The relevant regulatory bodies established in Cyprus for the licensing, supervision and control of legal entities carrying on banking, investment and ancillary services and insurance business are the Central Bank of Cyprus, the Securities and Exchange Commission and the Insurance Companies Control Service of the Ministry of Finance (the Insurance Companies Control Service) respectively.
The Central Bank of Cyprus (CBC) was established in 1963 as an autonomous institution. Its main functions today include the implementation of the European Central Bank's (ECB) monetary policy decisions, holding and managing the official and international reserves, supervising financial institutions, safeguarding the stability of the financial system, promoting, regulating and overseeing the smooth operation of payment and settlement systems, acting as banker for the government, preparing statistical data for the ECB and participating in the international monetary and economic organisations.
The CBC has the sole responsibility for the regulation of financial institutions established or registered in Cyprus, for branches or representative offices of those financial institutions abroad and of representative offices in Cyprus of financial institutions established abroad carrying on banking activities and investment and ancillary services and activities.
The Authority for the Supervision and Development of Cooperative Societies (OCS) was established in 1985 as a public corporate body. Until 2014 it was responsible for the regulation and supervision of cooperative credit institutions but this responsibility has now been transferred from the OCS to the CBC. The OCS remains responsible for registration issues and matters relating to prudent management of cooperative companies operating outside the financial sector, as well as the general promotion of cooperative institutions in Cyprus.
The Cyprus Securities and Exchange Commission (CYSEC) was established in 2001 as a public corporate body.
CYSEC is responsible for supervision and control of:
- the operation of the stock exchange and other regulated markets that operate in the Republic of Cyprus and the transactions carried out on them;
- the issuers of securities listed on the stock exchange or other regulated markets of the Republic of Cyprus as well as any financial instruments traded therein;
- licensed investment services companies and administrative service providers; and
- collective investment schemes.
CYSEC has powers to grant operating licenses and to inspect companies that have securities listed on the stock exchange, brokers, brokerage firms, investment consultants, administrative service providers and mutual fund management companies, and to impose sanctions and disciplinary penalties.
CYSEC has the sole responsibility for the regulation of the provision of investment and ancillary services in Cyprus in accordance with MiFID I and MiFID II Directives for which a license is required to be granted under existing legislation and for the operation of regulated markets and other related matters.
General capital reserve requirements
In order for a credit institution (bank or cooperative society) to be granted a licence to carry on business in Cyprus it must have its own funds of at least 5 million euros as calculated in accordance with EU Regulation 575/2013, as amended. Thereafter, the credit institution is subject to the CBC Directive on calculation of capital requirements as implemented in accordance with the Directives of the ECB.
A Cyprus Investment Firm (CIF) must have its own funds equivalent to the minimum requirements set out in EU Regulation 575/2013, as amended by EU Regulation 2019/2033 taking into account the nature of the specific investment services or activities being provided.
Public companies registered in Cyprus must have an authorised share capital of at least 25,629 euros and in the case of public companies listed in a regulated market the authorised share capital must be available when they commence of business.
In the field of securities and banking Cyprus has taken active measures and enacted numerous legislative instruments implementing and harmonising the domestic legal status with applicable European directives and regulations.
Domestic laws and European legislation applicable to Cyprus
In the field of incorporation in Cyprus as a legal person carrying on business
The Companies Law, Cap. 113 of 1951 to 2019 (the Companies Law), sets out the provisions under which any legal entity may be registered in the register of companies in Cyprus either as a private company limited by shares, private company limited by guarantee, public company, public company listed in a regulated market, branch or SE.
The Companies Law has been harmonised with all relevant significant European directives, including:
- First Council Directive 68/151/EEC on coordination of safeguards which, for the protection of the interests of members and others, are required by member states of companies with a view to making such safeguards equivalent throughout the Community;
- Fourth Council Directive 78/660/EEC on the annual accounts of certain types of companies;
- Sixth Council Directive 82/891/EEC concerning the division of public limited liability companies;
- Seventh Council Directive 83/349/EEC on consolidated accounts;
- Eleventh Council Directive 89/666/EEC concerning disclosure requirements in respect of branches opened in a member state by certain types of companies governed by the laws of another state;
- Directive 1999/93/EC on a Community framework for electronic signatures;
- Directive 2003/6/EC on insider dealing and market manipulation (market abuse);
- Directive 2003/51/EC on the annual and consolidated accounts of certain types of companies, banks and other financial institutions and insurance undertakings;
- Directive 2004/25/EC on takeover bids;
- Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market;
- Directive 2005/56/EC on cross-border mergers of limited liability companies;
- Council Directive 2006/99/EC;
- Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts as amended by Directive 2008/30/EC;
- Directive 2006/46/EC on the annual accounts of certain types of companies;
- Directive 2007/36/EC on the exercise of certain rights of shareholders in listed companies;
- Council Regulation (EC) No 2157/2001 on the statute for a European company (SE);
- Directive 2007/63/EC as regards the requirement of an independent expert's report on the occasion of merger or division of public limited liability companies;
- Directive 2009/49/EC as regards certain disclosure requirements for medium-sized companies and the obligation to draw up consolidated accounts;
- Directive 2009/101/EC on coordination of safeguards which, for the protection of the interests of members and third parties, are required by member states of companies with a view to making such safeguards equivalent;
- Directive 2009/102/EC in the area of company law on single-member private limited liability companies;
- Directive 2009/109/EC as regards reporting and documentation in the case of mergers and divisions;
- Directive 2011/35/EU concerning mergers of public limited liability companies;
- Directive 2012/30/EU on coordination of safeguards which, for the protection of the interests of members and others, are required by member states of companies, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent;
- Directive 2013/24/EU adapting certain directives in the field of company law, by reason of the accession of the Republic of Croatia;
- Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings;
- Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, as amended;
- Directive 2014/95/EU amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups;
- Directive 2014/102/EU adapting Directive 2013/34/EU of the European Parliament and of the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, by reason of the accession of the Republic of Croatia;
- Directive (EU) 2017/1132 of the European Parliament and of the Council relating to certain aspects of company law, as amended.
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Originally Published by Thomson Reuters
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