The Law regulating Financial Leasing and the activities of Financial Leasing Companies of 2016 (the “Law”) was published in the Official Gazette and came into force on 28th April 2016.
The Central Bank of Cyprus shall be the regulatory authority of financial leasing companies for the purposes of ensuring the smooth operation of the financial leasing market and protecting the parties to such transactions.
Financial leasing is a method of medium to long-term financing, constituting an alternative to traditional credit financing (such as use of own funds or banking loans), available to the public for the purposes of acquiring assets. A leasing company (as “Lessor”) acquires, at the request of a client (the “Lessee”), an asset which it then makes available to the Lessee for a certain period of time, in exchange for frequent payments. While the Lessor has legal ownership over the asset for the duration of the arrangement, the Lessee has the right to use the lease object and avail of all benefits arising from it as well as bear all risks and costs arising from the ownership.
Application of the Law
In accordance with the provisions of the Law, financial leasing activities and transactions may be provided to the public, by the following:
The Law does not apply to the following:
Permitted services and share capital
A financial leasing company may provide both financial leasing services and ancillary services as these are defined in the Law, and any other relevant service which may be determined by the Central Bank. Its minimum issued and paid share capital must amount to at least EUR 200,000.
How are existing companies affected?
A legal person who offers financial leasing services to the public within the territory of Cyprus (except those excluded by the Law) may continue to do so, provided that within 2 months from the Law coming into force, it shall comply with the provisions of the Law and further submit to the Central Bank the documentation required under the Law. If an application for the relevant license is not made within 2 months, the person in question must cease to provide such services.
All content prepared by KPMG Cyprus.