The principal forms of business entities are:
- Cyprus limited companies
- Branches of foreign companies
- Sole proprietorship.
The following categories of companies are recognized by the Cyprus law:
- Company limited by guarantee: In such a case the liability of the parties is up to the extent that has been agreed to contribute in case of winding up. This case usually occurs when a Company is formed by nonprofit making concerns
- Limited company by shares: In this case the liability of the parties is limited to nominal value of the shares each person owns. If shares are fully paid there is no further obligation towards the parties. There are two types of limited companies, public companies and private companies as explained below.
A public company, according to Company Law, has the power to extend an invitation to the public through a prospectus, to subscribe for its shares or debentures and is allowed a minimum of seven members.
A private company is prohibited from inviting the public to subscribe for its shares or debentures. It is allowed a minimum of one member and a maximum of fifty. There is also a restriction of the right to transfer its shares.