Cyprus legislation including the Cyprus Companies Law Cap. 113 as amended (“Companies Law”) as well as common law stipulate the duties of a Director in a Cyprus company.
The Director of a Cyprus company owes fiduciary obligations to the company, therefore as a fiduciary acts bona fide on behalf of the company in the interest of the company, under a relation of trust and confidence.
More duties of a Director of a Cyprus company under the Companies Law include, but are not limited to, the following:
s. 141: maintenance of accounting books and records for preparation of financial statements
s. 142: preparation of financial (or if applicable consolidated) statements
s. 151: preparation and submission to the Cyprus Registrar of Companies (“Registrar”) of the directors’ report, along with the financial statements, as part of the annual return of the company
s. 185: disclosure of details on payment for loss of office in relation to a transfer of shares in a company
s. 187: maintenance of a register of directors’ shares in the company (or its subsidiary or holding company or subsidiary of the holding company or any debentures issued therefrom to the Director)
s. 189: disclosure of any loans granted during the financial year to any Director of the company
s. 192: maintenance of a register of Director(s) and Secretary at the registered office of the company
s. 191: declaration of a direct or indirect interest deriving from a contract of the company during the meeting of the board of directors of the company
As regards s. 191, a person who is in a fiduciary position is not allowed to put himself in a position where his interest and duty are conflicted. Hence, when a company enters into a transaction, a Director of the company must disclose to it any interest which that Director has in the transaction.
Furthermore a Director of a Cyprus company as a ‘reasonably diligent person’ must, inter alia, have the skill, experience and knowledge which may reasonably be expected of persons carrying out the same functions carried out by that Director.
A breach by the Director of its duties under the Companies Law can result to a fine or imprisonment, as well as potentially personal compensation to the company.
It is noteworthy that in cases of breach of fiduciary duties equitable remedies may be available, however are mainly restitutionary instead of compensatory.
Finally, if the company has ratified a breach of the Director of the company, the company may not have a cause of action thereunder and, therefore, not make a claim against the Director.
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