Redomiciliation of the company on the example of Cyprus

Recently, the requests of foreign business owners to change the jurisdiction of their company, in other words, re-domicile the company, have become more frequent.

The reasons are simple enough:

• Most jurisdictions that were in demand accepted BEPS edits. Thus, many companies are faced with the requirement to fulfill the conditions for the physical and economic presence of business in the country of registration, which throws into question their tax-free status.
• Entering the jurisdictions in which the companies are registered into the “blacklist” in other states, banking and financial institutions that do not allow the owner of a foreign business to fully operate.
• An increase in the cost of annual maintenance of the company or an increase in tax rates for legal entities.
• Changing the direction of the company to another region, expanding the scale of business with access to new markets.
• And other reasons that individually depend on the needs of the owner of the company (tax optimization, additional benefits from the country of registration of the company - residence permit, citizenship).

In order to redomicile a company, it is necessary to fulfill all the requirements of both the initial country of registration of the company and the country to which the company will be moved. The change of jurisdiction of the company may be approved provided that the legislation of the two countries does not prohibit the redomiciliation procedure.

  Lawyers of Law and Trust International will help to understand the laws of various countries regarding the permission of the redomiciliation procedure and choose the most optimal option for changing the jurisdiction of the company.

A fairly attractive jurisdiction among business owners is Cyprus. The legislation of this jurisdiction allows the company to redomicile. Below we consider the requirements and conditions under which a change of jurisdiction of a foreign business is possible.

Before the company’s redomiciliation process, you must pay attention to the following conditions that are applied to companies:

• The legislation of the country where the company is registered allows the procedure for changing jurisdiction.
• The Memorandum and Articles of Association of the company provide for the possibility of a change of jurisdiction.
• The company is in good condition with Active status, has no debt to the state bodies.
• The company is not held criminally or administratively liable and is not a party to the lawsuit.

First of all, the foreign company must appoint an authorized local (Cypriot) representative (registration agent) who will lead the entire process of redomiciliation of the company. The approved name must be the same as the current name of the foreign company, except for the type of company LTD / LLC in the end.

A company must submit to the Cyprus Registration Authority:

• The decision of the shareholders on the permission to change the jurisdiction of a foreign company in Cyprus. The solution must be under the apostille.
• Notification letter regarding the intention of the company to be re-registered in Cyprus.
• Together with the accompanying documents, an affidavit must be submitted, which testifies that the provisions and requirements of the Cyprus Companies Law have been complied with and that the applicant company is currently in good condition and is not held criminally or administratively liable.

This package may be supplemented with other documents depending on the country of initial registration and its legislative requirements.

After a preliminary review of the application package for the applicant company, the registration authority of Cyprus issues a provisional registration certificate. From this time, the company can continue to operate as a Cyprus legal entity in accordance with tax laws.

Within 6 months from the date of the issue of the provisional registration certificate, the foreign company must provide the registration authority with evidence that the company has been officially closed in the country of initial registration. The proof may be a certificate of liquidation with an apostille.

It is worth noting that the company should not be closed/liquidated by the registration authority of the country of initial registration before the registration authority of Cyprus issues a temporary certificate of registration. The company should be closed only after issuing such a certificate in Cyprus.

After the certificate of liquidation is presented to the registration authority in Cyprus, it issues a permanent certificate of registration of the company.

For qualified legal advice as part of the company’s redomiciliation, as well as the selection of jurisdictions for moving the current company in accordance with the requirements of the original country of registration, please contact the specialists of Law and Trust International.