Home / CY AIFM Law of 2013 / PART V – AIFMs MANAGING SPECIFIC TYPES OF AIF / CHAPTER 2 - Obligations of AIFMs managing AIFs which acquire control of non-listed companies and issuers / Section 37 - Asset stripping.
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Asset stripping.
37.-(1) When an AIF, individually or jointly, acquires control of a non-listed company or an issuer pursuant to subsection (1) of section 33, in conjunction with subsections (5) and (6) of that section, the AIFM managing such an AIF shall for a period of twenty four months following the acquisition of control of the company by the AIF -
(a) not be allowed to facilitate, support or instruct any distribution, capital reduction, share redemption and/or acquisition of own shares by the company as described in subsection (2) of this section; and
(b) in so far as the AIFM is authorised to vote on behalf of the AIF at the meetings of the governing bodies of the company, not vote in favour of a distribution, capital reduction, share redemption and/or acquisition of own shares by the company as described in subsection (2) of this section; and
(c) in any event use its best efforts to prevent distributions, capital reductions, share redemptions and/or the acquisition of own shares by the company as described in subsection (2) of this section.
(2) The obligations imposed on AIFMs pursuant to subsection (1), shall relate to the following:
(a) any distribution to shareholders made when on the closing date of the last financial year the net assets as set out in the company’s annual accounts are, or following such a distribution would become, lower than the amount of the subscribed capital plus those reserves which may be not distributed under the law or the statutes, on the understanding that where the uncalled part of the subscribed capital is not included in the assets shown in the balance sheet, this amount shall be deducted from the amount of subscribed capital;
(b) any distribution to shareholders the amount of which would exceed the amount of the profits at the end of the last financial year plus any profits brought forward and sums drawn from reserves available for this purpose, less any losses brought forward and sums placed to reserve in accordance with the law or the statutes;
(c) to the extent that acquisitions of own shares are permitted, the acquisitions by the company, including shares previously acquired by the company and held by it, and shares acquired by a person acting in his own name but on the company’s behalf, that would have the effect of reducing the net assets below the amount mentioned in paragraph (a).
(3) For the purposes of subsection (2) of this section -
(a) the term ‘distribution’ referred to in paragraphs (a) and (b) of subsection (2), shall include, in particular, the payment of dividends and of interest relating to shares; and
(b) the provisions of capital reductions shall not apply on a reduction in the subscribed capital, the purpose of which is to offset losses incurred or to include sums of money in a non-distributable reserve provided that, following that operation, the amount of such reserve is not mere than 10% of the reduced subscribed capital; and
(c) the restriction set out in paragraph (c) of subsection (2) shall be subject to Article 22, paragraph 1, points b) to h) of Directive 2012/30/EU. (i)
(i) 8(I) of 2015
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