IPO in Cyprus

This publication looks at the specifics of the Cyprus stock market, as well as the key legal steps in the IPO process. The publication will help you understand how to conduct an IPO in Cyprus, what requirements are imposed on issuers, what the registration procedure looks like and what costs you will face. We will also look at alternative ways of raising investment and the risks involved. Emphasis will be placed on the practice of support, including from specialist advisers who know the jurisdiction inside out.

Why companies choose an IPO in Cyprus: an optimal combination of European norms and regulatory flexibility

IPOs on the Cyprus stock market are seen by many business owners as a balanced solution between the legal standards of the European Union and the relative simplicity of procedures. The Cyprus stock market is characterised by the absence of excessive technical requirements, and the jurisdiction itself is perceived by investors as a convenient entry point into the corporate structures of Central and Eastern Europe. This approach allows the initial public offering to be carried out with minimal costs and without pressure from European supervisory authorities.

A key role is played by the organisational model of the Cyprus Stock Exchange (CSE), which includes two separate sectors - the regulated main segment and the adaptive alternative market. The former is designed for legal entities with a sound financial base and a stable ownership structure. The second is aimed at small and medium-sized enterprises. Thanks to this architecture, access to listing on the Cyprus Stock Exchange is open even to issuers that do not meet the strict requirements set by the major stock exchange platforms in Western Europe.

The ability to list in Cyprus at a lower cost is particularly appreciated by high-growth companies. It opens the way to development without the need to resort to venture capital or expensive loans. Initial public offerings on the Cyprus Exchange are realised in strict compliance with the applicable regulatory mechanisms. This legal model ensures an appropriate degree of openness of corporate processes and contributes to the formation of sustainable trust on the part of the investor community.

Significant advantages include the possibility of launching an IPO procedure without necessarily obtaining tax residency status within the Cypriot tax system. This creates flexibility for international holdings operating in the technology, finance or trading sectors. This is particularly relevant for structures planning a second round of placement on the larger EU stock exchanges in the future.

Among other advantages is the possibility of attracting investments through IPO in Cyprus with minimal currency volatility, due to the pegging of trading to the euro. This reduces currency risks, unlike a number of other offshore platforms.

With European regulation becoming increasingly stringent, registering a company for an IPO in Cyprus remains an opportunity to retain autonomy in decision-making and the pace of development. This is particularly relevant for businesses looking to go public without losing control and speed.

Finally, the benefits of an EU IPO through Cyprus are also evident in terms of corporate structure. The country allows for a flexible governance model, including the presence of nominee shareholders, which is often utilised when preparing holdings for listing.

Cyprus IPO step-by-step procedure: from underwriter to listing

Before understanding how to go through an IPO in Cyprus, it is important to realise that it is not only a legal procedure, but also a profound transformation of a company's internal structure. Any public offering requires evidence of transparency, sustainability and investment appeal. This requires consistent preparation, from choosing a listing form to filing a CSE application.

Understanding the key steps makes it easier to navigate the regulatory environment. Conducting an IPO in Cyprus involves a number of step-by-step procedures, including structuring the corporate model, conducting independent financial due diligence, preparing the investment memorandum, obtaining approval from the Cyprus Securities and Exchange Commission (CySEC) and organising the listing.

The mechanism for the admission of securities to trading on the Cyprus Stock Exchange is subject to both the provisions of European legislation and the requirements set by the national regulator. There are no simplified or formalised methods of listing. However, compared to more highly regulated markets, including in Germany or Luxembourg, the CSE rules are characterised by lower costs and greater adaptability.

What steps should you take to prepare for placement? Let's proceed step by step.

At each of these steps, it is important to ensure that the IPO in Cyprus is professionally supported by legal counsel. This not only speeds up the process, but also reduces the likelihood of the IPO being cancelled or suspended. Disclosure is particularly critical - any inaccuracy in the investment prospectus can lead to legal liability.

In addition to the formal requirements, it is also worth remembering the details: aligning the business model with the market's investment expectations, selecting the optimal size of the offering, as well as a communication plan with future shareholders. And all this - even before the moment when the shares appear on the stock exchange board.

A list of mandatory components in preparation for a placement:

• Legal audit of corporate structure.
• Appointment of underwriter and legal counsel.
• Preparation of financial statements.
• Drafting and approval of the investment prospectus.
• Verification of information with CySEC.
• Negotiating listing terms and conditions with the CSE.
• Ensuring compliance control at all stages.

Pre-IPO due diligence in Cyprus covers not only financials and legal documents, but also business reputation, ownership structure and compliance with anti-money laundering requirements. Everything from the origin of capital to the beneficiaries is taken into account.

Cyprus Stock Exchange (CSE): What prospects it offers for issuers

The CSE is one of the few European markets that combine relatively low entry requirements with a regulatory framework harmonised with European Union directives. Despite its limited scale, the exchange remains an effective tool for companies interested in public offerings and capital raising with minimal administrative burden. This makes it particularly attractive for smaller holdings and emerging growth-oriented companies with a focus on cross-border growth.

The possibility of listing on the stock market in Cyprus is formally open to both Cypriot companies and foreign issuers. The key requirement for admission to listing is the demonstration of transparency, confirmed by reliable financial statements, as well as the company's willingness to provide information to the extent required by the regulator. Market participants investing through the CSE gain access to issuers that have undergone in-depth due diligence but operate in a more loyal legal environment than the major European exchange systems.

It should be emphasised that the Cyprus Stock Exchange offers the opportunity to list securities both in the main sector and in a separate alternative section. The latter is designed for small and medium-sized businesses and is characterised by a simplified listing procedure. In this case, less stringent requirements to the amount of authorised capital are set, placement-related costs are reduced, and the structure of documentation, including the investment memorandum, is simplified.

For a successful exit, the requirements for issuers in Cyprus must be met, including historical financial statements, sufficient capitalisation, a clear ownership structure and an independent board of directors. In addition, the company planning the offering must have a formally approved internal regulation governing the principles of corporate governance.

The conditions for listing on the Cyprus Stock Exchange are set taking into account the specifics of the chosen segment of the trading floor. This model of organisation provides companies with an opportunity to conduct initial public offerings within the European Union, using the legal system of Cyprus, while avoiding excessive bureaucratic procedures typical of the leading stock exchange centres of the united Europe. At the same time, the entire offering is carried out within the framework of European legislation, in particular, MiFID II and Prospectus Regulation.

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Regulatory conditions for companies planning an IPO in Cyprus: what is mandatory

It is not sufficient to initiate entry into the Cypriot stock market by merely submitting a listing application. The laws and regulations applicable to potential issuers are mandatory and cover not only the specifics of the organisational model, but also financial reporting, compliance with corporate regulations and completeness of disclosure. Violations or deficiencies at this stage may result in the refusal of registration or suspension of the offering procedure at any of the subsequent steps.

Any IPO in Cyprus requires a legally valid form of company. The main form permitted is a public limited company (public limited company). This structure allows shares to be traded on the stock exchange and has all the statutory shareholder protection mechanisms. Private limited companies do not have the right to offer their shares to the public.

In addition, it is necessary to submit reliable financial statements. For admission to listing on the CSE it is mandatory to submit audited reports. On the alternative segment, for two reporting periods. On the main segment, for three years. The audit must be performed by an independent audit organisation accredited in Cyprus and included in the official ICPAC register. At the same time, the statements are subject to harmonisation with International Financial Reporting Standards (IFRS).

Non-financial components should also be analysed in preparation for a placement. These include a balanced board of directors, a functioning internal control system, regulatory risk management structures, and a strategy for engaging with shareholders and external stakeholders. It is important that at least two members of the board are independent and that the chairman does not combine this position with the role of an executive director.

In order to qualify for admission to the Cyprus Exchange, the issuer must disclose its ownership structure, information on ultimate beneficiaries, the composition of the governing bodies and describe the risks associated with the company's activities. All data must be included in an investment prospectus prepared in accordance with EU and local law.

The registration of the prospectus with CySEC takes place after its approval by independent legal and financial advisors. The prospectus must be complete, accurate and not misleading to the investor. It contains information on the issuer's operations, management, corporate structure, business model, potential risks, terms and conditions of the offering and details of the proposed issue.

The procedure for listing securities on the Cyprus Stock Exchange is governed by the rules set out in the CSE Code of Regulations. This regulation is subject to annual updates and mandatory approval by the regulator, the Cyprus Securities and Exchange Commission.

A legal entity intending to initiate the process of entering the public market should bear in mind that listing is not a one-off event. It involves systematic compliance with requirements, including mandatory disclosure of material information, adherence to internal governance principles and ensuring the required level of trading activity of the issued shares.

Let us compare the main legal conditions for listing by category:

Fiscal aspects and legal position of the company after IPO in Cyprus

Upon completion of the listing procedure on the Cyprus Stock Exchange, the legal identity of the company is significantly transformed. The issuer qualifies as a public company and is subject to additional regulatory and fiscal requirements. This regime requires compliance with the principles of corporate governance, systematic disclosure of relevant information, and adaptation of internal regulations to the requirements of the European Union legislation.

A particularly significant element is the tax burden imposed on companies that have undergone the initial public offering procedure in this jurisdiction. The basic income tax rate is 12.5%, which makes the Cyprus tax system one of the most attractive among EU countries. However, from the moment a company is included in the official list of issuers, additional rules governing the taxation of income from dividend payments, transactions with shares and the procedure for applying transfer pricing come into force.

The mere fact of registration of a company on the Cyprus Stock Exchange does not lead to a revision of the tax rate. However, it entails the introduction of additional requirements relating to fiscal reporting, transparency and compliance with regulatory obligations. For example, the issuer is required to file more detailed tax returns, regularly update final beneficiary data, and comply with anti-avoidance regulations.

Companies planning to organise a listing on the Cyprus Exchange should analyse the tax implications in advance. In particular, in practice, issues are often raised in relation to the fiscal burden on the disposal of shares, the taxation of distributed income in the form of dividends, and the legality of the use of double tax treaties.

When intending to carry out an initial public offering on the Cyprus Stock Exchange, it should be borne in mind that the company retains the tax residency status if the actual management and administrative control continue to be exercised from the territory of Cyprus. At the same time, for international holdings, it is acceptable to relocate the structure so that the public company registered in Cyprus is actually managed from another country, while retaining the status of a Cypriot issuer.

This mechanism provides an opportunity to realise the initial placement of equity capital in Cyprus, while at the same time taking advantage of the tax advantages offered to participants in the investment process. In particular, dividend payments in favour of foreign shareholders are exempt from taxation if the requirements are met. Additionally, capital gains are not subject to taxation, provided that the income is not generated within the Cypriot tax system.

Placing a company on the Cyprus Stock Exchange also requires compliance with the rules of the settlement system. The issuer is obliged to connect to a centralised depository system, ensure that transactions are recorded, perform corporate actions in a timely manner and comply with transparency standards. All settlements are conducted in euros, which eliminates additional currency risks.

Key tax considerations after an IPO in Cyprus:

• The profit tax rate is 12.5%.
• Non-taxation of dividends paid in favour of foreign investors is allowed if the criteria stipulated by the legislation are met.
• Taxation of income from capital gains realised on the stock market does not apply.
• The use of international treaties aimed at preventing double taxation is permitted.
• Participation in the European tax information exchange system (DAC6).
• Mandatory disclosure of ultimate owners.
• Higher tax compliance and financial reporting requirements.

Financial Costs of an IPO in Cyprus: Indicative Costs

In preparing for an initial public offering on the Cyprus Stock Exchange, a legal entity must make provision for a set list of costs associated with the implementation of this procedure. The cost structure includes not only the regulated exchange fees, but also legal advisors, auditors, as well as specialists responsible for supporting the financial documentation and marketing strategy of the project. The cost of the project depends on the chosen segment (main or alternative CSE market), the size of the offering, the number of advisors and the complexity of the issuer's corporate structure.

The basic cost of an IPO in Cyprus is made up of three components: registration and exchange fees, underwriter and consultant fees, and reporting costs. There may also be costs for an advertising campaign (roadshow), legal opinions and notarisation of documents.

The financial burden is particularly noticeable at the filing stage. Thus, the costs associated with listing in Cyprus include mandatory fees, including the state fee for access to trading, the annual stock exchange presence fee, and the registration fee to the Cyprus Securities and Exchange Commission (CySEC) for the review of the issuance document. The amount of these fees is fixed in the regulations and is calculated on the basis of the size of the issue and the selected listing sector.

Organisations planning to go through all the stages of registration and listing on the Cyprus Exchange should budget between €50,000 and €120,000. The final amount depends on whether the application is for a mainstream or an alternative market listing. Larger projects with an international structure may require a higher amount, especially if English-speaking consultants and external auditors are involved.

To understand how much it costs to enter a CSE in Cyprus, a typical cost structure can be used:

In practice, to go public in Cyprus, an issuer also incurs hidden costs: for internal staff training, reporting automation, compliance system, digital security and regular legal updates.

In addition, there are CSE Cyprus listing standards that require payment of an annual maintenance fee for public company status. This amount varies from €2,000 to €10,000 per year and depends on the size of the enterprise and the type of listing.

When gaining access to the Cyprus Stock Exchange, companies should work out in advance the financial model of the exit, taking into account timing, market conditions and currency fluctuations. Mistakes at the budgeting stage can delay the process or make the project uneconomical.

Which companies are eligible for an initial public offering on the Cyprus Stock Market

The decision to go public on the Cyprus Stock Exchange with the aim of attracting investment through the issue of securities should not only be based on the financial or corporate objectives of the beneficiaries. It also requires an objective assessment of the legal entity's preparedness to operate as a public issuer. Not every structure fulfils the expectations of the stock exchange, the regulator and potential investors. Nevertheless, Cyprus remains one of the few European jurisdictions where both mature companies and high-growth projects are allowed to list.

IPOs in Cyprus for small businesses are made possible by the existence of an alternative market on the CSE. This section is specifically tailored to small capitalisation companies with limited history, provided they have a transparent corporate structure and a promising business model. This format is ideal for technology start-ups, innovative production and export companies.

For larger projects involving external investments and complex structures, it is possible to launch a start-up in Cyprus after preliminary preparation. In such cases, particular attention is paid to the quality of the investment prospectus, growth strategies and alignment with European regulations.

Going public through an IPO is considered, including by international holding structures with a placement in Cyprus. This is particularly relevant in cases where the parent company is registered in one of the European Union countries and subsidiaries operate in Eastern Europe, the Gulf States or the Asian region. In such cases, Cyprus is used as a jurisdiction with a balanced position, allowing to combine assets in different countries within a single legal and financial infrastructure.

When applying to list securities on the Cyprus Stock Exchange, the issuer needs to document that key conditions are met. These include adequate internal governance mechanisms, compliance with disclosure standards and the economic viability of the proposed investment scheme. Revenue or profit figures do not always play a decisive role, especially when applying for an alternative segment.

Companies are selected for listing on the Cyprus Stock Exchange on the basis of the following characteristics:

In addition, the organisation must have a sustainable development model for a period of three to five years. The management team must include specialists with proven business qualifications and experience in the relevant industries. An important factor is the positive business reputation of the company's key stakeholders.

Candidates for an IPO in Cyprus are usually:

• Organisations focused on foreign markets.
• Financial and technological start-ups with a scalable product.
• Holding structures with a diversified portfolio.
• Companies operating in the creative industry and online services.
• Developing family businesses ready for transformation.

The Cyprus listing model allows companies to enter the market that in other jurisdictions would not be approved for listing due to limited turnover or complex ownership structures. The key conditions for admission to listing are a proper legal structure, management transparency and a sound capital market entry strategy.

Expert support of the IPO process in Cyprus

An effective public offering cannot be carried out without the participation of qualified advisors with appropriate specialisation. It is only through comprehensive coordination with professional market participants that compliance with all regulatory requirements and the achievement of the issue's objectives can be ensured. Full IPO support in Cyprus includes not only the technical preparation and execution of documents, but also the strategic setup of internal processes, legal clearance of the corporate structure and compliance with CySEC and CSE requirements.

The process usually starts with a team of external advisors, including lawyers, auditors, underwriter and IR (Investor Relations) specialists. Their role is to provide the company with the tools and knowledge required to go through all the stages of going public in Cyprus. It is practically impossible to cope with tasks of this level on your own - neither from a legal nor a regulatory point of view.

Legal support begins with assessing the readiness of the business. This includes auditing corporate documents, analysing the ownership structure, screening for potential legal risks and building the strategic logic of the offering. Specialists advising on CSE listings also select the optimal listing market - main or alternative - and model possible exit scenarios.

The second significant area of pre-placement preparation is the legal support of the procedure for listing on the Cyprus Stock Exchange. This includes drafting the investment memorandum, obtaining authorisation from the Cyprus Securities Commission (CySEC), executing underwriter agreements and complying with the provisions of the legislation governing the issue and circulation of securities. The role of the legal adviser is not limited to the preparation of documentation. He or she is responsible for ensuring that the information provided is accurate and complies with the requirements set out in European regulations.

Companies that choose IPO consulting in Cyprus receive not only technical assistance, but also strategic support: forecasting market reactions, modelling share allocation scenarios, and sensitivity analysis of business valuation. This approach helps to make informed decisions before going to market.

Conclusion

Deciding to conduct an initial public offering in Cyprus is not just a mechanism for entering the stock market. It is a strategic step that allows a company to establish its reputation, access capital and rebuild its internal infrastructure to meet the requirements of going public. For many businesses, this is not just a financial transaction, but a point of transformation - a transition from a private, often informal management model to international standards of transparency and responsibility.

Despite the compact scale of the market, going public in Cyprus gives companies real access to EU investors, the opportunity to operate within the English-speaking legal system and participate in the European regulatory infrastructure without excessive costs and barriers. This is what distinguishes Cyprus from jurisdictions where entry to the stock exchange market is accompanied by excessive regulatory burdens and significant financial barriers.