Articles

EXAMINERSHIP AND INSOLVENCY – NEW LAW IN CYPRUS

Nov 26, 2019

Requirements for the granting of licence from the relevant authorities
S,14 (1) à A person may be authorised to act as Insolvency Examiner, only and if fulfils the following requirements ׃
(a) Is member of the competent/relevant authority that grants the said licence, in which the competent authority is not the Insolvency Service.
(b) Holds university degree or equivalent qualification.
(c) He has been employed for a minimum period of three (3) years preceding his application, under at least one of the capacities of a lawyer, authorised accountants, registered auditor, actuary, officer or examiner at the Official Receiver or/and at Insolvency Service or professional in the financial sector.
(d) Has obtained the standard professional experience (according to section (2) for a period of 2 years, or 600 hours in a period of 2 years or in 20 cases, of which at least half relate to voluntary liquidations within 2 years period. 'Professional experience in insolvency matters' means:
'Employment work on the management of insolvency proceedings as:

i. work for a natural person who is Insolvency Examiner
ii .work in a company or organization, whose officials, the
partners, members or employees include Insolvency Examiners
iii. Examiner Officer or the Official Receiver and / or Insolvency Service
iv. in relation to a company, as liquidator, provisional liquidator, receiver, administrator or loan restructuring advisor
v. in relation to a natural person as bankruptcy administrator, provisional
recipient of property or special administrator of the property or
enterprise or as loan restructuring advisor
vi. professional consultant of any of the provisions of paragraphs
(Iv) and / or (v) above. "
The above definition covers both the experience gained before enactment of this law, and the experience obtained during the implementation of the law.
(e) Has succeed in the professional competence exams which have been organised or authorised by government and
(f) Has a valid professional liability insurance which contains the minimum requirements which are set down with

Regulations issued according to the current law , as specified in article 22.

Persons acting before enactment of this law: may continue to act in that capacity, without being licensed Insolvency Practionners, until the completion of those cases or to discharge them from their duties in those cases, provided they maintain adequate insurance coverage as described above , and comply with Article 8 (3) of the Law.

Supervision and disciplinary penalties
While Insolvency Practitioners’ professional license is in force, shall be monitored by the competent authority which grants the licences in question, to ensure compliance with any relevant legislation, court order, professional standards, code of conduct and any other relevant matters.

Responsibilities of Insolvency Practitioner:
Whilst Insolvency Practitioners’ professional license is in force must participate in appropriate programmes of continuing education to maintain their theoretical knowledge, professional skills and values at a high level. For this purpose they furnish certificates and / or other certificates of participation in relevant training programs to the competent authority that provide them the relevant. Failure to comply for a period beyond 2 years, the competent/relevant authority may warn Insolvency Practitioners to comply within six months or to submit the matter to disciplinary proceedings, unless it is satisfied that there are sufficient grounds that justify failure to comply within the specified period.

2)Provisions for legal persons
Companies Law (Amending) 2015 Cap 113 (regarding restructure of a company’s debt)
Once the Court is convinced that there is a reasonable prospect of survival of a company, it will grant the Examinership Order, resulting in a moratorium period (initially) for four months, during which a company will be under its creditors’ custody, whilst directors will continue exercising their duties as administrators of their companies’ affairs. During the said period of 4 months,(after obtaining court leave) examiners will have specific powers including administration or disposal of property under security, and exercise the duties and powers that fall in the company’s management. During custody period examiners will be called to examine the financial statements of the company and to file in court their proposals for settlement and compromise, provided those proposals have been examined and voted by the company’s creditors and shareholders. Courts affirm examiners’ proposals if they are just and equitable, taking into account the continuation of a company’s business and the rescue of employment positions and the fact that creditors should not be put in a worse position than they would be if company was under liquidation process. Moreover, examiners’ proposals, as far as it is practically possible, aim to protect offices’ premises Having been accepted by the court, these proposals bind all the parties involved.

Who can apply to the court for the appointment of an examiner company?
• The company itself
• Any creditor of the company
• Shareholders of the Company holding 10% of the company capital
• Any guarantor of the company's obligations

Criteria to be met for the appointment of an Insolvency Examiner
• The company is unable to pay its debts.
• There is no resolution or decree to liquidate the company.
• There is a reasonable prospect of survival («reasonable prospect of survival»).

What is achieved by the application for appointment of an examiner? The company is placed under the protection of the court for four months. In this way, the company may not be liquidated, may not appoint a receiver (receiver), may not dispose secured property by secured creditor without the consent of the examiner. The creditor is not able to bring any action against any guarantor. No action may be filed against the company. Organizations / companies providing SGI,including electricity, water and telephone services are required to continue to provide services to the company during the period of protection, provided the costs incurred during that period are covered.

Companies Law (Amending) 2015 Cap 113 (regarding liquidations)
The voting of Examinership required the amendment of the Companies Law Cap 113 in order to comply with the new law that came intro force.

One amendment concerns the appointment of liquidator who will be appointed ,not only by the court but also by creditors’ and contributors’ meeting. Once court liquidation order is granted, the official receiver becomes liquidator (according to current law) . Moreover, if liquidator is not official receiver, will be an independent licensed practitioner ( examiner).

The current law amends the definition of a company’s incompetence to pay its debts and the main amendment concerns satisfaction of the court’s criterion that the value of a company’s assets is smaller than the amount of its obligations/liabilities, bearing in mind both its potential and future obligations/liabilities .

Furthermore, the new law amends the decision making process in relation to creditors’ meetings, introducing majority, replacing the current decision making process that requires majority according to the number and value of shares. The institution of majority of value is introduced in Article 198 Companies Act (Cap. 113), which is not part of Part V of the said law regarding liquidations, however, it concerns decision making process during meetings convened when compromise or arrangement are proposes between a company and its creditors. The way of decision making changes from majority in number representing three-fourths in value of the creditors or Members , with a simple majority in value of the creditors or number of votes members.

Once court order is granted, the official receiver or liquidator is given the power to manage the property of the company under security, provided the court is satisfied that disposal of any secured property may lead to a more favourable liquidation of the company’s assets, rather than any other liquidation that might take place. Any income deriving from disposal will be used to pay the amounts acquired with encumbrance. Any amount left will be used in favour of non-secured creditors.

Active involvement of liquidator
The new law also provides for the active involvement of the official receiver or liquidator in the liquidation process, who have increased control rights over the company's (in liquidation) business ,acts or omissions of the company officials. In particular, the official receiver or liquidator may apply to the court for public examination, including examination of a company’s officer who acted as liquidator or examiner of the company, or contributor of the company.

In order to avoid delays and eliminate costs, the Amending Law provides that if, after the liquidation order, the official receiver, as liquidator of the company, considers that the realizable assets of the company are insufficient to cover the costs of liquidation and the affairs of the company do not require further investigation, may apply to the court for the early dissolution of the company. The amending Act also provides that forced liquidation is completed within a period of eighteen months from its commencement and any extension of this period should be approved by the court.

The examiner must submit a report to the court, which includes, inter alia, the settlement proposals or settlement plan, the results of creditors’ and shareholders’ meetings where the said proposals and suggestions were examined. If new credit facilities are provided as working capital kefaleo kinisi the period which the company is under protection, the examiner ensures that, If the plan does not succeed and the company proceeded to liquidation, creditors that have granted new credit facilities will be paid before all other creditors (except creditors who hold collateral fixed - fixed charge holders).

2) Provisions for natural persons
Examinership also provides mechanisms for natural persons’ debts. The first one concerns repayment plans whose purpose is achievement (under certain conditions) of restructure of debts in order to safeguard repayment of creditors and maintenance of the ‘main home/residence’.

The second one concerns exemption from debts through the grant of court orders that will give a kind of relief to debtors regarding low amount unsecured debts, not exceeding €25.000. This mechanism applies on debtors who do not have any income available or any assets that could be used for repayment of their debts.

Actually, the Bill provides for׃ 1) personal repayment plans (consensus and imposed) that guarantee the main house and the handling of guarantors , 2)coordinated plans which guarantee natural persons and very small businesses , and 3)court orders which provide exemption from debts.

Main provisions

Procedure until preparation of the repayment plan
The debtor addresses to Licensed Insolvency examiner who, taking into account the financial situation of the debtor as well as other related issues, advices debtor whether he is entitled , according to legislation, to participate in any Repayment Plan. If the Insolvency Examiners is of the opinion that the case of the debtor in question falls in the provisions of the law, debtor may authorise him to prepare the appropriate restructuring plan for his debt. The granting of the necessary period for preparation of the said plan , without any interventions/ legal prosecutions by the creditors of the debtor in question, starts with the issuance of protective order. This means, the Insolvency Examiner submits an application on behalf of the debtor , to the Insolvency Service for the issuance of protective certificate.

The Insolvency Service requests all the financial and other information of the debtor in order assess if the debtor fulfils the conditions set by the law to be entitled to participate in any repayment plan. Once the protective certificate is issued, the Insolvency Service or the debtor’s lawyers files an application to court seeking the issuance of protective order for the debtor. This protective order aims to protect the debtor from any acts committed by his creditors against him, for period of 95 days.(this period may be extended). Then , when the repayment plan is prepared, the Insolvency Examiner shall submit it to creditors to vote.

2.1) Personal repayment plans

2.1.1) Consensual personal Repayment Plan
If creditors agree, by qualified majority, the Repayment Plan (called consensual Repayment Plan because creditors΄agreed by qualified majority) is submitted to the court for approval and hearing of any objections submitted by creditors who did not agree with the Plan. The validity period begins once the said plan is approved by the court.

Criteria to be met by the debtor for consensual repayment plan:
a)The debtor must have been ordinarily resident in Cyprus or had habitual residence in the Republic up to 3 years before the date of the enactment of the new Law.
b) The debtor must declare insolvent which means that he is unable to repay all his debts as they arise.
c) the debtor must submit a Statement of Personal Finance Information accompanied by a sworn statement stating that the information contained therein is complete and accurate
d) The debtor must have consented to confirmation of his financial information.
e) In case he has been declared bankrupt, the debtor must have been restored ( 5 years must have passed from that date)
f) There must be a reasonable prospect that the participation of the debtor in such settlement will facilitate him to become solvent over a period not exceeding five (5) years, according to the declaration of insolvency consultant.

The debtor is not eligible if:
a) he has been released from his debts in the last three years
b) a protective order has been issued in favor of him the last 12 months
c) he has participated again in Personal Repayment Plan (either approved by creditors and approved / not approved by the court, or rejected by creditors and imposed by a court or not).
d) 25% or more of its debts, other than exempted debts have been made within a period of six months expiring on the date where application is filed for issuing protective order.
e) has made a transaction which took place on non appreciable contribution or fraudulent preference against creditor

Conditions of Consensus Repayment Plan:
The Plan provides for the restructuring of debts of the debtor through various measures and shall have a maximum duration of 60 months. The plan cannot provide for payments which will deprive the debtor of his normal living expenses (unless he chooses ), the amount of which is determined by guidelines lines issued by the Insolvency Service and for a transitional period, the Ministry of Finance. The terms of the Repayment Plan should maintain creditors in the same or in a better position than they would be, if debtor’s property was available in the event of bankruptcy, excluding assets that are not available, and subject to the priority order of debts, unless consent obtained by creditor for acceptance of a different result. Whenever practicable, Repayment Plans preserve the main residence of the debtor. In order for an Insolvency Examiner to decide whether maintenance of main home is possible, must take into account the following: a) all expenses related to maintaining a primary residence (incl,rent, payment mortgage, maintenance, taxes and other charges, insurance costs, etc.)b) the income of the debtor derived from the data submitted) the ability of other people staying at the residence to contribute, and d) the needs of the debtor and his family.

2.1.2) Imposed repayment plans -Non-consensual Repayment Plan
If the plan is rejected by the meeting of creditors, but the Examiner considers that debtor meets the specified criteria, then the debtor may apply to the Court for an order with which will impose the plan to all creditors.

The main criteria relating to :a) the total remaining debts (incl. Guaranteed, secured debt) do not exceed € 350.000,b)at least one of his creditors is secured creditor and has guarantee on the principal residence of the debtor, which is in Democracy and has a market value of up to € 300.000,,c) the total value of the remaining assets of the debtor, excluding principal residence, do not exceed € 250,000,d) the debtor is unable to repay debts due to deterioration of economic situation as a result of events or circumstances out of his control, which have occurred from 2009 onwards and before application for a protective order, and resulted in the substantial reduction in income of at least 25%.

Conditions to be met by the Repayment Plan to be imposed by the court to creditors:
(A) the plan provides that debtor will retain rights to his main residence
(B) the plan would keep creditors at the same or better position than they would be found if debtor ‘s property was available in accordance with the provisions of Bankruptcy Law, excluding not available assets and respecting the order of priority of debts.
(C) the terms of the Plan, under which the debtor is obliged to make payments to creditors, provide that, any additional income, apart from the need to cover the reasonable expenses of living of debtors and dependents, shall be used in respect of the debt .
(D) the plan provides that all assets of the debtor, including all highly liquid (liquid assets) and luxury mobile assets, for strengthening purposes ability to repay debt and to protect the principal private residence are taken into account.
May be excluded :Assets which are necessary for his work, assets that are not mortgage security and namely movable assets below € 35,000 and properties less than € 75,000,immovable assets which generate substantial income for repayment of debt under the Personnel Repayment Plan.

2.1.3) Coordinated repayment plans
A debtor who fulfils the eligibility criteria for personal repayment plan and whose main house consists debt security for a small business, is entitled to begin procedures for coordinated repayment plan. This procedure falls under the law of restructure of debts for sustainable businesses (Examinership) which provides for the appointment of an examiner.

Coordinated Repayment Plans (for individuals and small enterprises)
A debtor who meets the eligibility criteria for repayment plan and whose main residence in any way constitute security for debt of small enterprise (ie. company employing fewer than ten persons), is allowed to start proceedings for this type of plan. If debtor wishes to proceed with the implementation of process of such plans, then the date where the protective order is issued, he must apply for the appointment of an Examiner (within the «Examinership») for small-enterprise, proposing as Examiner the Practitioner who is appointed to propose repayment plans. This process allows the Insolvency Practitioner to have a complete overview of the obligations of the debtor and the company, in order to propose a more coordinated solution. The protection of debtor and small enterprises is for the same period, ie 120 days, extendable by certain conditions. During coordinated repayment plan process, the proposed plan needs to be approved or the court to have issued an order imposing personal repayment plan and the proposal for a compromise or scheme settlement should be confirmed by the court pursuant to the Companies Law (under the "Examinership").When the proposal for personal repayment plan is not approved or court has not issued enforcement orders and compromise proposals or settlement plan is not confirmed within Examinership, the debtor may apply for a new repayment plan.

Results once repayment plan are enacted (applies to Consensus and Imposed Repayment Plans) If such plans are put into force or at their acceptance by creditors, or at their enforcement by court, become legally binding both for the debtor and the creditors. When the debtor has complied with the obligations provided in the Plan, the debtor is released from unsecured debts, which have not been repaid through the repayment plan. The debtor of secured debt who is subject to the plan, is not relieved of secured debts covered by the repayment plan, except insofar as provided in the Plan

2.1.4) Court order –Exception from debts
Debtor who considers that it meets the criteria / conditions provided in this law, submits a duly completed application to the Insolvency Service. The main criteria are the following:
a)The debtor is insolvent (meaning that he cannot repay all of his debts, as they arise) and very likely to continue to be in such position for a period of one year from the date of his application for the issuance of debt exemption order.
b) The monthly net disposable income of the debtor (calculated as explained below) does not exceed the amount of € 200
c )Debtors’ assets do not exceed the amount of € 1,000, except those protected under bankruptcy proceedings Calculating the net monthly income of the debtor, the following will be taken into account:
1) the salary or wages ,2)social benefits other than child allowance, receiving,3) income from pensions,4) contributions from other household members, and 5)any other income that is available to him. From the above deducted include: 1)Reasonable living expenses (defined by guidelines from the Insolvency Service)2)income tax
contributions payable by the debtor. The calculation of the assets of the debtor Includes: deposits, vehicles, shares, property (movable and immovable)

The following will not be taken into account: Books, tools and other items of equipment used by the debtor and reasonably necessary for employment or business of total value not exceeding € 6.000,a vehicle worth up to € 4.000 when the vehicle is reasonably necessary to carry out daily activities, household appliances and devices that are reasonably necessary to maintain n adequate standard of living for the debtor and their dependents, books, materials and other equipment that is reasonably necessary to the debtor, or the dependents of, as appropriate, if monitor municipal courses, medium, or higher education, for purposes of participation and integration of these courses ,any interest or right of the debtor who is a relative syntax.

The Insolvency Service ,after conducting the necessary checks and confirmed that all eligibility criteria are met, issues a relevant certificate and then, either Insolvency Service or a lawyer of debtor ‘s choice submits application to the Court to issue the relevant release of debts order.

Once the orders is issued, the debtor will be exempted from unsecured debt which do not exceed € 25,000, as well as any other obligations in this regard, and all interest, monetary clauses and other amounts from the date of application, become payable in respect of that debt. The debtor is also exempted from his obligations as guarantor. Guarantor who has guaranteed the debt included in the said Order is exempted from any responsibility in this regard and in relation to any other obligations in this respect and shall enjoy the same protection as the debtor. Creditors can file objections to the court within one year from the issue of the order.

3)Bankruptcy (Amending) Law 2015
The amending law of Bankruptcy modernises the bankruptcy procedure regarding natural persons. One of its major amendments is that bankrupt will be restored 3 years after the date that court granted bankruptcy order. Debtors who can’t repay their debts will be excepted from the status of ‘’bankrupt’’ as well as from their remaining debts, if they cooperate and act in good faith. However, in order to avoid abuse of process, the new law provides for the postpone of the above procedure if bankrupt has not complied with his obligations.

For old pending cases , debts will be exempted unless creditors oppose, but the exemption will not concern secured debts on property. Furthermore, in case of old cases, the three-year period before exemption shall be counted from the date of receipt of the Order, issued, based on the process of bankruptcy as it was before amendment of the law, and not from the date of the issuance of the bankruptcy order.

In case of new bankruptcy, discharge from debts will be available six years after the last time bankrupt has been released.

3.1) Simplification of the procedure - the abolition of the 'two-stage'and appointment of Directors as Insolvency Administrators
According to the previous bankruptcy procedure, it was published the Order receipt and the bankrupt’s assets were placed in the possession of the Official Receiver, but it was required a bankruptcy order to authorize the official recipient to proceed with the liquidation of property. Following the amending legislation, this process has been suppressed:
Following the bankruptcy order, the official receiver will be the direct legal owner of all assets, with the power to dispose the said assets without any further involvement by the court (other than cases of mortgaged property). Following the issuance of bankruptcy order, he may be appointed as administrator of the bankrupt’s property beyond the official receiver and private administrator of bankruptcy. The private administrator will be appointed by creditors or by the official recipient from the list,.(by rotation).

3.2) Connection with the Insolvency Individuals (Personal Raft Repayment and Debt Waiver Order) Law of 2015
The court may suspend the application process for issuance of bankruptcy order, for a period not exceeding three months, if debtor proves that he has already submitted a request for Personal Repayment Plan or if debtor proves that he is able to submit Personal Repayment Plan.

4) Companies Law Cap 113-Amendments
1. Section 2 of Article 1 of the basic law is amended incorporating new definitions in the law in alphabetic order.
The new definitions are the following:
a)unique modifier
b)platform
c)registers interconnection system
d)standard message format

2. Section 2 of Article 201K of the basic law is replaced by the new subsection 2 as follows :
‘’ Once the Registrar of Companies receives copy of decision, informs without delay, via registers interconnection system, the register that each company was obligated to file its acts stating that cross board merger has taken place׃
Any potential deletion of a file shall only be valid after receiving the relevant information.

3. Article 347 of basic law is being amended adding section (5) immediately after section 4 ׃
(5)(a) Documents and data which are mentioned in this section
(1) are disposed in public via register interconnection system.
(5)(b) The Registrar of Companies ensures that foreign companies own unique modifier, which allows their unadoptable identification, during their communication among registers via register interconnection system which includes, at least, data that allow identification of Member State’s register, the international origin register , the number of the foreign company in this register and, depending on each case, characteristics to avoid identification errors.
5) The basic law is amended adding Article 351A(1) :
A company’s register owns, though registers’ interconnection system, information regarding the beginning or termination of any winding up procedure or insolvency of the company and deletion of the company from the register of companies.
(2) The register of a foreign company, ensures, through registers’ interconnection system, receipt, without delay, of the information referred to in section (1).
(3) According to sections (1) and (2), exchange of information regarding registers, is free.
(4) The House of Representatives creates regulations, which set out the appropriate procedure to be followed upon receipt of the information refereed to in sections (1) and (2), which ensures that if a company has been wound up or has otherwise been removed from register, its foreign companies are deleted from registers as well, without any unreasonable delay.
Provided the obligation to delete foreign companies does not apply to companies, which have been deleted from the registry because of any change in their legal form, merger or division, or a cross-border transfer of the registered office. ".

6) Article 365B is amended, numbering the current text in section (1), adding after subsection (1) thereof , the following new sections (2), (3), and (4).׃
(2) The register of companies which is maintained according to section (1), publishes in electronic version the following׃
(a) The company’s Memorandum and Articles of Association.
(b) Amendments of the above documents.
(c) The whole text of the amended text in its new version, as this has been reformed after amendments on the Memorandum or Articles of Association.
(d) Appointment, resignation, as well as personal data of those who either as a body prescribed by law or as members of any such body:
(i) They have authority to bind the company against third parties and to represent it before a court. The referred measures must specify if persons, who have authority to bind the company, may act alone or they should act jointly.
(ii) They take part in the management, supervision or control of the company.
(e) The amount of the subscribed capital ,at least
per year, since the Articles of Association or the Memorandum are referred to share capital.
(f) Every accounting documents whose publication is obligatory according to the provisions of Articles 141,142,142A,150,151,152.
(g) Any transfer of the company’s seat.
(h) The dissolution of the company.
(i) Appointment and personal data of liquidators.
(j) Accomplishment of liquidation and deletion from registers.
4.3) Potential changes in acts and data which are referred to in section (2), shall be registered in company’s registers under directors’/officials’ responsibility and shall be disclosed according to provisions of section (1) Article 365(A), normally within 21 days after receipt of the full documentation regarding these changes.
It is provided that the above shall not apply to every accounting documents each year, the publication of which is obligatory according to the accounting guidance.
4.4) If directors or other officials of the company fail to comply with the obligation referred to in subsection (3), the directors involved or other company officials are guilty of an offense punishable, upon conviction, to a fine not exceeding three thousand (€ 3.000) euro.
4.5) The Registrar of Companies posts electronically on the register of companies, which is interconnected with the platform, all updated information which explain the provisions of the law, that third parties may trust data and every act which is referred to in section (2).
4.6) Electronic copies of actions and data which are referred to in section (2) are disposed in public through registers’ interconnection system.
4.7) The Registrar of Companies ensures that actions and data referred to in section (2) are disposed in public through registers’ interconnection system in a standard format message and are accessible in electronic means and ensures compliance with the minimum safety requirements of safety of data transmission.
7) The Basic Law is amended by inserting immediately after Article 365D thereof, the following new articles 365E, 365ST, 365Zand 365H:

365E. Companies must have a unique identifier that allows their unequivocal identification in their communication among registers through the interconnection system of registers, and which includes ,at least, elements that allow identification of the Member State’s register, the domestic register of origin and the number of the company in that register and, where appropriate, features to avoid identification errors.
365ST .- (1) Subject to section (2),the House of Representatives shall issue Regulations under paragraph (d) of subsection (1) Article 387 for fees charged for access to documents and information referred to in Article 365B through the system of interconnection.
(2) The following information is available for free through the system of interconnection of registers:
(a) the name and legal type of the company,
(b) the registered office of the company and the Member State in which is registered, and
(c) the registration number of the company.
365Z(1) A company’s register must dispose through the system of interconnection of registers ,information on the initiation or termination of any liquidation or insolvency procedure of the company and deletion of the company from the register.
(2) The register in which foreign companies are filed, guarantees, through the system of interconnection of registers, the obtaining, without delay of information referred to in subsection (1).
(3) The exchange of information referred to in sections (1) and (2) is free of charge for the registers.
365H. The Registrar of Companies, in cooperation with other departments of the Republic, guarantees the interoperable of its registry in the system of interconnection of registers through the platform.
8. The basic law is amended, by inserting immediately after Article 371 thereof, the following new article 371A׃
371A. The processing of personal data carried out by the Articles 201K, 347 and 351A is subject to the provisions of the Processing Personal Data (Protection of Individual) Law, as each amended or replaced. ".
Conclusion
The enforcement of this Bill has been introduced as effort to protect creditors’ interest and at the same time to help debtors take a breath. Its purpose is the establishment of an insolvency mechanism that aims to achieve restructure of debts, safeguard and restore business activity to maintain sustainable business that will subsequently contribute to financial growth and the keeping of employment. However, this regime has been described as a process putting companies on life support with no prospect of survival. The absence of safeguards in place to avert abuse of this process may increase risk of further loss to creditors. In order for this regime to work effectively a satisfactory insolvency framework must be enacted. Until this moment, Amendment of law such as the Companies Law (Amending) Cap 113 in conjunction with examinership, constitute an effort to comply with current standards that came into force with the introduction of this Bill. Finally, this new regime seems to be welcome and at the same time vulnerable.

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The House of Parliament of the Republic of Cyprus approved the 5th Bill regarding examinership which concerns insolvency of both natural and legal persons, deletion of debts and the law concerning auctions. This process is expected to provide a more creditor-friendly option in order to avoid insolvency options, such as liquidation, and suggests that the dividend to creditors will be much higher. However, only companies in trouble with good prospects of survival may be placed under examinership.
Examinership is defined as a process whereby the protection of the court is obtained to assist an insolvent company to survive, allowing the corporation to restructure. To acquire the appointment of an examiner it is necessary to petition to court and persuade it that there is a reasonable prospect of survival of the company and the whole or part of its undertaking with the appointment of an examiner. But how can we measure a company’s prospects of survival? The answer falls into the discretion of insolvency practitioners and courts. According to this Bill, creditors should not be put in a worse position than they would be if the said company was under liquidation. Moreover, examinership does not provide for any special fund for companies put under custody/protection.
Objectives
The main objectives of the Framework for Insolvency Reform are:
1)Creation of appropriate incentives for debt repayment, thus contributing to the reduction of non-performing loans,
2)Gives the opportunity to protect the primary residence, where possible and based strict eligibility criteria,
3)Gives a second chance for reactivation of bankrupt individuals in the economy,
4)Introduces a new mechanism that would provide full and rapid relief to a debtor with no income and no assets, with very low overall debt,
5)Provides incentives for the preservation and restoration companies through restructuring of companies and debt, giving the opportunity to viable companies to reduce their debts and keep jobs, while maximizing the value of the company as it is ("as going concern "),
6)Modernizes the laws concerning liquidation and bankruptcy of natural persons, so that,liquidation and bankruptcy proceedings to take place in a short time and efficiently.
1) Insolvency Practitioners-Examiners
Insolvency Examiners Law 2015
Since the role of insolvency examiners is crucial following the enforcement of the new law, and the need to guarantee effective application of the law that will govern insolvency proceedings for both natural and legal persons, emerged the need for government to vote the Insolvency Examiners Law 2015 to introduce appropriate insolvency procedures through regulation and institutionalization of the profession of insolvency examiner The above law aims to provide guidance on the standards to which examiners must adhere in order to avoid disciplinary action that may result in adverse economic consequences.
The new law defines insolvency examiner as any person who is authorised to act as insolvency examiner in accordance with the provision of this law. A person is considered to act as insolvency examiner if, regarding a company, acts as liquidator, provisional liquidator, receiver, administrator or examiner. As long as natural person is concerned, an insolvency examiner acts as bankruptcy administrator, provisional receiver of his ownership or special administrator of his property or his
EXAMINERSHIP AND INSOLVENCY – NEW LAW IN CYPRUS – FEBRUARY 2015 3
business or as consultant regarding repayment plans. Moreover, an insolvency examiner takes any action or acts in any capacity, which, according to any existing legislation , is defined as act or capacity, in which may explicitly take or act respectively, an insolvency examiner.
An authorised professional body for the purposes of this law, is set as competent authority for the granting of insolvency examiners licence. These professional bodies need to apply in order to obtain authorisation. However, the Cyprus Bar Association, Insolvency Services as well as the Certified Accountants Association are exempted from the obligation to apply. Appointments of examiners are to be published in the government Gazette and records kept with the Registrar of Companies. It must be noted that, in certain cases, the licence granted to insolvency examiners may be revoked.
Criteria s.8 Part III
8 (1) A person may act as insolvency examiner at any time, if, during the said time, owes a valid licence of insolvency examiner, which has been issued according to the provisions of the current law.
8(2) A legal person may not act as insolvency examiner .
8(3) A person may not act as insolvency examiner at any time if, during the said time ׃
a) Has been declared bankrupt according to Bankruptcy Law and has not been restored
b) Is subject to Court Order according to Article 180, Companies Law.
c) Holds public office, permanent or provisional, in the public sector.
d) Has been convicted of any offence , which includes lack of honesty or obscenity and, in case of conviction as such, has not been restored, according to Restoration of Conviction Law, as then amended or replaced.
e) Has not capacity according to any law or Court Order.
Requirements for the granting of licence from the relevant authorities
S,14 (1) à A person may be authorised to act as Insolvency Examiner, only and if fulfils the following requirements ׃
(a) Is member of the competent/relevant authority that grants the said licence, in which the competent authority is not the Insolvency Service.
(b) Holds university degree or equivalent qualification.
(c) He has been employed for a minimum period of three (3) years preceding his application, under at least one of the capacities of a lawyer, authorised accountants, registered auditor, actuary, officer or examiner at the Official Receiver or/and at Insolvency Service or professional in the financial sector.
(d) Has obtained the standard professional experience (according to section (2) for a period of 2 years, or 600 hours in a period of 2 years or in 20 cases, of which at least half relate to voluntary liquidations within 2 years period. 'Professional experience in insolvency matters' means:
'Employment work on the management of insolvency proceedings as:
i. work for a natural person who is Insolvency Examiner
ii .work in a company or organization, whose officials, the
partners, members or employees include Insolvency Examiners
iii. Examiner Officer or the Official Receiver and / or Insolvency Service
iv. in relation to a company, as liquidator, provisional liquidator, receiver, administrator or loan restructuring advisor
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v. in relation to a natural person as bankruptcy administrator, provisional
recipient of property or special administrator of the property or
enterprise or as loan restructuring advisor
vi. professional consultant of any of the provisions of paragraphs
(Iv) and / or (v) above. "
The above definition covers both the experience gained before enactment of this law, and the experience obtained during the implementation of the law.
(e) Has succeed in the professional competence exams which have been organised or authorised by government and
(f) Has a valid professional liability insurance which contains the minimum requirements which are set down with Regulations issued according to the current law , as specified in article 22.
Persons acting before enactment of this law: may continue to act in that capacity, without being licensed Insolvency Practionners, until the completion of those cases or to discharge them from their duties in those cases, provided they maintain adequate insurance coverage as described above , and comply with Article 8 (3) of the Law.
Supervision and disciplinary penalties
While Insolvency Practitioners’ professional license is in force, shall be monitored by the competent authority which grants the licences in question, to ensure compliance with any relevant legislation, court order, professional standards, code of conduct and any other relevant matters.
Responsibilities of Insolvency Practitioner:
Whilst Insolvency Practitioners’ professional license is in force must participate in appropriate programmes of continuing education to maintain their theoretical knowledge, professional skills and values at a high level. For this purpose they furnish certificates and / or other certificates of participation in relevant training programs to the competent authority that provide them the relevant. Failure to comply for a period beyond 2 years, the competent/relevant authority may warn Insolvency Practitioners to comply within six months or to submit the matter to disciplinary proceedings, unless it is satisfied that there are sufficient grounds that justify failure to comply within the specified period.
2)Provisions for legal persons
Companies Law (Amending) 2015 Cap 113 (regarding restructure of a company’s debt)
Once the Court is convinced that there is a reasonable prospect of survival of a company, it will grant the Examinership Order, resulting in a moratorium period (initially) for four months, during which a company will be under its creditors’ custody, whilst directors will continue exercising their duties as administrators of their companies’ affairs. During the said period of 4 months,(after obtaining court leave) examiners will have specific powers including administration or disposal of property under security, and exercise the duties and powers that fall in the company’s management. During custody period examiners will be called to examine the financial statements of the company and to file in court their proposals for settlement and compromise, provided those proposals have been examined and voted by the company’s creditors and shareholders. Courts affirm examiners’ proposals if they are just and equitable, taking into account the continuation of a company’s business and the rescue of employment positions and the fact that creditors should
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not be put in a worse position than they would be if company was under liquidation process. Moreover, examiners’ proposals, as far as it is practically possible, aim to protect offices’ premises Having been accepted by the court, these proposals bind all the parties involved.
Who can apply to the court for the appointment of an examiner
company?
• The company itself
• Any creditor of the company
• Shareholders of the Company holding 10% of the company capital
• Any guarantor of the company's obligations
Criteria to be met for the appointment of an Insolvency Examiner
• The company is unable to pay its debts.
• There is no resolution or decree to liquidate the company.
• There is a reasonable prospect of survival («reasonable prospect of survival»).
What is achieved by the application for appointment of an examiner? The company is placed under the protection of the court for four months. In this way, the company may not be liquidated, may not appoint a receiver (receiver), may not dispose secured property by secured creditor without the consent of the examiner. The creditor is not able to bring any action against any guarantor. No action may be filed against the company. Organizations / companies providing SGI,including electricity, water and telephone services are required to continue to provide services to the company during the period of protection, provided the costs incurred during that period are covered.
Companies Law (Amending) 2015 Cap 113 (regarding liquidations)
The voting of Examinership required the amendment of the Companies Law Cap 113 in order to comply with the new law that came intro force.
One amendment concerns the appointment of liquidator who will be appointed ,not only by the court but also by creditors’ and contributors’ meeting. Once court liquidation order is granted, the official receiver becomes liquidator (according to current law) . Moreover, if liquidator is not official receiver, will be an independent licensed practitioner ( examiner).
The current law amends the definition of a company’s incompetence to pay its debts and the main amendment concerns satisfaction of the court’s criterion that the value of a company’s assets is smaller than the amount of its obligations/liabilities, bearing in mind both its potential and future obligations/liabilities .
Furthermore, the new law amends the decision making process in relation to creditors’ meetings, introducing majority, replacing the current decision making process that requires majority according to the number and value of shares. The institution of majority of value is introduced in Article 198 Companies Act (Cap. 113), which is not part of Part V of the said law regarding liquidations, however, it concerns decision making process during meetings convened when compromise or arrangement are proposes between a company and its creditors. The way of decision making changes from majority in number representing three-fourths in value of the creditors or Members , with a simple majority in value of the creditors or number of votes members.
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Once court order is granted, the official receiver or liquidator is given the power to manage the property of the company under security, provided the court is satisfied that disposal of any secured property may lead to a more favourable liquidation of the company’s assets, rather than any other liquidation that might take place. Any income deriving from disposal will be used to pay the amounts acquired with encumbrance. Any amount left will be used in favour of non-secured creditors.
Active involvement of liquidator
The new law also provides for the active involvement of the official receiver or liquidator in the liquidation process, who have increased control rights over the company's (in liquidation) business ,acts or omissions of the company officials. In particular, the official receiver or liquidator may apply to the court for public examination, including examination of a company’s officer who acted as liquidator or examiner of the company, or contributor of the company.
In order to avoid delays and eliminate costs, the Amending Law provides that if, after the liquidation order, the official receiver, as liquidator of the company, considers that the realizable assets of the company are insufficient to cover the costs of liquidation and the affairs of the company do not require further investigation, may apply to the court for the early dissolution of the company. The amending Act also provides that forced liquidation is completed within a period of eighteen months from its commencement and any extension of this period should be approved by the court.
The examiner must submit a report to the court, which includes, inter alia, the settlement proposals or settlement plan, the results of creditors’ and shareholders’ meetings where the said proposals and suggestions were examined. If new credit facilities are provided as working capital kefaleo kinisi the period which the company is under protection, the examiner ensures that, If the plan does not succeed and the company proceeded to liquidation, creditors that have granted new credit facilities will be paid before all other creditors (except creditors who hold collateral fixed - fixed charge holders).
2) Provisions for natural persons
Examinership also provides mechanisms for natural persons’ debts. The first one concerns repayment plans whose purpose is achievement (under certain conditions) of restructure of debts in order to safeguard repayment of creditors and maintenance of the ‘main home/residence’.
The second one concerns exemption from debts through the grant of court orders that will give a kind of relief to debtors regarding low amount unsecured debts, not exceeding €25.000. This mechanism applies on debtors who do not have any income available or any assets that could be used for repayment of their debts.
Actually, the Bill provides for׃ 1) personal repayment plans (consensus and imposed) that guarantee the main house and the handling of guarantors , 2)coordinated plans which guarantee natural persons and very small businesses , and 3)court orders which provide exemption from debts.
Main provisions
Procedure until preparation of the repayment plan
The debtor addresses to Licensed Insolvency examiner who, taking into account the financial situation of the debtor as well as other related issues, advices debtor whether he is entitled , according to legislation, to participate in any Repayment Plan. If the Insolvency Examiners is of the opinion that the case of the debtor in question falls in the provisions of the law, debtor may authorise him to prepare the appropriate restructuring plan for his debt. The granting of the
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necessary period for preparation of the said plan , without any interventions/ legal prosecutions by the creditors of the debtor in question, starts with the issuance of protective order. This means, the Insolvency Examiner submits an application on behalf of the debtor , to the Insolvency Service for the issuance of protective certificate. The Insolvency Service requests all the financial and other information of the debtor in order assess if the debtor fulfils the conditions set by the law to be entitled to participate in any repayment plan. Once the protective certificate is issued, the Insolvency Service or the debtor’s lawyers files an application to court seeking the issuance of protective order for the debtor. This protective order aims to protect the debtor from any acts committed by his creditors against him, for period of 95 days.(this period may be extended). Then , when the repayment plan is prepared, the Insolvency Examiner shall submit it to creditors to vote.
2.1) Personal repayment plans
2.1.1) Consensual personal Repayment Plan
If creditors agree, by qualified majority, the Repayment Plan (called consensual Repayment Plan because creditors΄agreed by qualified majority) is submitted to the court for approval and hearing of any objections submitted by creditors who did not agree with the Plan. The validity period begins once the said plan is approved by the court.
Criteria to be met by the debtor for consensual repayment plan:
a)The debtor must have been ordinarily resident in Cyprus or had habitual residence in the Republic up to 3 years before the date of the enactment of the new Law.
b) The debtor must declare insolvent which means that he is unable to repay all his debts as they arise.
c) the debtor must submit a Statement of Personal Finance Information accompanied by a sworn statement stating that the information contained therein is complete and accurate
d) The debtor must have consented to confirmation of his financial information.
e) In case he has been declared bankrupt, the debtor must have been restored ( 5 years must have passed from that date)
f) There must be a reasonable prospect that the participation of the debtor in such settlement will facilitate him to become solvent over a period not exceeding five (5) years, according to the declaration of insolvency consultant.
The debtor is not eligible if:
a) he has been released from his debts in the last three years
b) a protective order has been issued in favor of him the last 12 months
c) he has participated again in Personal Repayment Plan (either approved by creditors and approved / not approved by the court, or rejected by creditors and imposed by a court or not).
d) 25% or more of its debts, other than exempted debts have been made within a period of six months expiring on the date where application is filed for issuing protective order.
e) has made a transaction which took place on non appreciable contribution or fraudulent preference against creditor
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Conditions of Consensus Repayment Plan:
The Plan provides for the restructuring of debts of the debtor through various measures and shall have a maximum duration of 60 months. The plan cannot provide for payments which will deprive the debtor of his normal living expenses (unless he chooses ), the amount of which is determined by guidelines lines issued by the Insolvency Service and for a transitional period, the Ministry of Finance. The terms of the Repayment Plan should maintain creditors in the same or in a better position than they would be, if debtor’s property was available in the event of bankruptcy, excluding assets that are not available, and subject to the priority order of debts, unless consent obtained by creditor for acceptance of a different result. Whenever practicable, Repayment Plans preserve the main residence of the debtor. In order for an Insolvency Examiner to decide whether maintenance of main home is possible, must take into account the following: a) all expenses related to maintaining a primary residence (incl,rent, payment mortgage, maintenance, taxes and other charges, insurance costs, etc.)b) the income of the debtor derived from the data submitted) the ability of other people staying at the residence to contribute, and d) the needs of the debtor and his family.
2.1.2) Imposed repayment plans -Non-consensual Repayment Plan
If the plan is rejected by the meeting of creditors, but the Examiner considers that debtor meets the specified criteria, then the debtor may apply to the Court for an order with which will impose the plan to all creditors.
The main criteria relating to :a) the total remaining debts (incl. Guaranteed, secured debt) do not exceed € 350.000,b)at least one of his creditors is secured creditor and has guarantee on the principal residence of the debtor, which is in Democracy and has a market value of up to € 300.000,,c) the total value of the remaining assets of the debtor, excluding principal residence, do not exceed € 250,000,d) the debtor is unable to repay debts due to deterioration of economic situation as a result of events or circumstances out of his control, which have occurred from 2009 onwards and before application for a protective order, and resulted in the substantial reduction in income of at least 25%.
Conditions to be met by the Repayment Plan to be imposed by the court to creditors:
(A) the plan provides that debtor will retain rights to his main residence
(B) the plan would keep creditors at the same or better position than they would be found if debtor ‘s property was available in accordance with the provisions of Bankruptcy Law, excluding not available assets and respecting the order of priority of debts.
(C) the terms of the Plan, under which the debtor is obliged to make payments to creditors, provide that, any additional income, apart from the need to cover the reasonable expenses of living of debtors and dependents, shall be used in respect of the debt .
(D) the plan provides that all assets of the debtor, including all highly liquid (liquid assets) and luxury mobile assets, for strengthening purposes ability to repay debt and to protect the principal private residence are taken into account.
May be excluded :Assets which are necessary for his work, assets that are not mortgage security and namely movable assets below € 35,000 and properties less than € 75,000,immovable assets which generate substantial income for repayment of debt under the Personnel Repayment Plan.
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2.1.3) Coordinated repayment plans
A debtor who fulfils the eligibility criteria for personal repayment plan and whose main house consists debt security for a small business, is entitled to begin procedures for coordinated repayment plan. This procedure falls under the law of restructure of debts for sustainable businesses (Examinership) which provides for the appointment of an examiner.
Coordinated Repayment Plans (for individuals and small enterprises)
A debtor who meets the eligibility criteria for repayment plan and whose main residence in any way constitute security for debt of small enterprise (ie. company employing fewer than ten persons), is allowed to start proceedings for this type of plan. If debtor wishes to proceed with the implementation of process of such plans, then the date where the protective order is issued, he must apply for the appointment of an Examiner (within the «Examinership») for small-enterprise, proposing as Examiner the Practitioner who is appointed to propose repayment plans. This process allows the Insolvency Practitioner to have a complete overview of the obligations of the debtor and the company, in order to propose a more coordinated solution. The protection of debtor and small enterprises is for the same period, ie 120 days, extendable by certain conditions. During coordinated repayment plan process, the proposed plan needs to be approved or the court to have issued an order imposing personal repayment plan and the proposal for a compromise or scheme settlement should be confirmed by the court pursuant to the Companies Law (under the "Examinership").When the proposal for personal repayment plan is not approved or court has not issued enforcement orders and compromise proposals or settlement plan is not confirmed within Examinership, the debtor may apply for a new repayment plan.
Results once repayment plan are enacted (applies to Consensus and Imposed Repayment Plans) If such plans are put into force or at their acceptance by creditors, or at their enforcement by court, become legally binding both for the debtor and the creditors. When the debtor has complied with the obligations provided in the Plan, the debtor is released from unsecured debts, which have not been repaid through the repayment plan. The debtor of secured debt who is subject to the plan, is not relieved of secured debts covered by the repayment plan, except insofar as provided in the Plan
2.1.4) Court order –Exception from debts
Debtor who considers that it meets the criteria / conditions provided in this law, submits a duly completed application to the Insolvency Service. The main criteria are the following:
a)The debtor is insolvent (meaning that he cannot repay all of his debts, as they arise) and very likely to continue to be in such position for a period of one year from the date of his application for the issuance of debt exemption order.
b) The monthly net disposable income of the debtor (calculated as explained below) does not exceed the amount of € 200
c )Debtors’ assets do not exceed the amount of € 1,000, except those protected under bankruptcy proceedings Calculating the net monthly income of the debtor, the following will be taken into account:
1) the salary or wages ,2)social benefits other than child allowance, receiving,3) income from pensions,4) contributions from other household members, and 5)any other income that is available to him. From the above deducted include: 1)Reasonable living expenses (defined by guidelines from the Insolvency Service)2)income tax payable by the debtor 3) Social insurance
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contributions payable by the debtor. The calculation of the assets of the debtor Includes: deposits, vehicles, shares, property (movable and immovable)
The following will not be taken into account: Books, tools and other items of equipment used by the debtor and reasonably necessary for employment or business of total value not exceeding € 6.000,a vehicle worth up to € 4.000 when the vehicle is reasonably necessary to carry out daily activities, household appliances and devices that are reasonably necessary to maintain n adequate standard of living for the debtor and their dependents, books, materials and other equipment that is reasonably necessary to the debtor, or the dependents of, as appropriate, if monitor municipal courses, medium, or higher education, for purposes of participation and integration of these courses ,any interest or right of the debtor who is a relative syntax.
The Insolvency Service ,after conducting the necessary checks and confirmed that all eligibility criteria are met, issues a relevant certificate and then, either Insolvency Service or a lawyer of debtor ‘s choice submits application to the Court to issue the relevant release of debts order.
Once the orders is issued, the debtor will be exempted from unsecured debt which do not exceed € 25,000, as well as any other obligations in this regard, and all interest, monetary clauses and other amounts from the date of application, become payable in respect of that debt. The debtor is also exempted from his obligations as guarantor. Guarantor who has guaranteed the debt included in the said Order is exempted from any responsibility in this regard and in relation to any other obligations in this respect and shall enjoy the same protection as the debtor. Creditors can file objections to the court within one year from the issue of the order.
3)Bankruptcy (Amending) Law 2015
The amending law of Bankruptcy modernises the bankruptcy procedure regarding natural persons. One of its major amendments is that bankrupt will be restored 3 years after the date that court granted bankruptcy order. Debtors who can’t repay their debts will be excepted from the status of ‘’bankrupt’’ as well as from their remaining debts, if they cooperate and act in good faith. However, in order to avoid abuse of process, the new law provides for the postpone of the above procedure if bankrupt has not complied with his obligations.
For old pending cases , debts will be exempted unless creditors oppose, but the exemption will not concern secured debts on property. Furthermore, in case of old cases, the three-year period before exemption shall be counted from the date of receipt of the Order, issued, based on the process of bankruptcy as it was before amendment of the law, and not from the date of the issuance of the bankruptcy order.
In case of new bankruptcy, discharge from debts will be available six years after the last time bankrupt has been released.
3.1) Simplification of the procedure - the abolition of the 'two-stage'and appointment of Directors as Insolvency Administrators
According to the previous bankruptcy procedure, it was published the Order receipt and the bankrupt’s assets were placed in the possession of the Official Receiver, but it was required a bankruptcy order to authorize the official recipient to proceed with the liquidation of property. Following the amending legislation, this process has been suppressed:
Following the bankruptcy order, the official receiver will be the direct legal owner of all assets, with the power to dispose the said assets without any further involvement by the court (other than cases of mortgaged property). Following the issuance of bankruptcy order, he may be appointed as administrator of the bankrupt’s property beyond the official receiver and private administrator of bankruptcy. The private administrator will be appointed by creditors or by the official recipient from the list,.(by rotation).
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3.2) Connection with the Insolvency Individuals (Personal Raft Repayment and Debt Waiver Order) Law of 2015
The court may suspend the application process for issuance of bankruptcy order, for a period not exceeding three months, if debtor proves that he has already submitted a request for Personal Repayment Plan or if debtor proves that he is able to submit Personal Repayment Plan.
4) Companies Law Cap 113-Amendments
1. Section 2 of Article 1 of the basic law is amended incorporating new definitions in the law in alphabetic order. The new definitions are the following:
a)unique modifier
b)platform
c)registers interconnection system
d)standard message format
2. Section 2 of Article 201K of the basic law is replaced by the new subsection 2 as follows :
‘’ Once the Registrar of Companies receives copy of decision, informs without delay, via registers interconnection system, the register that each company was obligated to file its acts stating that cross board merger has taken place׃
Any potential deletion of a file shall only be valid after receiving the relevant information.
3. Article 347 of basic law is being amended adding section (5) immediately after section 4 ׃
(5)(a) Documents and data which are mentioned in this section
(1) are disposed in public via register interconnection system.
(5)(b) The Registrar of Companies ensures that foreign companies own unique modifier, which allows their unadoptable identification, during their communication among registers via register interconnection system which includes, at least, data that allow identification of Member State’s register, the international origin register , the number of the foreign company in this register and, depending on each case, characteristics to avoid identification errors.
5) The basic law is amended adding Article 351A(1) :
A company’s register owns, though registers’ interconnection system, information regarding the beginning or termination of any winding up procedure or insolvency of the company and deletion of the company from the register of companies.
(2) The register of a foreign company, ensures, through registers’ interconnection system, receipt, without delay, of the information referred to in section (1).
(3) According to sections (1) and (2), exchange of information regarding registers, is free.
(4) The House of Representatives creates regulations, which set out the appropriate procedure to be followed upon receipt of the information refereed to in sections (1) and (2), which ensures that if a company has been wound up or has otherwise been removed from register, its foreign companies are deleted from registers as well, without any unreasonable delay.
Provided the obligation to delete foreign companies does not apply to companies, which have been deleted from the registry because of any change in their legal form, merger or division, or a cross-border transfer of the registered office. ".
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6) Article 365B is amended, numbering the current text in section (1), adding after subsection (1) thereof , the following new sections (2), (3), and (4).׃
(2) The register of companies which is maintained according to section (1), publishes in electronic version the following׃
(a) The company’s Memorandum and Articles of Association.
(b) Amendments of the above documents.
(c) The whole text of the amended text in its new version, as this has been reformed after amendments on the Memorandum or Articles of Association.
(d) Appointment, resignation, as well as personal data of those who either as a body prescribed by law or as members of any such body:
(i) They have authority to bind the company against third parties and to represent it before a court. The referred measures must specify if persons, who have authority to bind the company, may act alone or they should act jointly.
(ii) They take part in the management, supervision or control of the company.
(e) The amount of the subscribed capital ,at least
per year, since the Articles of Association or the Memorandum are referred to share capital.
(f) Every accounting documents whose publication is obligatory according to the provisions of Articles 141,142,142A,150,151,152.
(g) Any transfer of the company’s seat.
(h) The dissolution of the company.
(i) Appointment and personal data of liquidators.
(j) Accomplishment of liquidation and deletion from registers.
4.3) Potential changes in acts and data which are referred to in section (2), shall be registered in company’s registers under directors’/officials’ responsibility and shall be disclosed according to provisions of section (1) Article 365(A), normally within 21 days after receipt of the full documentation regarding these changes.
It is provided that the above shall not apply to every accounting documents each year, the publication of which is obligatory according to the accounting guidance.
4.4) If directors or other officials of the company fail to comply with the obligation referred to in subsection (3), the directors involved or other company officials are guilty of an offense punishable, upon conviction, to a fine not exceeding three thousand (€ 3.000) euro.
4.5) The Registrar of Companies posts electronically on the register of companies, which is interconnected with the platform, all updated information which explain the provisions of the law, that third parties may trust data and every act which is referred to in section (2).
4.6) Electronic copies of actions and data which are referred to in section (2) are disposed in public through registers’ interconnection system.
4.7) The Registrar of Companies ensures that actions and data referred to in section (2) are disposed in public through registers’ interconnection system in a standard format message and are accessible in electronic means and ensures compliance with the minimum safety requirements of safety of data transmission.
7) The Basic Law is amended by inserting immediately after Article 365D thereof, the following new articles 365E, 365ST, 365Zand 365H:
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365E. Companies must have a unique identifier that allows their unequivocal identification in their communication among registers through the interconnection system of registers, and which includes ,at least, elements that allow identification of the Member State’s register, the domestic register of origin and the number of the company in that register and, where appropriate, features to avoid identification errors.
365ST .- (1) Subject to section (2),the House of Representatives shall issue Regulations under paragraph (d) of subsection (1) Article 387 for fees charged for access to documents and information referred to in Article 365B through the system of interconnection.
(2) The following information is available for free through the system of interconnection of registers:
(a) the name and legal type of the company,
(b) the registered office of the company and the Member State in which is registered, and
(c) the registration number of the company.
365Z(1) A company’s register must dispose through the system of interconnection of registers ,information on the initiation or termination of any liquidation or insolvency procedure of the company and deletion of the company from the register.
(2) The register in which foreign companies are filed, guarantees, through the system of interconnection of registers, the obtaining, without delay of information referred to in subsection (1).
(3) The exchange of information referred to in sections (1) and (2) is free of charge for the registers.
365H. The Registrar of Companies, in cooperation with other departments of the Republic, guarantees the interoperable of its registry in the system of interconnection of registers through the platform.
8. The basic law is amended, by inserting immediately after Article 371 thereof, the following new article 371A׃
371A. The processing of personal data carried out by the Articles 201K, 347 and 351A is subject to the provisions of the Processing Personal Data (Protection of Individual) Law, as each amended or replaced. ".
Conclusion
The enforcement of this Bill has been introduced as effort to protect creditors’ interest and at the same time to help debtors take a breath. Its purpose is the establishment of an insolvency mechanism that aims to achieve restructure of debts, safeguard and restore business activity to maintain sustainable business that will subsequently contribute to financial growth and the keeping of employment. However, this regime has been described as a process putting companies on life support with no prospect of survival. The absence of safeguards in place to avert abuse of this process may increase risk of further loss to creditors. In order for this regime to work effectively a satisfactory insolvency framework must be enacted. Until this moment, Amendment of law such as the Companies Law (Amending) Cap 113 in conjunction with examinership, constitute an effort to comply with current standards that came into force with the introduction of this Bill. Finally, this new regime seems to be welcome and at the same time vulnerable.

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