On 5 September, the Cyprus Parliament approved a number of laws that were a precondition for the second installment (1.5 billion) of the bailout loan.
Under the legislation approved, the licensing, regulation and supervision competences with regard to cooperative institutions are now transferred to the Central Bank of Cyprus. The legislation also sets out the regulatory framework necessary for the recapitalisation of the cooperative institutions by the State. In an effort to improve corporate governance, the new legislation does not allow the issuing of loans to independent board directors of cooperative institutions. Under the law, the sum of loans issued to directors cannot exceed 10 per cent of a credit institution’s core equity. Cooperative institutions will merge so as to reduce their number to 18. Also, the Banking Law is now renamed “Credit Institutions Operation Law” in order to cover not only banks, but also every other authorised credit institution.
Furthermore, the Deposit Protection and Resolution of Credit and Other Institutions Scheme Law and Regulations were amended in order to provide that the Management Committee of the Deposit Protection and Resolution of Credit and Other Institutions shall also be responsible for the cooperatives’ Deposit Protection Fund, as a result of the supervisory role undertaken by the Central Bank of Cyprus. The said protection scheme shall cover provident funds in an effort to avoid their dissolution. The maximum level of compensation is €100.000. However, when calculating the amount of compensation payable to a depositor, any loans or other credit facilities granted by the depositor’s bank shall be set-off against the deposits.
The amendment to the Financial Organisations Restructuring Law regulates the empowerment of the Council of Ministers for the support or management of capital means of financial organisations, following a recommendation by the Central Bank of Cyprus. Furthermore, a new law sets out the regulatory framework for the establishment and operation of a special Unit, under the Ministry of Finance, that shall be responsible for the management of the government participation in the cooperative structure.
The Prevention and Suppression of Money Laundering Activities Law was also amended in order to be in line with the recommendations included in the reports of the Moneyval Committee of the Council of Europe, and in particular with regard to customer identification procedures and customer due diligence. Also, the law aims to further enhance MOKAS powers in Cyprus, as well as to improve the exchange of information between MOKAS and foreign competent authorities.
Further to the above, amendments to the International Trusts Law and the Law Regulating Companies Providing Administrative Services and Related Matters impose an obligation on the supervisory authorities, namely the Cyprus Securities and Exchange Commission, the Cyprus Bar Association and the Institute of Certified Public Accountants, to create and maintain registers of trusts established in Cyprus, for purposes of transparency. The registers shall not be open to public, but they must be available for inspection by the competent authority. The registers shall contain the name of the trust, the name and full address of every trustee at all times, the date of establishment of the trust, the date of any change in the law governing the trust, and the date of termination of the trust. Also, it is provided that, service providers establishing trusts must provide information with regard to the identity of the settlor, the trustees, the beneficiaries, any other person in control and the activities of the trust.
Within 15 days from the creation of the trust or the adoption of Cyprus law as the governing law, Cyprus-resident trustees of a trust governed by Cyprus law have to provide the competent authority with the information mentioned in the previous paragraph. Information must also be provided in case of any change in the law governing the trust or in case of termination of a registered trust. In such a case, the trust shall carry an indication that it has been terminated or that there is a change in the governing law accordingly. This information shall be kept in the register for five years.
Information with regard to existing trusts must be provided within six months from the enactment of the new legislation.
An amendment to the Contracts Law provides that a 10% extra charge on land transfer fees shall be imposed in case of failing to submit immovable property sales contracts to the Department of Lands and Surveys within 6 months from the date the contract was signed.
Finally, following the amendments to the Excise Duties Law, as well as the Motor Vehicles and Road Traffic Law, road tax fees will be increased and shall be based on the levels of carbon dioxide emissions.
Source: Dr. K. Chrysostomides & Co LLC
