Circumstances in which a company may be wound up voluntarily.
According to article 261, Part III of the Companies Law (Cap.113) (hereinafter referred to as the “Law”), a company may be wound up voluntarily in the following cases:
- when the period for the duration of the company (if any), which is fixed by the Company’s Articles of Association, expires, or the event (if any), on the occurrence of which the company’s Articles of Association provide that the company is to be dissolved occurs, and the company has passed a resolution in a general meeting requiring the company to be wound up voluntarily;
- where the company resolves, by special resolution, that it shall be wound up voluntarily;
- where the company resolves, by extraordinary resolution, that it cannot by reason of its liabilities, continue the operation of its business, and that it is advisable to be wound up.
The voluntary winding up of a company shall be deemed to commence at the time of the passing of the resolution for the voluntary winding up thereof (article 263 of the Law). It is noted that in cases where a company has passed a resolution for voluntary winding up, it shall, within fifteen (15) days as of the date of the approval of the aforesaid resolution, proceed with the filing of a copy thereof with the Department of the Registrar of Companies (hereinafter referred to as the “Registrar”), in order for the Registrar to proceed with the relevant publication thereof in the Official Gazette of the Republic of Cyprus (article 262(1) of the Law).
Consequences of Voluntary Winding Up
In case of a voluntary winding up, the company shall, as of the date of commencement of the winding up, cease to carry on its business activities, except where this may be required for the beneficial winding up thereof. Notwithstanding anything to the contrary contained in the company’s Articles of Association, the corporate state and corporate powers of the company shall continue until the company is dissolved (article 264 of the Law).
Furthermore, any transfer of shares, not being a transfer made to the liquidator or with the approval of the liquidator, and any alteration in the status of the members of the company, made after the commencement of the company’s voluntary winding up, shall be void (article 265 of the Law).
In addition to the aforementioned, it shall be noted that as of the date of the appointment of a liquidator all the powers of the directors shall cease, except where the liquidator or the company in general meeting approves the continuation thereof (article 268(2) of the Law).
Powers of the Liquidator
The liquidator’s powers include, inter alia, the following:
- taking into his custody or control all the assets, property, effects and actionable claims of the company;
- verifying claims of all the creditors and consolidate them;
- evaluating the assets and property of the company and prepare a relevant report;
- taking such measures to protect and preserve the assets and property of the company;
- selling the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer such property to any person or corporate body, or to sell the same in parcels;
- drawing, accepting, making and endorsing any negotiable instruments on behalf of the company, with the same effect as if such instruments were drawn, accepted, made or endorsed by or on behalf of the company in the ordinary course of its business;
- the investigation of the financial affairs of the company in order to determine undervalued or preferential transactions;
- the signing, execution and verification of any paper, deed, receipt document, application, petition, affidavit, bond or instrument, and for such purpose to use the common seal of the company, if any, as may be necessary for the purposes of liquidation and distribution of the assets of the company;
- to initiate or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the company;
- to apply to the Court for such orders or directions as may be necessary, regarding the liquidation process;
- to obtain any professional assistance, in the discharge of his/her duties, obligations and responsibilities;
- to invite and settle claims of creditors and claimants and distribute the proceeds in accordance with the provisions of the Law.
Completion of Voluntary Winding Up
As soon as the affairs of the company are fully wound up, the liquidator shall prepare an account in relation to the company’s winding up, indicating how the winding up has been conducted as well the manner in which the property of the company has been distributed, and thereupon, the liquidator shall convene a general meeting of the company for the purpose of presenting before the same the aforesaid account, and provide explanations in relation to it.
The meeting shall be convened by publication in the Official Gazette of the Republic of Cyprus, specifying the time, place and object thereof. The notice of the said meeting shall be published in the Official gazette of the Republic at least one (1) month prior to the date of the meeting.
Within one week as of the date of the meeting, the liquidator shall deliver to the Registrar a copy of the account, and files with the Registrar a report regarding the convocation of the meeting and the date thereof. In the event that the copy of the account is not delivered to the Registrar, or the report is not filed with the Registrar, the liquidator is subject to a fine. It is noted that in the event that a quorum is not present at the meeting, the liquidator shall, in lieu of the return mentioned hereinbefore, prepare a return stating that the meeting was duly summoned, and that no quorum was present thereat.
As soon as the Registrar receives the account as well as the relevant report, shall proceed with the registration thereof, and upon the expiration of three (3) months as of the date of their registration, the company shall be deemed to be dissolved.
It shall be stressed at this point that the Court may, on the application of the liquidator or of any other person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the Court thinks proper (article 273 of the Law).
In a winding up the following debts shall be paid in priority to all other debts-
1) the below rates and taxes:-
- all local rates owed by the company on the date of passing of the resolution for the company’s winding up, which become due and payable within twelve (12) months prior to the aforesaid date;
- all Government taxes and duties owed by the company on the date of passing of the resolution for the company’s winding up, that become due and payable within twelve (12) months prior to the aforesaid date. In the case of assessed taxes, these shall not exceed the whole one year’s assessment.
2) i. any salary owed to an employee and any sum withheld by the employer from the employee’s salary for the payment of any obligations of the employee or otherwise, which has not been paid by the employer; and
- any other sum or benefit of the employee that arises as a result of an agreement or employment relationship, including any sum owed to a recognized union that arises from the employment relationship between the employer and the employee or otherwise, that the employer has not paid. It is noted that this shall not apply in cases where an employee of a private company is a shareholder or member of the company’s board of directors, unless he/she holds shares or participates in the board of directors as a representative in an evidently procedural and non-substantive manner, and provided that there is no first or second degree relationship between himself/herself and the person being represented.
- every amount of compensation which the company is obliged to pay to an employee, on account of bodily harm suffered by the employee as a result of an accident caused by his/her employment and during his/her employment with the company. An employee of a private company who is a shareholder thereof is exempted, unless the company is voluntarily wound-up or wound-up for reconstruction or merger purposes.
- every amount due to the employee, excluding an employee of a private company who is a shareholder thereof, concerning the leave which he/she is entitled to from his/her employment in the company for an employment period of only one year.
- In cases where any payment has been made: (a) to any clerk, servant, workman or labourer in the employment of a company, on account of wages or salary; or (b) to any such clerk, servant, workman or labourer or, in case of his/her death, to any other person in his/her right, on account of accrued holiday remuneration, out of money advanced by some person for that purpose, the person by whom the money was advanced shall, in case of the company’s winding up, have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the clerk, servant, workman or labourer, or other person in his right, would have been entitled to in the event of the company’s winding up, to the extent this amount has been diminished by reason of the payment(s) having been made.
The foregoing debts shall rank equally among themselves and be paid in full, unless the company’s assets are insufficient to meet these debts, in which case they shall abate in equal proportions. If the assets of the company available for payment of the general creditors are insufficient for the full payment of the general creditors, they shall have priority over the claims of holders of debentures under any floating charge created by the company and be paid accordingly out of any property comprised in or subject to that charge.
Subject to the retention of such sums as may be necessary for covering the costs and expenses of the company’s winding up, the foregoing debts shall be discharged to the extent to which the assets of the company are sufficient to meet aforesaid debts (article 300 of the Law).
O Περί Αδειών (Πατρότητας, Γονικής, Φροντίδας, Ανωτέρας Βίας) και Ευέλικτων Ρυθμίσεων Εργασίας για την Ισορροπία μεταξύ Επαγγελματικής και Ιδιωτικής Ζωής Νόμος του 2022 (Ν. 216(Ι)/2022) (ο “Νόμος”), ο οποίος τέθηκε σε ισχύ με την έκδοση του στην Επίσημη Εφημερίδα της Δημοκρατίας την 16η Δεκεμβρίου 2022, αποσκοπεί στην εξισορρόπηση/συμφιλίωση της επαγγελματικής με την οικογενειακή ζωή για τους εργαζόμενους γονείς ή φροντιστές, μέσω θέσπισης ατομικών δικαιωμάτων και ειδικότερα, μέσω της χορήγησης δικαιωμάτων σε:
- άδεια πατρότητας, γονική άδεια, άδεια φροντίδας και απουσία από την εργασία για λόγους
- ευέλικτες ρυθμίσεις εργασίας για τους εργαζόμενους γονείς ή τους φροντιστές.
Σύμφωνα με το άρθρο 8 του Νόμου, εργαζόμενος γονέας, ο οποίος έχει συμπληρώσει συνεχή απασχόληση διάρκειας έξι (6) μηνών στον ίδιο εργοδότη, δικαιούται να λάβει γονική άδεια. Η μέγιστη διάρκεια της γονικής άδειας είναι δεκαοκτώ (18) εβδομάδες για κάθε τέκνο, ενώ σε περίπτωση χήρου/ας γονέα ή μονού γονέα, είτε λόγω αφαίρεσης της γονικής μέριμνας από τον άλλο γονέα είτε μη αναγνώρισης του τέκνου από αυτόν, η διάρκεια της γονικής άδειας επεκτείνεται σε είκοσι τρεις (23) εβδομάδες (άρθρο 8(3) του Νόμου).
Σημειώνεται δε ότι το δικαίωμα λήψης γονικής άδειας είναι ατομικό και αμεταβίβαστο δικαίωμα για κάθε γονέα, με εξαίρεση τη δυνατότητα μεταβίβασης εννέα (9) εβδομάδων από το υπόλοιπο της άδειας του ενός γονέα στο υπόλοιπο της άδειας του άλλου γονέα.
Χρονικό Διάστημα Εξάσκησης του Δικαιώματος Γονικής Άδειας
Η γονική άδεια λαμβάνεται μεταξύ του χρονικού διαστήματος που μεσολαβεί από τη λήξη της ληφθείσας άδειας μητρότητας ή πατρότητας, ανάλογα με την περίπτωση, μέχρι το όγδοο (8ο) έτος της ηλικίας του τέκνου, ενώ σε περίπτωση υιοθεσίας, η γονική άδεια λαμβάνεται μετά τη λήξη της άδειας μητρότητας ή πατρότητας, ανάλογα με την περίπτωση, και για περίοδο οκτώ (8) ετών από την
ημερομηνία υιοθεσίας, νοουμένου ότι το τέκνο δεν θα υπερβεί μέχρι τότε το δωδέκατο (12ο) έτος της ηλικίας του (άρθρο 9 του Νόμου).
Σημειώνεται ότι σε περίπτωση τέκνου με αναπηρία, τηρουμένων των διατάξεων του περί Ατόμων με Αναπηρίες Νόμου, το δικαίωμα για λήψη γονικής άδειας επεκτείνεται μέχρι το δέκατο όγδοο (18ο) έτος ηλικίας του τέκνου (άρθρο 9 του Νόμου).
Επίδομα Γονικής Άδειας
Κατά τη διάρκεια των οκτώ (8) εβδομάδων γονικής άδειας, ο εργαζόμενος γονέας δικαιούται να λάβει επίδομα γονικής άδειας, νοουμένου ότι κατά την ημερομηνία υποβολής της αίτησης έχει συμπληρώσει δώδεκα (12) μήνες απασχόλησης εντός των τελευταίων είκοσι τεσσάρων (24) μηνών (άρθρο 10(1) του Νόμου).
Σε περίπτωση τέκνου με αναπηρία, η διάρκεια του επιδόματος γονικής άδειας επεκτείνεται κατά:
- τέσσερις (4) εβδομάδες, νοουμένου ότι το τέκνο έχει πιστοποιηθεί από το Σύστημα Αξιολόγησης της Αναπηρίας και Λειτουργικότητας του Τμήματος Κοινωνικής Ενσωμάτωσης Ατόμων με Αναπηρίες, ως άτομο με σοβαρή αναπηρία ή με μέτρια νοητική αναπηρία.
- έξι (6) εβδομάδες, νοουμένου ότι το τέκνο έχει πιστοποιηθεί από το Σύστημα Αξιολόγησης της Αναπηρίας και Λειτουργικότητας του Τμήματος Κοινωνικής Ενσωμάτωσης Ατόμων με Αναπηρίες, ως άτομο με ολική αναπηρία (άρθρο 10(1) του Νόμου).
Σημειώνεται ότι το επίδομα γονικής άδειας καταβάλλεται εφόσον ικανοποιηθεί ότι πληρούνται οι όροι και προϋποθέσεις που προβλέπει ο περί Κοινωνικών Ασφαλίσεων Νόμος (άρθρο 10(2) του Νόμου).
Τρόπος Λήψης Γονικής Άδειας και Λήψη Γονικής Άδειας με Ευέλικτους Τρόπους
Σύμφωνα με το άρθρο 11(1) του Νόμου, η γονική άδεια δύναται να λαμβάνεται τμηματικά, με ελάχιστη διάρκεια μιας (1) ημέρας και μέγιστη διάρκεια πέντε (5) εβδομάδων ανά ημερολογιακό έτος. Η γονική άδεια, έπειτα από σχετική αίτηση του εργαζόμενου, δύναται εναλλακτικά να χορηγείται με ευέλικτο τρόπο που εξυπηρετεί τον ίδιο τον εργαζόμενο και τον εργοδότη του (άρθρο 11(2) του Νόμου).
Tο δικαίωμα λήψης της γονικής άδειας με ευέλικτους τρόπους περιορίζεται στη δυνατότητα λήψης αυτής με ελάχιστη περίοδο μίας (1) ημέρας. Σημειώνεται περαιτέρω ότι, το δικαίωμα του εργαζόμενου να λάβει επίδομα γονικής άδειας, δεν θίγεται από τον τρόπο λήψης της γονικής άδειας (άρθρο 11(2) του Νόμου).
Προειδοποίηση Λήψης Γονικής Άδειας
Ο εργαζόμενος ο οποίος προτίθεται να ασκήσει το δικαίωμα γονικής άδειας, προειδοποιεί τον εργοδότη του τρεις (3) εβδομάδες πριν από την ημερομηνία έναρξης της γονικής άδειας, ενημερώνοντάς τον εργοδότη για την ημερομηνία έναρξης και λήξης της εν λόγω άδειας, ενώ σε ειδικές περιπτώσεις, όπου απαιτείται η άμεση λήψη γονικής άδειας, η περίοδος της προειδοποίησης δύναται να μειωθεί, νοουμένου ότι έχει εξασφαλιστεί η προηγούμενη σύμφωνη γνώμη του εργοδότη (άρθρο 12(1) του Νόμου).
Στις περιπτώσεις λήψης της γονικής άδειας με ευέλικτους τρόπους, ο εργαζόμενος οφείλει, πέραν της προειδοποίησης προς τον εργοδότη του, να προσδιορίσει το είδος της ευελιξίας που επιθυμεί να κάνει χρήση, καθώς επίσης και το μέρος της γονικής άδειας που επιθυμεί να λάβει με ευέλικτο τρόπο (άρθρο 12(1) του Νόμου).
Definition of Institutions and Acquisition of Legal Personality
The term institution is defined by The Societies and Institutions and other related Matters Law of 2017 (104(I)/2017), as amended (the “Law”), as the aggregate of property that is intended to serve a certain non-profit object and for its establishment, the worth of the dedicated property cannot be less than One Thousand Euro (€1,000) (section 2 of the Law).
Institutions acquire legal personality as of the date of their registration in the Register of Institutions (the “Register”) by the competent District Officer of the relevant district who is responsible in relation to any matters in connection with the registration and operation of Societies, Clubs and Institutions, and the issuance of the relevant registration certificate (the “Registrar”) (sections 2, 5 and 26(1) of the Law).
Registration of Institutions
For the purposes of establishment and registration of an Institution, a written application by the founders or the trustees of a trust or the executors of a will, must be filed with the Registrar in the prescribed form and shall be accompanied by the constituent deed, as well as by the articles of association of the Institution.
The constituent deed and articles of association must stipulate and/or include at least the following:
- The Institution’s name, object(s) and registered office;
- The emblem of the Institution (if any);
- Detailed reference to the mode of operation and/or administration of the Institution;
- The aggregate of the Institution’s property;
- The names and addresses of the members of the Institution;
- The names and addresses of the members of the Board of Directors of the Institution;
- The manner of succession of the members of the Board of Directors of the Institution;
- A provision according to which no remuneration of any kind whatsoever shall be paid to any founding member or officer or member of the Board of Directors of the Institution with regards to any services provided by them (sections 26(2) and 27(2) of the Law).
The Registrar shall proceed with the examination of the relevant application for the institution’s registration, without any delay, and in any event within three (3) months as of the date of submission of the relevant application and all the necessary, duly filled in forms and documentation (section 26(2) and 26(4) of the Law).
Provided that the requirements under the applicable Law are met, the Registrar will proceed with the registration of the institution in the Register of Institutions and the issuance of the relevant registration certificate in the prescribed form. The registration certificate shall be published in the Official Gazette of the Republic and will constitute conclusive evidence of the date of registration of the institution and of compliance with all legal requirements (section 26(5) of the Law).
Objects of Institutions
An institution may be established and registered by the Registrar, provided that the main objective thereof is to achieve one or more of the following objects (section 26(3) of the Law):
- The combat and/or alleviation of poverty;
- The promotion of education;
- The promotion of health and/or saving lives;
- The promotion of the community’s and citizens’ development;
- The promotion and/or flourishing of arts, culture, cultural heritage or science;
- The promotion of amateur sports;
- The safeguard and protection of human rights, the promotion of dispute resolution or reconciliation, as well as the promotion of religious and/or ethnic harmony, equality and diversity;
- The protection and/or safeguard of the environment;
- The relief of needs arising out of young or advanced age, health problems, disability, financial hardship or other disadvantage;
- The promotion of animal welfare and protection;
- For the achievement of any other object that benefits the public in general, or for the achievement of any purpose which is considered to be relevant to any of the aforementioned objectives.
Administration of Institutions
Institutions must be administered by a board of directors consisting of at least three (3) members. Unless otherwise provided in the articles of association of the Institution, their decisions are taken by a simple majority of the members of the board of directors present at the meeting and, in the event of tied vote, the president of board of directors’ meeting shall have a casting vote (section 32(1) of the Law).
In case an institution is administered by three (3) persons, the presence of all three (3) persons is required for quorum purposes (section 32(1) of the Law).
Obligations of Institutions
The members of the board of directors of any institution are bound to keep accurate and detailed books of account where all accounts of money received and paid on behalf of such institution shall be recorded and shall also, at the end of each financial year, prepare the following accounts:
- an account of the gross income of the institution during the financial year;
- an account of any surplus in hand at the commencement of the financial year and of all moneys received during the same year on behalf of the institution;
- an account of all money owing to or from the institution and an account regarding all payments made during the same financial year (section 49(1) of the Law).
The members of the of the board of directors of an institution are obliged to submit to the Registrar, at the latest within seven (7) months from the end of each financial year, the accounts and relevant report prepared by a certified auditor.
Definition of Societies and Acquisition of Legal Personality
Society is defined by The Societies and Institutions and other related Matters Law of 2017 (104(I)/2017), as amended (the “Law”), as an organised association of at least twenty (20) persons that is established for the accomplishment of a common objective (section 2 of the Law).
Societies acquire legal personality as of the date of their registration in the Register of Societies, Clubs and Institutions (the “Register”) by the competent District Officer of the relevant district who is responsible in relation to any matters in connection with the registration and operation of Societies, Clubs and Institutions, and the issuance of the relevant registration certificate (the “Registrar”) (sections 2 and 5 of the Law).
Registration of Societies
For the purposes of registration of a Society, a written application must be filed with the Registrar by the board of directors of the society or the founding members thereof. The aforesaid application shall be accompanied by the Articles of Association of the society which must be executed by its founding members and bear an execution date, and the relevant forms including information as the names, addresses and contact details of the founding members and the members of the society’s board of directors, copy of the emblem of the society (if any) and a description of the immovable and movable property belonging and/or possessed by the society at the time of registration thereof and/or any immovable and movable property that is to be transferred to the Society after its registration in the Register (section 7(2) of the Law).
The Registrar shall proceed with the examination of the relevant application for the society’s registration, without any delay, and in any event within three (3) months as of the date of submission of the relevant application and all the necessary, duly filled in forms and documentation (section 7(4) of the Law). Provided that the requirements under the applicable Law and regulations are met, the Registrar will proceed with the registration of the society in the Register and the issuance of the relevant registration certificate upon payment of the prescribed fee (section 7(4) of the Law). The registration certificate shall be published in the Official Gazette of the Republic and will constitute conclusive evidence of the date of registration of the society and of compliance with all legal requirements.
Articles of Association of Societies
The Articles of Association of a society shall be deemed as acceptable for registration purposes, provided that this includes and/or addresses the following matters:
- The Society’s name, object(s) and registered office, which shall be located in the areas controlled by the Republic of Cyprus;
- The society’s resources;
- The terms of admission, resignation, expulsion of members, and the rights and duties of the society’s members;
- The manner and the body of representation of the society in Court and out-of-Court cases;
- The terms of alteration and/or modification of the Articles of Association of the society;
- The manner of auditing of the society’s accounts, in accordance with the principle of transparency;
- The terms relating to the convocation and holding of the meetings of the society’s members, the manner the decisions are taken, as well as the term that a members’ meeting is held at least once, on an annual basis;
- The administrative body of the society, the process of election of its board members, the term for which the members of the board will remain in office, the terms of formation and operation of the administrative body, the dismissal of its members and the frequency of their meetings;
- The terms relating to the society’s dissolution and/or merger with another society, as well as terms in relation to the utilisation and/or exploitation of the society’s property in case of dissolution thereof, as such property cannot be distributed to the society’s members.
Administration of Societies
Societies must be administered by a board of directors consisting of at least five (5) members, who, unless otherwise provided in the Articles of Association of the society, shall also be members of the society. Decisions are taken by absolute majority of the members that are present in the meetings, unless otherwise provided in the society’s Articles of Association (section 16(1) of the Law).
Provision of services without the payment of remuneration
No remuneration shall be payable to the members and/or administration members of the society in relation to any services they may provide to the society, unless otherwise provided in the society’s Articles of Association (section 18A of the Law).
Membership is non-assignable
Membership in societies is not eligible of representation, and cannot be assigned and/or inherited (section 15 of the Law).
On 20 May 2015, the European Council issued the Directive (EU) 2015/849 (the “4th AML Directive”). The 4th AML Directive required Member States to establish a register of the ultimate beneficial owners of obliged legal entities within their respective jurisdictions.
In 2018, the EU council issued the Directive (EU) 2018/843 amending the 4th AML (the “5th AML Directive”). Pursuant to the amended provisions, EU Member States are obliged to launch publicly accessible registers containing details as to the beneficial ownership of companies and other legal entities such as trusts.
The 5th AML Directive was transposed into national legislation via the enforcement of the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007 to 2021 (the “Law”), on 23 February 2021. The Law provides for the establishment and maintenance of a publicly available national central register of ultimate beneficial owners for companies and other legal entities (the “National Central Register of UBOs”), containing detailed information regarding the beneficial ownership and control of the obliged legal entities falling within the scope of the Law.
Definition of Ultimate Beneficial Owners
According to section 2(1) of the Law, the term Ultimate Beneficial Owner (UBO) is defined as any natural person or persons who ultimately own or control a company or other legal entity and/or the natural person or persons on whose behalf transactions and/or activities are being conducted and include at least:
(a) in the case of corporate entities:
(i) the natural person or persons who ultimately own or control a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market which is subjected to disclosure requirements compatible with the EU law or subject to equivalent international standards which ensure adequate transparency of ownership information.
It is noted that a shareholding of 25% plus one share or an ownership interest of more than 25% in the corporate entity held by a natural person shall be an indication of direct ownership. A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer entity held by another corporate entity which is under the control of a natural person(s), or by multiple other corporate entities, which are under the control of the same natural person or persons, shall be an indication of indirect ownership.
(iii) if, after having exhausted all possible means and as long as there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person or persons identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s),
It is noted that the obliged entities are under an obligation to maintain records of the actions taken to identify the beneficial owners.
(b) in the case of Trusts:
(i) the trustee(s);
(ii) the settlor;
(iii) the beneficiaries. If the persons benefiting from the legal arrangement have not been determined yet, the class of persons in whose interest the legal arrangement or entity is set up or operates;
(iv) the protector, if any;
(v) any other natural person exercising ultimate control over the trust through direct or indirect ownership or via other means;
(c) in the case of other legal entities including, inter alia, foundations and other legal arrangements like trusts, the natural person or persons holding equivalent or similar positions to those referred to in point (b) above.
The Directive issued by the Department of the Registrar of Companies and Intellectual Property regarding the National Central Register of Ultimate Beneficial Owners (UBOs) of Companies and other Legal Entities (the “Directive”) provides that the details and/or information of the beneficial owners of the obliged legal entities must be submitted electronically.
The obliged entities for which the details and/or information pertaining to their beneficial ownership must be submitted are the following:
- Companies incorporated and established under the Companies Law Cap.113
- European Public limited liability companies
It is noted that the aforementioned Directive does not apply to the entities mentioned below:
- Companies listed on regulated markets that are subjected to disclosure requirements consistent with EU law or equivalent international standards and which are intended to ensure sufficient transparency pertaining to the beneficial ownership details;
- Companies whose directors submitted an application for strike-off pursuant to Article 327 (2A) (a) of the Companies Law Cap. 113, prior to 12/03/2021;
- Companies whose liquidation has been enacted prior to 12/03/2021.
Information to be filed with the National Central Register of UBOs
The following information and details pertaining to each natural person that is a UBO of a corporate entity must be filed with the National Central Register of UBOs:
- Name, surname, date of birth, nationality and residential address;
- Identification document number indicating the type of document and the country of issuance thereof (passport or identity card);
- Date on which the natural person was entered in the National Central UBO Register as a UBO;
- Nature and extent of the beneficial interest held directly or indirectly by the UBO, including through percentage of shares, voting rights, or the nature and extent of the significant influence or control with other means exercised by each controlling person;
- Date on there were changes in the particulars of the natural person or the date on which the natural person ceased to be a UBO.
Currently, where the structure of a legal entity registered in the Republic of Cyprus, leads to Trust/s, Foundation/s, other similar legal arrangements or listed companies, the following information and/or details must be filed:
- Name of Trust(s), Foundation(s), listed companies or other similar legal arrangements;
- Country of Jurisdiction;
- Registration number (if any);
- Business address (not applicable to trusts);
- Nature and extent of the beneficial interest held directly or indirectly by each beneficial owner, including through percentage of shares, voting rights or the nature and extent of the significant influence or control with other means exercised by each controlling person;
- Date on which the Trust, Foundation, listed company or other similar legal arrangement was entered in the register as UBO;
- Date on which there were changes in the particulars of a Trust, Foundation, listed company or other similar legal arrangement or the date on which it ceased to be a UBO.
If no physical person can be identified as the UBO based on the ownership structure and rights of the legal entity or where there is doubt that the person identified is the actual UBO thereof, the senior management official’s information and details shall be filed with the National Central Register of UBOs, stating whether the person is a director in the company or whether he/she holds any other position in the legal entity. In such cases, the nature and extent of the beneficial interest is not submitted on the system. The obligation and responsibility for the filing of information is on the legal entity and the officials thereof.
Accessibility to the National Central Register of UBOs
The electronic National Central Register of UBOs shall be accessible by the following authorities and persons:
- Competent Supervisory Authorities, the FIU, the Customs Department, the Tax Department and the Police shall have quick and unlimited access without the payment of any fee;
- Obliged entities, during the conduct and application of due diligence and customer identification procedures, policies and measures, shall have access to the name, month and year of birth, nationality and country of residence of the UBO(s) as well as to the nature and extent of the beneficial interest held, following payment of a fee of €3,50 (Three Euros and Fifty Cents), per Entity;
- All members of the general public shall have access to the name, month and year of birth, nationality and country of residence of the UBO(s), as well as to the nature and extent of the beneficial interest held in the legal entity, following the payment of a fee of €3,50 (Three Euros and Fifty Cents), per Entity.
As of the date of establishment of the National Central Register of UBOs (i.e. 12/03/2021) until the 31/07/2022, on which the electronic National Central Register of UBOs will become fully operative, access to the information and details of the UBOs will be granted only to Competent Supervisory Authorities, the FIUs, the Police, the Tax Department and the Customs Department, upon submitting a written request to the Registrar of Companies.
Timing of filings (Deadlines)
Each and every obliged entity mentioned above shall proceed with the filing of the necessary information and details pertaining to the beneficial ownership thereof prior to the expiration of the interim solution period, which is extended until the 31st day of July, 2022.
In the event where there was a change of the details of the existing UBO(s) of an obliged entity or where the obliged entity decided to proceed with the change of its UBO(s), the entity and its officers are under an obligation to proceed with the filing of the details of the new UBO(s) with the National Central Register of UBOs within 14 (Fourteen) days from the date such change occurred.
In regard to newly incorporated obliged legal entities that were registered after the 12th day of March, 2021, the company and its officers shall proceed with the filing of the necessary information and details pertaining to the beneficial ownership thereof within 30 (Thirty) days as of their date of incorporation.
The filing of the necessary information and details pertaining to the beneficial ownership of obliged legal entities is possible via the Government Gateway Portal Ariadni (“Ariadni”), in one of the following manners:
- by creating a corporate/partnership Ariadni profile, belonging to the legal entity itself (if not already registered);
- by submitting the necessary information and/or details pertaining to the beneficial ownership of the obliged legal entity via the Ariadni profile of an officer or partner (physical person) of the legal entity;
- by submitting the necessary information and/or details pertaining to the beneficial ownership of the obliged legal entity via the Ariadni profile of an officer or partner (legal person) of the legal entity.
Consequences of non-compliance
It shall be emphasised that strict and penalties and fines may be imposed on obliged legal entities and the officers thereof in cases of non-compliance with the provisions of the Law, the AML Directives and/or the Directive issued by the Department of Registrar of Companies and Intellectual Property.
More specifically, both the obliged entity and each of its officers will be subject to a penalty in the amount of €200,00 (Two Hundred Euros) and, in case the default continues, an additional amount of €100,00 (One Hundred Euros) will be imposed upon them for each additional day of delay with a cap penalty in the amount of €20.000,00 (Twenty Thousand Euros).
It shall be noted that the aforementioned penalties and fines will apply post the expiration of the interim solution period, namely after the 31st day of July, 2022, as during the aforesaid interim solution period (grace period) no penalties and/or fines will be imposed upon obliged entities and their officers.
What is constructive dismissal?
Constructive dismissal is basically the situation where an employer has committed a serious breach of contract entitling the employee to resign in response to the employer’s conduct, by treating himself as having been dismissed by the employer. In such cases, the existing legal framework enables the treatment of the employee’s resignation as a form of unfair dismissal since the actions and/or conduct of the employer (constructive part) leads to the resignation of the employee (dismissal part).
In the British case Western Excavating (ECC) Ltd v Sharp, it was stated that “If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance”. If he does so and proceed with the termination of the employment contract by reason of the employer’s conduct, he is constructively dismissed.
The aforementioned legal approach is also reflected in the relevant applicable Cypriot law. More specifically, subsection 7(1) of the Termination of Employment Law of 1967 (24/1967) (the “Law”) provides that in cases where an employee legally terminates his/her employment with the employer due to the conduct of the employer, then such termination is considered as being termination of employment by the employer within the meaning of section 3 of the Law, which recognises the employee’s right to receive compensation after his/her termination of employment by the employer.
However, it must be stressed that according to subsection 7(2) of the Law, in any proceedings before the Labour Disputes Tribunal initiated pursuant to the abovementioned subsection 7(1) of the Law, it will be presumed, until proven otherwise, that the employee has not terminated his employment lawfully. This actually means that the burden of proof is on the employee to show at the Court that the conduct and/or actions of the employer amounted to a fundamental and/or serious breach of contract (usually referred to as a “repudiatory breach”) leading the employee to terminate the employment contract as a result.
What is a repudiatory breach?
In cases of constructive dismissal, the employer’s unreasonable conduct and behaviour leading an employee to terminate the employment contract is often referred to as a “repudiatory breach”. A repudiatory breach can either be a fundamental breach of an express contractual term or a breach of the implied term of “trust and confidence” between the parties.
It must also be noted that such unreasonable treatment by the employer may either be a one-off serious breach of the employment contract (for instance, failure by an employer to pay an employee’s salary) or a continuous pattern of behaviour and/or incidents, which taken as a whole amount to a fundamental breach of the implied term of trust and confidence (for instance, persistent bullying in the workplace).
In Lewis v Motorworld Garages Ltd it was stated that “..the repudiatory conduct may consist of a series of acts or incidents, some of them perhaps quite trivial, which cumulative amount to a repudiatory breach of the implied term of the employment contract that the employer will not, without reasonable and proper cause, conduct himself in a manner calculated or likely to destroy or seriously damage the relationship of confidence between the employer and the employee”.
In general terms, a finding that there has been conduct which amounts to a breach of the implied term of trust and confidence will inevitably mean that there has been a fundamental or repudiatory breach going necessarily to the root of contract. In Garner v Grange Furnishing Ltd, it was stated that behaviour or conduct amounting to a repudiation can be a series of small incidents over a period of time. If the employer is making it impossible for the employee to go on working, that is plainly a repudiation of the employment contract.
In the Cypriot case Louis Tourist Agency Ltd v Antigonis Elia, it was stated that the kind of an employer’s conduct and/or behaviour justifying the termination of employment by the employee is not specified in the aforementioned subsection 7(1) of the Law. However, in the aforementioned case, reference was also made to Alouet Clothing v Athanasiou, where it was held that a breach of a fundamental term of the employment contract by the employer, constitutes a conduct falling under the provisions of subsection 7(1) of the Law. Moreover, it was stated that although it is difficult, if not impossible, to exhaustively determine the employer’s misconduct falling under subsection 7(1) of the Law, such conduct must be of such nature and character as to undermine the foundation of the employer-employee relationship, whether by breach of a fundamental term of the employment contract or by conduct and/or behaviour on the part of the employer which is not compatible with the admissible relationship framework between the employer and the employee.
What is the applicable standard of assessment for a breach to be considered as a repudiatory breach of the employment contract giving rise to a claim for contrastive dismissal? Is this standard objective or subjective?
It shall be noted at this point that in order for a breach of the implied term of trust and confidence to exist, it is not necessary to be proved that the employer intended the repudiation of the contract. The function of the employment tribunal is to examine the employer’s conduct as a whole and to determine whether it is such that its cumulative effect judged reasonably and sensibly is such, that the employee cannot be expected to put up with it. Whether an employee is entitled to terminate his/her employment contract by reason of the employer’s behaviour does not depend upon whether the employer had intended the conduct to be repudiatory or could reasonably have believed that it would be accepted as such, but upon whether the employer’s conduct, viewed objectively, manifests an intention no longer to be bound by the contract. In other words, the employer’s behaviour must be such that its effect, judged reasonably, is to disable the other party from performing properly his/her duties and obligations. It is thus inferred that the applicable standard in such cases is objective and not subjective; it is that of a reasonable person. This is also reflected in Malik v BCCI, where it was stated that the conduct of the employer must impinge on the relationship between the employer and the employee, in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer. This requires one to look at all the relevant circumstances.
Whether the conduct of the employer constitutes behaviour that justifies the resignation on the part of the employee, is judged by examining and assessing objectively the facts and circumstances of each individual case.
The subjective sensitivities of an employee are not taken into consideration for the purposes of such assessment.
What kind of an employer’s behaviour and/or conduct may constitute a repudiatory breach for constructive dismissal purposes?
According to Halsbury’s Laws of England, although there is no exhaustive list of behaviours and/or incidences that may give rise to a claim for constructive dismissal, it was noted that among the types of breach of contract by the employer that may support a finding of constructive dismissal are the following:
a) A failure to pay wages or unilateral decision to cut pay;
b) Demotion or other change in status;
c) A change of job content not permitted or envisaged by the contract;
d) Undermining a senior employee’s position;
e) Change of the place of work, or breach of a mobility clause, whether express or implied;
f) Unilateral change of working hours;
g) Failure to ensure the employee’s safety;
h) Breach of the term of trust and respect;
i) Failure to follow a contractually binding disciplinary procedure;
j) Imposition of a disciplinary measure in a disproportionate manner;
k) Failure to provide a reasonably suitable working environment
l) Failure to deal with grievances properly and timeously.
An offensive and derogatory behaviour towards an employee may constitute a repudiatory breach giving rise to claims for constructive dismissal. In Palmanor Ltd v Cedron, it was stated that although tribunals have to be careful so as to avoid attaching great importance to words used in the heat of the moment or in anger, there comes a time when the language is such that even if the person using it is in a state of anger, an employee cannot be expected to tolerate it.
Moreover, failure of an employer to adequately support the employees in periods with increased workload may also constitute a behaviour amounting to a repudiatory breach for constructive dismissal purposes. In Seligman & Latz Ltd v Mc Hugh, the Employment Appeal Tribunal held that the employee was entitled to regard herself as having been constructively dismissed on grounds that the employers were in breach of an implied condition in her employment contract that if she were overloaded, she would have the assistance of a junior and/or apprentice hairdresser and that the breach was fundamental going to the root of the contract.
What role does the time of resignation play in cases of claims for constructive dismissal? What is the right time for an employee to tender his/her resignation in such cases?
The answer to the above question is that the timing of an employee’s resignation plays a crucial role in the outcome of a claim for constructive dismissal. In Western Excavating (ECC) Ltd v Sharp, it was stated that the employee “must make up his/her mind soon after the conduct of which he/she complains”. This is due to the fact that if the employee leaves a long period of time to lapse between the occurrence of the repudiatory breach and the time of his resignation as a result of such breach, he is quite likely to lose the right to claim that he has been constructively dismissed by the employer as he may be taken to have affirmed the employment contract and waive the repudiatory breach thereof.
In W.E. Cox Toner (International) Ltd v Crook, it was noted that an employee faced with a repudiation by his employer is in a very difficult position in the sense that if he goes to work the following day, we will himself be doing an act which is consistent with the continued existence of the contract, and he might be said to be affirming the contract. Moreover, if he then accepts his (monthly) salary (i.e. further performance by the guilty party), the risk of being held to affirm the employment contract is even greater. It was further noted that “delay might be serious, not in its own right but because any delay normally involves further performance of the contract by both parties. It is not the delay which may be fatal but what happens during this period of delay”. Mere delay, unaccompanied by any express or implied affirmation of the employment contract, does not constitute affirmation thereof, but if it is prolonged it may be evidence of an implied affirmation.
However, it must be noted at this point that if the innocent party further performs the contract to a limited extent but at the same time makes it clear that he/she is reserving his/her rights to accept the repudiation or is only continuing so as to allow the guilty party to remedy the breach, such further performance does not prejudice his right subsequently to accept the repudiation.
Moreover, in Marriot v Oxford Co-operative Society it was noted that provided that the employee makes clear his/her objection to what is being done, he/she is not to be taken to have affirmed the contract by continuing to work and be paid for a limited period of time (i.e. continue working under protest for a limited time period), even if his/her purpose is merely to enable him to find another job.
In Waltons and Mors v Dorrington it was further noted that there is no fixed time limit in which the employee must make up his mind. It depends upon all the circumstances including the employee’s length of service, the nature of the breach and whether the employee has protested at the change. It was also stated that “mere protest will not however, prevent an interference that the employee has waived the breach, although exceptionally, a clear reservation of rights might do so”.
In the Cypriot case Κώστας Mηνά v Κυπριακές Αερογραμμές Δημόσια Λτδ, the Court held that, although a not so short time period of 3⅟2 – 4 months, has lapsed from the date the breach has occurred (i.e. the unilateral change of the terms of the employment contract by the employer company), the employee had not waived the breach and/or affirmed the employment contract and concluded that the employee had been constructively dismissed. In its abovementioned decision the Employment Tribunal had taken into consideration the employee’s overall attitude during the aforesaid period of 3⅟2 – 4 months, the length of the employee’s employment with the employer company (i.e. twenty-three years), and the fact that the employee was faced with the objective difficulty in finding a job of a similar nature in Cyprus.
Is the employee’s right to a constructive dismissal claim lost permanently in cases of lapse of time?
In the latest leading case Kaur v Leeds Teaching Hospitals NHS Trust, the Court of Appeal confirmed that in cases where there has been an earlier repudiatory breach which has been affirmed by the employee, if there is subsequently conduct which taken together with the employer’s earlier fundamental breach that causes the employee to resign or plays a part in the decision of the employee to resign, the later act (which may not be itself repudiatory) effectively reactivates the earlier repudiatory breach. The employer’s further act can be described as “reviving” the employee’s right to terminate the contract. An employee who is the victim of a continuing cumulative breach, is entitled to rely on the totality of the employer’s acts notwithstanding a prior affirmation, provided the later act forms part of the series.
It was also noted that “when the threshold had been reached would of course be a matter of assessment in every case, and no one would know whether the employee had jumped either too early or too late until a tribunal ruled”.
In its judgment, the court stated that there is a five-question test for tribunals to consider when determining whether an act and/or an incident may be deemed to be a last straw, enabling an employee to claim that he/she has been constructively dismissed by his/her employer:
- What was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered, the resignation?
- Has the employee done anything to suggest that they have accepted (or affirmed) the contract since that act?
- If not, was that act (or omission) by itself a repudiatory breach of contract (i.e. of sufficient importance to justify resignation)?
- If not, was it nevertheless a part of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a repudiatory breach of the employee’s contract by showing that all trust and confidence had been destroyed? If it was, there is no need for any separate consideration of a possible previous affirmation.
- Did the employee resign in response (or partly in response) to that breach?
All that is required for a last straw resignation is that a series of incidents, whether or not previously affirmed, amounts to a fundamental breach of contract. In other words, further contributory acts effectively revive the employee’s right to rely upon the whole series of acts, notwithstanding the earlier affirmation(s). If the employee does not delay his/her resignation from the occurrence of the last of these incidents, his/her constructive dismissal claim may be well-founded.
In Kaur v Leeds Teaching Hospitals NHS Trust, the claimant was employed by the NHS Trust Hospitals, the Tribunal held that the entirety of the disciplinary and appeal process conducted by the employer and their outcomes were arguably reasonable and that it was not open to the claimant to wait fifteen (15) months after the incident in 2013 to rely on the appeal outcome in 2014 as the last straw entitling her to resign claiming that she has been constructively dismissed.
Is causality between the employer’s conduct and the employee’s resignation a requisite in order for an employee to be able to claim that he/she has been constructively dismissed by the employer? Does the employer’s repudiatory conduct have to be the sole cause of resignation?
Causality between the employer’s conduct and the employee’s resignation is a prerequisite in cases of constructive dismissal.
In Walker v Josiah Wedgwood & Sons Ltd, it was noted that it is at least a requisite that the employee should resign as a result of the breach of the employer’s relevant duty to him/her, and that this shall demonstrably be the case. Moreover, it was further stated that it is not sufficient if the employee resigns in circumstances which indicate some ground for his/her resignation other than the breach of the employer’s obligation to him/her. The test is whether the employee’s resignation was effectively caused by the employer’s repudiation. It is not necessary that the repudiatory breach by the employer is the sole cause of the employee’s resignation, it suffices that this is the substantive cause of the resignation.
In Jones v F Sirl & Son (Furnishers) Ltd,the employee was faced with worsened employment terms and conditions and waited three and a half weeks until she was approached by another firm that offered her a job prior to her resignation. The employee accepted the job offer and claimed that she had been constructively dismissed by the employer. The employment tribunal concluded that the resignation was in response to the job offer and not to the employer’s repudiation. The Employment Appeal Tribunal (EAT) overturned the decision of the employment tribunal and held that the employee had been constructively dismissed as a result of the repudiation of the employment contract on the part of the employer. It was also stated that the test was not what was the sole cause of resignation but rather what in fact was the effective cause.
Who bears the burden of proof in constructive dismissals claims?
The burden of proof in cases of claims for constructive dismissal is on the employee. This actually means that the employee has to show at the Court that the repudiatory conduct and/or actions of the employer left the employee with no other option than to terminate the employment contract and tender his/her resignation as a result.
As already mentioned, according to subsection 7(2) of the Law, in any proceedings before the Labour Disputes Tribunal relating to claims for constructive dismissal (pursuant to subsection 7(1) of the Law), it will be presumed, that the employee has not terminated his employment lawfully until proven otherwise by the employee.
What are the employees’ rights to damages/compensation in constructive dismissal cases?
According to subsection 7(1) of the Law, in cases of constructive dismissal, the employee is entitled to receive damages/compensation pursuant to section 3 and Tables A and D of the Law as per below:
|Continuous employment period||Compensation amount|
|Up to 4 years||2 weeks’ salary for every continuous employment period of 52 weeks.|
|More than 4 and up to 10 years||2 ½ weeks’ salary for every continuous employment period of 52 weeks.|
|More than 10 and up to 15 years||3 weeks’ salary for every continuous employment period of 52 weeks.|
|More than 15 and up to 20 years||3 ½ weeks’ salary for every continuous employment period of 52 weeks.|
|More than 20 and up to 25 years||4 weeks’ salary for every continuous employment period of 52 weeks.|
It is noted that paragraph 4 of Table A of the Law states that, the Employment Tribunal, has absolute discretion as to the determination of the compensation amount awarded to an employee. It is also noted that, except to what is provided above, in the determination of the compensation amount the Employment Tribunal will also take into consideration, inter alia, the following: i) the wages and any other earnings of the employee; ii) the period/duration of employment of the employee; iii) the loss of prospect of the employee in finding another job; iv) the age of the subject matter employee; v) the actual conditions of the employee’s employment termination.
What are non-solicitation clauses contained in employment contracts?
Non-solicitation clauses are contractual terms contained in employment contracts, restricting an employee from soliciting and/or canvassing, directly or indirectly, business or custom from employer’s clients, post-termination of his/her employment with the employer.
Are non-solicitation clauses easily upheld by the Courts?
It shall be stressed at this point that Courts are not willing to uphold non-solicitation clauses, unless it can be proved by the employer that he/she has a legitimate proprietary interest that needs to be protected against the employee in question and that the protection sought by the enforcement of such non-solicitation clauses goes no further than what is reasonably necessary, having regard to the circumstances and the facts of each individual case(Office Angels Ltd v Rainer-Thomas and O’Connor).It is noted that in cases where the Court is not satisfied that a non-solicitation clause meets the aforementioned requirements, it refuses to uphold the clause as, generally, any contractual term restricting an employee’s activities post-termination of his/her employment is considered to be void for being in restraint of trade and contrary to public policy (Gledhow Autoparts v Delaney).
What kind of proprietary interests are capable of being protected by the incorporation of non-solicitation clauses in employment contracts?
The legitimate proprietary interests that can be protected by the incorporation of non-solicitation clauses in employment contracts are mainly customer and trade connections. Client and trade connections actually refer to connections developed between the employee and the trading partners/customers of the employer. Is it noted that in certain cases, “client connections” may also includes potential clients (East England Schools CIC v Palmer and another). Any reference to “client connections” is actually a reference to the personal knowledge and/or power of influence and control an employee may have over the customers of the employer, to such a degree that enables him/her to take advantage of that connection in order to solicit or canvass the business or custom of his/her employer’s clients (East England Schools CIC v Palmer and another; GW Plowman & Son Ltdv Ash).Undoubtedly, in cases where an employee has dealt directly with certain clients for a period of time, he/she has knowledge and influence over the said clients. The clients develop a relationship of trust with the particular employee who, as a result, may exercise the control and influence he/she has gained over the said clients, who rely upon the employee to meet their needs, rather than on the employer’s company (East England Schools CIC v Palmer and another; GW Plowman& Son Ltd v Ash).In most of the cases, the aforementioned relationship built up between the employee and the employer’s clients was developed by the use of the resources of the employer (e.g. marketing budget).
When is a non-solicitation clause considered as being reasonable by the Courts?
Once the employer proves that he/she has indeed a legitimate proprietary interest that needs to be protected against the employee, namely his/her client connections, the employer also needs to demonstrate that the non-solicitation clause is reasonable. As already mentioned, a non-solicitation clause will only be considered as reasonable by the Court if it is proved by the employer that the clause is no wider than what is reasonably necessary for the purpose of protecting the employer’s client connections. In considering the reasonableness of the of a non-solicitation clause the Court may also take into consideration whether or not a covenant of a narrower ambit would have sufficed for the purpose of protecting the employer’s interests. In Office Angels Ltd v Rainer-Thomas and O’Connor, it was stated that a restrictive clause in one form cannot be considered to afford no more than adequate protection of the employer’s relevant legitimate interest if the evidence shows that a restrictive clause in another form, much less far-reaching and less prejudicial to the employee, would have afforded adequate protection.
Other factors that play some role in determination by the Court as to whether or not a restrictive clause is reasonable are the role, duties and responsibilities the employee had in employer’s business. Generally, the more junior the employee, the harder it may be for a restraint, namely a non-solicitation clause, to be upheld by the Court as reasonable. On the other hand, the more senior the employee and the more responsibilities he/she had, the more willing the Court is to uphold a restrictive clause as being reasonable, always taking into consideration the facts of each individual case. In Safety Net Security Ltd v Coppage, it was held that a non-solicitation clause restricting the employee from soliciting and/or canvassing, directly or indirectly, business or custom from clients of the employer for a period of six months, post-termination of his employment was considered as reasonable and was upheld by the Court as the employee had played a large role in the employer’s business as its “outward face” and he had contact with all of the employer’s clients as he had undertaken the role of director. It was stated that the employee had realistically had the power to influence all the clients with whom he had communication during his employment.
What constitutes “solicitation” of clients?
It is noted at this point that solicitation needs something more than simply informing a client of the employee’s departure. There must be an aim and an intention to acquire orders from the client and frequently requires the employee to initiate contact and communication with the client for that purpose (Baldwins (Ashby) Ltd v Maidstone).
How interpretation and construction of non-solicitation clauses affect their validity and enforceability?
The construction and interpretation of non-solicitation clauses play significant role in whether or not these will be upheld by the Court as enforceable. It must be noted that in cases where non-solicitation clauses/restrictive covenants are too wide, the Court will not be willing to interpret them in a more narrow way in order to render them valid and enforceable and will rather treat them as void and/or unenforceable (East England Schools CIC v Palmer and another).
Moreover, where a contract contains several restrictive clauses, these are treated by the Court as being severable. For instance, if a non-competition clause contained in a contract is considered as being too wide but a non-solicitation clause contained in the same contract is considered by the Court as reasonable, the Court will uphold the reasonable clause and render the other clause unenforceable.
According to the Court, the below mentioned criteria apply in order to assess whether a clause or some of the wording contained in a clause can be severed from the rest of the contract (also known as the “blue pencil” test (Tillman v Egon Zehnder Limited; East England Schools CIC v Palmer and another):
- The unenforceable wording can be removed without having to add to or modify the remaining words;
- The remaining clauses/restrictive covenants must be supported by adequate consideration;
- The removal of the unenforceable wording and/or provisions must not generate any major change in the overall effect of the restrictive covenants in the contract of employment.
Τhe role and functions of the secretary as contemplated by the Law are administrative in nature. The secretary cannot assume any executive or managerial powers in the absence of express authority from the Board of Directors of the Company.
Specifically, it is noted that a secretary must not take and/or assume any power entrusted upon the directors. For instance, the secretary cannot summon a general meeting on his/her own as he/she issues and sends notices in regards to general meetings, under the instructions of the Board of Directors.
It is noted that, exempt from certain statutory duties, the responsibilities and duties of the secretary are not stipulated by Companies Law Cap.113 (hereinafter referred to as the “Law”). The duties of the secretary are assigned to him/her either by the Articles of Association of the company, or by the contract of service signed between the secretary and the Company, or by the Board of Directors of the Company, which is the most common case. Moreover, it is mentioned that in practice, certain duties and responsibilities of the secretary are implied by a course of conduct. Ordinarily, the duties and responsibilities of the secretary include, inter alia, his/her presence at all general meetings of the Company and of the Board of Directors, keeping proper minutes of the general meetings and other proceedings, the issuance and dispatch of the necessary notices, under the instructions of the Board of Directors, to the members and other relevant persons in regards to the general meetings etc, the conduct of correspondence with the members of the Company regarding to transfers of shares, calls, forfeiture etc. Additionally, the secretary is responsible for the submission of the relevant returns to the Registrar of Companies. He/she also has the responsibility to keep the books of the Company which relate to the internal affairs thereof, such as the register of members, the register of debentures, the share ledger etc.
Kindly note that the Law imposes the following statutory duties upon the Secretary:
- In respect of a public company to make the statutory declaration required prior to the commencement of business (s. 104(1) (c) and 104(2)(c) of the Law);
- To sign the annual return and the accompanying documents (s.122 of the Law);
- In case of winding up of the Company by the Court, to verify the statement to be submitted to the Official Receiver (s.224(2) of the Law);
- In respect of a receiver being appointed by debenture holders whose debentures are secured by a floating charge on substantially the whole of the Company’s assets, to verify the statement to be submitted to the receiver (s.341(2) of the Law);
It is noted at this point that according to Palmer’s Company Law (21st edition), many of the duties imposed upon the companies by the Law, are so clearly within the province of the Secretary that default by the company to comply with such duties and/or obligations shall in appropriate occasions and circumstances give rise to liability on the part of the secretary, where the relevant applicable section(s) imposes liability upon officers in default. This may be applicable in relation to defaults in regard to the following obligations:
- To deliver a return of allotments (s.51 of the Law);
- To issue share or debenture certificates (s.78 of the Law);
- To cause the registration of charges with the Registrar of Companies (s.91 and 92 of the Law); and to keep the Company’s register of charges and make it available for inspection (s.99 and 100 of the Law);
- To publish the Company’s name outside its places of business, on its seal and on its publications (s. 103 of the Law);
- To permit the inspection of the register of members (s. 108 of the Law);
- To permit the inspection of the register of debenture holders and to forward copies and to forward copies of the trust deed (s.84 of the Law);
- To keep the register of directors and secretaries (s.192 of the Law);
- To ensure the publication of particulars with respect to directors in trade catalogues, circulars, etc. (s. 193 of the Law);
- To keep minutes (s. 139 of the Law) and to make available for inspection the minutes of the general meetings (s. 140 of the Law);
- To send out copies of the balance sheets and auditors’ reports (s. 152 of the Law).
It is mentioned that in many of the aforementioned cases, the secretary is liable to a fine in the event the Company fails to comply with its obligations under the Law. However, the conditions of criminal liability may vary. For instance, in sections 104(6) and 341(5) of the Law, the statutory provisions lay down their own criminal sanction in cases of non-compliance. On the other hand, in the instance of sections 120(2) and 78(2) of the Law, the provisions refer to the “default fine” as defined in section 375 of the Law. There are also instances, such as section 108(3) of the Law, where both a fine and a default fine are mentioned. It is noted at this point that in cases where under the applicable provision of the Law a fine is imposed on the secretary in his/her capacity as the “officer in default”, mens rea has to be proved against him/her due to the fact that section 375(2) of the Law provides that the phrase “officer in default” means an officer of the company “who knowingly and wilfully authorises or permits the default, refusal or contravention mentioned in the enactment”.
In any case, the Board of Directors of the Company has the power to dismiss the Secretary in case the secretary exercises his/her duties negligently and/or without due diligence.
The requirement for the establishment of the Ultimate Beneficial Owner (UBO) Register, originally emanated from the 4th Anti-Money Laundering Directive (EU) 2015/894), which was transposed into national legislation on the 3rd day of April 2018 through the Prevention and Suppression of Money Laundering and Terrorist Financing Law (13(I)/2018). In particular, article 61A (4)(a) of the Prevention and Suppression of Money Laundering and Terrorist Financing Law (13(I)/2018) provided for the introduction of the UBO Register.
The 5th Anti-Money Laundering Directive (EU) 2018/843), which amended the 4th Anti-Money Laundering Directive and provided for the launch of publicly accessible registers of beneficial ownership of companies and other legal entities in EU Member States, was transposed into national legislation through the Prevention and Suppression of Money Laundering Laws of 2017-2021 on the 23rd day of February, 2021.
Information to be filed with the National Central UBO Register
According to article 4(1) of the Directive on the Prevention and Suppression of Money Laundering Laws (Registry of Ultimate Beneficial Owners of Companies and other Legal Entities) of 2021 (Κ.Δ.Π. 112/2021) (hereinafter referred to as “the National Directive on UBO Register”), the information that shall be obtained and kept by obliged legal entities in regards to the beneficial owner(s) thereof and be filed with the National Central UBO Register is the following:
- Name, surname, date of birth, nationality and residential address of the beneficial owner(s)
- Information as to the type and extent of the direct or indirect beneficial ownership status beneficial owner(s), including possession of shares, voting rights and/or the type and extent of final control and personal influence exercised directly or indirectly by the beneficial owner(s).
- Identification document number indicating the type of document and the country of document issuance (Identity card or passport).
- Date on which the natural person was entered in the register as beneficial owner and
- Date on which there were changes in the particulars of the natural person or the date on which the natural person ceased to be a beneficial owner.
The National Central UBO Register was established on the 16th day March 2021. Initially, an interim solution period (grace period) of 6 months, was granted to all existing obliged entities in order for them to file the aforementioned information and details with the National Central UBO Register maintained by Department of Registrar of Companies. However, the aforementioned interim solution period (grace period) is further extended by the Department of Registrar of Companies until the 12th day of March, 2022.
In cases where there are alterations and/or changes in the details and information regarding the beneficial ownership of obliged legal entities, the entities and their officers must, within fourteen (14) days from the date of such alteration, file with the National Central UBO Register maintained by Department of Registrar of Companies the new accurate and valid information regarding the beneficial ownership thereof (article 10(2) of the National Directive on UBO Register).
Companies and/or other obliged legal entities that are registered after the 16th March 2021 shall proceed with the filing of the aforementioned information in regards to their beneficial ownership within thirty (30) days from the date of their registration (article 9(1) of the National Directive on UBO Register).
During the period commencing from the 1st until the 31st day of December of each calendar year, obliged entities are required to confirm electronically to the Department of the Registrar of Companies the information and details of their beneficial owner(s) (article 10(3) of the National Directive on UBO Register).
Filing of Information
The aforementioned information and details regarding the ultimate beneficial ownership of companies and other obliged legal entities shall be submitted exclusively via the government gateway portal “ARIADNI” (article 17(2) of the National Directive on UBO Register). In order to obtain access and use the e-filing system, entities and their officers must first obtain access through the government gateway portal “ARIADNI”, if not already registered.
In case of non-compliance with any of the aforementioned requirements, or in case of submission of inaccurate and or false information, a pecuniary penalty of €200,00 (Two Hundred Euros) and (in case the default continues) an additional amount of €100,00 (One Hundred Euros) shall be imposed on the obliged legal entity and on each officer thereof, for each additional day of delay with a cap penalty in the amount of €20.000,00 (Twenty Thousand Euros).
It is noted that the responsibility for submission of true and accurate information regarding the UBO(s) lies with entity itself and its officers (articles 4(3) and 11(1) of the National Directive on UBO Register).
It shall also be stressed that during the interim solution period, no penalties will be imposed on companies and/or other obliged legal entities.
Access to information submitted to the BO register (partly applicable to the interim solution period)
The following persons shall, in any case, have access to the information concerning the beneficial owner(s) through the electronic National Central UBO Register:
- Competent Supervisory Authorities, the Financial Intelligence Unit (FIU), the Customs Department, the Tax Department and the Police shall have fast, free and unlimited access;
- Obliged entities, in the context of conducting due diligence and identification measures for their clients shall have access to the name, month and year of birth, nationality and country of residence of the UBO(s) as well as to the nature and extent of the beneficial interest held, following payment of the amount of Three Euro and Fifty Cents (€3,50) per entity;
- All members of the general public shall have access to the name, month and year of birth, nationality and country of residence of the UBO(s), as well as to the nature and extent of the beneficial interest held, following payment of Three Euro and Fifty Cents (€3,50) per entity (article 12(1) of the National Directive on UBO Register).
It is noted, that during the interim solution period access to the information and details of the UBO(s) will only be granted to Competent Supervisory Authorities, the FIUs, the Customs Department, the Tax Department and the Police, without any restriction and upon submitting a written request to the Department of the Registrar of Companies. This actually means that during the interim solution period, the search facility will not be available to obliged legal entities and members of the general public.
Exceptions regarding the publication of information and details relating to UBO(s)
The National Directive on UBO Register introduces some exceptions in regards to the publication of information and details of Ultimate Beneficial Owners in order to ensure the proportionate application of the new measure and safeguard the privacy of the Ultimate Beneficial Owners’ personal data.
More specifically, under special circumstances, a beneficial owner or the obliged legal entity itself (provided that it has first obtained the consent of the UBO or his/her guardian) can submit a written request to the Registrar of Companies in order to request an exception so that the UBO’s personal data kept in the National Central UBO Register are not publicised. In particular, in exceptional cases where access to the aforementioned information and personal data of the UBO would expose the same to an incommensurate and unreasonable risk of extortion, fraud, intimidation, kidnapping, harassment, blackmail, violence or harassment or in cases where the UBO is a minor or he/she is legally incapable, an exception may be made by the Department of the Registrar of Companies on a case-by-case basis. The exception may concern the restriction of access to all or part of the personal data and details relating to the UBO(s). The aforementioned exemptions are not applicable to financial and/or credit institutions.
It shall be noted that exemptions regarding the disclosure of information relating to Ultimate Beneficial Owners are granted only following a thorough and complete evaluation of the exceptional nature of the circumstances.
The decision of the Department of the Registrar of Companies in regards to an application for an exemption regarding the publication of the aforementioned personal data and details relating to Ultimate Beneficial Owners may be challenged by filing a recourse with the Court pursuant to article 146 of the Constitution.