Meeting of the Parliamentary Committee of Energy, Commerce, Industry and Tourism held on Tuesday 9th October 2018
A. Subject: Summary of proposed amendments to current legislation (in translation):
- The Companies (Amended) Law no.2 of 2018
- The General and Limited Partnership and Trade Names (Amended) Law of 2018
- The Companies (Amended) Regulations of 2018
- The Companies (Fees) (Amended) Regulations of 2018
- The General and Limited Partnership and Trademarks (Amended) Regulations of 2018
- The inward and outward Redomiciliation (amended) Regulations of 2018
- The Societa Europea (SE) Regulations of 2018
B. Aim of the proposed amendments:
- In the context of advancing the Registrar of Companies department, the proposed legislation effectively seeks to restructure submission forms connected to companies, partnerships, trade names, foreign or European companies, as well as the internal procedures followed by the department.
- The proposed legislation ultimately seeks to simplify all procedures, decrease administrative costs involved, as well contribute towards Cyprus becoming a more attractive destination to the business world, especially when it comes to initiating business activity. Ultimately this aims to enhance the overall competitiveness of the jurisdiction and the utmost compliance to the current legislation.
C. Content of the amendments:
In practical terms, the key amendments to note are the following:
- Stamp duty 0.6% on the authorized share capital is abolished entirely as a measure to increase competitiveness of the jurisdiction and attract new business;
- Submission forms are now accompanied with explanatory notes to ensure correct completion is achieved – Contents are simplified.
- Procedure to remove the word ‘limited’ is simplified: does not require the consent of the Ministry any longer. Included in HE1 form.
- HE1 shall now be extensive to include registered address, secretary, members, share capital and list of attached documents. Affidavit requirement is removed.
- HE2: introduction of a penalty for late submission (14 days)
- HE12: introduction of a penalty for late submission (14 days)
- HE57: introduction of a penalty for late submission (14 days)
- HE32: introduction of a penalty for late submission (28 days)
- HE4: introduction of a penalty for late submission (14 days)
- Introduction of template regarding mergers, objection to company strike off.
- Provision for the creation of an electronic newspaper of the ROC department
- Publications should no longer be made in the Gazette, rather than the electronic newspaper of the Registrar.
- Introduction of the concept of administrative reinstatement of a company within 24 months of strike off: this is a new concept introduced via the amendments by which any interested party (employee, creditor, tax office etc) may apply to the ROC within 24 months to reinstate the company WITHOUT having to resort to the court.
- AE5/AE6/AE8: introduction of a penalty for late submission.
- Trade names/partnerships: if they omit to provide documents requested by the ROC within 6 months, then they are removed from the registry.
- Simplification of requirements for natural persons registering trade names.
- Redomiciliations: MEA and ME1 are now consolidated – simplified / abolishment of requirement to submit a separate list of officers and members – it will now be part of the form for completion. ME2 and ME3 shall also be under one document.
- Abolishment of affidavit requirement for the initiation of business activity (incorporations/redomiciliations/branches/SE formation/public companies).
- Allotments made in kind: no longer need to provide supporting documentation.
- Amendments to be voted by the Parliament in October/November.
- It was agreed by all members and representatives that the amendments seem beneficial to the current regime, and they opt for a much-needed modernization of the internal procedures followed by the Registrar of Companies department.
- The new amendments focus on the electronic system of submission and given the success to implement, are expected to create a user friendly and efficient system.
- Certain forms (such as HE1 for example) can only be implemented subject to installation of new software by the Registrar which is expected to be completed within 3 years from now, which can potentially be a disadvantage as to how soon the new amendments can be adopted.
- Overall the submission documents are transformed, re-designed and consolidated in an efficient and comprehensive manner, explanatory notes contribute towards minimizing mistakes and circulation of documents through returns, clarifications etc.
- Most important amendments were noted to be the mechanism of administrative reinstatement without the need of court order, the elimination of 0.6% stamp duty on the authorized share capital and the introduction of penalties for late submission.
- The new regime seems very promising indeed, however always subject to how effectively and quickly it can be implemented, considering it is conditional on the replacement of the ROC software.
- It was further noted that if the amendments are voted for, a period of 1 (one) year shall be allowed for full compliance, until all the relevant bodies are fully informed and ready to implement.
On Behalf of
CFA Legal & Tax Committee
23rd October 2018
Disclaimer: The information provided hereby by the Cyprus Fiduciary Association is for informational purposes only and is intended as guidance. The proposed changes/amendments are still subject to approval by the Parliament of the Republic of Cyprus and can be subject to changes or further amendments. Information provided hereby should not be construed as legal/investment/tax/economic advice and should not be relied upon as such. There are no representations or warranties made as to the accuracy of any information provided therein. The Cyprus Fiduciary Association will not accept any liability for any loss or damage arising as a consequence of reliance on such information. The Association does not guarantee that the information included is correct, accurate, complete or non-misleading and specific advice should be sought.