In order for a company to be able to openly offer its shares to the public, it must be registered or converted into a public company and must be listed on the relevant stock exchange.  In Cyprus the requirements and procedures for the registration of public company are fairly straightforward - the particularities and structural requirements of which are described in more detail in our Registration of a Company in the Republic of Cyprus article.  

A public company, in addition to being able to issue advertisement for offering shares to the public, provided it is compliant with the prospectus provisions set out in sections 37-46 of the Companies Law, can also gain access to the European capital markets through listing on one of the stock markets established in the Republic of Cyprus.  Currently, the Cyprus Stock Exchange (CSE) operates as a Regulated Market and a Multilateral Trading Facility – The Emerging Companies Market (ECM), based on the other similar non-regulated European markets.  Although the Main and Alternative Markets are segments of the Regulated Market, the ECM can be used for trade in shares, bonds, rights, warrants, Global Depositary Receipts (GDR), treasury bills and collective investment schemes, including those not listed on the Cyprus Security Depositary and Central Registry.  Listing on any one of these markets, offers access to the CSE’s fully automated computer trading system, consisting of the Central Registry Depository and Clearing & Settlement system.  

Emerging Companies Market (ECM)

Listing with the ECM is an excellent alternative solution for small, growing companies, seeking funding and access to the stock market that can be approved within a short period of two months, provided that all documentation is submitted correctly and no complications arise throughout the listing process.   As a non-regulated market, the ECM is subject to a simplified regulatory framework and minimum capital listing requirements, which can significantly lower costs, time and workload for both registration and annual requirement compliance.  However, having said that, in order to be eligible for admission, the issuer must still comply with several key initial requirements and registrational procedures, aside from the presentation of standard corporate documentation, company profile, business plan, disclosure of risk factors and relevant declarations.  This primarily means that the issuer must be a public company with a satisfactory number of investors, which is not defined by law but usually considered a minimum of 10 and must have published accounts for at least two years preceding the application, or in the case of newly established entities if satisfactory information is provided, allowing proper assessment of the value of the issuer’s titles.  Furthermore, applicants must obtain and maintain the services of an approved Nominated Advisor (“NOMAD”) who assesses the issuer and presents it to the Cyprus Stock Exchange certifying that the listing ECM requirements are met prior to listing and is further responsible for monitoring the issuer for compliance with the ECM regulations and annual obligations as well as to provide assistance for its smooth operation in the stock market environment.  

Once listed, a company’s main continuing obligations are as follows:

• Publishment of annual audited financial statements, prepared under IFRS, within four months after the end of the financial year
• Publishment of semi-annual unaudited financial statements within three months after the end of the half-year period
• Prompt notification and explanation to CSE of any changes in the relationship between the issuer and the NOMAD 
• Publication and submission of the dispersion statement of the share capital of the last business day of the calendar year within ten (10) working days from the day to which it pertains
• To ensure prompt notification to investors, there is an obligation to announce to the CSE immediately and if possible, at least one hour before the commencement of trading about any decisions relating to the following:

1. Any decision of the Board of Directors relating to the payment or non-payment of dividends, the distribution of profits or the payment of interest;
2. Any decision relating to the approval of financial results the manner of their publication;
3. In case of listed debt securities, every decision related to new issue, indemnities and collateral;
4. Every information concerning a takeover or liquidation of its material assets;
5. Any major changes to the activities or business structure of the issuer;
6. Any changes to the officers or executives of the issuers.

The Regulated Stock Exchange Market

The Regulated Market in Cyprus is supervised by the Cyprus Security and Exchange Commission and consists of the Main Market, Alternative Market, Collective Investment Schemes Market, Corporate and Government Bonds Markets and the Collective Receipts Market.  Each segment has its own value and characteristics with specific requirements and regulatory particularities.  However, the two key markets of interest are the Main and Alternative Markets due to the opportunities and exposure they can offer to companies. 

The Main Market is best suited for large, high value companies looking for a premium listing with increased liquidity, greater marketability and high profile and are willing to pay significantly higher listing costs and comply with very stringent regulatory and corporate governance requirements in order to reap the benefits of this market. 

The Alternative Market is best aimed at medium and small sized corporations that are not particularly concerned with maintaining a high, prestigious profile and thus would be content with a standard listing, especially considering the more flexible listing requirements, continuous obligations and substantially lower fees. 

Issuers seeking to list their titles on the Regulated Market (either the Main or Alternative Market) for the first time need to comply with the following requirements:

• The issuer is a public company and is able to issue securities to the public
• The issuer is able to issue specific securities that it wishes to list in accordance with its M&A, laws of its place of registration or any other relevant governing documentation
• If the issuer has securities listed on a foreign stock exchange, it is fully compliant with the terms and conditions of this stock exchange
• Except in the case of parallel listing or when the issuer lists its securities, which are already listed on an organized market, the listing concerns all the securities of the same category
• The titles proposed can be transferred free of charge
• The titles proposed are fully paid up
• The issuer has a minimum of four Directors
• The issuer is not bound against anyone in a manner which is incompatible with the interests of the holders of its securities
• The issuer can ensure equal treatment of all beneficiaries of the securities within the same category
• The issuer is ready and capable of providing its Registry to the Central Depository and Registry 
• The issuer has a satisfactory working capital
• The issuer is able to provide all the necessary guarantees to protect its investors
• The greatest part of the issuer’s revenue or assets does not derive from shipping activities, unless the issuer's activities are in the field of shipping

Furthermore, there may be additional specific listing requirements which vary depending on whether the listing will be on the Main or Alternative Market.  In short, the key difference between the Main and Alternative markets is the minimum public float and capitalization rule, the number of years for which audited financial statements should be provided and the structure of the issuer’s internal corporate governance policies.

Prospectus Requirements

On the 19th day of April 2019, the House of Representatives has passed a Law No. 57(Ι)/2019 amending the Public Offering and Prospectus Law No. 114(I)/2005, (the “Prospectus Law”) based on the European Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the “EU Prospectus Regulation”). 

Under this new law, the need for the publication of a prospectus is eliminated for issuers wishing to offer securities to the public if the total consideration of each offer within the European Union is less than EUR 5 million over a period of 12 months and the total number of retail members does not exceed 150.  For offerings exceeding EUR 5 million within 12 months, or when the number of retail investors is over 150, however, an issuer still needs to present its prospectus to CySEC, followed by an application for listing on the CSE.  The average timeframe for the examination and approval of the prospectus is usually no longer than three months and the listing process itself is typically completed within a period of one month.

Under the EU single passporting rule, a prospectus approved by CySEC and listed on the regulated market of the Cyprus Stock Exchange is valid and can be utilized throughout all the EU member states, allowing the issuer to apply for a dual listing on any other EU stock exchange such as The Frankfurt Stock Exchange, The London Stock Exchange, The Berlin Stock Exchange, The Vienna Stock Exchange among many others.

If a public company, upon its formation or after its conversion from a private company, does not publish a prospectus or subsequent to publication does not proceed with the allotment of its securities, it is obliged to file a statement in lieu of a prospectus with the Registrar of Companies in accordance with sections 31 and 48 and the Third and Fifth Schedule to the Companies Law. 

Listing Methods

Issuers may list their securities on the Cyprus Stock Exchange by any one of the following methods:

• By public offer for the purchase of shares which have not yet been issued or allotted;
• By public offer for the sale of shares which have already been issued or allotted;
• By offering sale through the introduction of shares already issued or allotted; and 
• By marketing aimed solely at specific investors for the sale of shares which have already been issued or are about to be issued.

For Initial Public Offerings (IPOs), the listing particulars that need to be prepared are quite overwhelming and may require a considerable amount of time and professional assistance.  For subsequent issues, however, these requirements tend to be significantly more flexible.  Moreover, it is important to note, that the CSE Council may at its full discretion exempt an issuer from the obligation to prepare listing particulars, pursuant to the conditions prescribed in the Regulatory Administrative Act 596/2005. 

Our professional team has extensive experience with working with the Cyprus Stock Exchange and can help guide you through the process of public company registration, licensing and listing on the CSE.  Our qualified lawyers and advisors can help you build a solid investment strategy, consult on the best suited listing market, assist with prospectus preparat ion, if the need arises and prepare detailed tax and legal opinions catered to your particular business model.

You can also find our informative report on Cyprus Investment firms here or read on financial licenses and the forex industry in the Republic of Cyprus in our introductory article here.  Our team remains at your full disposal should you require any clarifications or a personal consultation on any queries you may have.