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.
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.
Entrepreneurs and investors interested in opening companies in Cyprus should have a strong understanding of company management and a good way of learning this domain is by taking management training courses.
Cyprus benefits from strong regulations when it comes to company management. As mentioned above the Companies Law is the main regulatory instrument in terms of the responsibilities of a company’s managing structure. Other legal framework ensuring corporate governance is respected is the Cyprus Securities and Stock Exchange Law and Cyprus Securities and Exchange Commission Law. The Transparency Requirements Law provides the legal framework for investment companies and has the role of protecting investors. As part of the European Union, Cyprus falls under the regulations of the European Corporate Governance Institute (ECGI) that promotes the employment of best corporate governance practices.
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