by Andria PapageorgiouAnnouncement on the Mediation Bill
The Cyprus Bar Association (CBA) was informed on Friday, January 3, 2024, about the decision of the Council of Ministers to approve a bill making mediation mandatory before filing claims for commercial disputes up to €10,000.
During the consultation phase conducted by the Ministry of Justice and Public Order—prior to the current Board of Directors assuming office—the former President of the CBA expressed support for mandatory mediation in a letter dated April 7, 2023 (click HERE to view the letter), recommending that this apply to claims up to €10,000, rather than the initial proposal of €5,000 outlined in the draft bill.
The CBA’s Board of Directors will collectively review the bill’s provisions and submit recommendations aimed at improving the framework, making mediation an accessible and effective method of out-of-court resolution for small claims. The CBA will keep its members informed of any developments.
On this occasion, we wish to reiterate that the modernization of the justice system remains a key priority and objective for the CBA.
Mediation, like arbitration, must be embedded in the public’s mindset as an alternative dispute resolution method and is essential for an efficient justice system. The CBA, through its Arbitration and Mediation Centre, actively promotes the enhancement of these institutions.
The legal profession plays—and must continue to play—a pivotal role in the mediation process, both in terms of education and in representing parties in mediation procedures.
Alternative dispute resolution methods complement any modern legal system, contributing to the swift and definitive resolution of disputes. However, these methods should supplement, rather than replace, the judicial system. The primary focus must remain on developing a modern justice system.
For decades, no significant progress was made, leading to the accumulation of systemic problems and public disillusionment regarding access to justice.
The consequence of this stagnation is evident today, with a substantial decline in the number of new claims filed in courts (e.g., only 1,700 cases filed in Nicosia in 2024, compared to tens of thousands in previous years).
It is now clear that the objective should no longer be the mere decongestion of the courts, as this issue may naturally resolve itself in a few years due to the low filing rates. Instead, efforts should focus on designing and implementing a robust, modern justice system, incorporating innovative ideas and fully utilizing available technological tools.
Although some steps towards modernization have been taken in recent years, they remain insufficient. Cyprus is far from presenting a comprehensive justice system that reflects a modern rule of law. Particularly in the first-instance courts, aside from the introduction of new civil procedure rules—which, so far, have shown limited impact on reducing case durations—no other substantive changes have been made.
The CBA remains committed to supporting all efforts to modernize the justice system and will continue to submit proposals and engage in consultations with relevant stakeholders until the goal is achieved: a strong, modern, and citizen-friendly justice system that meets the needs of both individuals and businesses in Cyprus.
HOW WE CAN ASSIST YOU
At Andria Papageorgoiu Law Firm, we recognize the critical importance of alternative dispute resolution methods, such as mediation, in streamlining legal processes and achieving fair outcomes for all parties involved. Our law firm is proud to have certified mediators with extensive experience in handling commercial and civil disputes. Our team is committed to guiding clients through every stage of the mediation process, ensuring that their interests are effectively represented and that solutions are achieved efficiently and amicably.
We understand that disputes—whether small or complex—require more than just legal expertise; they require a strategic, client-centered approach to achieve swift and cost-effective resolutions. By engaging with our expert mediators, clients benefit from a structured yet flexible process that minimizes delays, reduces costs, and preserves valuable relationships.
Whether you are facing a commercial disagreement or any other legal challenge, Andria Papageorgiou Law Firm is equipped to assist you every step of the way, offering tailored support and solutions that align with your unique goals. We believe in empowering our clients by making dispute resolution a less burdensome and more constructive experience.
Our commitment to excellence and innovation positions us as a trusted partner in alternative dispute resolution.
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.
by Andria PapageorgiouThe Obligation of Employers to Register the Essential Terms of Employment for All Employees in the “ERGANI” Information System
According to a recent Decree issued by the Minister of Labour and Social Insurance, which came into effect on 20 December 2024, all employers in Cyprus are now required to register the essential terms of employment for all their employees in the “ERGANI” information system. Each employer must complete this registration between 2 January 2025 and 28 February 2025.
Pursuant to the Transparent and Predictable Working Conditions Law of 2023 (Law 25(I)/2023), and specifically Article 11, which forms the legal basis for this Decree, employers are now obligated to submit certain information into the “ERGANI” system. This includes details about the employer, the employee, a description of the employee’s role and position, the start date of employment, remuneration, and other key information.
More information can be found here.
The “ERGANI” information system is a digital platform through which employers must notify the authorities of hirings, terminations, and declarations of employment terms. The platform not only facilitates the management and monitoring of employment relationships but also serves as an important tool for both employers and state authorities by ensuring the proper documentation of employment terms for each employee and securing compliance with the legislation.
Compliance with the Decree for employers means the effective management of employee records, improved trust and transparency with employees, legal protection, and avoidance of fines or other legal disputes. For employees, it provides clarity and safeguards regarding their terms of employment as well as legal protection of their labor rights.
The Transparent and Predictable Working Conditions Law of 2023 (Law 25(I)/2023) applies to every employer and all employees. An employee is considered any person engaged under a contract or relationship of employment or apprenticeship, or under circumstances that may imply an employer-employee relationship.
Since Article 27 of the Transparent and Predictable Working Conditions Law of 2023 (Law 25(I)/2023) refers to the imposition of penalties on employers who violate any provision of the law, and considering that the obligation to register the essential terms of employment in the “ERGANI” system arises from the provisions of Article 11, timely compliance is imperative.
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.
by Andria PapageorgiouCross-Border Mergers in Cyprus: Legal Framework and the Impact of the New Amendment Law
Cyprus has long been recognized as a key jurisdiction for mergers and reorganizations at the local level and for cross-border operations within the European Union. With its robust legal framework, favorable tax regime, and adherence to EU directives, Cyprus offers a streamlined process for cross-border mergers, which has recently been further refined through legislative amendments. This article provides an overview of cross-border mergers in Cyprus and the significant updates introduced by the new amendment law harmonizing Directive (EU) 2019/2121.
The Concept of Cross-Border Mergers in Cyprus
A cross-border merger involves consolidating two or more companies governed by the laws of different EU Member States. In line with Chapter II of EU Directive 2017/1132/EC and Articles 201I-201X of the Cyprus Companies Law, Cap 113 (the “Companies Law”), a cross-border merger can take the following forms:
- Absorption: One or more companies transfer all their assets and liabilities to another existing company, dissolving without liquidation.
- Formation of a New Company: Two or more companies transfer their assets and liabilities to a newly incorporated entity.
- Absorption by Parent Company: A subsidiary transfers its assets and liabilities to its parent company.
Key Requirements for Cross-Border Mergers
Under Cyprus law, a cross-border merger must comply with both local requirements and those outlined in the EU Directive. Key requirements include:
- Drafting and Filing of Common Terms: The directors of all merging companies must prepare a common merger plan detailing the terms, impact on stakeholders, and any proposed structural adjustments. This plan must be submitted to the Registrar of Companies in Cyprus and published for stakeholder review.
- Shareholder and Stakeholder Reports: Reports must outline the legal, economic, and social implications of the merger, ensuring transparency for shareholders, employees, and creditors.
- Independent Expert Review: An expert report assessing the merger’s fairness and compliance may be required unless unanimously waived by shareholders.
- General Meeting Approval: The merger must be approved by special resolution at a general meeting of the merging companies.
- Court Sanction: The Cyprus District Court must issue a pre-merger certificate confirming compliance with all legal and procedural requirements.
The 2024 Amendment Law
On February 29, 2024, the Cyprus Parliament passed a significant amendment to the Companies Law, aligning it with Directive (EU) 2019/2121. This amendment enhances the cross-border merger process by introducing new safeguards, digitization measures, and streamlined procedures.
Key Features of the New Law
- Applicability and Restrictions: The law applies to companies with at least one Cypriot entity involved. Restrictions prevent mergers involving companies under liquidation, insolvency, or crisis prevention measures, ensuring responsible corporate governance.
- Joint Merger Plan Requirements: Directors must include specific details in the merger plan, such as the legal form of entities, exchange ratios, and creditor safeguards. The plan must be harmonized across all participating companies.
- Electronic Processes: The amendment introduces digital submission and publication of documents, reducing administrative burdens and promoting efficiency.
- Stakeholder Protection: The law mandates comprehensive reports for shareholders and employees, detailing the merger’s impact and any measures to mitigate adverse effects. Shareholders can seek additional compensation through the courts if dissatisfied with the merger terms.
- Creditor Safeguards: Creditors can request guarantees within three months of the merger plan’s publication, provided they demonstrate that their claims are at risk.
- Pre-Merger Certificate and Final Approval: The District Court’s pre-merger certificate ensures compliance with all procedures. A second court application finalizes the merger, followed by notification to the Registrar of Companies for official registration and publication.
Tax Implications of Cross-Border Mergers
One of the most compelling reasons to conduct mergers in Cyprus is the favorable tax regime. Cross-border mergers that align with the law’s reorganization provisions may qualify for exemptions from corporate income tax, capital gains tax, and transfer fees. An application to the Cyprus Tax Department, accompanied by the merger plan, is necessary to secure these exemptions.
Conclusion
The updated framework for cross-border mergers in Cyprus underscores the country’s commitment to harmonizing with EU directives while ensuring robust stakeholder protection. The 2024 amendments enhance efficiency, transparency, and legal certainty, making Cyprus an even more attractive hub for cross-border corporate activity.
With its strategic location, pro-business environment, and now a more streamlined legislative framework, Cyprus is poised to remain a leading jurisdiction for cross-border mergers in the EU.
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.
by Andria PapageorgiouCyprus caps large cash transactions
Cyprus lawmakers have approved a crucial amendment to the Law on the Prevention and Combating of Money Laundering, introducing restrictions on large cash transactions. The legislation passed with 24 votes in favor and two against, is aimed at curbing money laundering and illegal activities.
Under the new law, cash payments for goods, services, and property transactions are capped at 10,000 euros or equivalent in other currencies. Violators of this limit could face severe penalties, including substantial fines or imprisonment for up to five years.
The law also extends to cash equivalents such as bearer negotiable instruments, highly liquid goods, and prepaid cards, tightening measures to combat money laundering and terrorist financing. These changes align Cyprus with European regulations designed to enhance the integrity of the financial system.
A provision in the law allows for temporary suspension of these restrictions if electronic payment systems become inaccessible due to unforeseen circumstances. Offenders may incur fines of up to 10% of the amount involved in illegal transactions.
by Andria PapageorgiouA Quick Guide to IP Rights for Fintech Companies in Cyprus
A. IP Protection for Software
Under Cyprus law, software or computer programs are considered literary works protected by copyright, specifically under article 7B of the Law on Copyright and Related Rights of 1976 (Law No. 59/1976). The underlying ideas and principles of any component of a computer program, including the system interfaces, are not covered by intellectual property rights (article 7B(2)).
Copyright protection extends to preparatory design materials (if they can be turned into a computer program), source code, object code, and software architecture. Simply replicating an existing program or draft will not qualify for copyright protection.
Cyprus law does not require a formal registration for copyright, as it is automatically granted. Nevertheless, it is advisable to include the author’s name and creation date within the software’s source code.
Business methods and software programs are not eligible for patent protection, which is reserved for innovative inventions, new processes, and novel ways of operating products. However, this exclusion only applies to software as a standalone entity; inventions incorporating software may still qualify for a patent. Additionally, software code can be safeguarded as confidential information if kept secret, and confidentiality agreements should be used when third parties have access to the code.
B. IP Developed by Employees and Contractors
In Cyprus, intellectual property rights are generally owned by the creator or inventor. However, if an employee develops work as part of their employment contract, ownership typically transfers to the employer unless otherwise agreed. This is outlined in article 11(1)b of the Law on Copyright and Related Rights of 1976 (Law No. 59/1976).
Similarly, if an invention is created under an order or work contract, the patent rights usually belong to the person or entity that commissioned the work or the employer, unless a different arrangement is specified in the contract, as per article 11(1) of the Patents Law of 1998 (Law No. 16(I)/1998).
C. Joint Ownership
Joint owners of intellectual property are not restricted by law from using, licensing, charging, or transferring their rights. However, joint owners generally need to reach an agreement on how to exercise their rights. There may be exceptions depending on the type of intellectual property involved.
D. Trade Secrets
Trade secrets in Cyprus are protected under Law 164(I)/2020, which safeguards confidential business information from unauthorized access, use, or disclosure. To qualify as a trade secret, the information must be confidential, valuable, and protected by reasonable efforts to maintain secrecy. Unlawful actions include unauthorized access, misappropriation, or breaching confidentiality agreements. Trade secret holders can seek court remedies, including provisional measures or compensation for damages. Non-disclosure agreements and internal policies are recommended for protection.
Courts in Cyprus can ensure trade secret confidentiality during proceedings. Under Article 9(4) of Law 164(I)/2020, courts may restrict access to sensitive information and issue confidentiality orders, balancing this with the need for a fair trial.
E. Branding
Brand protection in Cyprus can be achieved through registering a Cypriot trademark or an EU trademark, which provides broader protection across the EU. Trademark registration is done through the Cypriot Intellectual Property Office or the EU Intellectual Property Office (EUIPO). A strong brand reputation can also offer protection against exploitation by third parties.
Logos and slogans that are original may qualify for copyright protection. Additionally, brand designs can be protected as industrial designs if they are new and unique. Fintech businesses should consult public trademark databases to ensure they do not infringe on existing trademarks or designs. A thorough trademark and design search is recommended to identify any potential conflicts.
F. Remedies for IP Infringement
Fintech businesses and individuals in Cyprus whose intellectual property rights have been infringed have several legal remedies at their disposal. These remedies are designed to protect their rights and mitigate the damage caused by the infringement:
- Injunctions: Courts can issue injunctions to immediately halt the infringing activities. This may include preliminary or interim injunctions, which are essential to prevent further damage while the case is being resolved, and permanent injunctions once a judgment is made.
- Damages: The aggrieved party may be entitled to monetary compensation for any financial loss or harm suffered as a result of the infringement. Damages can be calculated based on lost profits, a reasonable royalty, or the infringer’s unjust enrichment, ensuring the affected party is fairly compensated.
- Cease and Desist Orders: Courts may issue orders requiring the infringing party to cease all unauthorized use of the intellectual property. This includes removing or destroying infringing materials, discontinuing the production or sale of infringing goods, and taking measures to prevent future violations.
In addition to these primary remedies, courts may also grant additional relief, such as the seizure or destruction of infringing goods, publication of the judgment to restore reputation, and reimbursement of legal costs incurred by the intellectual property holder.
In case you have any questions or need any assistance, 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.
by Andria PapageorgiouNew Rules for Crypto-Asset Service Providers (CASPs) in Cyprus: Key Updates
The Cyprus Securities and Exchange Commission (CySEC) has made an important announcement regarding regulating Crypto-Asset Service Providers (CASPs). Here’s what you need to know:
- Transition to EU’s MiCA Regulation As of 30/12/2024, the European Union’s Markets in Crypto-Assets Regulation (MiCA) will come into full effect for CASPs. This regulation aims to create a clear framework across the EU for the operation of crypto-asset services, enhancing investor protection and market integrity.
- What Happens During the Transitional Period? CySEC has set a transitional period for CASPs already operating under current national rules. Suppose a CASP is registered before 30/12/2024. In that case, it can continue to offer services until 1/7/2026, or until it receives a decision on its application for authorization under MiCA, whichever comes first.
- No New Applications Under National Rules Starting from 17/10/2024, CySEC will no longer accept new applications for CASP registration under the existing national framework. All new applications will need to comply with the MiCA requirements once the regulation is fully in place.
- Preparation for MiCA Applications CySEC is awaiting the finalization of the Regulatory and Implementing Technical Standards (RTS and ITS) by the European Commission. Once these are released, CySEC will publish guidelines on how to apply for authorization under MiCA. In the meantime, interested parties can refer to draft technical standards by the European Securities and Markets Authority (ESMA) to get a head start on their preparations.
- Cross-Border Services For entities that are already providing crypto-asset services across the European Economic Area (EEA), the deadline to submit notifications to CySEC under the current rules is 30/10/2024. After this date, new cross-border service notifications will not be processed until MiCA is fully in effect.
These changes mark a significant shift in how crypto-asset services are regulated, aiming for more consistent rules across Europe. Entities currently offering these services should make sure they understand the new requirements and prepare for the transition to ensure compliance. For more details, you can refer to CySEC’s official announcement.
These updates represent a key step in aligning Cyprus’s crypto regulations with the broader EU framework, ensuring a smooth transition for CASPs and enhanced protection for users across the region.
In case you have any questions or need any assistance, 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.
by Andria PapageorgiouThe EU’s Digital Operational Resilience Act 2022/2554 (DORA)
Financial regulators have long faced the challenge of ensuring stability in financial markets, especially given the growing reliance on third-party systems, technology, and platforms. The integration of cloud solutions has heightened these complexities, and the potential risk to financial markets increases if a technology provider experiences a cyber incident.
In today’s interconnected financial ecosystem, long chains of IT subcontractors can make it difficult for institutions to fully understand the vulnerabilities in their systems. This is further complicated when key functions are outsourced to entities without direct contractual ties to the financial institution.
The EU introduced the Digital Operational Resilience Act (DORA) with these issues in mind. DORA mandates that financial institutions identify ICT services supporting critical functions and strengthen their contractual protections. It became effective in January 2023, and affected financial entities and ICT providers have until January 2025 to ensure full compliance. After that, regulators will have the power to impose fines and require firms to remedy security vulnerabilities.
DORA has implications beyond the EU, as it also applies to non-EU companies providing ICT services to EU-based financial institutions.
Key stakeholders in the financial industry must prepare for compliance by aligning their contracts with the new standards, as non-compliance can result in severe penalties, including fines, sanctions for board members, reputational damage, and even criminal liability.
Key Dates:
- January 2023: DORA came into force.
- January 2024: Technical standards to be finalized.
- July 2024: Final set of standards published.
- January 2025: Full compliance required.
Who Will Be Affected?
DORA applies to a broad range of financial entities, such as banks, investment firms, and insurance companies, as well as certain ICT service providers who meet specific criteria outlined in the regulation. Some providers will be classified as critical, subjecting them to oversight by EU regulatory authorities.
ICT Services Defined:
ICT services encompass digital and data services provided via IT systems, including hardware, software, and support services. Critical providers are identified based on their impact on the stability and quality of financial services.
Impact and Compliance:
Financial institutions must ensure robust ICT risk management frameworks, incident reporting protocols, and resilience testing. Contracts with third-party ICT providers must meet DORA’s standards, including pre-contractual due diligence, monitoring service levels, and planning for termination or exit strategies.
While DORA applies to the EU, it has a similar counterpart in the UK, with regulations designed to align with global standards on operational resilience. Firms in both regions should ensure they meet impact tolerances for critical services by March 2025.
With the compliance deadline fast approaching, it is crucial for affected organizations to identify gaps in their processes, update their policies, and negotiate contracts that reflect the new requirements.
In case you have any questions or need any assistance, 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.
by Andria PapageorgiouEU Financial Services: Key points to watch for the rest of 2024
Last week, Maria Luís Albuquerque from Portugal was appointed as the new EU Commissioner for Financial Services and the Savings and Investment Union. With her appointment, alongside Mario Draghi’s report on European competitiveness, the EU is set to focus on significant developments in the financial services sector in the coming months.
Key priorities include scaling up sustainable finance, with a focus on transition finance and climate resilience. This aligns with the recommendations from the European Supervisory Authorities (ESAs) and the European Securities and Markets Authority (ESMA) to introduce a product categorization system for financial products with sustainability features. Additionally, digital finance will be a major theme, with a push for an open-access framework and the use of AI in financial services.
Other areas of focus include revitalizing securitization markets and addressing macroprudential concerns with non-bank financial institutions (NBFIs). Upcoming consultations, including one on securitization regulations and another on macroprudential policies for NBFIs, are expected to bring significant regulatory changes.
While work will continue by the Commission and the ESAs to prepare Level 2 and Level 3 measures under key financial services mandates over the coming months (in particular MiCA, DORA, the new AML/CFT package and the EU Banking Package), a number of Level 1 measures (directives and regulations) actioned during the term of the last Commission still need to be finalised.
Several important legislative proposals, such as EMIR 3.0, the ESG Ratings Regulation, and amendments to Solvency II, are expected to be published by the end of 2024. Additionally, trilogue negotiations on key regulations like Payment Services Directive 3 (PSD3) and the retail investment package are set to commence soon.
The move towards a T+1 settlement cycle and developments in short-term funding instruments, such as commercial paper, are also worth monitoring, though immediate changes are not expected.
This period marks a transformative time for EU financial services as the region aims to strengthen its competitive edge and regulatory framework.
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.
by Andria PapageorgiouQ&A: due diligence for tech M&A in Cyprus
As the technology sector thrives in Cyprus, mergers and acquisitions (M&A) involving tech companies have become increasingly common. Conducting thorough due diligence is essential to ensure that intellectual property (IP) and technology assets are accurately evaluated, and potential legal or regulatory risks are addressed before completing a transaction. This process requires specialized knowledge in areas such as IP ownership, licensing, data protection, and cybersecurity.
With over a decade of experience in the fintech industry and extensive expertise in GDPR compliance, intellectual property, and regulatory frameworks, our Law Firm is well-equipped to guide clients through the complexities of tech M&A in Cyprus. We understand the unique challenges that tech companies face during the necessary due diligence phase, and our deep sector knowledge ensures that every aspect—from IP rights to data protection—is carefully reviewed to safeguard our client’s interests.
In this article, we present the key areas of tech M&A due diligence in Cyprus, outlining the distinct approaches for share acquisitions versus asset purchases, and highlighting the legal and regulatory considerations specific to the local market. With our expertise, both buyers and sellers can confidently handle these transactions, ensuring a seamless and legally sound process.
1. What are the typical areas of due diligence undertaken in tech M&A in Cyprus?
In Cyprus, due diligence for tech M&A focuses on reviewing the target’s technology and intellectual property (IP) assets. This includes confirming the ownership, licensing, and protection of technology and IP rights, assessing IT infrastructure (e.g., cloud-based or on-premises systems), reviewing data protection compliance (especially with GDPR), and evaluating cybersecurity measures. Due diligence also assesses contractual obligations, key third-party relationships, the handling of open-source software, and any regulatory filings triggered by the transaction.
2. How does due diligence differ between share acquisitions and asset purchases in Cyprus?
In a share acquisition, the buyer acquires the entire company, including all assets and liabilities, which typically means a more extensive due diligence process. This includes verifying IP ownership and identifying potential third-party disputes over rights. In asset purchases, the focus is on ensuring the transferability of the specific IP and technology assets, as well as contracts, with potential restrictions on transfer. Asset purchases may also require separate approvals for data transfers, particularly where customer data is involved.
3. What public searches are typically conducted during tech M&A due diligence in Cyprus?
Public searches typically involve checking Cypriot IP registers for patents, trademarks, and design rights to verify ownership and status. Searches may also include international IP databases, company registers, and records for liens or security interests on intellectual property. Additionally, searches may be made through the Department of Registrar of Companies for annual reports, charges, and encumbrances on the target’s assets.
4. Can liens or security interests be placed on intellectual property or technology assets in Cyprus?
Yes, intellectual property and technology assets can be pledged as security in Cyprus. Due diligence will involve checking the Department of Registrar of Companies for any registered liens, pledges, or security interests on IP assets. Ensuring that proper documentation for the release of such security is in place is crucial as part of closing the transaction.
5. What is the due diligence process for employee-created intellectual property in Cyprus?
In Cyprus, IP rights created by employees during the course of their employment typically belong to the employer, unless agreed otherwise. Due diligence should review employment contracts to ensure that they include clauses transferring IP rights to the company. Similarly, contractor agreements should be reviewed to confirm that the company holds ownership of any IP or technology developed by external third parties.
6. What due diligence is conducted regarding the target’s use of open-source software?
The buyer will assess whether the target uses open-source software in its proprietary technology and confirm compliance with relevant licenses. Open-source licenses, especially those with “copyleft” provisions, may require that modifications or derivative works be made publicly available. Due diligence will also check if the target has policies to manage the use of open-source software, and, if necessary, the buyer may request code scans to identify potential risks.
7. How is software licensing typically reviewed during tech M&A due diligence in Cyprus?
Software due diligence involves reviewing both licensing in (software the target uses) and licensing out (software the target licenses to others). Key issues include confirming that the software licenses cover the necessary users (especially in group structures) and assessing whether there are any restrictions on transferring licenses to the buyer. Agreements with third-party software providers should be reviewed to ensure continued support and maintenance post-acquisition.
8. What are the data protection considerations in tech M&A in Cyprus?
Compliance with data protection laws, including GDPR, is a significant focus in tech M&A. Due diligence will involve reviewing the target’s data processing activities, internal policies, and any potential data breaches. For transactions involving customer data, especially in asset purchases, it is important to assess whether customer consent is required for transferring personal data, as this may complicate the transaction.
9. Are there specific regulatory concerns for tech companies in Cyprus?
Yes, certain sectors may have additional regulatory requirements in Cyprus. For example, tech companies dealing with sensitive data or operating in sectors like telecommunications or financial services must comply with sector-specific regulations. Due diligence will assess whether the target company has made the necessary regulatory filings or received the appropriate approvals, and whether any filings are triggered by the transaction.
10. How are intellectual property rights (IPR) transferred in tech M&A in Cyprus?
The transfer of intellectual property rights is generally straightforward in Cyprus but may require specific agreements, especially in asset purchases. Transfer of licenses, particularly software licenses, often requires the consent of the licensor. Exclusive and non-exclusive licenses may be treated differently, with exclusive licenses requiring more stringent review. It is essential to ensure that all necessary consents and assignments are obtained before closing the transaction.
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.
by Andria PapageorgiouCyprus on Netflix: A New Era for the Olivewood Scheme
Stelana Kliris’ latest film, “Find Me Falling,” marks a significant milestone as the first Cypriot movie to stream on Netflix. This achievement brings notable actor Harry Connick Jr. to Cyprus, spotlighting the success of the Cyprus Olivewood Scheme.
“Find Me Falling,” a co-production by Jupiter Peak Productions (USA) and Meraki Films (Cyprus), with support from Cyprus’ Deputy Ministry of Culture and the Cinema Advisory Committee, was entirely filmed across Cyprus, from Peyia to Nicosia. The production team consisted predominantly of local talent, with over 150 crew members from Cyprus, alongside a few from the US and Greece.
Launched in September 2017, the Olivewood Scheme aims to attract international film, documentary, and television productions to Cyprus, enhancing investment and employment while promoting the island as a cultural and tourist hub. This initiative aligns with European Commission Regulation 651/2014, providing a blend of grants and tax incentives to qualifying productions.
A. Incentives Overview
Cash Rebate and Tax Credit: Producers can opt for either a cash rebate or a tax credit, not both, under the scheme. Additional incentives, such as tax allowances for infrastructure and equipment investments, and VAT returns, apply irrespective of this choice.
- Cash Rebate: Up to 45% of eligible expenditures incurred in Cyprus, contingent on the production’s cultural test score. The rebate is granted post-filming, upon submission and review of the audit report by the filming committee.
- Tax Credit: Up to 35% of eligible expenditures, with unused credits carried forward for up to five years, subject to a cap of 50% of the applicant’s taxable income in the production year.
- Tax Allowance for Investments: Small and medium-sized enterprises can deduct up to 20% (small enterprises) or 10% (medium-sized enterprises) of their investment in film infrastructure and equipment from their taxable income. Investments must remain in Cyprus for at least five years.
- VAT Refund: VAT incurred on qualifying production expenditures can be refunded. Cyprus VAT rates are 19%, 9%, and 5%, with refunds processed within six months of the VAT declaration deadline or the VAT return application date.
B. Scheme Extension and Impact
In September 2023, the Cyprus government extended the Olivewood Scheme for another three years, following a favorable cost-benefit analysis. An initial investment of 1 million euros yielded a return of 5.5 million euros, justifying the extension and an increased rebate rate of 45%.
C. Benefits of Filming in Cyprus
The Olivewood Scheme offers filmmakers cost-effective production opportunities against Cyprus’ stunning landscapes, from crystal blue seas and sandy beaches to breathtaking mountains and modern cities. This initiative has elevated Cyprus as a preferred filming location and opened new avenues for investment in the local film industry.
Should you have any further questions, please do not hesitate to contact us at [email protected].
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.