The Emerging Companies Market (ECM)
26/02/2021

The Emerging Companies Market (ECM)

in 2021

The Emerging Companies Market (ECM) is the unregulated market of the Cyprus Stock Exchange (CSE). The ECM’s concept is like the Alternative Investments Market (AIM) of the London Stock Exchange (LSE).

Companies which are wishing to list their securities on the ECM are not required to comply with the mandatory provisions of regulated markets with respect to both listing requirements, such as size, number of shareholders/ spread and continuous obligations.

The ECM’s simplified regulated environment has been designed to address the needs of:

• Unlisted companies which are seeking finance and easy access to a secondary market, thereby improving the liquidity of their shares, and providing an exit route to existing or future investors;

• Unlisted Companies that are aiming to enhance their permanent establishment status and benefit from DTT provisions. For example, the DTT with Russia provisions that a Company that is listed in a Recognised exchange is exempted from withholding tax on dividends.

• Listed companies that are not able or willing to undertake the higher costs of remaining in a regulated market (subject to first delisting from the regulated market following an acquisition);

• Companies which are seeking to float their securities to a recognised secondary market of an EU member state.

• Investors who are seeking new ways of investment, with awareness of the high risk of the market;

Methods of listing

Floatation in the ECM can be achieved in one of the following methods:

• By public offer which requires a Prospectus, pursuant to the European Prospectus Directive, and an approval by CySEC (unless offering is less than €5 million and is addressed to less than 150 persons) or

• By private placement, which requires only an Admission Document to be submitted to the CSE or

• A combination of the abovementioned methods or

• By listing of existing shares, which requires an Admission Document to be submitted to the CSE.

It should be noted, that whenever the size of a new issue and the number of persons to which the issue applies, falls within the limits of the Prospectus Law/ Directive, the Admission document should be a full Prospectus, that has to be prepared and approved according to the legal provisions (i.e. approved by the CySEC, if in Cyprus). Once the Prospectus is approved, an issuer listed in the ECM will only have the obligations of that market.

Advantages of ECM listing

There are many advantages through ECM listing including:

• Lower cost of listing compared to the regulated markets;

• Easiness of raising capital;

• Shares and bonds are more attractive to investors as listing provides an exit strategy;

• Lower cost of continuous obligations compared to regulated markets;

• The status of a listed company may assist in attracting investors;

• Serves as preparation for listing in the regulated markets of the CSE;

• Offers an alternative for companies delisted from the regulated markets of the CSE.

The tax benefits

The Cyprus tax legislation is fully compliant with the EU Acquis Communautaire and EU Directives. It is in full compliance with the code of Conduct for Business Taxation and against harmful tax competition. Cyprus has a double tax treaty network with over 60 countries. In addition to these advantages, there are significant tax benefits offered by the Cyprus tax legislation such as:

• One of the lowest corporate tax rates in EU at 12,5%

• Group relief availability

• Exemption from tax on foreign dividends (subject to meeting one of two exemption conditions)

• Exemption from tax on profit from sale and/or revaluation of qualified securities

• No capital gains tax on disposal of shares/units

• No withholding taxes on dividend, interest and royalty payments (under certain conditions) to nonresident shareholders or non-domicile resident shareholders

For more information please feel free to contact us at info@ayca.com.cy

Shipping Tonnage Tax System – Environmental Incentive
20/01/2021

Shipping Tonnage Tax System – Environmental Incentive

in Shipping, Tax

The Shipping Deputy Ministry (SDM) of Cyprus has announced environmental incentives for the Cyprus Tonnage Tax System.

It provisions a reduction of tonnage tax up to 30% for owners of Cyprus and Community flagged ships that use mechanisms for the environmental preservation of the marine environment and the reduction of the effects of climate change.

Environmental incentives are the following:

  1. Energy Efficiency Design Index
  2. IMO Data Collection System (D.C.S.)
  3. Use of alternative fuels

The outlined environmental incentives are cumulative and as per the Merchant Shipping (Fees and Taxing Provisions) Laws of 2010-2020, each ship can only receive a maximum 30% rebate on the Annual Tonnage Tax. An eligible ship for any of the environmental incentive is a ship that engaged in a qualifying shipping activity as per the Merchant Shipping (Fees and Taxing Provisions) Laws of 2010-2020.

Detailed information on the incentives can be found here.

COVID 19 – Business lessons learned
30/12/2020

COVID 19 – Business lessons learned

in 2020, Updates

The unprecedented impact of the COVID-19 pandemic, in our social and business life, leads to the society and businesses to revaluate and undertake critical decisions in attitudes and practices that will remain well past the pandemic. 

Working from home not only kept many businesses afloat but it has proven to management that in most cases the employees are capable to function and be as productive as working from the office. There were some additional costs, especially in investing in higher secured connectivity, but in the longer run they can pursue to high cost reductions in office space and cost of travelling as well as a widened talent pool for the Companies recruitment needs.

Risk analysis and contingency plans for most companies were unknown words. The coronavirus provided a big lesson of how important is for any Company to closely monitor its Operating environment, regularly review its business model, perform stress tests and implement contingency plans in all operational aspects.

The importance of technology has been emphasized more than ever. Companies adopted and implemented cloud-based communications, video conferencing and other productive tools. Simultaneously we saw the Government Authorities adopting to the new era by digitalising the processes of the Tax Authorities, the Registrar of Companies, the Shipping industry and many other sectors. It is more than evident that Companies must closely monitor the technological changes in their operating environment and be prepared to substantially invest in them to stay in the game.

The well-being of the staff has been set, and correctly so, as a top priority for the Companies. Health and Safety provisions are playing a vital role in the health of the employees and the business continuation. Companies must extend their interest for the well-being of their employees not just at work but also taking into consideration the current conditions and address the essential nature of social interaction. Firms must establish ways, by staff rotation between office and home, as well as fun activities via video conferencing to support the moral and enhance the team building.

So, are your reconsidering your place of stay, somewhere that you could enjoy very low taxes and a great Mediterranean lifestyle? Well as they say, location, location, location. Cyprus has proven that not only is a beautiful country to live but also a safe one. We have proven to be quick to respond, agile and well organised both at the private and public sector level and although is not yet over we can safely say that the situation is very well managed with as less casualties as possible. Being an island enabled the close monitoring of the inbound population whereas the sunny weather (2nd best climate in the world) and the proximity to the nature whether that is swimming or hiking played an important role in controlling the pandemic and maintaining our physical and mental health. It is evident that the world has changed. I would love to welcome you to your new home.

NOTIONAL INTEREST DEDUCTION
18/06/2020

NOTIONAL INTEREST DEDUCTION

in 2020, Law, Updates

The Notional Interest Deduction (NID) with retrospective effect as from 1st January 2020 rules have been amended by the Cyprus Income Tax (Amending) Law 66(I)/2020.

The new Law provisions that the NID Reference Rate is defined as the interest rate of the 10 year government bond yield of the country in which the new equity is invested (as published annually) increased by 5% instead of 3% that was applicable in prior years. 

Read more

TAX SERVICES TEAM IS GETTING STRONGER
10/06/2020

TAX SERVICES TEAM IS GETTING STRONGER

in 2020, Tax, Updates

We are proud to announce that Yiallourides & Partners LTD has established an association with TPAC LTD a company specialising in transfer pricing studies (TPS), with Mr. Panikos N. Tsiailis FCCA as the managing director. TPAC will be working in close cooperation with our tax team.

To read the full announcement, please click here.

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