CYPRUS Law and Practice Contributed by: George Middleton, Christoforos Iosif and Michalis Kramvis, Chryssafinis & Polyviou LLC
9. Insolvency 9.1 Rights of Shareholders If the Company Is Insolvent Generally speaking, shareholders are entitled to receive a distribution of the company’s capital or assets in a winding-up if there is a surplus follow- ing the payment of the company’s debts/liabilities in accordance with the statutory order of distribution (eg, the costs of the winding-up, preferential debts and secured creditors must be settled in priority to the share capital of the company). 10. Shareholders’ Remedies 10.1 Remedies Against the Company Generally speaking, a shareholder of a company has the following remedies. • They may sue the company for wrongs done to them in their capacity as shareholder. By reason of their membership in the company, a shareholder is entitled to: (a) have their name and shareholding entered on the register of shareholders of the company and to prevent unauthorised additions or alterations to the entry; (b) vote at a meeting of members; (c) receive dividends that have been duly declared and become due; (d) exercise pre-emption rights over other share- holders’ shares that are conferred by the articles; (e) have their capital returned in the proper order of priority in the winding-up or on a duly au- thorised reduction of capital of the company; (f) restrain the company from executing acts that are ultra vires; (g) have a reasonable opportunity to speak at a meeting of shareholders and to move amend- ments to resolutions proposed at such meet- ings; (h) transfer their shares; (i) not have their financial obligations to the com- pany increased without their consent; (j) exercise the various rights conferred on them under the law, such as the right to inspect
office from the conclusion of that meeting until the conclusion of the next AGM. A retiring auditor, however appointed, will be reap- pointed at the AGM without passing any resolution unless: • they are not qualified for reappointment; • a resolution was passed at that meeting appointing somebody else or providing expressly that they will not be reappointed; or • they gave the company notice in writing that they are unwilling to be reappointed. No person can be appointed as an auditor of a com- pany unless they hold a licence under the Auditors’ Law of 2017 (Law 53 (I)/2017).
7. Corporate Governance Arrangements 7.1 Duty to Report
In general, the directors do not have any obligation to report to shareholders on the company’s corporate governance arrangements, unless the articles of asso- ciation of the company provide for such an obligation. Public companies listed on the Cyprus Stock Exchange (CSE) may choose to adopt/comply with the provisions of the Code of Corporate Governance issued by the CSE; if they elect not to do so, they must provide reasons for their decision.
8. Controlling Company 8.1 Duties of a Controlling Company
Generally speaking, a controlling company does not have any duties or liability towards the shareholders of the company it controls. However, where the con- trol company uses its power of control to defraud or oppress minority shareholders, the court may interfere at the insistence of the minority.
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