{"id":3492,"date":"2025-05-05T14:49:41","date_gmt":"2025-05-05T11:49:41","guid":{"rendered":"https:\/\/ga0ab3892m.wpdns.site\/?p=3492"},"modified":"2025-06-19T17:12:32","modified_gmt":"2025-06-19T14:12:32","slug":"board-of-directors-under-cypriot-law-role-duties-and-accountability","status":"publish","type":"post","link":"https:\/\/www.patsalides.com.cy\/gr\/board-of-directors-under-cypriot-law-role-duties-and-accountability\/","title":{"rendered":"\u039f \u03a1\u03cc\u03bb\u03bf\u03c2, \u03c4\u03b1 \u039a\u03b1\u03b8\u03ae\u03ba\u03bf\u03bd\u03c4\u03b1 \u03ba\u03b1\u03b9 \u03b7 \u0395\u03c5\u03b8\u03cd\u03bd\u03b7 \u03c4\u03c9\u03bd \u0394\u03b9\u03bf\u03b9\u03ba\u03b7\u03c4\u03b9\u03ba\u03ce\u03bd \u03a3\u03c5\u03bc\u03b2\u03bf\u03cd\u03bb\u03c9\u03bd \u03c3\u03b5 \u039a\u03c5\u03c0\u03c1\u03b9\u03b1\u03ba\u03ad\u03c2 \u0395\u03c4\u03b1\u03b9\u03c1\u03b5\u03af\u03b5\u03c2"},"content":{"rendered":"<h4 data-start=\"276\" data-end=\"328\">1. <strong data-start=\"283\" data-end=\"328\">Powers and Role of the Board of Directors<\/strong><\/h4>\n<p class=\"\" data-start=\"330\" data-end=\"740\">The Board of Directors exercises the general management and administration of the company\u2019s affairs, excluding those powers that, under the Companies Law (Cap. 113) or the company\u2019s Articles of Association, are reserved exclusively for the General Meeting. Shareholders may exercise control over the directors\u2019 actions through the General Meeting, either by amending the Articles or by replacing the directors.<\/p>\n<p data-start=\"330\" data-end=\"740\">The Board&#8217;s powers usually include:<br \/>\ni) The general management of the company\u2019s operations,<br data-start=\"1430\" data-end=\"1433\" \/>ii) The maintenance of accounting records,<br data-start=\"1475\" data-end=\"1478\" \/>iii) The timely submission of tax returns,<br data-start=\"1520\" data-end=\"1523\" \/>iv) Compliance with the obligations towards the Registrar of Companies.<\/p>\n<h4 data-start=\"742\" data-end=\"775\">2. <strong data-start=\"749\" data-end=\"775\">Composition<\/strong><\/h4>\n<p class=\"\" data-start=\"777\" data-end=\"808\">Every Cyprus company must have:<\/p>\n<ul data-start=\"809\" data-end=\"932\">\n<li class=\"\" data-start=\"809\" data-end=\"877\">\n<p class=\"\" data-start=\"811\" data-end=\"877\">At least one (1) director in the case of a private company, or<\/p>\n<\/li>\n<li class=\"\" data-start=\"878\" data-end=\"932\">\n<p class=\"\" data-start=\"880\" data-end=\"932\">At least two (2) directors for a public company.<\/p>\n<\/li>\n<\/ul>\n<p class=\"\" data-start=\"934\" data-end=\"1003\">All directors and the company secretary must be over 18 years of age.<\/p>\n<p class=\"\" data-start=\"1005\" data-end=\"1346\">In private companies with only one director, that sole director is not permitted to also act as the secretary, unless the company is a single-member private company, in which case the same individual may act as both director and secretary. The secretary is appointed by the Board of Directors, which determines the duration, remuneration, and terms of the appointment.<\/p>\n<h4 data-start=\"1596\" data-end=\"1640\">3. <strong data-start=\"1603\" data-end=\"1640\">Legal Nature of Directors\u2019 Duties<\/strong><\/h4>\n<p class=\"\" data-start=\"1642\" data-end=\"1891\">There is no uniform standard of conduct applicable to company directors. While the exercise of power by directors must be subject to oversight, imposing excessively rigid standards may limit their ability to act in the best interests of the company.<\/p>\n<p class=\"\" data-start=\"1893\" data-end=\"2177\">On the one hand, the level of involvement of each director may vary depending on their specific duties. On the other hand, in large corporate groups or larger companies, the Board often delegates part of its powers to employed professionals who carry out certain directors\u2019 functions.<\/p>\n<p class=\"\" data-start=\"2179\" data-end=\"2749\">Historically, company directors were viewed as trustees or fiduciaries of the company, and their obligations were assessed on that basis. However, the prevailing modern view is that directors act as agents of the company and, in that capacity, occupy a fiduciary position. This distinction becomes largely irrelevant when assessing their duty of good faith and loyalty to the company, as these duties are identical to fiduciary obligations. However, it may become relevant when evaluating the duty of care and skill, which differs from that of a traditional trustee.<\/p>\n<p class=\"\" data-start=\"2751\" data-end=\"2915\">It is important to emphasise that directors owe duties to the company both collectively\u2014through the board\u2014and individually, in their personal capacity as directors.<\/p>\n<h4 data-start=\"2917\" data-end=\"2945\">3.1 <strong data-start=\"2925\" data-end=\"2945\">Fiduciary Duties<\/strong><\/h4>\n<p class=\"\" data-start=\"2947\" data-end=\"3039\">Due to the fiduciary relationship directors hold with the company, they are under a duty to:<\/p>\n<ul data-start=\"3040\" data-end=\"3328\">\n<li class=\"\" data-start=\"3040\" data-end=\"3068\">\n<p class=\"\" data-start=\"3042\" data-end=\"3068\">Act in good faith,<\/p>\n<\/li>\n<li class=\"\" data-start=\"3069\" data-end=\"3159\">\n<p class=\"\" data-start=\"3071\" data-end=\"3159\">Exercise their powers for the proper purposes for which they were conferred, and<\/p>\n<\/li>\n<li class=\"\" data-start=\"3160\" data-end=\"3328\">\n<p class=\"\" data-start=\"3162\" data-end=\"3328\">Avoid placing themselves in situations where their personal interests conflict with those of the company, unless they have the company\u2019s informed consent.<\/p>\n<\/li>\n<\/ul>\n<h4 data-start=\"3330\" data-end=\"3366\">3.2 <strong data-start=\"3338\" data-end=\"3366\">Duties of Care and Skill<\/strong><\/h4>\n<p class=\"\" data-start=\"3368\" data-end=\"3528\">The content of the directors\u2019 duty of care and skill is not expressly defined under Cypriot law. Instead, guidance is derived from English case law.\u00a0<span style=\"box-sizing: border-box;\">Specifically, in the\u00a0<em>In Re Barings Plc (No 5)<\/em> [2000] case, it was held directors, collectively and individually, had a duty to acquire and maintain a sufficient knowledge of the company\u2019s business to enable them to discharge their responsibilities. Directors cannot escape liability by delegating their responsibilities; instead, they must exercise powers of supervision adequately, and this depends on the facts.<\/span>\u00a0Moreover, in the <em>Lexis Holdings (in Administration) v Luqman [2009] case,<\/em> the Court of Appeal ruled that an inactive director will be in breach of this duty and may be liable for other directors\u2019 wrongdoing due to inactivity.<\/p>\n<p class=\"\" data-start=\"3368\" data-end=\"3528\">It should be noted that this area of law is constantly under review.<\/p>\n<h4 data-start=\"4272\" data-end=\"4327\">4. <strong data-start=\"4279\" data-end=\"4327\">Criminal Liability of the Board of Directors<\/strong><\/h4>\n<p class=\"\" data-start=\"4329\" data-end=\"4567\">As company officers, directors are subject to heightened legal responsibilities and are criminally liable if they breach the applicable legal framework. The criminal liability of officers in Cypriot companies is primarily governed by:<\/p>\n<ul data-start=\"4568\" data-end=\"4770\">\n<li class=\"\" data-start=\"4568\" data-end=\"4629\">\n<p class=\"\" data-start=\"4570\" data-end=\"4629\">The <strong data-start=\"4574\" data-end=\"4591\">Criminal Code<\/strong> of the Republic of Cyprus (Cap. 154),<\/p>\n<\/li>\n<li class=\"\" data-start=\"4630\" data-end=\"4669\">\n<p class=\"\" data-start=\"4632\" data-end=\"4669\">The <strong data-start=\"4636\" data-end=\"4653\">Companies Law<\/strong> (Cap. 113), and<\/p>\n<\/li>\n<li class=\"\" data-start=\"4670\" data-end=\"4770\">\n<p class=\"\" data-start=\"4672\" data-end=\"4770\">Various <strong data-start=\"4680\" data-end=\"4696\">special laws<\/strong>, such as tax legislation and anti-corruption\/money laundering provisions.<\/p>\n<\/li>\n<\/ul>\n<h5 data-start=\"4772\" data-end=\"4814\">A) Criminal Liability under Cap. 113:<\/h5>\n<ul data-start=\"4815\" data-end=\"5356\">\n<li class=\"\" data-start=\"4815\" data-end=\"4883\">\n<p class=\"\" data-start=\"4817\" data-end=\"4883\"><strong data-start=\"4817\" data-end=\"4832\">Article 307<\/strong>: Offences by company officers during liquidation<\/p>\n<\/li>\n<li class=\"\" data-start=\"4884\" data-end=\"4980\">\n<p class=\"\" data-start=\"4886\" data-end=\"4980\"><strong data-start=\"4886\" data-end=\"4901\">Article 308<\/strong>: Penalties for falsification of books and material omissions in declarations<\/p>\n<\/li>\n<li class=\"\" data-start=\"4981\" data-end=\"5047\">\n<p class=\"\" data-start=\"4983\" data-end=\"5047\"><strong data-start=\"4983\" data-end=\"4998\">Article 309<\/strong>: Fraud by officers of companies in liquidation<\/p>\n<\/li>\n<li class=\"\" data-start=\"5048\" data-end=\"5114\">\n<p class=\"\" data-start=\"5050\" data-end=\"5114\"><strong data-start=\"5050\" data-end=\"5065\">Article 310<\/strong>: Liability for failure to keep proper accounts<\/p>\n<\/li>\n<li class=\"\" data-start=\"5115\" data-end=\"5188\">\n<p class=\"\" data-start=\"5117\" data-end=\"5188\"><strong data-start=\"5117\" data-end=\"5132\">Article 311<\/strong>: Fraudulent trading by officers and connected persons<\/p>\n<\/li>\n<li class=\"\" data-start=\"5189\" data-end=\"5273\">\n<p class=\"\" data-start=\"5191\" data-end=\"5273\"><strong data-start=\"5191\" data-end=\"5206\">Article 312<\/strong>: Court\u2019s power to order compensation against offending directors<\/p>\n<\/li>\n<li class=\"\" data-start=\"5274\" data-end=\"5356\">\n<p class=\"\" data-start=\"5276\" data-end=\"5356\"><strong data-start=\"5276\" data-end=\"5291\">Article 313<\/strong>: Criminal prosecution of defaulting officers and company members<\/p>\n<\/li>\n<\/ul>\n<h5 data-start=\"5358\" data-end=\"5419\">B) Criminal Offences under the Criminal Code (Cap. 154):<\/h5>\n<ul data-start=\"5420\" data-end=\"5512\">\n<li class=\"\" data-start=\"5420\" data-end=\"5447\">\n<p class=\"\" data-start=\"5422\" data-end=\"5447\"><strong data-start=\"5422\" data-end=\"5431\">Fraud<\/strong> (Article 300)<\/p>\n<\/li>\n<li class=\"\" data-start=\"5448\" data-end=\"5477\">\n<p class=\"\" data-start=\"5450\" data-end=\"5477\"><strong data-start=\"5450\" data-end=\"5461\">Forgery<\/strong> (Article 335)<\/p>\n<\/li>\n<li class=\"\" data-start=\"5478\" data-end=\"5512\">\n<p class=\"\" data-start=\"5480\" data-end=\"5512\"><strong data-start=\"5480\" data-end=\"5498\">Abuse of power<\/strong> (Article 105)<\/p>\n<\/li>\n<\/ul>\n<h5 data-start=\"5514\" data-end=\"5542\">C) Special Legislation:<\/h5>\n<ul data-start=\"5543\" data-end=\"5739\">\n<li class=\"\" data-start=\"5543\" data-end=\"5593\">\n<p class=\"\" data-start=\"5545\" data-end=\"5593\"><strong data-start=\"5545\" data-end=\"5557\">Cap. 161<\/strong>: The Prevention of Corruption Law<\/p>\n<\/li>\n<li class=\"\" data-start=\"5594\" data-end=\"5654\">\n<p class=\"\" data-start=\"5596\" data-end=\"5654\"><strong data-start=\"5596\" data-end=\"5614\">Law 95(I)\/2000<\/strong>: Offences relating to VAT and tax law<\/p>\n<\/li>\n<li class=\"\" data-start=\"5655\" data-end=\"5739\">\n<p class=\"\" data-start=\"5657\" data-end=\"5739\"><strong data-start=\"5657\" data-end=\"5676\">Law 188(I)\/2007<\/strong>: The Law on the Prevention and Suppression of Money Laundering<\/p>\n<\/li>\n<\/ul>\n<hr class=\"\" data-start=\"5741\" data-end=\"5744\" \/>\n<h4 data-start=\"5746\" data-end=\"5764\"><strong data-start=\"5750\" data-end=\"5764\">Conclusion<\/strong><\/h4>\n<p class=\"\" data-start=\"5766\" data-end=\"6154\">The increasing responsibilities of company directors, combined with the breadth of their duties and the expanding framework of criminal sanctions, make the constant monitoring of their actions essential to protect the company. Ensuring transparency, accountability, and the smooth functioning of the company depends directly on the integrity and competence of those who govern it.<\/p>\n<h3><strong>Author:<\/strong><\/h3>\n<p><strong><img decoding=\"async\" class=\"alignleft wp-image-3325 size-thumbnail\" src=\"https:\/\/www.patsalides.com.cy\/wp-content\/uploads\/2024\/10\/jpeg-optimizer_CHR_0722-150x150.jpg\" alt=\"\" width=\"150\" height=\"150\" \/>Semeli Epifaniou<\/strong><\/p>\n<p><em>Lawyer \/Corporate Department\u00a0<\/em><\/p>\n<p><a href=\"http:\/\/semeli.epifaniou@patsalides.com.cy\/\"><span class=\"elementor-icon-list-text\">semeli.epifaniou@patsalides.com.cy<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>1. Powers and Role of the Board of Directors The Board of Directors exercises the general management and administration of the company\u2019s affairs, excluding those powers that, under the Companies Law (Cap. 113) or the company\u2019s Articles of Association, are reserved exclusively for the General Meeting. Shareholders may exercise control over the directors\u2019 actions through [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":2098,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"none","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"both","_seopress_redirections_param":"","_seopress_redirections_type":301,"_seopress_analysis_target_kw":"","_seopress_news_disabled":"","_seopress_video_disabled":"","_seopress_video":[],"_seopress_pro_schemas_manual":[],"_seopress_pro_rich_snippets_disable_all":"","_seopress_pro_rich_snippets_disable":[],"_seopress_pro_schemas":[],"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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