by Andria PapageorgiouUnderstanding Non-Governmental Organizations (NGOs)
Non-governmental organizations (NGOs), also known as civil society organizations, are groups or entities of volunteers that operate independently from any government. These organizations are established to contribute at community, national, or international levels, aiming to fulfill humanitarian purposes or environmental protection goals.
The Legal Framework for Establishing and Maintaining NGOs in Cyprus
In Cyprus, there are three primary options for establishing an NGO: Clubs, Foundations, and non-profit companies limited by guarantee. Clubs and Foundations are governed by the Clubs and Foundations Law (Law 104(I)/2017, as amended), with the latest amendment in 2020. Non-profit companies are regulated under the Cyprus Companies Law, Cap. 113.
If any of these entities are approved by the Council of Ministers of the Republic of Cyprus as a ‘charitable organization,’ their income is exempt from taxation. Donations to such approved organizations may also be tax-deductible under the Law on Income Tax (Law 118(I)/2002), though the tax treatment of donations depends on the laws of the donor’s jurisdiction.
Characteristics and Obligations of Different NGO Structures
Clubs:
- Require at least 20 members to form and must serve public purposes without commercial aims.
- Governed by their constitutional documents and the law, clubs must register with the Ministry of Interior’s Registrar of Clubs.
- Clubs must submit audited accounts annually and report changes in membership and board composition.
Foundations:
- Managed by a minimum of three persons, Foundations must register their incorporation act, detailing their purpose and assets.
- Must hold property valued at no less than €1,000, dedicated to non-profit purposes such as education, health, or environmental protection.
- Foundations are overseen by Commissioners or a Board of Directors and must file annual audited accounts.
Non-Profit Companies Limited by Guarantee:
- Established under the Companies Law, Cap. 113, these companies limit members’ liability to their guaranteed amount.
- Must state non-profit purposes in their memorandum of association and prohibit profit distribution to members.
- Managed by a Board of Directors, these companies must file annual audited accounts with the Registrar of Companies.
Conclusion
Establishing an NGO in Cyprus requires careful consideration of the legal form and compliance with specific regulatory requirements. Each type of entity—Club, Foundation, or non-profit company—offers distinct advantages and obligations. Proper registration and adherence to governance and reporting standards are crucial for maintaining the status and benefits of an NGO in Cyprus.
Should you have any further questions, please do not hesitate to contact us at [email protected].
Disclaimer: Please note that the information provided above is intended as an overview of the four types of non-profit organizations and should not be regarded as legal advice. To ensure proper understanding and compliance with the specific requirements for registering a non-profit company, society, foundation, or club, it is strongly recommended to seek professional legal advice. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouRegistration of a Non-Profit Organisation in Cyprus
In Cyprus, there are currently four primary types of non-profit organizations:
- Non-profit Companies: These entities are established with the purpose of serving non-profit objectives. They operate with the intention of benefiting the public or a specific group without pursuing commercial gains.
- Foundations: Foundations are established with the unique characteristic that all their assets are dedicated to a specific cause or purpose. They are typically created to support charitable, educational, scientific, or cultural activities.
- Societies: Societies are formed as unions comprising a minimum of 20 members. Their primary objective is to achieve a specific non-profit goal or purpose. These organizations work towards common interests or causes, fostering collaboration and collective efforts.
- Clubs: Clubs are associations formed by a minimum of 20 members, primarily for entertainment or recreational purposes. These organizations provide a platform for individuals with shared interests to come together, engage in activities, and promote social interactions.
These distinct types of non-profit organizations in Cyprus play crucial roles in various sectors, contributing to the betterment of society, the promotion of social causes, and the cultivation of shared interests.
It is important to note that each type of organization may have specific legal requirements and regulations governing its establishment, operation, and governance.
1. Non-Profit Companies:
Non-profit companies in Cyprus, governed by the Companies Law (Cap. 113), differ from for-profit companies in terms of their main characteristics:
- Dividend Distribution: Non-profit companies are prohibited from distributing dividends to their members or shareholders. Instead, any surplus generated is to be reinvested into furthering the organization’s non-profit objectives.
- Objectives: These companies can be registered to promote specific causes such as art, science, charity, or any other similar non-profit objective. The primary focus is on advancing public welfare or specific societal needs rather than generating profits for the shareholders.
- Regulatory Requirements: Non-profit companies are subject to the same legal requirements as for-profit companies, including the maintenance of audited accounts, adherence to annual levy obligations, and compliance with dissolution procedures such as strike-off or liquidation.
- Registration Authority: The Registrar of Companies is the competent authority responsible for the registration and oversight of non-profit companies in Cyprus.
2. Foundations:
Foundations in Cyprus are governed by the Societies and Foundations Laws of 1972 and 1997.
The main characteristics and requirements of foundations can be summarized as follows:
- Legal Definition and Purpose: Foundations are established with the principle that the entirety of their assets must be dedicated to a specific purpose or cause. This ensures that the resources are utilized for the intended objectives, such as charitable, educational, scientific, or cultural endeavors.
- Membership and Funding: Foundations can be established by a single individual (one member) and there is no specific minimum amount of funds required for their formation.
- Registration Authority: The Ministry of Interior is the competent authority responsible for the registration and oversight of foundations in Cyprus. To initiate the registration process, certain documents must be submitted, including the founding act, details of administration members, foundation name and address, foundation emblem (if applicable), and a lawyer’s letter.
- Dissolution or Liquidation: Foundations may undergo dissolution or liquidation under certain circumstances. In such cases, the remaining funds of the foundation are transferred to the authorities of the Republic of Cyprus, who are responsible for utilizing these funds for the cause originally supported by the dissolved or liquidated foundation.
3. Societies (or Associations):
Societies also referred to as associations, are governed by the Societies and Foundations Laws of 1972 and 1997 in Cyprus. Here are the key points and requirements related to societies:
- Definition and Purpose: According to the law, a society is defined as an organized union of at least twenty (20) individuals who come together to achieve a specific non-profit objective. These objectives can range from charitable, educational, cultural, or other similar non-profit endeavors.
- Registration Authority: The Ministry of Interior is the competent authority responsible for the registration and oversight of societies in Cyprus. It is through this authority that the registration process should be initiated.
- Registration Requirements: To register a society, the following documents and information are typically required: a memorandum of association, names and addresses of the administration members, articles of association signed by the members, the society’s emblem (if applicable), and a description of any movable and/or immovable property held by the society at the time of application.
- Publication: The certificate of registration, in the prescribed form, is published in the official Gazette of the Republic of Cyprus to formalize the society’s legal status.
- Dissolution: A society can be dissolved either by a resolution passed by the assembly of its members or if the number of members falls below twenty. Alternatively, a court order can also initiate the dissolution process.
4. Clubs:
Clubs in Cyprus are regulated by the Club Registration Law of 1972 (Cap. 112). The key characteristics and requirements of clubs can be summarized as follows:
- Definition and Purpose: A club is defined as the association of at least twenty individuals who come together for social activities, mutual entertainment, or any other lawful non-profit purpose. The primary focus of clubs is to foster social interactions and provide a platform for shared interests and recreational pursuits.
- Minimum Number of Members: A club must have a minimum of twenty members to be considered valid.
- Registration Authority: The registration of clubs is overseen by the local district office where the club premises are located. Prior to commencing operations, the club must submit an application to the local district office.
- Application Requirements: The application must include essential information such as the name and purpose of the club, the club’s address, the names of the secretary and all members, the total number of members, and the club’s memorandum.
Should you have any further questions, please do not hesitate to contact us at [email protected].
Disclaimer: Please note that the information provided above is intended as an overview of the four types of non-profit organizations and should not be regarded as legal advice. To ensure proper understanding and compliance with the specific requirements for registering a non-profit company, society, foundation, or club, it is strongly recommended to seek professional legal advice. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.