CYPRUS Law and Practice Contributed by: George Middleton, Christoforos Iosif and Michalis Kramvis, Chryssafinis & Polyviou LLC
4.2 Buybacks A private company may never acquire its own shares. A public company may acquire its own shares in the context of a buyback programme, provided that cer- tain conditions are satisfied.
and minus losses brought forward and sums to be placed in reserve, pursuant to the requirements of the law or the articles of association. The above provisions are generally adopted/followed by private companies as well, when declaring divi- dends. 6. Shareholders’ Rights as Regards Directors and Auditors 6.1 Rights to Appoint and Remove Directors The process of appointing and/or removing director(s) to/from the board of a company can be and is usually specified in the articles of association of a company. Notwithstanding any provisions in a company’s arti- cles of association, the shareholders may remove a director before the expiration of their period of office, by ordinary resolution (50%+1) for which special notice has been given to the company. 6.2 Challenging a Decision Taken by Directors Shareholders have a right to judicially challenge board resolutions, where: • the act or resolution complained of is illegal or ultra vires (outside the company’s objects); • the act required a specific majority resolution of the shareholders that was not secured; or • a personal right of the complaining shareholders was violated by the relevant act or resolution. Moreover, if a shareholder holds that the company’s affairs (including any decisions taken by its board of directors) are being conducted in a manner that is oppressive to some part of the shareholders (includ- ing the shareholder), they can apply to the court for a remedy. Remedies can include an order regulating the conduct of the company’s affairs in future. 6.3 Rights to Appoint and Remove Auditors The first auditors of a company can be appointed by the directors at any time before the first AGM. They hold office until that meeting is concluded. At each AGM, every company must appoint auditors to hold
5. Dividends 5.1 Payments of Dividends
In general, dividends become payable when the authorised body of the company declares them pay- able. It is common for the articles of association of the company to provide that dividends shall be declared at the annual general meeting of the company’s share- holders. Such dividends are called “final dividends” and relate to the profits made by the company during the financial year in relation to which financial state- ments are presented at the meeting. It is also com- mon for the articles of association to provide that the directors shall have the power to declare dividends without shareholder approval. Such dividends are called “interim dividends” and relate to profits made by the company in the current financial year, up and until such interim dividends are declared. In general, a declaration of dividend must be made out of profits. Regarding final dividends declared by public com- panies, the law provides, inter alia, that the amount of a distribution to shareholders cannot exceed the amount of the result of the last financial year, increased by any profits brought forward at the end of the last financial year and sums drawn from reserves available for this purpose, reduced by the amount of losses brought forward from previous financial years and sums placed in reserve in accordance with the law and/or the articles of association. The declaration of interim dividends by public compa- nies may only be made if interim accounts are drawn up showing that the funds available for distribution are sufficient, and the amount to be distributed may not exceed the total profits made since the end of the last financial year for which the annual accounts have been drawn up, plus any profits brought forward and sums drawn from reserves available for this purpose,
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