Cyprus: Cyprus Business Headlines: The Introduction Of The EURO And Other Important News

Last Updated: 3 April 2008

THE INTRODUCTION OF THE EURO AND THE END OF THE CYPRUS POUND

Following the introduction of the euro on 1 January 2008 the dual circulation period of one month, in which the Cyprus pound remained legal tender in Cyprus alongside the euro, came to an end on 31 January. With effect from 1 February any remaining Cyprus pounds will have to be exchanged for euro at a bank. Commercial banks will accept Cyprus pounds for exchange into euro until 30 June 2008 and the Central Bank of Cyprus will exchange currency until the end of 2017.

A survey carried out by the Research Centre of the European University Cyprus on behalf of the Central Bank of Cyprus indicates that the changeover to the euro has gone very smoothly so far, with most members of the public having completed the transition early in January. The smooth transition appears to have allayed concerns about the effects of the introduction of the euro, with a majority now believing that the euro will have a beneficial effect both on their personal finances and on the economy of Cyprus.

However, the change to the euro does not mean that the Cyprus pound has completely disappeared. Most Cyprus legislation passed before the euro changeover expresses monetary amounts in Cyprus pounds and has not been amended to replace the old currency with the new. So it is not time to throw away the calculators just yet!

NEW CYPRUS - MOLDOVA DOUBLE TAXATION AGREEMENT

A new Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income between Cyprus and Moldova was signed by the two countries' respective Ministers of Finance on 28 January 2008. When ratified, the new agreement will replace the existing arrangements under the 1982 Cyprus – USSR treaty. There is already a significant amount of investment between Cyprus and Moldova, which aspires to join the EU in due course, and both governments have expressed confidence that the new agreement will bring Cyprus to the top of the list of foreign countries investing in Moldova.

CONSOLIDATION NO LONGER MANDATORY FOR SMALL GROUPS OF COMPANIES IN CYPRUS

Law 131(I)/2007 has amended the Cyprus Companies Law so that small groups of companies are no longer required to prepare consolidated financial statements and clarified the requirements regarding intermediate holding companies. To qualify for the "small groups" exemption none of the companies in the group may be a public company and the group must satisfy at least two of the following three criteria:

  • aggregate gross assets before deduction of liabilities do not exceed €14.6 million;
  • aggregate turnover does not exceed €29.2 million;
  • average aggregate number of employees does not exceed 250.

The exemption is not available if other legislation to which the group is subject requires the production of consolidated financial statements.

Intermediate holding companies whose ultimate holding company publishes consolidated financial statements in line with generally accepted accounting principles are also exempt from the obligation to prepare consolidated financial statements.

The amendment of the law will remove an administrative burden from small groups of companies and reduce their costs.

IMPLEMENTATION OF THE MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE ("MIFID")

Cyprus has now passed the necessary legislation to implement Directive 2004/39/EC of the European Parliament and of the Council on Markets in Financial Instruments and Directive 2006/31/EC of the European Parliament and of the Council of 5 April 2006. Together, these directives establish a comprehensive regulatory framework for the execution of transactions on behalf of investors by stock markets, alternative trading systems and investment firms, with the objective of protecting investors, developing a single market in investment services across the EU, and promoting fair and transparent integrated financial markets.

The new Investment Services and Activities and Regulated Markets Law of 2007, number 144(1) of 2007, which was passed on 25 October 2007, replaces the Investment Firms Law of 2002 with effect from 1 November 2007. As well as implementing the MiFID Directive it also harmonises domestic law with relevant European directives regarding investor compensation schemes; capital adequacy of investment firms and credit institutions; organisational requirements, operating conditions for investment firms and recordkeeping obligations for investment firms, transaction reporting, market transparency and admission of financial instruments to trading.

INCREASE OF PENALTIES FOR DEFAULT IN SUBMITTING ANNUAL FINANCIAL STATEMENTS AND ANNUAL RETURNS

Law No. 70(I) of 2007 introduced an increase in the penalties for breaches by Cyprus companies of their obligations regarding annual meetings and annual returns.

Failure to lay the financial statements, the directors' report and where required, the auditors' report before the company at an annual general meeting within the prescribed time limit is now a criminal offence and each responsible director is liable to a fine of up to CY£5,000 (€8,543 from 1 January 2008).

Failure to circulate the financial statements, directors' report and where required, the auditors' report to all members and debenture holders of the company not less than 21 days before the date of the annual general meeting is now a criminal offence for the company and each responsible officer, punishable by a fine of up to CY£3,000 (€5,126).

Failure to forward the annual return to the Registrar of Companies within 42 days after the annual general meeting is a criminal offence for the company and each responsible officer, punishable by a fine of up to CY£25 (€42) for each day that the default continues. The Registrar of Companies may also impose an administrative fine of up to CY£5,000 (€8,543) on the company regardless of whether any other prosecution takes place.

Failure to annexe the financial statements, the directors' report and, where required, the auditors' report to the annual return is also a criminal offence for the company and each responsible officer, similarly punishable by a fine of up to CY£25 (€42) for each day that the default continues. The Registrar of Companies may also impose an administrative fine of up to CY£5,000 (€8,543) on the company regardless of whether any other prosecution takes place.

PREFERRED BIDDER FOR PAPHOS-POLIS MOTORWAY CONTRACT

The French international construction group Vinci has announced that the Kinyras consortium, in which it has a 40% stake, has been named as the preliminary preferred bidder for the 30-year PPP contract to build and operate the motorway between Paphos and Polis in the west of Cyprus.

The project consists of the financing, design, construction and operation of a 31 km stretch of motorway at a cost of EUR 470 millions. Vinci's partners in the Kinyras consortium are local companies J&P and Cybarco.

As yet there has been no official announcement by the Cyprus government.

MEMORANDA OF UNDERSTANDING BETWEEN THE CENTRAL BANK OF CYPRUS AND NATIONAL BANK OF KYRGYZ REPUBLIC AND THE ESTONIAN FINANCIAL SUPERVISION AUTHORITY

The Central Bank of Cyprus extended its network of bilateral ties in the domain of supervision of credit institutions by signing a Memorandum of Understanding with the Estonian Financial Supervision Authority on 7 November 2007. A similar Memorandum of Understanding with the National Bank of Kyrgyz Republic was signed on 5 December 2007.

The Memoranda of Understanding set out a framework for cooperation and information exchange between the two supervisory authorities with a view to facilitating the consolidated supervision of cross-border establishments and securing the safe and orderly functioning of credit institutions in their respective countries, in accordance with their national laws and regulations.

Memoranda of Understanding have now been signed with the banking supervisory authorities of eighteen countries.

CYPRUS HIGH IN MARKET FREEDOM RANKINGS

The annual market freedom assessment compiled by the Heritage Foundation, a Washington-based think-tank, and published in the Wall Street Journal rates Cyprus twenty-second out of more than 150 countries studied in terms of market freedom. Cyprus ranks eleventh out of the 41 countries in the European region.

If you would like to view the original newsletter please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.