Frequently asked questions (FAQ) relating to company’s share capital

Author: N. Pirilides & Associates LLC
Date:2017-06-02

What is the liability of shareholders of a Cyprus limited company?
A company limited by shares has separate legal personality from that of its shareholders. The liability of a shareholder for the company's liabilities is commonly limited to the amount, if any, that remains unpaid on that shareholder's shares.  A company limited by shares must issue at least one share.  

The liability of the company is restricted by its assets. Persons dealing with the company may not have recourse to the assets of the shareholders. The Court may, in exceptional cases, lift the corporate veil and allow such recourse.

Are there any number/age and nationality residency restrictions applicable on shareholders?
A company may have at least one member/shareholder and a maximum of fifty.  A public limited company must have at least 7 members and there is no limitation on the maximum number of such shareholders.  There are no nationality, residency or age limitations.

What is the minimum share capital necessary to establish a Cyprus limited company?
There is no minimum share capital for a private limited company. For a PLC, the minimum share capital is at least €25,650.

What assets can be contributed to a limited company?
Asset contributions may be either in cash or in kind and they can be accounted for either as capital contributions which require the issue of new shares to the shareholders, issued at the nominal value of the contributions, pro-rata to the shareholders or as partly nominal and partly as part of the company’s premium account. In private limited companies, contributions in kind do not require expert assessment, however, contributions otherwise than in cash, in case of PLCs, require expert assessment and valuation.

Is there any threshold for the issue of shares?
The par value of the shares in which the share capital is divided can be as low as €0.01. Shares may be issued at a higher value with the difference being accounted in the company’s premium account.  The company is not generally allowed to issue shares below par value. In some cases however the Court may authorize such issue.

Can a limited company acquire/buy its own shares?
The provisions governing the acquisition of company’s own shares are found in Articles 57A-57F of the Companies Law.  A private company may not acquire its own shares.  A public limited company may acquire its own shares to a certain extent and within a precise time frame if its Articles of Association permit it and of it is authorized by a Special Resolution of the company.


In what way does a limited company increase/ decrease its share capital?
The authorized share capital of the company is increased by an ordinary resolution (being 50% +1 of the shares voting at a meeting of the members).  If there are available authorized but unissued shares in the capital of the company and there is a member’s decision authorizing the Directors to issue the same, the latter may issue such shares according to the regulations of the Articles of Association of the company, which might give pre-emption rights to the existing shareholders. In PLCs such pre-emption rights may be waived by the General Meeting of the company if certain majority is reached to that effect. In order to decrease the capital of the company, a Special Resolution is required and following that the proposal to decrease the share capital must be sanctioned by the Courts.

In order to decrease the capital of the company, a special resolution is required and following that the proposal to decrease the share capital must be sanctioned by the Courts (Article 64 of the Law).  Subject to confirmation by the Court, a company limited by shares, if so authorized by its Articles, by special resolution notified to the registrar of companies and published pursuant to section 365A of the Law reduce its share capital in any way, and in particular, without prejudice to the generality of the foregoing power, may (a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or (b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or (c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company; or (d) cancel paid up share capital for the purpose of writing off losses of the company; or (e) cancel paid up share capital by the creation of a reserve, to be called “the capital reduction reserve fund” which will be subject to the same treatment as the share premium account as prescribed in section 55, the provisions of which shall apply in this respect, and may, if so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

Contact us for information on Frequently asked questions (FAQ) relating to company’s share capital

CONTACT US

Firm's Brochure

The brochure gives an overview and brief explanation of the services that may be offered.