Cypriot and European citizens can proceed with the necessary procedures and register their ship in the Ship Register. However, non-European citizens wishing to register a vessel under the Cypriot flag are required to establish a Cypriot shipping company. The registered Cypriot shipping company will purchase the ship on their behalf. In this article, I will provide some basic information on how to start and run a Cypriot shipping company.
The shipping company is registered as a private limited company according to the provisions of the Cyprus Company Law. Filing the Articles of Association and Articles of Incorporation in Greek at the Trade Register is obligatory for the formation of a company. The bureaucratic procedure required for company formation is approximately 3-5 days from the submission of the required documents. Note that the process can be expedited in urgent cases. From this it can be deduced that the establishment of a shipping company requires proper legal and administrative support.
Memorandum of Association and Articles of Incorporation
The memorandum should contain the company objects. In the case of shipping companies, ship ownership and operation, borrowing, mortgages, etc. are the common items. On the other hand, the Articles tend to adopt Table A of the Companies Act with some amendments or additions if necessary.
Company name and registered address
A key requirement is that the company name should end with the word “Limited” or “Ltd”. The Registrar of Companies should approve the name. The approval usually takes two days, in urgent cases the procedure can be accelerated. The registered address must be in Cyprus. In many cases it is located in the offices of the lawyers who established the company in Cyprus. Note that the secretary keeps the registers and log books.
The registered capital of the shipping company can be nominal or the actual amount to be deposited by the promoters for the implementation of the project. It can be awarded in full or by convocation, in cash or by shares. All share classes and with different voting and dividend rights are permitted. Note that all shares should be registered and bearer shares are not acceptable.
Shareholders and Security of Beneficiary Shareholders
Establishing and maintaining a Cypriot private company requires one shareholder, regardless of nationality. According to the provisions of Cyprus law, all shareholders of the shipping company can be foreigners residing abroad. The transfer of shares from one foreigner to another is permitted.
Cypriot law recognizes trusts both by law and by equity. We can provide you with the necessary support for the preparation and collection of security documentation, which includes:
Deed of Trust;
the original share certificates in the names of the nominee shareholders;
Blank executed instruments of transfer for Shares;
Resolutions of the Directors authorizing the transfer of Shares (if nominee Directors are appointed);
undated letters of resignation from the nominee directors;
irrevocable dividend powers of attorney to pay dividends to the beneficial owners or an account designated by them.
Annual General Meetings should be called every year. The first general meeting must take place within 18 months of the incorporation of the company. General meetings can be held abroad and written resolutions should be signed by all shareholders and this will suffice instead of a meeting.
directors and auditors
One or more directors can be appointed regardless of their nationality. The nationality of the directors does not affect the status of the company. Consequently, it is not mandatory to have local directors unless it is more convenient for tax or other reasons to have local management.
The shareholders decide on the appointment and removal of directors. The board meeting can take place in any part of the world.
The decision of the Board of Directors can be adopted in one of the following two ways:
at a duly convened and held board meeting
without meeting as the resolution is signed by all directors
Auditors are approved and removed during the general meeting. Otherwise the directors have the power to appoint auditors pending the calling of a general meeting. 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 does not matter and does not affect the status of the company. Nonetheless, it is recommended that the secretary be a company or an individual resident in the country where the directors reside. In addition, it is advisable to appoint a deputy secretary in Cyprus who will take care of the company’s annual formalities in the country. The latter ensures that all annual reports of the company are duly signed by the secretary and filed with the trade register. It should be emphasized that a director may also be company secretary. This does not apply if there is only one managing director and the company has one shareholder.
Annual reports must be filed with the Registrar of Companies. The names of the shareholders must appear in the financial statements.
The annual financial statements are then available for public inspection.
Procedure for establishing a Cypriot shipping company
In the case of establishing a Cypriot shipping company, Cyprus law firms require the following: Information.
Name of the company;
the amount of authorized share capital;
if the shareholders sign the memorandum of association themselves or through Cypriot nominees;
whether shares of Cyprus nominees are held in trust;
name, address, nationality and occupation of beneficial owners;
Name, address, nationality and occupation of directors;
Name and address of the secretary.
The fees for incorporating a company include the registration fees (a fixed amount of €102.52) plus 0.6% of the share capital. It is noteworthy that in Cyprus there are no annual fees for the maintenance and operation of the company. However, there is a €17.09 stamp duty equivalent to filing the annual return.
Trade and Taxes
After the issuance of the Certificate of Incorporation by the Commercial Register, the shipping company can commence operations and proceed with the registration of a vessel in its name.
Taxation is one of the major advantages that make Cyprus an attractive ship management destination. In short, until December 31, 2020, no income tax will be levied, imposed or levied on:
The income that the shipowner owning a Cypriot vessel derives from the operation of such vessel. This provision does not apply to fishing companies based in Cyprus.
The dividends paid to the shareholder or members of a corporation derived from profits derived from the operation of a Cyprus vessel.
Proceed to register a Cypriot shipping company
Registering a Cyprus shipping company does not involve complicated bureaucratic procedures. Nonetheless, the registration of a Cyprus shipping company requires collection and proper preparation of the necessary documentation and proper legal support. Therefore, persons wishing to set up a Cypriot shipping company and register their vessel under the Cypriot flag should seek appropriate legal advice and assistance.