CYPRUS Law and Practice Contributed by: Ioanna Solomou, Stephanos Ayiomamitis, Andria Kouloumi and Lefteris Eleftheriou, Michael Kyprianou & Co LLC
Michael Kyprianou & Co LLC Gladstonos 116 M.KYPRIANOU HOUSE Floor 3 & 4 3032, Limassol Cyprus
Tel: +357 2536 3685 Fax: +357 2536 3698 Email: info@kyprianou.com Web: www.kyprianou.com
1. Corporate Governance Requirements 1.1 Corporate Forms and Governance Requirements LTD and PLC The most common form that companies may take in Cyprus is that of a private limited liability company (LTD) or public limited liability company (PLC). The key characteristics and differences between an LTD and a PLC are as outlined below. LTD The LTD is the most common type of entity and enjoys the benefits of all relevant legal and fiscal regulations, as applicable. For example, it does not have any mini - mum or maximum share capital requirements. An LTD is best for small to medium-sized businesses, start- ups and subsidiaries. It is considered a separate legal entity, and the shareholders have limited liability. • An LTD requires at least one director and one shareholder (can be the same person). • Minimum share capital: there are no minimum requirements. • LTD companies also enjoy a 15% corporate tax rate. • Can be 100% foreign owned: there are no require - ments for shareholders being Cyprus nationals. However, there is a limit of a maximum of 50 share - holders. • Must file annual financial statements and audited accounts within 18 months as of the company’s incorporation and thereafter every year, but in no case exceeding 15 months as of the previous submission.
PLC PLCs are more suitable for large enterprises and com - panies seeking to raise capital through public offer - ings. • A PLC requires at least two directors and seven shareholders. • There is a minimum share capital of EUR25,629. • Its shares can be listed on a stock exchange (eg, Cyprus Stock Exchange). • It is subject to stricter reporting and transparency requirements. 1.2 Corporate Governance Legislation and Regulation The principal sources of corporate governance requirements for companies in Cyprus are as follows. • Companies Law CAP 113, which serves as the pri - mary legislation governing the incorporation, man - agement, duties of directors, shareholder rights, and general operation of companies in Cyprus. • Common law principles: Cyprus company law is heavily influenced by English common law, particu - larly in relation to directors’ fiduciary duties, duties of care, and equitable principles. • Cyprus Corporate Governance Code: this Code applies primarily to listed companies and sets out best practice principles on board structure, accountability, remuneration and internal controls. 1.3 Companies With Publicly Traded Shares For public companies listed on the Cyprus Stock Exchange (CSE), corporate governance requirements are significantly more extensive than for private com - panies. In addition to the Companies Law Cap 113,
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