The SDM, with its “SEA Change 2030” (Sustainable, Extrovert, and Adaptable) long-term strategic vision for Cyprus shipping, aims to improve the competitiveness of the Cyprus flag in international shipping and to simplify the procedures and operating regime for Cypriot shipping companies that own Cyprus-flagged vessels.
The primary goal of this legislation is to establish a “one-stop-shop” framework for ship-owning companies under the Cyprus flag. This was accomplished by designating the Shipping Deputy Ministry as the competent authority for the registration of these types of companies and for all related matters, which were previously handled by the Companies Registrar.
The new legislation includes and regulates the following subject matters, among others:
- The creation of a new registry for Shipping Limited Liability Companies (SLLCs) is established, which will be supervised by the Shipping Deputy Ministry (which currently also serves as the Registrar of Cyprus-flagged ships). This new registry will be responsible for the registration of SLLCs and any related matters.
- The General Director of the SDM will also serve as the Registrar for the SLLCs.
- The new legislation regulates the establishment/incorporation of the new entity, the content, signing, and amendment of its memorandum and articles of association, the name and share capital of the SLLC, and all relevant procedures for reducing or increasing the share capital.
- The registration of ship mortgages and other encumbrances on a ship.
- Addresses issues related to the management of the SLLC, such as general meetings, financial statements, and specific limitations on the positions of secretary and director of the company.
- The liquidation procedure, appointment of receivers/administrators, minority protection, issues where the Companies Law provisions will analogically apply.
- The option for any existing shipping company, which is currently governed by the Companies Law, to apply for its transfer and continuation as an SLLC, granted subject to the fulfilment of certain criteria.
- For the new SLLC’s entities, the company secretary must be a lawyer.
- The SLLC Registrar is also given the authority to impose an administrative fine in case of a violation of specific stipulations of the law, and the relative procedure is outlined.
The SLLC law was designed to make the incorporation of a shipping company more simple, flexible, and attractive to interested parties. To achieve this, the new legal framework features simplified procedures specifically designed for the activities of shipping entities.
Existing companies that were incorporated or registered under the Companies Law may choose to continue their operations as SLLCs under the new law. To do so, the interested company must submit an application along with certain required documents specified. If the SLLC Registrar determines that all legal requirements are satisfied, they will issue a Temporary Certificate of Continuance.
Once the Temporary Certificate of Continuance is issued, the company is considered an SLLC Company with all the rights and obligations conferred by the SLLC law. When the company presents evidence to the SLLC Registrar within 6 months of the Temporary Certificate being issued that all obligations have been fulfilled and it has been deleted from the Companies Registrar’s records, the SLLC Registrar will issue a Certificate of Continuance.
A Step Forward
Cyprus, having the 11th largest fleet globally and the 3rd largest fleet in Europe, demonstrates that it is a highly advantageous base for shipping activities for many ship owners around the world. The favourable tonnage tax system, tax benefits, and strategic location are just a few factors contributing to the island’s growth and its rise in the maritime industry’s ranking.
The introduction of the new SLLC law takes Cyprus a step further in making its flag even more competitive by consolidating all maritime matters under the same authority, which simplifies the procedures for interested parties.