When creating a company in Cyprus promoters will most often be given the choice of creating the company from scratch (tailor made) or buying a company that has already been created and amending it to suit their specific purposes (off the shelf).
A Tailor Made Company
Where the promoter of the company requires the company to be tailored to his specific requirements from the outset, then a tailor made company will be necessary. This will mean that the company will (with the approval of the Registrar) be named in accordance with the promoter’s wishes from the outset. Moreover, the Articles of Association and the Memorandum of the company will be specifically created with provisions that are appropriate to the specific circumstances of the company. The promoters of the company will in most cases also immediately be appointed as the first members of the company and they will also probably be the first directors and secretary of the company.
A tailor made company carries with it the benefit of creating a company that is very specifically made to the requirements of the promoters. However, tailor made companies will inevitably take longer to form (which can be more costly) and will require full instructions and documentation to be provided to the persons creating the company registration can take place.
An Off-the-Shelf Company
An alternative to the tailor made company is to buy a company “off the shelf”. This essentially means buying a company which has already been made and registered with the Registrar of Companies, but has never traded and has sat “on the shelf” waiting to be used.
Whilst the purchase of such a company will mean that the entity is can operate extremely quickly without the delays incurred when tailor making a company, there are likely to be elements of the new company which are entirely unsuitable and which will need to be amended in order to make it functional in accordance with the wishes of the promoters.
The first members (registered on creation) of the company will need to transfer their shares to the new members. Furthermore the existing directors and secretary will need to resign and the new directors and secretary will be appointed.
Although the memorandum will often be a general one that is suitable for the type of company envisaged, the Articles of Association will probably need to be amended in order to create an appropriate set. Moreover the name of the company will in most cases need to be amended, as it will likely bear no connection whatsoever to the new business of the company.
An off the shelf company has the advantage of being considerably speedier to create and as such will usually be the less costly option. Although there will be changes to be made to the company documentation in order to make the company suit its new purpose, the work will be considerably less than tailor making the company from the beginning.
Michael Chambers & Co. LLC’s team of corporate lawyers is able to advise on all aspects of the company formation process, can specifically tailor make companies to a client’s individual purpose, or has a large number of off the shelf companies from which to select. If you wish to speak to one of our corporate lawyers, please contact us.