On the 23rd September 2016 laws 95(1) of 2016, 96(1) of 2016 and 97(1) of 2016 were published int he official gazette and hence making them part of our national legislation. The three mentioned laws amend the Partnership’s law, the Companies Law and the Auditors Law in Cyprus. These amendments come to harmonize local legislation with Directive 2013/34/EU which in paragraph 5 of the directive declares as its scope the following:
In highlight the the main changes are :
- The directors report will change to a management report and the law specifies what should be included in that report.
- There is a new definition for small, medium and large companies and also for small, medium and large groups.
- On the calculation to determine the size of the group (small, medium or large) you can avoid doing the consolidation exercise (ex elimination of inter-company balances and transactions). If you avoid to do so you can add to the criteria a 20% uplift however this is not available for the criteria regarding the number of employees.
- For a group to be classified in any category need to satisfy the requirements of the category for 2 subsequent years (ex if for example at 2014 the group was large and on 2015 the group was medium then it is treated as large for the year ended 31 December 2015).
- On the financial statements of the companies the average number of employees needs to be shown.
- The law allows for small and medium size groups not to prepare consolidated financial statements. The size of the Group and materiality of subsidiaries are the only reasons that is allowed by the law not to prepare consolidated financial statements. The previous law provided for other exemptions relating to:
- severe and long term restrictions;
- disproportionate costs;
- subsequent sale, however these are no longer available.
- Small sized companies, that are not listed, are excluded from the preparation of the management report.
- Medium size companies should prepare management report. The requirement of including non – financial information in the report does not apply for the medium companies.
- It’s by law obligatory for all Cypriot companies to prepare audited financial statements. No exceptions for dormant, non Cypriot tax residents etc.
- Non Cypriot companies but having a business place in Cyprus should also prepare and submit audited financial statements.
On the website of the European Commission, follow this link, it seems that the transposition has not yet, as of the date of this publication, been updated.