Modernisation of cyprus companies law
Further to the recent amendments to Companies Law, CAP 113, (“CAP 113”) on 24-07-2009, the main amendments which have been introduced are the following:
1.Definition of “common seal”
Article 2 (1) of CAP 113 has been amended to include that a “Common Seal” also includes a stamp that does not create an engraved object.
Therefore, the need of affixing the common seal on documents which under English law would require the common seal to be affixed (i.e. deeds) has now been abolished.
2.Documents executed according to a written or silent authority
Article 35 of has been deleted and substituted with the following new Article:
“Any document executed on behalf of a company, in Cyprus or abroad, by any person acting in accordance with a written or silent authority of the company, will have the same effect as if the common seal of the company was affixed on the document:
Notwithstanding the above, in cases where the company opts to use its seal, the seal will be used in accordance with the provisions of its Articles of Association”.
Therefore, the need of affixing the common seal on documents which under English law would require the common seal to be affixed (i.e. deeds) has now been abolished.
3.Financial assistance
Article 53 of CAP 113 is amended with the addition, followed directly after sub-paragraph (2), of the following new sub-paragraph:
tyle=”text-align: justify;”>“(3) In the case of a private company, the prohibition of sub-paragraph (1) is not valid if:
(a) the private company is not subsidiary company of any company that is a public company, and
(b) the particular act has been approved at any time, by a resolution of the general meeting of the company with a majority vote of more than 90% of the total issued shares of the company.
This means that the provision of direct or indirect financial assistance by a private company for acquisition of its own shares or of the shares of its holding company is no longer unlawful in accordance with the above. It is further noted that the new provisions do not affect the obligation of the company to comply with any other legal obligations.
4. Registration of pledge of shares
Article 90 of the main law is amended by inserting the following exception at the end of sub-paragraph (2).
“Notwithstanding the above, in the following cases, Article 90 does not apply:
(a) pledge of shares of companies and all rights deriving thereon,”.
Thus, there is no longer a duty to register with the Registrar of Companies a pledge of shares in Cyprus companies created by pledgors which are Cyprus entities. It should be noted however, that in practice many companies opt to register such pledges.
5.Redeemable preference shares
Redeemable preference shares may now be issued on such terms that permit their redemption both at the option of the company and their holder.