December 30, 2019

Cyprus Company Compliance: Annual Return Submission

The Cyprus Companies Law Cap. 113 as amended (“Companies Law”) stipulates the obligation of companies registered in Cyprus to file at the Cyprus Registrar of Companies (“Registrar”) their annual return (Form HE32), accompanied by certified copies of the audited financial statements of the previous year, the directors’ and (if applicable) auditors’ reports.

In accordance with section 118 of the Companies Law, every company having a share capital shall once per calendar year prepare a return stating statutory information, including the registered office, members, directors and secretary of the company. Provided however that a company need not make a return thereunder either in the year of its incorporation or, if it is not required under section 125 of the Companies Law  to hold an annual general meeting (“AGM”) during the following year, in that year.

As regards timing of submission of the annual return, section 120 of the Companies Law provides that the annual return must be submitted within 28 days of the AGM of the company. Every company shall in each year hold a general meeting as its AGM in addition to any other meetings in that year, shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one AGM of a company and that of the next. Provided however that as long as a company holds its first AGM within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

Further, in accordance with section 152 of the Companies Law, the directors shall present to the company in general meeting the following:

(a) the set of financial statements;

(b) the directors’ report; and

(c) the auditors’ report attached to the aforesaid, where required by the Law.

The directors shall facilitate for the company a complete set of financial statements as per the International Accounting Standards, in accordance with section 142 of the Companies Law. Such financial statements shall be presented at the latest within 18 months following the incorporation of the company and, subsequently, once at least in each year. Moreover, the directors of the company shall have a collective duty towards it to ensure that the annual financial statements, and, as the case may be, the annual consolidated financial statements, shall be prepared and published in accordance with the requirements of the Companies Law and International Accounting Standards.

If a company omits or delays to submit its annual return or present the financial statements and accompanying report(s) at the AGM of the company, then the company and each of its officers responsible for the omission is subject to a fine.

Importantly, a company which fails to file any documents required by the Companies Law may be struck off the registry of companies if it fails to submit the documents required by the Registrar within six months of a written notice requiring submission being issued by the Registrar.

To sum up, the obligations of a Cyprus company include, but are not limited to, preparation of audited financial statements which must be presented at the duly held AGM and, thereafter, submitted timely to the Registrar. Given the ever-increasing statutory and regulatory requirements for legal entities, proper assessment and action must be made in order to avoid any pitfalls and incurrence of additional costs and administrative burden.

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