International’s market terms and conditions are hard and are not easily comprehend.

Therefore, the most important and wise action that an entrepreneur should do, is to cooperate with a law firm that has an extensive knowledge of the international market behavior and trends.

Our law firm Chambersfield Economides Kranos follows a customer-centric innovative entrepreneurial, and at the same time, comprehensive way of thinking. It recognizes that each customer approach should always be unique and exclusive.

In addition, the modern, multilevel business activities environment of globalization does not provide any limits or restrictions or protection to corporations, against the ruthless competition. Hence, the rapid technological development is helping competition to flourish even more, by sourcing heavily the various channels of communication.

Therefore, entrepreneurs are in a constant process of considering different strategies, in order to achieve a favorable course of action and thus differentiate their company, with the ultimate goal of lowering total costs and increasing profits.

Businesspeople are targeting strategic maximization of productivity, profitability and minimization of operating costs.

One of the key scenarios under consideration, due to its immediate variable capability, is to reduce operating costs through strategies such as:

• Enhanced management on corporate loans
• Company formations and / or relocations in favorable taxation environments
• Adjustment of the board of directors
• Modifications and reorganizations of companies and groups of companies
• Strategies formations and implementations for collecting outstanding amounts
• Trade agreements
• Mergers, joint ventures and acquisitions
• Formation of franchise agreements
• Formation of trusts with the aim of protecting the owners’ assets, as well as, safeguarding the company’s future strategies versus competition
• Voluntary liquidation of businesses, which are harmful with the aim of decreasing the operating costs
• New portfolio expansion investments

It is noteworthy to mention that the main prerequisite for the implementation and success of the aforementioned strategies is based entirely on the wise choice of selecting the appropriate legal advisor. The legal advisors together with the entrepreneur will generate the appropriate conditions for achieving reductions in operating costs, increase productivity and profitability.

Our law firm, Chambersfield Economides Kranos, with a comprehensive knowledge and expertise in the financial, investment, real estate and technology sectors, can be the ideal partner. We will assist you in finding the right strategies and business models that may increase your profitability.

Moreover, it is important to note that according to the legal and business needs of a company, our law firm will thoroughly investigate the operation and functioning, assess the internal and external policies used, evaluate the new products and services, and most importantly explore the performance of the current and new investments.

Last but not least, as an international law firm with a thorough experience of the international market terms and conditions, we consider that each entrepreneur / corporation before implementing any strategy should have a clear and accurate action strategy, which will be in accordance with the legal and business framework governing the jurisdiction that the business is headquarter, by setting and implementing the necessary legal safeguards, with the purpose of avoiding any adverse effects that may result from the improper handling.

The post Law Firms Assistance in Business Development appeared first on Chambersfield Economides Kranos.

GOLD: It’s a well-known fact that most companies in Cyprus are family businesses. Do they tend to have a succession plan in place or not?

Michalis Economides: In my experience, the majority of family businesses do not. I have seen many instances of companies only realizing the need for such a plan at a very late stage, usually when a dispute arises among the members of the next generation and it ends up in court. Such situations have become much more common over the past five years, as more and more young people take over the management of their parents’ companies. When several siblings are involved, things can become very complicated.

GOLD: What kind of advice do you give to clients who recognize that they need to take certain steps to ensure a smooth transition?

M.E.: We tell them that they need to draw up clear rules and guidelines, including the founder’s wishes about how he envisages the future management and strategy of the company and to put everything in writing. Some years ago, I had a case in which, on a Friday, agreement was reached between the company owner and his children – who were already working as managers in various departments – and on the following Monday, the father passed away. It was tragic but he had understood the importance of making sure that everything was clearly stated in writing. Years later, his children still go back to that agreement and its provisions, and that has enabled them to avoid the kind of disputes that arise in other companies that have no such agreements in place. When it was drawn up, we had considered all the possible outcomes,eventualities and scenarios – or at least 99% of them. So my advice to family businesses and Groups of Companies is always to plan ahead, have a corporate and shareholder structure that does not allow any room for interpretation or disputes,and determine separate and specific duties and roles to the members of the younger generation.

GOLD: It’s said that in some countries, 70% of businesses fail to make a successful transition to the 2nd generation. How are things in Cyprus?

M.E.: To be honest, I think it’s even more than 70% in Cyprus. Unfortunately, too many people in family businesses become so emotionally attached to the company – understandably so – that they fail to see the reality that time is running out. But it is essential to plan ahead, make agreements, give solid instructions to the next generation and, in particular, arrange the shareholding in such a way that will not allow any disputes between the siblings. This is an area that can lead to huge problems. When the founder of a business gives his children an equal number of shares, it might seem fair but it can lead to deadlock. If two children are each given 50% of a company, I can tell you with near-certainty that, at some point, there will be problems.

GOLD: So there has to be a distinction made between ownership and management?

M.E.: Exactly. Unfortunately, there is rarely a clear separation of ownership and management in Cyprus. People think that, once they are owners, they have to be involved in the management. There are exceptions but the majority think like this.

GOLD: What happens if the children either don’t want to join the company or they are just not right for the job?

M.E.: If someone has worked hard to create a successful Group of Companies, it is only fair for that business to continue to thrive. If your child is not interested in continuing what you have started, fair enough; you should not push him or her to do something they don’t want to do. Instead, you should appoint a professional manager and simply transfer the company ownership to your children, who will receive an annual dividend and a share of the profits. A more problematic situation arises when the children want to get involved in the business but they are not cut out for it. If the father realises this in advance, he can propose ownership only. If, for emotional reasons, he decides to appoint his children to management positions, time and the financial results will show if they are capable  or not. Huge groups have gone bust because of poor management by younger members of the family.

GOLD: How do you deal with such a situation?

M.E.: I have often told clients that not everyone is meant to be a manager but they don’t always accept this advice. On occasion I’ve proposed that, if it’s a Group of Companies, it should be divided up and each family member can be given one company and be responsible for its management. That, of course, means that the Group is diluted and it is not a solution I like. A much better one is to appoint professional business managers and to try and persuade the siblings to be owners, with no say in the day-to-day management of the company. Whatever the answer, if they don’t want their children to end up fighting each other in court, company owners have to take timely action.

GOLD: Given the changing business scene and the impact of technology, even the most successful established companies need to move with the times, so new blood and next generation managers are essential.

M.E.: Absolutely and we’ve seen many examples of young people coming in, changing the whole system and the company’s operations, resulting in the business doing even better than before. But again, that presupposes qualified and suitable family members or professionals from outside the family. On the negative side, I have noticed that members of the next generation often tend to be risky spenders – they are not the ones who have worked hard and for a long time to create wealth and they are more likely to take risks when it comes to marketing budgets and mergers & acquisitions, which their parents would never have done. When you find a few million euros of available funds, it’s very easy to spend it recklessly.

GOLD: In practical terms, how does a law firm like yours, help in the succession process?

M.E.: What usually happens is that we have numerous meetings over weeks and months – years sometimes – so that everything is thought out and put down in writing. We also advise the family from a business perspective because, during those meetings, we see things that they, for emotional reasons, may not see clearly. It’s much easier for us as outsiders to recognize potential problems in advance so we draw up agreements that clearly state the wishes of the founder/CEO, give clear instructions and identify specific roles and duties for those entering the company. They key is to plan ahead for all eventualities. We try to make family business owners understand that they need to think more as business people than as parents.

GOLD: Are there occasions when you propose solutions that are not accepted by the owner or the next generation? What happens then?

M.E.: Yes, there are such cases. Again, emotional reasons are usually behind the refusal of our proposed solutions but in 99% of such cases, after some months or longer, they will come back to us and admit that we were right and they want to do it that way.

GOLD: Is this a major part of your firm’s work? Is it an area that you see increasing?

M.E.: The answer is yes to both questions. Many company owners and founders are at retiring age and we are seeing more and more cases every month. I definitely expect this area of work to grow considerably as more businesses understand the need to ensure continuity and a smooth succession process.

GOLD: Did you follow in your father’s footsteps and join the family business?

M.E.: No, not at all. My father and mother are not related with the legal industry in any way what so ever, therefore my decision to become a lawyer was a genuine decision to do what I love. I started in the legal profession as an employee, then I became a partner in another firm and eventually took the risk of creating my own legacy.

GOLD: Your use of that word ‘legacy’ makes me want to ask if you imagine facing a succession problem in 20years’ time with your own children!

M.E.: I don’t think there should be a problem because I am already very clear about everything from now and I don’t even have any children yet! But the word ‘legacy’ doesn’t only refer to a business being passed on to the next generation. It’s about the brand and the name and, actually, this is the legacy of the founders of every business. So if my children decide that they want to join the firm, they will start from the bottom as trainees and then employees and they will have to prove that they are capable of managing the company. They won’t be given that responsibility from Day One. But although I have stressed the need for long-term planning, I think that in my case, it’s very early to be having such a discussion!

The post Succession Success appeared first on Chambersfield Economides Kranos.

that requires professional legal advice.

Michalis Economides, Advocate & Legal Consultant, CEO of Chambersfield Economides Kranos Law firm  |  Article Publication: Gold Magazine October 2019

When a company is looking to expand internationally, there are lots of factors to be taken into consideration if its overseas business operations are to be successful. For this reason and based on my international expertise, I am inclined to believe that entrepreneurs need to thoroughly consider all the factors before deciding to engage in overseas operations.

I would recommend that they consider the following three questions when assessing the possibility of expansion:

• Is my firm ready for overseas business operations?

When entrepreneurs are in the process of deciding whether to step into another market, they must be fully prepared and aware that the decision making process can be very stressful and demanding. Therefore, when they initially start considering their  firm’s international expansion, they must first decide if their business is “ready to go internationally” and, secondly, identify their differentiation strategy and how it will be communicated in the new market.

In addition, entrepreneurs need to scale and evaluate their financial resources, development strategies, business models and the potential new challenges that may arise when they enter the new market. Moreover, it is also very important to consider the regulatory framework in which the firm will be operating, to make sure it complies, as it is well known that all business operations and transactions are regulated by both international and national legislation.

Furthermore, international expansion requires an investment budget to be allocated to the establishment of business operations, including the formation of a new local legal entity, the establishment of a local branch, networking and building relationships, travel, local representation and much more.

Undoubtedly, globalization has made expansion into foreign markets considerably easier while technology has simplified everything as it directly connects businesses with the whole world. However, to smoothen and make the business operate successfully, there are numerous legal and due diligence aspects to be dealt with by legal professionals.

Consequently, it is highly recommended that, during the initial stage of the expansion in particular, entrepreneurs should collaborate with a law firm that has significant experience in international market expansion so as to safeguard their business operations, mitigate risks, monitor the overall project, fully prepare and handle all the necessary documentations and paperwork needed via the regulatory authorities of the selected market, as well as monitor all the legal aspects of the new business operation.

• How will my firm’s core values adapt to the requirements of the new market?

All countries have different cultures and habits; companies, therefore, need to adjust their approach and adapt to the reality of each country in which they plan to operate.

There are several models for a company to follow when going global, in order to obtain know-how about the market. For instance, companies may:

i. cooperate with local companies that have already established businesses and which offer similar services/products and wish to
expand their portfolio.

ii. proceed with a Joint Venture with a local company or a company with a substantial presence in the selected market.

iii. establish a franchise model that they can promote in selected markets.

iv. start a local branch through the incorporation of a new legal entity and hiring local human capital.

v. expand their online presence into other markets.

• Why is cooperation with a law firm essential?

Regardless of the chosen business model, the experienced legal advisors in a law firm possess the knowledge and know how that will ensure the interests of the parties involved and will include clauses in the agreement that are fully compliant with the provisions of the specific national law governing business activities and transactions.

Consequently, it is of the upmost importance to choose the right legal consultant who, together with the entrepreneur, will create the most favourable conditions for achieving growth strategies and international expansion.

Thus, my advice to entrepreneurs who are interested in expanding their business, is that they should engage in consistent and continuous cooperation with an accredited law firm that specializes in corporate, commercial and employment issues and has
international connections. Through such cooperation, each entrepreneur will ensure that his strategies are properly implemented
and aligned with all the procedures of the legislative framework.

It is no coincidence that many modern companies cooperate with law firms on an annual basis, for the provision of legal and advisory services and to safeguard their relationships with customers, associates, partners, affiliates and employees.

As a lawyer and businessman myself, I am inclined to believe that all entrepreneurs, should have a thorough knowledge of the legislative and business framework governing their chosen market before implementing any strategy and be prepared with all the necessary legal documentation needed and safety measures in place, in order to avoid any negative consequences that may result from misconduct.

The post Going Global appeared first on Chambersfield Economides Kranos.

Business nowadays operates in an interconnected world, without any boundaries or limitations to protect brands and companies from the merciless competition. In our era, due to technological breakthroughs, competition is thriving and multi-attacking companies and brands from various channels of communication; therefore entrepreneurs find themselves in the difficult position of searching and finding the most favorable path to follow, for the achievement of economies of scales.

Currently, many entrepreneurs are in the process of searching various ways on how they can maximize their productivity and enhance their profitability by minimizing their operational costs.

One of the main scenarios they examine, due to its endless possibilities, is the reincorporation or re domiciliation of their business activities in favorable markets.

Even thought this practice is very common, entrepreneurs should cautiously consider their options, since this path can be very costly, multifaceted and time consuming.

Consequently, when entrepreneurs decide to pursue this course of action not only do they have to prepare their business plan but they also have to include the nature of activities and purposes of their company and simultaneously proceed with the political, economical, social and technological environment analysis of the target market.

Additionally, they should examine important economical parameters of the targeted country such as the taxation regime scheme, processing time of company formation or re domiciliation and the terms and conditions of the exchange regulations, as well as, the transaction flexibility, assets, personal information protection and requirements for opening corporate bank accounts etc.

In summary, entrepreneurs should thoroughly assess the business law frame work under which their company will operate. Even though various countries are renowned for their favorable tax regime scheme, Cyprus is considered to be one of the most reputable and strongest jurisdictions for many types of company formation, incorporation, trusts and investment offering one of the lowest corporate tax rates in Europe. Cyprus is a country island situated in the Eastern Mediterranean area, at the heart of three continents; Europe, Africa and Asia thus rendering it a favorable choice.

It is a full member of the European Community and completely aligned with the EU regulations.

Its currency is Euro and the official language is Greek while English is spoken by almost everyone and Russian by a significant percentage of the population. In addition, Cyprus has one of the lowest crime rates in the world.

It has an excellent transportation structure and infrastructure that support the entire spectrum of business activities which take place on the island. It has a trustworthy and advanced private banking and medical system. Cypriot people are well mannered and are famous for their hospitality.

The Legal System of Cyprus is based on Common Law.

Its economy operates based upon an open, market driven principle, with favorable tax regimes for the incorporation of companies and investments.

Moreover, Cyprus is characterized by a high per capita income and renowned as a European Union center for foreign investments, offshore businesses and activities.

Also, it is important to note that the Government authorities of Cyprus are promoting heavily the incorporation and foreign investments, as well as, allowing the purchase / ownership of property under favorable conditions.

Consequently, Cyprus Government authorities engage in non – stop negotiations for forming double taxation treaties with non European countries, in order for the Cypriot active companies to enjoy an important competitive advantage.

Currently, Cyprus is an affiliate to more than 50 double taxation treaties based on the OECD including the EU, China, India, Kuwait, Russia, Singapore, Thailand, USA, Azerbaijan, Lebanon, UAE, Georgia and other important hub countries.

Furthermore, other important advantages of Cyprus are the low corporation tax rate, the very short time frame for company registration, as well as, the low annual maintenance fees of corporations.

Cyprus offers one of the lowest corporation tax rates in the EU, which is 12.5%. The time frame for the registration of a new company is very short, approximately 7-9 days.

Hence, Cyprus allows the use of nominee Directors, Secretary and Shareholders therefore there is no obligation of exposure of the Ultimate Beneficial Owner (UBO) in the public Company Registrar Record. Anonymity rights are fully safeguarded and there is no need for the owner to be present during the process of the incorporation or opening of a corporate bank account.

Bank accounts can open between 2 – 5 working days with full online electronic banking and digital pass as well as a debit card. Cyprus is considered to be the most well-known EU country for offshore company formation and Trusts.

The Cyprus International Trusts are exempted from income tax, capital gains tax, special contribution or any other taxes.

Additionally, there is no estate duty or inheritance tax in Cyprus, there is flexibility for relocation, there is no exchange control regulation and trusts can operate internationally with no disposal tax of securities. Thus, there are no withholding taxes on dividend payments, interest or royalties to non residents (subject to conditions).

In addition, the profits from the sale of shares in the stock exchange are tax free, whereas, the losses of a company can be carried forward opposed to future profits for an indefinite period. Besides those very important advantages, Cyprus is also offering the Group relief option, whereby the loss of one company can be covered by the profits of another since both of them are under the Cyprus residential tax scheme.

Moreover, Cyprus Permanent Residence and Cyprus Investment program are considered to be one of the strongest in the world since they provide several significant benefits to the investors, as well as, an advantageous flexibility towards the investors that are reside in non EU member states, which includes, their family members under 18 years old as well.

To sum up, Cyprus tax law is characterized by its simplicity, straight forward approach and effectiveness. Subsequently, entrepreneurs should consider Cyprus as a favorable market for incorporation or re – domiciliation of their business activities, since their companies will enjoy instantly, among other important advantages, low corporate taxation rates and annual maintenance corporation costs.

In addition, entrepreneurs will have the option of forming an offshore company or a trust so as to protect their assets, companies’ strategies and personal information by enjoying a very beneficial taxation regime with no exchange control regulation that would limit international operation.

Justifiably, Cyprus is considered to be an EU Tax Heaven island country. Cyprus companies enjoy safety, stability and flexibility, as well as, overall low tax rates while having the opportunity to trade not only in the EU but in other countries by enjoying the advantages of over 60 double taxation treaties. Cyprus is globally an ideal investment and incorporation gateway, offering to the investors a market right of entry to more than 500 million EU citizens, the Middle East and China.

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