This content is from: Local Insights

Cyprus

The long-awaited Mergers and Acquisitions (M&A) Law was finally passed by parliament in April 1997. The M&A Law is based on EU Directives and is fully harmonized with EU rules.

The M&A Law stipulates that any person or group of investors acquiring more than 5% of a target company's stock should immediately notify the Cyprus Stock Exchange Council and the target company's board and thereafter proceed to notify the public of the acquisition of such a stake.

A third party building a similar stake in the target company is also required to notify the CSE of every 0.5% capital acquisition in the target company. The Law also stipulates that counter-offers can be made by other groups within seven working days. When the 10% threshold is passed, the bidder should make public its intention and notify all concerned. If the intention is to raise the stake to 20%, then an offer should be made to all shareholders on a pro-rata basis irrespective of size.

When the 30% threshold is passed, the bidder must make a public offer to acquire up to 50% of the capital of the target company, by making an offer to all shareholders on a pro-rata basis.

When the 50% threshold is passed, the bidder must make a public offer to acquire up to 70% of the capital of the target company, and when the 70% threshold is passed, the company will cease to be a public company and will be de-listed.

The Law makes 'stock parking' and 'stock pushing' illegal and imposes severe penalties on bidders who violate any of its provisions. Penalties include stripping the voting rights of the bidder for three years and barring the bidder from appointing a director on the board of directors of the target company for five years, in addition to heavy fines.

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