Modernisation of the laws and procedures of the Registrar of Companies

 

30 January 2019

In the context of modernization and reorganization of the Department of Registrar of Companies and Official Receiver, the Cyprus Parliament has voted the following amending Laws and Regulations which were published in the Official Gazette of the Republic on the 18th of December 2018:

Full digitalisation, amendment of legislation, redesign of the Registrar forms, and revision of fees for the promotion of electronic submission of forms are some of the new characteristics introduced by the new amending Legislation and Regulations aiming at the restructuring of the Department of Registrar of Companies with a view to reduce the time of processing, simplify and expedite the various processes and services provided by the Companies Registrar Department, making it more efficient, and ensure the adequate and timely updating of the register kept by the Companies Registrar and provide high quality services to the public and the business world, which will help attract investment.

It shall be noted at this point that, according to the Registrar of Companies, some of the modifications introduced by the amending Legislation and Regulations have already been implemented, while some others will come into force gradually.

One of the most important changes introduced by the amending legislation and regulations is the redesign and remodel of the Companies Registrar forms which aims to the consolidation of associated forms (where this is feasible) and the enrichment of the forms with explanatory notes and checklists to make sure they are more comprehensible to the applicants (The Companies (Amending) Regulations of 2018). It shall be mentioned at this point that a single form has been created to replace the 5 correlated forms submitted for company registration (The Companies (Amending) Regulations of 2018). Moreover, the Registrar forms became more simplified. For instance, the company's stamp, the previous name, previous surname and profession of individuals relating to the Company, such as Director and Secretary are not required anymore (The Companies (Amending) Regulations of 2018). In addition, the Registrar forms have been customised and made machine readable for scanning and data exporting purposes.     

The new redesigned forms will become operative gradually with the necessary modifications to the electronic and information systems of the Registrar. Their implementation will be subject to advance timely notification by the Department of the Companies Registrar.

The amending legislation and regulations have introduced a number of modifications in relation to the existing applicable Companies Law Cap. 113 (hereinafter referred to as the “Law”).

More specifically, one of the modifications introduced by the Companies (Amending) Law of 2018 (N.149(I)/2018) is the late submission fee. Where a company fails to deliver any document in accordance with the relevant legislative provisions, the Registrar will require such company to pay late submission fees.  In most of the cases, such late submission fees will be 50 (Fifty) EUR and a pecuniary charge of 1 (one) EUR for each day of continuation of the offense with a maximum charge of 250 (Two hundred fifty) EUR for each violation (sections 11, 20, 23, 28 and 36 of the Companies (Amending) Law of 2018). This measure will come into force the 18th of December 2019, 1 (one) year after the publication of the amending legislation in the Official Gazette of the Republic.  

It is also stressed that one of the most important changes that comes into force is the abolition of the 0.6% variable fee applicable to a company’s registration and to the increase in the company's registered capital (The Companies (Fees and Duties) (Amending) Regulations of 2018). This legislative modification came into force on the 18/12/2018 which is the date of publication of the amending Legislation in the Official Gazette of the Republic.

Moreover, another significant change that is introduced by the new amending Legislation, that will be implemented gradually, is that the affidavit for the process of company registration and transfer of a foreign company’s registered office in Cyprus, will not be necessary anymore (The Companies (Amending) Regulations of 2018).

Furthermore, another notable modification is the introduction of the Official Gazette/Journal of the Department of Registrar of Companies and Official Receiver. According to section 39 of the  Companies (Amending) Law of 2018 (amending section 365A of the Law), the Registrar may, by decision of the Council of Ministers published in the Official Gazette of the Republic, replace the publication in the Official Gazette of the Republic by a publication in an electronic Gazette/Journal kept and maintained by the Registrar of Companies, which will allow the public to access and browse the published information in chronological order through the Registrar 's website. This legislative measure will come into force gradually subject to advance notification by the Department of the Companies Registrar.

Additionally, the Companies (Amending) Law of 2018, has introduced the concept of administrative reinstatement (section 33 of the Companies (Amending) Law 2018 providing for the addition of the new section 327A of the Law). According to the concept of administrative reinstatement, the Registrar may, upon request in the prescribed form, be made by any consultant or member of a company whose name has been deleted from the Register, restore its name to the register, provided that some conditions set out in that section are satisfied. Previously, the only way for a company, whose name was deleted from the register, to be reinstated, was to follow the process provided in subsection 327(7) of the Law. According to subsection 327(7) of the Law, the Court on an application made by the company (or a member or creditor thereof), provided that some conditions are satisfied, may order for the name of the company to be restored to the register, and upon an office copy of the order being delivered to the Registrar for registration, the company shall be deemed to have continued in existence as if its name had not been struck off. After the introduction of section 327A of the Law, an application to the Court and the issuance of a Court order is not the only way for a company to be reinstated, as from now on this can also be done by a decision of the Companies Registrar, provided that some conditions are satisfied, under section 327A. This legislative modification will come into force gradually subject to advance notification by the Department of the Companies Registrar.

Also, section 32 of the Companies (Amending) Law of 2018 modifies 327(7) of the Law, providing the opportunity to anyone who has suffered a loss from a company’s actions prior to its erasure from the Register, to submit an application before the competent Court seeking the reinstatement of the Company in the Register, provided that the application is submitted within 20 (twenty) years prior to the company’s deletion from the Register. This legislative modification came into force on the 18/12/2018 which is the date of publication of the amending Legislation in the Official Gazette of the Republic.

In addition, section 32 of the Companies (Amending) Law of 2018   provides for the addition of the new subsection 327(2A) of the Law which clarifies that the Companies Registrar can proceed with the struck off of a company from the Register upon request of its directors only as long as the company has fulfilled its obligations under the Law. The abovementioned legislative modification was implemented on the 18/12/2018.

 

In conclusion, the amending Legislation and Regulations published in the Official Gazette of the Republic on the 18/12/2018 are expected to bring significant, positive changes in relation to the company sector as their ultimate goal is the restructuring of the Department of Registrar of Companies, the reduction of the time of processing,  the simplification and acceleration of the various processes and services provided by the Companies Registrar Department and the achievement  of the adequate and timely updating of the register kept by the Companies Registrar. Thus, the Department of the Registrar of Companies will become more efficient and provide high quality services to the public and the business world, which will help attract investment.

 

Author:  Eleni Louka, Advcate  

 

 

The above is for information purposes only and does not consitute legal advice.