Cyprus Companies Law: provisions which you should know about

Prohibition of acting as sole director and secretary

As per to the Companies Law, Cap 113 (the ‘Law’), every company in Cyprus is obliged to have a director and secretary, noting that the latter is responsible for the efficient administration and operations of the company as well as compliance with local legal requirements.

However, as per the Article 173 of the Law, it is not permitted for one person to act both as a secretary and a director, if the shareholder of the company is a different person or an entity. Such company cannot be incorporated, and the Registrar of Companies would reject the submission for its incorporation. The above provision, along with Articles 171 and 172 of the same Law, have been enacted to the Law governing companies in Cyprus to prevent the abuse of powers granted to the Secretary.

The limitations do not apply in the case where a company has only one shareholder who wants to be appointed on all the positions, There is no conflict of powers, and the Law does not prohibit it.  In other words, in the case of a single-member private limited liability company – the shareholder can be also appointed as director and secretary of his company.

It is important though to remember that the provisions of the Law may create issues on a later stage, especially during changes, such as transfer of shares. For instance, the Registrar of Companies will not authorize changes in the shareholder’s structure if they are submitted and authorized by the secretary, who also acts as the director.

We suggest to analyze the possible scenarios well in advance. A good practice is to have a diversity in the company’s structure – for example, a third person, not directly related to the company – to be appointed as Secretary.

It should be also noted that in the interests of efficiency and smooth operation of the company, a local Greek speaking secretary should be appointed, considering that the secretary will be directly liaising with the authorities in Greek language.