CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Anna Borovska and Constantinos Kazamias, Scordis, Papapetrou & Co LLC
lowing documents are disclosed to the holders of securities: • the press announcement confirming the bidder’s intention to make a public offer; • declaring the intention to make a public offer and summarising the terms of the bid; • the preconditions attached and the consideration proposed; • the public offer document, the report of the board of the target with an independent expert’s report, which is sent to the holders of securities; • an acceptance and transfer in the prescribed form; and • a confirmation of funds (bank guarantee) where there is cash consideration. Directors are deemed to be company representatives, and as such they have a fiduciary duty towards the company to act in good faith and to make decisions in the best interests of the company. In exercising their powers, directors need to act with reasonable care, skill and diligence and avoid conflicts of interest. With regards to the latter, the Companies Law contains a duty for a director to disclose an interest in a con - tract or proposed contract, at a meeting for the board of directors, as well as for the company to lay before the shareholders in general meeting the amounts of any loans made to the officers of the company (includ - ing directors) by the company, or a subsidiary, or by any other person under a guarantee. 8. Duties of Directors 8.1 Principal Directors’ Duties Duties are owed towards the company and the share - holders and as such the company as an entity under the “proper plaintiff rule” and, in limited situations, the shareholders on their own behalf may take action against a director for failing to fulfil or breaching their fiduciary duties. Cases where a person having an indi - rect interest in the company (ie, not a shareholder) claims to suffer a loss due to the actions of a director are not common.
With respect to public companies, there are certain corporate governance obligations that need to be complied with as part of the Stock Exchange Law and the Code. These include the exercise of inde - pendent and unbiased judgement in the exercise of their duties, dedicating the time and attention which is needed to carry out their duties towards the company in due performance, while non-executive directors need to be sufficiently independent with respect to business, personal or family ties; further, the board is subject to accountability in the preparation of financial statements and reports and is bound to treat share - holders equally. 8.2 Special or Ad Hoc Committees It is common for the articles of association of a com - pany to provide that the directors may delegate any of their powers to committees, which shall be comprised of members of the board of directors, to act under such mandate as shall be prescribed under any regu - lations that may be imposed by the directors. Public companies are more likely to establish committees of directors, to deal with day-to-day matters or more specialised or specific items. The Companies Law provides that a director having an interest in a contract or proposed contract shall disclose the same in a meeting of the directors, and therefore it is not necessary, nor common, for a sepa - rate committee to be established for the purposes of the matter at hand. The articles of association of a company will contain provisions that either prohibit such director from vot - ing on such contract or restrict the conditions under which such director may vote, with the shareholders having powers to review such prohibition or restriction at general meeting. Public companies may be subject to an additional requirement under the Code, to set up a Remunera - tion Committee consisting of non-executive (inde - pendent) directors to make recommendations to the board to determine the remuneration and benefits of executive directors.
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