
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name, address, nationality and occupation of the directors;
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name and address of the secretary.
Costs
The incorporation fees of a company contain the Registration Fees (a fixed amount of € 102.52) adding 0.6% to the nominal capital. It is noteworthy that in Cyprus there are no annual fees for the maintenance and operation of the company. However, there is a stamp tax of € 17.09 that corresponds to the presentation of annual returns.
Trade and taxes
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 important advantages that makes Cyprus an attractive destination for ship management. Briefly, until December 31, 2020, no income tax will be charged, imposed or collected on:
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The income acquired by the owners of a Cypriot vessel from the operation of said vessel. This provision does not include fishing companies based in Cyprus.
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Dividends paid to the shareholder or members of a corporation, acquired from the proceeds of the operation of a Cyprus ship.
Continue with the registration of a Cyprus shipping company
The registration of a Cyprus shipping company does not include complicated bureaucratic procedures. However, the registration of a Cyprus transport company requires the proper collection and preparation of the necessary documentation and adequate legal support. As a result, persons wishing to set up a Cyprus shipping company and register their vessel under the Cyprus flag should seek proper legal advice and support.
