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Relocation of the companies from offshore and low tax jurisdictions to CyprusMain » Offshore and foreign companies » Relocation of the companies from offshore and low tax jurisdictions to Cyprus
The companies, as well as the individuals, can migrate to the other countries. This procedure is referred to as «the redomiciliation» (relocation of a company from one jurisdiction to another).
In Cyprus, «the redomiciliation» procedure is stated and determined in the Companies’ Law, cap 113 and allows you to change the company's foreign jurisdiction to Cyprus jurisdiction, and a Cypriot company – to any other foreign one.
WHY THE COMPANIES CHANGE THE JURISDICTION OF INCORPORATION
There can be many reasons:
- the companies from tax-free or low-tax jurisdictions face the problem of opening an account in a foreign bank. This is because banks are very severe and demanding in dealing with the jurisdictions where the legislation does not require submission of annual financial statements, if a company is registered in a country where it does not carry out any economic activity and does not generate any value for the country, does not have a real place of office and employees. Commonly, banks do not want to deal with such companies and refuse to open the accounts for them including because of the pressure and increased control by international organizations.
Banks and tax authorities usually have fewer questions to Cypriot companies, because the latter pay the taxes in Cyprus (provided they carry out economic activity in the country), submit annual financial statements and that is why it is difficult to use such companies as a «wallet».
- deterioration of tax conditions, regulation and control, increased transparency in the jurisdiction of original registration
- increase in expenses for annual support of the enterprise
- the jurisdiction is hit to the blacklist of the countries
- if operational needs of the company so require and other reasons.
Nowadays, the most common reason for a change of the company’s jurisdiction are inability to open a corporate account. Therefore, the clients having a functioning business incorporated in tax-free or low-tax jurisdictions should review their current business structures. Of course, you can just terminate such company and register a new one in the right jurisdiction. However, if a company has been incorporated for a long time, it has established business contacts, partners, has a good reputation, concluded contracts which are still in effect – then it is irrational to leave it. In such cases, another method to use – the relocation of a foreign company from one jurisdiction to another, from offshore to onshore. Most often, the companies incorporated in such classic offshore jurisdictions as the Seychelles, BVI, Belize, Panama, etc. are relocated to Cyprus.
WHAT DOES REDOMICILATION MEAN
If the national legislation of the country of the company’s incorporation does not prohibit the relocation of organizations to the other countries, the company may change its place of registration at another country at any time. Similarly, the host country should regulate companies’ acceptance from other countries at the legislative level.
Herewith, the company is not liquidated, does not cease its activities, does not change the corporate structure, but simply relocates its place of registration and office to another jurisdiction, similarly, if the legislation of the country allows it. E.g., the jurisdictions of England, Hong Kong and Singapore do not allow «the redomiciliation», but in Cyprus, it is possible.
In addition, the memorandum and the article of association of the company shall not contain any provisions that prohibit change the jurisdiction of the company.
THE PROCEDURE OF COMPANY REDOMICILIATION TO CYPRUS
1. The company applies to the Companies Registry in the county of its registration and submit the application for redomiciliation in another country in order to receive permission and all the necessary documents.
2. The company submits to the Companies Registry in Cyprus an application and required set of documents, as well as the company’s name (name of the company may be the same as its name before changing of jurisdiction, but with the abbreviation Ltd in the name. If the company’s name is not available in the Registry, you may choose another one).
3. A registrar of Cyprus reviews all the documents and their sufficiency, and when making a positive decision, issues a Temporary Certificate of Continuation confirming the temporary incorporation of the company in Cyprus. Since then, the company has all the rights and obligations equivalent to those the companies-residents of Cyprus have.
4. Within 6 months after receipt of temporary certificate, the company should to terminate its registration in the previous jurisdiction of incorporation and provide a Certificate of termination of the activity to the Registry in Cyprus. If the company does not provide this information and continues to be listed in the foreign registry, the Companies Registry in Cyprus may either liquidate the company’s name and notify the foreign authorities of it or extend the period to provide of the information for another 3 months.
5. After a company strike off its registration in the foreign registry and presentation the Certificate of termination of the activity to the Cyprus, the Registry in Cyprus issues the Certificate of Redomiciliation certifying final incorporation of the company in Cyprus.
6. The companies that plan to change the jurisdiction to Cyprus should to prepare accounting and financial statements for each year before the date of its redomiciliation.
LIMITATIONS WHILE CARRY OUT THE PROCEDURE OF CHANGE THE INTERNATIONAL JURISDICTION TO CYPRUS
There is a range of limitations that make redomiciliation of the company to Cyprus impossible to carry out:
- the company shall not be strike off, annulled or withdrawn from the registry of the country of its original incorporation before the Registry in Cyprus issues Temporary Certificate of Continuation, otherwise, the Registry in Cyprus may refuse to change the jurisdiction
- the company shall not be liquidated or being in the course of liquidation in foreign country
- there shall be no court decisions which aims to restrict the rights of the company's creditors
- the company shall not be a party to any existing, incomplete or impending litigation on insolvency, civil and criminal cases, enforcement proceedings or lawsuits on violation of the laws of the country of its incorporation should not be initiated against the company.
Should have any questions please contact our lawyers for advice:
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