The Republic of Cyprus is moving ahead with the establishment of a company that will assume ownership of the Crete-Cyprus power interconnection. This new company will be required to grant the necessary licenses, approvals, and authorizations for implementing the intergovernmental agreement between Cyprus and Greece, thus facilitating the certification of the Great Sea Interconnector as the owner of the power link.

Before the creation and operation of this company, the results of a due diligence assessment will be evaluated. Once Cyprus is given the green light to participate in the capital of the new company, both parties will be required to sign a Shareholders Agreement.

Legal sources explained to Brief that “the Shareholders Agreement is a contract between individuals who hold shares in a company and outlines their relationships, providing protection for minority shareholders. In addition to defining the rights and responsibilities of shareholders,” they pointed out, “the agreement is expected to clarify both general and specific issues, incorporating relevant provisions that govern the company's activities. For example, it can specify how directors will be appointed and the preemptive rights available to existing shareholders.”

A Shareholders Agreement serves several purposes:

1. It ensures the smooth operation of the company's business.

2. It minimizes the escalation of disputes into legal actions or contract violations.

With clear terms in place, the need for costly and prolonged settlement negotiations is reduced.

It should be noted that the agreement between the two countries expresses the Republic of Cyprus’s intent to participate in the project following the due diligence process, contributing €100 million through an appropriate entity in the share capital of the Great Sea Interconnector.

After the evaluation of the due diligence results, the decision on participation will be made promptly, and the participation will be formalized as soon as possible through the signing of the Shareholders Agreement.

Meanwhile, the due diligence process is already underway and is considered crucial by the Ministry of Finance, particularly for the outcome of the project. As part of the due diligence process, the Ministry has requested a detailed diagnosis, examination, research, analysis, and review of all financial data related to the project—whether they appear on financial statements or not. These are elements typically assessed in the context of a sale, merger, or acquisition transaction.

It is important to highlight that in the case of investor involvement in a project, due diligence helps prevent unnecessary business damages that could arise from assets or liabilities whose value is understated, overstated, or has no value at all, and which may have been falsely or inaccurately reported.