CYPRUS Law and Practice Contributed by: George Middleton, Christoforos Iosif and Michalis Kramvis, Chryssafinis & Polyviou LLC
1.7 Shareholders’ Agreements/Joint Venture Agreements It is quite common for shareholders’ agreements/joint venture agreements to be signed amongst the share- holders of private companies. 1.8 Typical Provisions in Shareholders’ Agreements/Joint Venture Agreements Typically, shareholders’ agreements set out provisions relating to: • the financing of the company; • the company’s business; • the appointment of the directors; • any reserved matters that require approval by the shareholders (with or without special majority requirements); • the issuing and transferring of shares, exit rights and restrictions (tag-along, drag-along, pre-emp- tion); • the ongoing relationship of the shareholders; • deadlock resolution; and • competition and restrictions on the parties. The rules of privity of contract apply to sharehold- ers’ agreements made under Cypriot law. Therefore, a person who is not party to a contract, including a shareholders’ agreement, does not have an enforce- able right and cannot be subject to an enforceable obligation under the agreement. Shareholders’ agree- ments do not need to be filed with the appropriate local authority. 2. Shareholders’ Meetings and Resolutions 2.1 Types of Meeting, Notice and Calling a Meeting All companies are required by law to hold their first AGM within 18 months of the setting up of the com- pany, and to hold subsequent AGMs no longer than 15 months after the previous one. A notice of at least 21 days is required; this notice period can be reduced only via a unanimous decision of the shareholders. Typically, the following issues are discussed/approved at an AGM:
• review/examination of the company’s financial statements, directors’ report and auditors’ report; • election of the company’s directors (to the extent that this is required by the company’s articles of association) and determination of their remunera- tion; • appointment of the company’s auditors and deter- mination of their remuneration; and • declaration of final dividend. Public companies are also obliged by law to hold an extraordinary general meeting (EGM) upon the occur- rence of an event that leads to the loss of 50% of the company’s capital or of a percentage that cre- ates doubt as to whether the company can achieve its corporate goal(s). The company may also hold an EGM (ie, a sharehold- ers’ meeting that is not the annual general meeting) for the passing of any other resolution(s) by its share- holders. 2.2 Notice of Shareholders’ Meetings Unless a resolution proposed for approval at the EGM is a special resolution, the calling of an EGM requires a notice of at least 14 calendar days. If a special reso- lution is proposed for approval at the EGM, the mini- mum notice requirement is increased to 21 calendar days. These notice periods could be shortened follow- ing a decision taken by shareholders holding not less than 95% of the company’s shares. 2.3 Procedure and Criteria for Calling a General Meeting Typically, a general meeting may be called following a decision of the company’s directors, or upon the request of shareholders holding no less than 10% of the shares comprising the company’s paid-up capi- tal. If the directors of the company do not convene a general meeting within 21 days following the deposit of such request, the members who submitted the request may convene a general meeting themselves. 2.4 Information and Documents Relating to the Meeting Unless the articles of association of the company pro- vide otherwise, notice of a general meeting must be given to every shareholder, whether or not they are
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