The Law Regulating Companies Providing Administrative Services and Related Matters of 2012 (the "ASP Law") transposed the provisions of Directive 2005/60/EC into national law and provided Cyprus with an effective regulatory framework.

A number of practical issues and uncertainties have emerged since the law took effect and following discussions between the Ministry of Finance, the "troika" of providers of international financial support to Cyprus, and the competent authorities (the Cyprus Securities and Exchange Commission, the Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus), the Cyprus parliament has enacted a number of amendments to the ASP Law in order to resolve these and to implement the commitments included in the Memorandum of Understanding with the troika.

The main amendments are as follows:

  • Cyprus companies offering administrative services only to fellow members of the group of companies of which they are a member and private trustee companies belonging to the beneficiaries of the trust or their close relatives (spouses or relatives up to the fourth degree of kinship) are excluded from the scope of the ASP Law provided that they have a representative in Cyprus who is accessible and accountable for anti-money laundering purposes.  This representative should be the secretary of the company, who should be a natural person or a company regulated under the ASP Law. In addition, such companies may not advertise their services or solicit clients for such services.
  • The role of protector of a trust is excluded from the scope of the ASP Law on the basis that the protector is a person who the settlor appoints to exercise oversight in a personal capacity and that since the trustee is regulated there is no real need for the protector to be regulated as well.
  • An ambiguity in the ASP Law which might be interpreted as indicating that officers acting as signatories of bank accounts of certain companies must be authorised again under the ASP Law has been removed. This change was made in order to make clear that all persons who can legally be appointed as directors may continue to be signatories on company bank accounts without being required to apply for a license.
  • Foreign providers of custodian services that are appropriately regulated in a home jurisdiction that has a co-operation agreement with Cyprus for regulatory purposes are excluded from the scope of the ASP Law for the purpose of holding shares in Cyprus companies.
  • Occupational retirement benefit funds which are under the supervision of the Registrar of Occupational Retirement Benefit Funds in accordance with the Establishment, Activities and Supervision of Occupational Retirement Benefit Funds Law of 2012 are explicitly excluded from the scope of the ASP Law.
  • Companies falling within the scope of the ASP Law may employ a lawyer who does not hold a licence to practise law as an advocate in Cyprus in the role of in-house legal advisor. In such case, the legal advisor should be employed in-house whereas in the case of a licensed advocate, the lawyer should be retained.
  • CySEC is required to provide a registration number to all service providers it authorises and to maintain a register of authorised service providers containing the information described below. The other competent authorities are required to maintain registers containing the corresponding information in respect of their members that provide regulated services.
    • full details of the service provider; 
    •  a description of the services offered;
    • the names of any wholly-owned subsidiaries offering administrative services; 
    •  the name and work address of its employees that offer administrative services; and
    •  the name and contact details of the compliance officer.

The amendments will take effect on publication in the Official Gazette of the Republic of Cyprus, and will further enhance Cyprus's reputation and position as a fully transparent and attractive trust jurisdiction with a legal infrastructure which entrenches jurisdictional and asset protection for trusts whilst fully complying with all applicable EU and domestic anti-money laundering laws and regulations.

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.