CYPRUS Law and Practice Contributed by: Marcos Georgiades, Dominique Pelides and Panayiota Elia, Georgiades & Pelides
Sale of business tool The Resolution Authority has the power to demand the transfer of the following to a pur - chaser that is not a bridge institution: • shares or other instruments of ownership issued by a bank under resolution; and • all or any assets, rights or liabilities of a bank under resolution. A transfer made under this tool is made on commercial terms (taking circumstances into account) and is considered to be valid without obtaining the consent of shareholders of the bank under resolution or any third person oth - er than the purchaser, and irrespective of any restriction imposed by law, contract or other - wise. Bridge institution tool The Resolution Authority can transfer the follow - ing to a bridge institution: • shares or other instruments of ownership issued by one or more institutions under resolution; and • all or any assets, rights or liabilities of one or more institutions under resolution. A transfer made under this tool (as well as the asset separation tool) is made without obtain - ing the consent of the shareholders of the bank under resolution or any third person, and with - out complying with any procedural requirements under company or securities law. The bridge institution is a legal person wholly or partly owned by one or more public authorities, includ - ing the Resolution Fund, and is controlled by the Resolution Authority.
Asset separation tool The Resolution Authority has the power to transfer the assets, rights or liabilities of a bank under resolution or a bridge institution to one or more asset management companies. An asset management company is a company wholly or partly owned by one or more public authorities, including the Resolution Fund, and is controlled by the Resolution Authority and manages the assets transferred to it with a view to maximis - ing their value through eventual sale or orderly wind-down. Bail-in tool The Resolution Authority has the power to demand the application of the bail-in tool for any of the following purposes: • to recapitalise a bank to the extent sufficient to: (a) restore its ability to comply with the con - ditions of its licence; (b) continue to carry out the activities for which it is authorised; and (c) sustain sufficient market confidence in the institution; or • to convert to equity or reduce the principal amount of claims or debt instruments that are transferred: (a) to a bridge institution with a view to pro - viding capital for that bridge institution; or (b) under the sale of business tool or the asset separation tool. The Resolution Law gives the Resolution Author - ity all the powers necessary to apply the resolu - tion tools to banks, including the power to take control of a bank under resolution and exercise all the rights and powers conferred on the share - holders, other owners and the management body of the relevant bank.
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