Implementation and scope

The original text of the Second Company Law Directive and the first amendment thereto introduced by Directive 92/101/EEC of 23 November 1992 have been transposed into the Cypriot legal order by means of Law 70(I)/2003, which was published and took effect on 11 July 2003, and Law 70(I)/2007, which was published and took effect on 22 June 2007. It should be recalled that the transposition deadline for Cyprus was 1 May 2004. The second wave of amendments effected by Directive 2006/68/EC of 6 September 2006 was implemented in Cyprus by Law 87(1)/2008, which was published and came into force on 17 October 2008. It is worth stressing that the deadline for the transposition of that Directive was 15 April 2008. The aforementioned domestic legislative measures have amended the Cypriot Companies Law (“CCL”), Chapter 113 and should therefore be read in conjunction with it.

The scope of the Second Company Law Directive is limited to public limited liability companies (see no 1 of Chapter 1). In Cyprus, the Second Company Law Directive applies, first, to δημόσιες εταιρείες περιορισμένης ευθύνης με μετοχές (public companies limited by shares) and, second, to δημόσιες εταιρείες περιορισμένης ευθύνης με εγγύηση που διαθέτουν μετοχικό κεφάλαιο (public companies limited by guarantee and having a share capital). Article 1(2) of the Second Company Law Directive provides Member States with the discretion to exclude from its scope of application investment companies with variable capital and cooperatives that take the form of a public limited liability company. The CCL does not contain such exclusions. The provisions discussed below apply therefore equally to the two aforementioned entities, unless it is otherwise provided for in the legislation specifically introduced to regulate them.

Preliminary note

In Cyprus the title ‘practising advocate’ (δικηγόρος που ασκεί την δικηγορία in Greek) is, in principle, accorded to legal professionals who (i) are members of the Bar, (ii) possess an annual licence from the Cyprus Bar Association and (iii) pay their contributions to the Advocates Pension Fund. Those professionals can be self-employed, partners or associates in a law firm. Their status and activities are basically regulated by the Advocates’ Law Cap. 2 (hereinafter the Law) and the Advocates’ Code of Conduct Regulations of 2002 (hereinafter the Code). There exist six local bar associations (Nicosia, Limassol, Famagusta, Larnaca, Paphos and Kerynia) and one centralised, national bar association, namely the Cyprus Bar Association.

The duty of secrecy in dealings and communications with clients (commonly referred to as ‘attorney–client privilege’) is exclusively imposed upon practising advocates as defined above. It does not therefore extend to those professionals who are not entitled to pursue their activities under that professional title. In-house lawyers may not be members of the Bar in Cyprus and the legal privilege is not therefore recognised for them. They are, of course, bound to respect the confidentiality clauses contained in their contract of employment; however, it is questionable whether those contractual constraints can validly be invoked by the in-house lawyer in order to refuse disclosure of information in court proceedings.

Introduction

1. The Cross-border Merger Directive has been transposed into the Cypriot legal order by Law 186(I)/2007, which was published on 31 December 2007. That piece of legislation amended the Cypriot Companies Law, Chapter 113 (the ‘CCL’) by inserting a new section on cross-border mergers (Arts. 201I–201X CCL).

Scope of the new rules

2. The new section applies to cross-border mergers of limited liability companies under the conditions that (i) at least one of the merging limited liability companies is a Cypriot company or the limited liability company resulting from the cross-border merger is a Cypriot company (Art. 201J(1) CCL), and (ii) at least one of the rest of the participating companies is subject to the jurisdiction of another European Economic Area Member State (Art. 201I CCL).

Cross-border mergers are only possible between types of limited liability companies which may merge under the national law of the relevant Member States. Every Cypriot company may take part in a cross-border merger except (i) the limited liability companies by guarantee, and (ii) the companies subject to liquidation. A Cypriot company participating in such a merger must comply with the provisions and formalities of the CCL (Art. 201K CCL).

It is worth noting that the Cyprus legislature chose not to exercise the option given by Article 3(2) of the Cross-border Merger Directive and therefore the new rules are applicable to cooperative societies falling within the definition of ‘limited liability company’ as laid down in Article 201I of the CCL.

Introduction

The Takeover Directive has been implemented in Cyprus by means of Law 41(I)/2007 on public takeover bids (hereinafter, the ‘Takeover Law’ or ‘Law’), which was published and took effect on 5 April 2007. This legislative text has entirely replaced an amalgam of rules contained in the Stock Exchange Laws, Law 14(I)/2003, the Cyprus Stock Exchange (Public Takeover Bids) Regulations of 1997–2006 and the Companies Laws of Cyprus, Chapter 113, as amended.

On the basis of the Takeover Law and with a view to facilitating its implementation, the Cyprus Securities and Exchange Commission (hereinafter, the ‘CySEC’) has issued five directives.

Scope

The Takeover Law applies to every takeover bid in which the target company has its registered office and its shares admitted to trading on a regulated market in the Republic of Cyprus.

Introduction

1. 3.1 The Prospectus Directive was transposed into Cypriot law by way of Law 114(I)/2005 (the ‘Public Offer and Prospectus Law’ or ‘Law’), which was published on 9 September 2005 and took effect on the same day. In addition to implementing the Prospectus Directive, the Public Offer and Prospectus Law facilitates the empirical application of the Prospectus Regulation. The Cyprus Securities and Exchange Commission (the ‘CySEC’), which, as will shortly be noted, is designated as the competent national supervisory authority, has the power to issue directives with a view to regulating a variety of matters pertaining to the function of the Public Offer and Prospectus Law in practice. No such directives have been adopted to date.

2. 3.2 The Public Offer and Prospectus Law repeals the Investments Invitation to the Public Law of 2002. The latter is still valid in respect of: (i) sanctions regarding its infringement; and (ii) offers to the public which took place up until the coming into force of the Public Offer and Prospectus Law (Art. 47 Law).

Competent authority

1. 3.3 The competent authority for the approval of prospectuses in Cyprus is the ‘CySEC’. That is a public corporate body established and operating pursuant to the Cyprus Securities and Exchange Commission (Establishment and Responsibilities) Law. The provisions of the foregoing legislative instrument governing the CySEC's authority, including investigative powers, remedial competence and cooperation with regulatory entities abroad, are also applicable to matters treated by the Public Offer and Prospectus Law (Art. 36 Law).

2. […]

Introduction

1. EC Regulation No 885/2004 of 26 April 2004 extends to Cyprus the application of Council Regulation No 2157/2001 of 8 October 2001 on the Statute for a European company (the ‘Regulation’) and Council Directive 2001/86/EC of 8 October 2001 supplementing the Statue for a European company with regard to the involvement of employees (the ‘Directive’). The European Public Limited-Liability Company Regulations 2006 (the ‘EPLLC Regulations’) and Law 277(I)/2004 were introduced in order to harmonise Cypriot and Community law. Given that the European company (commonly referred to by its Latin name, Societas Europaea or SE) has only existed since mid-2006, there is as yet no Cypriot case law on the subject.

As noted at no. 2 of the general report, the Regulation and the Directive apply throughout the European Economic Area (EEA), and references in this chapter to the European Union or to its Member States should be construed to include Norway, Iceland and Lichtenstein.

Application

2. Cyprus came under an obligation to bring its legislation into line with the Regulation and the Directive when it acceded to the European Union on 1 May 2004. The EPLLC Regulations facilitate the application of the Regulation and were introduced via Section 387(1)(e) of the Cypriot Companies Law, Chapter 113 (the ‘CCL’).