CYPRUS Law and Practice Contributed by: Marios Pelides, Dominique Pelides and Konstantinos Efthymiadis, Georgiades & Pelides
exercise the voting rights attached to the secu - rity in question with the aim of determining the undertaking’s competitive conduct (or the voting rights are exercised in preparation for a sale of the undertaking, its assets or the securities in question, which takes place within one year of their acquisi - tion); • control is vested in a liquidator or similar official; • control is acquired by an investment company, pro - vided that such company only exercises its voting rights to maintain the full value of its investments (and not to determine the undertaking’s competi - tive conduct); or • the property that forms the subject matter of the concentration is transferred on death. An exception is also provided where a concentration takes place between an undertaking and one or more of its subsidiaries. An entity will be regarded as a sub - sidiary of another entity where its business activity is controlled by the second entity. Concentrations of major importance A concentration will be regarded as being “of major importance” where it meets certain threshold tests. These are described in 2.5 Jurisdictional Thresholds . As noted in 1.3 Enforcement Authorities , the Minister may also declare a concentration as being of major importance, even if it does not meet the applicable thresholds. 2.4 Definition of “Control” Control may result from rights, contracts or other means, which (either on their own or when combined with other means) provide a person with the ability to decisively influence the activity of an undertaking. The Law makes specific reference to the following exam - ples of means which may produce control (the list is not exhaustive): • preference rights; • other rights to use; and • rights over the composition, meetings or decision- making of an undertaking’s board of directors or similar supervisory or executive body. In practice, control is interpreted broadly and can result from a wide variety of arrangements. Exam -
ples of rights that may confer control include share options, rights acquired pursuant to shareholders’ agreements (eg, as to the appointment or dismissal of senior management, or approval of the budget or the business plan), amendment of an entity’s articles of association, and rights resulting from the taking and crystallisation or enforcement of security. The Law does not distinguish between majority and minority interests. Minority interests that are capable of producing meaningful control (negative control) may also, therefore, be notifiable (eg, in cases where a minority interest gives its holder the right to veto an entity’s strategic decisions). 2.5 Jurisdictional Thresholds A concentration will be regarded as being “of major importance” (and will therefore be notifiable to the Service) where it meets the following thresholds: • at least two of the undertakings participating in the concentration have an aggregate worldwide turno - ver exceeding EUR3.5 million each; • at least two of the undertakings generate turnover within Cyprus; and • at least EUR3.5 million of the combined turnover of all of the participating undertakings is achieved within Cyprus. The thresholds set out above are applicable to all sectors, although turnover is calculated differently for certain types of enterprise (see 2.6 Calculations of Jurisdictional Thresholds ). 2.6 Calculations of Jurisdictional Thresholds Basic Position An entity’s turnover includes proceeds from the sale of products and/or provision of services by it as part of its ordinary course of business activity during the preceding financial year. However, turnover does not include: • sales rebates; • VAT and other taxes that are directly connected to turnover; or • internal transactions carried out between par - ties whose turnover is aggregated with that of the participant (see 2.7 Businesses/Corporate Enti-
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