EU Mobility Directive- Transposition into Cyprus Companies Law
On 15 March 2024, the Cyprus Parliament passed the Companies Law (Amendment) (No. 3) of 2024 (Law 26(I)/2024) (the "Amendment Law"), bringing significant changes to the legal framework governing cross-border conversions within the European Union. This amendment transposes the provisions of Directive (EU) 2019/2121 (the "Mobility Directive") into Cyprus's domestic legislation, thereby revising the Cyprus Companies Law, Cap. 113 (the "Companies Law").
The newly established procedures adopt a harmonized approach, applicable to companies incorporated within the EU ensuring that stakeholders across the EU benefit from a consistent regulatory environment.
New Provisions
The amendment introduces new sections into the Companies Law focusing on cross border conversions, divisions and mergers:
- Sections 201HA to 201HK: introduce a new legal framework governing cross-border conversions of limited liability companies – as this term is defined in Annex II of the Mobility Directive.
- Sections 201ΛΑ to 201ΛΚ: introduce a new legal framework governing cross-border divisions of limited liability companies - as this term is defined in Annex II of the Mobility Directive.
- Sections 201Θ to 201KZ: amend the existing provisions for cross-border mergers ensuring consistency and compliance with the Mobility Directive.
Continuation of Re-domiciliation Provisions
The existing provisions governing the transfer of seat of a company into and out of Cyprus, will continue to be available alongside the new cross-border conversion provisions in instances where a Cypriot company desires to re-domicile to a jurisdiction outside the EU or when a company from a non-EU jurisdiction seeks to transfer its seat to Cyprus.
Unaffected Provisions for Public Companies
The provisions governing mergers and divisions of public companies under sections 201A to 201H of the Companies Law remain unaffected by the Amendment Law.
Conclusion
The new procedures introduced to the Companies Law mark a significant improvement in respect to the processes of cross-border conversions within EU by aligning national law with the Mobility Directive. The modernized and harmonized approach also safeguards employees, creditors and minority shareholders .
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