Due diligence requirements

What due diligence is necessary for buyers?

Before negotiation of transaction documents on an acquisition, it is standard practice for a buyer to conduct legal, commercial, financial and tax due diligence.

Legal due diligence can entail corporate aspects relating to:

  • ownership and management;
  • security charges registered against the company;
  • validity of titles to assets;
  • IP rights; and
  • employment issues (including collective agreements).

Depending on the nature of the target’s activities, a regulatory due diligence may also be required in terms of the validity and other aspects of the target’s licences and authorisations to conduct its business. A buyer and the seller may also want to assess competition law aspects of a proposed transaction to ascertain whether, for example, merger control thresholds may be triggered and whether there are other competition law implications. 


What information is available to buyers?

Normally a request for information will be sent by a buyer to the target’s management, who will supply copies of the documents requested and responses to queries raised.

Public records maintained by the Cyprus Registrar of Companies (RoC) can be accessed on payment of a fee. These records include:

  • the memorandum and articles of association of a company;
  • the details of past and present directors and secretaries of a company;
  • information on current and past shareholdings in a company; and
  • charges registered against a company;
  • annual report filings.

The Cyprus Stock Exchange (CSE) may also provide a register of a public listed company’s members on application by an interested party.

With respect to labour matters, certain collective employment agreements are publicly available. 

What information can and cannot be disclosed when dealing with a public company?

In a hostile takeover bid, the bidder will have access only to publicly available information. Where the target’s board decides to recommend a takeover bid, it must treat all bidders equally under the Takeover Bids Law and disclose equal levels of information.


How is stakebuilding regulated?

Stakebuilding is largely regulated through the process of disclosure. Disclosure requirements are triggered in relation to securities listed in the CSE at thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%. In certain circumstances, a party may need to disclose acquisitions or disposals to the issuer of the securities concerned, the Cyprus Securities and Exchange Commission or the CSE. 

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