Under the Companies law of the TRNC, foreign investors who intend to conduct business in Northern Cyprus can operate in the local market only through LIMITED COMPANY (LTD) with a minimum capital of 25,000 euros.
The incorporation process of a limited company in Northern Cyprus is regulated under Cap. 113 Companies Law. The shareholders of a limited company only hold responsibility which is equal to the shares owned. In this respect, if there is any debt or other liabilities of the company, personal assets of a shareholder cannot be followed. However, this is not the case for the company itself. The company has unlimited liability with all its assets for the debts of the company.
There are certain regulations and conditions to be complied with in order to incorporate a company in the TRNC. However, once you engage the services of a qualified lawyer in Northern Cyprus, it will be easier for you to go through the incorporation process.
To register a company in Northern Cyprus, the following steps have to be taken.
STEP 1. SELECT A COMPANY NAME
You need to select a unique name for the company which is subject to approval by the TRNC Registrar of Companies. Upon approval of the company name, the Registrar of Companies will issue a document stating that the name of your company is reserved for 60 days.
STEP 2. WRITE THE MEMORANDUM AND ARTICLES OF ASSOCIATION
The Memorandum and Articles of the Association is the document on basis of which a company is incorporated. It stipulates the objects of the company and confirms the commitments of shareholders to incorporation. Depending on the objects and articles, a company conducts business.
In the TRNC, the Memorandum and Articles of the Association should be written in Turkish language.
Your qualified lawyer in Northern Cyprus will prepare the Memorandum and Articles of the Association based on proposed activities, and ensure that the contents of the above document does not restrict the company's activities.
STEP 3. COMPLETE COMPANY INCORPORATION FORMS
At this stage, your lawyer will fill out company incorporation forms – MŞ1, MŞ2, MŞ3.
These forms include information about the company's official address, director (-s), and secretary.
All the forms including the Memorandum and the Articles of Association have to be signed by shareholders in the TRNC. The possibility of a legal representative carrying out this procedure on behalf of a shareholder (-s) through power of attorney can be discussed.
STEP 4. PROVIDE CERTAIN INFORMATION FOR EACH FOREIGN SHAREHOLDER
In order to establish a company, at least 2 (two) shareholders are required. The percentage of shareholding is to be decided between the partners, as the TRNC law does not limit the shareholders to a certain percentage of shares that they must hold.
Each shareholder is required to provide the following documents:
- Certified copy of the passport;
- Original Police Clearance Certificate issued by the country of citizenship. Unless the certificate is not in Turkish or English, it must be translated by a sworn translator in Northern Cyprus. If the translation of the Police Clearance Certificate is to be done abroad, it has to be certified by the TRNC Representative's office or Turkish Embassy in the country where the certificate is issued;
- Residence Certificate issued by a local Muhtar stating residential address in the TRNC.
STEP 5. PROVIDE TAX SECURITY CERTIFICATE FOR EACH DIRECTOR
In addition to the documents specified above (read Step 4), a director is required to get Bank Guarantee Letter from the bank of TRNC and, based on the above letter from the bank, obtain Tax Security Certificate from the TRNC Tax Office.
To obtain Bank Guarantee Letter, the director shall deposit an amount of 140,000TL (may vary) to the bank account in the TRNC bank. This amount is lodged with the bank as security for any tax liabilities that may be incurred. Once the letter is issued by the bank, it has to be submitted to the TRNC Tax Office. In return, the Tax Office will issue a Tax Security Certificate which, later, should be given to the TRNC Registrar of Companies.
STEP 6. DEPOSIT THE CAPITAL SHARE TO A BANK IN NORTHERN CYPRUS
Under the law of Northern Cyprus, a share capital of the company must be paid up at the date of incorporation. Depending on the percentage of shareholding, each shareholder is required to deposit share capital (total of at least 25,000 euros) to a bank account in the TRNC. The capital is blocked by the bank until a company is incorporated.
Having satisfied the above requirements, the TRNC Registrar of Companies will issue a certificate of incorporation allowing the foreign investors to operate business in Northern Cyprus.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.