Cyprus Lawyers Regulated By New Law: Fiduciary and Corporate Services Law To Regulate Cyprus Lawyers
Ask Your Providers to Produce Their License
Cyprus lawyers are part of the country`s services industry which is one of the main axles of the economy. The new legislation promotes the healthy environment needed for the strengthening of this sector as the international investor`s trust in the fiduciary services is thus secured. Cyprus lawyers have an active role in this effort. law offices are now organized even further under the umbrella of a new Legislation which activates the European Directive 2005/60/EC. Under the new law Cyprus Lawyers have to qualify and register their law firms as providers of corporate services and fiduciary products. This new Law is quite comprehensive and its provisions are strict and it regulates all legal services provided for, which fall under its provisions. Basically it is a consolidation and restructuring (amendment) of the existing legislation in order to offer a legal vehicle by which lawyers can offer the registration and formation of companies as investment firms or investment businesses, which they can do quickly and efficiently to the benefit and protection of the investors.
For lawyers in Cyprus the fruit of this law are already rich. Many foreign companies registered recently in order to offer investment services. So law firms are now offering valuable services to foreign investors looking to benefit from the incentive rich tax environment to trade in all kinds of security products such as shares, bonds, debentures, forex, binary options etc.
Two Professional Bodies to Oversee Fiduciary Providers Such as Cyprus Private Companies or Cyprus Lawyers
The law provides for two professional bodies which are responsible for the overseeing and regulation of the activity of offering fiduciary services. For Lawyers and Law Firms this is the Cyprus Bar Association which is the professional body which regulates the licensing of lawyers. All other companies offering corporate services and fiduciary activities are regulated by CySEC. A highly professional body which was created and regulated itself by the Cyprus Securities and Exchange Commission Law 2009 (CySEC). Of course these companies are always supported by an in house lawyer. Strict KYC and anti money laundering procedures are observed by Lawyers and by the fiduciary services companies.
Activities Regulated by the New Law
Some of the activities falling under the legal provisions of Law 196(1)/2012, a “Law Regulating Companies Providing Administrative Services and Related Matters” are according to article 4 as follows:
Part II: Regulation Of Administrative Services 4. (1) The services and activities described below are considered to be administrative services:
(a) The management or administration of trusts including, without limitation, the undertaking or provision of trustee (commissioner) or protector of trusts, wherever these are set up or established, or the management or investment or marketing of the assets of a trust: It is provided that when protector services are provided these are not deemed to be administrative services, within the meaning this Law, in case where the protector of a trust is one of the beneficiaries of the trust or the settlor or is a relative up to third degree of the settlor.
(b) The undertaking or provision of the service of managing companies, including, but not limited, to the management or the administration of companies, general or limited partnerships, or other organizations with or without separate legal personality, wherever these may be registered or established, and the provision of the following services: (i) providing directors for legal persons; (ii) providing a secretary, or assistant secretary of legal persons; (iii) holding the share capital of legal persons and registering the holder in the respective registers of shareholders on behalf of third persons; (iv) provision of registered office address and or the official mailing address and or electronic address of companies; (v) provision of general or limited partners in partnerships; (vi) provision of other similar services, or in conjunction with the services described above, in relation to other legal persons or organizations, with or without separate legal personality; (vii) opening or managing bank accounts; (viii) safe keeping of financial instruments on behalf of clients, including acting as depository, as defined in Annex III, Part II, paragraph 1 of the Investments Services and Activities and Regulated Markets Law, and other related services, unless this is provided as an ancillary service by an IF in the framework of the Investment Services and Activities and Regulated Markets Law.
The Right to Register Companies is Exercised Only by Lawyers
By Cyprus Law it is provided that the legal right to register companies remains exclusively with lawyers, as provided so in the Advocates Law. So if you are looking to register a company, make sure to get the advice of an expert lawyer. The formation of Cyprus companies and their operation/activities/formalities are covered by the Cyprus Company Law. In case any of the administrative services are services that need a license according to the Investment Services and Activities and Regulated Markets or the Open Ended Undertakings in Collective Investments Law or any other law, the provider of the these services is obliged to obtain a license according to the respective applicable legislation and not this Law.
Exceptions to the Rule
Subject to the provisions of paragraph (7) of article 3, paragraph (2) of article 5 and paragraph (2) of article 23, the provision of administrative services by natural persons in the following cases does not require authorization provided that these will not be advertised or used to attract clients nor offered or provided to persons other than the ones referred to in this paragraph: (a) undertaking director duties :
(i) in a company whose securities are admitted to trading on a regulated market;
(ii) in a company who is regulated by a competent authority and according to that competent authority’s regulatory framework is obliged to appoint independent non-executive directors;
(iii) in a company where the Republic of Cyprus or any public body, authority or organization holds the majority of its shares;
(iv) in a company who is rightfully owned by at least twenty five per cent (25%): (a) by the person providing the relevant services and/or his/her spouse and/or members of his/her family and/or the spouse’s family, up to fourth degree of relation or (b) by a company or companies wholly owned by the person providing the relevant services and/or his/her spouse and/or members of his/her family up to fourth degree of relation or (c) by a trust, where, either the person providing the relevant services and/or his/her spouse and/or any person with whom the person providing the relevant services and/or his/her spouse has a family relationship up to fourth degree of relation, are the sole beneficiaries;
(v) in a company who is the sole employer of the person providing the services or a company who is a member of a group of companies where the employer is also a member;
(vi) in a company who is a subsidiary of a company described in sub paragraphs (a)(i) to (v) above(vii) in less than ten (10) companies not counting companies referred to in sub paragraphs (a)(i)-(vi) above and provided that the relevant person or persons do not jointly control the board of the relevant company. (b) Undertaking secretary duties in a company, by a natural person resident in Cyprus, in cases where:
(i) at least fifty percent (50%) of the shares in the company are owned: (a) by the person providing the relevant services and/or his/her spouse and/or members of his/her family and/or the spouse’s family, up to fourth degree of relation or (b) by a company or companies wholly owned by the person providing the relevant services and/or his/her spouse and/or members of his/her family up to fourth degree of relation or (c) by a trust governed by Cyprus law, where, either the person providing the relevant services and/or his/her spouse and/or any person with whom the person providing the relevant services and/or his/her spouse has a family relationship up to forth degree of relation, are the sole beneficiaries;
(ii) Sub paragraphs (i)(a)-(c) above are applicable and all the shareholders of the Relevant company is natural person’s residents of Cyprus, the threshold of Fifty per cent (50%) referred to in the introductory sentence of Sub-paragraph (i) above, is reduced to twenty five per cent (25%); (iii)
The company is the sole employer of the person providing the services or a Company who is a member of a group of companies where the employer is Also a member; (iv) The company is a subsidiary of a company described in sub paragraphs (b) (i) – (iii) Above; (c) The provision of trustee services when these are provided towards a trust where the person providing the administrative services is a settlor or where all the beneficiaries of the trust are himself and or his/her spouse and/or his/her family members and/or his/her spouse’s family members, up to fourth degree of relation or (d) The undertaking of trustee duties in a trust created under a will of a natural person.
Most Important Prerequisites by Law
The most important perquisites for any such corporate services company or Cyprus Law Firm under the provisions of the new Cyprus Law are:
- The Company must have its head offices in Cyprus, Branches abroad are not forbidden.
- It must employ a professional lawyer or other offices to act as the comp license offices.
- Must have two qualified Directors.
- Most employ an in-house Cyprus Lawyer or sign up the services of an external Cyprus Lawyer or a permanent basis.
Cyprus Lawyers are now organized in a very promising business, as it will known that the Cyprus Company is a very advantageous vehicle for any businessman from any country in the world to use in his quest for tax benefits and lawful tax avoidance. Many Double Tax Treaties offer extra benefits to the Cyprus Company. Corporate Tax in Cyprus is only 12 ½%, and legal services and Accounting services in Cyprus are of the highest standards.
The Law Regulating Companies Providing Administrative Services of 2012 can be found in English at the following link: http://www.cysec.gov.cy/existing_laws_en.aspx