Cyprus company law was updated in 2015, but still provides no codification of directors' duties. However, a recent bill submitted to Parliament for review makes directors accountable to the Tax Department for taxes due on company assets.
Under the bill, company directors or other persons exercising management and control over a company will be required to submit an annual return listing the company's assets. Further, they will be required to ensure that the company pays all taxes due to the relevant authorities.
To ensure that the reporting requirements are met and tax is duly paid, the bill enables the Tax Department to create a 'memo' on immovable properties owned by non-compliant companies that have not settled their tax liabilities. In this way, the Tax Department acquires preference and priority over immovable properties above other charges, liens or encumbrances that may pre-date the creation of the Tax Department's memo.
These changes are part of a wider overhaul of the immovable property tax regime promoted by the government, as the immovable property sector in Cyprus is undergoing significant changes due to the economic crisis.
It is expected that the bill will present even more reasons for companies to be careful who they appoint as a director. Directors must be vigilant and monitor regularly the transactions, business and assets of the companies they represent in order:
- to comply with applicable law; and
- to safeguard company assets against possible clawbacks, such as in the case of charges on immovable properties for failure to pay tax.
The bill will be reviewed by the Parliamentary Law Committee and is expected to encounter opposition before being voted into law.
For further information on this topic please contact Stella Koukounis at S Koukounis & Partners LLC - Solsidus Law by telephone (+357 99 415 708) or email ([email protected]). The S Koukounis & Partners LLC - Solsidus Law website can be accessed at www.solsiduslaw.com.
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