Cyprus Faces Legal Risks Over Cross-Border Company Operations and Air Pollution Non-Compliance
A Close Look at the EU's Infringement Decisions on Company Law, Air Pollution, and More
The European Commission's latest infringement decision package reveals Cyprus is on the verge of being taken to the Court of Justice of the European Union (CoJ). This situation arises from Cyprus' failure to implement EU regulations concerning cross-border company operations and non-compliance with EU air pollution laws. This scenario is not unique to Cyprus; several other countries are in similar positions according to the Commission's November announcements.
This package also marks the initiation of three new infringement procedures against Cyprus and various other EU countries. These procedures address deficiencies in waste management, aviation safety, and working conditions.
The Commission has issued a reasoned opinion to Cyprus, along with Bulgaria, Luxembourg, and Portugal. This action responds to their failure to adopt EU Directive (EU) 2019/2121, which governs cross-border conversions, mergers, and divisions of companies. This Directive aims to standardize procedures across the Single Market, ensuring fair practices and the protection of employees' rights. Member States were required to integrate this Directive into national law by January 31, 2023.
In March 2023, the Commission notified these countries of their non-compliance. Despite their responses, the Commission determined that they still had not enacted necessary national measures. These Member States now have two months to rectify these deficiencies or face potential referral to the Court of Justice of the European Union.
In parallel, the Commission has targeted Cyprus and several other nations, including Bulgaria and Ireland, for not fulfilling their air pollution reduction commitments. This action is mandated by the 2016 NEC Directive, which sets national targets for reducing key air pollutants known to harm health and the environment.
Each Member State is obligated to meet annual reduction targets from 2020 through 2029, with more stringent goals set for the subsequent years. Additionally, they must create national air pollution control programs (NAPCPs) to demonstrate compliance strategies.
After evaluating the responses from 14 Member States previously warned in January 2023, the Commission found ongoing non-compliance in several, including Cyprus. These countries now have a two-month period to respond and implement corrective measures.
The Commission has also commenced infringement procedures related to waste management. Cyprus, alongside Bulgaria and other countries, has been notified to address gaps in the transposition of the EU Waste Framework Directive and its amendments. These directives establish recycling targets and necessitate improvements in waste management systems.
Cyprus, specifically, has been identified for lacking proper documentation to confirm waste management operations. The involved Member States have a two-month deadline to respond and remedy these issues, failing which the Commission may issue a reasoned opinion.
Moreover, Cyprus and Denmark are facing infringement procedures for inadequacies in implementing EU aviation safety regulations. Cyprus' particular shortcomings include issues in airport oversight and deficiencies in its safety management system, as outlined in EU regulations. These countries have a two-month window to address the Commission's concerns and take necessary actions.
Finally, the Commission has opened infringement procedures against Cyprus, Greece, and Malta for not integrating the Directive on working time in inland waterways transport into their national laws. This uniform transposition is crucial, regardless of whether a Member State has inland waterways, to ensure that employment contracts for workers in this sector adhere to the Directive's provisions. These provisions cover various aspects of working time, including rest periods and annual leave. The countries have two months to notify the Commission of their compliance measures.