New financial tools and loans will be available to small and medium-sized enterprises and start-ups, as well as the self-employed, through the Cyprus Business Development Organization. A prerequisite for these businesses and self-employed to benefit from the funding is that they are registered and operate in the Republic.
The coverage of the funding gaps currently observed for the beneficiaries is expected to be achieved through the establishment of the Cyprus Business Development Agency (KOAE), which will operate as a legal entity under public law. In particular, the financial tools that the Agency will be able to develop include, among others, loans, guarantee and equity instruments and services. At the same time, it will be able to grant grants through the use of European funds. It is worth noting that all decisions taken will be based on national and EU state aid rules.
Race
A few days ago, the relevant bill was submitted to the Parliament and next Monday it will be put under the microscope of the members of the parliamentary Finance Committee. The Commission has a maximum of two sessions to complete its examination, as Parliament will close for the summer recess. Therefore, the legislation will have to be adopted before July 9, otherwise the Republic will lose funding from the Recovery Fund.
As is well known, the Recovery Plan will be completed in the coming months, with the Commission not intending to extend the planning. By the end of August, the member states of the European Union will have to implement the commitments they have made, otherwise they will lose millions of euros in European funds. For this reason, the Ministry of Finance is seeking the approval of the legislation, which extends to 60 pages. Already, the competent ministry has made the appropriate representations to the Parliament, requesting its approval as soon as possible. For this Agency, Cyprus should also appoint, before the end of August, the decision-making board of directors.
The provisions
In detail, the Organization aims to facilitate the access of beneficiary businesses to financing, including their direct financing, to promote extroversion, competitiveness, innovation and the green and digital transition of these businesses, as well as to contribute to the achievement of the economic, social and environmental goals of the Republic for sustainable development.
Specifically, the draft law defines the powers of the Agency, such as the preparation of financing plans and the provision of loans, as well as the framework for the exercise of these powers, which will be exercised in accordance with EU state aid rules.
At the same time, it prohibits the Organization from accepting deposits from the public. It also obliges the CSD to implement adequate and appropriate policies, controls and procedures to prevent money laundering and terrorist financing offences. In addition, the bill provides for the establishment of the Board of Directors of the Organization, its responsibilities and composition, the criteria for the appointment of its members, the duration of their term of office, the cases of their termination and the procedures for meetings of the Council.
At the same time, it prohibits the members of the Council from carrying out certain activities, while it sets out impediments to the appointment of the president, the vice-president and the members of the board of directors, as well as the persons who cannot be appointed due to incompatibility. With the government bill, the Organization is obliged to comply with the respective Public Governance Code and to issue a Corporate Governance Code.
The Ministry of Finance estimates that, with the operation of this Organization, no immediate economic or social effects are expected for citizens or the macroeconomic environment. As he points out, the impact is limited at the organizational level in the public service. At the same time, it estimates that positive effects on the business environment are expected, given that through the Organization the access of small and medium-sized enterprises to finance will be enhanced, in sectors where there are currently financing gaps in the market.
Finally, it notes that an administrative burden is expected to arise due to the establishment, staffing and undertaking of all the necessary actions for the operation of the Organization.
