PRESS RELEASE
28th November 2012

Important Judgment of the High Court dated 26/11/2012 which directly affects all lawyers’ limited companies

Nicosia, Cyprus – Recourse by Kinanis LLC against the decision of the Attorney General acting on behalf of the Registrar of Companies and Official Receiver

The lawyers’ limited company Kinanis LLC which was the Applicant in the case with number 1131/2010 filed recourse against the Attorney General who was acting on behalf of the Registrar of Companies in relation to an application which it had submitted for the incorporation of a company which would offer escrow services. The said application had been rejected by the Registrar of Companies who refused the incorporation of the said company by reason that it could not be registered as it had a lawyers’ limited company as a shareholder.

The Court accepted the Applicant’s application and annulled the decision of the Respondents (Registrar of Companies) who refused to register the said subsidiary company of the Applicants which would offer escrow services.

Further, the Court accepted the Applicant’s suggestion that the distinction between lawyers’ limited companies and natural persons (lawyers) as far as the exercise of activities which are mentioned in Regulation 18 (3) of the Code of Conduct Regulations would possibly represent a breach of Article 28 of the Cypriot Constitution which protects the Principle of Equality. Regulation 18 (3) foresees that a “house, group, union, partnership or legal person (controlled by lawyers) which provides consulting or other services, adjunctive, ancillary, parallel to or supplementary to the services offered or which may be offered personally by the lawyer or as a trustee, does not consist of a commercial or other business of a financial nature”. That is, since the above services may be offered by legal persons owned by lawyers (natural persons) without any problem, adopting the position that these cannot be offered by legal persons owned by lawyers’ limited companies may, possibly, breach Article 28 of the Constitution.

The Court further pointed out and actually accepted the Applicant’s position that the acquisition of property by lawyers, whether being natural persons or legal companies has no difference and it is nowhere foreseen in the law that there should be any different treatment.
Further, the Court held that a lawyers’ limited company may offer its services which are foreseen in Regulation 18 (3) and consequently, may offer consulting or other adjunctive services, ancillary, parallel to or supplementary to the services which it offers or which personally by the lawyer or as a trustee and this may be done via subsidiary companies, a practice which does not consist of a commercial or other business of a financial nature.

In conclusion, the said judgment now permits lawyers’ limited companies to establish subsidiary companies and to hold shares in such companies dealing with related, parallel, adjunctive or supplementary services to legal services without any problem, as is the establishment of subsidiary companies offering trustee services or escrow services.

Kinanis LLC
28/11/2012