Areas of Practice
21st Mar 2024
Since 1996, the CSE has been playing a pivotal role in facilitating capital formation, providing liquidity to investors, and enabling businesses to raise funds for expansion and development. It contributes significantly to the overall economy by fostering investment opportunities. The privitisation of the CSE has been frequently discussed over the past decade, driven by the need to establish a more agile, innovative stock exchange capable of attracting strategic investments and enhancing its global standing.
The need for privatising the CSE has been repeatedly emphasised by the MPs in the House of Representatives, particularly by the Finance and Budget Committee. As part of this privatisation project, the Council of Ministers decided to prepare a draft law titled “The Law on the Privatisation of the Cyprus Stock Exchange, Central Depository, and the Central Registry of Securities and Transfer of Personnel and Positions of the Cyprus Stock Exchange to the Ministry of Finance 2023.”[1] The draft law was made available for public consultation on 18 December 2023, and interested parties were invited to submit their comments and views by 15 January 2024.
The draft law focuses, amongst other things, on privatising the CSE through a competitive selection process aimed at identifying a strategic investor and contains provisions for the transfer of the activities and assets/liabilities of the CSE to a special purpose vehicle (including provisions for the transfer of the CSE’s personnel to the Ministry of Finance). The selection and future involvement of a strategic investor aims to propel the CSE into a renowned stock exchange and develop the CSE’s know-how, digital infrastructure and global status.
As at the time of writing, the draft law is being examined by the Ministry of Finance, the Cyprus Securities and Exchange Commission, and the Central Bank of Cyprus. Subsequently, it will be reviewed by the Law Office of the Republic of Cyprus and will require approval by the Council of Ministers before being submitted to Parliament for discussion and voting. According to a recent announcement made by the Chairman of the Board of the CSE, once the draft law has been approved by Parliament, the procedures for privatising the CSE will commence, followed by the announcement of a public tender aimed at identifying a strategic investor.
Finding a strategic investor for the CSE is one of the milestones set out in the “Cyprus Recovery and Resilience Plan”, within the framework of “Promoting Competitiveness”, with a timetable for completion set for December 31, 2024 (Component 3.3, Reform 5).
[1] The draft law can be found here: https://mof.gov.cy/en/press-office/announcements/1523/?ctype=ar
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