The Government is promoting the establishment and operation of a semi-governmental organisation, the Cyprus Enterprise Development Organisation, with the Ministry of Finance putting the relevant bill forward for pubic consultation until 19 October.
According to what is stated, in Greek, on the e-consultation platform, the Organisation's mission is to strengthen state initiatives to improve access to financing for small and medium-sized enterprises and start-ups and the self-employed, and to intervene where there are financial gaps in the market.
As is emphasised, the need to enhance Cypriot businesses' access to finance has been repeatedly highlighted by the European Commission in its country-specific recommendations.
It is noted that the project is included in the national Recovery and Resilience Plan.
The Organisation's purpose
Based on the provisions of the bill that was put out for public consultation, upon the passage of the law, a Cyprus-headquartered legal entity under public law will be established under the name 'Cyprus Enterprise Development Organisation'.
The Organisation will operate through a process of perpetual succession and, subject to the provisions of the Fiscal Responsibility and Fiscal Framework Law, may: (a) sue and be sued, (b) enter into contracts, (c) acquire, hold and dispose of movable and immovable property, (d) enter into loans to finance its activities and (e) perform any other act necessary for the fulfillment of its powers.
According to the provisions, the purpose of the Organisation is also:
- the promotion and support of entrepreneurship and the strengthening of the extroversion and competitiveness of businesses in the Republic,
- the promotion and support of innovation of covered enterprises in the Republic, including the promotion and support of the digital and green transition of enterprises,
- facilitating access to financing for covered businesses in the Republic,
- supporting investment initiatives in the Republic in line with the strategic priorities of the Organisation,
- investment in businesses and the management of such investments,
- the management of funds for financial, investment and other purposes and other assets of the Organisation and
- the use of European funds to support the covered businesses.
At the same time, the Organisation, through the exercise of the powers that will be assigned to it by the law under consultation, facilitates access for covered businesses to:
- financing to address the market failures and shortcomings identified under Article 44 in relation to the inability of credit institutions and other financial institutions to offer adequate financing to specific sectors and categories of enterprises and not in competition with them, through, in particular, the provision of financial instruments for the optimal channeling of national, European and other funds to enterprises, and
- business consulting services.
The powers
To achieve its purpose, the Organisation will have the following specific powers:
- the design, issuance and preparation of Schemes, including, without limitation, financial schemes,
- the provision of loans and other credits to covered enterprises either directly or through its subsidiaries,
- the arrangement of loans to covered enterprises through financial sector entities or other financing bodies,
- participating, directly or indirectly, in the provision of loans to covered undertakings together with financial sector entities or other financing bodies,
- the provision of guarantees for the benefit of covered enterprises to cover their obligations to entities in the financial sector or other financing bodies, in compliance with the "Law on Accounting and Financial Management and Financial Control of the Republic",
- the provision of grants to covered businesses,
- the acquisition, acceptance, receipt, possession, management, conversion or sale of any kind of shares, capital, bonds or other securities or interests in any company, partnership, association of persons, enterprise; investment fund or any form of investment scheme,
- the provision, to covered enterprises, of business advisory services programs, as well as programs for the development of skills within enterprises in areas such as strategy development, financial management, operational efficiency and other related areas, and
- the preparation of studies for use and exploitation by various market players.
However, in order to fulfill its special powers, the Organisation may:
- to take out loans, issue securities and raise, in any other way, funds to finance its activities and to provide collateral on its assets for this purpose,
- to acquire, own, manage, dispose of and/or lease any movable and immovable property, including without limitation as a result of the disposal of any security for the benefit of the Organisation,
- to invest its assets and manage such investments,
- to receive collateral for the benefit of the Organisation or its subsidiaries in the context of providing loans and other credits to businesses and generally exercising its powers,
- to establish, establish and participate in companies and investment funds or any form of investment schemes for the exercise of its activities, and
- to receive sponsorship from the Republic, the European Union and international organizations.
At the same time, however, it will not be able to accept deposits or other repayable funds from the public.
Financial market research
Also based on the provisions of the bill, the Organisation, every four years or at such shorter intervals as the Minister of Finance may determine, will investigate and identify weaknesses in the financial market in the Republic and will prepare a relevant study, which will determine the cases where credit institutions and other financial institutions are unable to offer adequate financing to specific sectors and categories of businesses.
Seven-member Board of Directors
Furthermore, based on the provisions of the bill under public consultation, the Organisation's board of directors will consist of seven members who will be appointed by the Council of Ministers upon the recommendation of the Minister of Finance and will be composed of:
- the Chairman,
- the Vice Chairmant, and
- five Members, of which three are the Permanent Secretary of the Ministry of Finance, the Permanent Secretary of the Deputy Ministry of Research, Innovation and Digital Policy and the Permanent Secretary of the Ministry of Energy, Trade and Industry or their authorised representatives.
(Source: InBusinessNews)
