Redomiciliation of Companies
In line with the international practice of permitting companies to move their seat of incorporation, companies are allowed under the laws of Cyprus to change their jurisdiction. Redomiciliation enables companies to avoid liquidating the existing company and transfer its portfolio of assets to an entity incorporated for the purpose of the new jurisdiction.
As much as a company can change its registered office or registered agent within the same jurisdiction, it can also “move” to a new jurisdiction. Corporate redomiciliation is the process by which a company moves its domicile (or place of incorporation) from one jurisdiction to another by changing the country under whose laws it is registered with, whilst maintaining the same legal identity. The ease with which redomiciliation may take place has increased in recent years.
Why redomicile
Companies re-domicile for a variety of reasons including:
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benefit from a favourable tax environment
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take advantage of less stringent regulation and scrutiny
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align their place of registration with their shareholder base
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move to an international financial centre
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access specialist capital markets
Where an existing company migrates or re domicile to Cyprus, the company’s existing legal status, goodwill and operational history is preserved. This process will allow for companies who currently operate in more costly, difficult regulatory, high tax and high risk environments in other countries to migrate to Cyprus without triggering a disposal of their assets or a diminution in their goodwill or operating history.
Procedure of redomiciliation of a foreign company to Cyprus
As from 2006 a new law has been enacted in Cyprus as an amendment to the Companies’ Law Cap. 113, by which:
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foreign companies can be redomiciled in Cyprus
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Cyprus registered companies can be redomiciled abroad
A foreign company registered in a country which allows re domiciliation and whose Memorandum and Articles of Association provide for the possibility of re domiciliation, may apply to the Registrar of Companies in Cyprus to be registered in Cyprus as a continuing company pursuant to the provisions of the Companies Law Cap 113.
Companies which offer licensed activities under certain provisions of the law in their jurisdiction and for which similar licenses are required in Cyprus, must produce relevant consent for their re domiciliation by the relevant Authority of their country.
Temporary registration
From the date of issuing the temporary certificate of continuation the foreign company:
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is considered as a legal entity duly domiciled incorporated according to the laws of Cyprus
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has the same liabilities and is eligible to exercise all powers that registered companies have according to the laws of Cyprus
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the constituent document of amendment is considered as the Memorandum of the company and where applicable as its Articles of Association
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the registration of the foreign company is not lawful and is void if it is done for the purpose of establishing a new legal entity to damage or affect the continuance of the foreign company as a legal body, to affect the property of the foreign company and the way this company will maintain its assets, rights and obligations, to render ineffective any legal or other procedures filed or to be filed against the foreign company, or prohibit from any conviction, judgment, opinion, debt, order or liability against the foreign company or its officials or shareholders
Within six months from the issuance of the temporary registration certificate, the foreign company must present evidence to the Registrar of Companies that it has been struck off from the public register in the country of initial incorporation to receive the certificate of permanent domiciliation.