The Association of Credit Acquisition Companies and Credit Facility Management Companies (ACACS) has raised serious concerns over a draft bill aiming to establish a framework for monitoring direct foreign investment in Cyprus.
In a letter to the Parliamentary Committee on Finance, ACACS’s Director, Lisa Solonos, expressed doubts about the bill’s practical application. She warned that, as currently worded, the legislation risks creating significant uncertainty and delays in investments, particularly in property transactions.
Concerns over investment in “strategic importance” properties
Solonos highlighted that the term “enterprise of strategic importance” and references to properties deemed crucial for infrastructure, as described in the bill’s annex, remain vague. This lack of clarity, she argued, poses risks both for member companies and prospective property buyers.
“For legal certainty and practical reasons, it is vital to clearly define which properties fall under the law,” Solonos stressed, adding that such clarity is essential to avoid transaction delays and ensure efficiency.
She warned that ambiguity – both in definitions and in timelines – could result in excessive applications, bureaucratic hurdles, and frustration among investors. This, in turn, might deter foreign capital from Cyprus, pushing it towards competing destinations.
Timelines may delay investment processes
The draft legislation sets strict notification and approval deadlines. For example, investors must notify authorities at least ten days before executing an investment. However, Solonos questioned what constitutes the “execution date” of an investment, pointing out that property transactions often require speed and certainty.
She further highlighted:
- A 20-day deadline for authorities to decide whether an investment is subject to review.
- A 65-day examination period to assess risks to national security or public order.
Taken together, these timeframes could extend the approval process beyond four months, creating major obstacles – particularly for transactions involving bank financing, tax clearances, and land registry procedures.
To address this, ACACS has called for clearer definitions, shorter deadlines, or even the introduction of a fast-track process for qualifying transactions.
Right to cancel transactions raises alarm
Another major concern is the Ministry of Finance’s right to revoke approvals and cancel transactions retroactively within 14 months of completion.
“This provision creates severe uncertainty and discourages investment,” Solonos noted. She questioned who would be liable for damages if a developer begins construction only to see the transaction cancelled.
ACACS proposes reducing the review period to 2–3 months and introducing a compensation mechanism for investors affected by retroactive cancellations. Additionally, they argue that once a property development has commenced, transactions should only be annulled under exceptional circumstances relating to national security.
The FDI bill at a glance
The revised bill before Parliament establishes a Foreign Direct Investment (FDI) Screening Mechanism in line with EU Regulation 2019/452. It defines mandatory notification requirements, approval criteria, procedural steps, and the Ministry of Finance’s powers as the competent authority.
While the legislation aims to safeguard national interests, industry stakeholders warn that without clearer definitions and streamlined processes, Cyprus risks losing its appeal as a real estate investment destination.
(Translated & summarised from a Greek article in StockWatch)
