CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Anna Borovska and Constantinos Kazamias, Scordis, Papapetrou & Co LLC
lender may freely assign its rights and obligations to a new lender; the borrower will not usually be allowed to novate its obligations without the prior express or written consent of the lender. With respect to securities granted to the original lend- er, these may be either released with the simultaneous execution of termination agreements with respect to the existing security agreements between the borrow- er and the original lender, and the new security agree- ments between the borrower and the new lender as secured party (or a tripartite agreement between the borrower, the original lender and the new lender), or transferred without release in favour of the new lender. The process is regulated by general principles of law There are no general statutory restrictions on debt buyback by the borrower or sponsor; it is a matter of commercial terms (existence or negotiation) and capacity under the constituent documents of the parties involved. There may be instances of specific restrictions (such as when the buyback by an affiliate amounts to financial assistance) and therefore each case needs to be examined on its particular facts. 3.8 Public Acquisition Finance With respect to public takeover bids pursuant to the Public Takeover Bids Law (41 (I)/2007), as amended, for the acquisition of securities of companies (or a squeeze-out or a sell-out) it is possible to offer securi- ties, cash or a combination of both. The consideration must be equal to at least the highest price paid or agreed to be paid for the same securities by the offer- or, within 12 months before the bid announcement. When a bid is made for a cash consideration, the bid- ding party must, in support of the bid, provide con- firmations by (i) its board of directors, and (ii) one or more credit (or other) institutions with the necessary solvency (determinable by the regulatory authority with respect to public takeover bids, CySEC), that the cash is and will remain available to such institution until the day of payment with respect to the bid. In the absence of such confirmations, CySEC shall reject the takeover bid documents. The public offer documents are mandatorily submitted to the commission and the and the Contract Law. 3.7 Debt Buyback
board of the offeree company, and will be made avail- able to the holders of securities subject to the bid following securing the approval of the commission to publish the same, and is announced in at least two daily newspapers with national circulation. 3.9 Recent Legal and Commercial Developments There have been no major developments that necessi- tate anything other than the customary ongoing refine- ment of legal documentation. 3.10 Usury Laws Usury principles are contained in the Criminal Code, Chapter 154, (the “Criminal Code”) which prohibits the receiving, charging and/or collecting of interest at a higher rate than the interest rate ceiling during the provision of any loan period, except by credit institu- tions. The CBC must calculate the interest rate ceiling every three months, which is then published in the Official Gazette of the Republic of Cyprus. Usury is punishable upon conviction with a fine not exceeding EUR30,000 and/or imprisonment not exceeding five years. Banking regulations also pro- hibit the charging of interest on interest (double count- ing) and general contractual principles render void/ unenforceable provisions that are penalty clauses in disguise. 3.11 Disclosure Requirements There are several disclosure requirements implement- ed in Cyprus, particularly in relation to financial trans- actions, tax matters, and financial reporting. These requirements are governed by various laws and regu- lations, such as the Law on Transparency Require- ments (Securities admitted to trading on a Regulated Market) – Law 190 (I) 2007 and Law on Insider Dealing and Market Manipulation (Market Abuse) – Law 116 (I) of 2005, which can be summarised as follows. • Disclosure to regulatory authorities – if the trans- action involves securities or derivatives, it may need to be reported to the CySEC, especially if it impacts market transparency or involves insider trading regulations. • Tax-related disclosures – for transactions between related parties, proper documentation and disclo-
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