CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Sofia Tryfonos Avraam and Anna Borovska, Scordis, Papapetrou & Co LLC
9.2 Directors’ Use of Defensive Measures
addressed to the shareholders. On the contra - ry, their actions to frustrate or delay (defensive actions) are regulated and require shareholder consent; and they are obliged to draw up and publicly release a document as soon as pos - sible and in no more than 15 working days from receiving the offer, reporting their view of the bid, the possible effects of the implementation of the bid on the company’s interests and the reasons on which these are based. They must be ready to explain their opinion of the offer at all times, if requested. In the case of other business combinations, such as a merger offer, the directors are able to “just say no” , provided they are always acting in the best interests of the company, without putting the issue to the shareholders of the company. As one may expect, seasoned businesspeople seek to resolve disputes amicably but, from time to time, disputes do end up before a judge or a tribunal, for breach of conditions/representa - tions/warranties, enforcement of rights or even the unwinding of an arrangement or other relief. 10.2 Stage of Deal There is no hard and fast rule as regards the stage of the deal at which litigation is commonly brought; each case depends on its particular cir - cumstances. 10.3 “Broken-Deal” Disputes The business community in Cyprus has been impacted more due to the diminished activity of companies with Russian or Ukrainian interests as a result of the sanctions imposed by the US, UK and Europe following the war in Ukraine in 10. Litigation 10.1 Frequency of Litigation
Directors in Cyprus can use defensive measures only if they obtain the authorisation of the gener - al meeting of shareholders. Until such approval, the directors are not entitled to take measures to obstruct or prevent a bid, with the exception of seeking alternative bids. 9.3 Common Defensive Measures Some of the defensive measures are described in the Takeover Bids Law in the context of anti- abuse provisions. Generally, such measures include: • issuance of shares; • suspension of transfer restrictions; • suspension of voting restrictions or enhanced voting rights; • granting of enhanced voting rights; • entering into agreements with third parties or making offers (bids); • board appointments coupled with restrictions on other appointments; and Irrespective of any decisions at general meet - ing (approving defensive measures), the direc - tors’ fiduciary duty to the company remains unchanged. This means that any defensive measure pursued must be in the best interests of the company. In addition, they must not put themselves in the position where their personal interest and the interest of the company and shareholders is likely to conflict. • seeking alternative bids. 9.4 Directors’ Duties 9.5 Directors’ Ability to “Just Say No” In terms of a hostile tender offer or generally an offer for the acquisition of shares in a public company, the short answer is no, the directors are not at liberty to object to the offer as it is
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