Corporate Governance in Cyprus
History of Corporate Governance in Cyprus
The Commercial Law in Cyprus was adopted in 1950 and has undergone a lot of changes during the years. The biggest change occurred in 2002 when the Corporate Governance Code was introduced. The Cypriot Corporate Governance Code is based on the Anglo-Saxon model and is comprised of principles. Its most important principles refer to the board of directors being more involved in the company’s monitoring, to ensure the protection of the shareholders, to offer more transparency and to allow the independence of the board of directors when making decisions about the company’s future. It is important to be noted that the Corporate Governance Code in Cyprus is not mandatory, but it merely contains principles certain types of Cypriot companies are advised to rely on. Companies that trade shares on the Cyprus Stock Exchange will abide by the Corporate Governance Law.
Board structure in Cyprus
The management board of a Cypriot company has the administrative, executive and managerial functions in the enterprise. The directors of a company will have fiduciary duties and statutory duties. They must act in the best interest of the shareholders and the company. The directors must act tactful and put their best effort in conducting the company’s activities, as stated in the Companies Law. The management board is required to act together in decision making situations, according to Section 80 in the Commercial Code, while the Corporate Governance Code states that the board of directors must receive any information in a timely and detailed manner. The Code clearly states the role of the chairman as the person in charge with the meetings. The chairman of the company will provide all the necessary information to the directors and will make sure the meetings are directed in a proper manner. The principles of the Cypriot Corporate Governance Law state that companies must have certain board committees. Among these there is the necessity of a nomination committee, an internal audit committee and a remuneration committee.
Regulation
The Cyprus Securities and Exchange Commission, (Greek: Επιτροπή Κεφαλαιαγοράς) better known as CySEC, is the financial regulatory agency of Cyprus. As an EU member state, CySEC's financial regulations and operations comply with the European MiFID financial harmonization law.
Responsibilities
CySEC has the following responsibilities:[11][12]
- To supervise and control the operation of the Cyprus Stock Exchange and the transactions carried out in the Stock Exchange, its listed companies, brokers and brokerage firms.
- To supervise and control Licensed Investment Services Companies, Collective Investment funds, investment consultants and mutual fund management companies.
- To grant operation licences to investment firms, including investment consultants, brokerage firms and brokers.
- To impose administrative sanctions and disciplinary penalties to brokers, brokerage firms, investment consultants as well as to in any other legal or natural person whom fall under the provisions of the Stock Market legislation.[13]
In a recent amendment to the Law governing CySEC and its responsibility it has received significant power over the entities that it regulates in that it may carry out investigations, enter premises and search as well as to share any findings with foreign regulators.[14]
[11]"VISION, MISSION & RESPONSIBILITIES". CySEC. Retrieved July 14, 2019.
[12]"Cyprus Investment Firms (CIFS) - Finance and Banking - Cyprus". www.mondaq.com. Retrieved 13 September 2017.
[13]"EY: Banking Dynamics - Issue 1" (PDF). Archived from the original (PDF) on 17 October 2016. Retrieved 13 September 2017.
[14]HSharpe (2019-08-01). "CySEC Powers Increased". Retrieved 2019-08-04.
The Cyprus Stock Exchange (CSE)
The Cyprus Stock Exchange (CSE) places significant emphasis on corporate governance codes to ensure transparency, accountability, and investor protection within listed companies. The CSE has developed comprehensive corporate governance codes that outline best practices for boards of directors, executive management, and shareholders. These codes cover a wide range of issues, including board composition and independence, risk management, internal controls, and disclosure requirements. By adhering to these codes, listed companies on the CSE strive to enhance investor confidence, promote market integrity, and maintain high standards of corporate behavior. The CSE regularly reviews and updates its corporate governance codes to align with international standards and emerging best practices, reflecting its commitment to fostering a robust and well-regulated capital market in Cyprus.
Sources:
Company Management in Cyprus (lawyers-cyprus.com)