What do the rental control laws prescribe

Cyprus additional information

Transcript

1 Cyprus- additional information INS Ltd- network of international tax consultants - London * Paris * New York * Hamburg law firm Andreas Neocleous & Co. as cooperation partner and author Supplementary explanations to the exposé company formations Cyprus (cyprus.pdf) (source: Central Intelligence Agency)

2 Cyprus - Additional information ... 1 Company acquisition and company formation Options for market entry ... 5 Company acquisition basics ... 5 Company formation Entry in the company register Registration of a permanent establishment Entry in the company register ... 7 Real estate Acquisition and rental of real estate Real estate acquisition Real estate right to Private ownership of immovable property Scope of rights to real estate Restrictions on property rights Registration of rental contracts Registration of trusts Registration of restrictive contracts Joint ownership of buildings Special features of the real estate purchase contract Real estate acquisition by EU foreigners Rental contracts Rental control law ... Exemption stocks Direct investment in Cyprus Trading in foreign currency Importing and exporting banknotes and gold Transitional provisions State-owned subsidies Overview of the stand in Cyprus ... 19 Company law General The private company as a counterpart to the GmbH in Germany Establishment Transfer of company shares ... 20 The public company The general and the limited partnership Restructuring law Management of the limited liability company Company forms Formation requirements Directors Company Secretary Founding Requirements Directors ... 22

3 45 Appointment Loans to Directors Authorities of Directors and the Board of Directors Minority Rights and Directors Fiduciary Duties of Directors Company Secretary ... 25 Commercial and Contract Law Fundamentals of Accounting and Financial Statements Accounting Requirements ... 26 Competition Law Promotion of Competition and Commercial Legal Protection ... 26 Promotion of competition Introduction Promotion of competition ... 27 Agreements and concerted practices Abuse of a dominant position Control of market concentrations ... 28 Industrial property rights, patents, trademarks, utility models, copyright ... 29 Tax law Introduction to the tax system Branches and subsidiaries Group taxation basics ... 30 The main types of taxation Corporate income tax Income tax Special defense levy Real estate transfer tax Real estate tax Capital gains tax Stock exchange sales tax ... 32 Sales tax reform projects ... 33 Branches and subsidiaries es companies Branches of foreign corporations Foreign subsidiaries ... 34 Posted workers ... 34 Group taxation Trade loss allocations Group taxation and capital gains Group taxation of foreign subsidiaries Transfer pricing Mergers and acquisitions Acquisition taxes Capital gains tax Goodwill Other taxes ... 36 Import and export of Internet transactions ... 37

4 86 References ... 37 Special Benefits of the Cyprus Tax System Trusts International Collective Investment Schemes and UCITS Trusts Domestic Trusts Cypriot International Trusts Cypriot Offshore Trusts ... 38 International Collective Investment Schemes and UCITS Taxation of International Collective Investment Schemes In addition, IGA are taxed on UCITS in Cyprus International tax aspects of Cypriot holding companies * Double taxation agreement DBA Germany Cyprus (1974) ... 42 Labor law Beginning and termination of employment relationships Beginning Special features of labor law Working time regulations Permanent establishments and trade unions Leave Maternity and parental leave Works councils and trade unions ... 45

5 Company acquisition and company formation 1 Options for market entry Content: Company acquisition - Basics - Acquisition via the stock exchange Company formation - General - Entry in the company register - Establishment costs Registering a permanent establishment - General - Entry in the company register - Registration costs company acquisition 2 Basics As a result of EU accession, the Facilitating investment opportunities in Cyprus for foreigners. This means that investors from the European Union can now buy up to 100% of a Cypriot company. The only exceptions are agriculture, hotels, travel agencies, restaurants and recreation centers as well as import agencies. Only a maximum share in equity of 49% is permitted here. All regulations that previously required an application to the Central Bank of Cyprus in the event of an investment in Cyprus have been abolished for EU citizens and EU companies since May 1st, 2004. Acquired shares must be entered in the company register with the name of the acquirer or with the names of their representatives. In the case of shipping companies, an entry is also made in the commercial shipping register. Acquisition on the stock exchange For companies that are traded on the Cypriot stock exchange, special rules apply. Here the purchase is not made directly, but via stock exchange traders, etc. Shares in companies can be acquired up to 100%, but only a maximum of 50% from banks.

6 Setting up a company The forms of business are based on United Kingdom law. That is why there are also private companies, public companies and general and limited partnerships in Cyprus. Even when establishing a private or public company or a partnership, all regulations pertaining to foreigners, which previously required an application to the central bank, have been abolished for EU citizens since May 1, 2004. Note The previously very popular International Business Companies (IBCs), which were isolated from the local market and taxed at a preferred tax rate of 4.25% with their profits generated exclusively abroad, were not in compliance with EU law and were replaced by a new, more contemporary system. Under the new regulations, Cypriot and international companies are now taxed equally with a 10% corporation tax. IBCs that were previously taxed at 4.25% can opt to keep the previous regulations until the end of 2005 (Grandfathering Clause), but are then still excluded from activities within Cyprus and can only carry forward losses from the years before 2000 until 2005 . As before, it is basically possible to purchase such Cypriot IBCs; however, the advantages they offer over the new regulations are very limited. 3 Entry in the company register When registering a private company in the company register, a number of documents are required that must be prepared: - Articles of association: This must include: name and registered office of the company, company purpose, declaration of limitation of liability to the share of the shareholders, Amount of the share capital and signatures of the shareholders. Regarding the name, it should be noted that the company register can reject it if it resembles the name of an existing company too closely, is viewed as misleading, arouses royal associations or contains the words Imperial, National, Corporation, Commonwealth or Co-operative . In addition, the name must begin with Ltd. to lock. - Articles of Association: Here the general meeting, voting rights or the transfer of company rights are regulated. According to Cypriot law, the involvement of a lawyer is mandatory when setting up a company, who has to draw up the articles of association and the articles of association.

7 To register a partnership, the following data is required: - Name, purpose and duration of the partnership, - Names, addresses, ID card numbers of the partners. 4 Registration of a permanent establishment General Cypriot law does not make the registration of a permanent establishment by foreign companies dependent on any special requirements such as permanent facilities, assets or personnel. Conversely, however, in the case of activities of a foreign company in Cyprus that have qualified permanent establishment characteristics, registration with the company register must be applied for within one month. When registering a permanent establishment, all regulations pertaining to foreigners, which previously required an application to the central bank, have been abolished for EU companies since May 1, 2004. Cypriot law allows an already registered permanent establishment to apply to be considered resident in Cyprus for tax purposes. This has the advantage, among other things, that the permanent establishment can benefit from the Cyprus double taxation treaty. 5 Entry in the company register When registering a permanent establishment (branch) of a foreign company in Cyprus, the following must be submitted: - A Greek translation of the articles of association, the articles of association and / or other documents describing the character of the company. This translation can either be carried out by the Public Information Office of the Cypriot government, which then also certifies the authenticity of the translation, or the translator provides an affidavit of the same content at the local district court; - Company director (s) and secretary details; - Name and address of at least one authorized recipient of the company who is resident in Cyprus and who is authorized to receive official documents for the company. Real estate content: 6 Buying and renting real estate

8 Acquisition of real estate - Real estate - Right to private ownership of immovable property - Scope of rights to real estate - Restrictions on property rights - Registration of leases - Registration of trusts - Registration of restrictive contracts - Joint ownership of buildings - Special features of the real estate purchase agreement - Real estate acquisition by EU foreigners rental agreements - General Contract Law - Rent Control Act 7 Real Estate Acquisition Cyprus was part of the Ottoman Empire until 1878 before it was incorporated into the British Empire. The Ottoman land law was officially in effect in Cyprus until the introduction of the modern Cypriot Real Estate Law by The Cypriot Supreme Court ruled several times that the 1946 law had no retroactive effect for the period before the law came into force. For questions in connection with the acquisition or loss of rights to real estate, the old Ottoman land law may occasionally still apply, as soon as the answer to these questions concerns facts that concern before the law came into force (i.e. before). A more detailed explanation of the Ottoman land law should be dispensed with here for reasons of space. The following presentations are limited to explaining the essential components of modern Cypriot real estate law. 8 Real estate property According to Cypriot law, real estate property includes - land, - buildings and other structures or structures and fortifications that are permanently attached to land, buildings or other structures or structures, - trees, vines or any other thing that has been planted or grows on a property as well as any product derived from it before separation, - sources, wells, water and water rights, regardless of whether they are held together with or independently of a property, - privileges, freedoms, easements and any other rights and advantages, which to a property, a building or

9 belong to or are deemed to belong to another establishment or structure, and - undivided shares in a property as defined above. Anything that is not covered by the concept of real estate ownership is considered to be property. Whether a movable thing is attached to a plot of land or a building in such a way that it can be considered real estate is regarded in Cyprus as both legal and factual issues and is decided on the basis of the circumstances of the individual case. 9 Right to private property in immovable property According to Cypriot law, no property, interest, right or freedom, preference, easement or any other benefit should exist in, on or about real estate property or be created, acquired or transferred, except in accordance with the provisions of the Real Estate Ownership Act. Note An appeal to common law principles or equity rules to establish rights to property in Cyprus is, in contrast to other possible legal practice, excluded. The term property in land, which, according to German legal thinking, would qualify as a claim in rem, describes any right that is directly linked to the ownership of and the scope of real estate and can be entered in the land register. A mortgage that encumbles real estate to secure a debt is not considered property on land, but merely a contractual claim of the mortgage beneficiary and a burden on the property. The tenant's rights to a rented property do not count as property on land in favor of the tenant, but merely as a contractual right, unless the tenant is exceptionally entitled to enter the tenancy law in the land register. The filing of the purchase contract for real estate at the land registry office, which is one of the special formal requirements when buying real estate, does not create assets on land, but only a burden on the real estate for the benefit of the buyer who deposited the contract. Notice No real estate transfer or encumbrance is effective until it is registered or admitted with the county state agency, and no one other than the registered owner should register a transfer or voluntary encumbrance of a property with the agency.

10 10 Scope of rights to property in real estate The concept of scope of property in real estate includes all regulations that define the nature and extension of the rights, obligations and restrictions relating to property and ownership of real estate. Note Anyone who is entitled to register as an owner is considered the owner of real estate, regardless of whether they are actually registered or not. Private real estate ownership of land extends - to the surface and substance of the soil; - Below the surface of the earth to a depth that is reasonably necessary for the soil to be used and cultivated; However, rights to minerals are generally excluded from property rights; - on the air space above the surface of the earth, as far as this is reasonably necessary for the use of the property. In practice, it is often of great importance to determine the current location of the property and the area covered. In the cases where a property is covered by a registered real estate title, the area covered by the property is deemed to be the area to which the chartered registration on a government land control plan or other land registration plan of the director of the land registry corresponds. The exact location of the property is therefore derived from the official plan mentioned and not from the boundary descriptions on the title deed. If there is no corresponding official plan for registration (which may be the case with older registrations), the extent of the property is decided according to the actual exercise of ownership by the registered title holder. 11 Restrictions on property rights Unrestricted property rights include: - the right to claim or demand ownership of the property, - the right of possession, - the right of use, - the right to retain, use and collect the fruits of the property and - the right to dispose of property, including partial or complete alienation of property or encumbrance, alteration or destruction of the property.

11 If one of the aforementioned elements is missing, the right of ownership is deemed to be restricted. With regard to real estate ownership, there are three groups of property rights restrictions. The first group of restrictions are from the exercise of property rights to expropriation in the interests of public safety, public health, public morality, community planning, public utilities, or the protection of third parties. If the restrictions or the deprivation of rights result in a significant reduction in the property's value, the owner is entitled to appropriate compensation as soon as possible. In addition to the aforementioned cases, the Republic of Cyprus or individual municipalities have a compulsory purchase right or a right to take possession of educational, religious, social or sporting facilities of the municipality in which the property is located. The second group of possible restrictions is based on the powers granted to the director of the land register with regard to - the division of real estate, - the sale in certain cases of property held in undivided shares, - the division of property held in undivided shares in the case of two or multiple owners and - the adjustment of property rights when the owner of trees and the owner of the property belonging to them are not the same.The third group of restrictions on property rights are property law restrictions (estate in land), insofar as they are effectively justified in favor of third parties on the basis of statutory provisions. 12 Registration of rental agreements Under certain conditions, rental agreements can be registered with the land register. The following requirements must be met: - the conclusion of a valid rental agreement, - the rental agreement does not expressly prohibit registration, - the landlord is the registered owner of the rented property, - the rental period exceeds 15 years, - the contract is concluded within three Submitted for registration months after the day of the conclusion of the contract and - the consent of the mortgage or other creditor has been given, provided the property is burdened accordingly The real right (estate in land) created by registering the rental contract is subject to the provisions of the underlying contract. The tenant can transfer or sublet the rights resulting from the contract, as far as this is permitted according to the provisions of the contract. 13 Registration of Trusts

12 The following requirements and special features apply to the registration of trusts: - The trust aimed at real estate property is established by will or a trust deed signed by the person authorized for this purpose, - The trust deed or testament is entered in the register of the competent district authority and - Only the registered owner can apply to the land register for a corresponding entry of such a trust relating to real estate property. 14 Registration of restrictive contracts In connection with the registration of restrictive contracts, restrictive contracts are those in which two owners of different real estate objects agree that the use or development of one real estate object for the benefit of the other property should be restricted. A restrictive contract can be submitted to the land register for registration by any of the owners involved. A registered restrictive contract establishes a real right (estate in land) over the encumbered real estate and binds its owner and his legal successor in favor of the owner and the legal successor of the other property. 15 Joint ownership of buildings Owing to the inadequacies of the previously existing legal and legal situation, a new law was passed in 1993 (No. 6 (1) from 1993) regulating jointly owned buildings (hereinafter referred to as GGEG). According to this, the following applies: - Buildings in joint ownership are those that consist of at least five units, even if the building is predominantly owned by one owner; it is registered as such a building in communal ownership; - Unit means a floor or parts of it, such as individual rooms, offices, apartments, shops or other parts or rooms of a building in common ownership, which can be used independently and fully as complete, separate and independent units, for whatever purpose can be; - Owners of a unit are also tenants of a unit on the basis of a rental agreement, provided this can be registered with the land register and is accordingly registered. The jointly owned building is regulated by regulations that are drawn up in accordance with the GGEG and regulate the control, operation, administration, management, use and use of the units of the jointly owned building as well as the rights and obligations with regard to the jointly owned building and land regulate. These regulations are made at

13 land registers and apply for and against every owner and his legal successor. If such a registration of the regulations does not take place, the rules attached to the GGEG as model regulations apply to the affected building in common property. All expenses for insurance, maintenance and repair of the jointly owned building are borne proportionally by the owners of the units according to their share in the jointly owned building. 16 Special features of the property purchase contract In addition to the general validity requirements that apply to all contractual agreements, there are also special formal requirements for property purchase contracts. These are - the existence of a contract in writing, - the deposit of a copy of the contract by the buyer with the land register within two months after signing the contract and - the pre-registration of the seller as the owner of the property. Insofar as the buyer enforces the contract, d. H. the transfer and registration of real estate property by court order, further requirements must be met, such as the request to the seller to declare consent to the transfer of ownership to the land register, as well as compliance with the deadlines to be observed for this and for the application to the court, be fulfilled. 17 Acquisition of real estate by foreigners from the EU Until Cyprus joined the EU, there were restrictions on the acquisition of real estate by foreigners from the EU. Since May 1, 2004, EU citizens are no longer considered foreigners within the meaning of the Acquisition of Immovable Property (Alien) Law with regard to the acquisition of real estate of any kind with the exception of the acquisition of second homes, although this restriction does not apply to EU citizens either who live permanently in Cyprus. As before, restrictions apply to foreigners from third countries; in particular, these continue to require the approval of the Council of Ministers prior to the acquisition of real estate. 18 Rental contracts In Cypriot law, no distinction is made between commercial and residential rental; both types of rental are essentially treated equally. General contract law In addition to the general prerequisites for the effectiveness of contracts, namely

14 - the existence of the offer and acceptance of the offer, d. H. an agreement, - the intention to create a legal connection, - the existence of any consideration, - the contractual age of the parties, - the honest consent of the parties to the terms of the contract and - the absence of violations of public policy, There are also special formal requirements in the real estate lease. If the term of the rental contract exceeds one year, the contract must be - expressed in writing and - signed at the end by the contracting parties in the presence of two witnesses who must themselves be of age and who have added their signature to the contract as witnesses. 19 Rent Control Act Cypriot tenants, whether of residential or commercial rental properties, are protected against termination and eviction under certain circumstances by the Rent Control Act. Note Foreigners renting property in Cyprus are generally not protected by the law. The extent to which EU citizens are to be treated on an equal footing with Cypriot tenants as a result of EU accession and whether the Rent Control Act would withstand an EU legal review with regard to the prohibitions on discrimination that exist within the EU are questions that should still need to be finally clarified in the future. Capital market Contents: 20 The new Cypriot Capital Movement Act Basics Scope of application Regulations - Principle of free movement of capital - Exemptions - Direct investments in Cyprus - Trading in foreign currencies - Import and export of banknotes and gold - Transitional provisions

15 21 Basics On May 1, 2004 Cyprus joined the European Union on the basis of the Athens Accession Agreement of April 16, 2003. The harmonization of the national legal system with European Community law, which became necessary when joining the Union, led to the passing of the Capital Movement Act * 2, which was passed and published in July 2003, but only came into force upon EU accession on May 1, 2004. As the name of the law suggests, its purpose is to liberalize capital and payment transactions. The previously existing Foreign Exchange Control Act * 3 was completely abolished by the Capital Movement Act. The gradual liberalization of capital movements that had already begun in 1991 reached its preliminary climax. 22 Scope of application On the one hand, the law regulates capital and payment transactions in Cyprus. In addition, business transactions in foreign currency and gold within Cyprus also fall within its scope of regulation. In particular, the law applies in the following cases * 4: - Capital and payment transactions between residents of Cyprus and residents of other member states; - Capital and payment transactions between residents of Cyprus and residents of third countries; - Transactions in foreign currency and gold within Cyprus. 23 Regulatory content 24 Principle of the free movement of capital Irrespective of the provisions of other laws, the Capital Movement Act provides that all capital and payment transactions between residents of Cyprus and residents of Member States or third countries can be carried out free of any restrictions. * 5 The following are considered to be movements of capital: * 6 - direct investment; - Investments in immovable property (e.g. real estate); - Transactions with regard to rights that can usually be traded on the capital market; - Transactions relating to shares in collective investment schemes; - Transactions relating to rights and other instruments normally tradable on the stock market; - Transactions with current accounts and custody accounts in credit institutions; - Credits with a view to trading or providing services in which a resident of a Member State is involved; - Financing credits and credits; - sureties, other guarantees and liens; - Transfers within the framework of the execution of insurance contracts;

16 - personal movement of capital; - Import and export of documents securitizing securities; - Other types of capital movements, e.g. Include inheritance tax, losses and interest, industrial and intellectual property. 25 Exemptions The liberalization of the movement of capital and payments does not remove the restrictions that exist with regard to the movement of capital for residents of third countries and that relate to direct investments (including the acquisition of real estate) and that already existed. There are also restrictions with regard to the acquisition of real estate, in accordance with the provisions of the Act regulating the acquisition of real estate by foreigners * 8. EU nationals with permanent residence in Cyprus are treated on an equal footing with Cypriot nationals with regard to any property purchase. EU citizens without permanent residence in Cyprus can purchase land and building plots in Cyprus without restriction, but the approval of the Council of Ministers is required to purchase apartments, houses and other real estate. Citizens from third countries always require the approval of the Council of Ministers when purchasing real estate. Furthermore, the Republic of Cyprus * 9 can take unilateral measures against a third country with regard to capital movements and payments for serious political reasons and if there are urgent conditions. It can also take all necessary measures to prevent the violation of an effective law in Cyprus, especially in the areas of banking compliance. In addition, the Republic can put in place procedures for the registration of capital movements for administrative or statistical purposes and such measures

17 take actions necessary for the maintenance of public order or national security. Cyprus will implement any decision of the EU Council of Ministers concerning the imposition of measures of any kind against third countries and will take any precautionary measures in this regard. * 10 The Cypriot central bank has the power to order and enforce the precautionary measures and sanctions that the EU Council of Ministers imposes on capital and payment transactions in a third country. 26 Direct investments in Cyprus Direct investments in Cyprus by citizens of other EU countries are carried out in accordance with the Cypriot regulations, which also apply to Cypriot citizens in this area. However, the Council of Ministers may restrict such direct investments for the protection of public safety and order, national security and public health or for the purpose of restricting or prohibiting the production or trade in weapons or ammunition. * 11 The Ministry of Finance sets guidelines for direct investment by foreigners * 12 in Cyprus. Nobody may transfer securities or shares in existing companies to a non-Cypriot without the prior approval of the Ministry of Finance, * 13 unless it involves portfolio investments or securities listed on the Cypriot stock exchange. With regard to citizens of third countries, the Cypriot Central Bank has issued guidelines * 14 that further elaborate on the Capital Movement Act. As a basic requirement for the approval of applications for direct investments by citizens from third countries, the guideline names - the non-impairment of public order, security and health as well as - the complete exclusion of the production of or the trade in arms and ammunition. In addition, there are minimum and maximum limits for investments and / or participation by citizens from third countries. In the agriculture and fisheries sector, for example, there is a maximum participation limit of 49% company participation with a minimum investment volume of Cypriot pounds at the same time. In the industrial manufacturing sector, on the other hand, for example in the free zone of Larnaka, there is no minimum investment requirement and a 100% participation in the company is possible. Most of the rules in the directive concern the service sector. As a rule, a 100% stake in the company is possible, although the minimum investment must be Cyprus pounds or pounds, depending on the service sector. A detailed list of the service areas sorted by minimum investment can be found in Annexes 1 and 2 of the guideline * 15. Exceptions exist for restaurants, cafes, night clubs and tourism and travel agencies, where the company participation may only be up to 49%. There are further exceptions in the wholesale and retail sector, where the minimum

18 The investment amount, depending on the participation in the company's capital, is at or in Cypriot pounds. Tourism projects are examined and decided on a case-by-case basis by the central bank in cooperation with the Ministry of Trade, Industry and Tourism. Acquisition of shares in land development companies is simply rejected. In addition, there are special regulations in the areas of participation or establishment of banks, insurance companies, financial services companies, airlines, companies that are active in the areas of public utilities, ship management and companies listed on the Cypriot stock exchange. 27 Trading in foreign currency With the exception of financial institutions, no one in Cyprus may act as a currency negotiator (person who trades in foreign currency, i.e. a currency dealer) without the prior approval of the Central Bank of Cyprus in accordance with the provisions of Article 36 of the Central Bank Act * 16. * 17 Financial services companies that have received approval in accordance with the Financial Services Act * 18 may only carry out transactions for short or long-term deliveries in a foreign currency if such services are linked to the provision of financial services. * 19 28 Import and export of banknotes and gold Everyone who enters or leaves Cyprus is obliged to * 20 notify the responsible customs officer either - the amount of the banknotes in Cypriot or foreign currency or the value of the gold they are carrying, insofar as this amount or value is equal to or greater than CYP or EUR or reaches or exceeds the amount that the central bank may determine from time to time by issuing orders, or - to present a copy of the relevant transaction if a financial institution was involved in the purchase . 29 Transitional provisions While the Capital Movement Act abolishes the Foreign Exchange Control Act, permits, licenses, edicts, orders, orders and all other administrative acts that have been or have been granted under the Foreign Exchange Control Act are viewed as if they were or had been granted under the Capital Movement Act, * 21 and remain in effect until they expire or are revoked. Until it joins the euro zone and subject to the provisions of Articles 119 and 120 of the Treaty establishing the European Community, Cyprus can take precautionary measures * 22 if it gets into difficulties or seriously anticipates difficulties with regard to its balance of payments or as a result of the type of currency available to it and especially if it is assumed that they jeopardize the functioning of the common market or common trade policies, Cyprus is obliged to inform the EU Council of Ministers and the other members

19 to keep the States informed of the measures it intends to take to deal with the difficulties. 30 National funding 31 Overview of the situation in Cyprus The Cypriot policy had to revise its support services in the context of admission to the European Union. The Public Aid Control Law and its amendments are now decisive for investment incentives. In these z. B. stipulates the following: - Export is particularly encouraged. There are grants for this, which are based on the value of exports. - There are further funding programs for small and medium-sized enterprises, research and development, training, catching up and restructuring of companies in danger of bankruptcy, environmental protection and regional aid. Information on the individual programs and their application is available from the Commissariat for Public Aid (Company Law Company Forms in Cyprus Content: General The Private Company as a counterpart to the German GmbH - Formation - Organization - Transfer of company shares The Public Company The General and Limited Partnership Restructuring Law 32 General Company law in Cyprus is strongly based on British law, which is why there are no GmbHs in Cyprus, but only public or private stock corporations and partnerships that are similar to the German legal forms of general partnerships and limited partnerships.

20 33 The private company as a counterpart to the GmbH in Germany 34 Establishment The private company can be established by natural persons or by legal entities. In the case of incorporation by legal entities that do not belong to the EU, the names of the shareholders must be disclosed to the Central Bank of Cyprus. This information is treated confidentially. One-man founding of a private company is possible. A founding contract and the articles of association are always required. A private company can have a maximum of 50 shareholders. Current and former employees of the company are exempt from this rule. In principle there is no legal minimum deposit. However, the central bank recommends deposits of at least Cypriot pounds (approx. EUR). These should be divided into shares with a minimum face value of 1C. Instead of cash contributions, contributions in kind are also possible. At least C must be performed before entry in the commercial register. The shares must be registered. For this purpose, some information about the shareholders must be given, e.g. B. Name, residential and business address, nationality, information about previous and current business activities, status in the company to be founded, share in the capital, etc. Organization Important for Cypriot law is the appointment of the managing director or the board of directors. The method of appointment and their tasks are to be regulated in the statutes. Ultimately, however, the power of appointment and discharge of the board of directors lies with the shareholders. It is possible to appoint the first board members in the statutes. Practice Council For tax reasons, it can be recommended that the majority of the members of the Board of Directors are Cypriot residents. It is also favorable that the number of foreign members of the executive board is not sufficient for a quorum. (More on this in the chapter on tax law). 35 Transfer of Company Shares The transfer of shares is restricted in the private company. The shares may not be offered publicly and it is possible to restrict the transfer. The public company The legal regulations of the private company also apply in principle to the public company. The differences are that in a public company - an unlimited number of shareholders is possible, - it requires at least seven shareholders,

21 - can offer its shares publicly for purchase and - restrictions on the transfer of shares are not possible. According to a regulation of the company register of Cyprus, the minimum contribution to public companies is C. Contributions in kind are also possible with the public company, but must be valued according to special rules. 36 The General and the Limited Partnership These types of company are similar to the German OHG (General Partnership) and the KG (Limited Partnership). As with these, in the General Partnership, the shareholders are also liable for the company's obligations with their private assets. In a limited partnership, there are general partners who are fully liable and limited partners who are only liable up to the amount of their contributions. The number of shareholders in the partnerships is limited to a maximum of 20. A partnership agreement can regulate the relationships between the partners. The company must be entered in the commercial register. For this purpose, the personal details of the shareholders, the purpose of the company and the duration of the partnership must be given. 37 Restructuring law The Cypriot restructuring law, which came into force on and offers a number of advantages for international companies, is very modern. The new Cypriot reorganization law literally follows the Merger Directive, but, unlike the Merger Directive, it allows cross-border reorganizations with both member and non-member states of the EU as well as purely national reorganizations, all without negative tax consequences at the level of the company or the Shareholder. The tax book values ​​are to be carried forward, the losses are transferred. The types of reorganization that are covered are mergers, divisions, transfers of business units and exchanges of shares, all following the terminology of the Merger Directive. According to the new legal situation, reorganizations are also exempt from value added tax, tax on the sale of real estate shares, stamp duties and real estate transfer tax. Contents: 38 Management of the Limited Liability Company 39 Company Forms 40 Formation Requirements 41 Directors - Appointment - Loans to Directors - Powers of Directors and Board of Directors - Minority Rights and Directors - Directors' Fiduciary Duties

22 42 Company secretary The most common form of company in Cyprus is that of the Private Company Limited by Shares, hereinafter referred to as Ltd. for simplicity. called. The characteristics of the Cypriot Ltd., as well as any other legal entity (corporation), are their legal personality as well as the continuous legal succession, i.e. the maintenance of the corporation by its members, who can be changed or changed in number from time to time. In addition, the Ltd. from the fact that the liability of a member is limited to the nominal value of the company shares of this member or to the premium price of a share if a higher value than the nominal value of the amount to be paid by the shareholder has been agreed. 43 Formation Requirements Every Cypriot Ltd. must name at least one director and one (company) secretary when it is founded. These must be named in the company register as one of the founding requirements. In principle, each partner can also fulfill one of the aforementioned functions. However, a single partner cannot fulfill both functions at the same time. 44 Directors Cypriot company law does not define the term director, but it does provide that any person exercising the functions of director is to be regarded as director regardless of his title. Directors are generally to be viewed as representatives of the company for which they work. 45 Appointment Cypriot company law contains few provisions with regard to the means of appointing directors and reserves the corresponding provisions in the articles of association. In practice, the latter provide for an initial appointment of the directors by the signatories of the founding statutes (memorandum) and an annual, rotating resignation. The resulting vacancies will then be announced at the annual general meeting of the Ltd. occupied again. Occasionally the company's articles of association also determine the first director (s). It is also possible that directors do not retire on a rotation basis, but are appointed for life. Note In any case, it is basically possible to remove a director by an ordinary resolution of the shareholders' meeting, regardless of what the company statutes provide and what agreements exist with him. Cypriot law does not require directors to hold shares in the company. Insofar as there is a corresponding requirement in the company

23 of the Articles of Association, an appointed director must acquire shares accordingly within two months of his appointment; otherwise the position of director is considered vacant. Actions by a director are generally effective vis-à-vis society, regardless of whether, after his appointment, deficiencies in the appointment or in the qualifications of the director emerge. However, this does not mean that a lack of appointment in this respect would be cured. 46 Loans to Directors As a matter of principle, loans to Directors are prohibited. The director of its holding company is also deemed to be the director of a company. This principle can only be deviated from in certain, strictly regulated cases. 47 Authorities of the directors and the board of directors In the relationship between the board of directors (board of directors) and members of the company, the directors exercise all powers of the company. How these powers of attorney are distributed is ultimately subject to the provisions of the company statutes, unless Cypriot company law provides for the exercise of specific powers by the company. To the extent that a board of directors exists (i.e. at least two directors are appointed), the authority to exercise the powers of the company is given to the board of directors as a whole and not to individual directors. The shareholders are not permitted to dictate to the board of directors (or the director) how the business of the Ltd. are to be led. In addition, the shareholders cannot correct a decision of the management made within the scope of the powers granted to the directors. If the powers of attorney of the directors are to be restricted in retrospect, a change in the company's articles of association is necessary. The powers of attorney to manage the business of the company are granted to the board of directors as a whole; internally, however, the latter can grant these powers of attorney or part thereof to individual directors, other officials of the company or separately authorized third parties, insofar as the company's articles of association permit this. Insofar as the directors act outside of their powers but still within the scope of the company's purpose, the shareholders can subsequently approve corresponding actions by the directors at a general meeting. Such subsequent approval is excluded in cases in which the directors breach fiduciary duties and control voting at the general meeting. It can happen that the board of directors is unable or unwilling to act. This is the case, for example, if the required majority voting is not achieved or individual directors are unable to act in certain cases due to existing fiduciary duties. In such cases, the shareholders can decide at a general meeting to appoint an additional director to close this randomly created gap.