The 10 most Common Legal Issues in Cyprus

The 10 most Common Legal Issues in Cyprus

By: Michalis Economides, Advocate & Legal Consultant, CEO of Chambersfield Economides Kranos Law firm 

During  the course of our lives, we will definitely need the assistance of a  legal consultant on numerous occasions, either for a reason such as  buying a home, establishing a new business or protecting a new idea, or  for more complicated matters such as accident claims, medical  negligence, property disputes, personal disputes and so on. Legal issues  are a part of everyday life and it is very important to learn how to  deal with them efficiently with the help of smart planning and the  assistance of the right legal consultants. Based on my experience, the  following are the most common legal issues on which advocates in Cyprus  are being asked for advice.


1. Formation of a New Legal Entity (Company Incorporation)

During the initial stage of setting up a business, it is highly  recommended that new Legal Entities obtain legal consultation from an  accredited law firm with experience of business and tax law issues. What  happens in the initial stage will follow the operational life cycle of  the company’s business development and corporate obligations.

Therefore, with the assistance of legal consultants:

  • The right type of company will be selected and formulated in a  favorable jurisdiction, taking into consideration the tax laws and  business operations of the chosen jurisdiction.
  • The Memorandum and Articles of Association will clearly outline all  the general terms of the new entity and will specifically address the  conditions regulating the relationship between the involved contracting  parties.
  • A possible shareholders’ agreement will document shareholders’  relationships by specifying the responsibilities and rights, meetings,  the decision-making process, terms and conditions of a voluntary  resolution, shareholders’ capital issuance and transfer as well as the  necessary mechanism for common disputes that may arise during the  company’s operations.
  • The employment contract will define and clarify the parties’ relationships and duties.
  • A confidentially agreement will secure the preservation of the new  development ideas and concepts of the new entity. Business owners will  protect their newly established company via this methodology and by  implementing the right procedures and strategies to deal successfully  with common uncertainties and misunderstandings that may arise during  the firm’s business development and operations.

2. Intellectual Property

Fearless competition, cross-border transactions, constant  availability of information and development of businesses abroad have  established a new reality and prerequisite regarding the protection of  intellectual property rights. The registration of Intellectual Property  such as trademarks is a business investment that should not be neglected  since it adds value to the services / products of a business and  provides instant recognition and differentiation from the competition.  Subsequently, the registration of Intellectual Property rights is highly  recommended and the process must be supervised by a law firm with  experience in this matter, in order for the proper guidelines to be  implemented on both a national and international level.

3. Employment Law

The relationship between employer and employees should always be  well-defined and secured through an employment contract, since a dispute  between the parties may turn into a major legal liability. With an  employment contract in place, the business code of conduct is specified,  the parties know their rights, responsibilities, tasks and evaluation  methods. With the relationship properly established, all the parties  know exactly where they stand.

4. Real Estate – Property Sales and Purchase Contracts

The sales purchase contract is the most important document in any  transaction, since it outlines all the rights and appropriate actions to  be taken, should a dispute arise, and documents all the possible risks  that may lead to a disagreement. A real estate property acquisition  requires significant investment.

Consequently, it is essential that the drafting of the contract  agreement to be undertaken only by legal advisors, who are responsible  for safeguarding the interests of all the parties involved and ensuring  that the terms and conditions are fully compliant with the provisions of  the legal framework that governs the jurisdiction in which the  transaction takes place.

Furthermore, a law firm can act as a mediator and provide escrow  services until the completion of the business transaction, meaning that  the law firm will be responsible for overseeing the transaction progress  and only when all due diligence has been performed and the terms and  conditions are satisfied, then, upon the instructions of the client,  will it proceed with the release of the funds and complete the  transaction.

5. Commercial Contracts

We all deal with commercial contracts, either oral or written, as  part of our daily routine. As mentioned above, a contract is a legally  binding agreement that should always exist when two or more parties are  forming a business relationship of any kind, no matter the size of the  entity or the value of the deal. It is advisable to spend some time with  your legal advisors and draw up a proper contract, to limit any future  disputes and drawbacks that will affect your future business operations.  A properly drafted contract agreement should clearly state the  obligations and rights of the relationship between two or more parties,  as well as define the nature of the relationship, its duration, the  tasks of the parties, confidentiality and other important aspects.

6. Tenancy Issues

The laws governing the relationship between a tenant and landlord  have recently been amended in Cyprus, in order to change what comprised a  series of time- consuming legal processes that a landlord needed to go  through in order to evict tenants who violated their agreed  responsibilities and to recover outstanding rent. But it has always been  essential to have a well-structured lease agreement, which clearly  addresses all possible future scenarios that may lead to a dispute,  states the responsibilities and rights of each party, as well as the  timeframe of the agreement. I would like to emphasize on the importance  of tenancy agreements between private owners and legal entities.

In my opinion, the appointment of an expert legal consultant should  be required in order for property owners to avoid the unfortunate  consequences of the discontinuation of business operations on the part  of the legal entity or lack of financial collateral.

7. Loan Restructuring

Loans, mortgages and debts can frustrate and fill people with  anxiety. Trusted lawyers / certified liquidators and insolvency  practitioners will examine whether legal entities and/or physical  persons have the ability to repay and may provide several consultative  restructuring plans that aim to activate the appropriate debt dealing  mechanisms, i.e. through restructuring or by lengthening the repayment  period of the amount or exchanging the debt for a real estate asset,  etc.

8. Divorce

The dissolution of a marriage is, of itself, a very stressful process  and becomes even more stressful for the parties when children are  involved. It is, therefore, essential to have a trusted lawyer who will  help in all the required procedures, including the maintenance of  children and spouse, custody issues, the division of family assets, etc.

9. Accident Claims

Being involved in a motor accident, even a minor one, is not always  as straightforward as it initially seems, and disputes may arise between  the involved parties. Therefore, legal representation is a necessity to  avoid possible discrepancies and ensure that, where relevant, you  receive the greatest possible compensation. Besides calling for medical  assistance for any injuries, you must contact the police, your insurance  company and your lawyer, so as to properly protect your legal rights.  Moreover, it is of equally great importance that you take your own  photos, not move your vehicle until the police and the insurance company  are on the scene and note the full contact details of any witnesses to  the accident.

10. Medical Negligence

In recent years, there has been an increase in the number of cases of  alleged malpractice and/or liability (cases of medical negligence).  People are more aware than ever of their right to question the quality  and the result treatment that they or a family member have received and  to act accordingly. For an incident to be characterized as medical  negligence, certain conditions must be met. According to the relevant  regulatory and legislative framework, in civil cases, the components of a  three- part test should be established and proven on the balance of  probabilities, whereas, in criminal cases, considering medical  negligence-related convictions, the standard of evidence that needs to  be met is “beyond any reasonable doubt”. Medical malpractice incidents  are rarely deemed to be black and white cases, since they may be based  on subjective and contradictory opinions, different types of medical  practices and techniques, lack of diagnosis, medical misdiagnosis,  surgical error, anesthesia error, unforeseen events and many other  factors. Therefore, it is prudent, when such incidents occur, to seek  the assistance and consultation of a law firm experienced in instances  of medical negligence, in order to fully discuss the case and possible  action. In general, whether an individual or a business, it is wise to  seek legal advice on matters that involve relationships with third  parties, so as to safeguard your rights. An experienced law firm has the  knowledge and know-how to proactively delineate the status of  relationships and assist in the prevention of disputes.

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