At the end of 2016 thousands of Cyprus companies were struck off – as the Cypriot Government recognised that many had been inactive for a number of years.
This Information Note considers why these companies were struck off and explains the relatively straightforward process for a company to be reinstated.
Why were Cyprus Companies Struck Off?
There are two reasons why the Cyprus Registrar of Companies proceeded with the involuntary strike off of Cyprus companies:
- Failure to file annual returns
A deadline of the 31 December 2016 was set. According to the latest statistics on the Registrar’s official website, annual returns filed by this date were approximately 100,450, of the 208,500 total estimated registered companies at this date.
- Failure to pay the annual levy fee
The annual levy fee for a Cypriot company is €350. An announcement from the Registrar regarding the payment of annual fees, on 16 August 2016, stated that if a fee was outstanding for a period of one year from the date it had become due, the Registrar would proceed with the strike off (deregistration) of the Company.
What are the Consequences?
If a Company is struck off, it cannot legally continue its business operations. All transactions and assets are immediately frozen, including bank accounts.
The liability, if any, of each director, managing officer and member (shareholder) of the Company will continue, and may be enforced.
Deregistration does not mean that the company is liquidated or ceases to exist. Third party creditors and other interested parties; for example, the Inland Revenue Department, can reinstate and prosecute the company and its directors.
How Can a Cyprus Company be Reinstated?
Within 20 years from the publication of the relevant notice in the Official Gazette of the Republic of Cyprus (part of the striking off process), a Company, any of its members or its creditors, can file a petition to the Court for its reinstatement. If this petition is accepted by the Court, an order for its restoration is issued.
On acceptance of the petition by the Court, a general requirement specified by the Registrar of Companies is that all pending financial statements, audited accounts, annual returns and any pending annual fees, must be submitted in order that the reinstatement can be successfully implemented.
Relevant expenses of up to €500 are payable, in addition to the annual fees, within two years of the strike off and €750 after this two year period. Relevant stamp duty fees are also added to the petition.
How can Dixcart Assist?
Dixcart has many years of experience in establishing and managing Cypriot Companies. If a company has been struck off and there is a need for it to be reinstated, Dixcart can coordinate the process to ensure that it is conducted as efficiently as possible and that all future obligations and filings are undertaken in an organised and timely manner.
If you have any questions, please speak to the Dixcart office in Cyprus: email@example.com or to your usual Dixcart contact.