CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Sofia Tryfonos Avraam and Anna Borovska, Scordis, Papapetrou & Co LLC
50% of the voting rights wishes to increase its shareholding within the company. 6.6 Requirement to Obtain Financing Buyers in M&A transactions may require third- party financing to acquire shares in a target company. It is not uncommon in the case of a private company that the parties do agree that the transaction will close only once the buyer has secured the necessary financing. However, if the acquisition involves a publicly listed company, it is a statutory requirement that the bidder has the necessary financial capability, and that financing has been secured by a credit institution or organisation and will remain secure until the day of payment. The announcement of the intention to make a public offer must include a report on the actions taken to ensure payment of the consideration price, where this is to be paid wholly or partly in cash. Following the impact of the war in Ukraine, it has become more challenging for parties to an M&A deal to obtain financing for additional funding in view of the increased compliance requirements with regards to both due diligence and sanc - tions. 6.7 Types of Deal Security Measures There are no express restrictions that would prevent a target from agreeing to any security measures. In relation to fees (whether coined as commissions or break fees), special care should be taken by the directors of the company to act in the best interests of the company and not to act in contravention of provisions concerning the provision of commissions (there is a statutory upper limit of 10% and other conditions) and the provisions on financial assistance.
It is very common to include exclusivity and con - fidentiality provisions as well as non-solicitation clauses. In addition, it is not unusual for M&A agreements to contain lock-in or exclusivity clauses. 6.8 Additional Governance Rights Depending on the type of company, a bidder interested in enhancing corporate governance or seeking to secure additional governance rights has a variety of options available. For example, in the case of private companies, such a bidder may include such rights in either a shareholders’ agreement or by way of an amendment to the articles of association of the company in question. Possible options include enhanced voting thresholds, weighted voting rights, classes of shares, lock-in periods, board representation thresholds or restrictions, share - holder reserved matters, tag-along, drag-along rights, call and put options, etc. With regards to public companies, sharehold - ers’ agreements are not generally an option, but a number of the aforementioned options (enhanced governance rights) may be included in the company’s articles of association. 6.9 Voting by Proxy This is a matter regulated by the articles of asso - ciation of a company. The customary practice is to allow a proxy to be appointed to attend and vote at a general meeting of a company. The per - mission given to a proxy need not be the same for all the shares in relation to which the proxy is appointed. 6.10 Squeeze-Out Mechanisms In the absence of a shareholders’ agreement, there are no squeeze-out mechanisms in relation to private companies, albeit capital increase and
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