by Andria Papageorgiou

Company Law, CorporateMay 27, 20240 comments

Understanding 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.