On 9th of June 2022 the House of Representatives passed an amendment to the Cyprus Companies Law, Cap. 113, introducing lighter financial reporting obligations for small and medium-sized private limited liability companies (the "Law"). The purpose of the Law is said to be to reduce the administrative burden of such companies as well as to deal in practice with the issue of the real costs borne by companies and audit firms due to the work being done today.
As per the Law, private limited liability companies may submit financial statements for review instead of audit, by a statutory auditor or statutory audit firm, provided that:
- the company's net turnover (as defined by the Cyprus Companies Law, Cap. 113, and including income received from rent, interest, dividends and exploitations rights) does not exceed the amount of EUR 200,000; and
- the total value of the assets, without deducting liabilities, does not exceed the amount of EUR 500,000.
The "review" of the financial statements shall have the meaning as per the International Standard on Review Engagements (ISRE) 2400.
It must be also noted that the Law provides for specific exceptions, such as:
- Parent companies which are obliged by the Cyprus Companies Law, Cap. 113, to prepare consolidated financial statements;
- Subsidiaries whose parent company is obliged to prepare consolidated financial statements;
- Companies that are subject to regulation and supervision by certain independent authorities
The Law is to become active upon its publication in the Official Gazette of the Republic of Cyprus and shall be applicable as from the 1st of January 2023. The provisions are to apply to financial statements ending the 31st of December 2022 or any other subsequent date.
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.
