M&A – Main differences between Share Deals and Asset Deals in Cyprus

• Transfer of the ownership (or part of it) of the target company (with all assets and liabilities).
• The transferor is the owner of the target company.
• The articles of association of the company and or an applicable shareholders’ agreement may provide restrictions on the transferability of shares and or provide for a right of first refusal to existing members of the company.
• Shareholder or board approvals may need to be obtained by seller for share transfers prior to transfer. 
• Prior governmental and/or regulatory authorizations may need to be obtained.
  
• Prior clearance by the Commission for the Protection of Competition or European Commission may be required depending on certain thresholds being met.
• Recommended that Share Purchase Agreement (SPA) be tailored in order to include appropriate representations, warranties and indemnities (in particular regarding tax, labour and environmental matters, among others).
• No mandatory legal requirements as to content of SPA.
  

• Transfer of specific assets and or liabilities while other assets and liabilities remain with the company.
• The transferor is the company which transfers the assets and or liabilities.
• Shareholder or board resolution may need to be obtained by the management of transferor in order to negotiate and or complete the asset deal prior to transfer.
• Prior governmental and or regulatory authorizations might need to be obtained. 
• Prior clearance by the Commission for the Protection of Competition or European Commission may be required depending on certain thresholds being met.
• New contracts with clients, suppliers, employees, landlords etc. might need to be executed with the purchaser. 
• Certain licences and permits may not be transferrable along with the business. 
• Recommended that SPA be tailored in order to include appropriate representations, warranties and indemnities.
  
• New contracts between clients, suppliers, employees, landlords etc. and the purchaser might need to be executed.
  

Private Company (Ltd)

• Instrument(s) of transfer to be submitted to the target company.
• Approval of transfer(s) by relevant corporate body as per articles of association (if provided).
• Cancellation of share certificate(s) issued in the name of transferor(s) and issue of new share certificate(s) in the name of transferee(s). 
• Entry of transfer(s) and name of shareholder(s) in register of members.
• Changes in registered shareholder(s) notifiable to the Registrar of Companies.

Public Company (Plc)

• Instrument(s) of transfer to be submitted to non-listed target company. Rules of relevant exchange and or depository applicable where company is listed.
• Approval of transfer(s) by relevant corporate body as per articles of association (if provided).
• Cancellation of share certificate(s) issued in the name of transferor(s) and issue of new share certificate(s) in the name of transferee(s) where the company is not listed.
• Entry of transfer(s) and name of shareholder(s) in register of members. Rules of relevant exchange and or depository applicable where the company is listed.
• Statutory minimum number of members i.e. 7 shareholders to be complied with.
• Where the company is not listed, the changes of registered shareholder(s) notifiable to Registrar of Companies.
  

• Provision for the transfer of assets and the issue of relevant deeds of title in the name of the purchaser e.g. with regard to immovable property, vehicles etc. 
• Provision for registration in the name of the purchaser or assignment of any intellectual property rights to the benefit of the purchaser. 
• Assignment of existing contracts and or novation of contracts where applicable. 
• Transfer of possession of possessory assets e.g. stock, machinery etc. 
• Where applicable, transfer of personnel under new employer.
  

• Stamp duty payable on value of the transaction.
• Gains from transfer of securities exempted from income tax and capital gains tax (except where the target company owns directly or indirectly immovable property in Cyprus).
• Stock exchange transfer fees where the shares are listed.
  

• Stamp duty on value of the transaction.
• Corporate income tax on gains from disposal of goodwill and IP, stock and work in progress, profit from amounts collected from trade debts exceeding the price paid for debts, on any amount after capital allowances balancing.
• Land transfer fees and capital gains tax on the transfer of immovable property.
• VAT potentially chargeable on the sale of assets, subject to exemptions for transfers of a business as a going concern to a purchaser intending to use them to carry out the same kind of business.