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Bank of Cyprus Directorship Saga Continues

The saga for the appointment of the new Board of Directors at Bank of Cyprus continues. The Central bank is leading the attempt in the struggle to determine personalities suitable for meeting the objective guidelines of qualifications and experience as future directors. There is though, an attempt on the House of Representatives to pass a law containing or restricting the "influence" of the Central Bank Governor from exercising the right of vote on behalf of the bad bank ex Marfin Laiki.

Lawyers representing foreign based depositors whose deposits have been converted into BOC shares, shall most likely demand representation on the Board thus are expected to come up with a number of names. There is one prominent name a Russian national with banking experience currently working in London who appears to be a common candidate. The 5th September appears to be date when all the candidates will be announced. Due to the apparent conflict of interest the Central Bank as bank regulator is trying to lessen its influence on the appointments, and is, from what it seems, taking a step back. Marfin Laiki's administrator is currently representing 18% of the share capital of BOC and it remains to be seen to what extent she shall have a say in the prospective board appointments. Legally it will be difficult to impose a vote restriction once the voting shares have been registered in her name as administrator of the shares.

It should be also noted that this transition from depositors to shareholders has never been practiced before, at least in the western world, and is perhaps a "solution" requiring serious rethinking, mainly at European level if one wants to maintain integrity and protection of shareholders Europe-wide. Company laws need to be rewritten and basic principles of law readjusted given the direct impediments these measures create in the Cyprus legal system.

Rights to civil actions may be utilised, given the protection afforded by the Cypriot constitution to the right of property, which in the eyes of the ex BOC shareholders was abolished (or at least seriously diminished) overnight. Even those who have not exercised their administrative review rights within the 75 days deadline (which has expired already) still maintain the right to bring civil actions in the district courts for damages for negligence breach of contractual duty etc within the next coming years (subject to the time limitation rights under the law). For more information on this matter please contact us.

Nicos Chrysanthou

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