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This article is addressed to clients and groups considering restructuring and aims to clarify one of the key obstacles in restructuring involving Cypriot companies, by explaining which structures are permitted and which structures are prohibited by section 28 of the companies law, Cap 113 (the Companies Law).

Section 28 of the Companies Law is essential to consider when contemplating a restructuring, as the prohibition it contains on certain persons' membership in Cypriot companies¹ may impact the restructuring decisions of our clients.

Section 28 of the Companies Law restricts the ability of some companies to hold shares in their holding companies. This section states that "...a body corporate² cannot be a member of a company³ which is its holding company⁴, and any allotment or transfer of shares in a company to its subsidiary⁵ shall be void." We shall refer to this section in the remainder of this article as either "section 28", or the "Prohibition".