Filenews 14 September 2022
The bill of the Ministry of Finance for the control of foreign direct investments in Cyprus is submitted at today's meeting of the Council of Ministers.
The draft law aims to transpose into national law the European regulation of March 19, 2019 concerning the establishment of a framework for the screening of foreign direct investments in the Union. It is noted that the vast majority of EU member states have either established relevant control mechanisms or are in the final stages of the process of their establishment.
As the CNA is informed, the bill describes the conditions under which an obligation to notify the intended foreign direct investment and obtain approval is created, the criteria and factors that can be taken into account when controlling a foreign direct investment, the procedure for checking foreign direct investment, the type of information required during the control of the investment and the executive powers of the competent authority (MIC).
In essence, this bill allows the respective Minister of Finance to have a say in the realization of foreign direct investments especially by third states in Cyprus. After its approval by the Council of Ministers, the bill will be submitted to the Parliament for discussion and approval.
In recent statements to Alpha Cyprus TV station, Konstantinos Petrides had stated that "as a country we must preserve banking stability in the public interest" and added "if we see that there are dreaded and aggressive acquisitions possibly from abroad, then we must have the right to analyze whether it should be done or not".
The bill is directly related to the three non-binding proposals submitted by the US investment fund Lone Star for the acquisition of the share capital of the Bank of Cyprus, which the Board of Directors of the bank rejected, saying that Lone Star fundamentally underestimates the value and future prospects of the bank. The proposal for the acquisition of the Bank of Cyprus had been published by the fund on 19 August.
Lone Star came back with a new announcement on September 6th saying it was considering its options in relation to the possibility of submitting a revised bid to acquire the Bank of Cyprus. Under the Irish takeover rules (The parent company of Bank of Cyprus is registered in Ireland), Lone Star is obliged not later than 17:00 (Irish time) on 30 September, either to announce its intention to submit its final bid or to notify that it does not intend to do so. The timetable may be extended by the Irish Takeover Board.
