In this article I will inform you about the amendment of Law 144 (I)/2015, which introduced the partnership limited by shares. The new legislation came into force in 2015. As a result of this particular legislation, Cyprus is now in line with other EU member-states, including the UK, Poland and Luxembourg. In addition, the introduction of partnerships limited by shares is expected to create new business and investment opportunities and consequently urge business people and investors coming from different EU member-states to invest and develop their business plans in the Republic of Cyprus.
Generally speaking, the partnership limited by shares is regulated by the Partnership and Business Names Law, Cap. 116.
According to Cap. 116 there are the following two types of partnership:
- The General Partnership, in which each partner is liable jointly and individually with all the other partners for an unlimited amount of debts and any other financial obligations of the Partnership. It should be pointed out that a limited liability company or other partnership can be a partner. Precisely, the Partners of a Partnership can be merely limited liability companies, or only Partnerships or both.
- The Limited Partnership, in which at least one of the partners must have unlimited liability for Partnership’s obligations and debts. The remaining partners may have limited liability. It should be clarified that limited liability companies can be partners in a Limited Partnership, as the partner with unlimited liability.
This article will be focused on the provisions of the new regulation and specifically to partnerships limited by shares.
Before proceeding to the presentation of partnerships limited by shares, I would like to point out that according to Article 48, the registration of limited partnership is compulsory. Following the provisions of this particular Law, every limited partnership should be registered based on the provisions of this Law. In case a limited partnership is not registered, then is considered as a general partnership. As a result, every limited partner is regarded as a general partner.
Partnerships Limited by Shares:
Following the provisions of Article 47, partnerships limited by shares have no legal personality, regardless if they have or not a share capital. On the contrary, following the law, a limited company has a legal personality on incorporation.
Another major advantage of partnerships limited by shares is tax transparency consequently any taxation arises at the level of partners. The particular amendment has facilitated the adjustment of alternative investment funds to limited liability partnerships.
Restrictions:
- No company, association, or partnership consisting of more than ten persons shall be formed for operating business activities unless it is registered as a Company based on the provisions of Companies Law, or any amendment thereof or has been incorporated according to any other Law.
- No company, association, or partnership consisting of more than 100 persons shall be formed for the purpose of carrying out any operation which is designed to bring profit to the company/association/partnership, or each member of the company/association/partnership, unless it is registered as a Company based on the provisions of Companies Law, or any amendment thereof or has been established according to any other Law.
