We would like to take this opportunity to inform you of certain changes introduced recently to the Companies Law, Cap. 113.
Annual Returns Late Submission Fine Reduction
Pursuant to the amendment the fine imposed to companies for late submission of their annual returns to the Registrar of Companies is reduced from EUR 500 to EUR 150.
The new late penalty fee is applicable from the 24th of June 2022 to the 31st of December 2024 for annual returns that were drafted in 2021 and 2022. The difference will be refunded to companies which have already paid a fine exceeding EUR 150 for the annual returns of 2021 and/or 2022.
Auditing of Financial Statements of Small and Medium-sized Companies
The amending law aims to simplify the procedure of auditing the financial statements of companies whose net turnover (including income from rent, interest and dividends), and total balance sheet (i.e., the total value of assets without liabilities being deducted) do not exceed EUR 200,000 and EUR 500,000 respectively.
According to the law, companies that satisfy the abovementioned criteria, may submit their financial statements for a review, instead of audit, by a statutory auditor or audit firm. Companies may submit their financial statements for review only in cases where at the date of balance sheet closing, they have not exceeded, or ceased to exceed, the limits of the two criteria for at least two consecutive years.
The simplified procedure does not apply to parent companies, or subsidiaries of parent companies, that are obliged to prepare consolidated financial statements. In cases where the parent company is not obliged to prepare consolidated financial statements, and the said parent company together with its subsidiaries, exceed the threshold criteria at group level for at least two consecutive years, both the parent company and its subsidiaries are excluded from the simplified procedure.
The law also excludes companies which are regulated and supervised from the Central Bank of Cyprus, the Cyprus Securities and Exchange Commission and the Superintendent of Insurance as well as companies which acquire or hold a qualifying holding in such companies.
The law will enter into force on the 1st of January 2023 and its provisions will apply to companies’ financial statements expiring on the 31st of December 2022 onwards.
Extension of Deadline for the Payment of Annual Levy
Pursuant to the amending law the deadline for payment of the annual levy for the year 2022 is extended until the 31st of December 2022.
The law has effect from the 30th of June 2022. Any fines imposed to companies between the 1st of July 2022 and 4th of July 2022 for the late payment of the annual levy, may be refunded by submitting a refund of fees form to the Registrar of Companies.
* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render professional advice. Before making any decision or taking any action that may affect you and/or your business, bespoke advice should be obtained.