An Article by Michalis Economides, Advocate & Legal Consultant | CEO of Chambersfield Economides Kranos Law firm

Article Publication: Capital Today Magazine July 2018.

The last decade formed a new reality in the Intellectual Property sector, which made its registration essential to any business.

The cyberspace with its continuous information flow, as well as the expansion of most businesses abroad, have already established the new, modern, framework for the intellectual property.

Intellectual Property is defined as the competitive advantage of a private or legal entity and is categorized as follows:

• Industry and Industrial Property that includes inventions – patents, trademarks, industrial designs and intellectual property rights.
• Creators’ Copyright rights. This category includes scientific, musical, literary and artistic works as well as television shows, software, databases, architectural plans, advertising and multimedia.
• Business strategies which include business secrets, confidentiality agreements and know-how.

As a business investment center and member of the European Union, Cyprus provides protection under the Community law while being harmonized with all the standards and requirements of the World Intellectual Property Organization (WIPO) and the European Union Intellectual Property Office (EUIPO). Additionally, the Republic of Cyprus has numerous Community and international conventions and related sanctioning laws, including the Bern Convention on the Protection of Literary and Artistic Works, the Madrid Agreement and Protocol on the Registration of Trademarks at International Level, the Paris Convention on the Protection of Industrial Property etc., and has rightfully earned its position on the world map as one of the most favorable jurisdictions for company formation and intellectual property management.

The competitive advantage gained by the intellectual property protection is of major economic importance for today’s businesses because it can provide instant awareness and / or differentiation in the company’s products and services, while adding value to its reputation. This is exactly why reputation is considered to be a fixed asset of a business.

Another competitive advantage, for reducing the taxation on intangible assets such as intellectual property, is the company’s formation in jurisdictions with a favorable tax regime. Republic of Cyprus is definitely a privileged jurisdiction due to the various double taxation treaties which maintains its favorable tax status with other countries, as well as the low to zero tax retention of dividends.

It is vital to understand the differentiation of the trademark, the business trade name and their significance.

The trademark guarantees the name and / or logo and / or both, while the business trade name basically protects only the name, without fully guaranteeing the owner’s copyright. The trademark is what effectively protects the name of the product or service, the logo, or the combination of both.
Additionally, the company name is not copyrighted if the company does not make the appropriate procedures provided by the legal framework for its registration as a trademark.

Subsequently, in order to be protected by the registration of the company name, it should be registered as a trademark, as defined by the Trademark Law (Chapter 268), combined with the provisions, principles and guidelines deriving from the International Convention of Paris for the Protection of Industrial Property (Laws 63/65 and 66/83).

As a law firm that operates internationally in more than twenty one jurisdictions by providing corporate services, we advise our customers, especially those operating abroad, to register their trademark so that they can prevent any use and / or exploitation, by third parties. Specifically, this process is of upmost importance when it comes to companies investing remarkable funds in branding the services and products they provide.

Besides, the trademark is the one characteristic that differentiates and highlights the innovative ideas and activities of the businesses. For that reason, huge branding, preservation and development budgets are being invested for the product or service concerned, always aiming at the establishment of reputation, which is inseparably interrelated with the profitability of the company.

Furthermore, our highly competitive business environment, having as its main feature the widespread and immediate dissemination of information, indicates the significance of branding, making it a matter of major importance.

In the Republic of Cyprus, the Intellectual and Industrial Property sector of the Department of Company Registrar and Official Receiver, is the one who manages and regulates Intellectual Property issues. This sector includes trademarks, patents, industrial designs, record keeping and intellectual property rights.

In conclusion, the registration of Intellectual Property should not be overlooked; on the contrary, it is an investment and at the same time, an intangible asset, which adds value to the products and / or services of each business. Moreover, it is important that an intellectual property owner monitors and protects his intellectual property rights in a wider range, especially when they operate in other countries, where appropriate actions should be taken to register and protect such intellectual property rights to all required entities.

Based on our experience and due to the fact that not all cases are simple, we recommend that all intellectual property procedures must be supervised by experienced and accredited law firms, which can provide the necessary and appropriate advice throughout the procedure, both at national and international level.

The post Intellectual Property | IP appeared first on Chambersfield Economides Kranos.

What are investors’ main objectives?

What do investors examine before proceeding with the investment?

What are the best investments in Cyprus?

The list of questions is endless and the answers always vary, depending on the uniqueness of each case. Investments, as a concept, refer to any activity that intends to exploit new opportunities with the sole purpose of capital increase.

So, when an investment is materialized, the outcome should result in profit and capital increase, otherwise it is considered as spending. Consequently, investors seek a return on their capital, either on a long-term basis or as traders on a short-term basis.

The combinations of opportunities and options in the international market are limitless and no-one can list them all, per se, since they differ considerably.

My experience as a lawyer and CEO of the international law firm Chambersfield Economides Kranos has helped me identify many and varied promising investment opportunities in Cyprus. Before naming and analyzing them, I would like to mention a tendency that I have come across in the past few years, usually observed among young investors/entrepreneurs.  It is usually referred to as “analysis paralysis” and describes the way investors tend to over-think and over-analyze an investment opportunity, resulting in them taking no action. This is quite often found among start-ups, which are themselves considered high-risk investments. In their attempt to minimize their risks, start-up entrepreneurs over-analyze their options, resulting in an idea that is never realized.

Despite this, I must also say that, in the past few years, Cyprus has accomplished the impossible and is, in my opinion, among the ‘fighters’ of our era, earning the respect of the international market. After the financial and banking crises in 2013, the bailout programme agreed between the Government and the Troika (the European Commission, the European Central Bank and the International Monetary Fund), the downgrading to “junk” status by the credit rating agencies and the implementation of the AML Directives, Cyprus has managed to rise up and thrive once more, earning a place among the most dynamic and stable business centres in the world, with a growing economy that attracts international investments. Cyprus, as a European Union member state and a business hub, offers various investment opportunities.

Below, I identify some of these, from both traditional and emerging industries.

Top Three Traditional Cyprus Investments

1 Real Estate

The Real Estate industry is again thriving in Cyprus. The Cyprus Investment Programme is a significant booster which, when successfully implemented, encourages foreign direct investment (FDI) and attracts High Net Worth Individuals to settle and conduct their business activities in Cyprus. Today, there are numerous attractive opportunities in real estate, both commercial and residential units, all over Cyprus that promise a relatively secure initial capital investment, an excellent Return on Investment (ROI) and capital appreciation.

2 Tourism

According to the World Data Atlas, “In 2017, the contribution of travel and tourism to GDP for Cyprus was 22.3 %.” Moreover, Deputy Minister of Tourism Savvas Perdios has stated that “the tourism industry has the long-term potential to contribute to Cyprus’s economy by 25%.” Tourism is one of the strongest industries in the Cyprus economy and it is continuously increasing its competitiveness, through new developments and strategies. Therefore, investments on this sector are considered premium, especially when investors target large-scale projects such as the construction of marinas, luxury resorts, etc.

3 Shipping

Cyprus is renowned for its high-quality maritime services, as well as for its reliable operational infrastructure and appealing legal framework. As a result, Cyprus is the third largest ship management jurisdiction in the EU and possesses a large merchant fleet market share on a worldwide basis. An investment in this industry, through the establishment of a Cyprus entity, is considered very promising since services, registration fees and taxes are very competitive, compared to other EU member states. Additionally, it is worth noting Cyprus’ EU-approved Tonnage Tax System, which is a major advantage that should be taken into consideration by investors.

Top Three Emerging Cyprus Investments

1 StartUps

In the last few years there has been a substantial increase in the number of startups in Cyprus. The highly educated workforce and eligible human capital, incentives provided by the government (e.g. the startup visa regime), as well as the straightforward legislative incorporation framework and attractive tax system are just some of the main factors that have contributed to the startup sector’s growth. Major players in the field of technology have proven that Cyprus is a very favourable jurisdiction for startups, since, after their establishment in Cyprus, they have successfully run multi-million international businesses.

2 Investment Funds

Investment funds represent the new emerging market that Cyprus is seeking to expand and, to this end, it is continuously upgrading its regulatory and legislative framework in order to attract foreign direct investment and has already formed various Alternative Investment Funds (AIFs) and Undertakings for the Collective Investment in Transferable Securities (UCITS). Of course, this target would have been unreachable if the professional services sector was not so strong and well-educated to support this expansion. In my opinion, investors should take a closer look at Cyprus Investment Funds opportunities, since a lot of effort and support is being provided by the legislator and other supervisory authorities.

3 Energy

The discovery of hydrocarbons marked the start of a very promising new era for Cyprus in the energy industry. Energy giants have since approached Cyprus and formed strategical alliances, upgrading the jurisdiction to that of a developing oil and gas hub for the region. Of course, from the energy industry we should not omit the growth in renewable energy that Cyprus has experienced over the past few years, mainly in the areas of wind power and solar energy. I personally advise professional investors to monitor activities in the country’s energy industry very closely, since it holds great promise and enormous future potential for development and expansion. Cyprus is a country that has a lot of investment opportunities to offer. Potential investors are therefore advised to establish cooperation with law firms that can consult and assist them in selecting the best possible combinations of investment, determining risk tolerances and the capital required to achieve a successful portfolio allocation.

Info: Michalis Economides is CEO, Advocate & Legal Consultant, Chambersfield Economides Kranos Law Firm.

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In the last few years the term “StartUps” has become quite popular, despite the fact that this business model first appeared in 1950s.

“StartUps or Young Entrepreneurships” are newly established enterprises which offer innovative ideas, aim at extremely fast business development and reach a wide audience.

Their main goal is to create a model that can evolve and repeat itself.

Due to the above-mentioned characteristics, a large percentage of these companies originate from the field of technology aiming at the dynamic development of an existing idea or the creation of an innovation that will satisfy a new need.

Based on our experience, the past has repeatedly demonstrated that there is no “secret recipe for success”. Each case is different and unique, it accepts either positive or negative influences from the various changes and fluctuations that occur in the domestic and international market, as they result from the political, economic, social, technological, environmental and legal framework.

Due to the complexity of the aforementioned factors as they arise from the markets, especially from the legal perspective, it is important for StartUps companies, from the conception of the idea until its realization, to cooperate with a law firm specializing in company and business law. Embracing this approach, you directly ensure the protection of the newly established company, the implementation of the correct procedures and due diligence on the points of cooperation. It also prevents uncertainties on terms and conditions, while providing legal and business advices at every stage of the business development.

Although each case is unique, we have noticed that there are common legal questions about the establishment of the StartUp corporate entity, such as:

• Which is the most appropriate type of forming a corporate entity for a “StartUp” company?

The most popular corporate entity of a “StartUp” type is the Limited Liability Company (LTD). This is because the company is a separate legal entity and the responsibility of the owners and shareholders is limited to their share of the investment capital, without any extension to their personal assets, unless of course the case is of a criminal nature.

• Where will the headquarters of the new entity’s StartUp be?

Because of the European Union as well as globalization, a “StartUp” company can choose its headquarters among multiple jurisdictions. Cyprus is one of the most popular jurisdictions for the incorporation of a company since it has a straightforward taxation system and a 12.5% corporate tax, one of the lowest in Europe. In addition, among others reasons, Cyprus has more than 60 double taxation treaties established with other countries, is a Member State of the European Union, operates in a favorable tax regime, has a low to zero retention of dividend taxes, any financial losses of a company may be transferred against future profits for an indefinite period, while the company registration is quick and immediate.
Additionally, Cyprus’s investment strategy is strongly supported by the government and is constantly creating new business opportunities.

• How long does it take to establish a new legal entity in Cyprus?

7 – 9 days

• What is the appropriate structure / organization chart of the new legal entity “StartUp”?

The appropriate structure / organization chart of the new legal entity depends on a case-by-case basis; however, it is explained in a descriptive way in the Memorandum and Article of Association, defining the relations of the contracting parties.

• What should be mentioned in the Memorandum and Article of Association of the new legal entity?

The Memorandum and Article of Association mentions, all general terms as well as specific, all the conditions that ensure and regulate the relations of all the Contracting Parties involved, as they result from the legislative framework of the jurisdiction in which the new legal entity will operate.

• How will the ownership of partners and / or shareholders and employees be divided in the new legal entity?

The drafting of a shareholders’ agreement defines, inter alia, their obligations and rights, their meetings, the decision-making process to be followed, the terms and conditions of a voluntary resolution and the provision of the necessary mechanisms for the immediate settlement of disputes between the parties.

• What contracts are needed to ensure the stable and continuous development of the new legal entity?

It is wise to have shareholders and employee contracts that will define and clarify the relationship of all the parties involved.

• Is the drafting of a Privacy and Confidentiality Agreement needed?

Because of the innovative nature of “StartUps”, it is advised to draft a Privacy and Confidentiality Agreement when two or more members exist, to preserve the idea until the new entity has its proprietary intellectual property in its possession.

• Do the “StartUps” need to register their intellectual property?

The main competitive advantage and the most important predictor of StartUps’ success is innovation. Therefore, safeguarding and protecting intellectual property is of major economic importance for the enterprises of this type.

My legal and business advice for StartUps, is to work with a law firm specialized in corporate, commercial and employment law, prior to the start of the company, which will also have the necessary knowledge and connections at an international level. This cooperation will ensure the protection of the new corporate entity while the company is in line with all procedures resulting from the legislative framework.

In addition, such cooperation is a necessary pillar for setting the right foundations of the enterprise, which can later evolve into an international “StartUp”. Unfortunately, we have repeatedly observed that the founders of companies turn to legal advisors at a later stage and they are called upon to solve various problems that could be avoided with the proper cooperation of reliable lawyers who are familiar with this company model.

The post StartUps – Frequently Asked Questions appeared first on Chambersfield Economides Kranos.

The questions’ list is endless, and the answers always vary depending on the uniqueness of each case.

Investments, as a concept, refer to any activity that intends to exploit new opportunities with the sole purpose of capital increase. So, when an investment is materialized, the outcome should result in profit and capital increase, otherwise is considered as a spending.

Consequently, it is a fact that investors seek a return on their capital, either on a long-term basis, or as traders, on a short-term basis.

The combinations of opportunities and options in the international market are limitless and no-one can list them, per se, since they differ considerably.

My experience as a lawyer and CEO of the international law firm Chambersfield Economides Kranos, helped me identify that there are many promising investment opportunities of various types in Cyprus.

In the past few years, Cyprus accomplished the impossible. Cyprus earned the bet and the respect of the international market, and, in my opinion, is among the “fighters” of our era.

Considering that after the financial crash crisis of the banking system in 2013, the Bailout program, signed by the Cyprus Government with the European Commission – the European Central Bank (ECB) and the International Monetary Fund (IMF), the downgrade to “junk” creditworthiness and the implementation of the AML directives, Cyprus managed to rise back up, thrive and earned its place among the most dynamic and stable business centers of the world, with a growing economy that attracts international investments. Therefore, Cyprus as a European state member and a business hub, offers various investment opportunities to investors.

If I could identify some, I would select investments from traditional and emerging industries.

Top Cyprus Traditional Investments

• Real Estate Industry

The Real Estate industry is thriving in Cyprus. The Cyprus Investment program is a significant booster which, when successfully implemented, encourages foreign direct investments (FDI) and attracts high net worth individuals (HNWI) to settle and conduct their business activities in Cyprus.

Nowadays, there are numerous attractive opportunities in real estate, both commercial and residential units, all over Cyprus that promise a relatively secure initial capital investment, an excellent Return on Investment (ROI) and capital appreciation.

• Tourism Industry

According to the world data atlas tourism “In 2018, the contribution of travel and tourism to GDP (% of GDP) for Cyprus was 21.9 %.” In terms of the tourism industry potentials, the Tourism Deputy Minister Mr. Savvas Perdios, stated that “the tourism industry has the long-term potential to contribute to Cyprus’s economy by 25%.”

This particular industry is one of the strongest industries of Cyprus economy and it is continuously elevating its competitiveness, through further developments and strategies. Therefore, investments on this sector are considered to be premium, especially when investors target large scale projects such as the construction of marinas, luxury resorts etc.

• Shipping Industry

Cyprus is renowned for its high-quality maritime services, as well as, its reliable operational infrastructure and appealing legal framework.

It is noteworthy to mention that Cyprus is the third largest ship management jurisdiction in EU and possesses a large merchant fleet market share, on a worldwide basis.

An investment in this industry, through the establishment of a Cyprus entity, is considered to be very promising since the services, registration fees and taxes are very competitive, compared to other EU member states.

Additionally, it is important to mention that Cyprus uses an EU – approved Tonnage Tax System (TTS), a major advantage that should be taken into consideration, from the investors’ perspective.

Top Cyprus Emerging Investments

• StartUps

In the last few years there is a substantial increase of StartUps in Cyprus. The high percentage of educated workforce and eligible human capital, the incentives given by the government i.e. startup visa regime, as well as, the straightforward legislative incorporation framework and attractive tax system, are some of the main factors that contributed to the startup’s sector growth.

Major players in the field of technology have proven that Cyprus is a very favorable jurisdiction for startups, since, after their establishment in Cyprus they run their international multi-million businesses successfully.

• Investment Funds Industry

Investment funds is the new emerging market that Cyprus seeks to expand.

Cyprus is continuously upgrading its regulatory and legislative framework in order to attract foreign direct investments (FDI) and it has already formed various Alternative Investment Funds (AIFs) and Undertakings for the Collective Investment in Transferable Securities (UCITS). Of course, this target would have been unreachable if the professional service provider sector was not so strong and well-educated to support this expansion.

In my opinion, investors should take a closer look on Cyprus Investment Funds opportunities, since a lot of effort and support is being put by the legislator and supervised authorities.

• Energy Industry

The discovery of hydrocarbons was the starting point of a very promising era for the energy industry in Cyprus. Energy giants approached Cyprus and formed strategical alliances that upgraded the jurisdiction to a developing oil and gas hub of the surrounding area.

Of course, from the energy industry we should not omit the growth that Cyprus had in the past few years in renewable energy, which mainly focuses on the wind and sun energy.

Personally, I advise professional investors to monitor the overall activities of the energy industry in Cyprus very closely, since it holds enormous and very promising future potentials for development and expansion.

In conclusion, Cyprus is a country that has a lot of investment opportunities to offer.

Therefore, investors are advised to establish cooperation with law firms that can consult and assist them on selecting the best possible combinations of investment, by determining the risk tolerances and necessary capital for achieving a profound portfolio allocation.

The post Cyprus – A European Investment Hub worth looking at! appeared first on Chambersfield Economides Kranos.