The incorporation of a Cyprus company, although a straightforward procedure, entails an abundance of requirements with which the company must comply with. Failing to ensure the timely management and settlement of such requirements can be a costly process, as this often translates into fines imposed on the company by the authorities.
Every company that is incorporated and registered under the Cyprus Companies Law, Cap.113 must “keep proper books and records at the company’s registered office or at any place designated by the directors”. However, the law does not include an exhaustive list of documentation or records that should be kept, nor does it explicitly dictate the duration for which such records should be preserved or maintained in file.
In the absence of a “one rule fits all” and/or a consolidated legislation to govern such requirements, provisions on record keeping are found scattered in legislation.
As a result, deciding whether a document may be eligible for destruction or whether it should be retained is not a straightforward process. What is of outmost importance is to examine each document in the context for which it has been prepared and in conjunction with the legislative provisions that may be applicable to it. Indicatively,
The Limitation of Actions Law (Law 66(I)/2012) sets out the time period within which a claim can be brought against Court, also specifying the time limitations prescribed by law. The Limitation of Actions Law serves as an initial indication of the timeframe for which it is prudent to retain documentation. Depending on the nature of the right the time period and limitations vary, also depending on the legislation relevant to the claim (i.e. whether it is a civil or criminal claim).
The Cyprus Companies Law, Cap.113 provides that a Cyprus company is required to maintain, for its entire active time as well as for a set period after its dissolution or winding-up:
- Accounting Books and supporting documents (such as loan or financing documentation);
- Minute Books (including Board of Directors, Shareholders and Annual General Meetings);
- Corporate registers (detailing members’ information, director and secretary appointments and shareholders); and
- Instruments (such as instruments of transfers of shares etc.).
The Cyprus Tax Laws (for direct and indirect taxation, including but not limited to, the Income Tax Law and the Value Added Tax Law) set out the time period for which a company must maintain accounting records for income tax and VAT purposes.
The Prevention and Suppression of Money Laundering and Terrorist Financing Law (the “AML Law”) (Law 188(1)/2007, as subsequently amended) lists the time periods and documentation that an “obliged entity” (as this is defined therein) must preserve, following (i) the end of the business relationship with a customer, and (ii) the end of a transaction.
In the ambit of the recent amendments of the AML Law further emphasis is given to the need for enhanced scrutiny so as to prevent the misuse of legal entities and legal arrangements, including their facilitation for tax avoidance. It is provided that the information on beneficial ownership should remain available for a minimum of five years, even after the grounds for registering beneficial ownership information of the trust or similar legal arrangement have ceased to exist. This period may be extended for the purposes of facilitation of criminal or administrative proceedings from regulatory or supervisory authorities.
If you would like to find out more about your company’s record-keeping requirements as these derive from Cyprus laws or would like to discuss your specific needs, please contact us: