SHIPOWNING COMPANY FORMATION AND SHIP REGISTRATION UNDER CYPRUS FLAG
I refer to the above and I set out hereinbelow the requirements for the registration of shipowning companies and ships under Cyprus flag and the procedure followed for these purposes.
SHIPOWNING COMPANY FORMATION
Introduction
The first step to be taken in order to register a ship under the Cyprus flag is to form and register a shipping company in Cyprus, which will acquire the ship in its name.
Throughout the years it has become customary to create a special type of shipping company for this purpose, it being a company limited by shares with a nominal share capital of C£100,00 divided into 100 shares of C£1,00 each.
The said company, like any other company formed pursuant to our Companies Law, Cap 113 [which is similar to the 1948 British Companies Act], must also be established and operate under and in accordance with all the Laws of the Republic and have its registered office in the Republic.
Name of the company
The name of the company must be approved by the Registrar of Companies. The Registrar will not give the approval if the proposed name: is of a general nature, it is considered misleading, it includes words like "King", "Queen", "Crown", "Commonwealth", "National", etc, or is similar to the name of an existing company.
Therefore, in order to avoid delays due to possible rejection of a name, it is recommended that a choice of 3 to 4 names be given to us. Alternatively, for expediency a name can be chosen from a list of company names that have already been approved by the Registrar and formed by us in order to assist our clients further and to efficiently cope with urgent requests.
For your information it takes approximately 3 to 4 days to incorporate a Cyprus company using one of the already approved names.If a specific name is desirable then the process and the time required are considerably longer.
Please note that should the case arise whereby a proposed Cyprus company intends to have a name similar to to the one of its parent company, then the consent of the latter company will be required.
Memorandum and articles of association
As with every company, a Cyprus limited liability company must have a Memorandum and Articles of Association which specify the activities in which the company may engage itself in, its corporate powers, the means by which it will conduct its business and regulations for its internal management.
Shareholders
When forming the company the following information is required with regard to the benefical and registered shareholders:-
(a) Full name
(b) Residential address
(c) Occupation
(d) Nationality
(e) Percentage of shareholding
It is a Cyprus Companies Law requirement that the minimum number of shareholders in a company, be that of two.
The nationality of the shareholders of the company, who are usually the owners of the ship, is immaterial but for reasons of exchange control they must be non-residents of Cyprus or Cypriots holding shares as nominees for non-residents.
In sum, the beneficial owner of the shares in a shipping company must be a non - resident who may be the registered holder of all but one share in the company. The remaining at least one share may be held by a nominee shareholder in trust for the beneficiary.
Also, for purposes of confidentiality, a matter of great importance to shipowners, all of the beneficiary's shares may be held by nominees and nothing will appear in the Companies Registry or anywhere else where the public has access regarding the ownership of the ship.
Nevertheless, for the purpose of the Central Bank's approval regarding the company and allocation of its shares the names of the beneficial owner/s of the shares must be disclosed to us.
Directors
There is no legal requirement to appoint local directors. However, it may be advisable that the majority of the directors are local. This may be so for tax purposes as the residence of the majority of board members may have a significant bearing on demonstrating where management and control lies.
With regard to the proposed directors the following particulars are required:
(a) Full name
(b) Residential address
(c) Occupation
(d) Nationality
Secretary
Pursuant to Cyprus Law every Cyprus company must have a secretary. However a sole director cannot also be the secretary. The appointment of the secretary is made by the directors. For practical purposes it is recommended that the secretary appointed is from Cyprus. Usually lawyers are appointed.
Registered office
Pursuant to Cyprus Law a company must have a registered office in Cyprus and therefore an address in Cyprus must be used. Lawyers' offices are normally used for the address of the registered office of a company.