The 10 most Common Legal Issues in Cyprus
By: Michalis Economides, Advocate & Legal Consultant, CEO of Chambersfield Economides Kranos Law firm
During the course of our lives, we will definitely need the assistance of a legal consultant on numerous occasions, either for a reason such as buying a home, establishing a new business or protecting a new idea, or for more complicated matters such as accident claims, medical negligence, property disputes, personal disputes and so on. Legal issues are a part of everyday life and it is very important to learn how to deal with them efficiently with the help of smart planning and the assistance of the right legal consultants. Based on my experience, the following are the most common legal issues on which advocates in Cyprus are being asked for advice.
1. Formation of a New Legal Entity (Company Incorporation)
During the initial stage of setting up a business, it is highly recommended that new Legal Entities obtain legal consultation from an accredited law firm with experience of business and tax law issues. What happens in the initial stage will follow the operational life cycle of the company’s business development and corporate obligations.
Therefore, with the assistance of legal consultants:
- The right type of company will be selected and formulated in a favorable jurisdiction, taking into consideration the tax laws and business operations of the chosen jurisdiction.
- The Memorandum and Articles of Association will clearly outline all the general terms of the new entity and will specifically address the conditions regulating the relationship between the involved contracting parties.
- A possible shareholders’ agreement will document shareholders’ relationships by specifying the responsibilities and rights, meetings, the decision-making process, terms and conditions of a voluntary resolution, shareholders’ capital issuance and transfer as well as the necessary mechanism for common disputes that may arise during the company’s operations.
- The employment contract will define and clarify the parties’ relationships and duties.
- A confidentially agreement will secure the preservation of the new development ideas and concepts of the new entity. Business owners will protect their newly established company via this methodology and by implementing the right procedures and strategies to deal successfully with common uncertainties and misunderstandings that may arise during the firm’s business development and operations.
2. Intellectual Property
Fearless competition, cross-border transactions, constant availability of information and development of businesses abroad have established a new reality and prerequisite regarding the protection of intellectual property rights. The registration of Intellectual Property such as trademarks is a business investment that should not be neglected since it adds value to the services / products of a business and provides instant recognition and differentiation from the competition. Subsequently, the registration of Intellectual Property rights is highly recommended and the process must be supervised by a law firm with experience in this matter, in order for the proper guidelines to be implemented on both a national and international level.
3. Employment Law
The relationship between employer and employees should always be well-defined and secured through an employment contract, since a dispute between the parties may turn into a major legal liability. With an employment contract in place, the business code of conduct is specified, the parties know their rights, responsibilities, tasks and evaluation methods. With the relationship properly established, all the parties know exactly where they stand.
4. Real Estate – Property Sales and Purchase Contracts
The sales purchase contract is the most important document in any transaction, since it outlines all the rights and appropriate actions to be taken, should a dispute arise, and documents all the possible risks that may lead to a disagreement. A real estate property acquisition requires significant investment.
Consequently, it is essential that the drafting of the contract agreement to be undertaken only by legal advisors, who are responsible for safeguarding the interests of all the parties involved and ensuring that the terms and conditions are fully compliant with the provisions of the legal framework that governs the jurisdiction in which the transaction takes place.
Furthermore, a law firm can act as a mediator and provide escrow services until the completion of the business transaction, meaning that the law firm will be responsible for overseeing the transaction progress and only when all due diligence has been performed and the terms and conditions are satisfied, then, upon the instructions of the client, will it proceed with the release of the funds and complete the transaction.
5. Commercial Contracts
We all deal with commercial contracts, either oral or written, as part of our daily routine. As mentioned above, a contract is a legally binding agreement that should always exist when two or more parties are forming a business relationship of any kind, no matter the size of the entity or the value of the deal. It is advisable to spend some time with your legal advisors and draw up a proper contract, to limit any future disputes and drawbacks that will affect your future business operations. A properly drafted contract agreement should clearly state the obligations and rights of the relationship between two or more parties, as well as define the nature of the relationship, its duration, the tasks of the parties, confidentiality and other important aspects.
6. Tenancy Issues
The laws governing the relationship between a tenant and landlord have recently been amended in Cyprus, in order to change what comprised a series of time- consuming legal processes that a landlord needed to go through in order to evict tenants who violated their agreed responsibilities and to recover outstanding rent. But it has always been essential to have a well-structured lease agreement, which clearly addresses all possible future scenarios that may lead to a dispute, states the responsibilities and rights of each party, as well as the timeframe of the agreement. I would like to emphasize on the importance of tenancy agreements between private owners and legal entities.
In my opinion, the appointment of an expert legal consultant should be required in order for property owners to avoid the unfortunate consequences of the discontinuation of business operations on the part of the legal entity or lack of financial collateral.
7. Loan Restructuring
Loans, mortgages and debts can frustrate and fill people with anxiety. Trusted lawyers / certified liquidators and insolvency practitioners will examine whether legal entities and/or physical persons have the ability to repay and may provide several consultative restructuring plans that aim to activate the appropriate debt dealing mechanisms, i.e. through restructuring or by lengthening the repayment period of the amount or exchanging the debt for a real estate asset, etc.
The dissolution of a marriage is, of itself, a very stressful process and becomes even more stressful for the parties when children are involved. It is, therefore, essential to have a trusted lawyer who will help in all the required procedures, including the maintenance of children and spouse, custody issues, the division of family assets, etc.
9. Accident Claims
Being involved in a motor accident, even a minor one, is not always as straightforward as it initially seems, and disputes may arise between the involved parties. Therefore, legal representation is a necessity to avoid possible discrepancies and ensure that, where relevant, you receive the greatest possible compensation. Besides calling for medical assistance for any injuries, you must contact the police, your insurance company and your lawyer, so as to properly protect your legal rights. Moreover, it is of equally great importance that you take your own photos, not move your vehicle until the police and the insurance company are on the scene and note the full contact details of any witnesses to the accident.
10. Medical Negligence
In recent years, there has been an increase in the number of cases of alleged malpractice and/or liability (cases of medical negligence). People are more aware than ever of their right to question the quality and the result treatment that they or a family member have received and to act accordingly. For an incident to be characterized as medical negligence, certain conditions must be met. According to the relevant regulatory and legislative framework, in civil cases, the components of a three- part test should be established and proven on the balance of probabilities, whereas, in criminal cases, considering medical negligence-related convictions, the standard of evidence that needs to be met is “beyond any reasonable doubt”. Medical malpractice incidents are rarely deemed to be black and white cases, since they may be based on subjective and contradictory opinions, different types of medical practices and techniques, lack of diagnosis, medical misdiagnosis, surgical error, anesthesia error, unforeseen events and many other factors. Therefore, it is prudent, when such incidents occur, to seek the assistance and consultation of a law firm experienced in instances of medical negligence, in order to fully discuss the case and possible action. In general, whether an individual or a business, it is wise to seek legal advice on matters that involve relationships with third parties, so as to safeguard your rights. An experienced law firm has the knowledge and know-how to proactively delineate the status of relationships and assist in the prevention of disputes.