The following legal and reporting requirements must be considered before setting up a company in Cyprus:
Conduct of the company
The directors of the company have the responsibility for the maintenance of the books and records required to present a true and fair view of the company’s affairs and for the preparation and presentation of a full set of financial statements to the annual general meeting of the company accompanied by their report and the auditor’s report.
Financial statements
The directors of the company have the obligation, under the Cyprus Companies Law Cap 113, at some date not later than eighteen months from the incorporation of the company and subsequently once at least in every calendar year, to lay before the company in a general meeting a full set of financial statements prepared in accordance with the International Financial Reporting Standards (IFRS) and the requirements of the Companies Law.
Annual General Meeting
Annual general meetings must be held every year, the first to be held within 18 months from the date of incorporation of the company.
Filing of annual return
Every company is obliged at least once a year to file an annual return stating the registered office of the company, the members and debenture holders, the number of shares and debentures, present members, the directors and secretary and particulars of indebtedness.
The annual return must be completed and filed within 42 days from the annual general meeting.
Annexed to the annual return there should be a copy, certified both by a director and by the secretary of the company to be a true copy, of every balance sheet laid before the company in a general meeting during the period to which the return relates (including every document required by law to be annexed to the balance sheet) and copies of the directors’ and auditors’ reports accompanying each such balance sheet. If the above mentioned balance sheet and reports are in a foreign language, certified translated versions into Greek must also be annexed.
Requirement to keep books of account
Under the Cyprus Companies Law Cap 113, the Directors of a company should:
- ensure that proper books of account are maintained which disclose, at any time the financial position of the company
- prepare financial statements in accordance with the IFRS
- appoint external auditors authorised to practice in Cyprus and members of the Institute of Certified Public Accountants of Cyprus
- ensure that the financial statements prepared are subject to external statutory audit in accordance with the Companies Law
- prepare and file tax returns to the tax authorities in a timely manner
Requirement to keep other records
Certain other statutory, non accounting records, are also required to be kept by companies:
- Articles of incorporation
- Minutes of meetings both of directors and shareholders
- Register of members
- Register of debenture holders
- Register of charges
- Register of directors and secretaries
- Register of directors` shareholdings
Requirement for an external statutory audit
The company’s financial statements should be subject to external statutory audit for the following reasons:
- the Companies Law requires every company to keep proper books of account and prepare financial statements and to have the latter subject to external statutory audit by registered auditors authorised to practice in Cyprus
- for submission to the Cyprus Registrar of Companies
- for the preparation of the company’s annual income tax return which is submitted to the Income Tax Authorities of Cyprus
Requirement and exemptions for the preparation of consolidated financial statements
Under the Companies Law, the financial statements of Cyprus companies are prepared in accordance with the IFRS. These standards require holding companies to prepare consolidated audited financial statements on an annual basis.
However, the Companies Law allows Cyprus companies the following exemptions for non consolidation which are not generally allowed by the IFRS:
A small group company need not prepare consolidated financial statements under certain criteria
- A company need not prepare consolidated financial statements, even if not a `small group`, if its parent company or ultimate parent company prepares consolidated financial statements in accordance with Generally Accepted Accounting Principles which are accepted by recognised Stock Exchange authorities of countries which are members of the International Organisation of Securities Commission (IOSCO)