The Amending Law 100(Ι) of 2009 makes a number of important changes to Cyprus's Banking Law.
It transposes the provisions of EU Directive 2007/44/ΕC relating to mergers and acquisitions of banks into the national law and increases the maximum limits of investments by banks in the share capital of any company, as provided for in subsection (1) of section 13 of the Banking Law, to align them with the maximum limits permitted under article 120 of EU Directive 2006/48/ΕC.
In addition, the new law amends the provisions of the Banking Law regarding banks' obligations to provide the Central Bank of Cyprus ("CBC") with information on beneficial shareholders holding 5% or more of their share capital.
With effect from 24 July 2010, the maximum limits of exposures to each director and to all directors together of each bank will be reduced from 5% to 2% and from 40% to 20%, respectively.
In addition, the CBC has recently issued two Directives to banks in accordance with the recommendations of the Basel Committee on Banking Supervision and the relevant EU Directives on banking sector issues.
The Amending Directive on the "Framework of Principles of Operation and Criteria of Assessment of Banks' Organisational Structure, Internal Governance and Internal Control Systems" was issued in October 2009 and is intended to strengthen the overall framework of organisational structure and internal governance of banks as well as to improve three basic functions of their internal control systems, namely, internal audit, risk management and compliance.
The revised Directive on "Communication between the CBC and the Approved Auditors of Banks", issued in November 2009, provides a framework for trilateral meetings between the CBC, the banks under its supervision and their approved auditors, sets out the circumstances and conditions under which the CBC may invite the auditors of banks to bilateral meetings and outlines the circumstances under which the auditors are required to report to the CBC.
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