Effort underway to resolve BO Register issues

An effort is currently underway to resolve the problems that have arisen since the European directive for the electronic Beneficial Ownership Register came into effect, which led to a number of business associations sending a letter of complaint to Registrar of Companies Irene Mylona-Chrysostomou to express their discontent.

The President of the Cyprus Bar Association, Michael Vorkas, made statements saying that the problems relate to Cyprus’ harmonisation and compliance with certain EU directives on the obligation of registered companies to now disclose their beneficial owners, who are the shareholders and essentially natural persons.

“There was an interim solution to the problem for compliance purposes, based on which, all companies had up until 14 November 2023 to comply. And this was in the context of a final solution that involved certain software that the Registrar of Companies was meant to introduce,” said Vorkas.

Then, according to Vorkas, it seems that a large number of businesses found it impossible to meet the deadline.

On top of this, he added, more problems arose, such as difficulties in accessing the system which prevented timely registration.

“Consultations followed with the Registrar of Companies and we concluded that the deadline would be extended until the end of February 2024,” said Vorkas. “The Registrar then granted this deadline, however, there was a problem concerning the companies whose beneficial owners were trusts or a public company, and not natural persons,” he explained.

“Thus, in that case there was an amendment to a specific regulatory administrative act in which its wording did not clarify whether it referred to the companies whose beneficial owners were trusts or a public company", Vorkas added.

The Registrar then started imposing fines on everyone who failed to comply, pursuant to the relevant law. The fines are in the thousands, he said, and they don’t only involve just companies but also officials, and were imposed not only on large but also small businesses.

“As Bar Association, we consider that these fines are being imposed wrongly and unjustifiably,” said Vorkas.

With the above in mind and following the turmoil it has caused in the business world, an effort got underway to resolve the issue.

To this end, the Registrar consulted with the Labour Ministry and they agreed to “expire” the system and enable individuals to proceed with the changes without having to pay a fine.

At the same time, they are looking at how to revoke the fines that were already imposed, in consultation with the Law Office of the Republic.

Meanwhile, the matter is going to be discussed at the House Commerce Committee next week, as the issue does not only affect lawyers and accountants, but also their clients as well as small and big businesses.

Vorkas warned that if the issue isn’t resolved, there will be a huge reaction, not just from local businesses but also foreigners who are using Cyprus as a centre for their business activities.