Cyprus companies and other legal entities are required to identify their ultimate beneficial owners and maintain accurate, adequate and up-to-date information in the Register of Beneficial Owners maintained by the Department of Registrar of Companies and Intellectual Property.
Identifying a beneficial owner is not always a straightforward exercise. Corporate ownership chains, nominee arrangements, trusts, different voting and economic rights and other control arrangements can all affect the assessment.
This practical guide addresses some of the most common questions concerning the Cyprus Beneficial Ownership Register.
1. Who is considered a beneficial owner?
A beneficial owner is always a natural person who ultimately owns or controls a company or other legal entity.
For a Cyprus company, beneficial ownership may generally be established through:
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direct ownership of more than 25% of the shares;
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indirect ownership of more than 25% of the shares through one or more intermediate entities;
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control of more than 25% of the voting rights;
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control through other means, including contractual rights or other arrangements; or
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where no natural person can be identified after all reasonable measures have been exhausted, the natural person or persons holding the position of senior management official.
The analysis must therefore extend beyond the company’s immediate registered shareholders.
2. If a shareholder is also the beneficial owner, must the person still be registered?
Yes. The Register of Companies and the Register of Beneficial Owners are separate registers established for different purposes.
Accordingly, the fact that an individual already appears as a registered shareholder does not remove the obligation to submit that individual’s information to the Beneficial Ownership Register where the relevant ownership or control threshold is satisfied.
3. Does the 25% threshold make someone a beneficial owner?
The ownership test generally concerns a natural person who owns more than 25%, commonly described as “25% plus one share”, directly or indirectly.
For example:
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A person holding 35% would normally meet the ownership test.
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Three individuals holding approximately 33.33% each would normally all be registered.
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Two individuals holding 50% each would both be registered.
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Where four individuals each hold exactly 25%, none necessarily satisfies the “more than 25%” ownership test solely by reference to shareholding.
However, shareholding is not the only relevant consideration. A person holding 25% or less may still be a beneficial owner if that person exercises control through voting rights, contractual arrangements, veto rights, appointment rights or other means.
4. Are shareholders holding less than the threshold also registered?
Not ordinarily, unless they exercise control through other means.
For example, if two individuals hold 35% and 30%, while the remaining shareholders hold percentages below the threshold and have no additional control rights, the two individuals exceeding the threshold would normally be registered.
The company must nevertheless examine the entire ownership and control structure before reaching its conclusion.
5. What happens when no individual owns more than 25%?
The company must first investigate whether any natural person exercises control through other means.
It should not move automatically to the senior management official merely because nobody exceeds the ownership threshold. Relevant matters may include:
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voting arrangements;
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shareholders’ agreements;
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rights to appoint or remove directors;
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veto or reserved-matter rights;
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contractual influence;
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economic rights;
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family or coordinated ownership arrangements; and
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any other mechanism through which a person may exercise decisive influence.
Only where no natural person can be identified through ownership or control, after all reasonable measures have been exhausted and provided there are no grounds for suspicion, should the company proceed with the senior management official approach.
6. Who qualifies as a senior management official?
A senior management official is a natural person holding a sufficiently senior position and possessing adequate knowledge of the entity’s exposure to money-laundering and terrorist-financing risk.
The person should occupy a sufficiently high position in the decision-making hierarchy. A senior management official is not necessarily a director, although a director may satisfy the relevant criteria depending on the company’s governance and actual management arrangements.
If two or more natural persons jointly satisfy the definition, it may be necessary to register all of them.
A senior management official is not required to have a Cyprus address.
7. Can a corporate entity be registered as the beneficial owner or senior management official?
The beneficial owner entered in the register must ultimately be a natural person.
Where a company is shown as a shareholder, the ownership chain must be examined through every intermediate entity until the individuals who ultimately own or control the structure are identified.
Similarly, if the senior management function is associated with a corporate service provider or another corporate entity, the company must identify the appropriate natural person or persons rather than register the corporate entity itself.
8. What happens when the shares are held by a nominee shareholder?
The nominee shareholder is not normally registered as the beneficial owner merely because the shares are held in the nominee’s name.
The company must identify and register the natural person on whose behalf the shares are ultimately held, assuming that person meets the ownership or control criteria.
The declaration of trust or other nominee documentation should clearly identify the person for whom the shares are held. If that person is also acting for somebody else, the ownership chain must be followed further until the ultimate natural person or persons are identified.
9. Does the appointment of a nominee director affect the assessment?
A nominee director is not automatically the company’s senior management official or beneficial owner.
The assessment should focus on the company’s actual decision-making structure and the natural persons who ultimately own, control or exercise decisive influence over it.
The title “director” is not, by itself, sufficient to determine beneficial ownership or senior-management status.
10. How should trusts and similar arrangements be treated?
Where a trust or comparable legal arrangement appears in the ownership structure, the company should examine the persons connected with the arrangement and determine who ultimately owns or controls the corporate entity.
Depending on the circumstances and applicable legislation, relevant persons may include:
Trust structures should be reviewed individually, as the correct treatment will depend on the terms of the trust, the nature of the beneficiaries’ interests and the control arrangements in place.
11. What if shares, voting rights and dividend rights are different?
The percentage of registered shares cannot always be considered in isolation.
Where different classes of shares carry different voting, dividend, capital or control rights, the company should review:
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its memorandum and articles of association;
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the rights attached to each class of shares;
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shareholders’ agreements;
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dividend arrangements;
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voting arrangements;
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appointment and removal rights; and
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any other agreement affecting ownership or control.
For example, a shareholder holding 49% of the issued shares but having no voting or dividend rights may require a more detailed assessment than the percentage alone suggests.
Similarly, a minority shareholder may still be a beneficial owner if special rights give that person effective control over the company.
12. Should the same interest be entered under both shareholding and voting rights?
Where ordinary shares carry corresponding voting rights, for example, one share carries one vote, the relevant interest should generally be recorded under the appropriate category required by the electronic system.
The same percentage should not be duplicated under both shareholding and voting rights merely because the voting rights arise automatically from the shares.
Where voting rights differ from the shareholding percentage, the underlying legal rights must be examined carefully before the information is submitted.
13. Are companies limited by guarantee required to register beneficial owners?
Yes. A company limited by guarantee is not automatically exempt from the Beneficial Ownership Register.
Because such a company may not have shareholders in the conventional sense, it is necessary to examine whether any natural person exercises ultimate control through voting, appointment, constitutional or other rights.
If no natural person can be identified through ownership or control after all reasonable measures have been exhausted, the appropriate senior management official or officials may need to be registered.
14. Are regulated companies and investment entities exempt?
Being regulated by the Cyprus Securities and Exchange Commission does not, by itself, exempt a company from its beneficial-ownership filing obligations.
Entities such as Alternative Investment Funds, Registered Alternative Investment Funds and other regulated investment companies should therefore assess and submit their beneficial ownership information unless a specific statutory exemption applies to them.
Any potential exemption should be verified carefully against the legislation and current official guidance rather than assumed from the entity’s regulated status.
15. Must a shelf company submit beneficial ownership information?
Yes. A shelf company remains a legal entity and is not generally exempt merely because it has not yet begun trading or been transferred to an intended client.
Its beneficial ownership information must be submitted within the applicable deadline. When the company is subsequently sold or its ownership changes, the information in the register must be updated accordingly.
16. Does non-payment of the former annual levy remove the UBO filing obligation?
No. A company’s obligations concerning beneficial ownership are separate from its obligations relating to annual returns, financial statements, fees or other filings under the Companies Law.
A company does not become exempt from the Beneficial Ownership Register because another corporate obligation has not been met.
17. What is the filing deadline for a newly incorporated company?
A newly incorporated or registered company or other legal entity must file its beneficial ownership information electronically no later than 90 days from its incorporation or registration.
The company should not wait until the end of the period where the relevant information is already available. Early identification and filing reduce the risk of omissions, inconsistencies and penalties.
The Registrar’s current guidance confirms the 90-day period for new registrations. Registrar’s guidance on UBO filing periods
18. When must a change in beneficial ownership be reported?
Where the company becomes aware of a change in its beneficial ownership information, the updated information must generally be submitted within 45 days from the date on which the change was brought to the company’s attention.
A reportable change may include:
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the appointment of a new beneficial owner;
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the cessation of an existing beneficial owner;
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a change in a beneficial owner’s ownership percentage;
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a change in the means through which control is exercised;
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a change in the beneficial owner’s personal particulars; or
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a change requiring the registration of a senior management official.
Companies should establish internal procedures requiring shareholders, beneficial owners and relevant officers to notify them promptly of changes.
19. Must beneficial ownership information be confirmed every year?
Yes. Companies and other legal entities subject to the regime must electronically confirm their beneficial ownership information each calendar year.
According to the Registrar’s standing guidance, the annual confirmation period runs from 1 October to 31 December.
Confirmation is required even where the information has not changed. The purpose is to confirm that the information appearing in the register remains complete, accurate and current.
Companies should distinguish between:
Submitting a change during the year does not necessarily replace the annual confirmation obligation.
20. Who is responsible for making the submission?
The company or other legal entity is responsible for ensuring that its beneficial ownership information is properly identified, submitted and maintained.
Company officers also have responsibilities in connection with compliance. For the purposes of the Companies Law, the term “officer” includes a director, manager or secretary.
A company secretary may therefore be able to submit information through the electronic system, subject to the system’s access and authorisation requirements.
The use of a corporate administrator or other service provider to make the electronic filing does not remove the company’s responsibility for the accuracy and completeness of the information supplied.
21. Must the company contact its beneficial owners?
The company must take reasonable measures to obtain and maintain adequate, accurate and current beneficial ownership information.
Where the company already possesses all the required information and has already been properly informed that a particular natural person is its beneficial owner, a separate notice may not always be required.
As a matter of good governance, however, companies should maintain written evidence supporting:
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how each beneficial owner was identified;
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the ownership and control calculations;
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the information received from the relevant person;
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the documents reviewed;
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any notices or confirmations obtained; and
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the date on which the assessment was made or updated.
22. What records should the company maintain?
The company should maintain sufficient records at its registered office to demonstrate how its beneficial ownership was determined.
Depending on the structure, these records may include:
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registers of members;
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certificates of shareholders and officers;
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corporate structure charts;
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constitutional documents;
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shareholder and voting agreements;
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declarations of trust;
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trust deeds or extracts containing relevant information;
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identification documents and proof of address;
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corporate documents for intermediate holding companies;
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evidence of ownership percentages;
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records of control or appointment rights;
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written beneficial-owner declarations; and
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internal assessment notes.
The records should be reviewed whenever there is a corporate change and as part of the company’s periodic compliance review.
23. What happens if incorrect or incomplete information is submitted?
The company remains responsible for ensuring that the submitted information is true, accurate and current.
Obliged entities carrying out customer due diligence may report discrepancies between information obtained through their own checks and the information appearing in the Beneficial Ownership Register.
A discrepancy does not replace the obliged entity’s own customer due-diligence obligations, nor does registration in the UBO system conclusively prove that the registered information is correct.
Companies should investigate any discrepancy promptly and correct the register where required.
24. What are the consequences of failing to comply?
Failure to submit, update or confirm beneficial ownership information within the prescribed period may result in administrative penalties and may also give rise to other liability under the applicable legal framework.
Under the penalty regime described in the Registrar’s official announcements, a non-compliant company or other legal entity may be subject to:
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a penalty of €100 for the first day of non-compliance; and
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an additional penalty of €50 for each subsequent day during which the non-compliance continues,
subject to a maximum total penalty of €5,000.
The applicable consequences should always be checked against the legislation, directives and announcements in force when the breach occurs. Registrar’s announcement describing the UBO penalty regime
25. Does registration in the UBO Register replace the company’s AML and KYC obligations?
No. Submission to the Beneficial Ownership Register is a separate regulatory obligation.
A company and its service providers may still need to obtain and maintain appropriate identification, verification, ownership and source-of-funds documentation under the applicable anti-money-laundering framework.
Banks, auditors, accountants, lawyers, administrative service providers and other obliged entities must conduct their own risk-based customer due diligence. They are not expected to rely exclusively on information appearing in the Beneficial Ownership Register.
26. What practical steps should a Cyprus company take?
A company should adopt a structured compliance process that includes:
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Preparing and maintaining a current ownership and control chart.
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Identifying all direct and indirect shareholders.
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Following every corporate ownership chain to the ultimate natural persons.
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Assessing voting, contractual and other control rights.
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Reviewing nominee, trust and similar arrangements.
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Obtaining current identification and supporting documentation.
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Recording the reasoning used to identify each beneficial owner.
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Filing the required information within the applicable period.
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Updating the register promptly following any change.
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Completing the separate annual confirmation between 1 October and 31 December.
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Periodically reviewing the supporting corporate, KYC and AML file.
More complex cases, particularly those involving trusts, foundations, multiple ownership layers, special share rights or conflicting control arrangements, should be assessed individually.
How Hamilton Berkley Ltd Can Assist
Hamilton Berkley Ltd can assist Cyprus and international businesses with:
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reviewing corporate ownership and control structures;
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identifying the natural persons who may qualify as beneficial owners;
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reviewing nominee and trust arrangements;
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collecting and reviewing supporting KYC and corporate documentation;
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preparing ownership structure charts;
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submitting new beneficial ownership information;
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updating changes in beneficial ownership;
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completing annual UBO confirmations; and
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reviewing and maintaining corporate, compliance and AML records.
Timely professional review is particularly important where ownership, voting and economic rights do not align or where a corporate structure includes several jurisdictions or legal arrangements.
Official Sources
This guide has been prepared with reference to the applicable Cyprus beneficial ownership framework and the guidance published by the Department of Registrar of Companies and Intellectual Property.
Further information is available from the following official sources:
Disclaimer
This publication is provided for general information purposes only and does not constitute legal, tax, regulatory or professional advice. Beneficial ownership must be determined by reference to the specific facts, ownership rights, control arrangements and documentation of each entity.
The applicable legislation, Registrar’s directives, electronic filing requirements and official announcements should be reviewed before a filing or compliance decision is made. Professional advice should be obtained where the ownership or control position is uncertain.
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