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  • Miranda Pambori

When it comes to debt collection, although the procedure to be followed is pretty straight forward, it can be lengthy and challenging for the creditor, especially in the cases of creditors from foreign jurisdictions.


The primary aim in collecting debt, is to achieve this through a negotiation with the debtor. Aiming to resolve this though negotiation, implies that no further costs and time is lost – contrary to directly proceeding with debt collection through the court. During the negotiation process, the costs and hardship on the creditor himself are less – however negotiation does not guarantee results/success. If all alternative means are exhausted and out of court settlement cannot be achieved, then the creditor will proceed with a judicial collection of the debt.


The creditor may try and negotiate directly with the debtor – but often it is done through lawyers/legal advisors.


In trying to negotiate, the below procedure is usually followed:

  • The creditor will contact the lawyers – provide them with details about the transaction and debt owed

  • The lawyers will then contact the debtor(s) – making them aware of the situation

  • Negotiation process – aiming to avoid court intervention (to avoid lengthy procedures, added costs and hardship for the creditor)

  • Official notifications and demand letters are then sent to the debtor(s)

  • Further communication with the debtor(s) – (electronic / postal correspondence and telephone communication)

Plenty of cases are amicably resolved during the negotiation process. This, of course, depends on the circumstances of each case – primarily by the debt owed, the relationship between the creditor and debtor(s),as well as the willingness of both sides to compromise and resolve the matter.


If the negotiation procedure is unsuccessful or the debtor(s) neglect to pay, the lawyers and creditor will proceed with debt collection through the court.


Prior to filling for debt collection through the court lawyers should discuss and make their clients aware of their professional view of the case – informing them of all potential risks and factors associated, as well as the strengths and weakness of their case.


Upon that, filling to the court is initiated (including legal actions / bankruptcy petitions / dissolution or liquidation proceedings for legal persons as the case may be).


Once the judgment is issued, lawyers take action for the execution of the decision thereafter.


Debt Collection Process

1. Case review with lawyer

2. Out of court negotiations with debtor

3. Court proceedings

4. Upon issuance of a court judgment, enforcement of judgment


Our office assists clients in the debt collection and recovery procedure. We strive to provide our clients with as much accurate and valuable assistance both before and during the debt collection procedure and we always aim in informing the clients as to the merits of their case and potential benefit from the court procedure in case of non-settlement. If you are interested in obtaining advise or representation, or want to know more about our law firm, please contact us.






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Following the adoption of EU Directive 2018/843 (the 5th Anti-Money Laundering Directive) (the “AML” or the “Directive”), the Republic of Cyprus has proceeded with the amendment of Law (L. 188(I)/2007) on the Prevention and Suspension of Money Laundering Activities (the “Law”), so as to be fully aligned with the Directive.


Scope

The scope of the Directive and thus the Law is to secure that companies and any legal entities incorporated in the Republic of Cyprus are accountable and hold adequate and up-to-date information concerning their beneficial ownership through the established centralised Registry of Ultimate Beneficial Owners (the “UBO Register”) that will include all necessary details on the beneficial ownership of entities that fall under the Law.


Definition of Beneficial Owner (BO)

According to the AML Directive, ‘‘Beneficial Owner’’ means any natural person(s) who ultimately owns or controls the company directly or indirectly (owner of 25% plus one share either directly or indirectly).


UBO Register for Corporate Entities

This Register, is created and managed by the Registrar of Companies (the ‘‘ROC’’). All companies and legal entities incorporated in Cyprus and subject to its laws, are required to maintain adequate information on their beneficial owners. Detailed information on the natural persons who ultimately control or own a legal entity and their respective rights in the entity must be entered into the UBO Register.

Once finalised, the Register for Corporate Entities will be made accessible to the general public. This is an extension from the 4th AML Directive, which envisioned/allowed only the relevant authorities and obliged entities in the course of performing their due diligence obligations would have access to the Register.


UBO Register for Trusts (or Similar Legal Arrangements)

The Law also provides for the UBO Register for Express Trusts. This Register is created and managed by the Cyprus Securities and Exchange Commission (the ‘‘CySec’’). The required information as to the identity of the following persons are required:

  • the settlor,

  • the trustee,

  • the protector (if any),

  • the beneficiary (or the class of people whose main interest in the legal arrangement or entity is set up or operates, as applicable), and

  • any other physical person exercising effective and ultimate control over the trust.

Contrary to the Register for Corporate Entities, the Register for Trusts will not be made publicly accessible. Only competent authorities and obliged entities in the course of performing their due diligence obligations, as well as to any physical or corporate person that can demonstrate a ‘‘legitimate interest’’ will have access to the UBO Register for Trusts.


Competent Authorities in this case include:

  • Supervisory Authorities (Central Bank, CySec, CyBar, ICPAC etc.),

  • MOKAS,

  • Tax Authorities,

  • Customs Department, and

  • Cyprus Police

All other organisations and institutions will have to show a ‘‘legitimate interest’’ to be able to access the Register for Trusts (i.e. the interest of a person with respect to the suppression of money laundering activities and the offences prescribed under applicable legislation.)


Exceptions

(1) Where the UBO would be exposed to disproportionate deception, kidnapping, extorsion, harassment, violence, intimidation or where the UBO is a minor or incompetent, exceptions as to the access of such information are applicable.

(2) Where a Trust or a similar legal arrangement holds or owns a controlling interest in a corporate or other legal entity, directly or indirectly, access to such information will be granted upon written request.


Procedure

In order to obtain access and use the e-filling system, entities and their officers must first obtain access through the government getaway portal “ARIADNI”, if not already registered.

Time-frame and other information

The interim solution must be filed and completed until 12th March 2022.

  • For companies incorporated on or after the 12th March 2021, filing of the above to the UBO Register must be completed within 30 days from incorporation.

  • A grace period of 6 months was initially given to all eligible service providers to collect and submit the required information.

Note: Personal information provided, will not be widely publicly available. But Competent Supervisory Authorities, the FIU, the Customs Department, the Tax Department and the Police have unrestricted access to the BO information.


Next Steps : Required Actions

Companies and other entities should review the information they have on their UBOs and update the UBO Registers accordingly. Registering the information on the UBO Register is not a once-off activity. On the contrary such information will need to be monitored and modified regularly (when relevant changes take place in the structure of the Company or entity which resultantly affect the UBOs and their rights).


Going onwards, both the obliged entities, as well as the Member States themselves, are required to implement and manage mechanisms so as to ensure that the registers are updated and correct. Persistent and continuous data collection and filling of all current and future changes is essential.


For all new Companies incorporated or legal arrangements made from now on, there will be a 30-day filling period, from the day the incorporation or arrangement is made available.


Our Law Firm undertakes to submit the relevant information of Cyprus companies and ensure compliance with the said Law/Directive. For more information and/or consultation please contact our office.


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Cyprus is generally known for its low-tax jurisdiction and favourable, company-oriented perspective. Paired with Cyprus’s membership in the European Union (the ‘‘EU’’) and the consequent opportunities this carries for businesses and professionals, Cyprus has been established as a desired destination to do business.


Incorporation of a Cyprus Company

  • a Cyprus Company, may be incorporated within 10 working days, with 100% foreign ownership (of any nationality),

  • the physical presence of the beneficial owner in Cyprus is not required,

  • all procedures may be done remotely, via emails and couriers,

  • the annual costs and management of a Cyprus Company are very low,

  • for a Cyprus Company a bank account can be opened in any country,

  • the EU VAT registration can be acquired within 48 hours,

  • a long stay visa and a renewable work permit are supplied to the Ultimate Beneficial Owners (‘‘the UBO’s’’) and their families, and

  • provided 7 years have of stay in the Republic of Cyprus are established, both the UBO’s and their family may acquire an EU passport.

Re-domiciliation of a Foreign Company into Cyprus

Apart from initial incorporation of a company in Cyprus, the simplicity of the transferring procedure, makes the Republic of Cyprus an attractive country for a foreign company to redomicile to:


Other benefits include:

  • the corporate tax rate in the Republic of Cyprus amounts to 12,5% - the lowest corporate tax rate in Europe;

  • dividend between Cyprus companies is tax exempt;

  • sale or transfer of shares in a Cypriot company is fully exempted (exception: where the company owns immovable property in the Republic of Cyprus);

  • up to 80% tax exemption on profits derived from licensing or exploitation and gains on disposal of Intellectual property;

  • royalties received by a connected company registered in the EU is exempt from tax;

  • large number of double tax treaties are in force, with over 50 countries Russia, China, US and the UK;

  • no Inheritance Tax;

  • no Wealth Tax;

  • no Controlled Foreign Corporation Rules and Legislation;

  • Cyprus being an EU Member State, the applicable EU Directives and Regulations will also be applicable for the re-domiciled company;

  • a legitimate opportunity for (foreign) businessmen to conduct business within the Republic of Cyprus, Europe and Internationally.






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