Cyprus has recently made a number of amendments to the Companies Law, directed at modernising its provisions and improving Cyprus's competitiveness as a centre for international business. The main changes are summarised below.

Financial Assistance for Acquisition of Own Shares

The rigid prohibition which previously existed against companies providing financial assistance for the acquisition of their own shares has been partially eliminated by the introduction of a "whitewash" mechanism. A private company may now provide direct or indirect financial assistance for the acquisition of its own shares or shares of its holding company as long as it is not a subsidiary of any public company, and the arrangement is approved by a resolution passed at a general meeting at which the holders of 90% of all the issued shares of the company vote in favour. Public companies continue to be prohibited from providing financial assistance for the acquisition of their own shares.

Registration of Charges

Pledges over shares in Cyprus companies created by Cyprus companies need no longer be registered with the Registrar of Companies, subject to compliance with all other requirements to perfect a pledge over shares in a Cyprus company. In addition, charges which fall within the scope of the Cyprus legislation adopting the EU Financial Collateral Directive need not be registered with the Registrar of Companies. An amendment, assignment

or other change to a charge which has been filed with the Registrar of Companies may now be registered as a modification of the existing charge, rather than as a new charge, which was previously the case.

Affixing the Common Seal

The requirement to affix the company's common seal on documents which would require the common seal to be affixed under English law has been abolished. If the company does choose to affix its common seal on any document, it should do so in accordance with the procedure set out in its articles of association.

Prospectuses

In the case of offerings of shares or debentures to which the Public Offer and Prospectus Law of 2005 or the Open-Ended Undertakings for Collective Investment in Transferable Securities and Related Issues Law of 2004 Law apply, there is no longer an obligation to file a copy of the prospectus with the Registrar of Companies.

If a public company does need to file a prospectus with the Registrar of Companies (for example if it is offering shares or other securities in a market abroad) the Registrar of Companies will now accept the prospectus and accompanying documents in any widely used language.

Redeemable Preference Shares

Redeemable preference shares may now be issued on terms that allow their redemption at the option of the company or of the holder of the shares.

Conversion of Shareholder Rights

A company's articles of association may now provide for the automatic conversion of the rights attached to shares on the happening of a specific event without the company needing to take any action or pass any resolutions.

Registration of Members

Provisions regarding the registration of transfers have been amended to reflect the fact that electronic records have largely replaced paper records. For example, transfers of shares or other securities may be registered without an instrument of transfer provided that the transfer took place in accordance with the rules regulating the relevant market. Companies which carry on business outside Cyprus, whose shares are listed on a market outside Cyprus or which have shareholders residing outside Cyprus may keep their register of members in their main place of business or in the location where their shares are listed or their members reside, as long as copies of all entries made in it are sent to the registered office of the company.

Companies whose shares are listed on an overseas market may maintain their register of members in accordance with the rules regulating the market in question, in effect allowing for electronic registers and dematerialized shares. The applicable procedures for perfection of pledges over shares will be those laid down by the rules of the market on which they are traded.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.