CYPRUS Law and Practice Contributed by: Thanasis Korfiotis, Loizos Papacharalambous, Eleni Korfiotis and Georgia Charalambous, Koushos Korfiotis Papacharalambous LLC
4.12 Participation of Government- Sponsored Entities No government-sponsored entities participate in the securitisation market in Cyprus. 4.13 Entities Investing in Securitisation Entities investing in the securitisation transac - tions described previously are normally invest - ment firms and credit institutions operating in the EEA. 4.14 Other Principal Laws and Regulations There is no applicable information in this juris - diction. 5. Synthetic Securitisation 5.1 Synthetic Securitisation Regulation and Structure Synthetic securitisation (ie, securitisation where the transfer of risk is achieved by the use of credit derivatives or guarantees, and the expo - sures being securitised remain exposures of the originator) is permitted in Cyprus, provided the Securitisation Law (as defined in 1.3 Applicable Laws and Regulations ) is complied with. It is not customary to use synthetic securitisation in the Cypriot market. 6. Structurally Embedded Laws of General Application 6.1 Insolvency Laws Generally, insolvency laws can affect securitisa - tion/Cypriot SPEs in the same manner in which they affect any other legal entity, since the Com - panies Law (Chapter 113) – which regulates the winding-up of Cypriot limited liability companies – is applicable to SPVs, which are regulated as
securitisation SPEs under the Securitisation Law (as defined in 1.3 Applicable Laws and Regula- tions ), and neither the credit servicers nor credit purchasers regulated under the Sale of Loans Law and the Credit Servicers and Credit Pur - chasers Law, respectively, are immune to the Cyprus insolvency law (ie, the Companies Law, Chapter 113). The main difference with respect to the impact of insolvency laws on securitisa - tion/SPEs and other entities is that the winding- up of an SPE requires the involvement of the competent authority – ie, the CBC (as defined in 4.1 Specific Disclosure Laws or Regulations ). Please refer to 6.3 Transfer of Financial Assets and 6.5 Bankruptcy-Remote SPE for more details on the impact of insolvency on securiti - sation transactions. 6.2 SPEs An SPE (as defined in 6.1 Insolvency Laws ) shall abide by the requirements set out in 4.8 Inves- tor Protection , which include the appointment of a servicer to manage the pool of purchased receivables or the underlying credit exposures on a day-to-day basis, determining which ser - vicer shall be authorised by the CBC (as defined in 4.1 Specific Disclosure Laws or Regulations ) and the submission of an application document - ing the servicer’s compliance with the Securiti - sation Law (as defined in 1.3 Applicable Laws and Regulations ), which in turn provides that the servicer shall comply with the Directive on Internal Governance of Credit Institutions (which currently provides that the management body shall comprise at least seven – but no more than 13 – members, two of which shall be executive, and the majority independent). 6.3 Transfer of Financial Assets Under the Securitisation Law (as defined in 1.3 Applicable Laws and Regulations ), where
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