Understanding Share Capital for Your Cyprus Company
When setting up a limited company in Cyprus, one of the key concepts you will encounter is **share capital**. While it may seem like a complex legal term, it is a fundamental component of your company's structure and finance. Understanding share capital is crucial for new entrepreneurs, as it has implications for the company's ownership, legal status, and financial obligations. This guide will explain what share capital is, its different types, and its practical importance for your Cyprus-registered company. For a broader perspective on the registration process, you can read our guide on Cyprus Company Registration: A Step-by-Step Guide 2025.
1. What is Share Capital?
Share capital is the money or other assets that a company raises from its shareholders in exchange for shares of stock. It represents the company's initial funding and the ownership stake of each shareholder. The share capital is a very important part of the company's legal and financial identity and is a key factor for a new venture. The share capital is divided into two main types: authorized and issued.
Authorized Share Capital
The authorized share capital is the maximum number of shares that a company is legally allowed to issue to its shareholders. The amount is stated in the company's Memorandum of Association and can only be increased by passing a special resolution. The authorized share capital is a theoretical maximum and does not need to be fully issued. For a company in Cyprus, there is no minimum authorized share capital, but a symbolic amount of around **€1,000** is often used. You can also explore our business directory of Professional Corporate Services.
Issued Share Capital
The issued share capital is the number of shares that have been issued to the shareholders. It is the actual amount of money or assets that the company has received from its shareholders. The issued share capital can be less than or equal to the authorized share capital. In Cyprus, the issued share capital can be paid in cash or in kind, and it must be paid within a reasonable time after the company is registered. The issued share capital is a key indicator of the company's financial health and its ownership structure. You can find more information about this in our finance, banking, and investment section.
2. The Importance of Share Capital
Share capital is a fundamental concept that has a number of important implications for your company:
Ownership Structure
The share capital of a company determines its ownership structure. The number of shares held by each shareholder determines their percentage of ownership in the company. For example, a company with 1,000 issued shares, where a person holds 500 shares, gives them a 50% ownership stake in the company. This is a very important part of the company's legal identity and is a key factor for a new venture. Our guide on Choosing Your Cyprus Company Name provides more detail.
Legal Status
The share capital is a key part of a company's legal status. A limited company is a separate legal entity with limited liability for its shareholders. The share capital of the company is a public record, and it is a key indicator of the company's financial health and its ownership structure. This is a very important part of the legal requirements and should be handled by a professional. You can also get more help on Cyprus Shelf Companies to get a better idea of the local environment.
Financial Obligations
The share capital of a company also has financial implications. When a company is registered, it must pay a one-time tax of 0.6% on its nominal share capital. The company must also maintain accurate financial records and submit an annual financial statement to the Registrar of Companies. For more on the local business environment, you can check out our guide on Costs to Set Up a Limited Company in Cyprus.
