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Cyprus Company's Law Cap.113: A Brief Overview

Cyprus Company’s Law Cap.113: A Brief Overview

Cyprus Company’s Law Cap.113 is the principal piece of legislation that outlines the legal framework for the proper and efficient functioning of companies incorporated in Cyprus. The law regulates the establishment, operations, governance, dissolution, and liquidation of companies in Cyprus.

In this article, we aim to provide a brief overview of the key provisions of Cap.113.

Formation of a Company

Section 4 of Cap.113 outlines the requirements for the formation of a company, primarily the submission of the appropriate documents to the Registrar of Companies in Cyprus, including the articles of association or the memorandum of association, and other relevant documentation.

The articles or memorandum of association is a document that sets out the company’s objectives and the rights of its shareholders. It also specifies the rules and regulations that govern the company’s internal workings.

Types of Companies

Cap.113 outlines several types of companies that are recognized under Cyprus law, including private and public limited companies, companies limited by guarantee, and investment companies.

Private limited companies (Ltd) are the most common type of company in Cyprus. They have a limited number of shareholders and are restricted in their ability to sell shares to the public.

Public limited companies (Plc), on the other hand, can sell their shares to the public and have no restrictions on the number of shareholders they can have. They must also comply with the stricter regulatory requirements outlined in Cap.113.

Corporate Governance

Cap.113 places great emphasis on the importance of effective corporate governance for a company’s proper functioning. The law sets out the duties and responsibilities of directors, including fiduciary duties and the duty of care and skill.

The law requires directors to act in good faith and in the best interests of the company. It also outlines the procedure for the appointment, removal, and remuneration of directors.

Shareholders’ Rights

The law recognizes the rights of shareholders, and their ability to hold the board accountable for their actions. Shareholders can vote on significant decisions, such as changes to the articles of association or the appointment of directors.

Shareholders also have the right to inspect the company’s books and records and can bring proceedings against the directors for mismanagement or breach of duty.

Conclusion

Cyprus Company’s Law Cap.113 has played a critical role in facilitating the smooth operation of businesses in Cyprus. The law outlines the requirements for the formation of companies, the types of companies recognized under Cyprus law, and their governance procedures.

Effective corporate governance is a cornerstone of the law, ensuring that companies operate efficiently and in the best interests of their shareholders. Cap.113 has set a strong legal framework for companies in Cyprus, ensuring that they can thrive and contribute to the country’s economic growth.

The above article is provided only for information purposes. It should not be consider as a professional advice. We recommend you to ask for a professional advice before acting on any information provided.  Should you require a professional advice please contact us at info@elaaccounting.com or call us at (+357 99 832578).

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