Corporate redomiciliation
- The essence of corporate redomiciliation
- Why may redomiciliation be necessary?
- What should be considered when deciding to redomicile?
- What are the main steps to be taken in the country from which the company intends to redomicile (e.g. Cyprus)?
- What actions need to be taken in the country to which the company plans to redomicile?
The essence of corporate redomiciliation
| Redomiciliation is a change of jurisdiction (country of incorporation) of a company while retaining its legal form, assets, balance sheet, etc. after re-registration in another jurisdiction. In the case of redomiciliation there is no liquidation of the company itself in the country of its original registration - the company changes only the place of its registration and continues to exist and carry out its activities in the new place of registration with preservation of its legal history, structure, all its assets, rights and obligations in relations with counterparties. |
Why may redomiciliation be necessary?
Redomiciliation is relevant in the context of cross-border capital movements. It is often used to change the place of registration of parent (holding) structures of companies for tax, investment, reputational or other reasons.
What should be considered when deciding to redomicile?
The following should be considered:
- From and to which jurisdiction the company wants to redomicile, as it is not possible to re-register a company from or to any country (the list of such countries is relatively limited).
For example, at the moment Cyprus, UAE, Qatar allow redomiciliation from and to these countries. At the same time, Kazakhstan (but only to a special zone of the International Financial Centre "Astana") and Russia (but only to special administrative areas such as Oktyabrsky Island near Kaliningrad and Russky Island near Vladivostok) allow redomiciliation to their territory.
To address whether redomiciliation between jurisdictions is permissible, it's essential to verify if such provisions are outlined in the respective national laws both in country of leaving and country of arriving.
- Business specifics
For instance, from a tax perspective, it's prudent to select a country that has double taxation agreements with countries where the main company's profit-generating assets reside.
What are the main steps to be taken in the country from which the company intends to redomicile (e.g. Cyprus)?
- Analysis of corporate documents
It is necessary to analyse (1) the company's constitutional documents to determine whether it can be redomiciled to another jurisdiction; (2) the company's financial statements to ensure that there are no «red flags» in relation to the company's assets and financial position that could prevent redomiciliation.
- Preparing and submitting formal applications
It is necessary to prepare (1) corporate resolutions approving the redomiciliation, including a statement by the (board of) directors and a declaration of solvency; (2) the relevant application for redomiciliation to be filed with the Registrar of Companies.
- Publication on redomiciliation
Redomiciliation notices must be prepared for publication in 2 local newspapers in Cyprus.
- Obtaining Clearance Certificates
It is necessary to obtain (1) Tax Clearance Certificate from the Cyprus Tax Department, (2) VAT Clearance Certificate and (3) Social Insurance Clearance Certificate.
- Obtaining regulatory approvals and other documents
Consent of the Registrar of Companies to continue operations in another jurisdiction must be obtained. It may also be necessary to obtain a legal opinion from local lawyers in Cyprus, which should contain conclusions on the possibility of redomiciliation in a particular case.
What actions need to be taken in the country to which the company plans to redomicile?
In addition to a number of actions that need to be taken in the country from which the company is to be redomiciled, a number of documents need to be prepared and official actions taken in the country to which the company plans to «immigrate».
What documents and actions will be required for redomiciliation depends on the jurisdiction where the company plans to relocate. As a rule, it will be necessary to prepare documents (application for registration, etc.), pay a state fee (the amount of which depends on the country and the specific place of new registration in such country), obtain a legal opinion of local lawyers in the country of "immigration" on the possibility of redomiciliation. In some cases, a physical office will be required to continue the activities of the parent (holding) structure and/or submit audited accounts of the redomiciled company, etc.
When analysing the "host jurisdiction", it is necessary to take into account the peculiarities of the local market and regulation in special zones and financial centres, which provide special conditions, practices and infrastructure for redomiciliation: for example, Free Zones / free economic zones in the UAE, International Financial Centre "Astana" in Kazakhstan, Qatar Financial Centre and others. Often such zones have a special legal regime based on the institutions of English law (common law).
Redomiciliation is therefore a complex process involving a number of necessary legal actions both in the country from which the company «emigrates» and in the country to which «immigration» will take place.
REVERA lawyers are poised to offer comprehensive support for your company's redomiciliation, leveraging their extensive network of offices across various countries and their expertise in this area.
Any questions you have can be directed to:
- Egor Zelianouski, LL.M., Senior Associate - e.zelianouski@revera.legal
- Fedonas Ioannou, Senior Associate - f.ioannou@revera.legal
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