Conflicts and disputes, unfortunately, are unavoidable in every business operation. As it comes to shareholders, issues that relate to, inter alia, the management of the company by the directors, the distribution of profits, the exercise of control, or the service of personal interests that may contradict the company’s affairs usually lead to an escalation of disputes and can interfere with the rights of other shareholders or even place at risk the operation and the best interest of the company itself.

Shareholders, as the owners of a company, have an array of legal rights and obligations in relation to the company, which flow principally from both contract law and statute, under the Companies Law (Cap. 113). The regulation of such rights and obligations, in advance, is the key to eliminating or at least limiting the possibility of any disputes arising between the shareholders. However, in the unlikely event that any conflicts and disputes arise, Cyprus Law provides mechanisms that are available to be enforced before the Cyprus Court to preserve the rights of the respective parties, as described below.

Be proactive – Shareholders Agreements

Before investing or by any other means acquiring any stake in a company it is advisable that the respective rights and obligations of the shareholders should be regulated via a Shareholders Agreement. A Shareholders Agreement, like any other private contract, binds all the parties to its terms of it while the usual remedies for breach of contract will be available if any party breaches its terms. Such Agreements are entered into between the shareholders themselves (the company is not a party to the agreement) and aim to specify, inter alia, how they will behave within their company, what business the company will do, regulate the decision-making power of the shareholders to various aspects of the company as well as, determine issues regarding the transfer or sale of any shares held in the company. 

Although many of the aspects that can be determined under a Shareholders Agreement are also included in the company’s Articles of Association, entering into such an agreement can be advantageous for the following reasons: 

  1. Enforceability: Parties may agree to include in a Shareholders Agreement personal rights, i.e. the right of a specific individual to be appointed as a director of the company, which are not included in the Company’s Articles of Association and are not provided under the Law. Therefore, that right becomes contractually enforceable and, in case of any breach, gives the right to the shareholder to seek remedy, which would not otherwise be available.  
  • Minority protection: Any parties entering into a contract must all agree to amend it. Therefore, each contracting party has an equal say whilst under the Law, shareholders’ power is determined by the proportion of their respective voting rights in the company. 
  • Confidentiality: As a private agreement, a Shareholders Agreement is a private contract and does not need to be made publicly available, whilst the Articles of Association of a Company must be filed at the Registrar of Companies. 

Minority shareholders and their rights

The degree of involvement by shareholders in their company ultimately will vary considerably, depending on the size and the rights attached to their shareholding. Minority shareholders have little direct power within the company as they cannot be certain about the passing of a specific resolution at a general meeting without the backing of other shareholders. Such dependency, many times, leads to the oppression of their rights and their exclusion from the decision-making and management of the company. However, minority shareholders are by no means powerless. 

Common Law Derivative Action 

A well-entrenched common law principle, as it was determined in the landmark case of Foss v. Harbottle, is that the company, as a separate legal entity, is the correct plaintiff to bring any action for any wrongdoing in its affairs. However, common law has established exceptions to this rule to enable minority shareholders to pursue a claim which would not otherwise have been possible to be launched, due to the wrongdoers’ dominant position and exercise of control over the company, which include the majority shareholders or directors of the company. 

Following the common law, Cyprus Courts have adopted and developed the common-law protection and minority shareholders can proceed with such a claim (a Derivative Action), inter alia, provided that the following requirements are met: 

  1. Fraud on the minority – based on the relevant case law, fraud on the minority has been interpreted to include the following circumstances: 
  • Where the company acts illegally or outside the framework of the Articles of Association (ultra vires); 
    • Where the rights of a shareholder or a group of shareholders are violated, such as exclusion from the management of the business, exclusion from the payment of any dividends, etc;
    • Where the majority are endeavoring directly or indirectly to appropriate money, property, or advantages that belong to the company. 
  • Control by the wrongdoers – such ground covers the cases where the wrongdoer is the director of the company or the majority shareholders. 

Statutory remedy of unlawful prejudice shareholders

Section 202 of Cap. 113 provides the right to any member of a company, which is a registered shareholder for at least 6 months, to file a winding up petition before Cyprus Courts, on just and equitable grounds, including, inter alia, cases where the company’s management is conducted oppressively and fraudulently, where there is abuse or deadlock to the management of the company’s affairs as well as lack of confidence to the company’s procedures and operations. However, in the context of a Winding-up Petition, Court can award alternative remedies if it is of the opinion that the affairs of the company have been conducted in a manner oppressive to the petitioner but to wind up the company would unfairly prejudice the latter, although, based on the facts of the case, it would have been just and equitable to wind up the company.

The alternative remedies that can be awarded under Section 202 of Cap. 113 include the followings:

  1. An order regulating the conduct of the company’s affairs in the future.
  2. An order for the purchase of the shares of any member of the company by other members of the company.
  3. An order for the purchase of the shares of any member of the company by the company and a reduction accordingly to the company’s capital.

The impact of the Coronavirus (Covid19) outbreak is unprecedented and it is considered to be one of the greatest economic downturns in recent history. The corporate sector worldwide was amongst the hardest hits of Covid19, which was brought to a standstill and many organizations were forced to shut down and even more are struggling to survive. The effects of Covid19 will not fade away that easily, so service and corporate providers are called to articulate and strategize effectively to keep their clientele base and at the same time achieve their goals.

Every company’s purpose of existence is to differentiate and gain advantage over competition, which will eventually result in achieving a greater amount of market share. Competitive advantage may be successful through strategic planning, the most crucial step of which is to identify and develop mission and vision statements which will in turn add to the identity of an organisation and distinguish it from other organisations by emphasising on its own unique characteristics (Ozdem, 2011). Through strategic planning, an organisation will formulate its mission and vision statements, set up its strategy so to realise and facilitate in practice those statements and if successful, this will lead to reaching its goals and objectives.  

            According to Whittington et al. (2020), a company’s purpose must go beyond just profits and in defining their purpose, companies use mission and vision statements, statements of corporate values and objectives. For mission and vision statements to be articulate, effective and realistic, they must be formed following discussions, meetings and research. Even though Kaplan and Norton (2008) argue that formulating those is a decision for the few (i.e. executives and CEO’s), it is the author’s opinion that when developing a mission and vision statement for an organisation, the interaction and involvement of everyone in the organisation is a vital one. Taiwo et al. (2016) argue that such a formulation must have wide participation. After all, if employees feel that they are part of such a decision making, they will eventually share in practice the mission and vision of the organisation, something which will inspire and motivate them towards higher level of productivity and performance.

Cochran et al. (2008) define mission as a statement of an organisation’s business or the reason that such a business exists in the first place. It is the rationale behind an organisation’s existence and such a statement must be coherent and consistent. Whittington et al. (2020) argued that a mission statement offers to employees and stakeholders a clear picture on what the organisation is there to do. A vision statement describes the future and desired long-term goals of the organisation. Joachim (2010) stated that a vision statement is a mechanism that drives the future of an organisation and demonstrates belief and expectations about contingencies related to the desired future. To put it simplistically, the mission of an organisation is its purpose of existence, and its vision is its ambition for future results.   

For an organisation to have such statements is of parallel importance. Having clarity and coherency on vision and mission statements with no ambiguities serves as the foundation of an organisation’s strategy which will assist it to implement and reach its goals and objectives and eventually grow. Such statements provide a significant channel for communicating essential values and norms not only to consumers but also to shareholders and employees (Leuthesser and Kohli, 1997). Also, mission and vision statements are important management tools that can impact employee behavior and attitude, expressing desirables attitudes work ethics, value and culture on which employees may operationalize in their choice of actions and inactions (Taiwo, 2016).

Thus, having a correct mission and vision statement ensures that employees will serve the organisation having a joint purpose and direction, maximising in this way productivity, efficiency and actualising the core reason of the organisation’s existence. They can even provide a meaning behind assigning and allocating tasks to employees, targeting right customers, as well as they express public image of the organisation to target groups (Germain and Cooper, 2001). There are though certain problems that may arise in formulating mission and vision statements such as they might not be clearly put into words, or they might simply be not realistically achievable, or be similar or even identical to other companies’ statements (Ingenhoff and Fuhrer, 2010). Thus, a company’s statements must differentiate from its competitors, address the correct stakeholders and manage to be well known as to its products or services’ uniqueness. Only then a company will have a leverage over its competitors.

Strategic planning is essentially about choice, that is what the organisation will do and will not do to achieve its goals and objectives (Morris, no date). One of the main and basic formulas in setting up a strategy and asses an organisation’s competitive position is to gather information and conduct an analysis on the organisation’s internal characteristics and the external market conditions. Organisations, often employ a SWOT analysis to evaluate different aspects of their business, related to their strengths (S) and weaknesses (W), as well as opportunities (O) and threats (T) of the corporate environment.

Strengths include available resources, such as human recourses, skills, expertise, know-how and machinery, while weaknesses include having a weak strategy, lack of motivation and financial difficulties. An analysis of the strengths will enable an organisation to reach its goals whereas an analysis on its weaknesses will assist the organisation to discover those elements that interfere with its success (Benzaghta et al. 2021). Such an analysis on internal characteristics will assist the organisation to understand which of its resources and capabilities are likely or not likely to be sources of competitive advantage (Gurel and Tat, 2017).

Opportunities include predictions for the need of a specific service or product in the market and potential measures so to facilitate those needs. Threats include situations which either exist or may arise in the future and will prevent an organisation to reach its goals. Opportunities and threats derive from the change of the environment, for example amendment in legislation which may affect the organisation’s conduct of business. An analysis of opportunities and threats will examine how competition is likely to evolve and what implications will such evolution have on the organisation (Gurel and Tat, 2017). This will also assist an organisation to identify potential opportunities in the market, set action plans and take series of measures so to take advantage of those opportunities whereas to tackle and avoid any threats that may damage its business.

A SWOT analysis is usually formed in a power point presentation which includes a four-quadrant box (2X2 matrix). Each box will include one of the initial letters of SWOT and will list all key points for every one of them. For an objective and comprehensive SWOT analysis review, all key leaders and decision makers of an organisation must be involved in meetings, workshops and discussions. It is very important that when an organisation conducts such an analysis review, all departments of the organisation are being represented. To ensure unbiased and independent results, larger organisations may appoint external firms which will conduct such analysis review and assist to weight the various proposals. Importantly, supporting documents must be presented so to convince on the need for every element to be added in the matrix. Those may include questionnaires, and statistical analysis.

The SWOT analysis is a vital tool for an organisation’s the management team, which enables it to identify and assess internal and external factors, focus on the strengths, tackle any weaknesses, exploit opportunities and avoid threats. Strengths and weaknesses of an organisation will depend on various internal factors that may be controlled within, such as managerial skills, marketing campaigns, research and development, whereas opportunities and threats arise from external factors that may not be controlled within, such as economic, political, health, environmental.

Despite the advantages that a SWOT analysis has to offer, there are certain disadvantages and limitations. Despite not requiring a computer system or software (Beeho and Prentice, 1997), such an analysis will nevertheless need a thorough research and dedication of time and workforce. Also, the traditional 2×2 matrix encourages users to be extremely brief and not thorough something which may result in shortcuts in thinking (Minsky and Aron, 2021). SWOT analyses are often covertly political (Allio, 2006), which will often result in ignoring significant issues. 

The direct negative impact of Covid19 in the corporate sector was a great one, however it seems that organisations are adopting numerous measures so to mitigate their losses and attract business. Revising one’s mission and vision statements and adopting a SWOT analysis is of parallel importance and contributes towards the organisation’s survival and competition.

Legal Framework

The legal framework of property disputes between spouses and partners, is regulated by the Law Regulating Property Affairs of 1991 (No. 232/91). The Family Courts have exclusive jurisdiction to deal with and hear such disputes that relate to property affairs between spouses.

The issue of resolving property disputes between spouses lies within Article 14 of the Law No.232/1991, which reads as follows:

14. (1) If the marriage has been dissolved or annulled or if the spouses are separated and the property of the one spouse has been increased after the marriage, the other spouse, having contributed in any way to the said increase, is entitled to file an action before the court and claim such part of the increase resulting from his/her contribution.

Article 2 of the Law No. 232/91 defines property as any movable or immovable property that has been acquired before the marriage with the prospect of marriage or at any time after marriage takes place, from any of the spouses.

In addition, Article 15 of the Law No. 232/91 refers to the limitation period of the claim and specifically states that “The claim that arise from article 14 (a) shall lapse three years after the dissolution or annulment of the marriage, (b) shall not, on the case of death, arise in heirs of the deceased spouse (c) shall not be assigned or inherited unless it has been contractually recognised or a claim has been served“.

The Supreme Court recently examined the current practice as to the right of a surviving spouse to claim posthumously his/her contribution to the increase in his/her deceased spouse’s property, regardless of his/her rights under the Law No. 232/91.

Prokopiou v Giagkou and Pilidou as Administrators of the property of the deceased Karalouka Appeal no. 22/2020

Background

Three days before the lapse of three years from the dissolution of her marriage the Appellant filed an application with the Family Court of First Instance, based on Article 14 of Law 232/1991 and the application was directed against the administrators of her ex-husband’s estate, since he had passed away before the submission of the application.

The First Instance Family Court

The Family Court of First Instance, ex officio, raised an issue of its jurisdiction to conclude that the application did not concern a property dispute between spouses and that ” The claim of article 14 of the Law does not arise in the person of the deceased spouse’s heirs (article 15(b) of the Law) “. Consequently, he rejected the application.

The Supreme Court

The appeal raised an issue concerning the jurisdiction of the Family Court of First Instance and to what extent does it acquire jurisdiction to hear a claim, pursuant to Article 14 of the Law 232/91, after the death of the spouse against whom the claim would have been directed had he been alive.

The Supreme Court unanimously agreed that the interpretation of the Family Court of First Instance was incorrect. The Supreme Court explained that “Article 15(b) does not refer to the right of the surviving spouse to the property of the deceased, which is an acquired and existing right, only that due to the death of the spouse the claim must necessarily be directed against the administrator or administrators of his property, as in any other claim against a person who has passed away (Article 34(1) and (7) of the Law on the Management of Inheritance of Deceased, Cap. 189)………In other words, what the deceased could claim, based on Article 14, if he was alive, cannot be claimed by his heirs.”

The Supreme Court concluded that the Family Court of First Instance has exclusive jurisdiction to deal with and hear the said application before it and any other claim under Article 14 of the Law 232/91.

The Supreme Court decision was influenced by the statement in Philippou v. Philippou (2003) 1 (C) A.A.D. 1343, where it was stated that “it is evident that the intention of the legislator was to include all property disputes between spouses without distinction in relation to property acquired before the marriage in anticipation of the marriage or at any time after the conclusion of the marriage, by any of the spouses, in accordance with the provisions of the Property Relations Regulation of Spouses Laws of 1991-1999, in the exclusive jurisdiction of the Family Court, regardless of what the basis of the action is.”

Legal Findings

Hence, in light of the above, it is evident that, the interpretation of Article 15 (b) of the Law 232/91 given by the Family Court of First Instance was incorrect and the Family Court of First Instance, in case of the death of one of the spouses, is the only Court that has the jurisdiction to deal with and hear an application submitted by the surviving spouse against the administrator  of the property of the deceased spouse in order to claim posthumously his/her contribution to the increase in his/her spouse’s property.

 The Supreme Court decision of Prokopiou v Giagkou and Pilidou as Administrators of the property of the deceased Karalouka Appeal no. 22/2020 can be read in full detail by following this link.

On 04.03.2022, the Cyprus Parliament has enacted the law, L.19(I)/2022 (“Law”), providing for the establishment of an Independent Authority against Corruption (the “Authority”).

In accordance with the provisions of the Law, the Authority shall be comprised of the Transparency Commissioner and four (4) other members, who are appointed by the President of the Republic of Cyprus. Τhe term of their office shall be six (6) years without the option of re-appointment. Persons of recognized prestige and supreme morality are appointed as members of the Authority, and no person can be so appointed to the office if: (i) he/she has been convicted of an offense entailing dishonesty or moral disgrace; (ii) and/or has been declared bankrupt, in accordance with the provisions of the Bankruptcy Law; and/or (iii) has not fulfilled his/her debts to the public up to the year preceding the year before his/her appointment to the office. During the term of their office, the members of the Authority are not allowed to hold any other position or office in the Republic and/or engage in any other paid work.

The mission of the Authority is to take the necessary steps and initiatives to ensure the coherence and effectiveness of the public sector’s actions, as well as the actions taken by the wider public and private sector, in matters relating to the prevention of corruption. The Authority shall be also responsible to, inter alia, ensure the implementation, progress and evaluation of the national anti-corruption strategy, as adopted from time to time.

The Authority investigates, ex officio or following a complaint, any acts of corruption in the public, wider public and/or private sector. It is understood that, in terms of the private sector, the only complaints that might be submitted to the Authority are: (i) the ones relating to any acts of corruption committed by private sector entities or persons, which however directly involved public or wider public sector entities or persons; and/or (ii) acts of corruption committed by public or wider public sector entities or persons, in which private sector entities or persons were also involved.

The Authority is designated as the (independent) competent authority for coordinating any actions taken by the public, wider public and private sector, with regards to the preventing and combating of corruption, and has, amongst others, the following powers and responsibilities:

  • Supervising and evaluating the actions taken by the public, wider public and private sector, in preventing and combating corruption
  • Preparing ex officio reports with suggestions and proposals for the prevention of corruption
  • Informing the private sector on best practices and standards for the prevention of corruption and providing advice and guidance for their adoption and proper implementation
  • Assessing the risks associated with acts of corruption and, if necessary, drafting reports and making suggestions and recommendations for the prevention of such acts
  • Issuing circulars to the relevant competent authorities and taking any necessary actions (where and to the extent permitted)
  • Cooperating with international organizations and institutions on the implementation of programs, policies and/or strategic plans relating to the prevention of corruption, the receipt of technical assistance and the exchange of information
  • Accepting complaints and receiving information and personal data which relates to acts of corruption in the public sector, the wider public sector and the private sector
  • Investigating and evaluating any complaint, information or personal data that comes to its knowledge and which relates to acts of corruption in the public sector, the wider public sector and the private sector
  • Collecting, recording, processing and/or evaluating, information and personal data for the purposes of combating and preventing corruption in the public, wider public and private sector
  • Managing, keeping, and maintaining all necessary files and/or registers with personal information, for the purposes of carrying out its mission and responsibilities.

It is noted that the collection and processing of any personal data by the Authority shall, at all times, be carried out in accordance with the provisions of the applicable data protection laws and regulations.

In case where, in the exercise of its powers to investigate, collect and process information and personal data, the Authority finds a possible infringement of the provisions of the Law then:

(i) provided that the potential infringement may constitute a criminal offence, it prepares a report and submits it, together with all other available data and/or information that has in its possession, to the Attorney General of the Republic

(ii) provided that the potential infringement may be of a disciplinary nature, it prepares a report with all relevant information that it has in its possession, and refers the case to the appropriate authority, body or department to conduct a disciplinary investigation, regardless of any criminal liability.

Subject to the provisions of the Law that provide otherwise (with regards to criminal liability), a person who violates the Law, is guilty of an offense and, if convicted, is subject to imprisonment not exceeding two (2) years or a fine not exceeding ten thousand euros (€ 10,000) and / or both these penalties.

Legal Background

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.

Obliged Entities

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
  • Partnerships.

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:

  1. Name, surname, date of birth, nationality and residential address;
  2. Identification document number indicating the type of document and the country of issuance thereof (passport or identity card);
  3. Date on which the natural person was entered in the National Central UBO Register as a UBO;
  4. 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;
  5. 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:

  1. Name of Trust(s), Foundation(s), listed companies or other similar legal arrangements;
  2. Country of Jurisdiction;
  3. Registration number (if any);
  4. Business address (not applicable to trusts);
  5. 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;
  6. Date on which the Trust, Foundation, listed company or other similar legal arrangement was entered in the register as UBO;
  7. 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.

Submission Process

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.

Domesticated and Stray Animals: Obligations and Prohibitions

It is commonly known that a very high percentage of the island’s population adopts and owns domesticated animals, while even those who do not own any, come into contact with stray animals on a daily basis. In this regard, although interacting with animals, domesticated or not, is a part of everyone’s daily routine, few of us are aware of the relevant laws and regulations regarding the possession, guarding, protection and general treatment of animals.

The basic legislation that regulates this issue is the Law on Protection and Welfare of Animals (Law 46 (I) / 1994), the provisions of which will be referred to in a concise manner below.

Obligations

–          Animals should always be handled in a way that best suits their physiological and ethological needs.

–          A person who owns, possesses or guards an animal must ensure its health and well-being.

–          A person who owns, possesses or guards an animal must provide food, water, care and shelter suitable for its species or  category.

–          Any animal transportation must be carried out in such a way that the animals are protected from unnecessary suffering and injury.

–          Necessary operations on an animal should be performed exclusively by a veterinarian. If the operation is expected to cause pain to the animal, general or local anesthesia should be   given to the animal, unless contraindicated therapeutically.

–          The urgent put down of the animal due to illness, injury, old age, rage or other justified circumstances, must be done in a way that causes the least possible suffering or strain.

Prohibitions

–          It is forbidden for any person to cause pain, suffering, injury or fear to any animal.

–          It is forbidden to ingest or administer poison or any other harmful substance to any animal.

–          It is forbidden to put any animal in a state of horrible death in any way.

–          It is forbidden to organize competitions between animals or with animals during which the animals are abused or killed.

–          It is forbidden to use animals for exhibitions, advertisements, film production or other similar purposes if they cause pain  injury or suffering.

–          It is forbidden to release or abandon an animal that is under human care in order to get rid of it.

–          Hard work and training of the animal that reaches the limits of torture is prohibited.

–          It is forbidden to tie up a dog or cat, except for temporary tie up in a public place.

–          It is forbidden to keep, isolate or restrict a dog or cat on a terrace or a balcony.

As far as the penalties for violating the provisions of this Law are concerned, a first conviction carries a prison sentence of up to 1 year and/or a fine of up to €10,000, while a second or subsequent conviction carries a prison sentence of up to 2 years and/or a of up to €20,000.

The amount and severity of the fines was one of the most notable changes of the amending law L.175 (I) / 2020, since the maximum fine was increased from £1,000 and £2,000 to €10,000 and €20,000. Such an obvious increase in fines shows the elevating importance of animals in the Cypriot society, as well as the reduced tolerance of the Republic of Cyprus in crimes that concern them.

The blame games

Chaos, panic, staggering collapse. How did this happen so fast? So many people, are blaming the Afghan president who left the country, without warning the public or the rest of the government. Hundreds of people are criticizing the USA withdrawal for destabilizing the country. On the other hand, President Biden blames the Afghan military. Whose fault is this? That’s a very difficult question to answer particularly because in a situation as complex as the US involvement in Afghanistan, there’s enough blame to go around however, it seems that nobody is taking any responsibility, even though the situation in Afghanistan is critically crucial.

The main priority of all countries should be the cooperation to protect the vulnerable population during the Taliban regime. The word is full of situations that put-on threat the basic human rights of many people. Even with the existence of the United Nations the need of aid from all the countries individually is vital. Afghanistan is a country with a history of conflicts due to its geopolitical position and its natural resources. It has been a toy for the rich countries to meet their social, economic, and political goals. Endless wars helped the powerful to draw attention away from economic corruption.

The Taliban’s recognized terrorist organization has a regime which it provokes international opprobrium for its cruelty-erasing women’s rights and its brutal, inhumane punishments, while offering shelter to Islamist extremists. Harboring Osama bin Laden and Al-Qaeda ahead 9/11 is one sad example of the impact of the Taliban’s organization in the world.

The USA withdrawal

Everything started when President Donald Trump agreed to withdraw US troops from Afghanistan in a 2020 peace deal, with his successor Joe Biden later setting a departure date. President Joe Biden, mindful of domestic exhaustion at the so-called forever war, announced that the US would leave by the end of September 2021. The troops retirement was forced due to the weakness of the Afghan National Army and the lack of further financial support by Washington to the existing forces. After the withdrawal of international troops, the Taliban swiftly seized control of Afghanistan in August 2021.

In the present situation, as the world follows events in Afghanistan with a heavy heart and deep disquiet about what lies ahead, massive amounts of people have been trying to flee the country in a desperate action to avoid the Taliban regime. However, the refugees are indeed between a rock a hard place, due to the immersed amount of asylum requests being filed every day, in the neighboring countries, such as Pakistan and Iran. Women, children, minorities, journalists, and activists are in extreme danger. According to the Secretary-General, since the Taliban takeover in Afghanistan, the nation’s poverty rate has soared and basic public have neared collapsed, hundreds of thousands of people have been made homeless after being forced to flee fighting. After decades of war, suffering and insecurity, they face perhaps their most perilous hour.

The Taliban’s war on women

Concerns over accounts of mounting violations against women and girls who fear to return in the “the darkest days” are being voiced through journalists and through people all around the world using their social platforms. They continuously face gender-based discrimination and violence. Their rights and freedoms are threatened by the Taliban’s acquisition of power. Murders and massacres of women just because they are wearing the “wrong” clothes are the results of the obscured Taliban takeover. Child brides for the militants and the opposition to women’s education are instances of the human rights violations Afghan women are currently facing. Under their rule, women have been beaten for the length of their burqa or for painting their nails, and people have been horrifically executed for their sexual orientation. Its dictatorial, oppressive, and non-democratic. During the first phase of the Taliban regime in Afghanistan, women were not allowed to travel without a male guardian and were punished if they were perceived as too independent. The Taliban, who ruled over Afghanistan from 1996 until 2001 but were forced from power after a US-led invasion, have historically treated women as second-class citizens, subjecting them to violence, forced marriages and a near-invisible presence in the country.

After they reclaimed the country’s capital last month, the Taliban’s leadership claimed that it would not enforce such draconian conditions this time in power. But the absence of any female representatives from their newly-formed interim government and an almost overnight disappearance of women from the country’s streets has led to major worries about what will happen next for half of its population. Female employees in the Kabul city government have been told to stay home, and only women whose jobs cannot be done by men are allowed to come to work.

Financial challenges

For the past 20 years, the USA government and other countries have financed the vast majority of the Afghan government’s non-military budget. Now, with the American aid out of the question and billions in the banks frozen, the Taliban will have to find other means to pay for salaries and support citizens and infrastructure. Keeping in mind, that Afghanistan is a country that for decades was navigating by aid from international donors, it’s going to be a challenge as the humanitarian crisis deepens. A severe drought is now affecting Afghanistan, threatening nearly 12 million people with food poverty. Food and other needs have increased in price, although most banks have reopened with limited cash availability.

However, it’s easier to win a battle than to administer a new government and that’s why Talibans are currently facing daunting financial challenges. 9.4$ billion international reserves were frozen immediately after the Taliban took over. The International Monetary Fund suspended more than 400$ million in emergency reserves, and the European Union halted plans to disperse 1.4$ billion in aid to Afghanistan through 2025.

Intelligent agencies and others believe that various countries, including Russia, Iran, Quatar, Pakistan, and China, have helped finance the Taliban, and these countries may continue to do so. With those money they managed to buy plenty of weapons and grow their military ranks as they took advantage of the US withdrawal and conquered Afghanistan in a matter of weeks. In the 2020 year alone, the Taliban had 1.6$ billion from a variety of sources. Some of their well-known sources of funding is selling opium, mining minerals and donations from private groups.

In conclusion, Americans want to say that they don’t negotiate with terrorists, but for the last few days US military officials have been meeting with Talibans trying to work out a deal that it will protect Afghan civilians. There was a conversation, that the US doesn’t have a great deal of leverage left in the situation, there is not a lot of bargaining that US left to do. The nature of how things have collapsed in Afghanistan, it’s as if the Americans gave a timeline for this and that was a strategic mistake. They had a ticking clock the and the advantage to just wait it out. Everything that happened over the past 3 – 4 months was not only foreseeable, but it was also foreseen. How America spent 20 years in Afghanistan, only to have the Taliban resume control again as its troops withdrew, will be a topic for historians to ponder for decades, and who ultimately bears responsibility will be forever a complicated debate.

*The photo is taken by the Pulitzer award winning and Reuters photographer, late Yiannis Behrakis, the day the Taliban regime fell in Kamboul in 2001.

Recent years have witnessed a rapid growth in the betting industry in the Republic of Cyprus. According to the records of the National Betting Authority (NBA), between 2016 and 2019, the total revenue from betting activities has increased by 286%, contributing approximately around 3.5% to the country’s GDP.

Betting activities in the Republic of Cyprus are regulated under the Betting Law L. 37(Ι)/2019. The Law imposes on licensed bookmakers, i.e. holders of Class A license (land-based betting) and Class B license (online betting), certain restrictions when it comes to advertising their services.

From the outset, it is worth remembering that the advertising of betting-related services is subject to certain statutory restrictions. Pursuant to the provisions of s.89 of the Law, any person advertising betting in a manner that:

(a) suggests that betting promotes or is related to social acceptance, personal or financial success, or the resolution of any personal, financial or social issues, or

(b) includes the endorsement of well-known personalities in a way that suggests that betting is related to their success, or

(c) is capable of influencing in any way, underaged persons to participate in betting activities or

(d) promotes the taking place of betting using services provided by a person not a licensed Class A or Class B bookmaker or authorised representative, or

(e) exceeds the limits of honesty and decency

is guilty of an offence.

The NBA, in its capacity as the competent supervisory authority tasked with ensuring compliance of licensed bookmakers with the provisions of the Law, has recently proceeded to issue a new Advertising Code, which takes into account recent technological advancements and developments in the field of advertising and marketing. In addition, in recognition of the growing influence of social networking sites as powerful advertising forums, the revised Advertising Code aims to facilitate the protection of the public (placing particular emphasis on the protection of minors and underaged persons) against the risk of exposure to unethical and illegal advertising and marketing practices.

In this respect, the Advertising Code, which came into force on July 1, 2021, seeks to ensure that the advertising of betting activities shall be characterised by a sense of social responsibility prioritising the adequate protection of underaged persons and other sensitive social groups.

It is worth noting that the Advertising Code applies not only to licensed entities but also to any person who enters into a contract with, or is in any way associated or represents or offers services for or on behalf of the licensed entity in respect of services subject to licensing by the NBA. Essentially, the Advertising Code serves as a rulebook, outlining not only the marketing and advertising activities which are prohibited but also the procedure for the granting of an approval

Any proposed advertising or marketing activity must be submitted to the NBA for review prior to its circulation or publication. Depending on the outcome of the review, the NBA may approve publication, prohibit publication, require that amendments be made or make comments. Falling afoul of these requirements may result in the imposition of fines by the NBA.

For the purpose of facilitating compliance with the stipulations of the Advertising Code the NBA will proceed to issue a Practical Guide which shall cover all issues relating to the Advertising Code, including, among others, the procedure for the submission of advertising plans and marketing activities, the maximum timeframe for the review of advertising plans by the NBA as well as advertising activities which may be exempt from the obligation of prior submission to the NBA.

Advertising Activities

The Advertising Code defines an “advertisement” as the announcement or unilateral transmission of information with a view of promoting betting services. Advertising plans must necessarily include details and information expressly stating the licensed entity’s identity, that the services comprising the subject-matter of the advertisement are licensed by the NBA, that the participation of underaged persons in betting activities is prohibited, and must also include a reference to the Safer Gambling webpage of the NBA www.safergambling.gov.cy.  

Betting-related advertisements must be readily recognisable and distinct from any other content of any third person. In this respect, any person who publishes or incorporates in his content a betting-related advertisement shall not claim or imply that he is expressing an opinion as a consumer or expert; on the contrary he is under an obligation to clarify his relationship with the license holder and that the publication constitutes a paid advertisement.

The dissemination of advertising material by licensed entities to persons not registered as players is expressly prohibited, while several restrictions apply in respect to advertising material that can be sent to a registered player. Among others, licensed entities, may not proceed to send advertising material to registered players unless, it enables the player to elect not to receive such advertising material, it contains links relating to the protection of players and safer gambling.

The Advertising Code introduces a stricter regime in relation to the manner in which betting-related services are advertised through various mediums. More explicitly, there is a general prohibition on betting related advertisements which

(a) encourage the excessive and/or unrestrained betting activity,

(b) present the choice of abstinence from betting activities in a negative light,

(c) are untrue or misleading, especially with regards to information relating to winnings or the chances of the player to win,

(d) accept or encourage any person to violate the Law or to engage in antisocial behaviour,

(e) imply that skill plays a decisive role in predicting the outcome of future sporting events,

(f) suggest that the participation in betting activity may constitute a way out of financial worries, or solution instead of employment or means of financial security or means of financial investment,

(g) present participation in betting activity as priority or necessity in relation to other social or family relationships or obligations, such as friendly, professional, or academic,

(h) imply that participation in betting activity may offer a way out of professional, learning, or personal problems, such as loneliness or depression,

(i) present the participation in betting activity as a condition or means for successful social, friendly or professional relationships,

(j) present the participation in betting activity through a context of toughness or associates betting activity with endurance or dangerous or reckless behaviour,

(k) suggest that the participation in betting activity may enhance the player’s personal characteristics, such as his sense of self-respect, or his abilities, or suggests that betting constitutes a way to acquire control, superiority, power, recognition or admiration,

(l) exploit cultural convictions or traditions in respect of betting or chance,

(m) link the participation in betting activity with charm, sexual success, or enhancement of attractiveness,

(n) promote smoking and/or excessive consumption of alcoholic during participation in betting activity,

(o) present the participation in betting activity as acceptable or encourages the participation of betting activity in the work environment.

Unsurprisingly, in order to ensure the protection of children and underaged persons, the Advertising Code imposes certain prohibitions, placing particular emphasis on digital advertising and advertising through social networking sites. An underaged person is defined as any natural person below the age of eighteen, whilst “child” is defined as any natural person below the age of fifteen. In particular, digital advertisements which feature age-targeting must be adjusted in a way to preclude the targeting of underaged persons. Similarly, advertising through social networking sites must be made following the determination of appropriate age adjustments to prevent the targeting of underaged persons, and preventing, where reasonably possible, the projection of announcements, posts, notifications or any other content from the page of the licensed entity to the accounts of underaged persons.

Furthermore, the Advertising Code expressly prohibits the advertising of betting activities by any medium where such advertisements:

(a) encourage underaged persons and/or vulnerable persons to participate in betting activity;

(b) seeks to exploit the vulnerability, aspirations, credulity, inexperience or ignorance of underaged persons or other vulnerable persons;

(c) have particular appeal among underaged persons, especially where it reflects or relates to the culture of youngsters;

(d) represent persons behaving in an adolescent, childish or unorderly manner within licensed premises;

(e) are addressed to underaged persons via the choice of means of communication or the manner in which it is presented;

(f) include a person who is or appears to be below the age of twenty-five engaging in betting activity or playing a vital role in the advertisement.

Some restrictions and limitations also apply in respect of audio-visual and acoustic advertisements, in that such advertisements are prohibited unless a distinct reference is made to the existence of means of self-protection and safer gambling.

In so far as television advertisements are concerned, their duration may not exceed ninety seconds per television organization within any given clock hour. Advertisements through television and the radio are allowed to be broadcasted only within the time schedule determined by the competent authority and the Radio and Television Organizations Law L. 7(I)1998 as amended or repealed. The broadcasting of advertisements and program sponsorship is allowed during live sporting events, subject to compliance with the time schedule as aforesaid. In particular, the broadcasting of betting-related activities is permissible during live sporting events and for an interval of fifteen minutes prior to the beginning and after the ending of the sporting event. In any case, however, the broadcasting of betting-related advertisements immediately before and after, as well as during, kids shows, or shows addressed to children or shows appealing to children are prohibited.

Marketing Activities

For the purposes of the Advertising Code, “marketing activity” is defined as the offer of a player reward program or system provided by the licensed bookmaker, which entails or claims to entail some form of offer or benefit for the player. As is the case with advertising, all marketing activities are subject to the prior approval of the NBA.

The Advertising Code introduces a general requirement for marketing activities not to be misleading or unfair. This general requirement encompasses the obligation to ensure that marketing activities:

(a) are specific as to the extent of the player’s commitment in order to avail themselves of an offer or opportunity;

(b) do not omit or withhold material information or present these in an unclear, vague or ambiguous manner;

(c) provide all material information with sufficient emphasis, including the conditions relating to participation and deposit that the player must fulfil in order to benefit, and any other restriction or limitation.

(d) provide examples which state the conditions, requirements and restrictions using plain and intelligible language; and

(e) include terms and conditions relating to all material information relating to the marketing scheme and, provided that the player shall submit a confirmation that he has been informed with regards to such terms and conditions, remain available and accessible to the player.

A licensed bookmaker is obligated to ensure that players shall be informed in relation to their progress in the fulfilment of the conditions or requirements in order to benefit from an offer or opportunity immediately and at any time, whilst in case a player is disqualified from the scheme on the basis of the terms and conditions of the marketing activity he must be informed immediately with regards to any such disqualification.

With the exception of marketing activities relating to registration or deposits rewards, the advertisement of marketing activities requiring a player to place a bet within a specified timeframe (a) a minimum amount or (b) a number of bets is prohibited, except where such marketing activities take place in the licenced bookmakers premises or on the licensed bookmakers webpage.

It is a prerequisite that players provide a confirmation of acceptance of the terms and conditions of the marketing offer or opportunity before their induction into any marketing activity. In the event that a player agrees to participate in a marketing activity, the licensed bookmaker may only amend the terms and conditions of such marketing activity, provided that the amended terms are more favourable for the player, the licensed bookmaker informs the player with specificity and using examples all material amendments to the player and procures a new confirmation by the player on the revised terms and conditions.

The NBA is expected to issue a practical guide with regards to the Advertising Code, and also plans to organise seminars addressed to the various stakeholders for the purpose of analysing the provisions of the Advertising Code.

The provision of security services constitutes a regulated activity that can only be carried on by persons licensed to this end by the Cyprus Police, which is the supervisory authority. That said, in order for a license to be issued, the interested person must submit an application to this end the competent department of the Cyprus Police, which (application) must be accompanied by all material information and documentation.

In the course and for the purpose of the application for the issue of a license, the applicant must specifically indicate the security services that he is interested in providing. In this respect, it is worth-noting that a security services provider may offer all (private agency providing general security services) or some (private agency providing special security services) of the following services:

(a)    Surveillance, safeguard, custody of movable or immovable property or installations;

(b)   Protection of natural persons (individuals)

(c)    protection for smooth operation of spectacles, exhibitions, conferences, competitions or sport or other events;

(d)   safe transport and custody of money, securities and precious items;

(e)   instalment, maintenance and monitoring of the operation of alarm systems, fire detection systems, fire safety systems, fire fighting systems, closed circuit TV and access control, anti-theft and protection of merchandise systems;

(f)     installation and management of centre of receipt, check and transmission of alarm signals;

(g)    check of passengers and luggage within airports and ports using special machinery;

(h)   preparation of studies and design of electronic and physical security system;

(i)      control or regulation of the movement of the public with the use of vehicles or other means within private property or an area the entry to which is restricted to the public in order for such property or area to be protected;

(j)     private investigation services;

(k)    facilities for the secure storage of movable property;

(l)      the provision of armoured vehicles for the transfer of money or other items;

(m) operation and custody of places for the confinement of illegal immigrants or places for the reception of asylum seekers or refugees;

(n)   any other services so determined by an order of the Minister of Justice and Public Order.

In addition to the above, it is worth to stress that, pursuant to a recent Order of the Minister of Minister of Justice & Public Order issued on 11/06/2021, the check of passengers, luggage and objects in areas of governmental buildings and buildings of governmental organizations, departments and services, with the use of special machinery, may also be provided by provided by provided security service providers (provided that these are duly licensed).

Of course, an application must be well supported and sufficiently documented while all the criteria, set forth in the Law, must be met. One of the core criteria is the existence and staffing of the provider’s premises / offices. In particular, the provider must have premises / officers which must be adequately staffed; especially in cases where the private agency is interested in providing security services with guards, a head-office must operate 24/7, which must be able to contact and cooperate with the Cyprus Police in case of emergency. In this respect, it is worth to note that the staff to be employed by the provider must be qualified (age and origin criterion, physical and mental fitness, no connection with serious criminal offense or disciplinary offenses involving dishonesty or moral depravity, narcotic drugs or other psychotropic substances, weapons, ammunition or explosives etc.) and trained (attendance of training course organized under the auspices of the Cyprus Police at a college/facility designated by the Police Commissioner) in accordance with the provisions of the Law.

Provided that everything is line and before the approval of the application, the competent authority examines the trademark (logo) to be used for trading purposes as well as the uniform which the provider’s staff (and guards) shall use since these must be approved by the Chief of the Cyprus Police. In this regards, it is recommended for the uniform to consist of trousers (in black, brown, beige or blue), shirt (short sleeve and long sleeve), t-shirt (short sleeve and long sleeve) that may even be a hoodie/ pullover, sweater, jacket and tie. On the front left or right side of the shirt, t-shirt, hoodie/ pullover, sweater, jacket, the words “ΙΔΙΩΤΙΚΕΣ ΥΠΗΡΕΣΙΕΣ ΑΣΦΑΛΕΙΑΣ” and “PRIVATE SECURITY SERVICES” MUST be printed along with the trademark (logo) of the provider.

Moreover, as a general rule, the possession of guns and/or weapons is restricted; however, the proper and licensed possession, use, acquisition or transfer of firearms falling within Category D of Law 113(I)/2004, is exempted from the restriction.

Lastly, it is quite important to note that an entity, which is willing to proceed with the provision of security services, must make sure that the specific purpose is explicitly provided for in its Memorandum of Association; otherwise, a Court Application may have to be submitted in order for the Memorandum of Association to be adjusted accordingly.

The Law

The Open-Ended Undertakings for Collective Investment Law of 2012 (L.78(I)/2012) (the “Law”) regulates the operation and supervision of open-ended undertakings for collective investment in transferrable securities (“UCITS”) in Cyprus.

The Law implements into Cyprus law:

–          EU Directive 2009/65/EC, on the coordination of laws, regulations and administrative provisions relating to UCITS and;

–          Articles 11 and 13 of the EU Directive 2010/78/EC, as regards the authority of the European Banking Authority, the European Insurance and Occupation Pensions Authority and the European Securities and Markets Authority.

In addition, the Law implements:

–          Commission Regulation 583/2010, as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website and;

–          Commission Regulation 584/2010, as regards the form and content of the standard notification letter and UCITS attestation, the use of electronic communication between competent authorities for the purpose of notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities

Definition of a UCITS Fund

UCITS fund is defined as an undertaking:

–          Whose sole purpose is the collective investment of capital raised from the public in transferable securities and/or other liquid financial instruments, as included in section 40 (1) of the Law and as listed below (Investment Policy of UCITS).

–          Operates on the principle of risk spreading.

–          Which its units can be redeemed or repurchased at the request of the investor, directly or indirectly, out of the undertaking’s assets.

The following are not regarded as UCITS, pursuant to the Law:

–          Closed ended undertakings for collective investment.

–          An undertaking for collective investment which raises capital without promoting the sale of their units to the public within the European Union or any part of it.

–          An undertaking for collective investment, the units of which may only be sold to the public of third countries, pursuant to the terms of their constitutional documents.

–          An undertaking for collective investment, whose investment and borrowing policy, as prepared in accordance with the law of their home member state, does not fulfil the requirements of Chapter VII (obligations concerning the investment policies of UCITS) and Article 83 (borrowing requirements) of Directive 2009/65/EC.

Legal Form

UCITS may take the form a Common Fund or a Variable Capital Investment Company (“VCIC”).

–          A Common Fund is a contractual vehicle that does not have a legal personality and is represented through the management company, who acts on behalf of the unitholders and it exercises all rights deriving from the assets in the Common Fund.

–          The VCIC is a corporate vehicle, that is incorporated in accordance with Cyprus Corporate Law (Chapter 113) as a limited liability company, and it could be internally or externally managed.

Investment Policy of UCITS

UCITS may invest their funds in any of the following:

–          Transferable securities and money market instruments that are admitted to trading or are the object of trading on a regulated market in the Republic or another member state of the EU, which is defined as a “a multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third‑party buying and selling interests in financial instruments – in the system and in accordance with its nondiscretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly”.

–          Transferable securities and money market instruments that are the object of trading on another regulated market of a member state, which operates regularly and is recognised and open to the public.

–          Transferable securities and money market instruments that are admitted to trading or are the object of trading on a regulated market in a third country, that operates regularly and its open to the public.

–          Recently issued transferable securities on the condition that they will be admitted into trading within one year from the date of issue.

–          Units of authorised UCITS or another collective undertaking, which are subject to prudential supervision and comply with specific requirements as included in the Law (Section 40.1.e of the Law)

–          Deposits to credit institutions, that are payable on demand or that provide the entitled of withdrawal within 12 months.

–          Financial derivative instruments that are the object of trading on a regulated market or over the counter (“OTC”) derivatives, provided that the underlying of such derivative consists of indices, interest rates, foreign exchange or currencies; the counterparties are institutions subject to prudential supervision and belong to categories that have been approved by Cyprus Securities and Exchange Commission and; the OTC derivatives are subject to daily valuations and can be sold, liquidated or cancelled by an offsetting transaction at any time and at fair price.

–          Money market instruments, except those trading on a regulated market, whose issuer is subject to regulations for the protection of investors and their funds.

This article seeks to provide an outline of the nature of the position as well as the scope of the duties of a Data Protection Officer under the General Data Protection Regulation (EU2016/679) (“GDPR”).

The position of the Data Protection Officer introduced by virtue of Article 37 GDPR constitutes one of the most innovative and interesting aspects of EU data protection legislation. It is submitted from the outset that, depending on the circumstances, the appointment of a Data Protection Officer may be mandatory, or not required at all (although it is worth noting that the designation of a Data Protection Officer is encouraged by competent supervisory authorities as good practice). In light of the practical difficulties of formulating a one-size-fits-all approach with regards to whether or not the appointment of a Data Protection Officer is necessary, the GDPR provides some guidelines which seek to help data controllers and data processors determine whether the processing activities in which their organization is engaged warrant the designation of a Data Protection Officer.

In so far as private entities are concerned, the appointment of a Data Protection Officer is understood to be mandatory where the core activities of the entity in question constitute processing activities requiring the frequent and systematic monitoring of data subjects on a large scale. It therefore follows that the activities of the organization, the frequency of processing and the volume of data processed, all constitute material factors. The practical application of these guidelines to each particular scenario is, nevertheless, a matter which requires the kind of meticulous analysis which largely falls outside the ambit of this article, and as such will not be considered further.

Essentially, the role of the Data Protection Officer consists of monitoring and facilitating compliance of the entity which he / she serves with the provisions of the GDPR and applicable data protection legislation. More specifically, as part of his responsibilities, the Data Protection Officer may collect information with a view of determining the processing activities, analyse and examine the compliance of processing activities with the GDPR and inform the data controller or data processor and provide advice and issue suggestions. What is more, whilst the GDPR imposes on data controllers and data processors the obligation to keep a record of processing activities, this record-keeping obligation may be delegated to the Data Protection Officer. In this respect the record of processing activities shall enable the Data Protection Officer to perform certain aspects of his responsibilities such as the monitoring of compliance and the provision of advice to the data controller or data processor.

Whilst the level of expertise and professional qualifications which the Data Protection Officer should possess, are not expressly stipulated in the GDPR, pursuant to the guidelines issued by Working Party 29, the Data Protection Officer is generally expected to possess, among others, the following professional qualifications, skills and expertise:

  • Expertise from a legal and practical standpoint in respect of personal data protection in both a national and EU level, as well as excellent knowledge of the GDPR
  • Knowledge of processing activities carried out by the data controller
  • Knowledge of the field of information technology and data security
  • Knowledge of the fields of business activity of the data controller
  • Ability to develop a data protection culture within the data controller

It is worth noting that the GDPR endeavours to safeguard that the Data Protection Officer is autonomous and independent, in that he is answerable only to the highest management level within the organization and must be provided with access and information concerning departments, personnel, and processing activities carried out by the entity. At the same time, it should be stressed that the designation of a Data Protection Officer does not, in any way absolve or release the data controller or data processor from the obligation of ensuring compliance with the provisions of the GDPR; in fact, whilst the position of Data Protection Officer entails a number of important responsibilities, the Data Protection Officer cannot be held personally liable in respect of any breach of the data processing obligations imposed upon data controllers and data processors.

In order to ensure that the Data Protection Officer shall be in a position to carry out his duties adequately and effectively, the GDPR requires data controllers and data processors to offer every reasonable assistance to this end. Crucially, the Data Protection Officer is expected to be promptly and duly involved in any matter relating to data processing. This necessarily entails, among others, the participation of the Data Protection Officer in meetings of senior officials of the organization’s management (to the extent and in so far as the agenda of the meeting includes any proposed course of action which is capable of influencing or affecting personal data protection), as well as consultation with the Data Protection Officer in respect of cases relating to data breaches or other similar incidents.

Going further, to ensure the autonomy and independence of the Data Protection Officer, the designating entity should not seek to influence or dictate the manner in which the duties of the Data Protection Officer are to be exercised. In particular, having due regard to the guidelines issued by Working Party 29, the Data Protection Officer must not, among others, receive instructions as to the desired outcome of a case, instructions on how to approach an investigation of a complaint, instructions on whether or not the competent supervisory authority should be consulted, or indeed instructions with regards to the manner in which legislative provisions relating to data protection laws are to be interpreted.  In addition, in order to ensure that the Data Protection Officer shall be in a position to exercise his duties in an impartial and independent manner the following safeguards must be in place:

  • The designating entity should not dismiss or otherwise penalise the Data Protection Officer for reasons relating to the exercise of the Data Protection Officer’s duties and responsibilities under the GDPR
  • No conflict of interests should exist between the duties of the Data Protection Officer under the GDPR and any other duties or obligations arising by virtue of any other position held by the Data Protection Officer in the organization. This means that the Data Protection Officer must not hold any position that may determine the purpose and means of processing of personal data. Because each organization has a different organizational structure, this particular issue should be examined on a case-by-case basis. Usually, a conflict of interests is deemed to arise where the appointed Data Protection Officer also holds some other senior managerial or other key position within the organization which -by its very nature- determines or contributes in the determination of the purposes and means of processing of personal data (i.e. executive director, general manager, chief executive officer, chief financial officer, marketing officer, human resources manager, IT manager).

Moreover, to enable the Data Protection Officer to carry out his responsibilities effectively, the organization is expected to offer adequate support and sufficient resources. Such support is not only limited to financial assistance but may also take the form of continuous professional training aiming to enhance and improve the skills and qualifications of the Data Protection Officer, notifying the organization’s employees and members of staff of the designation of a Data Protection Officer and informing them of his duties and responsibilities, ensuring that the Data Protection Officer will have access to other departments within the organization such as the human resources department, legal department or information technology department for the purpose of ensuring the continuous technical support of the Data Protection Officer, and providing the Data Protection Officer with sufficient time in order to properly and effectively carry out his responsibilities.

Finally, yet another important function of the Data Protection Officer is that he also serves as the point of contact between the entity and the competent supervisory authority (in this case, the Commissioner for Personal Data Protection). In this respect, the contact details of the person appointed as a Data Protection Officer must be communicated to the Commissioner for Personal Data Protection.

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.

Timeframe

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.

Penalties

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.