Cyprus is a popular jurisdiction for establishing special purpose vehicles with an increased involvement in shadow banking, which takes the form of, among other things, securities lending, repurchase and derivatives transactions. This has resulted in a call for strengthened regulations to mitigate risks and support financial stability. Newly introduced regulations now bring non-financial counterparties, such as limited liability companies, into the ambit of transparency reporting.
Following the economic crisis, Cyprus witnessed the merging of several cooperative societies, mainly cooperative credit institutions. These mergers reduced the number of cooperative credit institutions from over 300 to just 18. However, in July 2017 a second merger took place which saw the 18 institutions merged into a single entity. Although cooperative societies are limited liability companies, the procedure that must be followed for merging such companies varies significantly.
The economic crisis has led several entrepreneurs to consider the possibility of merging or transferring their business in order to survive, regroup and regain competitiveness. An essential part of the restructuring of businesses is the role played by the workforce of the entity that will be affected by the potential transfer or merger. A number of concerns arise with regard to the protection of employees' rights following reorganisation.
In the face of the many challenges ensuing from the recent economic crisis, Cyprus is struggling to regain its economic status quo and its reputation as a leading international business centre often used as the desired vehicle in international tax structures. The country's M&A regime has played a crucial role in its attempts to re-enter the financial markets.
A cross-border merger may take place between limited liability companies that are incorporated in accordance with the legislation of a member state and have their registered office, central administration or main place of establishment in the European Union. This update summarizes the main provisions of the Companies Law that apply to cross-border mergers involving a Cypriot limited liability company.
Last year was a busy year for M&A professionals. Despite the relatively small and new stock exchange, 30 public offers were filed under the provisions of the new Law on Public Takeovers. In addition, the hidden value of investment companies led to counter offers and revised offers.
Cyprus has enacted Law 41(1)/2007 to incorporate the EU Takeover Directive into national law. One major amendment made by the law is that partial public offers are allowed only if permission is granted by the Cyprus Securities and Exchange Commission, which supervises and controls the Cyprus stock exchange.
The long-awaited, highly politicized EU Takeover Directive (2004/25/EC), which was signed on April 21 2004 and came into force on May 20 2004, should have been transposed into national law by member states by May 20 2006. Although Cyprus missed this deadline, it is expected that the directive will be implemented in Cyprus before the end of the year.