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21 December 2009
In July 2009 the Company Law (Cap 113) underwent significant changes. One such change was the deletion and replacement of Sections 114 to 117, which contained anachronistic provisions regarding the maintenance of corporate share registers. Until 1960 Cyprus was a British colony, and until a few years ago Cap 113 was a virtual copy of the UK Companies Law 1948. Consequently, these sections referred to 'Her Majesty's dominions' and permitted a company to maintain 'dominion registers' in any such dominion.
The new sections have removed such references to Cyprus's old colonial status and modernized the relevant provisions to bring them into line with today's commercial requirements. The new provisions permit a Cypriot company whose objectives include the carrying on of business in any country abroad and whose shares are traded in foreign markets and/or the market where the members reside to maintain a share register in one or more of these countries.
The company must notify the company registrar within 14 days of the address where the share register is maintained abroad and of any subsequent changes to that address. A register held by a Cypriot company abroad will be considered to constitute part of the share register kept in Cyprus. The Cypriot company must record in its share register in Cyprus information regarding any entry made in the share register abroad. The law requires that a mirror record of the register of members be kept in Cyprus.
A Cypriot company may incorporate any regulations in its articles of association that it considers appropriate for maintaining a share register abroad.
Section 115(4) contains another new provision stating that any shares that are registered in the register abroad are distinguished from the shares that are registered in the Cyrpus register and no transactions or dealings with any of these shares should be registered in any other register while they continue to be registered abroad. Furthermore, Section 116 provides that the transfer of any share registered abroad is deemed a transfer of assets of the company that is located outside Cyprus. This is an important provision because it can be interpreted to mean that any transactions relating to these shares, including any sale of them, are exempt from stamp duty in Cyprus.
Regarding companies that are registered outside Cyprus, Section 117 provides that they can maintain a share register in Cyprus, provided that they are permitted to do so under their constitutional documents and subject to the provisions of the laws of the country in which they are incorporated. The Council of Ministers is the authority on these matters and it has the power to make a relevant order to be published in the Official Gazette.
Regarding public companies, Section 117A provides that where a Cypriot public company has its shares or securities listed and traded on a foreign market, that company, if it complies with the requirements and regulations of the relevant foreign market, will be deemed to have complied with the Cyprus law requirements to keep registers of members. Furthermore, if the shares or securities are pledged, the regulations of the foreign market, rather than the relevant provisions of the Cyprus Contract Law, will apply to the pledges.
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