Cyprus: A Time Of Change For Cyprus Companies Law (Cap 113)

The House of Representatives of the Republic of Cyprus implemented significant changes to the Cyprus Companies Law (Cap 113) in July 2009 with a view of modernizing certain aspects of the legislation with one eye on raising the country's profile as a viable jurisdiction for international investors and the other improving the day to day running of company business in Cyprus. A summary of the same follows;

Company Seal

The definition of the common seal of a Company was amended as to also include a rubber stamp.

In turn, the use of a Company's common seal is no longer obligatory when executing an agreement or any other document. Accordingly, when a person, expressly or impliedly authorized by a Company, executes a document on behalf of the Company, his/her signature shall be valid and treated as though the Company's seal was affixed to the agreement. Should a company choose to affix its seal, it should so be affixed in the manner prescribed by its articles of association.

Change to filing a Company Prospectus

Where a Public Company seeks to list its shares or other securities in a foreign market it may now file a Prospectus with the Registrar of Companies in a language that is accepted throughout the international financial business community; English being the favored language in this instance.

Filling a Prospectus by Public Companies with the Registrar of Companies is not a requirement when it involves shares or debentures to which the Public Offer and Prospectus Law and/or the Open – Ended Undertakings for Collective Investment in Transferable Securities and Related Matters Law have application.

Prohibition of Financial Assistance

Section 53 has been amended introducing an exception to the general rule that a Company is strictly prohibited from providing financial assistance, directly or indirectly, for or in relation to the acquisition of its own shares or of the shares of its parent company. Accordingly, a private company may now by means of loan, guarantee or otherwise offer financial assistance whether directly or indirectly for purchase of its own shares provided that;

1. The private company is not a subsidiary of a public company; and
   
2. The arrangement proposed has been approved at any time by way of a resolution passed by the general meeting of the company by a majority of 90% of all issued shares of the Company.
   
   

Issue of Redeemable Preference Shares

Section 57 (1) of the Law has been re-worded to allow for the issue of redeemable preference shares on terms that allow redemption either;

1. at the option of the company or
   
2. at the option of the member and
   
3. provided the articles of association of the Company authorize the issue of preference shares.
   

In addition to the above the law was amended as to provide for the following:

• The Registrar of Companies must be notified within a month of any shares being converted from one class to another whether by resolution or automatically in accordance with the terms of issue in respect of the said shares.
  
  

• A Company is no longer under an obligation to register with the Registrar of Companies:
  

• The possibility to record any amendments that will have a bearing on any registered charge with the Registrar of Companies as opposed to reregistering the charge.
  

• A Public Company the objects of which include carrying on business around the world, and/or whose shares are listed on a market outside Cyprus and/or whose members reside outside Cyprus may now maintain a Company Register abroad (branch register), in the jurisdiction where it either carries on business, or the relevant market is situated in, or in which its members reside. In such case, the Registrar of Companies should be notified of the office in which such Register is kept and of any subsequent amendments thereto. Accordingly, Cyprus Companies must keep their basic register in Cyprus updated in respect of each entry made on its foreign branch register.
  

• Transfer of a share registered in a register situated outside Cyprus is deemed to constitute a transfer of Company property situated outside Cyprus.
  

• In cases where shares or other securities are listed and traded in a foreign market, it is obligatory that the Cyprus Company complies with the regulations of the jurisdiction in which the relevant market is situated in.
  

• In case of a pledge over shares or securities listed and traded in a market outside Cyprus, the provisions of Contract Law shall not have application; the rules and regulations of the jurisdiction that the market is situated in shall apply.
  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.