The incorporation of a company in Cyprus entails different stages, one of which is the preparation of the Memorandum and Articles of Association. These two key corporate documents set out the objects of the company as well as how the company must operate.
Memorandum of Association
The Memorandum of Association demonstrates the objects and confirms the commitment of its members to its incorporation.
Irrespective of whether a company is private or public, the Memorandum needs to include the following clauses:
a) Name clause: The name stated in the Memorandum is regarded as the legal corporate name of the company. In case of private companies, the company name must end with the word 'limited' or the abbreviation 'Ltd', while in case of public companies, the required end-wording is 'Public Company Ltd' or 'Public Co. Limited' or 'Public Co. Ltd' or 'PLC' or 'Public Limited' or 'Public Ltd'.
b) Objects clause: As it has been mentioned, the Memorandum is the key document that reflects the authorised activities of the company, i.e. the purposes for which it is being registered.
c) Limited liability clause: The Memorandum needs to include a statement that the liability of its members is limited, in the sense that they will not be liable to contribute any more than the nominal value of their share.
d) Share capital clause: For a company that has a share capital, this clause reflects the amount of authorised share capital with which the company is to be registered, as well as its division in shares.
e) Subscription clause: This is an association declaration of the persons who set up the company. It has to contain their personal particulars (name, address, profession) and, given that a company has a share capital, the number of shares they receive stated opposite their names. In addition, the memorandum of association has to be signed by a witness who confirms the signature of the persons who set up the company and by the lawyer who prepared the memorandum of association.
Articles of Association
The company's articles of association set out the regulations for the company's operation and regulate the rights of the members of the company among themselves.
The said document secures the smooth functioning of the business. Inter alia, it addresses matters such as convening and conduct of general meetings, dividend payments, the appointment, duties and powers of directors, class rights, share transfers and board meetings.
The Articles of Association must be printed and divided into numbered paragraphs. Moreover, this document needs to be signed by every subscriber to the Memorandum in the presence of a witness who must attest the signature.
The Memorandum and Articles of Association are submitted to the Registrar of Companies with the application for the incorporation of companies. In case that the company wishes to acquire and maintain a certified copy of the Memorandum and Articles of Association in a foreign language, then a file of translations of the company needs to be created, by providing the Registrar the aforementioned documents in the foreign language at the time of submission of the incorporation application.
Any amendments regarding the Memorandum and Articles of Association that take place following the incorporation of a company are notified to the Registrar of Companies.
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.