Transposition of the EU Mobility Directive into Cyprus Companies Law

A new set of provisions has been introduced into the Companies Law, namely (a) sections 201HA to 201HK establishing a new legal framework for cross border conversion; and (b) sections 201ΛΑ to ΛΑΚ establishing a new legal framework on cross border divisions of companies with a share capital. The existing framework for cross border mergers already within the Companies Law, namely sections 201Θ to 201KZ has also been amended to align with the requirements of the Mobility Directive.

The new procedures on cross border conversion, division and mergers follow a harmonized approach in respect of the three cross border corporate actions, and apply where the companies involved have been incorporated, have their registered office, their central management or principal place of business within the European Union, ensuring an aligned set of safeguards across the European Union for the affected stakeholders.

It is noteworthy to mention that the Companies Law already accommodated an analogous procedure to cross border “conversions”, known as "redomiciliation", which provided for the transfer of registered office of a company both into and out of Cyprus, from and to other jurisdictions both within and beyond the European Union, therefore having a broader scope of application than the cross border conversion provisions. The redomiciliation provisions will remain available alongside the cross border conversion provisions, in scenarios where the cross border conversion provisions would not be applicable, ie where a Cypriot company wishes to redomicile to a jurisdiction outside of the European Union and conversely where a company from a non-EU jurisdiction wishes to transfer its seat into Cyprus.

The provisions on merger and division of public companies under sections 201A to 201H of the Companies Law, remain unaffected by the Amendment Law.

Importantly, Amendment Law ensures continuity for pending cross-border mergers and redomiciliations, clarifying that the amendments shall not affect procedures which have already commenced in respect of:

• cross border mergers, provided that the information under section 201IΓ of the Companies Law have been submitted with the registrar of companies for registration, in respect of each merging company; and
• redomicilations to or outside of Cyprus, provided that an application under section 354Γ of the Companies Law has already been submitted or an application for the registrar’s consent to the company’s continuation in another member state has been submitted under section 354IA of the Companies Law.

For further information on any of the new amendments, please do not hesitate to reach out to our Cyprus Corporate team.