CYPRUS Law and Practice Contributed by: Thanasis Korfiotis, Loizos Papacharalambous, Eleni Korfiotis and Georgia Charalambous, Koushos Korfiotis Papacharalambous LLC
reduction of share capital; and violation of the negative pledge. These defaults are enforced in the manner described in 3.2 Principal Warranties . 3.7 Principal Indemnities The principal indemnities in the securitisation documentation usually cover the indemnifica - tion (as discussed in 2.1 Issuers ) of: • any investor (as discussed in 2.6 Investor s) against any payments/obligations/liabilities incurred under the relevant finance documen - tation by the issuer; • the bond/note trustee (as discussed in 2.7 Bond/Note Trustees ) and the security trus - tee/agent (as discussed in 2.8 Security Trustees/Agents ) against any loss/liability incurred in relation to the performance of their duties, except where the loss/liability was caused by the latter’s negligence or wilful misconduct; and • the financial parties involved (eg, investors/ noteholders, bond/note trustee) where any payment by the issuer is made in a currency other than the one prescribed as the currency in which payments are to be made under the securitisation documentation, or where violation of the securitisation documentation’s undertakings, representations or warranties results in loss/liability. These indemnities are enforced in the manner described in 3.2 Principal Warranties . 3.8 Bonds/Notes/Securities The terms and conditions relating to bonds/ notes are customarily included in a subscrip - tion/facility agreement, which mainly covers the following:
• the conditions that need to be satisfied in order for an investor/noteholder to be required to subscribe for the said bonds/ notes/securities, and the procedural steps that need to be taken in order for the sub- scription to be completed; • the repayment schedule, including the circumstances that trigger the obligation of mandatory prepayment (such as a change of control) and the right of prepayment; • the payment terms, including the distribu - tion and allocation of amounts received by the obligors (as described in 3.4 Principal Covenants ) to the accounts opened and maintained in the name of the bond trustee (as discussed in 2.7 Bond/Note Trustees ), financial terms, including the calculation and payment terms of the interest, and risk allo - cation provisions covering potential market disruption events and increased costs due to any changes in applicable law; and • the negotiated and agreed warranties (dis - cussed in 3.2 Principal Warranties ), cove - nants (discussed in 3.4 Principal Covenants ), defaults (discussed in 3.6 Principal Defaults ) and indemnities (discussed in 3.7 Principal Indemnities ). 3.9 Derivatives The use of derivatives is not customary in Cyprus. The market practice is for hedging agreements to be entered into by the issuer (as discussed in 2.1 Issuers ) to hedge against interest rate risks in connection with the securitisation documen - tation. 3.10 Offering Memoranda It is not mandatory to prepare an offering memo - randum/prospectus to accompany an applica - tion for the shares or debentures of a company incorporated pursuant to the Cyprus Companies Law, Chapter 113 where:
70
CHAMBERS.COM
Powered by FlippingBook