Changes in the companies’ law
On 23 September 2016 the companies law has been amended. The main changes are as follows:
- The directors report, included in the financial statements, 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 – large) the consolidation exercise (ex elimination of intercompany balances and transactions) can be avoided. If avoided, you can add to the criteria a 20% uplift (not on the criteria for 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 need 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 other exemptions offered in previous version of the law relating to a) severe and long term restrictions, b) disproportionate costs, c) subsequent sale, have been abolished and do not apply.
- Small sized companies, that are not listed, are excluded from the preparation of the management report.
- Medium size companies must prepare management report together with their financial statements. 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 cy tax residents etc.
- Non Cypriot companies but having a business place in Cyprus should also prepare and submit audited financial statements.