What is the legal status of a Company in Cyprus?
The current legal framework which regulates Companies in Cyprus is the Companies Act (Cap.113), as it has been amended from time to time hereinafter referred to as (the “Law”) and EU Directives and/or Regulations. The fundamental attribute of corporate personality from which indeed all the other consequences flow is that the corporation is a legal entity distinct from its members[1]. Hence it is capable of enjoying right and of being subject to duties which are not the same as those enjoyed or borne by its members[2]. Inter alia, it has “legal personality” in contract with human being, a natural person.
How a company is dissolved?
There are two ways a company can be dissolved in Cyprus. The one is voluntary while the other is involuntary.
Involuntary:
- When the Registrar of Companies has good ground to believe that a company is not doing business and/or is not operating, he or she may mail to the company a letter verifying whether the company is doing business or operating[3]. If no answer is given (within (1) month) to the Registrar of Companies, then another registered letter is mailed to the Company (after 14 (fourteen) days), warning that if the Company fails to reply once again in 1 (one) month period the Registrar of Companies will publish a notice and delete the Company from the register[4].
- If the Company fails to submit any documents that has the obligation to do so to the Registrar of Companies[5].
- If the Company fails to pay the annual levy for a period of more than 1 year[6].
- If the Company has a lot of creditors and cannot pay its debts (Court procedure)
Voluntary:
A voluntary dissolution of the Company can take place but not limited to if the Board of Directors of the Company (after signing a resolution) send to the Registrar of Companies a specified form for the dissolution of the Company[7].
How to restore a dissolved Company?
A company that has been dissolved from the Registrar of Companies either voluntarily or involuntary can be reinstated and considered to exist as if it had not been dissolved. There are two options of how to restore a Company in Cyprus, the one is through the Court, while the other is through an administrative procedure.
Restoration through the Court:
- Any interested party (i.e. member, creditor etc.) has the right for a general petition to the Court for the restoration of the dissolved Company[8].
- The petition can be made within 20(twenty) years after the dissolution
- The court, if it is satisfied that the company at the time of its dissolution was carrying out business and/or was in operation, or otherwise that it is right and/or fair for the company to be restored to the register, issues an injunction restoring the company to the register.
- The interested party shall serve the injunction for the restoration to the Registrar of Companies either by hand or by registered mail.
- Fee to the Registrar of Companies: €160.00
Administrative restoration[9]
The power of administrative restoration is provided to a company that has been dissolved by the Registrar of Companies for the following reasons:
- Failure to submit with the Registrar of Companies any document required by the Law (i.e. Annual Reports, etc.)
- Failure to pay the annul leave.
- If the Registrar of Companies had a reasonable reason to believe that the company did not carry out business and/or was not operating
The procedure
- Officer[10] or member of the Company has the right for the petition of administrative restoration (HE 64)[11].
- The petition can be done within 24 (twenty-four) months after the dissolution
- Fee to the Registrar of Companies: €20.00
- This procedure has been applicable from the 6th of December 2021
[1] Definition of members: The Company’s shareholders
[2] Paul L. Davies & Sarah Worthington, “Gower & Davies Principles of Modern Company Law”, Sweet and Maxwell 9th edition (2012), p. 35
[3] Article 327 (1) of the Companies Act (Cap.113)
[4] Article 327 (2) of the Companies Act (Cap.113)
[5] Article 327 (6) of the Companies Act (Cap.113)
[6] Article 327 (2A) b of the Companies Act (Cap.113)
[7] Article 327 (2A) of the Companies Act (Cap.113)
[8] Article 327 (7)A of the Companies Act (Cap.113)
[9] Article 327Α of the Companies Act (Cap.113)
[10] Officer has the meaning of the Director or Secretary of the Company
[11] https://www.companies.gov.cy/assets/modules/wgp/articles/202112/1909/docs/he64_fillable.pdf
