Coronavirus and Cyprus Company Meetings
The Coronavirus will affect Cyprus Company meetings. This might be due to travel restrictions, sickness or just for good measure.
Although the coronavirus will disrupt face to face meetings, a Cyprus company still continues to be obliged to, at least, perform the following mandatory company meetings:
- Board of Directors meeting approving the financial statements, auditor representation, audit engagement letter
- Annual general meeting (AGM)
- Significant transactions
Similarly, each Cyprus company will be required by the end of the year, to:
- Prepare audited financial Statements
- Submit an Annual Return (HE32)
- Prepare and file the annual tax return for the previous year; and
- Pay the annual levy of Euro 350
In other words, obligations shall continue as if the coronavirus never existed. After all, this is the nature of companies… to live in perpetuity and this is how the Cypriot government reacted to the 2013 banking crisis.
Accordingly, businesses need to operate irrespective of the impracticality of holding physical meetings. The most accessible method is, of course, a video conferencing platform or a simple telephone conference between the relevant parties.
What are the legal requirements to hold a Cyprus Company Meeting via video or telephone conference?
In general, the Cyprus companies law is silent on the method of holding Cyprus company meetings. Certain provisions include minimum time frames for notice of meetings, however, in general, this is left to the terms of the articles of association.
Board of Directors Meetings
Table A, the template articles of association available in the Cyprus Companies Law, was drafted in 1948. Since the Companies Act of 1948, no relevant amendment has been made to Table A. Due to this Table A is silent on remote meetings and the use of technology for meetings.
Accordingly, scholastic practitioners insert special wording in the articles of association. These insertions provide for the possibility to hold company meetings by way of video or telephone conference. These provisions can even be extended to other methods of holding meetings however caution should be given to the specific wording and process available in the Cyprus company’s articles of association. Below is a template clause:
A Board Meeting may consist of a conference between Directors some or all of whom are in different places provided that each Director who participates is able to hear each other participating Director addressing the relevant meeting and to address all of the other participating Directors simultaneously, whether directly, by conference telephone or by any other means of, or equipment for, communications or by a combination of the said means or equipment. A quorum shall be deemed to be present if those conditions are satisfied in respect of at least the number of Directors required to form a quorum.
General Meetings (shareholder)
The above provision is typically included for board of director meetings; because the participants are known to each other and have a right to speak.
In practical terms, shareholders’ annual general meetings can take place without any shareholder being physically present. This is because the articles of association, Table A included, provide for proxy voting over shareholder decisions.
In practical terms taking into account the legal notice requirement of 21 days, the shareholder will receive the notice of the general meeting along with any accompanying documents (e.g. Financial Statements) proposed to be presented at the meeting. Included in the pack would be a proxy notice, requesting from the shareholder to designating an individual to vote on behalf of the shareholder.
To the point of this article, the shareholder annual general meeting may be streamed nowadays via any popular streaming service without any particular legal difficulty, however for a shareholder vote to be considered a proxy is required. Certain articles even require that that proxy reaches the company’s registered office 48 hours prior to the time of the Cyprus company’s Annual General Meeting (AGM).
Significant Transactions affected by the Coronavirus
Arguably significant transactions such as million euro financing arrangements and mergers and acquisitions are the ones to be most significantly affected by the coronavirus and the absence of key decision-makers from the workforce.
Although several companies are ready for remote working in my experience working in a full house is not that easy. A key practical issue identified has been the remote approval and digital signature of documents in Cyprus.
Digital signature and remote approval are covered separately in an upcoming publication, subscribe to receive the update in the coming days.
In the coming days, we will be coming back to the impact of the Coronavirus to corporate structures in an article considering digital signature and remote approval of corporate documents, agreements and general practise
Author - Photographer
For many years he has worked and devoted his skills and efforts towards building a successful career as a leading executive. From humble beginnings, his aim has always been to yield results; with a keen focus to attention to detail and client satisfaction. His experience has always been varied and not specific, at times he preferred it. With that in mind, he has dealt with CySEC on licensing and ongoing regulation, international private equity and credit fund managers, NASDAQ and NYSE listed companies occasional millionaires as well as self-made millionaires. His passion though is difficult transaction work organizing and deploying people for a common goal. Harris enjoys reading and studying the Cyprus law and sharing that information on this website.