CYPRUS Law and Practice Contributed by: Kyriacos Scordis, Sofia Tryfonos Avraam and Anna Borovska, Scordis, Papapetrou & Co LLC
February 2022, as opposed to seeking redress in court over pending, delayed or frustrated trans - actions. The necessity to ensure that sanction risks are adequately addressed from the outset of the M&A process and beyond is now of paramount importance, as is the inclusion of representa - tions, warranties and covenants in the relevant agreements to cover regulatory compliance in relation to imposed sanctions. Shareholder activism is not an established notion, nor is it particularly exercised in Cyprus, not least due to the size of the market, which is of no interest to large funds or strategic investors who would have the capability and resources to support and carry out such activism. Having said that, since 2013 (which saw the collapse of the banking sector and thus destruction of shareholder value in relation to one public enti - ty, creation of unwilling shareholders in another) and general changes in a number of public com - panies with the break-up of the dominance of existing shareholding interests, there have been increased instances of shareholder activism. Overall, in Cyprus, the legislative framework of M&As provides for a greater degree of transpar - 11. Activism 11.1 Shareholder Activism
ency and accountability from the board of direc - tors in relation to corporate governance of the company but also the Companies Law provides shareholders with certain powers and rights to fair treatment, allowing them to initiate certain actions to protect themselves, such as the fol - lowing: • to call meetings; • to pose questions at a general meeting; • to put items on the agenda of the general meeting and table draft resolutions; • to vote against resolutions; • to remove a director; and • to file a court petition for the protection of minority shareholder rights. 11.2 Aims of Activists Even though shareholder activism is a growing trend in Cyprus, it is still not very common for activists to encourage companies to enter into M&A transactions, spin-offs or major divesti - tures. 11.3 Interference With Completion As activist interference with completion is not a common practice, it is difficult to comment. Having said that, it is more likely than not for activists to seek to interfere with the completion of announced transactions in Cyprus rather than other matters relating to a company.
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