Andria Papageorgiou, Author at Andria Papageorgiou

Procedures for the receipt of reports of infringement of Regulation (EU) No. 596/2014 on market abuse

We would like to draw your attention to the Circular C488 (the “Circular”) issued by the Cyprus Securities and Exchange Commission (the “CySEC” of the “Commission”) on the 17^th of February 2021, under the provisions of Article 2(1) of the Regulation (EU) No 596/2014 as amended (the “Market Abuse Regulation”), in relation to the updated procedures in force regarding the receipt of reports of infringement pursuant to the provisions of Article 32 of the Market Abuse Regulation.

In brief, please note the following:

A. Reporting Requirements:

The staff members of the Market Surveillance and Investigations Department of CySEC dedicated to the handling of the reports of infringements (the “Competent Department”) have been assigned with specific duties in order to assist and provide information on the procedures for reporting infringements to any interested person.
The report of infringement can be submitted either by name or anonymously, through the communication channels of the Competent Department as further specified under point A3 of the Circular.
A person who is accused of having committed an actual or potential infringement of the Market Abuse Regulation (the “Reporting Person”), may proceed with the submission of a written report of infringement by completing the “Whistleblowing External Disclosure Form” (the “Form”) which is available as an Appendix within the Circular.
In cases when the identity of the Reporting Person has been disclosed, CySEC may request further information.
Upon the submission of the infringement report, either orally or written, CySEC notifies the Reporting Person in writing within how many days will be notified about the results of his/her inquiry and ensures that the relevant notification will be sent within the timeframe set.

B. Record Keeping of the Infringement Reports:

Unless otherwise requested by the Reporting Person, a receipt of a confirmation is sent by CySEC.
In cases where reporting of infringements has been performed through the use of a telephone line, CySEC has the right to document the oral reporting, except the cases where Reporting Person’s prion consent is not provided.
In cases where Reporting Person’s consent is not provided for the reporting of infringements, CySEC has the right to document the conversation in the form of accurate minutes.
In cases where a person requests a physical meeting with the Competent Department for the purposes of reporting the infringement, CySEC ensures that complete and accurate records of the meeting are kept in a durable and retrievable form.
In cases where the confidentiality regime is used, CySEC notes that under certain circumstances as those explained in point C of the Circular, confidential information of the Reporting Person may be published.

To this end and as per Article 6(6) of the Market Abuse Law of 2016, a person providing information to CySEC, in accordance with the Market Abuse Regulation, is not considered to be infringing any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision, nor will the said person have the liability of any kind related to such disclosure.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.

COMPLIANCE, CYSEC, News, REGULATORYFebruary 22, 20220 comments

by Andria Papageorgiou

Supervisory briefing in relation to firms using tied agents in the MiFID II framework

A. INTRODUCTION

In accordance with the Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority) amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC as amended by Regulation (EU) 2019/2175, one of European Securities and Markets Authority (the “ESMA“)’s objectives is to actively foster supervisory convergence across the Union with the aim of establishing a common supervisory culture.

B. OVERVIEW AND SCOPE

Following the UK withdrawal from the EU, ESMA has been monitoring the behaviour of firms in order to understand whether their interaction with EU-based clients is done in a way that is compliant with the MiFIR and MiFID legislation (including the regimes providing the conditions for third-country firms to provide investment services and activities in the Union). In this context, some practices concerning investment firms using tied agents recently emerged as a potential source of circumvention of the abovementioned legal framework.

Furthermore, ESMA believes that these issues have more general relevance, and it is thereby important to identify the supervisory expectations on firms using tied agents in a convergent manner across the Union. Therefore, this supervisory briefing takes into account all cases where an EU firm uses tied agents; a specific focus is given to cases where tied agents are legal persons that are controlled or have close ties with other entities or third-country entities.

The purpose of the Briefing is to give indications and information on supervisory expectations of ESMA and National Competent Authorities (the “NCAs”) to market participants of compliant implementation of the MiFID II provisions relating to tied agents and aims at contributing to the development of a convergent supervisory culture across the European Union (the “EU”).

The Briefing has been designed to be used in the way that best fits with supervisory methodologies. It is noted that the Briefing covers the aspects mentioned under Points [B] and [C] below.

C. SUPERVISORY EXPECTATIONS WHEN FIRMS APPOINT TIED AGENTS

Before the appointment of a tied agent, it is expected that a firm:

Has a clear understanding of how the tied agent will contribute to the strategy of the firm, what types of clients the tied agent will be dealing with and how the firm will obtain and deal with these clients.
Assesses, inter alia, the following:

The tied agent is suitable to promote or provide activities on behalf of the firm, is of sufficiently good repute, and possesses the necessary knowledge and competence (e. tied agent should be included in the assessment of knowledge and competence of staff in accordance with the ESMA Guidelines);
The tied agent has the ability, capacity, sufficient resources, appropriate organisational structure to support the performance of activities on behalf of the firm, and that the firm has a good understanding and is satisfied that the tied agent is able to ensure compliance with MiFID II requirements (e. assess the organizational structure of tied agent, assess the existence of appropriate mechanisms that the tied agent will use to report to the firm, assess the good repute and suitability of the persons responsible for the management and internal control of the tied agent, etc.);
The tied agent (if a legal person) has anticipated the number of natural persons that will be involved in the provision of activities on behalf of the firm, the place from which those persons will provide services to the firm as well as how they will be monitored;
In the case where under the national legislation a tied agent is allowed to hold money and/or financial instruments of clients as per Article 29(2) of MiFID II, then it is expected that the firm will assess the financial situation and the arrangements performed in regards to safeguarding of clients’ funds;
The appointment of the tied agent does not prevent the firm from complying with the MiFID II legislative framework (e. verification that the organisational settings of tied agents do not prevent their effective supervision by firms).

Ensures that the tied agent clearly agrees with the respective rights and obligations. Thus instructions and termination rights shall be provided by firms through an agreement between the relevant parties. The aspects that the relevant agreement is expected to cover are available under Point [22] of the Briefing.
Avoids appointing a tied agent which is a legal person and whose employees involved in the provision of the activities on behalf of the firm (e.g. sales staff) are also at the disposal or under the control of other entities (including third-country entities) as such entities could exercise inappropriate influence over the way in which the tied agent carries out the activities on behalf of the firm or may prevent the firm from effectively monitoring the activities of their tied agent.

D. SUPERVISORY EXPECTATIONS ON FIRMS USING TIED AGENTS IN THEIR ONGOING ACTIVITIES

Pursuant to the provisions of Article 29(2) of MiFID II, firms are required to monitor the activities of their tied agents to ensure that they continue to comply with MiFID II when acting through tied agents. Thus, once a firm appoints a tied agent, it is expected to ensure the following:

It has in place adequate internal measures and processes to appropriately oversight the activity that the tied agent carries out on its behalf, such as the following:

The Compliance Function shall advise and assist the persons responsible to carry out investment services and activities to comply with the firm’s obligation under MiFID II.
With respect to risk management, a firm shall monitor, inter alia:
- the level of compliance by the firm’s relevant persons with the arrangements, processes and mechanisms adopted by the firm to manage the risks relating to the firm’s activities
- the adequacy and effectiveness of measures taken to address any deficiencies in the policies, procedures, arrangements and mechanisms adopted by the firm to manage the risks, including failures by the relevant persons to comply with such arrangements, processes and mechanisms
The remuneration policies and procedures are not incentivising relevant persons to favour their own interests to the potential detriment of any client.
The Conflict of Interest Policy shall include procedures and measures to ensure that relevant persons carry on their activities at an appropriate level of independence.

Adoption of appropriate and proportionate governance arrangements by firms to monitor the activities carried out by the tied agents, such as for example:

The appointment of one or more independent or non-executive directors in charge of monitoring the activities of the tied agents;
To carry out an independent (external) review of the internal control framework (and staff) in charge of monitoring the tied agents.

Consequently, in order to monitor the tied agent’s activity, NCAs should be satisfied that a firm has in place, inter alia, adequate:

Organisational arrangements in order to monitor the skills and experience of the tied agent;
Appropriate reporting mechanisms (e.g. firms to engage in face-to-face meeting/discussions with tied agents to avoid excessive reliance when it comes to high-level attestation from the tied agent, receipt of specific information from the tied agent on a regular basis);
Mechanisms to assess the quality of services provided by the tied agent, as well as the consistency of the tied agent with the relevant EU legislative framework;
Mechanisms for the identification of conflicts of interest, which may arise from the relationship between the appointed tied agent and other entities or third-country entities with which the tied agent has the close link.

Regular monitoring of the tied agents’ financial situation through experienced persons (e.g. financial accountants).
Dealing with the complaints concerning the activities of the appointed tied agents.
Has the ability to terminate the relationship with a tied agent, where necessary, with immediate effect (e.g. when this is in the interest of clients) without determinant the continuity and quality of the provision of activities to clients.
When the relationship between a firm and a tied agent is terminated:

Immediate notification of the NCA of the home Member State specifying if the said termination is due to matters having a serious regulatory impact or involving an offence or a breach of MiFID II requirements;
Notification of all relevant clients in order to avoid any future interaction with the tied agent; and
Completion and fulfilment of all outstanding activities and obligations to clients either by the firm itself or another tied agent.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.

COMPLIANCE, REGULATORYFebruary 11, 20220 comments

by Andria Papageorgiou

Andria Papageorgiou Law Firm awarded by The Lawyers Global Awards 2021

It is with great pleasure to announce that Andria Papageorgiou Law Firm has been awarded as an Outstanding Law Firm, within the regions of Europe, Eastern Europe, and Cyprus, by The Lawyers Global (TLG), which is the ultimate exclusive directory for Elite Law Firms and Lawyers.

The award was received by the firm’s Founder, Mrs. Andria Papageorgiou.

Law firms have overcome the numerous challenges imposed by an atypical and unprecedented global crisis. Some of the challenges resulted, in many cases, in the capability of law firms to adjust, innovate, and find the paths for successful outcomes. Congratulations to all the Awarded law firms that proved to deserve their recognition and become listed at The Lawyers Global as The Law Firms’ Elite.

We are elated with this major achievement of our Law Firm as this recognizes the hard work and commitment during our very fresh beginning as a newborn Law Firm, with a legacy of a long experience in both legal and financial services sectors.

Our aim is to remain dedicated to bringing the highest value of service to our clients in any sector or industry they operate in, ready to provide bespoke advice and legal services tailored to the client.

Thank you to all friends, associates, and clients for their continuous and valuable support.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Signed-Awards-Certificate-2021-A4

NewsDecember 17, 20210 comments

by Andria Papageorgiou

Directors’ duties under Cyprus Law

A. INTRODUCTION

The board of directors of a Cyprus company is the administrative body responsible for the day-to-day management of the company.

According to section 170 of the Cyprus Companies Law, Cap. 113, it is mandatory for a private company limited by shares to have at least one director on the board of directors while public companies must have at least two directors. In the case of private companies with a single member, the sole director may also be the secretary of the company (section 171 (1) of the Cyprus Companies Law, Cap. 113).

The provisions of the Cyprus Companies Law, Cap. 113 do not explicitly fix the maximum number of directors to be appointed on the board of directors of a Cyprus company, however, this restriction is imposed in the articles of association of each Cyprus company.

Directors exercise extensive powers in the management of their companies, influencing their company’s conduct, by virtue of their involvement in the decision-making process. Under Cyprus law, the directors are considered to stand in a fiduciary relationship, with their company, and are subject to specific duties, stemming from their relationship.

B. WHO MAY BE APPOINTED AS A DIRECTOR?

Any natural person or legal entity qualifies to be appointed as director of a Cyprus company.

The Cyprus Companies Law, Cap. 113 does not make explicit provisions of any formal requirements for the appointment of a person or legal entity in the position of director.

Furthermore, the director of a Cyprus company need not be a shareholder of the company.

C. APPOINTMENT AND REMOVAL OF DIRECTORS

The first directors of a Cyprus company are appointed by the subscribers of the company and from there on, the procedure to be followed for the appointment and/or removal of subsequent directors is governed by the company’s articles of association.

Subject to the articles of association of the company, the appointment of a director will arise in instances such as to fill a casual vacancy, i.e. when a director has retired or when it is necessary to appoint an additional director.

The company may by ordinary resolution remove a director from office, prior to the expiration of his period of office, by adopting an ordinary resolution in general meeting, notwithstanding, anything contained in the articles of association of the company or any agreement between the director and the company.

D. GENERAL DUTIES

1. Fiduciary Duties

A director owes a duty to the company to act bona fide, meaning in good faith in the best interests of the company. This duty is commonly called the “fiduciary duty” of directors. The core of this duty is that the directors must act to promote the success of the company, taking into consideration both the short-term and long-term interests of the shareholders. In order to adequately execute this duty, directors must be loyal. In other words, they must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members. This gives directors considerable leeway, but if they establish their honest belief to that effect, then necessarily there must be some evidence that they actually considered the matter.

In considering whether a director did act bona fide in the interests of the company, the question can be asked in terms of whether an intelligent and honest director could in the whole of the circumstances reasonably believe the transaction to be for the benefit of the company. In order for a director to decide whether or not an act is promoting the success of the company, he examines the objectives of the company as set by the members of the company.

It is of utmost importance that directors must while exercising their fiduciary duties act in accordance with the company’s constitution (such as the articles of association) and exercise their powers only for the purposes allowed by law. The payment of a dividend when there are insufficient profits to permit distribution is an illustration of a breach of this duty.

1.1 Independent judgment

Directors cannot without the consent of their company, fetter their discretion in relation to the exercise of their powers, and cannot bind themselves, to vote in a particular way, at future board meetings. This is so even if there is no improper motive, or purpose and no personal advantage to the director.

1.2 Loyalty and conflicts of interests: Duty to avoid a conflict of interest is one of the directors’ fiduciary duties

It is a long-established equitable rule precluding a fiduciary/director from entering without consent into engagements in which he has or can have a personal interest conflicting or which may conflict with the interests of those whom he is bound to protect

The no-conflict rule refers to the exploitation of property, information or opportunity of which a director became aware at a time when he was a director of a company. This duty applies whether the conflict is between ‘interest’ and ‘duty’ ie between the direct or indirect interests of a director and the interests of the company and his duty to advance those interests and/or where there is a conflict or possible conflict between ‘duties’ (for example where a director is a director of two or more companies and has a separate duty to advance the interests of each company).

Not only directors must not place themselves in a position of a conflict or possible conflict, but also in case they find themselves in such a position, they must regulate or abandon the conflict.

1.3 Disclosure

Directors have the duty to disclose any, direct or indirect, interest in a General Meeting. However, they do not have to account for interest if they are allowed to have that interest by the Company’s Constitution, or the interest has been disclosed to the Board and approved by the Company in a General Meeting.

Apart from these, a Director in order to be is a good fiduciary, must act fairly as between the Members of the Company.

1.4 Duty to exercise skill and care

In addition to their fiduciary obligations, directors should be subject to duties of care and skill appropriate to the modern commercial world, bearing in mind the increased emphasis on higher standards of corporate governance. In general, the breach of the duty gives rise to liability for negligence; however, it is important to note that directors are rarely sued for negligence in the management of a company’s affairs.

Enforcement of the duty of care and skill takes place when the company goes into insolvent liquidation or administration where a liquidator or administrator may consider it worthwhile to pursue a director for wrongful action or decision. If in the course of a winding-up of a company, it seems that directors knew or ought to know that the company has no reasonable possibility of paying and nevertheless, they did nothing to cease the company from being credited, then they may become personally liable for that credit as per section 307(v) and 312 of the Companies Law. In this case, directors can avoid the liability if they show that they have taken “every step with a view to minimizing the potential loss to the companies’ creditors as they ought to have taken“.

1.5 Standard of care, skill, and diligence

All directors of the company are collectively responsible for the company’s affairs, but equally directors’ duties are ‘personal and inescapable’ duties, and so within that collective responsibility each director must meet the appropriate standard of care, skill, and diligence. The standard of care, skill, and diligence that is required is that of a reasonably diligent person who has taken on the office of director, set in the context of the functions undertaken, with that objective minimum standard capable of being raised in the light of the particular attributes of the director in question. For example, if a director is a professional person, such as a chartered accountant, is required to meet the standard expected from a reasonably diligent director carrying out the functions carried out by him in that company and having that personal attribute. This interpretation of the duty of care is set out in Re D’ Jan of London Limited [1993] B.C.C. 646. It is commonly known as the “objective” or “benchmark” test of what “the reasonable man” would expect of a director in particular circumstances. If a director has a specific skill or level of expertise, then he or she must exercise that skill in addition to the “benchmark” test.

2. Statutory Duties

The statutory duties of directors are enforced by the Companies Law, Cap. 113, Income Tax Laws, VAT, Customs & Excise legislation, Health and Safety and Environmental legislation.

As far as Companies Law is concerned, directors have various duties to the company, its shareholders, and the public. To start with, directors must be registered as per s.192. The number of shares or debentures which are held by them must also be stated in the register (s. 187). In case of transfer of shares in a company, directors must take all reasonable steps to secure those particulars with respect to the payment made to him as compensation for loss of office, including the amount thereof, are disclosed (s. 185). In addition to this, directors have the duty to disclose any direct or indirect interests, if any, which arise under a contract or a proposed contract with the company (s.191). Directors’ salaries, pensions, compensations, and/or loans offered to them by the company must be transparent and hence, included in any accounts of a company laid before it in general meeting (s. 188 and s. 189). Directors must make a statement in lieu of prospectus to be delivered to the registrar of companies upon company ceasing to be a private company (s. 31), make contracts following the formalities of s. 33 and sign documents that require authentication as per the provisions of s. 37. Regarding the publication of the prospectus, directors are obliged to draft the same according to the formalities of ss. 38 and 39. Moreover, directors must execute the transfer of shares taking into consideration pre-emptive rights and the procedural formalities stated in s.71 to s.82, such as the issuance of both the certificates of shares and the certificates of all debenture stock allotted or transferred within two months after the allotment.

Further to these duties, directors must keep books of account available for inspection (s.141) and make a complete set of financial statements in accordance with the International Accounting Standards (s.142). They must attach to the financial statements a report in relation to the status and the foreseeable development of the company affairs, as well (s. 151). Any alteration or initial drafting of books of account, papers, and securities must be made with due consideration since in winding up, any mistakes in these documents may give rise to personal liability under s. 308. Last but not least, in case of directors make a petition to the Court for winding up, they must comply with the procedures of s.213 and contribute the assets of the company in accordance with s.207.

3. Transparency in financial reporting

It is worth mentioning that directors must keep books of account and financial statements open for inspection at least for a period of six years and in a place within the Republic of Cyprus. If a director does not comply with this duty, then he or she is liable for committing a criminal offense, the penalties of which range from a default fine to 2 years imprisonment. Moreover, he or she will have to compensate the company with an amount equal to the loss that occurred by his or her breach of duty.

E. TO WHO ARE THE DUTIES OWED?

Directors fiduciaries’ duties are owed to their company as a whole, and not to individual shareholders, creditors employees etc. However, in certain circumstances, the director’s fiduciary duties may extend to shareholders (i.e. for example where the directors are involved in the sale of shares of a shareholder) or to creditors (i.e. for example, where a company is insolvent).

F. REMEDIES FOR BREACH OF DUTIES

In the event of a violation of the above duties, the company – (or any minority shareholder by a derivative action) – may bring an action against the directors for inter alia:

The injunction to block them for violating their duties;
Declarations and orders for setting aside the decisions taken;
Damages;
Restoration of the Company’s property;
Cancellation of the relevant contracts; and
Account of profits.
Summary dismissal of a director.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Business Law, Company Law, CorporateDecember 10, 20210 comments

by Andria Papageorgiou

Registration of the Ultimate Beneficial Owner(s) (“UBOs”) to the Registrar of Companies

The Department of the Registrar of Companies and Official Receiver, has been appointed as the Competent Authority for the operation of the Registration of the UBOs of Companies and Other Legal Entities, based on the Prevention and Suppression of Money Laundering Activities and Financing Terrorism Law and similar Directives.

Hence, all registered/incorporate legal entities, have the obligation to submit electronically, the information of their UBOs under the Beneficial Owners Register operated in the Department of the Registrar of Companies and Official Receiver.

The Partnerships who are registered in the Company’s Registrar have also been included in the list of the entities with the above respective obligation.

UBO can be considered as the physical person who owns/control a legal Entity or the physical person to whom an activity or transaction is operated by a third party.

Direct ownership means a physical person who holds the 25% of shares plus 1 share or shares over 25%
Indirect ownership means a legal entity/ies who hold on behalf of the physical person/s the 25% of shares plus 1 share or shares over 25%

Based on the above, the Companies and Other Legal Entities (Partnership) incorporated before 12/03/2021, are obligated to submit in Registrar of Companies the information required for the real beneficial owners the latest by 12/03/2022.

The submission must be done electronically by the Company or any other Legal Entity (Partnership) via the Government Gateway Portal (Ariadni), that operates since 16.03.2021 without any fees.

The steps for the electronic submission, that need to be taken, are as follows:

Each Company or Partnership must create a profile as an Organization in the Government Gateway Portal (Ariadni) https://eservices.cyprus.gov.cy.
The Identification of the Entity’s / Partnership profile must be done by the physical presence of the Entity’s/Partnership representative at the following authorized centres:

Unified Service Center (CSR) – 13-15 Andrea Araouzou, 1421 Nicosia
District Post Offices (KEPO)
- Nicosia – 100 Prodromou, 2063
- Limassol – 16 June 1943 (former Gladstonos) 3022 Paphos –
- Aristotelis Savva 23, 8025
- Larnaca – Vassileos Pavlou Square, 6023
Citizens’ Service Centers (KEP)
- Nicosia – Georgiou Seferis, 2415 Engomi
- Limassol – Spyrou Araouzou 21, 3036
- Famagusta – Eleftherias 83, 5380 Deryneia

The following companies have an exception from the UBOs registration:

Companies that are licensed under a Regulated Market and are subject to notification requirements based on the European Union Legislation.
Companies which are, subject to equivalent international standards that ensure the ownership transparency.
Companies which submitted to the Registrar of Companies, the application for the deletion of their officers based on the article 327(2A)(a) of the Companies Law before 12/03/2021 or the companies that were without any officers before 12/03/2021.
Companies to which the liquidation procedure has started before 12/03/2021.

More details in relation to the submission of the Beneficial owner’s information in the Register and its operation can be found at the following links:

Regulatory Administrative Act No 112/2021
At the manual for the Interim Solution of the Register of Real Beneficiaries: CLICK HERE
To the answers on frequently asked questions in relation to the Real Beneficiaries: CLICK HERE
Το the announcements of the Registrar of Companies.

Based on the above the Ministry of Energy, Commerce and Industry and the Department of the Registrar of Companies and Official Receiver, are inviting you to proceed as soon as possible and before the 12 March 2022, with the submission of the Real Beneficiaries information at the Real Information Register. Please note that no further extension will be given.

During the collection and submission of the Beneficial Owners’ information, no penalties will be imposed against the entities, until 12/03/2022. Any changes as to information of the UBOs should be submitted within 14 days since the day of the information/changes is acknowledged.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Announcement, Company Law, Corporate, NewsNovember 17, 20210 comments

by Andria Papageorgiou

Circular C475: Sanctions Imposed by the Office of Foreign Assets Control (“OFAC”) of the U.S. Treasury Department

With Circular C475 and on continuation to the Circulars C266 and C337, CySEC draws your attention to the continuously updated list of the latest U.S. sanctions (available here), which inter alia, contains Cyber related Designations and Designations Updates.

Sanctions imposed individually by third countries are not enforceable in the EU, but CySEC expects the Obliged Entities falling under their supervision to take such measures into account, in the context of their relevant risk assessment and take proportionate action, including refraining from engaging with affected persons.

This Circular serves as a reminder to Obliged Entities of their obligations and particularly to CASPs, of the content of CySEC’s Policy Statement on the Registration and Operations of CASPs (“PS-01-2021”, available here), according to which CASPs, are inter alia expected to have in place policies, procedures, systems and controls to ensure compliance with a risk based approach (Paragraph 2.2.2.4 of PS-01-2021 elaborates further on the subject matter).

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Announcement, NewsNovember 15, 20210 comments

by Andria Papageorgiou

New Incentive Scheme To Be Launched To Attract High Tech Companies

Cyprus Government presented recently a new proposal for the attraction of businesses and digital nomads, placing an emphasis on domains related to High-tech, Research & Development and Shipping.

The establishment of this proposal has an attempt to make Cyprus an attractive investment destination in the wider region and Europe and is expected to come into force as from January 2022.

In general the suggested main pillars of the new proposal are as follows:

A. Employment of Non-EU Nationals:

Employment of Non-EU Nationals with a General Minimum salary of €2.500 for highly skilled employees, while a university degree or at least 2 years experience are required. The work permits will be issued within one month and will last up to 3 years. The maximum work permits for Non-EU Nationals per Company is 70% for a 5-year period. The Companies will need to be able to employ Non-EU Nationals as supporting staff with salaries below €2.500 (Maximum 30% of the total supporting staff of the entity).

B. Employment of family members:

Non-EU employee’s spouses, who are employed in a Company operating under the provisions of the Business Facilitation Unit (excluding the supporting staff category) will also have immediate and free access to Cyprus labour market.

C. Digital Nomad Visa:

A new type of permit the so-called Digital Nomad Visa will be introduced for those who wish to live in Cyprus but work remotely for companies operating abroad. This Digital Nomad Visa will have a maximum quota of 100 applications. The visa will be granted for the period of 1 year with the right to renew it for another 2 years. The Digital nomads’ minimum threshold of funds coming from abroad (salary, bank statements, etc.) is €3.500, plus an additional 20% for the spouse and 15% for any minor.

D. Naturalization of Non-EU Nationals employed in Cyprus:

According to the new proposal, non-EU Nationals who are employed in Cyprus, will be able to apply for citizenship after 5 years of residency instead of 7. For those who have a very good knowledge of the Greek language with a proof of certification, will be able to apply for citizenship after 4 years.

E. Simplification of the process for obtaining Permanent Residency:

The actual proposal provides a simple process for obtaining Immigration Permits and Long-Term residency permits. Relevant Regulations of the Aliens and Migration Law will be amended in order to speed up the process of the applications.

F. AP Law Firm:

Andria Papageorgiou Law Firm can assist with any of the above matters. Therefore, should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

Announcement, Employment Law, Immigration Law, NewsNovember 5, 20210 comments

by Andria Papageorgiou

Legal Opinions For Financial Institutions

Legal opinion is a piece of professional legal advice on a specific subject. Lawyers have an exclusive right to prepare such a document at the request of the person concerned. A correctly drafted opinion letter will ensure the benefit of your side to all parties to the dispute and confirm the transparency of the contract or the legality of certain legal actions.

Navigating through complex and uncertain legal provisions, Andria Papageorgiou Law Firm provides qualified third-party opinions on an array of subjects, with our expertise lying in financial services to assist you to come to the right conclusion whilst allowing you to have a clear understanding of the law.

We can assist with drafting legal opinions in Cyprus and over 100 other jurisdictions through our network of associates.

Regulators, payment service providers, and other methods of payment such as Visa and Mastercard are now requiring investment firms and other financial institutions to show that the provision of services in European or non-European countries, is permitted and in line with local country rules and regulations.

It is important to remember that in drawing up a Legal Opinion on any issue, Lawyers are responsible for their opinions, as they conduct legal and factual research, analysis, and verification and it is for this reason that providing Legal Opinions can be a rather expensive process at times.

Our global network of associates has been vetted to ensure that quality Opinions are prepared with investment issues distinguished by strict language, clarity of circumstances provided, and presence of transparent and understandable conclusions.

We have assisted investment firms and other financial institutions globally, including Cyprus, South Africa, Belize, New Zealand, Australia, Thailand, Malaysia, Taiwan, Singapore, and more, to attain Legal Opinions in over 100 countries.

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

COMPLIANCE, REGULATORYNovember 1, 20210 comments

by Andria Papageorgiou

Shareholders’ Agreements

A. Introduction:

Under the Cyprus Companies Law, Cap 113 (hereinafter the ”Law”), all private limited Companies are required to adopt articles of association (hereinafter the ”AoA”) and a memorandum of association upon their incorporation. The AoA specify the regulations for a Company’s operations and management, and they set out the administrative and Company law procedures for carrying out the business affairs of the Company. It goes without saying that they are being drafted in accordance with the Law so that the provisions of Law are reflected in the regulations of a Company. The AoA are public documents, and the public can review them through the Registrar of Companies and Official Receiver of Cyprus.

A Shareholders’ Agreement (hereinafter the ”SHA”) is a private contract between the members of a Company. A SHA regulates the relationship between the Shareholders as well as setting the grounds in the event of a deadlock. Whilst Companies are not legally required to have a SHA (the Law does not make any references to SHA), it is important for the Shareholders to enter a SHA upon the incorporation of the Company in order to be aware of their rights and obligations towards each other. It is not necessary that the Company is a Party to a SHA.

B. When should the Shareholders enter a SHA:

From our experience, we would recommend for a SHA to be signed at the stage when you form the Company and issue the first shares. In fact, it is a good practice to ensure there is a common understanding of Shareholders’ expectations of the business.

C. What a SHA usually covers:

At Andria Papageorgiou Law Firm, we offer tailor-made solutions for SHAs drafted specifically to avoid future conflicts between the members of a Company, covering, among others, the below issues:

The Company structure, including the composition of the share capital of the Company;
Shareholders’ rights and obligations;
Regulate the issuance, transfer and sale of shares of the Company;
Regulate the appointment and resignation/removal of Directors;
Restrictions on the activities of the Company, including provisions, requiring consent of all Shareholders, or approval by specific majority to enter new areas of business or territories;
Set out provisions to resolve deadlock situations;
Non-Competition issue, including provisions preventing shareholders from setting up competing business, to the Company, within a prescribed time period, or territory;
Regulate the amount and way of declaring dividends;
Confidentiality issue, including provisions relating to the exposure to publicity of the Company’s documents (Under Cyprus Law there is no obligation for the registration or deposit of the SHA with the Registrar of Companies); and
Set out provisions for dispute resolution procedures.

D. What if there is a breach of the SHA:

In the event of a violation of the SHA by any contracting Party, then the other Party can enforce same by an action for specific performance, and for damages, as well as to apply for an injunction to block the violation of same.

It should also be noted however that any term of the SHA which contravenes any statutory provision of the Law is considered invalid under Cyprus Law. In addition to this point a SHA and the AoA of a Company should be consistent with one another.

E. Conclusion:

A SHA is a valuable tool, for providing a procedural framework, to regulate and govern the internal management of a Company, or joint venture.

In addition, through the use of a SHA, the Parties can achieve greater protection, of the rights of minority Shareholders, quick resolution of deadlocks, sufficient regulation of the rights of entry, or exit, of shareholders in the Company, secure methods of valuation of the fair value of the shares of the Company etc. Because the SHA, has the additional advantage of not being available to public, unlike the Company’s constitutions, sensitive details, regarding the role of the Parties in the Company’s management, their rights, and obligations etc., may be set out in the SHA.

The SHA shall be signed by all registered Shareholders of the Company, as well as by the Company, and in case of conflict between the terms of the AoA, and the terms of the SHA, the terms of the latter, prevail and have superior effect.

F. AP Law Firm:

Andria Papageorgiou Law Firm can assist you with the below:

Provision of a Legal Opinion and Advice on the SHA;
Drafting of a new tailor-made SHA;
Review and Comment on any existing SHA;
Provision of a Legal Advice on any dispute arising out of a SHA

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

Business Law, Company LawOctober 21, 20210 comments

by Andria Papageorgiou

Cyprus Visas and Permits

A. Introduction

All non-EU citizens who wish to enter the territory of the Republic of Cyprus have various options of visas, including the short-stay visa, temporary residence permits, immigration permits, and residence permits for family members.

B. Short Stay Visas

When it comes to business or vacation purposes (i.e. non-immigration related) for less than three (3) months, non-EU citizens should apply for the short-stay visa. This type of visa can be issued as a multiple-entry, allowing non-EU citizens to visit Cyprus several times, or a single entry visa.

However, if a non-EU citizen is planning to visit Cyprus on a frequent basis for business purposes or otherwise, there is the option of obtaining a multiple entry visa for one year, although the total visits must not exceed ninety (90) days, starting from your first visit during each six (6) month period.

C. Temporary Residency Permit (“Pink Slip”)

Non-EU citizens who wish to visit Cyprus for a long-term, without any employment rights, should obtain special temporary residency permit (“pink slip”). This type of permit can be issued for a period of 1 to 4 years (with a limitation of absence period not more than 4 months). A “Pink Slip” could be issued for a period of 1-2 years upon first application and will be easily extended for a further 1-2 years period thereafter.

“Pink Slip” – Visitor Visa

Visitor Visas are normally provided to applicants under the following categories:

Spouses from third countries that are married to Cypriot citizens or parents-in-law from third countries or underage children of foreigners (younger than 18 years) who have applied for family reunification and a residence permit;
Third country nationals that apply for an extension of their visitors visa and which have enough funds from abroad to support themselves (or foreigners who have enterprises in Cyprus);
Applicants who have received temporary entry permits from consular authorities of Cyprus abroad; having the term FINAL on them, may apply for an extension when special reasons are taken into consideration (e.g. Humanitarian reasons, householders of property in Cyprus etc);

“Pink Slip” – Student Visa

Each student who takes a long-term course at a Cyprus educational institution must obtain permission for long stay. Students from non-EU countries can be issued visas by an Embassy / Consulate of the Republic of Cyprus in the student’s home country or by the Migration Department of Cyprus. International students must report to their educational institution immediately upon arrival to register and complete other formalities required for obtaining further temporary resident permits.

“Pink Slip” – Employment Visa

Applications for the issue of Entry and Temporary Residence and Employment Permits must be submitted by the Cypriot employer through the District Office of the Aliens and Immigration Unit of the Police or at the Central Offices of the Civil Registry and Migration Department in Nicosia. The applications should be submitted along with the contract of employment certified by the Department of Labor of the Ministry of Employment and Social Insurance, which is the competent Department for securing that there are no Cypriots or citizens of Member States of the European Union, available or adequately qualified for the specific job or post prior to recommending the employment of third country nationals. The applicant must proceed to register with the District Office of the Aliens and Immigration Unit of the Police. The maximum duration of employment in most cases is four years (exemptions may apply).

Companies who meet the criteria to be classified as foreign interest companies are also eligible to employ third country nationals in Cyprus. They must meet the following criteria:

The majority of the company’s shareholders or ultimate owners should be foreign;
The company should operate from their its own fully fledged offices in Cyprus;
New companies should prove that they have direct foreign capital investment amounting to at least EUR 171,000 brought legally to Cyprus from abroad.

Documents required for Temporary Residence Permit (Pink Slip) application (where applicable):

Copy of sale agreement or rental agreement or title deed;
Copy of employment contract duly signed and stamped;
Proof of funds deposited in a personal bank account;
Passport(s) copy (plus copy of first page and last entry stamp);
Pension certificates + translation and any other source of income such as interest, rental income, other investments. The applicant must provide evidence of steady and regular income, adequate for the maintenance of the applicant and his/her family, from external sources;
Bank guarantee (as required);
Marriage certificate + translation with apostil (Russians exempted);
Birth certificate for children + translation with apostil (Russians exempted);
4 photos for first issue (1 photo for renewal);
Medical Insurance which is automatically renewable

D. Immigration Permits

Non-EU aliens could apply for immigration permits if they are qualified for the Categories as listed below under the 5^th Regulation of the Aliens and Immigration Regulations of Cyprus:

Category A: Persons who intend to work as self employed in agriculture, cattle breeding, bird breeding or fish culture in the Republic, provided that they have in their possession adequate land or a permit to acquire same, they have fully and freely at their disposal capital of approximately €430,000 (CY£250,000) and such an employment should not negatively affect the general economy of the Republic.

Category B: Persons who intend to work as self employed in mining enterprises in the Republic, provided that they have in their possession a relative permit, they have fully and freely at their disposal capital of approximately €350,000 (CY£200,000) and such an employment should not negatively affect the general economy of the Republic.

Category C: Persons who intend to work as self employed in a trade or profession in the Republic, provided that they have in their possession a relative permit, they have fully and freely at their disposal capital of approximately €260,000 (CY£150,000) and such an employment should not affect negatively the general economy of the Republic.

Category D: Persons who intend to work as self employed in a profession or science in the Republic, provided that they have academic or professional qualifications, for which there is demand in Cyprus. Possession of adequate funds is also necessary.

Category E: Persons who have been offered permanent employment in the Republic, which will not create undue local competition.

Category F: Persons who possess and have fully and freely at their disposal a secured annual income, high enough to give them a decent living in Cyprus, without having to engage in any business, trade, or profession.

The annual income required should be at least €9568,17 (CY£5,600) for a single applicant and moreover at least €4613,22 (CY£2,700) for every dependent person, but the Immigration Control Board may demand additional amounts as necessary. Most applicants come under this Category, the majority of them being pensioners or retired persons.

This is the only category where a permit can be obtained by all family members simultaneously. An Immigration Permit will be automatically cancelled if the interested person fails to acquire residence in Cyprus within one year from the approval of the application, in case he/she is residing outside Cyprus. It will also be cancelled if he/she acquires permanent residence abroad or be absent from Cyprus for a period of two years.

Ε. Residency Permits

Residency Permit for non-EU family members of non-EU citizens:

Non-EU family members of a third country national who has prospects of applying for a permanent residency permit in Cyprus, can obtain a Resident Permit. Non-EU family members such as a spouse and unmarried children under 18 years old can obtain a Resident Permit upon providing documentary evidence of the family relationship (e.g. birth certificates) with a third-country national who holds a residence permit valid for at least one year and who has resided legally within Cyprus for a period of at least 2 years. Upon application for Family Reunification non-EU family members may obtain a Residence Permit.

Residency Permit for non-EU family members of EU citizens:

Non-EU family members of EU citizens who reside in Cyprus can obtain a Resident Permit. Non-EU family members such as a spouse and unmarried children under 18 years old can obtain a Resident Permit upon providing documentary evidence of the family relationship (e.g. birth certificates) with the EU citizen.

The Residency Permit issued to a non-EU family member is valid for five years from the date of the issue or for the envisaged period of residence of the EU citizen.

Finally, please note that all the documents issued by a foreign authority (either for applying for temporary or permanent residence permit) should be translated to either Greek or English and be duly authenticates (they should bear the stamp “APOSTILLE”, if they are issued by countries that have signed the Hague Convention, otherwise they should be sealed by the Ministry of Foreign Affairs of the issuing country and the diplomatic mission of the Republic of Cyprus in the issuing country).

F. AP Law Firm:

Andria Papageorgiou Law Firm can assist you with the below:

Provision of a Legal Opinion on any Immigration matter;
Advice and preparation of any type of application, according to each Client’s case;
Support and assistance through all the procedure from initial property purchase, if required;
Advice on required documents;
Preparation and submission of the necessary applications;
Collection of the relevant cards.

Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.

Employment Law, Immigration Law, Property LawSeptember 28, 20210 comments

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Andria Papageorgiou

Author: Andria Papageorgiou

A. Reporting Requirements:

B. Record Keeping of the Infringement Reports:

A. INTRODUCTION

B. OVERVIEW AND SCOPE

C. SUPERVISORY EXPECTATIONS WHEN FIRMS APPOINT TIED AGENTS

D. SUPERVISORY EXPECTATIONS ON FIRMS USING TIED AGENTS IN THEIR ONGOING ACTIVITIES

A. INTRODUCTION

B. WHO MAY BE APPOINTED AS A DIRECTOR?

C. APPOINTMENT AND REMOVAL OF DIRECTORS

D. GENERAL DUTIES

1. Fiduciary Duties

1.1 Independent judgment

1.2 Loyalty and conflicts of interests: Duty to avoid a conflict of interest is one of the directors’ fiduciary duties

1.3 Disclosure

1.4 Duty to exercise skill and care

1.5 Standard of care, skill, and diligence

2. Statutory Duties

3. Transparency in financial reporting

E. TO WHO ARE THE DUTIES OWED?

F. REMEDIES FOR BREACH OF DUTIES

A. Introduction:

B. When should the Shareholders enter a SHA:

C. What a SHA usually covers:

D. What if there is a breach of the SHA:

E. Conclusion:

F. AP Law Firm:

A. Introduction

B. Short Stay Visas

C. Temporary Residency Permit (“Pink Slip”)

D. Immigration Permits

Ε. Residency Permits

F. AP Law Firm: