CYPRUS Law and Practice Contributed by: Ioanna Solomou, Stephanos Ayiomamitis, Andria Kouloumi and Lefteris Eleftheriou, Michael Kyprianou & Co LLC
the Cyprus Corporate Governance Code – overseen by the Cyprus Securities and Exchange Commission (CySEC) – introduces soft-law principles focused on transparency, board composition and shareholder protection. Listed companies are expected to maintain a bal - anced board with independent non-executive direc - tors, establish key committees such as audit, remu - neration and nomination committees, and implement robust internal control and risk management systems. They are also subject to enhanced disclosure obliga - tions, including periodic financial reporting and the publication of price-sensitive information. In parallel, EU legislation – particularly the Shareholder Rights Directive II (SRD II) and the Accounting and Trans - parency Directives – further strengthens governance standards by reinforcing shareholder engagement, accountability and disclosure requirements. 1.4 Stock Exchange Requirements Developments The most notable changes to listing requirements in Cyprus affecting corporate governance is the 2024 update of the Cyprus Corporate Governance Code and the continued alignment with EU regulatory frameworks. These changes have reinforced expec - tations around board structure, with greater emphasis on independence, diversity and the effective function - ing of boards, including a stronger role for independ - ent non-executive directors. At the same time, dis - closure and transparency obligations have become more stringent, requiring listed companies to enhance corporate governance reporting, ensure timely finan - cial disclosures, and maintain robust internal control systems. Overall, the direction in Cyprus reflects a gradual move towards stricter governance standards and closer alignment with broader European prac - tices.
required to act in good faith and in the best interests of the company as a whole, rather than in the interests of individual shareholders, management or themselves. Their core legal obligations include a duty of care, skill and diligence, meaning they must act with the level of care reasonably expected given their position, knowledge and experience. They are also subject to fiduciary duties, requiring them to act honestly and loyally, avoid conflicts of interest, and refrain from deriving personal benefit from company transactions. In addition, directors must act within the scope of their authority, ensuring that they do not exceed the powers granted to them under the company’s memorandum and articles of association. In addition to directors, the shareholders – especially in private companies – have an important role in cor - porate governance. Although the day-to-day manage - ment of the company is entrusted to the directors, shareholders retain strategic oversight through their voting rights and statutory powers. Key rights afforded to shareholders under the Com - panies Law Cap 113 and typically reflected in a com - pany’s articles of association include: • the right to vote on resolutions at general meetings (such as the appointment or removal of directors and changes to the capital structure); • the right – subject to certain conditions – to access company records and financial information; and • pre-emption rights, which allow existing sharehold - ers to be offered new shares first in proportion to their current holdings. 2.2 Types of Decisions Under Cyprus law, certain key decisions are reserved for shareholders and cannot be taken solely by the board of directors. Under the Companies Law Cap 113 and subject to the company’s articles of association, these “reserved matters” typically require approval by an ordinary or special resolution of shareholders. Such matters commonly include: • amendments to the memorandum and articles of association; • approval of dividends;
2. Corporate Management 2.1 Principal Bodies or Functions
In Cyprus, under the Companies Law, the board of directors is vested with the primary responsibility for the management of the company’s business and everyday affairs. In performing their role, directors are
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