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Capital Market Regulations in Cyprus

Capital Market Regulations in Cyprus

The Cyprus Stock Exchange

The Cyprus Stock Exchange (CSE) was established under the Securities and Stock Exchange Law which establishes the terms under which companies can trade their securities. The Cyprus Stock Exchange started operating in 1996 and allows the transactions of stocks, bonds and warrants.

The capital markets and the transactions carried out through them in Cyprus are overseen by the Cyprus Securities and Exchange Commission (CySEC) which was established in 2001, according to the Securities and Exchange Commission Law.

For conditions about listing a company on the Stock Exchange you can ask our lawyers in Cyprus.

Ways of listing securities on the Cypriot capital markets

Both foreign and Cypriot companies can list their securities on the Stock Exchange. The following methods are available for trading stocks on the Cypriot capital markets:

  • by public offer for subscription for buying shares which have not been issued yet,
  • by public offer for sale of titles already issued or allotted,
  • by offer to sale already issued titles,
  • by private placement.

In order to register public offers, which is also one of the most advantageous ways of trading on the capital markets, a Cypriot company issuing the titles must submit an application with the CSE Board. Considering public offers are subject to certain prospectus requirements, the issuer must obtain a special license from the Cyprus Stock Exchange Board. Once the license in obtained, the issuer must publish its listings within 15 days in two national newspapers. The issuer must also provide a Cypriot address where they can receive the prospectus.

Why trade on the Cypriot capital markets?

Shareholders in Cypriot listed companies benefit from several tax incentives granted by the Government. One of the most advantageous incentives is that 30% of the amount invested in an Initial Public Offering (IPO) can be deducted from the total income if 80% of the company’s issued shares with voting rights are listed on the CSE in the first 3 months from the date of the issue. The deduction is available for the fiscal year in which the shares are listed and does not exceed 25% of the income. Foreign investors will not be taxed on this income provided that their resident country has a double taxation agreement with Cyprus.

If you need assistance in obtaining a license with the CSE you can contact our law firm in Cyprus.