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Cyprus Routes To Market

So you've decided to expand a business in Cyprus and researched your market. Now it's time to decide how you will register and expand your business in Cyprus. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?

Here are your typical options when expanding a business into Cyprus:

Sole Proprietorship/Trader

This type of business is set up and run by one person. They may or may not employ other people. There is unlimited liability for any company debts and any business name must be registered with the Registrar of Partnerships. This type of business falls under the Partnership and Business Names Law Cap 116. It is largely subject to the same conditions as a General Partnership.

General Partnership

This type of business can be set up 2 or more individual members and up to 20. Partnerships fall under the Partnerships and Business Names Law Cap 116, which is similar to the equivalent English legislation. It is important to register a partnership with the Registrar of Partnerships within the first month of establishing the business and you must provide details such as names, purposes, place of business, full details of the partners etc.Each partner to responsible for the running of the business and their own taxes.

Limited Partnership

This type of partnership has one or more general partners with unlimited liability and one or more limited partners (whose liability is limited to the amount stated in the partnership return filed with the Registrar of Companies).

Company Limited by Guarantee with or without Share Capital

This type of company is usually established for non-profit making purposes. The liability of the members of this type of company is limited to an amount agreed by the members.

Public Company Limited by Shares

This type of company can be set up by one or more people. There is no restriction regarding the number of members this company may have and the shares of a public company are freely transferable.

Private Company with Limited Liability by Shares

This type of company must have a limited number of shareholders i.e. one and no more than 50. There is one or more director, a secretary and have a registered office. The liability of the members is limited to the value of the subscribed shares. A private company limited by shares is the most commonly used type of company.

A company's memorandum and articles of association combine to form the legal charter of the company and is prepared by a local advocate in Greek and then translated into English. These must be filed with the Registrar of Companies.

You must apply to the Registrar of Companies in order for them to authorise the proposed Company's name. It must always contain "Limited" or "Ltd".

Branch of Overseas Company

This means that any foreign company can establish a branch in Cyprus. Within one month of setting up a branch, it is essential to file the following documents (in Greek) with the Registrar of Companies:

A certified copy of the Memorandum and Articles of Association

A record of the directors and secretary

The names and addresses of those residents in Cyprus who are authorised to accept all notices on behalf of the Company

A branch must file annual accounts, including a certified Greek translation. Foreign companies operating a branch in Cyprus must submit copies of its financial statement every year.

Licensing

Licensing in Cyprus is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

• Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.

• Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.

• Patent License in Cyprus - The allowance of another party to use your patented product, design or process.

• Trademark License in Cyprus - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

Franchising In Cyprus

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of franchising your business in Cyprus include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.

Disadvantages of franchising a business in Cyprus: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

There no regulations or laws on franchising in Cyprus, although having joined the EU, this may change over time. For up to date information it is advised to contact a well established local lawyer who can help with setting up and registering a franchise business in Cyprus.

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