Following certain amendments made to the Cyprus corporate legislation last year, on 04 June 2015 another important bill was passed into law, that is Amending Companies Law No. 4. Cyprus is regarded as one of the world’s leading corporate and holding jurisdictions. Cyprus success owes much to the firm legal foundation offered by its company legislation, which has been praised as a pragmatic and practical piece of legislation, coupled with common law. Cyprus is keen to preserve its favourable recognition amidst changes in the global economy. The aim of the new amendments to the Cyprus Companies Law, Cap. 113 (“CCL”) is therefore to ensure that Cyprus continues to offer a clear and stable approach to corporate law by updating or adapting a number of existing provisions to meet recent developments.
While many of the overriding features and qualities of the CCL remain unaltered, the recent amendments introduce a number of key changes that owners, or prospective owners, of CYPRUS companies and their advisers should be aware of. These amendments to the CCL are as follows:-.
Place of Meeting
While it was long permissible, if provided in the Articles of Association, a board meeting to be held by means of a telephone conference or other similar means, and it has now been clarified that such a Board Meeting to be deemed to have been held at the location where the person who was keeping the minutes was actually located.
Short Form of Memorandum
The amendment to the CCL brings an end to the unnecessary long and detailed Memorandums as it is now allowed for a company to adopt a short form of Memorandum if it is incorporated as a general commercial company with power to carry on any trade or business and to do all such things as are incidental or conducive thereto.
Registration of Charges in Cross Border Mergers
Where a cross merger is concluded under the Cross Border Merger Directive 2005/56/EC and the dominant / surviving company is registered in Cyprus, any registrable charges which were registered against the acquired / dissolved legal entity can be registered as against the Cyprus dominant / surviving company provided the appropriate forms are submitted with the Department of the Registrar of Companies within 42 days from the date when the cross border merger became effective.
No Need to Register Shares Pledges
The amending law clarifies the position that a pledge of shares in a Cyprus Company, assignment of rights which are attached to shares of a Cyprus Company or any other similar charge over shares in a Cyprus Company do not constitute a registrable charge.
Registration of Charges in Re-domiciliation
Where a company is re-domiciled to Cyprus, any existing charges registered with the authority of its jurisdiction of origin, are capable of registration with the Cyprus Registrar of Companies as the CCL requires now such companies to register such existing charges within 42 days from the date of the temporary continuation certificate.
Adopt of Greater Majority
The CCL has now mirrored the practice often contained in shareholders’ agreements, to include in the Articles of Association of a Cyprus Company a provision for a greater majority for a shareholders’ resolution to be passed than the majority specified in the Companies Law.
Updating a Registered Security
It is not any longer necessary to novate a security registered with the Cyprus Registrar of Companies where security documents are amended to increase the amount secured. It is possible under the CCL to update the registered security with the Cyprus Registrar of Companies regarding the increase of the secured amount under registered security without affecting the priority of the initial charge.
For further information on this topic please contact Mr. Soteris Flourentzos, Managing Director at SOTERIS Flourentzos & Associates LLC, by telephone (+357 25 107242) or by e-mail ([email protected]). This article is not intended to be a substitute for legal advice or a legal opinion. It deals in broad terms only and is intended to merely provide a brief overview and give general information.