Directors' reporting obligations

Guidance for directors


Cypriot boards of directors are once again faced with new challenges amid the current unprecedented geopolitical unrest caused by the Russia-Ukraine conflict. Among those that are particularly affected are companies headquartered in Cyprus that conduct business or have personnel in Eastern Europe.

There are numerous points for boards of directors to consider at this time. Therefore, this article provides an overview of urgent issues that directors will be called to evaluate and decide upon in order to ensure stakeholder and investor protection and compliance with the applicable regulatory rules and guidance.

Directors' reporting obligations

Under the following legislation, a board of directors of regulated entities have reporting obligations both in relation to their regulators (ie, the Cyprus Securities and Exchange Commission or the Central Bank of Cyprus) and their investors and stakeholders:

  • the Investment Services Law, 87(I)/2017;
  • the Credit Institutions Law, 66(I)/1997;
  • the Electronic Moneys Law, 81(Ι)/2012; and
  • the Alternative Investments Law, 124(I)/2018.

Therefore, in order to fulfil their duties, some of the primary considerations of directors of regulated companies include:

  • business continuity – clarifying with their clients or stakeholders the ways in which business continuity will be achieved in the near future;
  • anti-money laundering and risk manuals – updating internal client acceptance policies and risk manuals, addressing the latest sanctions and recording the possible disruptions to businesses and how these disruptions may affect cash-flow;
  • risk factor disclosures – preparing relevant risk factor disclosures to regulators addressing the way in which the political unrest is expected to impact the company's current and projected business operations and liquidity;
  • evaluation of board members – given the evolving list of global sanctions, it may be worthwhile to consider whether the composition of the board of directors needs to be updated; and
  • shareholding structures – reviewing a company's articles of association may be required in order to evaluate whether the current geopolitical situation and the list of sanctions will trigger any provisions that could change the shareholding structure.

Guidance for directors

Having headquarters in Cyprus may serve as a solution to businesses with global operations, including those in the affected areas in Eastern Europe. Due to the current flight restrictions and the large flow of refugees, it is likely that workforces will experience ongoing upheaval for the foreseeable future. A few points that directors may wish to consider in order to reduce disruption include:

  • employee continuity – it is important to safeguard salary payments and the provision of other resources to employees of companies whose income depends on sanctioned institutions or those that are based in areas affected by the war;
  • new rules for refugee acceptance in the European Union – as an EU member state, Cyprus will follow new immigration rules that will enable refugees to find safety and, where possible, to continue their employment remotely;
  • financial obligations – issues such debt repayment or access to capital are crucial in conditions of severe currency fluctuations and restrictions applied to payments in certain currencies. Directors should soon receive advice on how to navigate financial obligations with various financial institutions;
  • contractual obligations – directors should list existing contractual obligations and specify the ones that can no longer be met and have the relevant legal teams review the contracts for clauses that identify the next steps. Chapter 149 of the Contracts Law should be consulted alongside any force majeure clauses or contractual frustration obligations;
  • insurance policies – directors should evaluate the applicability of insurance coverage, especially where "conflict" or "war" is excluded;
  • cybersecurity – directors should evaluate existing protective software for potential leaks or "holes" that could render data vulnerable to a potential attack;
  • investment protection – directors should also evaluate the existing legal documentation or arrangements that are in place that could protect investments; and
  • directors may also be required to consider:
    • dismissing staff;
    • reducing salaries;
    • reducing employee benefits;
    • ceasing operations;
    • closing down businesses or business sectors;
    • defaulting on loan repayments; and
    • defaulting on rental payments.

There are a few additional steps that directors may be required to take to keep up with the developing situation:

  • being informed of the latest sanctions list;
  • being aware of the latest government decisions and announcements;
  • being aware of commodities prices, with a particular focus on the fluctuating oil prices as the shift in demand and supply is estimated to have considerable effect in all key business sectors;
  • taking professional advice on how to structure or restructure investments;
  • referring to the company's latest financial position and applying the most severe scenarios for a projection of actions that may be required in the near future;
  • ringfencing assets and obligations where appropriate to avoid blending assets or liabilities that may be affected, considering that companies are separate entities;
  • taking professional advice on the management of contractual obligations; and
  • evaluating possibilities of payments via fintech payment institutions.


Two years after the start of the covid-19 pandemic, company directors are again forced to navigate through turbulent times and make humanitarian-focused decisions.

By using the existing Cypriot legislation as a framework for the legal, accounting and business issues that will continue to emerge, directors may be able to adapt to the developing situation, achieve business continuity and investment protection, and protect human capital.

For further information on this topic please contact Stella Koukounis or Chara Paraskeva at Solsidus Law by telephone (+357 22 007700) or email ([email protected] or [email protected]). The Solsidus Law website can be accessed at