Prevention of Money Laundering and Terrorist Financing

Georgios Prodromou (Cyprus)

Latvijas goda konsuls Kiprā. Advokāts. (Kipra)

Prevention of Money Laundering and Terrorist Financing

It is 65 km south of Turkey, 328 west of Israel, 385 north of Egypt, 980 south east of Athens. The strategic location of the island has played an important role in its continuing development into a financial centre. With an area of 9.251 sq km, Cyprus is the third largest island in the Mediterranean after Sicily and Sardinia.

Population

The estimated population of Cyprus is 820.000. Greek Cypriots form by far the largest ethnic group, accounting for almost 80 percent of the population. Turkish Cypriots, British,Armenians, Maronites and other ethnic groups make up the remaining 20 percent.

History

Cyprus has a long and varied history. It was settled by the Greeks in about 1200 BC. Its strategic position made it an object of contest among the great powers ruling the world at different time periods. As a result, the island was occupied through the ages by many different races, the main ones being the Egyptians, Romans, Byzantines, Francs, Venetians, Turks and British. Each one of these people, in their own way, left their mark on the island but the Greek character of the island remains predominant. The British, who were the last to control Cyprus before the island eventually became an independent sovereign republic in 1960, have left their mark on commerce, law and public administration, all of which have developed along the British model. Cyprus joined the EU on 1 May 2004.

Political and social environment

Cyprus is an independent and sovereign Republic with a presidential system of government. The elected President of the Republic is the Head of State and takes precedence over all persons in the Republic. His term of office is set for a five year period but he may be re-elected for an unlimited number of terms.

Legislative power lies in the hands of the House of Representatives, the 56 members of which hold office for a period of five years.

Cyprus' legal system has been structured on its English counterpart. English case law is closely followed and all statutes regulating business matters and procedures are based essentially on English laws.

The Cyprus economy

The Cyprus economy is based on the free enterprise system. The private sector is the backbone of economic activity, with the government's role being limited to monitoring the economy and the provision of public utilities, although with Cyprus' accession to the EU, privatisation of public utilities is inevitable.

In recent years the economy has been growing at an average annual rate of nearly 4 percent.

Inflation in recent years remained at a relatively low level average of 3.5 percent. The per capita income of the Greek Cypriots at around €20.000 is today one of the highest in the Mediterranean. This is an impressive performance, when considering key socio-economic factors - such as the excellent housing conditions, low crime rate, pollution free environment - which are not reflected in the per capita income.

Society

Cypriots have earned themselves a reputation as hardworking and industrious people with a flair for business. Tradition and family ties are still strong in what is also a liberal and pluralistic society. There is a high standard of education on the island, which has one of the highest percentages of university graduates in the world.

Most professional and academic qualifications can be gained either at the local Universities or Colleges, but mostly at EU and American universities. Cypriots enjoy a high standard of living. As an example, around 70 percent of homes are owner occupied, and there are no records of homelessness. The crime rate is low on the island thus making Cyprus an ideal location to visit and live.

Non EU individuals wishing to retire in Cyprus are granted a residence permit provided they can satisfy the authorities that they have enough income from abroad to support them during their retirement in Cyprus.

Cyprus and the EU

The Republic of Cyprus became a member of the European Union from 1 May 2004. The accession of Cyprus to the EU and the adoption of the acquis communittaire have given rise to new challenges and opportunities in the business world in Cyprus. Moreover, a number of new funding opportunities became available from EU funds aiming mainly to support the development of business activities in the manufacturing, agriculture and agrotourism sectors as well as human resource upgrading and the development of the rural areas of the island.

Cyprus has recently entered the European Exchange Mechanism (ERMII). The Government of Cyprus has already announced the implementation of a strategic plan for the preparation of the introduction of the euro. Businesses in Cyprus are now faced with the challenge to take all necessary action needed to ensure the smooth transition to the euro in January 2008.

Transit trade

The development of the container transhipment business in Cyprus started in the late 1970s. Because of the island's strategic position, efficient port facilities, minimal customs formalities, advanced business infrastructure and stable political environment, container transhipment dramatically increased in volume and expanded in scope.

It is widely acknowledged that Cyprus offers a safe and reliable gateway to the region and that it can play a significant role in the effort for reconstruction and generally the redevelopment of the area.

The island is located at the crossroads of major international trade routes between Europe, Asia and Africa. This makes it the natural transhipment load centre for shipping lines delivering and receiving cargo to/from any combination of European and Middle East ports in the Mediterranean. Furthermore, it can act as a central depot for distribution to the markets of Europe, the Middle East, the Gulf and north Africa.

Services sector

The services sector has become increasingly important as indicated by its almost 70 percent contribution to GDP and its share in employment, while the importance of agriculture and manufacturing is declining steadily.

Services include banking and financial services, insurance, advertising, legal, architecture and civil engineering, accounting and auditing, consultancy, design, electrical and mechanical engineering, film production, market research, medical, printing and publishing, public relations, education, software development, tourism and related services, telecommunications, transportation and other services. The size and rate of growth of this sector, which has been the fastest in recent years, has led observers to call Cyprus a "service economy".

Foreign investment

Cyprus is an attractive place for investment. The strategic location of the island, its excellent climate, the well developed infrastructure and the plentiful supply of high quality, well trained labour are some of the advantagesCyprus has to offer. In addition to these, the favourable tax regime and the availability of a free zone area, make Cyprus an ideal location for manufacturers, especially those with Middle East and north African export activities.

As a consequence of the government's general policy of non intervention in business operations, in July 2003 a new investment law was passed by the House of Representatives. The official government policy is welcoming to foreign investment provided that this does not have adverse environmental effects.

Foreign direct investment

The Council of Ministers of Cyprus liberalised the Foreign Direct Investment (FDI) policy for both EU and non EU nationals as of 1 October 2004, the main features being:

■ restrictions relating to the minimum level of investment and the foreigners' participation percentage have been abolished in most sectors of the economy, unless otherwise stated by separate laws or regulations

■ permits and authorisations that may be required for the realisation of an investment, or the conduct of business activities in Cyprus, are to be issued by relevant local authority

■ foreign companies now have the opportunity of investing and establishing business in Cyprus on equal terms with local investors as no distinction is being made between foreign and Cypriot companies

Investors from the EU wishing to acquire shares or a stake in a company registered in Cyprus, may apply directly to the Registrar of Companies for approval. They are allowed 100 percent equity participation in any enterprise in Cyprus without a minimum level of capital investment.

Direct investments by non residents who are outside the EU are generally allowed. Certain limitations existing concerning mainly real estate acquisitions, media, health transportation and education services.

Investors who are citizens of EU member states may acquire up to 100 percent of the share capital of Cypriot companies listed on the Cyprus Stock Exchange. Non residents may carry out the relevant transactions with Cypriot stockbrokers and public companies.

Financial System Banking

The supervisory authority for the banking sector is the Central Bank of Cyprus. In addition to the Central Bank, the banking system consists of nine local commercial banks, twenty eight international banking units, two administered banking units, a wide array of specialised financial institutions and leasing companies. Commercial banking arrangements and practices follow the British model. All banks maintain correspondents around the world and they subscribe to Swift, Reuters, Telerate and other services. Consequently, they have easy access to the world banking network and are able to carry out both conventional and specialised financial transactions.

The Stock Exchange

The Cyprus Stock Exchange commenced its operations in 1996. The Council of the Stock Exchange is responsible for implementing policies for the Exchange. A fully computerised on-line trading, clearing and settlement system is in operation.

Some 150 companies have their shares quoted on the Cyprus Stock Exchange.

The accession of Cyprus to the EU and the adoption of the acquis communautaire have given rise to new challenges and opportunities

Insurance

The activities of insurance companies are governed by the Insurance Companies Law and the Superintendent of Insurance monitors regulations and their operation. The major insurance companies are subsidiaries or affiliates of local banks.

There are also a number of captive insurance companies.

Investment firms

The activities of investment firms are governed by MiFID and the Investment Firms Acts 2002 - 2005. The Cyprus Securities and Exchange Commission monitors their operations.

Time

Cyprus is two hours ahead of Greenwich Mean Time (GMT). Between the end of March and the end of October, clocks are advanced one hour under a summer time system. Time differences between Cyprus and certain major cities are shown in the following table.

City	Hours behind	City	Hours ahead
Amsterdam	-1	Beijing	+6
London	-2	Hong Kong	+6
Los Angeles	-10	Moscow	+1
New York	-7	Singapore	+6
Paris	-1	Sydney	+8
Rome	-1	Tokyo	+7

Legal Framework

This section addresses key issues relating to private limited liability companies which are governed by the Cyprus Companies Law, Chapter 113, as amended.

We refer to private companies limited by shares. They are by far the most common type of legal entity registered in Cyprus and are used extensively in international tax structures. They have Articles of Association (Charter) that specifically:

■ restrict the number of members to less than 50

■ restrict the right to transfer shares

■ prohibit any invitation to the public to subscribe to its shares or debentures

■ prohibit the issue of bearer shares

Features of Cypriot private limited companies Incorporation and capacity to contract

A company comes into existence as a legal entity as soon as it is incorporated by the Registrar of Companies. This is evidenced by the Registrar issuing a Certificate of Incorporation that is conclusive evidence that the company has satisfied all legal requirements in respect of incorporation and that the company is duly registered under the Companies Law.

A company cannot contract into or enter any other obligation under the law until it has been incorporated. It cannot become liable on, or entitled under contracts purporting to be made on its behalf, prior to incorporation. It cannot ratify contracts that were made prior to its existence. In such circumstances, companies should make new contracts to give force to agreements that were made prior to incorporation.

Memorandum of Association

The company's objects and powers are defined in its memorandum of association. Any act beyond a company's legitimate powers as defined in its memorandum is void. Consequently, the memorandum of association is normally drafted as widely as possible to enable the company to engage in any type of business.

Articles of Association

The articles of association set out the administrative regulations and procedures for running the company. They stipulate and define how meetings of shareholders and directors are held, the powers bestowed on directors, the method of appointing and removing directors, determine the minimum number of persons that must be present for a quorum, set out the procedures for issuing new shares, transferring shares, borrowing powers and so on.

Although the articles of association can often be in standard form, they are also drafted to take into account the specific needs and requirements of the shareholders.

Shareholders and directors

The powers in a company are distributed between the board of directors and the shareholders as stipulated in the articles of association. The power of the directors can, therefore, be as wide or narrow as the articles provide except that the exercise of certain powers are specifically reserved for the shareholders. For example, the shareholders always have the right to appoint and remove directors.

The memorandum of association and articles of association are filed with the Registrar and are, therefore, public documents available for inspection by everybody.

As previously stated, an action outside the objects of the company is void and therefore unenforceable. The remedy commonly available to the other contracting party is to recover money or property paid or transferred under the void transaction to the extent that it is possible to trace it.

However, the situation regarding an action that is within the objects of the company but made by directors acting outside their powers as stated in the articles of association may be very different. The "indoor management rule" as it is often called, accepts that persons dealing with directors are entitled to assume that the directors have the authority which they claim to have. Under common law principles, the company is bound by the actions of a director where that director acted within the usual, apparent or ostensible scope of the "director's authority'!

Directors and secretary

A prívate company may have only one director and a secretary. A director may also be the secretary. From an administrative point of view, it is advisable for the secretary to reside in Cyprus and be conversant in Greek as all communications and filings with the Registrar of Companies are required to be made in the Greek language.

Procedural requirements

All companies are required to hold an Annual General Meeting (AGM) in each calendar year. No more than 15 months must elapse between one AGM and the next. The first AGM must be held within 18 months of incorporation. Failure to comply makes the company and each director liable to a fine not exceeding €450.

The articles of association normally provide that the directors may call an Extraordinary General Meeting at any time. Notwithstanding the provisions of the articles, the law states that the holders of 10 percent of the paid up capital of the company have the right to require the directors to call an Extraordinary General Meeting.

The notice period for an AGM or the meeting for the passing of a special resolution is 21 days. The notice period is 14 days for every other case. These notice periods may be shortened if 95 percent of the members entitled to attend and vote agree to do so, except in the case of an AGM where all the shareholders must agree to the shorter notice period.

Obligation to maintain accounting records and prepare audited financial statements

The directors are obliged to ensure that the company maintains accounting records which enable the préparation and audit of financial statements that present a true and fair view of the company's financial position and performance in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS).

The accounting records must be held either at the registered office or at another place in Cyprus and must always be available for inspection by the directors. Even if the book-keeping function is maintained outside Cyprus, arrangements must be made for the accounting records to be sent to Cyprus at regular intervals, not exceeding 6 months.

Every company that has subsidiaries is obliged, in many circumstances, to prepare consolidated financial statements in accordance with IFRS and IAS and present these financial statements to members in the general meeting. Additionally, those financial statements must disclose the following:

■ remuneration of auditors

■ amounts paid to directors as compensation for loss of office

■ the total amount paid to directors in fees and emoluments

■ directors' holdings in shares and debentures

■ loans granted to directors

The financial statements must be accompanied by a report of the board of directors which includes:

■ details of any changes in the nature or volume of operations

■ any changes in the share capital

■ any significant change in the constitution of the board of directors or the duties assigned to its members

■ directors' proposals regarding the distribution of the retained profits

■ the financial statements must be audited by a registered auditor

An amendment to the law was effected recently and it is now possible for "small groups" as defined in the law to be exempted from the preparation of consolidated accounts, unless:

1. they are public companies
2. the preparation of consolidated accounts is governed by other specific legislation, and
3. they exceed any two of the following three criteria:

i) total balance sheet assets of €14.600.000

ii) total turnover of €29.200.000

iii)total number of employees 250

Forms of enterprises

The laws and regulations for setting up and administering Cypriot entities are the same for foreign investors carrying on international business activities as they are for local investors Entities may be registered in the following legal forms under Cypriot company law which is almost identical to the UK's former Companies Act 1948:

■ limited liability company

■ partnership

■ branch

■ European company (SE)

Limited liability companies make up the vast majority of entities registered in Cyprus. Branches and partnerships constitute only a small percentage, mainly because their legal status and financial liabilities are ultimately the same as those of their beneficial owners.

Limited liability company

The liability of a private company's members is limited either by shares or by guarantee. If a company is limited by shares, the liability of its members is limited to the nominal value of the shares fully paid up and the shareholders are not liable to contribute further. If a company is limited by guarantee, the liability of its members is limited to the amount to which they have agreed to subscribe in the case of liquidation. Companies limited by guarantee are usually formed by non profit making businesses.

A private limited company means a company which by its articles:

■ restricts the right to transfer its shares and prohibits the issue of bearer shares

■ prohibits any invitation to the public to subscribe for its shares or debentures

■ limits the number of its members to a maximum of fifty

More stringent regulations from the Registrar of Companies and more requirements by law govern public companies. International business entities are, as a rule, registered as private companies because this legal form enjoys comparatively inexpensive formation procedures, consensus of a few shareholders, control over the membership and uncomplicated reporting requirements.

Partnership

A partnership can be either general or limited and comprises two or more persons aiming to profit by carrying on a common business.

Each of the partners of a general partnership is liable severally and jointly with the remaining partners for all debts and obligations of the firm. Furthermore, after a partner's death, his estate is also liable for all debts and obligations and is subject to prior payment of his separate debts.

Limited partnerships comprise of general and limited partners. The one or more general partners are liable for all debts and obligations of the firm and the one or more limited partners must, at the time of entering into such a partnership, contribute a stated amount to its capital or property valued. The limited partners are not liable for debts and obligations of the firm above the amount contributed.

A limited partner may neither take part in the management of the partnership nor bind it. A company can become a partner with another company or with individuals, provided that it is authorised by its articles.

Branch

A branch of a foreign company may be registered in Cyprus with the Registrar of Companies under the relevant section of the Companies Law. A branch does not constitute a legal entity différent from that of its founding overseas company. There are two types of branches:

■ local branch of a foreign company

■ branch of a local company

Overseas companies may establish a branch in Cyprus, provided they register with the Registrar of Companies within 30 days of such establishment. Branches of foreign corporations are required to file further information upon registration including the company's Memorandum of Association, list of directors and the local representative.

European Company (SE)

The registration of a European Company is in line with the EC Council Regulations 2157/2001. The main objective is to allow companies in different EU member states to merge or form a holding company or joint subsidiary while avoiding the legal and practical constraints arising from the existence of 25 or so different legal systems.

Immigration

In accordance with the EU's acquis communautaire, Cyprus has amended its Aliens and Immigration régulations with regard to the entry and stay of third country nationals for self employment, study purposes or for long term residency.

From 1 January 2007 third country nationals who have been residing in Cyprus for at least five years will be entitled to a long term residence permit which will have an indefinite limit. This entitlement is valid in all EU member states.

In 2008 Cyprus plans to become a signatory to the Schengen agreement which will allow EU citizens and third country nationals living in the EU a substantially increased freedom of travel and improved safety within the Schengen countries and at their external border.

Third country nationals wishing to enter Cyprus for other purposes not mentioned above will require a visa in line with current EU regulations.

Work permits

Citizens of EU member states may work in Cyprus. If they are employed, they must obtain a residence permit.

Third party nationals wishing to work in Cyprus require an employment permit. These are granted for employment by a specific employer and are normally issued for one year, although they can be renewed.

In December 2006, the government announced proposals to simplify and expedite the application process to allow foreign companies to employ non EU workers more efficiently.

The main features of the new policy are as follows:

■ an increase in staffing levels and resources in the departments dealing with applications

■ simplification of procedures and conditions for granting work and residence permits for third country employees of foreign companies

■ reduction of the time taken to examine applications

■ granting of indefinite work and residence permits to senior management and other key employees

■ streamlining procedures for domestic staff employed by senior management personnel

■ reducing documentation required to support applications to the essentials

■ easing of re-entry visa requirements for third country workers who frequently travel outside Cyprus

■ encouraging management employees who intend to stay in Cyprus for an extended time to obtain permanent residence permits

A special committee has been set up whose terms of reference are to examine the more complex applications, to resolve any problems that arise and to submit proposals to improve policy and procedures on an ongoing basis. The aim is to improve the service to foreign companies in the context of a general policy to attract foreign investment to Cyprus.

For example, a fast track application procedure will be established for Russian businessmen in senior management positions who reside mainly in Cyprus and wish to apply for a permanent residence permit. The Immigration Control Committee will oversee this procedure whilst liaising closely with the Russian Chamber of Commerce and the Embassy of the Russian Federation in Cyprus in order to resolve any problems that may arise.

Cyprusasan IFC

Inbound Investments

Cyprus is an attractive place for direct investment. The strategic location of the island, its excellent climate, the well developed infrastructure and the plentiful supply of high quality, well trained labour are some of the advantages Cyprus has to offer. In addition, the favourable tax regime makes Cyprus an ideal location for manufacturers, especially those with Middle East and north African export activities.

As a consequence of the government's general policy of non intervention in business operations, a new investment law was passed in July 2003 by the House of Representatives. The official government policy is welcoming to foreign investment provided that this does not have adverse environmental effects.

Holding international investments

Tax costs play a significant role in investment decisions. Investors aim in maximising after tax return on investment. Therefore, investment structures which have the least tax leakage are preferred by investors and are recommended by the advisors. As such, a Cypriot investment vehicle can in many cases collect income, which is a charge against high tax income. Foreign withholding tax is eliminated or reduced under double tax treaties or under EU directives. The rate of tax in Cyprus is low. The income can then be repatriated in any form the investor wishes without any Cypriot withholding tax.

This investment vehicle is suitable both for EU inbound or outbound investments. There are no investment activities that are inappropriate for the Cypriot tax environment. However, there are investment activities which are ideally suited to Cypriot tax environment such as:

■ holding companies

■ finance companies

■ royalty companies

■ investment funds

■ south Europe, Middle East, central and eastern Europe

■ head office operations

European enlargement and the accession of Cyprus opened up a new gate to investors. Cyprus is no longer just the traditionally strong link of investments in and out of Central and Eastern Europe and Russia, but it is also a strong connecting link of investments in or out of the EU.

Foreign direct investment

Foreign investment has long been considered as one of the most important elements of the country's economic prosperity. Considerable efforts have been implemented to facilitate and enhance the attraction of foreign investments, and create a friendly environment for foreigners to establish their business on the island.

In this context, the government has liberalised the Foreign Direct Investment (FDI) policy for both EU and non EU nationals. Administrative procedures have been simplified and as far as the minimum level of investment and the percentage of foreign participation are concerned, no limitations apply in almost all sectors of the economy.

Consequently, foreign companies may now invest and establish business in Cyprus on equal terms with local investors. No distinction is being made between foreign and Cypriot companies.

Incentives

Incentives for locating a business in Cyprus include:

■ favourable taxation which includes, inter alia, 10 percent corporation tax, low personal income tax and no capital gains tax on the sale of shares

■ a prosperous and resilient economy enjoying long term stability and growth and high per capita income

■ privileged location at the crossroads of three continents, providing a strategic base for expansion into new markets

■ member of the EU, situated at Europe's Middle Eastern outpost and a gateway for the movement of goods inside and outside the EU

■ liberal FDI policy allowing 100 percent participation in almost all sectors of the economy

■ skilled workforce, highly qualified and multilingual with one of the highest percentage of university degree holders in the world

■ double tax treaties with nearly 40 countries

■ bilateral investment agreements with 20 countries

■ excellent infrastructure providing easy access by air and sea, and serving as an important telecommunications hub in the region

■ low set up and operating costs including rental costs, salaries and social insurance contribution

■ simplified procedures for acquiring requisite permits - company registration may be completed within one to two weeks

■ efficient legal, accounting and banking services

■ a fine place to live and work with pleasant climate, high standard of living, friendly people and one of the lowest crime rates within the EU

Technology and research

Cyprus is pursuing the goal of establishing itself as a regional research and technology centre. Through incentives, the country is rapidly being transformed into a hub for technological development within the eastern Mediterranean region.

Foreign capital plays a fundamental role in these efforts, as it contributes substantially to the introduction of high technology, know how and expertise.

Business incubators act as catalysts, through which the necessary support is given to scientists and researchers in order to exploit innovative ideas. At the same time, business incubators facilitate the establishment and growth of new ventures involved in developing and promoting innovative products or services. It is addressed to individuals or small groups of individuals, who may apply for a government grant under this programme through an incubator company having a contract with the government. The approved individual or team has to set up a limited liability company. The company is obliged to be housed and operate in the designated premises of the incubator company for a period of up to two years.

The Research Promotion Foundation (RPF), an initiative of the government, was established in order to promote the development of scientific and technological research in Cyprus. One of its main activities is the development of a national framework programme for financing Research and Development and Innovation (R&D&I) projects. A large number of research projects and supporting activities are financed through RPF's programmes, with an approximate funding budget of €17 million in 2006. The budget is expected to grow substantially in the coming years. The R&D&I supporting programmes are categorised under five strategic areas:

■ strategic and multi thematic research and development

■ growth of national scientific and research human capital

■ applied research development and enterprise innovation

■ research infrastructure development and large scale investments

■ international networking and collaboration in the field of R&D&I

Industrial development

Industrial development has been amongst the primary objectives of the government, as it constitutes a vital component of economic policy. The accession of Cyprus in the EU provides Cypriot enterprises with the opportunity to participate in the various community programmes concerning industrial technology: namely product development, marketing, professional training etc thus further enhancing the process of restructuring.

The Industrial Development Service (IDS) of the Ministry of Commerce, Industry and Tourism, aims at accelerating the rate of growth of the manufacturing sector and enhancing its competitiveness under free market conditions. IDS has introduced a framework of investment incentives which cover:

■ technological upgrading

■ manufacturing in rural areas

■ relocation of small enterprises

"One Stop Shop" for Foreign Investors

Within the framework of the décision taken by the heads of EU member states and the commitment of Cyprus to adopt specific measures in order to reduce the average time for setting up a business, the Ministry of Commerce, Industry and Tourism announced as from 2 April 2007 the operation of a "One Stop Shop Service" for setting up a business.

Consequently, investors and businessmen now only need to be in contact with one single point to obtain almost all the required permits in one streamlined coordinated process rather than having to go through different government services. The aim is to reduce to one week the average time for setting up a new business in Cyprus.

The new service operates as a "One Stop Shop", hosting services from all the government departments involved in setting up a new business in Cyprus.

Officials from the Department of the Registrar of Companies are available, with the authority to approve a company name, check corporate documents to be submitted and forward these for the registration of the entity within five working days.

Officials from the VAT Department register the new company for VAT purposes, and provide a registration number and any other necessary information on VAT.

The Inland Revenue Department provides tax identification numbers and advice on Cyprus tax.

The Labour Department has staff available who can provide assistance with regard to the employment of local and foreign staff and to effect registration in the social insurance scheme.

The Immigration Department issues work and residence permits for directors, managers and staff from third countries, as well as any facilitation required by EU citizens.

In addition to the above, officials from the Ministry of Commerce, Industry and Tourism are on hand to provide general advice and assistance. This includes the coordination of the above procedures as well as rendering advice on incentives, grants and other business possibilities.

Taxable and non taxable entities

A company is considered to be a tax resident of Cyprus if it is "managed and controlled" in Cyprus. Although no definition of management and control is provided in the tax law itself, this is generally accepted as being the place where board decisions are taken and where the directors reside. Consequently, for a company to be managed and controlled in Cyprus we would expect to see resident directors and regular board meetings being held in Cyprus.

A company that is incorporated in a foreign country is considered to be tax resident in Cyprus if managed and controlled in Cyprus. The Cypriot branch of a foreign company is taxed at 10 percent on its worldwide income, as long as the management and control of the branch is in Cyprus. If it is exercised abroad, all the branch income is exempt from Cypriot tax.

It is possible to incorporate companies in Cyprus that are non resident for Cypriot tax purposes. Non resident companies, ie entities not managed and controlled in Cyprus, are not subject to taxation in Cyprus unless they have a permanent establishment on the island. Where they have such an establishment, they are taxed only on the income that arises from the activities of that establishment. Such companies cannot take advantage of the Cyprus network of double tax treaties and are therefore used mainly for trading activities where treaty benefits are not required. The reputation of Cyprus as a top quality financial centre with highly developed banking, legal and accountancy professions gives a non resident Cyprus company a clear advantage over known offshore jurisdictions which are often viewed with suspicion or mistrust.

Taxation of resident companies

Resident companies are subject to Cypriot corporation tax at the rate of 10 percent. This is the lowest corporate tax rate in the EU.

Dividends, interest, royalties and profits realised from the sale of securities are subject to special tax treatment as detailed below.

Taxation of transactions in shares and other securities Profits realised from the sale of securities are exempt from tax.

"Securities" are defined as meaning shares, bonds, debentures, founders' shares and securities of companies or other legal persons and options thereon.

The definition of security does not embrace all financial instruments. The Cyprus Tax Authorities have not issued a definitive list of all the financial instruments that they consider to fall under this definition but it is generally considered that shares in mutual funds and currency contracts are not considered as securities. Profits realised on dealing in these instruments are not exempt and are subject to corporation tax.

Taxation of dividends

Dividends received by a Cyprus resident company are generally exempt from taxation in Cyprus if they are received from a foreign entity in which the Cyprus entity owns more than 1 percent of its share capital.

The exemption does not apply where the foreign entity:

■ receives more than 50 percent of its income from investment activities, and

■ the foreign tax burden of the company paying the dividend is substantially lower than that of the Cyprus resident company. "Substantially lower" has been interpreted as meaning less than 5 percent

Where dividends do not satisfy the requirements for exemption from taxation or where the holding constitutes less than 1 percent of the paying company's share capital, they are then subject to defence tax at the rate of 15 percent. However, any tax withheld at source is allowed as a deduction from this tax even if it is made from a country that does not have a double tax treaty with Cyprus.

EU Parent Subsidiary Directive

Cypriot holding companies benefit from the EU parent subsidiary directive. The directive provides that dividends paid between associated enterprises that are both situated in the EU are made free of any withholding taxes. A company is defined as an associate of another, if that other company holds at least 20 percent of its share capital. This percentage fell to 15 percent in January 2007 and will fall to 10 percent in January 2009.

In August 2005, Cypriot law was amended to satisfy the requirements of the EU parent subsidiary directive. These amendments provide that where dividends received from an EU company, irrespective of the shareholding percentage, do not qualify for participation exemption as explained above, then a credit will be provided for any tax paid in that EU country. Tax paid includes not only withholding taxes but also any tax attributable to the profits of the paying company (underlying tax) on lower level subsidiaries.

Taxation of interest income

The taxation of interest income depends on whether it is derived in the ordinary course of business or it is closely related with that business. In such cases, the interest income earned is included in the calculation of taxable income under corporation tax and taxed at 10 percent. Interest earned by banks, financial companies, hire purchase companies or leasing companies is considered to accrue from the ordinary course of business.

Interest earned as detailed below is also considered to be closely related to that business and is subject to corporation tax:

1. businesses such as car dealers or property developers that sell their products on extended payment terms and charge interest on their trade debtors
2. interest on current account balances at banks
   1. interest earned by companies which act as a vehicle through which a group finances the operations of companies within it. No formal definition of "group" has been provided but it is generally considered that a group comprises any relationship where the companies are ultimately controlled by one entity. Consequently, two entities that are owned by a physical person without a common holding company are not considered as a group

In all other cases, where the interest is considered to arise outside the ordinary course of business, only half is treated as income for corporation tax purposes. However, the gross interest received is also subject to Special Defence Contribution at the rate of 10 percent. Thus the effective tax burden on such interest is 15 percent. Interest on deposit accounts and interest earned on loans granted to third parties are treated in this way.

A credit is provided against the defence tax payable for any taxes withheld at source, irrespective of whether a double treaty exists or not.

EU Interest and Royalty Directive

The EU interest and royalty directive came into effect on 1 January 2005. It provides that interest and royalty payments in one EU member state are exempt from any taxes imposed on those payments in that state, provided that the beneficial owner of the interest is a company in another EU state.

For the directive to apply the companies must be associated. One company is defined as an associate of another if that other company holds at least 20 percent of its share capital. This percentage fell to 15 percent in January 2007 and will fall to 10 percent in January 2009.

The company receiving the interest or royalty payment must not be acting as a trustee, agent or intermediary. It should be receiving the income for its own benefit.

The interest or royalty must be on an "arm's length" basis. The directive will not apply to what is considered to be in excess of an "arm's length" amount.

The low tax regime of Cyprus makes it the ideal route through which non EU residents can extract profits from their EU operations. Interest and royalties are allowed as an expense for the EU payer reducing the tax base and taxed at low rates, often nearly zero in Cyprus.

Greece, Czech Republic, Slovakia, Poland, Portugal, Spain, Latvia and Lithuania have been granted a transitional period in which to apply the directive as the economic effect of immediate compliance would be onerous. They charged a maximum withholding tax of 10 percent up to 2007 and 5 percent applies until 2011. However, the Cypriot network of double taxation treaties includes Greece, Czech Republic, Slovakia and Poland.

The overall tax burden on interest and royalties remitted to Cyprus from these countries is not affected by the transitional provisions as Cyprus grants a tax credit for the taxes withheld by these countries.

Taxation of royalties

Royalties received by a non resident from sources within Cyprus are liable to 10 percent withholding tax. However, if a Cyprus company is granted the right to use a patent, trademark or innovation outside Cyprus, then there is no withholding tax and the Cypriot company is taxed at the corporate tax rate on the profit margin that it realises on the use of the right.

Notes

1. Dividend income from abroad is exempt from SDC if the Cypriot holding owns at least 1 percent of the company paying the dividend. This exemption does not apply if:

1. more than 50 percent of the paying company's activities result directly or indirectly in passive income, and
2. the foreign tax is significantly lower than the tax rate payable in Cyprus

When the above exemption does not apply, the dividend income is subject to SDC at the rate of 15 percent.

Interest income from savings bonds and development bonds and all interest earned by a provident fund is subject to SDC at 3 percent (instead of 10 percent).

In the case where the total income of an individual (including interest) does not exceed €12.000 in a taxable year, then the rate is reduced to 3 percent.

SDC on rental income and trading profits is payable in 6 monthly intervals on 30 June and 31 December each year.

In the case of interest and dividends received gross, any defence due is payable at the end of the month following the month in which they were received.

Dividends received from companies net of 20 percent withholding tax under the legislation that was in force up to 31 December 2002, and not distributed as dividends up to 31 December 2002, can be distributed within six years from the date of their receipt without any further tax deduction.

Foreign taxes paid can also be credited against the SDC liability.

Deemed dividend distribution

If a Cyprus resident company does not distribute a dividend within two years from the end of a tax year, then:

■ 70 percent of accounting profits (after some adjustments) are deemed to have been distributed

■ 15 percent SDC is imposed on deemed dividend distribution applicable to shareholders who are residents of Cyprus

■ Deemed distribution is reduced with payments of actual dividends which have already been paid during the two years from the profits of the relevant year.

When an actual dividend is paid after the deemed dividend distribution, then SDC is imposed only on the additional dividend paid.

4 Capital Gains Tax (CGT) Basis

Capital Gains tax is imposed at the rate of 20 percent on gains from the disposai of immovable property situated in Cyprus including gains from the disposai of shares in companies which own immovable property in Cyprus and not listed in any recognised Stock Exchange.

Determination of capital gain

The capital gain is calculated after deducting from the selling price the initial acquisition cost or the market value as at 1 January 1980 whichever is the higher, inflated by the retail price index in Cyprus.

Exemptions

The following disposals of immovable property are not subject to CGT:

■ transfer arising n death

■ gift made from parent to child or between husband and wife or between up to third degree relatives

■ gift to a company where the company's shareholders are members of the donor's family and the shareholders continue to be members of the family for five years

■ gift by a family company to its shareholders

■ gift to charities and the government

■ transfer as a result of reorganisations

■ exchange or disposal of immovable property

■ expropriations

■ exchange of property where the market value of the property exchanged is equal.

5 Estate Duty

Estate duty was abolished in 2000. The executor/administrator of the estate of the deceased is required by the Deceased Persons Estate Law to submit to the Tax Authorities a statement of assets and liabilities of the deceased within six months from the date of death.

6 Immovable Property Tax

Immovable property tax is imposed on the market value as at 1 January 1980 and applies to the immovable property owned by the taxpayer on 1 January of each year. The immovable property tax is payable on 30 September of each year.

The immovable property tax is imposed on both individuals and legal persons.

Advantages

The double taxation treaty network of Cyprus coupled with the Cypriot holding company and the fiscally beneficial entities described below, allow international transactions to be structured in the following ways, to achieve optimum benefits:

■ as an intermediary company for joint ventures or other participation, particularly in eastern European countries, to avoid or reduce withholding taxes

■ to finance joint ventures or other acquisitions to reduce or eliminate withholding taxes and extract profits that would otherwise be subject to significant foreign taxation

■ as an operating company which can claim treaty protection to avoid the creation of a permanent establishment in a foreign country, with the facility of having an office in that country to perform limited functions

■ as a Cypriot international trust administered by a Cypriot Company as trustee which may be entitled to benefit from treaty protection

■ to operate shipping companies from Cyprus with treaty protection

■ to benefit from the non discrimination clause of a treaty e.g to avoid the French tax of 3 percent on IBC owning real estate in France

Where tax has been paid on income from a foreign country with which a double taxation treaty is not in force and such income is subject to Cypriot tax, unilateral relief from Cypriot tax not exceeding the amount of tax paid in the foreign country will be granted by means of exemption, credit or deduction.

Tax planning possibilities

Circumstances are set out in which Cypriot registered companies can be used efficiently. Careful planning is recommended to ensure that the objectives and conditions are properly considered and evaluated. Professional and up to date advice should always be sought before a final decision to proceed is taken.

I Holding Companies For Direct Investments

II Investment Companies Trading In Securities

III Non EU Residents Investing In EU Countries

IV International Collective Investment Schemes (ICIS)

V International Companies Not Taxed In Cyprus

VI International Companies Taxed In Cyprus

VII Holding Property

VIII Extracting Profits As Interest Income From EU IX Royalty Companies

IV International Collective Investment Schemes (ICIS)

There are three forms of ICIS funds available to investors:

■ funds open to the public

■ funds available to experienced investors

■ private funds comprising a maximum of 100 members

The rules and regulations regarding each type of ICIS vary. The simplest to administer is the private ICIS. There is no requirement to have a manager or trustee appointed and there is little regulation on the type of investments that can be held by the fund. On the other hand, ICIS marketed to the public are subject to much stricter regulations on the type of investments they can hold and are required to have both a reputable fund manager and a reputable trustee, normally a bank.

An ICIS may take one of several legal forms, including a variable capital company or a unit trust. It is also possible to have bearer units, but only for ICIS marketed to the public that intend to obtain a listing on a stock exchange.

Shares and units of investors can be registered in the names of nominees.

In practice, private funds and those marketed to experienced investors are the most common forms of ICIS due to their relative ease of administration and flexibility.

Holding Companies

Holding companies exist for legal, commercial and tax reasons

Cyprus is an attractive location for holding companies, and in light of the 2003 tax reform, the island's attractiveness as a holding company location has been highly upgraded in comparison to other financial centres around the world. Offering the lowest tax rate in the EU, complying with the EU requirements as well as OECD requirements against harmful tax practice, have made Cyprus an ideal International Financial Centre (IFC) for both inbound and outbound EU investors.

Cyprus is most commonly used as an intermediate holding company jurisdiction and is of particular interest in the following circumstances:

■ for groups - international or domestic - investing outside Cyprus, aiming at dividend income streams. Such dividends in most cases will be tax exempt in Cyprus

■ to hold subsidiaries that have scope for significant capital appreciation and that may be spun off or sold in the future. Such disposals are not taxable in Cyprus

■ to benefit from the favourable withholding tax provisions of the Cypriot double tax treaties network and the EU parent subsidiary directive and the other directives

■ where a jurisdiction is required that does not have controlled foreign company (CFC) legislation

■ where it may be important to achieve a tax free unwind of the holding company at some stage in the future

■ to avail of the easy exit strategy under Cypriot law which allows payment of dividend, interest and royalties without payment of withholding tax

■ appropriate for any fund or investment vehicle, as there is no tax on transactions in shares and securities as defined, even if this is the trading activity of the entity

Cyprus can be used as the location for the ultimate holding company, for instance in a group that is relocating to a new jurisdiction or on formation of a new publicly traded corporation with international operations

Cypriot holding companies

A Cypriot holding company is generally set up as an ordinary company resident in Cyprus which, besides participating in domestic and/or foreign companies, may also have other functions such as trading, manufacturing or financing. There are no restrictions on its activities. It is taxable in Cyprus on its worldwide income, provided that it is managed and controlled in Cyprus.

The attractive features of the Cypriot holding company regime include:

Taxation of trading income

Trading income is taxed at the rate of 10 percent, the lowest in the EU.

Taxation of dividend income

Dividends and other profit distributions received by a Cypriot tax resident company from another Cypriot tax resident company are exempt from Corporation Tax.

Dividends and other profit distributions received by a Cypriot tax resident company from a foreign company are exempt from Corporation Tax. Such income is also exempt from Special Contribution for Defence (1S percent) provided that the company receiving the dividend owns at least 1 percent of the company paying the dividend. This exemption does not apply if:

(a) more than SO percent of the paying company's activities result directly or indirectly in investment income, and

(b) the foreign tax is significantly lower than the tax rate payable in Cyprus.

Tax treatment of capital gains on the sale of shares

The exemption from tax of trading gains and capital gains made by a Cypriot holding company from the sale of shares in a foreign subsidiary puts Cyprus on a par with the traditional European holding company regimes. No minimum participation threshold is required. Gains from local subsidiaries are also exempt, only gains from shares in companies owning immovable property in Cyprus are not.

Withholding tax on outgoing dividends

Outgoing dividends remitted by a Cypriot holding company to its ultimate parent company are not subject to withholding tax in Cyprus.

Withholding tax on interest

The EU interest and royalty directive has been incorporated into Cypriot domestic law. The result is exemption at source of interest whose beneficial owner is a non resident of Cyprus and resident in an EU member state.

Foreign tax credit on income received by a Cypriot company

I ncome received by a Cypriot company from abroad may have been liable to a withholding tax on payment in the country of origin. If this income is liable to tax in Cyprus, the tax paid abroad can be credited against the tax payable in Cyprus.

Foreign taxes are credited in Cyprus:

1. under unilateral provisions of the Cypriot tax law
2. under bilateral treaty provisions which in some cases provide for credit of the underlying tax as well.

Interest deduction for borrowing costs

Generally, interest expenses payable by a Cypriot company are fully deductible.

Thin capitalisation

Cyprus tax legislation does not contain specific provisions relating to thin capitalisation of companies ie debt to equity ratio restrictions. A Cypriot holding company may therefore be capitalised with loans without any risk that interest paid at "arm's length" to its parent company will not be deductible.

Controlled Foreign Company (CFC) legislation

Compared with many other jurisdictions, Cyprus' CFC legislation is rather limited, targeting only certain types of income that are not derived from real business activities to create a distinction between participation (active) and investment (passive) income. The CFC provisions will only be triggered if more than SO percent of the company's activities result directly or indirectly in investment income, and the foreign tax burden of the non resident company paying the dividend is substantially lower than the tax burden of the Cypriot company.

Capital duty

Capital contribution is subject to capital duty under the Cypriot legislation on the authorised share capital and any further increases, as follows:

■ upon incorporation of the company: €102.50 plus 0.6 percent on the authorised share capital

■ upon subsequent increases: 0.6 percent on the additional share capital

The capital duty is payable to the Registrar of Companies. The duty can be reduced by having small authorised share capital and issuing the shares at a higher share premium. There is no capital duty payable on share premium.

Value Added Tax

If the holding company's activity is limited to the holding of shares, it will not be taxable under the VAT legislation. As such it will fall outside the scope of the VAT legislation and will not be entitled or obliged to register for VAT purposes.

However, if the holding company is involved in activities in addition to the holding of shares, such as the provision of management services or granting of loans, then it may be entitled to deduct VAT that it suffers on expenses incurred in Cyprus or self charged under the reverse charge provisions.

Double taxation treaties

Cypriot double taxation treaty network ensures that dividends received by a Cypriot holding company from its foreign subsidiary are either exempt from or subject to low withholding tax in the subsidiary's place of residence.

Other benefits of Cypriot holding companies

Cypriot corporate tax on business profits is at the relatively low rate of 10 percent. Cyprus does not have any Outgoing dividends remitted by a Cypriot holding company to its ultimate parent company are not subject to withholding tax.

A practical example

■ an Austrian software company is developing software for which it intends to register the patent rights

■ the company registers the patent not under its own name but under the name of a 100 percent owned offshore company

■ the offshore company registered in, for example, the British Virgin Islands, then enters into a licence agreement with a Cypriot company for the offshore company's European patent rights

■ the Cyprus company now has the exclusive ability to exploit these rights in Europe

■ the Cypriot company then enters into contracts with European customers, through which it exploits the rights which it now owns

■ contract 1 is with an Italian software company for the right to subscribe to the software rights

■ the income passes fully to the Cypriot company without withholding taxes in any EU country

■ contract 3 is with a Russian software company for the same rights. The income passes fully to the Cypriot company from Russia without any withholding taxes in accordance with the double tax treaty

■ the Cypriot company retains a 5 percent licence fee and pays tax on this income but it will be able to pass 95 percent to the offshore company where no further tax will be levied

If the Austrian company had negotiated these contracts directly it could have suffered up to 34 percent income tax on the income. Also, the Austrian company will pay the Cypriot company for the right to utilise the patent. This will be considered as an expense for the Austrian company and consequently the taxable profit will be reduced. Further, if the Austrian company sells the rights, any gains will be taxed at 34 percent. However, if the offshore company sells the rights, the capital gains tax is nil.

Registration procedure

Before any other steps are taken with regard to the incorporation of a company, the Registrar of Companies must be approached to ascertain whether the name by which the company is proposed to be incorporated is acceptable. The Registrar will not accept a name, if:

■ it is too similar to the name of an existing company

■ it is considered to be misleading - for example, if the name of a company with small resources suggests that it is trading on a great scale or over a wide field

■ it suggests a royal connection -for example, names containing such words as "Royal", "King" "Queen", "Crown" etc

■ it includes any of the following words: "Imperial", "National', "Corporation", "Commonwealth", "Cooperative"

Bearing in mind the above restrictions it is desirable to submit for approval to the Registrar two or three alternatives to the first choice of name, as experience has shown that this can save time.

Where the proposed Cyprus company is intended to have a similar name to that of its parent company, the Registrar will require the consent of the parent company for the use of such name.

Filing of the Memorándum and Articles of Association

To effect registration of a company the memorandum and articles of association must be submitted for filing with the Registrar of Companies.

Memorandum of Association

The memorandum must contain the following information:

■ the name of the company with "limited" as the last word

■ the situation of the registered office

■ the objects of the company, which should be as wide as possible to enable the company to engage in any kind of business or activity without this being ultra vires (beyond the powers of the company) and, therefore, void

■ a statement that the liability of the members is limited by shares or by guarantee

■ the amount of the share capital

■ the subscribers to the memorandum together with the number of shares for which they have subscribed Articles of Association

The articles contain rules governing the internal management of the company and regulating the rights of its members among themselves. The articles may be altered or added to by means of a special resolution, which requires a majority vote of over 75 percent of the members. The articles deal with matters such as:

■ general meetings of the company

■ voting rights of members

■ transfer of shares

■ appointment and powers of directors

■ dividends

■ accounts and audit

Specimen memorandum and articles of association which have been prepared after careful study by lawyers can be made available, but care should be taken that the first few main object clauses are tailored to the specific circumstances and main business objects of the company.

Share capital requirements

There is no legal requirement as to the minimum or maximum share capital of the company. It is recommended that the authorised share capital should be at least €1.000 which may conveniently be divided into 1.000 shares of €1 each.

Shareholders

Under Cyprus law, every company limited by shares must have at least one shareholder. If anonymity is required, the shares may be held by nominee companies in trust for the beneficial owners without public disclosure of the owners' identity. Our trustee companies may be used by clients to hold shares in trust for them.

Trusts

The nature of a Trust

A trust is established by an individual (the Settlor) and is a means whereby property (the Trust Property) is held by one or more persons (the Trustees) for the benefit of another or others (the Beneficiaries) or for specified purposes. The Settlor can be a Trustee and the Settlor and the Trustees or any of them can be Beneficiaries.

In law, the Trustees are the owners of the trust property, although they may not deal with it as absolute owners but rather in accordance with the provisions of the law relating to trusts and the rights of the beneficiaries as set out in the trust documents. In other words, the trustees are under a binding obligation to deal with the trust property in accordance with the law and the direction set out in the trust document.

The trust property can include all kinds of assets situated anywhere in the world.

The most common types of Cypriot international trusts include:

■ Discretionary Trusts

■ Fixed Trusts

■ Charitable Trusts

■ Purpose Trusts

■ Protective Trusts Tax aspects

International trusts are governed by the International Trusts Law of Cyprus. International trusts are not taxed in Cyprus.

In fact, Cypriot international trusts enjoy important tax advantages, providing significant tax planning opportunities to interested parties. The following advantages are indicative of the possible options for tax minimisation:

■ All income, whether trading or otherwise, of an international trust (ie a trust whose property is located and income is derived from outside Cyprus) is not taxable in Cyprus

■ Dividends, interest or other income received by a trust from a Cyprus international business company are also neither taxable nor subject to withholding tax provided that the beneficiaries are not tax resident in Cyprus. Even though a trust with shares in a Cypriot company may not be an international trust, the exemption relies on the fact that Cypriot tax is imposed only on Cyprus residents. As the beneficiaries are not residents of Cyprus, no tax is imposed on the distributions made to the trust

■ Gains on the disposal of the assets of an international trust are not subject to capital gains tax in Cyprus

■ An alien who creates an international trust in Cyprus and retires in Cyprus is still exempt from tax if all the property settled and the income earned is abroad, even if he is a beneficiary

■ An international trust created for estate duty planning purposes would not be subject to estate duty in Cyprus.

Trusts are usually used by wealthy individuals for the purpose of protecting their estate from inheritance or capital gains taxes in their home country. They can also be used by expatriates settling into a trust before repatriating assets acquired while working abroad, to protect such assets from the tax of their home country.

Other aspects

There are many situations other than saving in taxes where Cypriot trusts can prove advantageous. These include the following:

■ an individual, through the use of a Cypriot trust, can ensure that minors, mentally impaired persons or persons unable to deal with the management of the individual's estate are well provided for, even after the individual's death

■ an individual, through the use of a Cypriot trust, can arrange to be inherited by persons, who due to the legislation of the individual's country, would otherwise be excluded from the inheritance

■ an individual who wishes to divest himself of personal assets for fiscal or other reasons can achieve that by transferring them to a Cypriot international trust

■ an individual who wishes to keep the ownership of a company anonymous and confidential, can do this by setting up a discretionary Cypriot trust to own the shares in the company

■ an individual who has or may have income arising overseas, which they do not wish to remit to their country of residence, can arrange for such income to be directed to the trustees of a Cyprus based settlement and be held in a discretionary trust in accordance with their wishes

■ an individual with assets outside their country of residence - which country may in future extend its exchange control restrictions to include remittance of overseas funds - may wish to retain the flexibility of overseas funds by transferring them to a discretionary trust

Other advantages

In addition to the tax and other aspects set out above there are other favourable factors for creating a trust in Cyprus.

The favourable legal system relating to trusts together with the advantageous geographic position of the island make Cyprus a particularly attractive trust location.

Cypriot international trusts are not subject to exchange control. Bank deposits with Cypriot banks, either local or international, or with any bank around the world, are also not subject to exchange control. The absence of exchange controls and the availability of excellent telecommunications and international banking services, make Cyprus a convenient base for the remittance and transfer of funds.

The presence of a number of reputable international fund management companies on the island and the high standing of the legal and accounting professions ensure the availability of expert advice as well as the competent management services required for the proper operation of a trust.

There are no registration or reporting requirements for trusts established in Cyprus nor are the names of the trust or of the persons referred to in the Trust Deed disclosed. Cypriot law is flexible in that it allows the removal of a trust from its jurisdiction and vice versa. This could be important in cases where a change in circumstances may render such a transfer advantageous for fiscal or other reasons.

Investment Firms

With its entry into the EU in May 2004, Cyprus has become one of the most attractive countries to set up and opérate investment and financial services activities.

The Investment Firms Act 2002-2005

The Cyprus Investment Firms Act of 2002-2005 (the "Act") and MiFID provide the legal framework for the provision of investment services as well as for the registration, regulation of operations and supervision of Cypriot Investment Firms (CIF).

Under the provisions of the Act, only the following entities may provide investment services on a professional basis:

■ CIF - investment firms operating within Cyprus, excluding credit institutions, provided that the CIF has obtained the appropriate authorisation from the Cyprus Securities and Exchange Commission (CySEC)

■ credit institutions established in Cyprus - provided that the credit institutions have received an authorisation from the Central Bank of Cyprus, in accordance with the provisions of the Banking Acts 1997 to 2000 for the provision of investment and non core services

■ investment firms with their registered offices outside Cyprus - whether providing investment or non core services through a branch or operating on a cross border basis without a branch, provided they have been granted a licence from the regulators of an EU member state

Investment services

Investment services include any of the following services:

■ reception and transmission of orders in relation to one or more financial instruments

■ execution of orders on behalf of clients

■ dealing on own account

■ portfolio management

■ investment advice

■ underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis

■ placing of financial instruments without a firm commitment basis

■ operation of multilateral trading facilities Ancillary services

■ safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management

■ granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction

■ advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings

■ foreign exchange services where these are connected to the provision of investment services

■ investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments

■ services related to underwriting

Procédure for the granting of a CIF authorisation

The business objective of a CIF should be the provision of those Investment and ancillary Investment services for which it has received a licence by the CySEC.

CIFs must be licenced by the CySEC, which is the relevant regulatory and supervisory authority. In this respect, a written application to the CySEC must be submitted and accompanied by a number of documents including:

1. a business plan, which should include a description of the operations, the organisational structure, forecasts for the first two financial years and the names of at least two experienced and reliable persons who shall run the business
2. draft Articles of Association such as they are expected to be formulated after the granting of the CIF authorisation
3. an excerpt of the criminal record, certificates of non-bankruptcy and resumes well as their answers to a questionnaire issued by the CySEC
4. a draft of the internal regulations (operations depending on the investment and ancillary services which the company proposes to provide
5. a draft organisational structure of the applicant company
6. a description of the applicant's computer network and electronic infrastructure
   1. a draft regulation, in accordance with acceptable practices, for the prevention of the legalisation of the proceeds of criminal activities

The CySEC reserves the right to request the submission, together with the application, of any additional documents not listed above.

If the shareholders possessing a qualified holding in the applicant company (10% or more) are legal entities, then the CySEC will also require the details for all natural persons - ultímate beneficial shareholders.

The CySEC will reach a decision within four months following the submission of a duly completed application, on either granting a CIF authorisation or refusing the application.

During this four month period the CySEC may request additional information or clarifications regarding the application submitted.

When CySEC is satisfied with the paperwork submitted, including

■ content of the manuals

■ due diligence information provided for legal and physical shareholders and personnel

■ sufficiency in quantity and quality of the staff to be employedmain shareholders, managerial staff and internal auditors are called for personal interviews with the President of the CySEC

Criteria for successful application

In general, in order to grant a CIF authorisation, the CySEC must be satisfied that the applicant Company has and maintains throughout its operation:

■ the minimum capital required under the Act

■ shareholders possessing a qualifying holding or otherwise capable of exercising an influence over the management and business strategy, must be fit to ensure the sound and prudent running of the company

■ at least two experienced and reliable persons[1] to manage its business, and that the said persons are capable to exercise their duties. One of these two executives should be employed by the company on a full time basis and live in Cyprus. They should both be accessible and available to appear before the Commission with reasonable notice

■ adequate technical and financial resources

■ appropriate control and safeguarding arrangements for electronic data processing and adequate internal control mechanisms

■ reliability, experience, professional skill and professional diligence of the persons who direct its business

■ adequate structures and mechanisms in order to guarantee the protection of investors' assets and elimínate any conflict of interest that may arise between the company or the staff and clients' interests

■ full fledged office with established telecommunication and PC network, staffed with employees on a full time/part time basis as described in the applicant's organisational chart

■ all executive employees i.e Cyprus based General Manager, heads of the core services departments and internal auditor, must possess relevant professional competence certificates from the Ministry of Finance of Cyprus. The CIF has an 18 month period subsequent to the issue of the licence to comply with the above requirement

After the granting of the authorisation, the CIF must comply with the ongoing obligations provided by the law and the relevant CySEC directives.

International Collective Schemes

The International Collective Investment Schemes Law, 1999 has provided the requisite legal framework for the registration, regulation of operations and supervision of International Collective Investment Schemes (ICIS).

An ICIS can take one of the following legal forms:

■ international fixed capital company

■ international variable capital company

■ international unit trust scheme

■ international investment limited partnership

The sole object of an ICIS is the collective investment of funds of its unit holders.

Clients who set up and operate such schemes include financial services companies, fund managers, investment firms and high net worth individuals. They include the following circumstances:

■ funds for property investments especially in central Europe, Russia and ex USSR countries

■ accumulating funds of high net worth individuals in a collective scheme, which is flexible, with minimum regulatory supervision and tradeable

■ investments in securities, bonds and other financial instruments, capitalising tax free gains

■ collective fund of several sub fund portfolios with varied risk profiles

■ fund of a number of other funds or sub funds each with a specific objective, projected target return and risk profile

■ fund managers providing an investment tool for their clients Tax and other advantages

An ICIS is subject to tax in an identical manner to any other Cypriot entity. In short, what is especially significant from a tax perspective are the following:

1. exemption from tax on profits from sale of shares and other financial instruments
2. exemption from tax on foreign dividends received
3. absence of any withholding taxes of interest payments made abroad
4. absence of withholding taxes on dividend payments from Cyprus, no thin capitalisation rules

1. relative simplicity and certainty of Cypriot tax regime
2. favourable network of tax treaties with some 40 countries

h) straightforward legislation as well as comfortable Central Bank of Cyprus regulations

i)Cyprus has the lowest corporate tax rate in the EU

Other advantages:

■ Cyprus is an EU country and compliant with EU law

■ legislation has been put in place and is constantly under review to regúlate and harmonise operations in the financial services sector

■ facilitation of operations of brokerage firms and enhanced prestige on the international markets

■ licencing and existence of regulatory framework improves transparency and legitimacy with respect to shareholders, employees, authorities etc

■ Cyprus can be used as a springboard for immediate access and easy setting up in prestigious financial markets within the EU (Frankfurt, London etc) through the use of Cyprus financial services entities which can operate under a portfolio management licence and act as fund managers to ICIS

■ the island enjoys sound reputation

■ Cyprus has a pool of highly educated and qualified professionals who can advise clients and provide expert support

Structure of ICIS Form and objectives

The most commonly used ICIS legal form is that of an International Variable Capital Company. This is a company whose legal form is much the same as a Cyprus international business company, except that it has variable capital. In other words, the shares in the company are issued or redeemed as investors buy in or sell their investments in the fund.

The sole object of an ICIS must be the collective investment of funds of the investors/shareholders. The shares issued by an ICIS must, at the option of the investors, be redeemed or repurchased directly out of the assets of the ICIS. The ICIS may be established with unlimited or limited duration.

Mínimum subscription

The mínimum subscription by investors in an ICIS, which is marketed solely to experienced investors is €50.000 or equivalent. A private ICIS does not need to have a minimum subscription.

Registration process

An ICIS must be approved by the Central Bank of Cyprus which is the regulatory and supervising authority for the schemes, for their managers and their trustees, if applicable. In this respect, a written application to the Central Bank must be submitted as follows:

■ In the case of an international fixed capital and an international variable capital company, the written application must be submitted to the Central Bank of Cyprus by the applicant company or its local professional advisers

■ Pre printed questionnaires will need to be completed for the directors and founder members

■ Standard application will need to be completed along with the required details and references

Clients who set up and operate ICIS schemes include financial services companies, fund managers, investment firms and high net worth individuals

■ An offering memorandum should be prepared that describes the purpose and objectives of the fund and which needs to be approved by the Central Bank of Cyprus prior to its circulation to prospective investors

■ To approve the scheme, the Central Bank of Cyprus must be satisfied that:

• the directors, the promoters, the managers and the trustee of the scheme are competent, experienced and honest and that the manager, the general partner (as the case may be) and the trustee (as the case may be) act independently of one another
• the manager meets the necessary legal requirements and the Central Bank of Cyprus regulations
  • the trustee (where applicable) meets the minimum legal requirements and the Central Bank of Cyprus regulations
• the name of the scheme is not undesirable or misleading.

Furthermore, the Central Bank of Cyprus must be satisfied that the constitutional documentation and the offering memorandum of the scheme contain the information prescribed by the bank and that they are in an acceptable form.

Fund manager

It is possible, but not a requirement, to appoint a fund manager approved by the Cyprus Securities and Exchange Commission, which will exclusively be managing the finances of the unit holders. The manager is required to have an established place of business in Cyprus.

What we can do

We are leaders in the formation of ICIS structures and can advise clients from the early phases of the application stage as well as with their ongoing requirements. Our services include:

■ advice and application to the Central Bank of Cyprus, on behalf of clients, to obtain their initial approval

■ assistance in drafting the offering memorandum, incorporation and legal documents

■ provision of administrative services including nominees, office facilities, administration of affairs, accounting etc

arranging the provision of accounting and tax services

Banking Units

In 1981, the government of Cyprus introduced a comprehensive policy regarding International Banking Units (IBUs) and their encouragement in Cyprus. This type of activity has grown both rapidly and steadily and there are now twenty six foreign banks operating from Cyprus with a banking licence and two with a representative office.

The Central Bank of Cyprus (CBC) has always been guided in its supervisory role by the recommendations of the Basle Committee on banking supervision and the EU directives on banking regulation while following up closely new developments and having its prudential functions under constant review to take account of these developments and changing circumstances.

Supervision is exercised by both off site monitoring and on site examination. Off site monitoring entails the submission by banks of an extensive range of periodic returns which cover numerous aspects of banking operations. Any areas of concern revealed through the returns are taken up promptly with the bank involved for remedial action. On site examinations are carried out with a view to assessing the current financial position and soundness of a bank and its future prospects at a given time.

The CBC may grant a banking licence for the following two legal types of establishments:

Cyprus incorporated bank. A Cyprus incorporated bank may take the form of: (a) a subsidiary, being a legally independent person, wholly or majority owned by a credit institution, incorporated either in Cyprus or abroad or (b) a joint venture, between legally independent institutions, controlled by two or more parent institutions being either domestic or foreign and not all of which being necessarily credit institutions.

Branch of a foreign non EU bank. The CBC may grant a banking licence to an established overseas bank allowing it to register and operate a branch in Cyprus, an operating entity which does not have a separate legal status from that of its head office. The Cyprus branch must be registered with the Registrar of Companies under section 347 of the Cyprus Companies Law. Due to its legal status, a Cyprus branch of an overseas bank is not required to have its own minimum capital as is the case of a bank incorporated in Cyprus. In this respect, should the overseas bank which has obtained a banking business licence by the CBC to establish a branch, decide to operate in Cyprus through a branch network and not merely through a single branch, a separate authorisation is not required.

The CBC may also grant an authorisation for the establishment of a Representative Office (RO) of a foreign bank incorporated either in the EU or in a third country. This is an office in Cyprus from which the interests of the entity to which it belongs are promoted or assisted but from which no banking business or the business of accepting deposits is carried on. It must therefore be clarified that a RO is not granted a banking business licence by the CBC but merely an authorisation.

Application for a banking licence

The following conditions and guidelines are stipulated for the application of a banking licence:

■ IBU, whether branches of foreign banks or locally incorporated legal entities, are required to be licenced under the provisions of the Banking Business (Temporary Restrictions) Law, Chapter 124

■ As a rule, only branches or subsidiaries of banks enjoying a good reputation internationally, established in countries where there is adequate banking supervision and lender of last resort facilities are available, will be considered eligible for a licence

■ An IBU's head office in a case of a branch, or its parent bank in the case of a subsidiary, is expected to provide an appropriate letter of comfort in support of the IBU's operations from within Cyprus

■ IBU are expected to operate as fully staffed units and not merely as brass plate operations

■ IBU are expected to comply with the provisions of the CBC and Cyprus law or regulations made there under, but are exempted from the maintenance of formal liquidity ratios, reserves with the CBC and capital ratios. IBUs are, however, required to supply the CBC, on request, with information about their activities, their ability to meet their obligations as they fall due, and their general adherence to sound banking practices

■ IBU pay an annual fee to the Central Bank of Cyprus of €20.000.

Applications for a banking business licence or an authorisation for a RO must be submitted in writing by or on behalf of the applicant to the CBC, together with any documents and information which the CBC may require. The application is designed to provide the CBC with information on:

■ business plans, providing insights on the applicant's proposed banking activities

■ management and organisational structures, including internal governance

■ financial standing of the applicant bank/financial institution

■ compliance procedures and systems to be used

■ identity of all directors, controllers and managers of the applicant bank/financial institution Procédure for obtaining an IBU licence

Applications for establishing an IBU must be submitted to the Controller of Banks who, by law, is the Governor of the Central Bank of Cyprus. The Controller of Banks, in granting a banking business licence, may attach such conditions as he may deem fit. The Banking Business Law gives the power to the Controller of Banks to call for any books, accounts or documents of any licenced bank.

Each application is considered on its own merits and in the case of established international banks the required information is considerably reduced. Set out below is the information normally required.

Branches

If the proposed IBU is a branch of an overseas bank, the following particulars are required:

■ audited financial statements for the last three financial years

■ short history of the applicants, reflecting gradual and constant achievement of new and improved levels of financial capability

■ the extent to which the applicants envisage contributing towards the improvement, expansion or diversification of banking and financial services offered

■ list of major and/or controlling shareholders with their respective percentage shareholding and a short description of their financial outlook

■ experience, qualifications, reputation, nationality and address of persons who are expected to assume the local direction and management

■ feasibility study of the proposed IBU's operations, incorporating projected profit and loss accounts, balance sheets and statements of source and application of funds for the first five years of operation

The Central Bank of Cyprus has always been guided in its supervisory role by the recommendation of the Basle Committee on banking supervision and the EU direc­tives on banking regulation

■ present geographical representation of the applicants

■ copy of the applicant's memorandum and articles of association, translated where necessary into English

■ present organisational chart of the applicant's head office, together with the profile of executive directors and senior management

Subsidiarles

If the proposed IBU is a local subsidiary of an overseas bank, the above information, as applicable, is again required. In addition, the following should be included:

■ complete list of the proposed shareholders of the subsidiary company with their respective percentage shareholding and a short description of their economic and financial outlook

■ draft of the proposed subsidiary's memorandum and articles of association

■ written undertaking to provide and set apart the proposed fully paid up capital before or at the time the subsidiary commences business

■ a letter of comfort from the applicant

■ a certified copy of a decision by the board of the parent company to establish the IBU in Cyprus Mínimum requirements

The mínimum statutory criteria for licencing which must be fulfilled with respect to an applicant, in order that the CBC grants a banking business licence, as set out in the Banking Law of 1997 as subsequently amended, are the following:

"Fitness and properness" of directors, chief executives and managers

Directors, chief executives and managers of the prospective bank or the prospective branch, as appropriate, have to satisfy the CBC that they are "fit and proper" persons to be involved in the provision of banking services. The Law prescribes the considerations which the CBC must take into account when determining "fitness and properness". These include the persons' integrity, sound judgment, honesty, diligence, competence, capability and adequate experience.

The "four eye" principie

At least two persons are required to participate and concur in the effective direction and management of the business of the bank. The CBC expects, in the case of Cyprus incorporated banks, that the individuals concerned are either Executive Directors or persons granted executive powers by and reporting immediately to the bank's board of Directors.

Minimum capitai

A bank incorporated in Cyprus must have at all times a minimum capital of not less than €5.1 million or such other higher amount that the CBC might determine. A branch is not required to have its own minimum capital as is the case for a bank incorporated in Cyprus although an "assigned capital" arrangement will be looked at favourably by the CBC.

Suitability of controllers

The CBC places particular emphasis on the "fitness and properness" of prospective controllers of the bank (both natural and legal persons) as well as their financial soundness in order to grant its approval. The suitability of

controllers is determined, to the extent possible, by means of detailed questionnaires which are required to be completed by the persons concerned, as is the case for directors, chief executives and managers.

Ongoing requirements

On site examinations and off site monitoring

Once authorised, and following the commencement of its operations, licenced banks are subject to the supervision of the CBC under section 26 of the Law. Supervision is exercised through regular on site examinations as well as off site monitoring. The aims of on site examinations are to assess the quality of a bank's assets, its financial soundness, the adequacy and quality of its management, its internal control systems, the implementation of prudent policies and its compliance with the conditions that may be attached to its banking business licence. Off site monitoring entails the submission of various periodic returns.

Minimum reserve requirements

Banks, whether incorporated in Cyprus or operating as branches of foreign banks, are required to maintain minimum reserves with the CBC, in pursuance of monetary policy objectives, in accordance with section 41 of the Central Bank of Cyprus Law of 2002 as subsequently amended.

Annual financial statements

According to section 24 of the Law, banks, whether incorporated in Cyprus or operating as branches of foreign banks, are required to prepare annual accounts and submit them, after they have been audited, to the CBC within four months of the end of each financial years. These financial statements are required to be audited in accordance with the International Standards on Auditing, issued by the International Federation of Accountants, by external auditors appointed by the applicant bank and approved by the CBC.

Participation in the Deposit Protection Scheme

Cyprus incorporated banks or Cyprus registered branches of banks incorporated outside the EU are required to become members of the Cyprus Deposit Protection Scheme, unless a bank is specifically exempted by a decision of management committee responsible for the administration of the scheme.

Participation in the Investor Compensation Fund for Clients of Banks

All banks which are incorporated in Cyprus as well as Cypriot registered branches of banks incorporated outside the EU which intend to provide investment services are required to become members of the Cyprus Investor Compensation Fund for Clients of Banks, unless a bank is specifically exempted by a decision of the management committee responsible for the administration of the fund.

Anti Money Laundering measures

Banks operating in Cyprus are required to implement strict procedures for preventing the use of their services for money laundering in accordance with the provisions of the Prevention and Suppression of Money Laundering Activities Law of 1996 as subsequently amended and the Guidance Notes issued thereunder by the

CBC.

Payment of fees

The CBC is empowered, under section 26 of the Law, to require banks to pay fees as reimbursement of the expenses incurred for their supervision and inspection.

Specialised services

You cannot predict the future. But you can plan for it. The key to long term stability is not only to anticípate what lies ahead but also to stay agile and adaptable as the unexpected happens. It is no great secret. We also have an entrepreneurial structure that makes us more responsive to change. It means we can embrace and develop new ideas quickly and move into new geographical markets as they emerge.

Just some of our specialised services:

■ intellectual property

We believe that managing intangible assets effectively is about three things: value protection, value creation and corporate governance. It is essential for the future success of your business. Careful management, legal protection, tax planning and the financial exploitation of intellectual property are all becoming increasingly important.

■ option administration services

We can help corporate clients who either have an employee participation plan, or are interested in starting one. We handle all of the compliance issues, including mandatory reporting to your regulator, reporting regularly on the status of your plan and the exposure eligible for hedging. A big relief for your human resources department.

■ outsourced services

More people are choosing to become their own boss. If you are - or want to be - a self employed sub contractor, we have specialists who can help you turn local legal and tax issues to your advantage. It is all about getting more from your income, without sacrificing your flexibility.

Taking you further Business strategy

We can assist you in transferring your corporate goals to reality. We can identify potential acquisition targets and joint venture partners in the local and international markets.

Our valuation teams are industry specialists rendering quality professional services including valuations of targets, shareholder agreements, purchase accounting, litigation support. Our experience in dealing with funding agencies and finance institutions enables us to identify the types of information they will require and to assist you with presenting your case during the negotiation process.

Escrow services

Escrow is growing in popularity as a way to distribute cash flows to the beneficiaries of companies being sold, international trading and construction projects. We set up escrows in connection with the acquisition of several eastern European companies. The escrow acts as a cash collateral guarantee for the earn out arrangement.

Securitisation services

We can administer securitisation programmes. Assets include asset backed securities, trade receivables, loan receivables, and warehousing facilities. We also offer post closing administration and transaction services for term securitisation transactions, such as mortgage backed securities and collateralised debt obligations.

With our international network of experts in tax, corporate law and accounting we cover a full range of trust and corporate services... We offer a range of specialised corporate finance, business management and transaction services

Services

Oneworld provides a comprehensive range of corporate, accounting and business outsourcing services. We can provide the experience and expertise to help clients improve their performance and allow them to focus on their core business activities.

Comprehensive delivery

Oneworld focuses on quality measures, controls and productivity, providing timely information needed for decision support and business planning. You can rely on our dedicated staff to manage your day to day operations transparently and flawlessly.

Customised services at your convenience

Taking your specific individual needs into account, Oneworld is ready to provide a flexible, scalable solution that is ideally suited to you.

A snapshot of our services

The next section provides a snapshot of our management and accounting outsourcing services. For more detailed information about each service, specialised folders are available from all of our offices, or visit our website at www.oneworldweb.net

■ company and trust formations

■ book-keeping and reporting

■ human resource and payroll

■ domiciliary and management

■ corporate secretarial

■ tax and legal

■ international VAT registration and refund

■ registrar and shareholder

■ corporate finance

■ fund administration

■ structured finance

■ international licencing and collection

Company and Trust Formations

Our network and specialised teams have extensive experience in helping clients set up in Cyprus and elsewhere. Our formation services cover:

■ the incorporation and registration of corporate entities in a variety of jurisdictions

a the formation and administration of specialised entities, trusts, collective and mutual funds

■ availability of ready-made (shelf) companies

Book-keeping and Reporting

More stringent accounting standards and extensive and complex reporting requirements have increased the pressure on CFOs. At the same time, compliance and risk management have become more important.

Oneworld can relieve you of this burden. As an independent third party, we manage your accounting processes efficiently, and provide you with the timely and accurate information and analysis that is critical to strategic decision making. Clients receive easy to read, consistent reports of all their activities worldwide, along with the accompanying local and international management reports.

Human Resource and Payroll

We provide payroll and human resource services for companies of any size, regardless of whether they have one employee or thousands. We offer strict confidentiality, flexible fee structures and salary administration costs, together with the responsive, personal service you require. Oneworld payroll services provide the people, processes and systems needed to calculate, record, and report all payroll components. Our human resource services cover virtually every aspect of employee related administrative affairs.

Domiciliary and Management

Every company needs a registered office where official documents can be served, in addition to one or more directors who handle day to day management. Oneworld provides domiciliary and management services, making sure that all requirements are met and rules and regulations are complied with. We tailor our services to accommodate your individual requirements.

Oneworld management services gives you all the advantages of working with experienced and highly qualified people who look after your best interest, and ensure that your company meets all local requirements.

Corporate Secretarial

For our clients, meeting statutory and regulatory obligations and satisfying increasing stakeholder demands for strong corporate governance continue to present challenges.

Our services include:

■ global compliance outsourcing

■ global incorporation and registration

■ provision of nominee company secretary

■ provision of registered office services

■ group reorganisations

■ consultancy, assurance and project management

■ secondments and interim resourcing

■ corporate structure simplification

By outsourcing your statutory compliance responsibility to Oneworld, you can be sure that all corporate secretarial statutory compliance requirements are satisfied.

Tax and Legal

As enterprises globalise, they can find themselves facing a complex web of tax rules and regulations. It is important for them to find ways to align their tax strategies with their overall business needs, while meeting their compliance obligations.

Our teams are able to help you structure your business in a tax efficient manner, both locally and globally.

Our tax services include international tax structuring, corporate tax consulting and compliance and tax optimisation. We advise on tax efficient holding company locations, cross border financing solutions, inbound and outbound structuring, managing intellectual property and intangibles.

Our legal department provides "boutique" legal services including drafting and review of agreement, legal compliance, shareholder agreements, obtaining licences, incorporation of entities, liquidations, registration of patents and trademarks and representation in court on tax related matters.

International VAT Registration and Refund

VAT is often the first tax and regulatory barrier to international commerce. To help clients overcome the language and procedural hurdles involved, not to mention keep business flowing, Oneworld offers the most extensive VAT compliance network in the market. Our services include:

■ VAT registration and returns

■ fiscal representation

■ VAT refund

■ compliance

Registrar and Shareholder

Oneworld provides share registration and value added services that enhance the interaction between shareholders and companies.

We combine traditional shareholder services with a broad range of management and corporate secretarial outsourcing services to alleviate the administrative burden associated with managing share registers as well as add value to clients businesses.

We manage shareholder registers for thousands of companies and their shareholders. With our global scope and expertise, we can ensure that your company meets all statutory requirements which your company is expected to comply with.

Corporate Finance

To assist our clients in making a strategic decision, we provide tailored market research covering areas such as the current and the anticipated. This information forms the base for an initial decision as to whether the opportunities are in line with your goals.

We can assist in transforming your corporate goals to reality. For example, we can identify potential acquisition targets or joint venture partners in the local or international markets. The knowledge obtained and our extensive network of industry contacts facilitates this process.

T o operate effectively, a company needs a set of realistic objectives. We can provide assistance to management in clarifying the corporate goals and acting as an independent sounding board with experience on what is successful both within the domestic market and internationally.

Our experience in dealing with funding agencies and finance institutions enables us to identify the types of information they will require and to assist you with presenting your case during the negotiation process. We aim to ensure that your finance provider and the method of financing suggested fits your circumstances and your objectives.

Fund Administration

Our services include:

■ fund accounting and valuation services

■ shareholder services

■ custodian services

In addition, we provide assistance with administrative and registered office secretarial duties that are essential when setting up an investment fund company or fund management company.

Structured Finance

Oneworld's structured finance services team focuses on providing management and accounting services to Special Purpose Vehicles (SPV) in securitisations and other structured finance transactions. We provide these services in all major onshore jurisdictions.

Our structured finance services include:

■ assistance with SPV incorporation

■ provision of qualified independent directors

■ provision of shareholders

■ accounting and consolidation services

■ reporting to investors, trustees and rating agencies

■ corporate secretarial services

■ trustee and process agent services

International Licencing and Collection

We can maximise, directly or indirectly, the earning potential of our clients assets by offering tailor made and effective solutions to any kind of royalty management challenge faced by our clients and business partners in placing and exploiting their intellectual property rights and collecting their entertainment assets. Our involvement is client and service driven

■ international licencing

we provide clients with an unrivalled level of service and expertise to successfully deal with any kind of royalty management challenge

■ collection account management

as a trusted third party in the capacity of one of our group companies, we collect, administer and disburse revenues derived from the exploitation of audiovisual works such as films, television programmes and video games, providing fully transparent and impartial overviews of the financial status of the exploitation of these audiovisual works to our clients

 

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[1]"Experienced and reliable persons" to be appointed as Directors of the CIF are not defined in the Law. However a manager will need to have the following qualities:

1. experience of at least three years in the financial services sector in the market(s) where the company will be operating

2. he/she will need to possess adequate academic background and practical experience

3. he/she should be in a position to appreciate the nature of the business which the applicant plans to undertake and duly comprehend the nature of the tasks undertaken

4. he/she should also know at least another European language, English is a must in most circumstances