Supervision of Takeovers in Cyprus Company Law: The Role of the Cyprus Securities and Exchange Commission

Abstract

This paper will analyze the supervision of takeover bids in Cyprus company law. Special emphasis will be given on the relevant case law. The Cyprus Securities and Exchange Commission (CySEC) is responsible for the supervision of takeover bids in Cyprus. This paper will shed light on the supervisory powers of CySEC. Cyprus, as a Member of the European Union, had to implement the EU Takeover Directive. However, the Takeover Directive is characterized by a complicated optionality and reciprocity system which gives a certain degree of discretion to member states with regard to the transposition of the Directive’s provisions into the national legal order. The Takeover Directive was implemented in Cyprus by Law 41(I)/2007 on takeover bids. According to Article 4 of Law 41(I)/2007[Cyprus Takeover Bids Law], the Cyprus Securities and Exchange Commission (CySEC) is the relevant supervisory authority. The CySEC examines potential violations of the Cyprus Takeover Bids Law. Various cases were brought before Cyprus Courts arising from decisions of CySEC concerning the supervision of takeover bids. This paper will focus on Cyprus case law on the implementation of Cyprus Takeover Bids Law. This case law examined various aspects of the regulation and supervision of takeovers in Cyprus: takeover bid documents, exemptions from the obligation for a takeover bid (mandatory bid), applications to exercise the right of squeeze-out and sell-out, monitoring the compliance with other specific provisions of the Cyprus Takeover Bids Law, squeeze-out and the sell-out rights, infringement of mandatory bid rules (sanctions and arguments of maladministration), cash consideration for takeover bids, collection of information and identifying “persons acting in concert”. This paper will criticize this case law. Useful conclusions on the supervision of takeover bids will be drawn.