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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 as well as regulatory due diligence, depending on the nature of the target’s activities.

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 existing and past shareholdings in a company; and
  • charges registered against a company.

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