Cyprus is a small European country whose economy largely relies on the services sector which is manned by highly qualified and experienced professionals and this is one of the reasons why the country has been established as a popular business hub. In the face of many challenges in recent years, the services sector in Cyprus has exhibited resilience and has strived for growth. Nowadays, in a rapidly evolving international business environment, largely reliant on technology, the lack of modern infrastructure and the often-excessive bureaucracy proves to be a significant obstacle for professionals in Cyprus.
In an effort to reduce bureaucracy and increase the efficiency within the much-criticized Registrar of Companies (“RoC”), the first steps towards modernizing the corporate legal framework have been made through the introduction in the past year of a number of amendments including the requirement for notifications and statutory forms to be filed the RoC electronically and the possibility to file documents with the RoC which are signed or certified or validated electronically, subject to the issue of regulations in this respect by the RoC. Recently, further amendments have been implemented in an effort to change the infrastructure of the RoC on a more extensive level.
The latest key amendments include the following:
- Update of statutory forms
Over 100 existing statutory forms of the RoC have been revised to introduce simplified and user-friendly forms which will include guidance notes, aiming to reduce time-consuming correspondence with the RoC caused by unclarities. The changes include in particular (i) the merging of forms where this has been considered necessary, (ii) the removal of unnecessary information previously included in forms, such as the occupation and previous names of directors, and (iii) the introduction of new notification forms aiming to unify submissions to the RoC, such as the notification by the company directors of the decision to strike-off the company.
- Abolition of capital duty
The capital duty payable on the authorized share capital and on any subsequent increase of share capital is abolished, an amendment which apart from being an incentive for investors, will lead to the simplification of the increase and reduction of capital of a company.
- Electronic publications
An official gazette which shall be maintained by the RoC electronically is introduced, to allow for publications which would have been made in the official gazette of the Republic of Cyprus to be made on the RoC electronic gazette. This is a significant step towards efficiency and transparency as it will reduce time required for a publication and will give easier access to the public to information of interest in relation to companies.
- Provisions relating to companies strike off
The provisions of the Companies Law, Cap.113, in relation to the strike off of companies from the companies register have been amended to allow creditors or members of a company to object to its striking-off, and to provide the power to the RoC to reinstate a company without a court order under certain circumstances.
- Administrative Fines
Several provisions of the Companies Law have been amended to provide for the imposition of administrative fines in the case of late flings of statutory notifications to the RoC including notifications of allotment of shares, transfer of shares and filing of the annual return.
Even though the recent amendments include several provisions which are not directly aimed at modernizing the infrastructure of the RoC, these are considered to be a step in the right direction. Provided the amendments are properly implemented, they could be a much-needed shift to digitalization and a streamlining of the statutory requirements with the practical procedures of the RoC, in a way which is expected to reduce inconsistencies and bureaucracy and enable professionals in Cyprus to offer a higher quality of service to local and foreign investors.
What remains to be seen is whether the everyday implementation of the revised procedures will bring about the long-awaited improvements or whether they will result in further complications and backlog.