The Implementation of Electronic Signatures in Cyprus in a time of Social Distancing

It has become obvious that whilst COVID-19 epidemic has caused disruptions in certain industries, in other industries its effects can be moderated by technology. We would like to provide some information on the key legal aspects of the use of technology concerning electronic signatures under Cyprus Law and the reason why companies all over the world, including our law firm, is implementing Electronic Signatures.

WHAT ARE ELECTRONIC SIGNATURES?

An electronic signature is a method by which an individual or entity commits to a legal obligation electronically, in the absence of a physical, written, wet ink signature.
Electronic signatures may be created in various ways, including:

  • using an electronic execution platform;
  • signing a pdf on screen;
  • agreeing within the body of an email to an attached document;
  • or providing an electronic copy of a document with an image of your signature or just your typewritten name within the execution block.

 

THE LEGAL POSITION

Subject to some legislative and form requirements, a ‘signature’ (of any kind) is not actually necessary for a contract to be formed.

However, one of the requirements for forming a contract is that the parties demonstrate an intention to be legally bound, and traditionally, wet ink signatures give strong evidentiary support for that.

The requirement that parties demonstrate an intention to be legally bound is as relevant to electronic signatures. So the real question is – how good are they as evidence?

Within the European Union, Regulation 910/2014/EU (the “Regulation”) established a concise legal framework for e-signatures, e-documents e-seals, and in general, all forms of electronic communications with a direct effect on all member states. Thus, as European Union Regulations are directly applicable to all European Union Member States, including Cyprus, there is no need for implementation of further local legislation.

Cyprus nonetheless has embodied the provisions of the Regulation in the local legislation with the establishment of Law 55(I)/2018 “Providing for a legal framework for electronic identification and related issues” (the “Law”). The Law establishes the legal framework regulating electronic signatures and some certification that focuses on enabling their use and legal recognition.

According to Article 25 of the Regulation, an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it was made in electronic form.

As per Article 3.10 of the Regulation, the electronic signature is defined as data in electronic form which is attached to, or logically associated with, other electronic data and which is used by the signatory sign (i.e. “Electronic Signature”).

By virtue of Article 3.11 of the Regulation, an advanced electronic signature (i.e. “Advanced Electronic Signature”) is a signature that meets the following essential requirements:

  • it is uniquely linked to the signatory;
  • it is capable of identifying the signatory;
  • it is created using means that the signatory can maintain under his sole control; and
  • it is linked to the data to which it relates in such a manner that any subsequent change of the data is detectable.

Additionally, an Advanced Electronic Signature supported by a qualified certificate issued a Qualified Trust Service Provider (QTSP), and created by a qualified electronic signature creation device (i.e. a Qualified Electronic Signature) has the most important judicial value because it is being certified by a QTSP and may even be used for sensitive interactions with public authorities.

It is pointed out that although an electronic signature cannot be denied of legal enforceability solely because it is in electronic form, only a qualified electronic signature shall have the equivalent legal effect of a handwritten signature and when based on a qualified certificate issued in one Member State, it shall be automatically recognized as a qualified electronic signature in all other Member States as well.

The bodies responsible for certifying qualified electronic signature creation devices must comply with the European Commission’s standards and technical specifications.

The Department of Electronic Communications of the Ministry of Communications and Works of Cyprus has been appointed as the responsible authority for enforcing regulatory system for electronic signatures in Cyprus, including the supervision and regulation of all Qualified Trust Service Providers, which are intended to provide high-level security trust services and products under the applicable legislation.

Furthermore, section 9 of the Legislation specifies that if the Electronic Signature does not meet with the criteria of a qualified signature, it can still be considered as admissible proof in legal proceedings in Cyprus.

It is also interesting to note that the Cyprus government has recently signed a memorandum of understanding with commercial banks that would open the way for the introduction of e-signatures, a catalyst in the state’s long-delayed course towards modernization and digital transformation. Their introduction is expected to go online by the end of the year 2020 after the necessary legislation is put in place.

Lastly, it should be noted that any e-signatures executed in other jurisdictions outside the European Union and/or regulated by any jurisdiction outside the European Union would have to comply with local laws and/or regulations, depending on the nature of the document in question.  It is therefore advised that local legal advice is sought when dealing with Electronic Signatures within non-European counties.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

 

Working from home during COVID-19? What you and your organisation need to consider

With cases of COVID-19 arising in almost every country, several companies are taking action in an effort to limit its spread. ‘Working from home’, is the main point of such efforts made from organisations.  Although remote work arrangements can be successful in slowing the spread of COVID-19 from one person to another, they pose data protection obstacles that can be different from on-site work.  Below is a list of considerations and suggestions to better assist companies in addressing such obstacles.

1. Policy:

Review your information security and other related procedures to decide whether there are any established security standards for remote work and remote access to the company’s information systems.  Many organisations may already have procedures related to remote work, whilst others can provide for contingencies in disaster response strategies, BYOD (bring your own device) policies, and other related strategies and policies. In case there are no appropriate procedures or policies in effect, it is now the best time to set out at least some clear rules for addressing remote access to company’s information systems and the usage of personal devices by employees for company work.  

2. Communication:

Security managers should be familiar with the appropriate security guidelines, plans, and procedures, and make sure that important information is transmitted to their departments as well as throughout the whole company.  Many employees may have never worked remotely before, therefore, providing guidance and advice to all employees is essential.

3. Preparation:

Organisations should evaluate data breach and incident response policies to ensure that they are well prepared for responding to a data breach or security incident. The increased security risk of remote work highlights the need to have a policy in place in case something develops in an undesirable way.

Remote work data protection tips to keep your information secure:

  • Employees should be made aware of the types of information they need to safeguard.  This includes information such as sensitive company documents, trade secrets, protected intellectual property, client and employee personal information etc.
  • Sensitive information such as employee data, client data, health records, financial records retained on or transmitted to or from remote devices should be encrypted.
  • Employees should also be trained on how to identify and handle phishing attacks. An increasing number of Coronavirus-based phishing emails are going around lately preying on the public’s health concerns.
  • Sharing of work computers and other devices should not be allowed. When employees carry work devices at home, those devices should not be shared with or be used by someone else. This eliminates the risk of unwanted or accidental exposure of clients’ confidential information.
  • A two-factor or multi-factor authentication (MFA) is recommended to be implemented and enforced.
  • Virtual Private Networks (VPNs) ensure that internet traffic is encrypted. If your company has one in place, it should be ensured that employees exclusively use the VPN when working and when accessing remotely company’s information systems.
  • Company information should never be downloaded or saved to employees’ personal devices or cloud services, including employee personal computers, thumb drives, or cloud services such as their personal Google Drive or Dropbox accounts.  
  • Employee access to protected information should be limited to the minimum scope and duration needed to perform their specific tasks and duties. 

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

Could COVID-19 be qualified as a Force Majeure event?

The ‘force majeure’ term is commonly used in commercial contracts to define incidents that may occur and are totally beyond the control of the parties.  The basis of this provision is to protect the parties from any liability in case they are unable to comply with the provisions of the contract for reasons outside of their control.

The degree of protection that these provisions may offer can vary from country to country even within Europe, owing to the various definitions of ‘force majeure’ across the legal systems of different Member States. Therefore, it will depend on the relevant laws of the country that the parties have designated in the contract and the parties are thus encouraged to seek legal advice on the subject.

In common law jurisdictions such as Cyprus, there is no concept of force majeure, and therefore every case is decided on its own basis. It is worth noting that a ‘force majeure’ provision would not necessarily enable the parties to avoid potential liability for any violation of the terms of the contract. Parties shall be able to rely on this provision only if it is expressly included in the contract and in order to benefit from it, it is important that such clause be as detailed and specific as possible in terms and context.

Having said the above, whether a particular clause relieves a party of contractual liability will, under Cyprus law, depend on the precise wording used in the clause, the allocation of risk between the parties provided for by the contract as a whole, the circumstances in which the parties entered into the contract, and the situation that has arisen.

The inclusion of the words “virus” or “pandemic” or “epidemic” in force majeure clauses is likely to be adequate, particularly in view of the fact that the World Health Organization (WHO) has recently classified COVID-19 as such.  However, this is not without saying that a review of the wording of the relevant clause would not be necessary.

It is also worth noting that in the absence of a force majeure clause, the so-called doctrine of frustration can provide the party with an alternative path to terminate the contract. The contract becomes frustrated when performance becomes impossible due to some unexpected incident beyond the control of the parties. In Cyprus, the issue is dealt with under section 56(2) of the Contract Law (Cap. 149), as amended, which releases a party from liability under such circumstances.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

Announcement

Financial Measures of the Cypriot Government to support businesses and labour, due to COVID-19 effects

On Sunday 15th March 2020, Labour Minister, Zeta Emilianidou, unveiled measures to safeguard education, employees and vulnerable classes of the population as a result of the impact of coronavirus on the economy, which is projected to cost an estimated of 159 million euro.

The measures proposed include the granting of leave to private-sector employees who have to stay at home to take care of their children, unemployment benefits for employees working in companies that plan to temporarily suspend their operations or companies that experience a 25% reduction in their turnover, as well as sickness benefits and remuneration to those who teach in the afternoon schools of the Ministry of Education.

The Minister states that the processes shall be made clear and that the proposed benefits shall be received as quickly as possible.

Parents of children up to 15 years of age, working in the private sector, would be given extra parental leave lasting up to four weeks, excluding public holidays.

It was further stated that a parent with an income of up to EUR 2,500, for the first EUR 1,000 would be given a 60% ‘special leave’ allowance, and a 40% allowance will be given for the next EUR 1,000.

In the case of single-parent households, the percentage ranges between 70% to 50%.

It was explained that leave for parenting responsibilities would be provided only in cases where the nature of the work of the parent does not qualify for work from home or flexible working hours and that no assistance is received by grandparents.

In relation to the public sector, staff who wish to take care of their children should need to get approval from their head of department.

The cost of the grant is estimated at 20 million euro.

With respect to companies that have decided to temporarily suspend their activities and those who will continue to work but experience loss in their turnover greater than 25%, relevant business suspension measures should be set up so that layoffs are prevented and employees continue to earn a living.

At the same time, employees affected due to company’s suspension of activities would be given unemployment compensation for as long as the activities of their employer are suspended. The cost of this initiative is estimated at 110 million euro.

As regard to companies employing up to 5 individuals, a 70% subsidy shall be given for their staff, provided however that they have a turnover reduction of more than 25% and that there is no dismissal of any member of staff.

Employees suffering from serious health conditions and need to stay at home so that their health and safety is preserved will obtain a monthly allowance of 800,00 euro. A list of health conditions regarded as serious will be published by the Minister of Health in due course.

Self-employed individuals would also be compensated in the same way as employers, from the fourth day instead of the ninth day as it was until recently.

It has also been decided that the deadline for submission of objections to Social Insurance authorities for self-employed individuals shall be extended by one month, the deadline of which shall be on the 30th April 2020.

The development of mobile units to supply food and medicine was also confirmed to support elderly and disabled citizens who are alone and require state assistance.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

Cyprus Redomiciliation – A Global Solution

Cyprus Law permits the so-called “re-domiciliation” process allowing a company to transfer its “seat” of incorporation into, or out of Cyprus, in accordance with Companies (Amendment) Law of 2006, Law No. 124(I)/2006) (the “Law”).

This law provides a major advantage for a foreign company that can transfer its seat to Cyprus and perhaps later to any European country.

What is the Re –Domiciliation process?

 A re-domiciliation of a company is also known as a “transfer of seat”, which it refers to a procedure of a company transferring its seat of incorporation, to and from a jurisdiction.   The company continues to exist under the laws of a new jurisdiction, into which it transfers its seat, and ceases to exist under the jurisdiction of its incorporation.

It’s remarkable that this process provides a solution to the company to continue existence and not to be liquidated and incorporated from scratch to a different country. This allows an existing company to transfer its registered office and address to another jurisdiction by acquiring all the benefits there.

On a European level, the re-domiciliation of companies within the EU is not prohibited and each member state has its own strict regulations for the re-domiciliation process. However, Cyprus is included in the list of very few countries which allow the re-domiciliation of third-country companies (Non-EU) into and out of the Republic of Cyprus.

Why re-domicile to Cyprus?

Undoubtedly, Cyprus attracts a lot of foreign investors and international merchants as they gain a lot of benefits by either incorporating a Cyprus company or by re-domiciling their existing company to Cyprus. 

Some of the main advantages are below:

  • The foreign company continues to maintain its legal identity;
  • Cyprus is a member of the European Union;
  • Cyprus can be used as a key to transfer the foreign company in any other European country;
  • Cyprus has one of the lowest corporate tax rates in Europe;
  • Tax-exempt dividend income – (less stringent regulation and scrutiny);
  • There are no withholding taxes on payment of dividends, interest and royalties;
  • There is no taxation on profits from the sale of Securities;
  • There are widespread double tax treaties in force;
  • There is full adoption of the EC Directives.

What is the procedure to re-domicile into Cyprus?

The process to re-domicile a foreign company to Cyprus is simple from a practical perspective, as long as there is the appropriate guidance.

A lawyer is an essential part of this process as there is a need to prepare and submit documents both to the Courts of Cyprus and to the Department of Registrar of Companies and Official (the “Registrar”). 

The procedure to re-domicile a foreign company to Cyprus is divided to the bellow different parts:

  1. Company’s name approval;
  2. Application for re-domiciliation of the foreign company to Cyprus and submission of all the supporting documents;
  3. Issuance of Temporary Certification of the foreign company;
  4. Issuance of Permanent Certificate of Continuation.

Are there any restrictions?

It is crucial for a foreign company that intends to re-domicile in Cyprus or abroad, not to start any proceedings for its dissolution or have any pending court orders against it. If any of these exists, then the procedure of re-domiciliation may not be allowed by the Registrar.

Why should consider this process?

Cyprus is an attractive solution for investment and specifically for British enterprises and businesses. Our legal system is based on British Common Law and there are lots of similarities with UK companies’ law system, which arguably, investors can benefit from it.

Thus, as per the uncertainty caused by Brexit, Cyprus can be the key for many companies that wish to be based within the European Union, under a tax favorable system.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

Do You Have a Personal Injury Claim?

Involved in an accident? Are you aware of your legal rights in Cyprus?

Personal Injury is a term used for an injury to body and/or mind and/or emotions caused by the negligent conduct of another party. In Cyprus, personal Injury claims are regulated under the Civil Wrong Law, CAP 148. This legislation mostly follows the principles of English Law and covers negligence, personal injury and any other harm, wrongfully caused by one person to other.

MOST COMMON TYPES OF PERSONAL INJURIES

The most common types of accident in Cyprus are:

  • Accidents in the workplace;
  • Road Traffic Accidents;
  • Clinical / Medical Negligence Accidents;
  • Occupiers liability Accidents;
  • Slips, Trips and Falls

Many Cypriot citizens do not have a full understanding of their legal rights and of their ability to proceed with court proceedings in case of an accident.  If it’s proven that the damage the injured party suffered is caused by another’s party liability, and the injured party experienced financial loss due to this injury, then the injured party is entitled to monetary compensation.

TYPES OF DAMAGES

There are two types of Compensatory damages in Cyprus:

  1. General Damages: These are not measurable damages such as bodily harm, emotional and psychological harm, pain and suffering, loss of amenity, damage to private and family life.
  • Emotional and Psychological harm: Includes things like mental anguish, emotional distress, loss of enjoyment of life, fear, anger, humiliation, anxiety, and shock. Mental pain and suffering is basically any kind of negative emotion that a victim suffers as a result of the physical pain and harm of the accident.
  • Pain and Suffering:  Includes the physical and mental injury that the victim is suffering not only from the date of the accident but also detrimental effects that the victim is likely to suffer in the future.
  • Loss of Amenity: Relates directly to the non-financial impact the injury has on the victim’ social and family life and their ability to do their job.
  • Special Damages: These are measurable damages such as loss of earnings, medical expenses, travel expenses and any financial expenses incurred directly linked to the injury. They represent the actual monetary damages that lead to the victim’s financial loss. 

HOW TO MEASURE YOUR COMPENSATION

For General Damages, there is not an exact measure of calculating damages, as the reaction of every victim in an accident is unique. Therefore, the victim’s compensation depends on the type and the severity of the injury and the impact on the victim.

On the other hand, calculating Special Damages is a more straightforward procedure as it takes into consideration the actual expenses the victim experienced as a result of the accident. Any future expenses such as medical care or loss of income directly linked to the injury, are also considered.

DO YOU HAVE A PERSONAL INJURY CASE?

If you were a victim of an accident due to someone else’s negligence, which caused you to experience financial loss, either due to payment of medical bills or due to your inability to work, then you probably have a personal injury case and you can seek compensation.

Please keep in mind that there are types of injuries that may not be immediately noticeable and it may be take days, weeks or months after the accident to realize that you have been injured.  Pay attention to your health and always visit a doctor immediately after an accident.

The content of this article is intended to provide a general guide to the subject matter and does not constitute a legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

Guidelines Regarding The Dissolution of a Cyprus Company

There are two methods of dissolution of a Cyprus company:

  1. STRIKING – OFF: A summary procedure when the company has no assets or liabilities. It is considered to be the easiest and cheapest method of dissolution under section 327 of Cyprus Companies Law, Cap.113.
  2. MEMBERS VOLUNTARY LIQUIDATION: Comprehensive liquidation to distribute assets and liabilities of the company. It is considered to be a more formal method under sections 268 to 274 of the Cyprus Companies Law, Cap.113.

STRIKING – OFF

This method is considered to be the easiest and cheapest method of dissolution and is regulated under section 327 of Cyprus Companies Law, Cap.113.

Prior to initiating the procedure, it is important that the directors ensure that the Company has no assets or liabilities, particularly tax liabilities, to avoid objections to the striking off of the company by any creditors, or the Tax Authorities.

It is essential to submit up to date Tax Returns to the Tax Authorities and ensure that all taxes are settled so that the Tax Clearance Certificate is obtained.

The Registrar of Companies takes internal action and informs the public its intention to strike off the company. The whole process takes several months until the Registrar of Companies publishes a final notice of the striking off, in the Official Gazette of the Republic.

A Company which has been struck-off from the Register can be restored, provided that an application is made to this direction prior to the 20 years’ expiration period from the date of publication notice of strike-off, in the Official Gazette of the Republic.

MEMBERS VOLUNTARY LIQUIDATION

A Company may be wound up voluntarily if the company resolves so by special resolution under sections 268 to 274 of the Cyprus Companies Law, Cap.113,

This is a more formal and conclusive method of liquidation, whereas a licensed insolvency practitioner acting as liquidator is appointed, to initiate the liquidation proceedings.

A declaration of solvency is firstly sworn by all the directors in Court, stating that the company will be in a position to repay in full all of its debts and liabilities within a period not exceeding twelve months from the commencement of the dissolution. This declaration of solvency should be made within five weeks preceding the date of passing the resolution of dissolving the Company and a tax clearance certificate should already be obtained.

The liquidator informs the Cyprus Registrar of Companies that the company has been placed into members’ voluntary liquidation and an advertisement is placed in the Official Gazette of the Republic, giving notice to any creditors of the company to forward any claims against the company.

The Registrar of Companies will issue a Certificate of Dissolution within 3 months from this date of filing of the final liquidator’s accounts and the company is deemed to be dissolved.

The whole procedure takes approximately 6 months and fees depending on the workload involved.

The content of this article is intended to provide a general guide to the subject matter and does not constitute a legal advice.

For any additional information, please contact us at [email protected] or at +357 22 42 11 90.

Cyprus Tax Residency for Physical Persons

How can you be qualified as a Cyprus Tax Resident?
On 14 July 2017, the Cyprus parliament voted for a Cyprus tax law amendment adding a second test –the “60 day rule” – for the purposes of determining Cyprus tax residency for individuals.
Therefore you can now be considered as being a Cyprus tax resident provided that you either satisfy the “60 day rule” or the “183 day rule”.
Under the “183 day rule”, you need to spend at least 183 days a year in Cyprus, whereas under the “60 day rule” you should meet the below criteria.

How to become Cyprus Tax Resident under the 60-day rule?
You should meet the following criteria, for each fiscal year:
• Remain in Cyprus for at least 60 days during the tax year in question; and
• Not reside in any other single state for a period exceeding 183 days, and
• Not be tax resident in any other state; and
• Carry out business activities in Cyprus and/or work in Cyprus and/or be a director in a company that is tax resident in Cyprus at any time of the tax year in question; and
• Maintain a permanent residence in Cyprus (either owned or rented).

How to calculate the days of residency in Cyprus?
• The day of departure from Cyprus is considered as a day outside of Cyprus;
• The day of arrival in Cyprus is considered as a day in Cyprus;
• Arrival in Cyprus and departure from Cyprus within the same day is considered as one day in Cyprus;
• Departure from Cyprus and return to Cyprus within the same day is considered as one day outside of Cyprus.
What are the applicable tax benefits?
• A Cyprus tax resident individual but non-domiciled in Cyprus is exempt in Cyprus from taxation on his/her worldwide dividend and ‘passive’ interest income.
• Profit from the sale of securities is exempt from tax in Cyprus.
• An individual who will be employed in Cyprus and his/her income will exceed €100.000, and, provided that he/she has not been a tax resident of Cyprus prior to the commencement of his/her employment in Cyprus, he/she will enjoy a 50% discount on his/her income tax in Cyprus, for a period of 10 years.
• Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.


For any additional information, please contact us at [email protected] or at +357 22 42 11 90.