John has been unlucky finding employment as an employee and he is contemplating opening a Business in Cyprus. He wonders what business is most suitable for him. As he is willing to invest a limited amount of money at the beginning and limit his exposure to 3rd party liability he decides that the best formation for him would be a private limited liability company, where he would be the director and sole shareholder. Before he proceeds to incorporate a Limited Liability Company ha wants to know what his obligation and liability would be:
STATUTORY AND FINANCIAL OBLIGATIONS
As per the Company Law, Cap.113 some of the Companies’ obligation are described below.
Annual General Meetings: All Cyprus incorporated companies must hold in each year a general meeting as their Annual General Meeting (hereinafter “AGM”) in addition to any other meetings held during the year, which are called Extraordinary General Meeting.
The first AGM must be held within a period of 18 months from the date of incorporation and not more than 15 months should elapse between the date of one general meeting of the shareholders and that of the next. The articles of association normally contain certain provisions concerning notice and the place where the meeting may be held.
Every Cyprus company is required to submit an Annual Return (Form HE32) accompanied by the Financial Statements of the previous year. The deadline for the submission of the Annual Return is within 28 days of the AGM. The Annual Return contains the company’s statutory information as at the date of the AGM and should include among other information certified copies of the financial statements, directors’ report and auditors’ report. A delay in the submission of the Annual Return may result in penalties.
Every company must pay an annual levy amounting to €350, before 30 June of each calendar year. If late payment is effected, additional penalties are imposed. In addition, if payment of the levy is not effected within a period of 2 years from the due date, the company may be stricken off the Registry.
And of course tax obligations…
To form the Company, John visits a local lawyer that helps him incorporate the Company in a few days. From that day forward, John acts through his company whose liability is limited to its available funds and share capital.