When you register your company you need:
- a ‘memorandum of association’ – a legal document signed by all initial shareholders of the company
- ‘articles of association’ – written rules about running the company agreed by the shareholders of the company
Memorandum of association
The memorandum must include:
- The company’s name;
- its registered office address;
- provide the main objects / purpose of the company. A Cyprus company can only carry out transactions permitted by the objects clause in its Memorandum of Association, otherwise the transaction will be considered ultra vires and void. The current professional practice in Cyprus is, therefore, to draft the objects clause as wide as possible;
- a limited liability clause, stating that the liability of its members is limited, meaning that the company’s finances are separate from the personal finances of their owners and as a general rule creditors of the business may only pursue the company’s assets to settle a debt. The personal assets of the owners are not at risk;
- a capital clause setting out the authorized or nominal capital of the company and its division into shares of a fixed amount. The authorized share capital may subsequently be increased by the company in general meeting.
You can only update the memorandum once the company has been registered by confirmed petition of the court.
Articles of association
The Articles of Association of a Cyprus Company set out its internal management rules and shareholders’ rights.
Subject to the provisions of the Companies Law and to the conditions contained in its memorandum, a company may, by special resolution, alter or add to its articles without a need for court approval.
The Articles of Association bind the Cyprus Company to its members and vice versa, but not the shareholders to each other. Therefore, if the shareholders of a Cyprus Company want to keep certain matters private, they can enter into a separate shareholders’ agreement which does not need to be filed publicly.
See a sample Memorandum and Articles of Association.