Cyprus: StartUps – Frequently Asked Questions

Last Updated: 13 September 2019
Article by Michalis Economides

In the last few years the term "StartUps" has become quite popular, despite the fact that this business model first appeared in 1950s.

“StartUps or Young Entrepreneurships” are newly established enterprises which offer innovative ideas, aim at extremely fast business development and reach a wide audience.

Their main goal is to create a model that can evolve and repeat itself.

Due to the above-mentioned characteristics, a large percentage of these companies originate from the field of technology aiming at the dynamic development of an existing idea or the creation of an innovation that will satisfy a new need.

Based on our experience, the past has repeatedly demonstrated that there is no “secret recipe for success”. Each case is different and unique, it accepts either positive or negative influences from the various changes and fluctuations that occur in the domestic and international market, as they result from the political, economic, social, technological, environmental and legal framework.

Due to the complexity of the aforementioned factors as they arise from the markets, especially from the legal perspective, it is important for StartUps companies, from the conception of the idea until its realization, to cooperate with a law firm specializing in company and business law. Embracing this approach, you directly ensure the protection of the newly established company, the implementation of the correct procedures and due diligence on the points of cooperation. It also prevents uncertainties on terms and conditions, while providing legal and business advices at every stage of the business development.

Although each case is unique, we have noticed that there are common legal questions about the establishment of the StartUp corporate entity, such as:

  • Which is the most appropriate type of forming a corporate entity for a “StartUp” company?

The most popular corporate entity of a "StartUp" type is the Limited Liability Company (LTD). This is because the company is a separate legal entity and the responsibility of the owners and shareholders is limited to their share of the investment capital, without any extension to their personal assets, unless of course the case is of a criminal nature.

  • Where will the headquarters of the new entity’s StartUp be?

Because of the European Union as well as globalization, a “StartUp” company can choose its headquarters among multiple jurisdictions. Cyprus is one of the most popular jurisdictions for the incorporation of a company since it has a straightforward taxation system and a 12.5% corporate tax, one of the lowest in Europe. In addition, among others reasons, Cyprus has more than 60 double taxation treaties established with other countries, is a Member State of the European Union, operates in a favorable tax regime, has a low to zero retention of dividend taxes, any financial losses of a company may be transferred against future profits for an indefinite period, while the company registration is quick and immediate.
Additionally, Cyprus's investment strategy is strongly supported by the government and is constantly creating new business opportunities.

  • How long does it take to establish a new legal entity in Cyprus?

7 – 9 days

  • What is the appropriate structure / organization chart of the new legal entity “StartUp”?

The appropriate structure / organization chart of the new legal entity depends on a case-by-case basis; however, it is explained in a descriptive way in the Memorandum and Article of Association, defining the relations of the contracting parties.

  • What should be mentioned in the Memorandum and Article of Association of the new legal entity?

The Memorandum and Article of Association mentions, all general terms as well as specific, all the conditions that ensure and regulate the relations of all the Contracting Parties involved, as they result from the legislative framework of the jurisdiction in which the new legal entity will operate.

  • How will the ownership of partners and / or shareholders and employees be divided in the new legal entity?

The drafting of a shareholders’ agreement defines, inter alia, their obligations and rights, their meetings, the decision-making process to be followed, the terms and conditions of a voluntary resolution and the provision of the necessary mechanisms for the immediate settlement of disputes between the parties.

  • What contracts are needed to ensure the stable and continuous development of the new legal entity?

It is wise to have shareholders and employee contracts that will define and clarify the relationship of all the parties involved.

  • Is the drafting of a Privacy and Confidentiality Agreement needed?

Because of the innovative nature of “StartUps”, it is advised to draft a Privacy and Confidentiality Agreement when two or more members exist, to preserve the idea until the new entity has its proprietary intellectual property in its possession.

  • Do the “StartUps” need to register their intellectual property?

The main competitive advantage and the most important predictor of StartUps' success is innovation. Therefore, safeguarding and protecting intellectual property is of major economic importance for the enterprises of this type.

My legal and business advice for StartUps, is to work with a law firm specialized in corporate, commercial and employment law, prior to the start of the company, which will also have the necessary knowledge and connections at an international level. This cooperation will ensure the protection of the new corporate entity while the company is in line with all procedures resulting from the legislative framework.

In addition, such cooperation is a necessary pillar for setting the right foundations of the enterprise, which can later evolve into an international “StartUp”. Unfortunately, we have repeatedly observed that the founders of companies turn to legal advisors at a later stage and they are called upon to solve various problems that could be avoided with the proper cooperation of reliable lawyers who are familiar with this company model.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions