Tag: Cyprus

Introducing the Cyprus Shipping Limited Liability Company (SLLC)

Posted on | by Paschalis Paschali

With an attractive location lying just a few miles from the Suez Canal and in the crossroad of the European – African and Asian markets, Cyprus grew to one of the main maritime players of the world with the 3rd largest fleet in the European Union and the 11th largest worldwide. The country’s business minded policy coupled with the evolving needs of the shipping industry led to the creation of the Shipping Deputy Ministry in 2018.

In 2021, the Ministerial Counsel approved the Strategic Vision for Cyprus Shipping dubbed “Sea Change 2030” which included the development of a regulatory and administrative framework for the incorporation of shipping entities. As a result of this strategy, the Cypriot parliament voted in favour of the Cypriot Shipping Limited Liability Company Law (the “SLLC Law”).

The SLLC Law was published in the Official Gazette of Cyprus, issue no. 4916 on 27 October 2022 and was shaped after the Cypriot Companies Law, Cap.113 (the “Companies Law”), thus offering shipping entities a familiar regulatory framework and corporate environment.

Shipping Limited Liability Company

The purpose of the SLLC Law is to simplify the procedures and operation of shipping companies for the ownership and exploitation of ships. To that effect, the SLLC Law introduces a new type of legal entity, the Shipping Limited Liability Company (“SLLC” or «ΝΕΠΕ – Ναυτιλιακή Εταιρεία Περιορισμένης Ευθύνης») which is the equivalent of a limited liability company.

The SLLC Law applies to newly incorporated SLLCs and to shipping companies incorporated under the Companies Law that wish to transfer on the SLLC register under the SLLC Law.

Administration and management of SLLCs

The objective of the SLLC Law is the creation of a “one-stop-shop” within the Shipping Deputy Ministry for the servicing of shipping companies and their shareholders, and the handling of matters which were previously under the responsibilities of the Registrar of Companies. In effect, SLLC Law maintains the advantages and flexibility offered under the Companies Law as it includes provisions for the administration and management of SLLCs and provisions regulating matters which concern SLLCs from their incorporation up to their liquidation.

Features of the SLLC Law

The SLLC Law mirrors a number of functions exercised by the Registrar of Companies. The following list outlines some of the matters regulated under the new law:

  • The creation of the Registrar of SLLCs as the competent authority for the registration of SLLCs and any other corporate matters relating to SLLCs, for the promotion of a “one-stop-shop”;
  • The creation of the SLLC register;
  • Provisions on the incorporation of SLLCs, their share capital and other management arrangements;
  • The appointment of a secretary of the SLLC who, as per the SLLC Law, must be a lawyer;
  • Provisions for the transfer of companies registered in the register of the Registrar of Companies under the register of the Registrar of SLLCs;
  • The power of the Registrar of SLLCs to approve the use of electronic signatures in relation to documents submitted to or issued by the Registrar of SLLCs;
  • The power of the Registrar of SLLCs to impose administrative fines.

Why incorporate or convert into an SLLC?

Despite the seemingly identical legal frameworks between a limited liability company (incorporated under the Companies Law) and a SLLC (incorporated/transferred under the SLLC Law), the SLLC Law contains small but rather significant differences which are tailored to the operations of SLLCs:

Simplified procedures for the increase and reduction of share capital

The Companies Law requires a court approval for the reduction of a company’s share capital.

On the other hand, the reduction of share capital for SLLCs does not require a court order and is achieved under a simpler and time-effective manner.

Simplified procedures for amending the SLLC’s memorandum

Under the Companies Law, a change in the memorandum of association is not effective unless approved by the court following a related application.

In contrast, the memorandum of SLLCs is based on a template prescribed under a notification of the Registrar of SLLCs and its amendment is permitted only in circumstances specified under the LLC Law.

A law tailored to SLLCs

SLLCs have the opportunity to benefit from a legal framework distinct from other entities. The SLLC Law is tailored to their business activities and creates a sustainable environment for SLLCs by setting the ground for further targeted improvements in the shipping industry.

Our services

  • Incorporation and administration of SLLCs;
  • Advice on Environmental, employment and safety requirements;
  • Acquisitions and financing services;
  • Sanctions and export control advice;
  • Ownership, acquisition, chartering and selling of superyachts.
  • Corporate and commercial advice.

Get in touch for a free consultation with our team.

The information provided in this article does not and is not intended to constitute legal advice; instead, all information contained in this article is for general informational purposes only. If you require assistance with any legal matter, including a matter referred to in this article, you should contact one of our attorneys to obtain advice tailored to your specific circumstances.

The New Cyprus Commercial Court: An “Internationalisation” of Cyprus Civil Justice?

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On 2nd June 2022 the Cypriot parliament passed law 69(I)/2022 for the establishment of a Commercial Court and an Admiralty Court (“the Law”).

Introduction

Many readers will be aware that Cyprus is an island in the eastern Mediterranean and the eastern most outpost of the European Union. Its geographical location being at the crossroads of Asia, Europe and the Middle East has shaped its history. Previously seen as a strategic location for would be conquerors of which there were many, the location of Cyprus, its Common Law background, large number of Double Tax Treaties, business friendly climate and highly effective and efficient services sector have been key drivers in making Cyprus a favoured business destination for many Europeans especially Dutch, for Canadians, nationals of the states of the former Soviet Union and latterly Chinese and Israeli investors. This has established Cyprus as a major international business hub which has a reach that belies its size.

The growth of Cyprus as a business centre has placed great pressure on its civil courts, resulting in delays that are amongst the worst in the European Union. The reasoning behind the establishment of the Commercial Court is the creation of a specialist Court where the judges will specialise in commercial disputes in the same manner and with the same efficiency as specialist courts such as commercial courts, construction and technology courts operate in other jurisdictions.

Characteristics of the Commercial Court

One unique aspect of the Commercial Court which demonstrates the desire of the legislature to ease the administration of justice in international commercial disputes is the permissibility of using the English language. This mirrors recent initiatives in some EU jurisdictions, most notably Holland which have established similar international commercial courts to cater for the foreign business community that conducts business in or through these jurisdictions.

Jurisdiction of the Commercial Court

The Commercial Court will hear commercial disputes which are defined in the law as disputes relating to:

(a) Business documents or contracts.

(b) Purchase, sale, import and export of goods.

(c) The carriage of goods by land, air or pipeline.

(d) The exploitation of oil, natural gas or other natural resources.

(e) Insurance and reinsurance.

(f) The functioning of markets or the exchange of shares, stock or other monetary credit or investment vehicles or goods (which is clarified to mean every kind of moveable property save for choses in action and money and includes bonds and shares.

(g) The provision of services excluding medical, quasi medical, dentistry services or services that are provided within an employment contract.

(h) Manufacture of vehicles.

(i) Commercial representations.

(j) The application of the provisions of the law relating to Compensation for Breaches of competition law.

(k) Disputes between shareholders in entities that are regulated by any regulatory authority within the Republic of Cyprus.

(l) Matters relating to copyright and related rights within the ambit of the law for the Protection of Copyright and Related Rights law and the Certificates of Inventions law.

(m) Arbitration Issues.

Minimum Monetary Value of Disputes

The Law sets the minimum value of disputes that will be heard by the Commercial Court at €2 million excluding interest claimed. In the event of a dispute as to the value of the dispute, and by extension the jurisdiction of the court the objecting party may apply to the court of a determination.

In the event that the court determines that the value of the commercial dispute is below €2 million the Law allows the Commercial Court to refer the dispute to the District Court.

Geographical Jurisdiction

(a) The cause of action arises in whole or in part in the district where the Court has jurisdiction.

(b) The defendant or any one of the defendants at the time of the filing of the action resides, carries on business, or in the case of a legal person has its registered office in the district where the court has jurisdiction.

(c) The parties jointly agree between themselves by written agreement to refer the commercial dispute to the Commercial Court, in such a case if any one of the parties resides outside Cyprus, or carries on business outside Cyprus, or in the case of a legal person has its registered office outside Cyprus. In such a case the Commercial Court sitting in Nicosia shall have jurisdiction

(d) The jurisdiction of the Commercial Court derives from community law, international treaty or any rule of private international law. In such a case the Commercial Court sitting in Nicosia shall have jurisdiction.

Transfer of Cases from the District Court to the Commercial Court

Any party may apply to either the Commercial Court or to the District Court for a case that is before the District Court to be transferred to the Commercial Court provided that the hearing of the case has not commenced.

Transfer of Cases from the Commercial Court to the District Court

A judge of the Commercial Court may transfer a case to the District Court where:

(a) the Commercial Court lacks jurisdiction, or

(b) where upon the application of any party that it is appropriate for the case to be tried before the District Court.

Sittings of the Commercial Court

The Commercial Court shall sit in the district capitals of each administrative in buildings that will be specifically prescribed and published in the Official Gazette. Given that there are four administrative districts one can assume that two judges will sit in Nicosia one in Limassol, one in the Larnaca-Famagusta District and one in Pafos.

The Commercial Court will have its own separate registry and registrars.

Judges of the Commercial Court

The Commercial Court will be manned by five judges to be appointed by the Supreme Legal Council.

As the Law prescribes that the number of judges shall be five. This number will effectively and for all intents and purposes be limited to five as a change of law is required for the increase in the number of judges.

The judges of the Commercial Court shall have the standing and shall have the same powers as those of a President of the District Court. (Hitherto the highest tier of judges of first instance in the civil justice system of Cyprus).

The powers derive from the Courts of Justice Law and the Civil Procedure Law.

Procedure Before the Commercial Court

The Courts of Justice Law applies to the following extent:

  • Section 29 relating to the law to be applied (the Constitution, Statute law, Common Law and Equity, Vakouf (Turkish Cypriot trusts and immoveable property) law;
  • Part 4 – relating to the powers of the Court;
  • Part 5 – relating to the witnesses and evidence;
  • Part 7 – relating to the transfer of cases from a court to another court having jurisdiction by order signed by the President of the Supreme Court*.

Procedure before the Commercial Court shall be regulated by procedural regulations specially formulated for the requirements of the Commercial Court. For this purpose, the Supreme Court* has power within the Law to issue a procedural order for the better implementation of the Law and for the regulation of any matter capable of regulation by way of procedural rules.

Use of English Language

A judge of the Commercial Court may where the interests of justice demand allow for the hearing of the case and the filing of pleadings to be in the English language following an application of one of the parties. In such a case the court prescribes that the English language as the language in which the procedure shall be carried out and shall issue its judgment in English.

Appeals from the Commercial Court

Each judgment or order of the Commercial Court is subject to appeal before the Supreme Court.

A decision of the Commercial Court for the pre-trial referral of a question to the ECJ or a decision of the Commercial Court dismissing an application for the pre-trial referral of a question to the ECJ shall not be subject to appeal.

As with other courts in Cyprus the Law establishing the Commercial Court does not contain any provisions for leave to appeal or any restrictions as to the grounds of appeal.

In the case of an appeal, the Law states that the Supreme Court* shall not be bound by any findings of fact made by the Commercial Court and shall where the circumstances so demand shall have power to review and re-examine evidence and reach its own conclusions and shall further be entitled examine further evidence and to rehear witnesses and to issue any order of judgment that is justified under the circumstances including an order the rehearing of the case by the Commercial Court or other court having jurisdiction to hear the case.

Conclusions

The establishment of the Commercial Court is a reaction to commercial pressure for a quicker and more specialist trial court for larger commercial disputes many of which run into hundreds of millions and indeed some into billions of Euros.

Specialist commercial judges will in time gain the experience and specialised knowledge so as to be able to deal with complex commercial cases effectively and speedily.

The ability of the court to conduct proceedings in English will expand and enhance cooperation with foreign lawyers and make justice more accessible to a large number of potential litigants who conduct their commercial businesses within and through Cyprus.

The wide jurisdiction given to the Supreme Court* may appear daunting at first. It is however to be seen as an attempt to give finality to the proceedings at the level of the appeal. This should eliminate the need for retrials in all but the most unavoidable circumstances.

On the whole, the legal and commercial community of Cyprus has greeted the creation of the commercial court with an open mind and a cautious optimism. 

Andrew Demetriou

Ioannides Demetriou LLC  

*It should be noted that the current Supreme Court will be re-organised into an Appeals Court and a Constitutional Court. The appeal from the Commercial Court will be to the civil division of the Appeals Court.

Competition Clearance in Cyprus – a quick summary

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Under Cyprus law, transactions such as mergers and acquisitions resulting in concentrations of major importance which meet the threshold prescribed under the Control of Concentrations Between Undertaking Law 83(I)/2014 (the “Law”) may have to be notified to the Cyprus Commission for the Protection of Competition (“CPC”).

Which acts of concentration must be notified?

Acts of concentration of major importance within the scope of the Law, shall be notified to the service of the CPC (the “Service”) before their implementation and following the conclusion of the agreement or before its conclusion upon proving to the CPC the existence of a bona fide intention to enter into an agreement. A concentration is considered to be of major importance where:

(i) the aggregate turnover achieved by each of at least two of the participating undertakings exceeds EUR 3.500.000 (EUR 3.5 million);

(ii) at least two of the participating undertakings achieve turnover in Cyprus; and

(iii) at least EUR 3.500.000 (EUR 3.5 million) out of the aggregate turnover of all participating undertakings is achieved in Cyprus.

Notifications and timeframes

With the submission of the notification, a fee is paid to the Service of the CPC (currently set at EUR 1.000) which marks the commencement of the initial stage of the review. The Service will then proceed with a preliminary evaluation of the notification and prepare a written report to the CPC with its reasoned opinion. The CPC will in turn examine the notification taking into account the written report produced by the Service and take a decision as follows:

(a) the notified concentration does not fall within the scope of the Law and/or within the meaning of concentration; or

(b) the concentration does not raise serious doubts as to its compatibility with the functioning of competition in the market and the concentration is declared compatible with the functioning of competition in the market; or

(c) the concentration raises serious doubts as to its compatibility with the functioning of competition in the market and commences full investigation proceedings.

If the CPC decides to initiate a full investigation it invites the parties to pay an additional fee (currently set at EUR 6.000).

The Service has a statutory deadline of 1 month to notify the parties of the decision taken by the CPC on whether the concentration may be implemented (Phase I review) or whether the concentration is going to be fully investigated as per point (c) above (Phase II investigation). Depending on the complexity or volume of information, the Service may extend the deadline by 14 days in which case it shall inform the notifying undertaking at least 7 days before the expiry of the initial statutory deadline. If additional information is required for the purposes of securing the completeness of the notification, the statutory deadline is reset to 1 month.

If the notifying undertaking does not receive CPC’s decision within the expiration of the aforementioned timeframe, the transaction is deemed to have been declared compatible with the market.

Publication of CPC decision and confidentiality

The nature of the notified concentration, names of the participating undertakings and the economic sectors involved are published in the Official Gazette of the Republic of Cyprus (“Official Gazette of Cyprus”). A non-confidential version of CPC’s decision on the notified concertation with the redaction of selected parts of the decision is published on the Official Gazette of Cyprus and the website of the CPC upon a confidentiality request by the parties involved in the concentration.

The CPC and the Service are bound by a duty of confidentiality and their members and officers are prohibited from communicating and/or publicising confidential information and business secrets which become available to them in the process of the notification. The notifying undertaking may also specify to the CPC which documents, statements and material it considers as confidential information and/or business secrets.

Basic notions and definitions

“Undertaking”In Competition Law, an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. Any activity consisting in offering goods or services on a given market is an economic activity.
“Concentration”A concentration arises where a change of control on a lasting basis results from:  

(a) the merger of two or more previously independent undertakings or parts of undertakings;  

(b) the acquisition, by one or more persons controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings;  

The creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity also constitutes a concentration within the meaning of point (b) above.

Failure to comply with the law & administrative sanctions

The implementation of a transaction giving rise to an act of concentration of major importance is prohibited under Cyprus Law unless such transaction is cleared by the CPC. Failure to obtain clearance may result in fines, including an administrative fine of up to 10% of the total turnover of the undertaking with an obligation to notify. The CPC also has the power to order the dissolution or partial dissolution of a concentration, in order to secure the restoration of the functioning of competition in the market.

Our services include

  • Preliminary assessment to determine whether the transaction constitutes a concentration of major importance which must be notified to the CPC;
  • Comprehensive advice on cross-border and national transactions;
  • Merger control filings (notification) and approvals (clearance);
  • Request for confidentiality by redacting selected parts of the published clearance decision.

Get in touch for an initial consultation

The information provided in this article does not and is not intended to constitute legal advice; instead, all information contained in this article is for general informational purposes only. If you require assistance with any legal matter, including a matter referred to in this article, you should contact one of our attorneys to obtain advice tailored to your specific circumstances.

“An Evolving Profession” by Andrew Demetriou, Co-Founder, Managing Director, Ioannides Demetriou LLC

Posted on | by Paschalis Paschali

“The days of the lawyer as ‘Jack of all trades’ – and, dare I say it, ‘master of none’ in many cases – are long gone” Andrew Demetriou, Co-Founder, Managing Director, Ioannides Demetriou LLC

Read more about the evolving legal landscape, the developments in technology and the skillset that lawyers need to master in Mr. Demetriou’s recent interview in Gold Magazine.

An_Evolving_Profession_ADemetriou_GoldMagazine_TheLrgalEdition_Issue137-August2022

Download the article here

The Legal 500 (Leagalease) Country Comparative Guide: Insurance & Reinsurance

Posted on | by Paschalis Paschali
Country Comparative Guide: Cyprus Insurance & Reinsurance

This country-specific Q&A provides an overview of insurance & reinsurance laws and regulations applicable in Cyprus. Ioannides Demetriou LLC is a contributing firm, where Christina Ioannidou, Partner, and Katerina Hadjichristofi, Partner, provide information about the current issues affecting insurance and reinsurance in Cyprus and address topics such as contract regulation, licensing, penalties, policyholder protection, alternative dispute resolution as well as personal insight and opinion as to the future of the insurance market over the next five years.

Read the full Q&A here

Or download the Q&A PDF here

ISO 9001 Certified since 2007 for the Provision of services of advocacy, legal advisors, legal consultants in all fields of the legal profession

Posted on | by Paschalis Paschali

We are proud to have consistently upheld our certification with ISO 9001 from 2007 until today, initially with NIS ZERT Hellas and, as from 2012, with the Cyprus Certification Company.

We have maintained our Quality certification in the fields of the provision of services of advocacy, legal advisors, and legal consultants, in all fields of the legal profession, since our formation. 

This represents recognition from an accredited independent certification body that we work to the Quality Standards set by the International Certification Network. 

We thank our lawyers and staff for their dedication to quality because, as Aristotle said, “Quality is not an act. It is a habit.”

Brexit and the Insurance Industry in Cyprus

Posted on | by Paschalis Paschali

In light of the UK withdrawal from the EU and in the absence of an agreement that allows insurers and brokers to continue to service clients and risks located in EU countries, UK insurance firms shall no longer have passporting rights to European markets including Cyprus.

Passporting rights allow firms registered in the EEA to do business in other EEA states without additional authorisation being given from each country. Without passporting rights, UK intermediaries may not be permitted to place certain European risks with insurers. Many insurers have been restructuring their business, planning the relocation or opening of new branches in EU27 member locations including Cyprus. This will allow them to continue to operate within the EU27 following Brexit as well as in other jurisdictions where the EU has bilateral trade or services agreements.

The European Insurance and Occupational Pensions Authority (“EIOPA”) has published a number of recommendations intended to facilitate an orderly transition of UK insurance business in EU states post Brexit (the “Recommendations”). The Recommendations set out a number of principles that will apply to in respect of the conduct of UK insurance firms which essentially prohibit new business (including renewals) but allows ongoing administration of insurance contracts which were incepted before 31 December 2020 until such time they expire or are terminated on the basis of Recommendation 6 (which effectively states that the location of the risk remains in the UK (on the assumption that the risk was first underwritten by a UK insurance entity).

In response to EIOPA Recommendations the Insurance Companies Control Office (the “Cyprus Insurances Regulator”) has indicated that it intends to follow and apply all the Recommendations and that they will be issuing relevant orders for business written in Cyprus by UK companies with respect to each Recommendations, before the UK withdrawal date.

Whilst, the Cyprus Regulator has yet to issue relevant orders in connection to the Recommendations, Law 19(I)/2020 was published and is effective on the 6th March 2020.  The said law, by amending national relevant law, aims to regulate the services offered by British insurance companies in Cyprus and essentially, the run-off of UK insurance and non-insurance business which was sold in Cyprus to customers before 31st December 2020. The new legislation grants to insurance companies and insurance agents offering insurance products from the United Kingdom to the Republic of Cyprus a two-year grace period by which they may continue managing the affected portfolios as follows:

  • Insurance products already in issued shall continue to have legal effect without requiring any amendment increasing the overall cost,
  • British Insurance Companies in Cyprus can settle any claims arising during the grace period
  • British Insurance Companies in Cyprus can continue to collect premiums settle any undertaken liabilities in a business as usual way.

For the affected insurance companies to continue offering services after the 2-year grace period a relevant license from the Cyprus Insurances Regulator must be obtained.

It is clear from the above that, UK intermediaries and entities which intend to continue or commence distribution activities to EU27 policyholders and for EU27 risks after the UK’s withdrawal are established and registered in the EU27 in line with the relevant provisions of the IDD. Recommendation 9 requires that intermediaries, which are legal persons, demonstrate adequate corporate substance, proportionate to the nature, scale and complexity of their business.  Intermediaries should not display the characteristics of an empty shell.

Our firm provides legal advice and services with respect to the re-domiciliation or new formation of a Cyprus Intermediary (broker, agent etc.) pursuant to the provisions of applicable Cyprus laws which essentially adhere to and adopt the provisions of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (the “IDD”).

Our firm also advises with respect to Cyprus law matters that may arise with respect to the business of a UK firm including in the context of a UK firm executing an insurance business transfer to an EU group entity to ensure continuity of service and to eliminate any potential detriment to those customers, i.e. transferring customers to whom policies were sold under their freedom of services passporting permissions. Such transfer can resolve the issue of having EEA domiciled customers (whose policies were sold under the freedom of services passporting permissions) by transferring them to EU subsidiaries, however, UK insurers may still have customers who have been sold a product or contract in the UK, but who relocate to an EEA country. This will continue to occur post Brexit and it is expected that the Cyprus Insurances Regulator will also address this issue in due course.

Oil & Gas Services in Cyprus

Posted on | by Paschalis Paschali

Ioannides Demetriou LLC is recognised as a leading Oil & Gas law firm in Cyprus. It represents major players in the Cyprus market, including government, semi-government, public and private clients in all aspects of the Oil & Gas supply chain, including upstream, midstream, downstream and Liquefied Natural Gas (LNG).

The following article is featured in Gold, The Business Magazine of Cyprus – Supplement with special feature on Oil & Gas Services in Cyprus.

Oil-and-gas-supplement-IDLAW-GOLD

GOLD News Cyprus: Leading Law Firms in Cyprus – Ioannides Demetriou LLC

Posted on | by Paschalis Paschali

Ioannides Demetriou LLC is featured in GOLD: The Business Magazine of Cyprus, Issue 113, 16th Aug 2020.

“Ioannides Demetriou LLC is an established full services commercial law and litigation firm and is considered a leading law firm in all the fields it operates.”

The Legal 500 and Chambers and Partners also recognise our firm’s co-founders, Pambos Ioannides and Andrew Demetriou as leading individuals. Our directors, Christina Ioannidou, Christos Frakalas, Zoe Christou and Savvas Yiordamlis are recommended in these guides and others.

ID LAW Leading Law Firm in Cyprus
ID LAW Leading Law Firm in Cyprus