CYPRUS Trends and Developments Contributed by: Ioanna Solomou, Stephanos Ayiomamitis and Andria Kouloumi, Michael Kyprianou & Co LLC
within a specified timeframe, must meet or exceed EUR2 million. The investment must also relate to an undertaking operating in a sector considered to be of strategic importance, further reinforcing the targeted nature of the regime. Article 3 further expands the scope of the notification obligation by capturing subsequent increases in par - ticipation. Where an existing shareholding crosses key thresholds, such as moving from below 25% to 25% or more, or from below 50% to 50% or more, a fresh notification requirement may arise, irrespective of the value of the transaction. This ensures that incremental acquisitions leading to enhanced control are subject to scrutiny. The Law also extends its application to entities that are directly or indirectly controlled by foreign inves - tors, including through beneficial ownership or other means of influence. This prevents the circumvention of the regime through intermediary structures and reflects a substance-over-form approach to identify - ing foreign control. At the same time, certain limited exemptions are envisaged, including specific transactions in the ship - ping sector, demonstrating the legislature’s intention to balance regulatory oversight with sector-specific considerations. Role of the Screening Authority The Ministry of Finance has been designated as the competent Screening Authority responsible for admin - istering the regime. Its mandate includes receiving and assessing notifications, co-ordinating the review pro - cess, and issuing decisions in accordance with the Law. In carrying out its functions, the Screening Authority is expected to engage with other competent bodies and regulators, particularly where specialised knowledge is required. This ensures that the assessment of each transaction is comprehensive and informed by sector- specific expertise. The authority is vested with broad decision-making powers. It may approve an investment unconditionally, approve it subject to conditions designed to mitigate
identified risks, or prohibit the transaction where con - cerns cannot be adequately addressed. The ability to impose conditions is particularly significant, as it allows transactions to proceed while ensuring that appropriate safeguards are in place. Furthermore, the Law grants the Screening Author - ity the power to examine investments ex officio, even where they do not fall within the mandatory notification framework. This includes the possibility of reviewing transactions retrospectively where there are reason - able grounds to believe that they may affect security or public order. This feature enhances the flexibility and effectiveness of the regime. Notification and information requirements A defining feature of the Cypriot FDI screening regime is the introduction of a mandatory prior notification system. Foreign investors intending to proceed with transactions falling within the scope of the Law must submit a written notification to the Screening Author - ity and obtain approval before completing the invest - ment. Article 4 of the Law sets out the information require - ments accompanying such notifications. The submit - ting party must provide detailed and comprehensive information regarding the investment, including the identity and ownership structure of the foreign inves - tor, the ultimate beneficial owners, the value and nature of the transaction, and the activities of the tar - get undertaking. Additional information may be required concerning the sources of financing, the business plan, and any links to third-country governments or entities. This level of disclosure enables the Screening Authority to con - duct a thorough assessment of potential risks and to identify any elements that may raise concerns from a security or public order perspective. The requirement to provide accurate and complete information is of critical importance, as incomplete or misleading submissions may delay the review process or give rise to legal consequences. From a practical standpoint, investors and their advisers must ensure that sufficient due diligence is undertaken at an early
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