CYPRUS Trends and Developments Contributed by: Marcos Georgiades and Dominique Pelides, Georgiades & Pelides
tion as a CAC if it was a company incorporated in Cyprus; as a result, non-Cypriot credit acquir - ers (including those established in other EU member states) needed to establish a Cypriot vehicle if they wished to acquire credit facilities in Cyprus. This has historically been a somewhat burdensome requirement, as the Cypriot vehicle needed to independently fulfil the substantive criteria for authorisation, regardless of whether these were already met at group level. The revisions to the Sale of Loans Law remove the requirement for CACs to obtain authorisation from the CBC. At the same time, the Credit Ser - vicers Law permits the acquisition of non-per - forming credit facilities by entities established anywhere in the world, subject to (i) adhering to requirements to notify and provide certain infor - mation regarding themselves and the facilities acquired by them to the CBC and (ii) a blan - ket prohibition on the acquisition of performing credit facilities by credit acquirers (which, as defined, excludes banking institutions). Additionally, pursuant to the Credit Servicers Law, a credit acquirer who does not reside in, have its constitutional seat in, or have its head office in, the European Union, and who acquires credit facilities governed by the draft legislation, must appoint a representative in the EU who will be responsible for communicating with the CBC and for ensuring the compliance of the credit acquirer with its obligations under the draft leg - islation. The flip side of the abolition of the requirement for credit acquirers to obtain authorisation as a CAC is that credit acquirers will no longer be exempt from the requirement to obtain authori - sation as a credit servicer in the event they wish to manage their credit facilities in-house, which was the case under the previous regime. Con -
sequently, credit acquirers who do not wish to outsource the servicing of their credit facilities to a third-party servicer must themselves obtain authorisation as credit servicers. To the extent that a third-party servicer is appointed, the credit acquirer (or their representative, if one is appoint - ed) must notify the competent authorities of its home member state of the details of the servicer appointed, at the latest when the servicer begins its credit servicing activities. Some basic addi - tional detail regarding the contents of the agree - ment concluded between a credit acquirer and a credit servicer regarding the servicing of credit As it previously stood, the Sale of Loans Law already contemplates a requirement for per - sons performing credit servicing activities in Cyprus to obtain prior authorisation from the CBC. The basic elements of this regime have been retained, albeit they have been moved from the Sale of Loans Law to the Credit Servicers Law. One key difference is that under the pre - vious regime, entities were only eligible to be authorised as credit servicers to the extent they hd their constitutional seat in Cyprus; there - fore (much like CACs) non-Cypriot entities who wished to participate in the credit servicing sec - tor in Cyprus needed to establish, and obtain authorisation for, a Cypriot entity. Under the new regime, the cross-border provision of credit ser - vicing services is permitted, although (unlike the original draft legislation proposed) the cross- border servicing of performing credit facilities is expressly excluded. facilities has also been introduced. Authorisation of credit servicers Pursuant to the revised regime, a credit servicer whose constitutional seat or head office is situ - ated in Cyprus must obtain authorisation from the CBC prior to commencing its activities. The basic requirements for authorisation remain
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