![Image](/images/awards-web/emea-leading-firm-2023.jpg)
![Image](/images/awards-web/ftw-logo.jpg)
![Image](/images/awards-web/2023-GLE-Awards-Winner-Generic-Logo.jpg)
![Image](/images/awards-web/aida-europe-logo.jpg)
![Image](/images/awards-web/ISO-9001-English.jpg)
![Image](/images/awards-web/iqnet.png)
![Image](/images/awards-web/nextflaw.jpg)
![Image](/images/awards-web/network.png)
As a subscriber to Mondaq's Market Intelligence Reporting (MIR), please find below a summary of Haviaras & Philippou L.L.C's readership.
Our detailed reporting enables you to view all available reader information including: named individuals, company names and email addresses. We also provide other related information such as print requests, clicks to your profile or website, keywords used in search engines to locate your articles as well as many other features.
Please note that users viewing your content through some of our distribution partners, such as Factiva, Lexis-Nexis, Westlaw, Reuters, and Bloomberg, cannot be reported through the MIR system.
Summary | Last 14 Days | Historic Total |
Article Reads | 80 | 3,145 |
Articles Published | 0 | 3 |
Contact Activities/ Profile Clicks | 2 | 198 |
Number of individual readers | 18 | n/a |
Your Recently Read Articles
Your top articles over the last 14 days based on readership. We show a maximum of 10 readership stats.
Article Title | Date | Reader Contact/ Profile Clicks |
Article Reads | Total Reads (last 14 days) |
|
Named Readers | Social Media/ Search |
||||
Commercial Overview Of The Shipping Industry | 11 May 2015 | 28 | 85 | 97 | 182 (47) |
The Scheme For The Naturalisation Of Investors In Cyprus | 27 April 2015 | 84 | 287 | 1100 | 1387 (46) |
Cyprus Anti-Money Laundering Measures and The New Regulations For The Administrative Service Providers (ASP)Regulations For The Administrative Service Providers (ASP) | 23 June 2014 | 86 | 245 | 1331 | 1576 (45) |
Your Recent Readers
Recent Readers (just a few showing here) |
Company | Job Title | Industry |
John Owen | JLT Specialty Ltd | Consultant, Accounta... | Business & Consumer Services |
Karima Saini | Independent | Consultant, Accounta... | Consumer Industries |
Radish Singh | PwC | Consultant, Accounta... | Accounting & Consultancy |
Stephen Sweeney | CBLG Law Network | CEO, Owner, Chairman... | Law Firm |
John Galani | Genesis Holdings | CEO, Owner, Chairman... | Transport |
Sam Bonilla | Rich-Port Consulting, LLC | Consultant, Accounta... | Basic Industries |
Daniel Reiss | Automated Terminal Systems, Inc. | CEO, Owner, Chairman... | Transport |
Lisa Knowles | Macquarie Group Limited | Inhouse Counsel, Law... | Banking & Credit |
Lynda Marshall | US DOJ | ||
Margaret McClennan | Bank Of America | Banker, Stockbroker,... | Financial Services & Insurance |
Interesting to Know - Mondaq's most popular articles on topics you write on.
Trending Articles
1. | Government, Public Sector: Cyprus Anti-Money Laundering Measures And The New Regulations For The Administrative Service Providers (ASP)
Haviaras & Philippou L.L.C |
2. | Government, Public Sector: CySEC Circular On Anti-Money Laundering Compliance Reports
Andreas Neocleous & Co LLC |
3. | Government, Public Sector: Publication Of The Deloitte And Moneyval Reports On The Effectiveness Of Cyprus's Anti-Money Laundering Regime
Andreas Neocleous & Co LLC |
4. | Immigration: Cyprus Citizenship By Investment - The Most Attractive Program In Europe
C.Savva & Associates Ltd |
5. | Immigration: Obtaining A Cyprus Citizenship-New Rules
Eurofast Taxand |
The Republic of Cyprus (hereinafter "Cyprus") has been the target of many European Countries due to it's allegedly lack of money laundering measures that damage the European Union. Is the reaction of these European Union Countries justified?
Cyprus, even before joining the family of the European Union had in place legislation as well as a body responsible for the supervision of monetary transactions within its jurisdiction.
The relevant legislation as drafted and proposed by the Parliament in 1996 was approved in 1997 as the Prevention and Suppression of Money Laundering Acts Law. Since then numerous amendments were made with the latest coming into force in 2012.
In addition, Cyprus ratified on 30 Nov 2001 the International Convention for the Suppression of the Financing of Terrorism.
The unit for Combating Money Laundering (MOKAS) was established to supervise the provisions of Prevention and Suppression of Money Laundering Activities Law. MOKAS gained the power to investigate any reports for potential money laundering and has therefore been structured and manned with a variety of professionals such as advocates, custom officers, financial analysts, police officers and many others, making MOKAS a powerful tool in the hand of the Attorney General against money laundering in Cyprus.
The adoption of the Prevention and Suppression of Money Laundering Activities Law 2007 has put Cyprus in line with the international conventions of the:
Recent Measures for ASP's
Foreign investors use the services of local lawyers and accountants, who are qualified in implementing investor's corporate structures. It is vital to be in opposition to recognize which transactions may not be genuine in order to report them to MOKAS. Unfortunately, in the last few years a number of unqualified offices made their appearance in Cyprus, providing "corporate services" without having the necessary know-how and with limited knowledge of Cyprus Law. This inevitably caused problems to a number of investors who realized that the administration of their Company was not in line with Cyprus law. The Parliament of Cyprus, in an attempt to maximize the control over the corporate service market, has recently approved and adopted law 196(Ι)/2012 on Regulating Companies Providing Administrative Services and Related Matters (the "Law").
The Law has put the burden on the Cyprus Bar Association and Cyprus Securities and Exchange Commission to supervise those authorized under the Law and those that are already qualified to provide administrative services.
The Law provides for exempt persons, i.e. persons that are allowed to provide administrative services without applying to the Cyprus Bar Association and Cyprus Securities and Exchange Commission. Namely, the the Cyprus Bar Association and Cyprus Securities and Exchange Commission persons are:
It is therefore important that each investor makes sure that his companies in Cyprus are being administered by a licensed ASP company or by one of the exempt persons. It should be noted that persons that are in breach of the Law are subject to heavy fines by the regulatory authorities.
Reports and Incidents of Money Laundering
The Government of Cyprus has recently obtained two reports from Deloitte and Moneyval who they were instructed to review, among others, the Anti-Money Laundering (AML) procedures used by the Banks and service providers as well as the Customer's Due Diligence (CDD).
Both reports have shown that there is room for improvement but under no circumstances gives the right to any EU Country or otherwise to attack Cyprus as the money laundering jurisdiction of Europe.
We have seen in the near past money laundering scandals around the globe, but those countries haven't been "attacked" by the media and or foreign governments as much as they did with Cyprus.
Some examples of proved money laundering are:
It should further be noted that a study published by the Tax Justice Network which examined seventy countries found that Germany is one of the biggest havens for tax evasion. It's worth saying that Germany even ranks higher than offshore jurisdictions, such as Cayman Islands, that do not comply with the OECD or EU Regulations and Directives.
In the light of the above mentioned facts each of you can make his own decisions to which countries do really "support" money laundering.
This article explains the options available to non-Cyprus citizens through which they can, by exception, apply for the acquisition of Cypriot citizenship. This scheme is available non-Cypriot non-EU residents who would like to get EU citizenship which will enable them to move around Europe without the need for any kind of visa. Further, having an EU passport makes the issuance of any visa, around the world, much easier to obtain.
The relevant law, provides for six methods through which an applicant may obtain their Cypriot citizenship and at the same time their EU citizenship. This article will only examine four out of six methods - one of them is not an option we would advise our clients to pursue.
A1. Investment in Real Estate (immovable property), land development and infrastructure projects:
The applicant must have invested or has to invest at least €2 million for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector) or other infrastructure projects exclusively in Cyprus. However, if the land is eligible for construction or is under construction, a business plan needs to be presented to the relevant Authorities for approval. Investment in land that is situated in a building zone of zero development is excluded.
A2. Investment in financial assets of Cypriot companies or Cypriot organizations:
The applicant should have made an investment of at least €2 million by purchasing or by participating in companies or organizations established and operating in the Republic of Cyprus, with proven physical presence and activities. The invested funds shall be used for the financing of specific investment plans exclusively in Cyprus. The companies must employ at least five Cypriot or EU citizens who have been legally residing in Cyprus for a continuous period of at least 5 years. The minimum number of employees increases when more than one applicant invest simultaneously in the same business.
A3. Investment in Alternative Investment Funds (AIFs) or financial assets of Cypriot companies or Cypriot organizations that are licensed by CySec:
The applicant should have bought or will purchase financial assets or units (e.g. bonds, bills and securities) of at least €2 million from alternative investment funds established in the Republic of Cyprus, licensed and supervised by the CySec (Cyprus Securities and Exchange Commission) and whose investments are made exclusively in the Republic of Cyprus. Any other investments which are approved by the Ministry of Finance may qualify for the present investment scheme.
The administrator and the auditor of the Fund is obliged to report to the relevant Ministries on an annual basis that the initial investment amount is in place.
A4. Combination of the aforementioned investments:
Applicants can have a combination of any of the above criteria amounting to at least €2 million. Within this, the applicant may also purchase special government bonds of the Republic of Cyprus of a maximum amount of €500,000.
The applicant must submit the following documents:
The Cypriot merchant fleet ranks among the 10 largest fleets in the world and ranks third in the European Union, with 12 per cent of the total fleet of the 27 Member States of the EU. It has 1,857 ocean-going vessels of a GT exceeding 21 million.
Cyprus is also a major ship management centre with a total of around 60 ship management companies, some of which rank among the largest of their kind in the world, operating from within Cyprus. From those ship management companies, 87 per cent are controlled by Cypriot and EU interests and they employ almost 40,000 seafarers, out of whom 5,000 are EU nationals. The total fleet managed from Cyprus represents 20 per cent of the world third–party ship management market.
Cyprus' ports are the commercial ports of Limassol and Larnaka, the industrial port of Vassiliko, the Paphos Port, the small port at Latchi and the oil terminals at Moni, Vassiliko and Dhekelia. All of them are under the Cyprus Port Authority jurisdiction. The ports of Famagusta and Kyrenia and the Karavostasi terminal are, unfortunately, still under Turkish occupation and therefore are not open to shipping activities. Restrictions have been put in place that declare these ports as closed to all vessels.
In 2013 there were 4,534 calls of ships in the Cyprus ports moving 270,364 passengers and 277,276 metric tons of cargo.
II GENERAL OVERVIEW OF THE LEGISLATIVE FRAMEWORK
Cyprus has a legal system based on the English model harmonised with relevant EU legislation. As regards the ship registration, maritime safety, security and seafarers' legislation, the key laws are:
As regards the taxation of shipping activities the key laws are:
Cyprus imposes a special reduced tax on companies engaged in international maritime transport, which replaces the corporate tax, and this without unduly distorting competition. This scheme allows companies to opt for a tax calculated on the net tonnage of the fleet that they operate (tonnage tax) instead of being taxed on the actual profits of their maritime transport activities. The scheme is authorised until 31 December 2019. The tonnage tax system is available to any owner, charterer or ship manager who owns, charters or manages a 'qualifying ship' in a 'qualifying shipping activity'. The tonnage tax is calculated on the net tonnage of the ship according to a broad range of bands and rates prescribed in the legislation. The rates applicable to ship managers are 25 per cent of those applied for ship owners and charterers. A 'qualifying' ship is any sea-going vessel certified under applicable international or national rules and regulations and registered in the ship register of any member of IMO and the ILO. Certain types of ships such as fishing vessels, ships used primarily for sports or recreation, river vessels, non-self propelled floating cranes and non-ocean going tug boats are specifically excluded.
A 'qualifying shipping activity' is any commercial activity that constitutes 'maritime transport', crew management or technical management of ships. The definition of 'maritime transport' includes the traditional carriage of goods and passengers, as well as ancillary services such as all hotel, catering, entertainment and retailing activities on board a qualifying ship, the loading and unloading of cargo the operation of ticketing facilities and passenger terminals. Towage, dredging and cable laying are also eligible for the tonnage tax regime.
Ship owners of Cyprus-flagged ships automatically fall within the scope of the tonnage tax system. Ship owners of EU-flagged ships may opt to be taxed under the tonnage system. Ship owners of foreign-flagged ships must comply with certain requirements to qualify for the option to be taxed under the new system. These include the requirement that a share of their fleet comprise EU-flagged ships, which share must not be reduced in the three-year period following the exercise of the option (flag-share requirement) and that the commercial and strategic management of the fleet be carried out from the EU or EEA.
Any ship owner opting for the tonnage tax system must remain in the system for 10 years. Early withdrawal will result in penalties, calculated as the difference between the amount paid the period the ship owner was under the tonnage tax system and the amount that would have paid had it been subject to corporation tax in the same period. In addition, the ship owner will lose the right to opt for tonnage taxation until expiration of the 10 years from the date the option was first exercised.
The tonnage tax system covers profits from shipping operations, dividends paid directly or indirectly out of such profits, profits on the sale of the ship and interest earned on funds used as working capital or for the financing, operation or maintenance of the ship.
Any charterer who charters a ship under bareboat, demise, time or voyage charter is eligible for the tonnage tax system provided the tonnage of the ships under time or voyage charters do not exceed 75 per cent of the total tonnage of ships chartered and owned, for more than three consecutive years. This eligibility percentage increases to 90 per cent if the ships chartered are from the EU or EEA. The charterers of a fleet comprising EU and non-EU flagged ships must also comply with the flag-share requirement.
An eligible charterer may opt to be taxed under the tonnage tax system, but once the option is made, it must remain in the system for 10 years. Early withdrawal will result in the penalties outlined above for ship owners.
The tonnage tax system covers profits from shipping operations, dividends paid directly or indirectly out of such profits and interest earned on funds used as working capital or for the payment of expenses arising out of the charterparty.
A ship manager who provides crew or technical ship management services is eligible for the tonnage tax system provided it satisfies certain criteria. These include the maintenance of a fully operational office in Cyprus, the employment of a sufficient number of qualified personnel (51 per cent of whom should be EU or EEA citizens) and at least two-thirds of the management is entirely carried out from territory in the EU or EEA. Further, a share of this fleet must comprise EU-flagged ships, the share of which must not be reduced in the three-year period following the exercise of the flagshare requirement. All ships and crews under management must comply with relevant international standards and EU law requirements must be fulfilled, in particular those relating to maritime security, safety, training and certification of seafarers, environmental performance and on-board working conditions.
Other specific criteria must be complied with, depending on the ship management service provided (i.e., full implementation of the MLC for crew managers and the ISM Code certificate for technical managers).
The tonnage tax system covers profits from the provision of crew or technical ship management services, dividends paid directly or indirectly out of such profits and interest earned of funds used as working capital or for the payment of expenses relating to the management of the ships. The 10-year option rule also applies to eligible ship management and the same penalties apply for early withdrawal.
The international conventions ratified by Cyprus are:
i Courts
Shipping disputes in Cyprus are litigated before the Supreme Court of Cyprus in its admiralty jurisdiction or, exceptionally, before a district court of Cyprus. The Supreme Court of Cyprus is empowered with the same powers as those vested in the High Court of England in its admiralty jurisdiction as those existed immediately before the independence of Cyprus (16/8/1960). The district courts of Cyprus have jurisdiction to hear admiralty cases remitted to them by the Supreme Court of Cyprus, however, the District courts do not have power to order the arrest of a ship unless it is in execution of an existing judgment.
There is a general six-year time bar for claims arising out of contractual relations and three-year time bar for civil wrongs claims, however, claims related to the carriage of Goods by Sea have a time bar of one year.
Admiralty courts gain jurisdiction for in rem claims simply by the presence of the ship in the territorial waters of Cyprus whereas they will not deny jurisdiction to litigate disputes on the ground that, assuming jurisdiction, would amount to forum shopping. Characteristically, Supreme Judge Papadopoulos said:
Lord Denning referring to the right of access to English courts said it: '... is not confined to Englishmen. It extends to any friendly foreigner. He can seek the aid of our courts if he decides to do so. You may call this forum shopping if you please, but if the forum is England, it is a good place to shop in, both for the quality of the goods and the speed of service.' [The Atlantic Star [1973] QB 364, at page 382]. With all respect I would adopt the above passage from Lord Denning's judgment for Cyprus as a good forum for those foreign friends who seek the aid of the Cypriot courts.
ii Arbitration and ADR
Cyprus does not have any specific maritime procedure other than that provided for other commercial disputes. The Admiralty Court of Cyprus lacks jurisdiction to arrest a ship for the purpose of aiding foreign arbitration proceedings.
iii Enforcement of foreign judgments and arbitral awards
Foreign judgments or arbitration awards, whether admiralty or otherwise, first need to be recognised before being capable of execution in Cyprus. This is possible under EU Regulation No. 44/2001 041215/12 or Law No. 101/87 for those of EU origin or under bilateral or multilateral treaties for those of non-EU origin. In an admiralty case it has been decided that an action based on a foreign arbitration award on a dispute under a charter party is in fact based on the charterparty itself and not on the arbitration award. A direct consequence of such finding is that the arbitration award holder is entitled to claim his appropriate priority on the proceeds of sale of the ship.
IV SHIPPING CONTRACTS
i Ship building
Cyprus does not have any significant ship-building facilities.
ii Contracts of carriage
The main local law related to the carriage of Goods by Sea is an adoption of the Hague Rules. Cyprus has ratified the Hague-Visby Rules but has not, so far, adopted the Hamburg Rules or the Rotterdam Rules.
iii Cargo claims
Cargo claims may be brought either by an action in rem against the cargo itself or by an action in personam against the appropriate person depending on the facts of the case. The contract of carriage is evidenced by the terms of the bills of lading, which may or may not incorporate the terms of the charterparty including dispute resolution clauses. The admiralty court has very recently accepted that the terms of the charterparty are in fact incorporated into bills of lading even if the appropriate parts of the bill of lading remain blank.
iv Limitation of liability
The carrier's liability may be limited by adopting in the bills of lading the terms of the Hague-Visby Rules.
Further by Law No 20(iii)/2005 Cyprus has adopted the LLMC and the Protocol of 1996 amending said Convention.
V REMEDIES
i Ship arrest
The in rem jurisdiction of the admiralty court of Cyprus may be invoked with a ship arrest or cargo arrest or sister ship arrest that is within the jurisdiction under the circumstances specified in Section 1 of the English Administration of Justice Act 1956. The claimant must file an in rem writ of summons and within those proceedings to apply ex parte for a warrant of arrest. The application needs to be accompanied by an affidavit verifying the facts of the case and requeseting the aid of the court in arresting the targeted property. The court, when issuing a warrant of arrest, will order the claimant to file a security (normally in the form of a bank guarantee) to be answerable in favour of the defendant's property in the event of the arrest being proved wrongful. At the same time the court will determine the amount of the countersecurity that, if offered by the defendants (again in the form of a bank guarantee), will secure the release of the arrested property. The court will further order the claimant to deposit with the court an amount sufficient to cover the initial expenses of the marshal of the court who will effect the arrest and maintain the arrested property in his or her possession. There has never been an arrest with the use of a helicopter but there have been arrests at anchor in territorial waters by the use of launches.
The arresting party must pursue its claim in Cyprus. It is not possible to arrest the ship in aid of foreign proceedings.
ii Court orders for sale of a vessel
The admiralty court may order the sale of the ship or cargo in execution of an in rem judgment or pedente lite. In the latter case an application must be filed and the court will issue the order for the sale only if it is satisfied that maintaining the ship or cargo under arrest will diminish its value or put it at unreasonably high risk. In both cases the court fixes a minimum reserved price and the sale is effected by the marshal of the court by public auction or private treaty.
VI REGULATION
i Safety
With regard to safety and pollution prevention, Cyprus has harmonised its legislation with the EU legislation. From an implementation point of view, the Cyprus Department of Merchant Shipping has been strengthened by specialist personnel and a network of inspectors at the most important ports around the world something that has contributed substantially to the increase of inspections of Cyprus-flagged ships. With such set up, the number of detentions of Cyprus ships with regard to serious deficiencies has greatly diminished so as to allow Cyprus to enter both the Paris MoU and the Tokyo MoU 'white lists' and to be removed from the United States Coast Guard (USCG) targeting system.
As regards the danger of ships being used or being a target for terrorist activities, Cyprus adopted the ISPS Code and all ships under the Cyprus flag, as well as all port facilities in Cyprus, have been duly certified as complying with its requirements.
Recently, Cyprus participated voluntarily in an audit scheme undertaken by the IMO. The completion of the audit revealed that the Department of Merchant Shipping has substantially complied with the IMO Assembly principles established under Resolution A974(24) and with the Code for the implementation of the mandatory IMO instruments included in Resolution A973(24). This voluntary scheme demonstrates Cyprus as the only open registry to have achieved this and i onlys the second country in the world being voluntarily audited. The Department of Merchant Shipping already has in place a complete system for adopting and implementing the IMO's conventions and therefore the IMO audit scheme is viewed as a means of identifying weaknesses for the purpose of refining and perfecting the system.
ii Port state control
The Cyprus Ports Authority was established as a public entity to apply the policy of the government. This policy is conveyed and supervised by the Minister of Communications and Works. The Cyprus authority is member of IAPH, ICHCA, IALA, ESPO and Med Cruise Association.19 Under the provisions of the Agreement for Financial Support to Cyprus the government has committed itself to privatising a number of public entities, one of which is the Cyprus Port Authority. The CPA has the power and authority to run and exploit the Cyprus ports.
iii Registration and classification
A vessel may only be registered in the Register of Cyprus Ships if more than 50 per cent of the shares of the ship are owned by Cypriot citizens or EU citizens who, if not being permanent residents of the Republic, have appointed an authorised representative in Cyprus; or the 100 per cent of the shares of the ship are owned by one or more corporations that have been established and have their registered office in Cyprus or are established and have their registered office in the European Economic Area and which will have either appointed an authorised representative in Cyprus; or the management of the ship is entrusted in full to a Cypriot or a Community ship management company.
Ships of any type or size other than those constructed for exclusive use on inland navigation or which are to be used exclusively on inland navigation or are banned on port state control grounds20 may be registered in the Register of Cyprus Ships or the Special Book of Parallel Registration, provided the applicable agerelated requirements and the applicable type-related requirements are complied with. The registration of the types specified in the table below may be allowed provided the age of the ship does not exceed the maximum age limit corresponding to the type of the ship and the related conditions corresponding to the type of the ship (i.e. entry inspection and additional inspection) are complied with.
Type of ship | Maximum age limit | Related conditions | |
Entry inspection requiered | Additional inspection requiered | ||
Cargo ships and cargo high speed craft | Yes: ≤25 years | Yes: if ≥15 years | No |
Passenger ships and passenger high speed craft engaged on international or short international voyages |
No |
Yes: if ≥30 years | Yes: if 2 years ≤ age ≤ 10years: biennial; if age > 10 years: annual |
Passenger ships and passenger high speed craft engaged on domestic voyages within the territory of a state, other than Cyprus | No | Yes: if ≥25 years | Yes: if 2 years ≤ age ≤ 10years: biennial; if age > 10 years: annual |
Passenger ships and passenger high speed craft engaged on domestic voyages within the territory of Cyprus | No | Yes: if ≥20 years | No. In order to operate they are requiered to be inspected and certfied annually. |
Fishing vessel | Yes: ≤25 years | Yes: if ≥20 years | No |
Floating production storage offloading; floating storage offloading vessels and mobile offshore drilling units | Yes: ≤25 years | Yes: if ≥15 years | No |
Ships of types other than those listed above | Yes: ≤35 years | Yes: if ≥20 years | Yes: if the ship is carrying industrial or special purpose personnel and 2 years ≤ age ≤ 10years: biennial; age > 10 years: annual |
Cyprus law allows for the provisional registration of a vessel. This will allow the ship owner time (up to nine months, including a three-month extension) during which it will be able to complete the administrative formalities for permanent registration.
The application for registration of a ship under the Cyprus flag must be made by a local lawyer to the Minister of Communications and Works through the Registrar of Cyprus Ships. A ship may be provisionally registered under the Cyprus flag either in Limassol, by the Registrar of Cyprus Ships or at any diplomatic mission or consular post of the Republic of Cyprus abroad who will act on instructions issued by the Registrar of Cyprus Ships. At the time of her provisional registration under the Cyprus flag a ship must be at a port so that she can be surveyed and certified on behalf of the Cypriot government.
The permanent registration of a ship must be effected within six months (or nine months if the three-month extension has been obtained) from the date on which it was provisionally registered.
Under Cypriot legislation parallel (bareboat) registration of vessels is possible. The legislation provides for the two forms of internationally accepted bareboat registration: 'parallel-in' registration and 'parallel-out' registration. These two options offer some very interesting opportunities for leaseback, hire-purchase and finance arrangements. 'Parallel-in' and 'parallel-out' registration may be effected with more than 20 states whose legislation is compatible with Cypriot legislation.
Cyprus exclusively recognises and authorises the organisations that meet the criteria as specified in the Annex to European Union Directive 94/57/EC, as amended to carry out statutory surveys, inspections and certification services for ships flying the Cyprus flag.21 The Department of merchant Shipping has in place a biannual audit schedule for monitoring each RO's performance so as to satisfy itself that the RO complies with the requirements of Directive 94/57/EC, as amended and of Appendix 1 of the Annex to Assembly Resolution A739(18), including future amendments thereto.
The classification societies recognised by the Republic of Cyprus and authorised to carry out assessment, auditing, verification and certification of safety management systems and ISPS Code, on behalf of the Republic of Cyprus are:
The standard agreement between Cyprus and the classification societies provides that if liability arises out of any incident that is finally attributed to the Republic of Cyprus by a court of law, or as part of the settlement of a dispute through arbitration procedures, and this may be attributed to an omission or gross negligence of the classification society, its bodies, employees, agents or others who act on its behalf, the Republic of Cyprus will be entitled to financial compensation to the extent of the said loss, damage, injury or death, as decided by that court, caused by it.
iv Environmental regulation
The key legislation in force in relation with sea pollution is set as follow:
v Collisions, salvage and wrecks
Cyprus has in place the Wrecks Law Cap. 298 and the Shipwrecked Passengers Law Cap. 297. It has also ratified the Assistance and Salvage Convention and the Protocol of Signature, 1910.
vi Passengers' rights
Cyprus has in place the Merchant Shipping (Liability of Carriers of Passengers by Sea in the Event of Accidents) Law No. 5(I) /2014. This law applies to carriage of passengers falling within the scope of Regulation (EC) No 392/2009, which incorporates certain provisions of the Athens Convention.
vii Seafarers' rights
There are a number of laws regulating the seafarers' training and certification whereby Cyprus has ratified the MLC by Law No. 6(III)/2012.
The reform of the insolvency statutory framework to which Cyprus consented to in 2015, was one of the terms of the Memorandum of Understanding between the government of Cyprus, the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC) program, as agreed in 2013 during the banking crisis. The reform was indeed achieved both by passing entirely new statutes and amendment of the Companies Law, Capital 113 and the Bankruptcy Law, Capital 5, as it will be discussed in the forthcoming paragraphs.
In a nutshell, the new insolvency regime consists of five parts and to a great extent mirrors the model which was adopted by Ireland. Two out of five relate to legal entities or companies, amending the existing Company Law Cap 113; the first one consists of a new scheme called “examinership”, while the other amends the provisions on liquidation allowing for faster and more cost effective liquidation of insolvent, nonviable companies. The new regime applicable to natural persons consists again of two parts, the one relating to modernization of the Bankruptcy Law in order to allow for a “fresh start” for insolvent debtors through their discharge after three years of bankruptcy, subject to appropriate safeguards. The other part relating to natural persons is a Law on Personal Insolvency, implementing provisions for debt relief orders and personal repayment plans to people with virtually no income or assets. The last part of the new regime sets out criteria for obtaining a license to act as an Insolvency Practitioner and effectively regulates the role of the Insolvency Practitioner.
As a general remark, the new regime attempts to provide incentives for repayment and restructuring of debt. A the same time, for the first time a rescue culture to be put into place, ensures a speedier and more efficient procedure leading to rescuing and the rehabilitation of debtors. Moreover, it tries to modernize and streamline the procedure for the compulsory liquidation of companies, resulting in minimizing the time taken to complete the process, thus facilitating and expediting the return of productive assets on the market. Last but not least, giving a formal and official structure to the role of the insolvency practitioner, safeguards the rights and property of the insolvent people, both legal and natural, against the rights of the creditors, further enhancing this rescue culture.
To begin with the concept of examinership, a company which is inter alia unable to pay its debts and there is no liquidation order while at the same time there is some reasonable prospect of the company surviving, may file a petition to the Court to appoint an examiner. By appointing an examiner, the company is automatically placed under the protection of the Court for a period of time not exceeding 4 months; notably it is up to the discretion of the Court to extend further this four-month period. During this standstill period the company is not to go into liquidation, a Receiver is not to be appointed, secured assets are not to be disposed of, the company is safeguarded from creditors and no Lawsuits are to be initiated against the company. The examiner’s role is to investigate the affairs of the company and make proposals for its survival through a compromise or an arrangement scheme so as to keep the company alive as a going concern. The above mentioned proposals must be submitted to the Court for approval. In case of approval and consequently once the compromise or settlement comes into force, both the Court protection and the Office of the examiner come to an end. The process of examinership is therefore a mechanism for the restructuring and rehabilitation of viable companies, allowing them to live rather than pushing them to die in such a volatile environment as it is currently the Cypriot economy. At the same time, placing proper safeguards hardly makes the amendment an escape route by which companies can evade their creditors or liabilities; the purpose is to provide an otherwise unavailable chance to re-direct the fate of the company, kick off a new start and ultimately prevent its failure and associated effects on the wider economy.
The other piece of legislation relating to companies changes the provisions on liquidation. Firstly, it amends the criteria for assessing the inability of a firm to pay its debts increasing the minimum debt required for a creditor to petition for winding up from from €854 to €5,000c and adds that for a company to to be deemed to be unable to pay its debts the court must be satisfied that the net asset value is negative, that is to say the value of the company's assets is lower than the sum of its liabilities, taking into account both its current and future liabilities. What is more compulsory liquidations must be completed within eighteen months from commencement unless the court grants an extension making the new insolvency procedure quicker and ensuring the return of assets back into the economy. This is further reinforced by another new accelerated process which aims to avoid any unnecessary delays and consequently reduce costs, by which the Liquidator may apply to the court for early dissolution of the company if he is satisfied that the assets of the company are insufficient to cover the costs of liquidation and that the company's affairs do not require further investigation. Another notable change which addresses the delays and bottlenecks created by the involvement of the court in the procedure, is the power given to the liquidator by the Court to manage assets subject to charges in favour of third parties if the court is satisfied that the disposal of any secured property of the company in this way may result in a more beneficial realization of the company's assets than by alternative means. The liquidator is granted also the authority to distribute any surplus, after repaying the secured creditors, to unsecured creditors. All of the above together with the new requirements of obtaining the relevant work experience and expertise in consultancy to hold the office of the liquidator (he/she must be a licensed and regulated professional insolvency practitioner) constitutes a major chance of survival for companies that are close to liquidation.
Moving on to the regime applicable to natural persons, as mentioned above, it is reformed again by two pieces of legislation. The first piece, the Bankruptcy (Amendment) Law of 2015 amends the previously allegedly outdated provisions on bankruptcy allowing for discharge of bankruptcy of an insolvent debtor after a period of 3 years on the condition that all their property both movable and immovable Is sold and the proceeds generated have been used to repay creditors. This new law is said to address the serious issue which arose under the existing regime where a bankrupt was effectively a "hostage" of the system and was never given a chance to a fresh start, further enhancing the rescue culture of the new regime
Last but certainly not least, the reformed statute on Personal Insolvency, namely the Insolvency Individuals (Personal Plans Repayment and Debt Waiver Order) Law of 2015 allows for the restructuring of secured and unsecured debts of insolvent individuals, as well as debt relief for individuals with no income or assets. Under the new regime, debtors with unsecured debts are now able to apply for relief of an amount of up to €25,000 if his/her assets are valued less than €1,000 and his/her monthly income is less than €2,000. The application for debt relief will be made to the Insolvency Service who will process the application and apply to the court for an order giving effect to the debt relief. Under the same piece of legislation, the court is given the power to enforce a 95-day standstill period, whereby creditors and debtors who are currently unable to pay their debts but have some repayment capacity voluntarily come up with a re-scheduled payment plan. If the repayment plan is consented by 75% of the creditors or more as well as the court, then it is made binding. Creditors who do not approve of the repayment plan are given the right to present their case before the court. The court has the authority to reschedule the repayment plan given that the following criteria are met. Collective liabilities must amount to more than €350,000; the individual’s primary residence property was purchased for €300,000 or less and has been mortgaged in favour of one or more creditors; the collective value of the remainder assets are not more than €250,000; the individual’s was unable to repay debts due to reasons that were beyond his/her control, which consequently led to a 25% or more decrease of his/her income. Clearly, this new framework could be described as squaring the circle by providing solutions to the issues arising out of non-performing debts, since increasing defaults of loans undoubtedly have a domino effect to the economy as a whole. At the same time the new framework tries to balance the interests of creditors and debtors recognizing their rights and protection they enjoy under the existing legal framework as well as their free will and their intentions in the contractual arrangements between them.
Interestingly, as seen from the above analysis of the new insolvency framework, it seems that the Courts’ role in its application is, undoubtedly, of huge importance. Indeed, many if not all of the new as well as amended provisions require the engagement of the courts in order to effectively facilitate their application. Consequently, taking into account that litigation in general is time consuming coupled with the fact that it cannot guarantee the resolution of non-performing debt, the new insolvency regime needs to be predictable in the sense that the law should provide clear and comprehensive guidelines on how the courts should exercise their discretion, particularly when the court ́s decision involves an assessment of economic and commercial issues, in addition to legal issues. In this way, court hearings will be held promptly and disputes will be resolved within reasonable time, while ensuring the proper balancing of the interests of all the players in the field of insolvency. In such a rapidly changing environment of the property markets in Cyprus, delay in the court's adjudication as a result of inadequate guidance can have adverse effects on the value of the assets of individuals, or the viability of the enterprise which are at the core of the new legal framework.
Hence the approach adopted by the courts in combination to the requirement for advice and the spreading of information as regards the benefits as well as the requirements for debtors to be able to acquire such benefits from the competent bodies will be critical factors in determining the degree of success of this newly created insolvency regime.
1, Constandinou Skokou, 1061 Nicosia, Cyprus
39 Vasili Krokou, Angelika Court, flat 101, Larnaca, Cyprus
+357 22764001