Joint ventures are most commonly seen in the construction and real estate development sectors in Cyprus, particularly where projects are large, capital intensive, or tender-driven. In practice, public procurement dynamics often incentivise bidders to combine technical capability, financial capacity and track record through a joint venture, particularly where the costs and risks of bidding independently are significant.

Joint ventures are also employed in the energy sector, including renewable energy and power projects, often in cross-border investment structures involving international and local participants.

Outside these sectors, joint ventures are also frequently used to facilitate foreign investment, allowing international investors to combine capital and sector expertise with local regulatory familiarity and market access. Cyprus’ EU membership and established corporate and tax framework have also made it a commonly used jurisdiction for structuring cross-border corporate joint ventures.

Cyprus law does not provide a bespoke statutory regime for joint ventures, but four principal forms are recognised in practice. These are: (i) contractual joint ventures, (ii) partnership joint ventures (general or limited), (iii) corporate joint ventures, and (iv) European Economic Interest Groupings (EEIGs).

2.1 Contractual Joint Ventures

Contractual joint ventures are established exclusively by agreement between the parties, without the creation of a separate legal entity. In practice, the joint venture agreement is the primary and often sole source of rights and obligations between the parties.

2.2 Partnership Joint Ventures

Under Cyprus law, partnerships may take the form of either a general or a limited partnership. Joint ventures may also be structured in partnership form, with the choice of structure determining the extent of the participants’ liability, as general partners bear unlimited liability while limited partners benefit from limited liability. The partnership agreement governs the relationship between the partners.

2.3 Corporate Joint Ventures

This form of joint venture is structured through the incorporation of a company with separate legal personality, established and governed by the Cyprus Companies Law, Cap. 113 (Cap. 113). The joint venture company is established following completion of the applicable registration formalities with the Registrar of Companies. The operation of the joint venture and the relationship between the parties are governed by the company’s memorandum and articles of association, together with a shareholders’ agreement.

2.4 European Economic Interest Groupings

EEIGs are a form of joint venture established under Council Regulation (EEC) No 2137/85 (Regulation 2137/85) and, at national level, under the European Economic Interest Grouping (Implementing Provisions) Law of 2012 (161(I)/2012) (Law 161(I)/2012).

Membership is limited to companies incorporated in EU Member States and individuals carrying on business activities within the European Union (EU). This type of joint venture may be established in Cyprus, transferred to Cyprus from another EU Member State, or operate in Cyprus through a branch.

EEIGs are intended to operate as a facilitative vehicle for their members, supporting and enhancing their underlying economic activities, rather than carrying on an independent profit-making activity of its own.

Equity joint ventures in Cyprus are most commonly structured through a company incorporated under Cap. 113, typically in the form of a private company limited by shares.

The choice between a contractual, partnership, corporate or EEIG joint venture structure is shaped by a combination of legal, commercial and tax considerations. In practice, the principal factors include:

(a) the desired limitation and allocation of liability between the parties;

(b) the governance structure and decision-making framework;

(c) financing requirements;

(d) the need for a separate legal entity to contract with third parties or hold assets;

(e) tax structuring considerations and efficiency; and

(f) the parties’ preferred termination methods.

4.1 The desired limitation and allocation of liability between the parties

Liability exposure is typically a primary driver of structural choice. Where liability ring-fencing is a priority, parties tend to favour corporate joint ventures, as the liability of participants is generally limited to their capital contribution. By contrast, partnership joint ventures involve a closer nexus between participation, management and liability, particularly in the case of general partnerships, which may be unattractive where exposure to third-party claims is a concern, given the unlimited liability borne by general partners. Contractual joint ventures, while offering flexibility, do not involve a separate legal entity, with each party remaining liable for its own acts or omissions, subject to the agreed contractual allocation of risk. In the case of EEIGs, members are jointly and severally liable for the debts and obligations of the grouping, with any limitation of liability operating only where expressly agreed with the relevant third party.

4.2 The governance structure and decision-making framework

Where the parties require a defined decision-making framework, including the allocation of management powers, board representation or enhanced control over key decisions, these matters are most commonly addressed within a corporate joint venture structure through the company’s constitutional documents and a shareholders’ agreement. In unincorporated joint ventures, governance is regulated entirely by contract, which may offer flexibility but less structural certainty where decision-making is complex or ongoing.

4.3 Financing requirements

Practical funding considerations may also shape the choice of structure. Where a joint venture is expected to raise external financing, this is commonly achieved through a corporate joint venture structure, which is capable of borrowing in its own name. In practice, lenders commonly require security and, in many cases, guarantees from one or more of the joint venture participants, which may affect both structure and risk allocation. As a result, financing arrangements may affect both the choice of structure and the allocation of risk between the joint venture participants. Unincorporated structures, such as contractual joint ventures, may be more challenging to finance on a standalone basis, as they lack a separate legal personality and typically rely on direct funding by the participants.

4.4 The need for a separate legal entity to contract with third parties or hold assets

When a joint venture is intended to contract with third parties, hold assets or otherwise operate in its own name, a corporate joint venture structure is typically preferred, given its separate legal personality and ability to assume rights and obligations independently of its participants. Conversely, where flexibility and speed are paramount, such as in tender-driven or single-project collaborations, contractual joint ventures are often chosen due to their limited formalities, lower cost and the absence of a dedicated registration procedure.

4.5 Tax structuring considerations and efficiency

In terms of tax considerations, profits and losses under contractual joint ventures and partnerships are generally taxed at the level of the participants, while corporate joint ventures are taxed at the company level at a rate of 12.5%, subject to any applicable double tax treaties. Tax treatment will also depend on the legal form adopted.

4.6 The parties’ preferred termination methods

Corporate joint ventures are often preferred where the parties wish to regulate termination scenarios in advance, including restrictions on share transfers and agreed exit routes, which are typically documented in a shareholders’ agreement. In contractual and partnership joint ventures, termination is more directly governed by the underlying agreement between the parties and the applicable statutory framework, which may offer less flexibility where bespoke termination mechanics are required.

In the absence of a bespoke statutory regime for contractual joint ventures, the joint venture agreement is central to defining the parties’ rights and obligations and to avoiding uncertainty, including the risk of recharacterisation as a partnership.

For partnership joint ventures, the partnership agreement, as the primary document, outlines the terms of the venture and regulates the relationship between the partners. Accordingly, the partnership agreement plays a central role in regulating the relationship between the partners and in allocating rights and responsibilities.

The principal documents for corporate joint ventures are the memorandum and articles of association, which bind the company and its members. In addition, parties typically enter into a shareholders’ agreement, which regulates key matters such as governance, reserved matters, funding, transfer restrictions, minority protections, and termination. The shareholders’ agreement is commonly used to regulate matters not fully addressed in the constitutional documents. Discrepancies may arise where the articles of association and the shareholders’ agreement are not aligned. To mitigate this risk, key governance and transfer provisions are often reflected in both the articles of association and the shareholders’ agreement. As a matter of company law, the articles of association prevail in relation to the validity of corporate acts. Therefore, aligning both documents is essential for preventing conflicts and ensuring the proper operation of the joint venture.

In the case of EEIGs, the principal governing document is the formation contract, which must include details such as the name, objectives, members, official address and duration of the grouping.

The timeframe for establishing a joint venture in Cyprus varies depending on the structure adopted.

Contractual joint ventures may be implemented relatively quickly, as they do not involve the creation of a separate legal entity and may take effect upon execution of the relevant agreement between the parties. As no registration is required, the timing is primarily driven by the negotiation and finalisation of the joint venture agreement.

Partnership joint ventures require registration under the Partnerships and Business Names Law, Cap. 116. In practice, once the partnership terms have been agreed and the partnership agreement finalised, registration is typically completed within one month following submission of the relevant filings, provided the documentation is in order.

Corporate joint ventures require incorporation under Cap. 113. Once the memorandum and articles of association have been agreed and submitted to the Registrar of Companies, together with the required statutory filings, incorporation is typically completed within 12-15 business days, subject to the Registrar’s processing time and the completeness of the filing. In practice, negotiation of the shareholders’ agreement, while not part of the registration process, is typically factored into the overall formation timeline.

EEIGs are established following registration in accordance with the applicable EU and national legislation. In practice, once the formation contract has been agreed and the required documentation submitted, registration (or transfer of seat to Cyprus, where applicable) is completed upon review by the Registrar of Companies, subject to the completeness of the filing and any queries raised during the registration process.

In practice, the overall timeline is often influenced less by the formal registration process itself and more by the time required to negotiate and finalise the joint venture arrangements. This will depend on factors such as the complexity of the proposed venture, the experience and sophistication of the parties involved, and whether any sector-specific or regulatory approvals are required.

A corporate joint venture, typically established as a private company limited by shares, has a separate legal personality, which forms the basis for liability ring-fencing under Cap. 113. As a general principle, shareholders’ exposure is limited to the price paid for their shares (including any unpaid nominal amount), and the joint venture entity itself is responsible for its debts and obligations. That said, this protection is not absolute. In practice, the protection offered by limited liability may be reduced where joint venture parties provide guarantees or security in favour of third-party lenders, which commonly arises where the joint venture is externally financed.

The legal considerations which apply to the financing of a joint venture and the contribution of assets vary depending on the structure adopted and, in particular, whether the joint venture has separate legal personality.

In contractual joint ventures, the absence of separate legal personality means that the joint venture cannot raise finance or hold assets in its own name. Funding is therefore typically provided directly by the parties, whether through agreed capital contributions, cost-sharing arrangements or alternative financing structures. Similarly, assets and intellectual property are generally not transferred to the joint venture, but remain owned by the contributing party and are made available through contractual arrangements, such as licences or usage rights.

Under partnership joint ventures, financing is commonly provided by the partners in accordance with the partnership agreement. The partnership may contract with third parties in its own name. Assets, as well as intellectual property rights, initially contributed to the partnership, or acquired for the purposes of the partnership’s business, are deemed to be partnership property.

Financing, in relation to corporate joint ventures, is mainly structured through a combination of equity contributions, shareholder loans and third-party facilities. The joint venture company, having its own legal personality, is capable of acquiring legal and beneficial ownership of contributed assets and intellectual property. Where external financing is sought, lenders commonly require security over the joint venture’s assets and may also seek guarantees or other forms of support from one or more of the joint venture participants.

In the case of EEIGs, financing is typically achieved through contributions by the members, as an EEIG may not invite investment by the public. A duly registered EEIG has the capacity, in its own name, to conclude contracts and to acquire rights and obligations. However, unless it is vested with legal personality under the applicable national law, an EEIG does not have assets and liabilities separate from those of its members. Whether an EEIG is vested with legal personality is a matter left to the discretion of the Member State in which it is registered.

In Cyprus, minority shareholders in corporate joint ventures benefit from a combination of statutory protections under Cap. 113, equitable remedies developed through case law, and additional contractual safeguards commonly agreed between the joint venture parties.

As a matter of statutory protection, minority shareholders may seek relief under Section 202 of Cap. 113, where the affairs of the company are conducted in an oppressive manner or in a way that unfairly prejudices their interests. Where the statutory threshold is met, the court has wide discretion to grant relief, including orders regulating the future conduct of the company or the purchase of shares. In appropriate cases, minority shareholders may also seek the winding up of the company on “just and equitable” grounds under Sections 209, 211(3) and 214 of Cap. 113.

In appropriate circumstances, minority shareholders may also pursue derivative actions on behalf of the company, where wrongdoing has been committed against the company and those in control prevent the company from taking action, with any relief accruing to the company rather than to the shareholder personally.

In addition to these statutory and equitable remedies, enhanced minority protection is typically achieved contractually, particularly in the context of corporate joint ventures. Shareholders’ agreements commonly include bespoke provisions designed to protect minority interests, such as the identification of reserved matters subject to enhanced shareholder approval thresholds, rights to board representation, enhanced information and inspection rights, restrictions on related-party transactions, and protections against dilution. Transfer-related protections, including pre-emption rights and tag-along rights, are also frequently agreed to prevent or limit unintended changes in ownership and to preserve the minority shareholder’s economic position.

In practice, these contractual mechanisms play a critical role in joint venture structures, as they allow the parties to tailor minority protections beyond the statutory safeguards provided by Cap. 113, reduce the likelihood of disputes, and provide greater certainty as to governance, control and exit outcomes.

In an equity joint venture structured as a Cyprus company, directors owe their duties to the joint venture company itself. These duties arise under Cap. 113 and common law fiduciary principles. Directors are subject to fiduciary duties to act in good faith in the best interests of the company, to exercise their powers for proper purposes and to use independent judgment. In the joint venture context, this means that a director, often appointed by a particular joint venture party, must frame decisions by reference to the interests of the joint venture entity as a whole, rather than the interests of the appointing shareholder.

Conflicts of interest are a central issue in equity joint ventures. Directors are under a duty to avoid situations in which they have, or may have, a direct or indirect interest that conflicts with the interests of the company, including conflicts arising from duties owed to other companies or to a joint venture party. Where a conflict arises or may arise, the director must make the necessary disclosure in accordance with Cap. 113 and, unless duly authorised by the board or shareholders, refrain from participating in the relevant decision-making.

Directors also owe a duty of care, skill and diligence appropriate to their role and expertise. This requires directors to make informed decisions and to exercise judgment that a prudent director would consider reasonable in the circumstances.

In practice, joint venture parties commonly regulate the management of conflicts and governance expectations through shareholders’ agreements, including disclosure obligations, approval mechanisms for related-party transactions, and abstention requirements for conflicted directors. While such arrangements do not override directors’ statutory or fiduciary duties, they provide practical mechanisms to manage conflicts in equity joint ventures.

The structure of the management body of a Cyprus joint venture depends on the form of the venture and its legal structure.

Under contractual joint ventures, there is no formal management body. Instead, management and decision-making arrangements are governed entirely by the joint venture agreement, which allocates responsibilities between the parties and sets out approval mechanisms for key decisions.

For partnership joint ventures, the management structure depends on the type of partnership. In general partnerships, management responsibilities are commonly shared equally among all partners, subject to the terms of the partnership agreement. Conversely, in limited partnerships, the management authority ordinarily lies with the general partners, while limited partners are usually excluded from day-to-day decision-making.

In corporate joint ventures, the management body consists of a board of directors, appointed by the shareholders. The board is generally responsible for day-to-day operations, while certain fundamental matters are reserved for the shareholders, who retain control over key strategic decisions. These powers are set out in the articles of association and supplemented by a shareholders’ agreement, which may also address matters such as deadlocks and governance issues.

For EEIGs, the management structure typically involves members acting collectively and a manager or managers appointed to oversee the operations. The formation contract may also create additional organs and define their powers. Members usually have one vote each, with certain decisions requiring unanimous approval.

Under Cyprus law, fiduciary duties primarily arise in the context of corporate joint ventures through the duties owed by directors to the company itself. In this context, directors of a Cyprus company are required to act in good faith and in the best interests of the company, to exercise independent judgment, to avoid conflicts of interest, and to act within the scope of their powers.

For contractual joint ventures and partnership joint ventures, Cyprus law does not automatically impose fiduciary duties or general duties of good faith between the parties. Instead, these duties must be expressly agreed upon in the joint venture or partnership agreement. Similarly, for EEIGs, duties between members are a matter for the formation contract rather than arising by operation of law.

Cyprus has long positioned itself as an investor-friendly jurisdiction, offering a low-tax environment and openness to foreign investment. However, recent changes in Cyprus law introduce specific regulations for foreign direct investments (FDI) into strategic sectors.

On 30 October 2025, Cyprus enacted the FDI Screening Law, which will come into effect on 2 April 2026. Under this law, certain foreign investments in strategic Cypriot entities are subject to a mandatory screening and approval process, particularly those involved in critical infrastructure sectors such as energy, transport, telecommunications, defence, and healthcare. These sectors are deemed sensitive due to their importance to national security or public order.

The FDI Screening Law requires that foreign investors notify the Ministry of Finance if their investment meets certain thresholds. This includes acquiring at least 25% of a strategic entity’s shares or voting rights, or increasing an existing stake to 25% or 50%. In addition, investments with a value of €2 million or more may trigger notification requirements where the relevant thresholds are met.

Failure to comply with the notification requirements may result in administrative sanctions, including fines and, in certain cases, measures affecting the transaction.

This law aligns Cyprus with the EU’s broader Foreign Direct Investment Screening Regulation (EU) 2019/452, ensuring that Cyprus is in compliance with EU-level security and public order protections for foreign investments.

Under Cyprus competition law, corporate joint ventures may constitute a “concentration” subject to notification under the Control of Concentrations Between Undertakings Law of 2014 (83(I)/2014). A concentration arises where the joint venture performs all the functions of an autonomous economic entity. The regime is enforced by the Cyprus Commission for the Protection of Competition (CPC), and where the relevant turnover thresholds are met, the joint venture must be notified to and cleared by the authority prior to implementation.

The notification requirement is triggered where certain turnover thresholds are met, including an aggregate global turnover exceeding EUR 3.5 million for at least two of the participating undertakings, with at least EUR 3.5 million of the combined turnover generated in Cyprus. Failure to notify a notifiable concentration prior to its implementation may result in penalties, including fines of up to 10% of the annual turnover of the undertakings concerned.

Non-concentrative joint ventures, such as contractual or partnership joint ventures, may nonetheless be subject to competition law. In particular, Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit agreements and conduct that restrict competition within Cyprus or affect trade between Member States. Accordingly, joint venture arrangements must be assessed for compliance with these competition rules.

The Registrar of Companies maintains an electronic Register of Ultimate Beneficial Owners of Cyprus companies. Where a joint venture is implemented through a company incorporated under the Cap. 113, the ultimate beneficial owners of that company must be disclosed to the Registrar of Companies and the relevant information kept up to date in accordance with the applicable requirements.

The ownership and licensing of intellectual property rights are fundamental considerations in the establishment and termination of a joint venture and are commonly addressed expressly to avoid uncertainty and future disputes.

In a contractual joint venture, intellectual property contributed by a participant will generally remain the property of that participant, unless the joint venture agreement provides otherwise. Intellectual property developed in the course of the joint venture is commonly allocated by reference to the relevant contractual arrangements, including the involvement of each party’s employees or contractors. Accordingly, the joint venture agreement typically regulates ownership, permitted use and licensing arrangements. Where ownership is not clearly allocated, uncertainty may arise as to the ownership and exploitation of such intellectual property.

In a partnership joint venture, unless the partners agree otherwise, intellectual property contributed to the partnership, acquired for its purposes, or created in the course of the partnership business is deemed to be partnership property. This joint ownership can give rise to practical difficulties, particularly in relation to exploitation, licensing, and enforcement of rights. These matters are therefore typically addressed expressly in the partnership agreement.

In a corporate joint venture, the joint venture company has a separate legal personality and is capable of owning intellectual property in its own right. Intellectual property created by the company’s employees or contractors in the course of its business will typically vest in the company. The rights of the participants to use or license such intellectual property are usually governed by shareholders’ agreements or related contractual arrangements.

In the case of EEIGs, the grouping may not have assets separate from those of its members unless it is vested with legal personality. As a result, the ownership and licensing of intellectual property generated in the course of an EEIG’s activities may be uncertain and are commonly addressed expressly in the founding agreement, given that neither Regulation 2137/85 nor Law 161(I)/2012 contains specific provisions governing the ownership or licensing of intellectual property.

The transfer of employees into a joint venture in Cyprus is governed by the Safeguarding and Protection of Employees’ Rights during the Transfer of Businesses, Establishments, or Parts of Businesses or Establishments Law of 2000 (104(I)/2000), which aligns with EU Directive 2001/23/EC. This legislation ensures that employees’ existing rights, including their terms of employment, benefits, and any collective agreements, are protected during the transfer process.

Where the legislation applies, employees are transferred automatically to the joint venture with continuity of employment, and all rights and obligations arising from their contracts of employment transfer to the new employer. The transfer itself may not constitute grounds for dismissal, although dismissals for economic, technical or organisational reasons connected with changes in the workforce may be permissible. Employers are also subject to information and consultation obligations in advance of the transfer.

These considerations are relevant when structuring joint ventures involving the transfer of employees, particularly where an existing business or part of a business is contributed to the venture.

Where a publicly listed company is a party to a joint venture, the listed company is subject to enhanced disclosure, transparency and corporate governance obligations arising from its status as a publicly traded entity.

Publicly listed companies are supervised by the Cyprus Securities and Exchange Commission (CySEC) and are subject to the regulatory framework applicable to securities admitted to trading on a regulated market, including the rules of the Cyprus Stock Exchange (CSE). They are subject to ongoing financial reporting and disclosure obligations, including the publication of annual and half-yearly financial reports and, where applicable, interim information. In the context of a joint venture, this may require disclosure through periodic reporting or ad hoc announcements in accordance with the Transparency Requirements Law (190(I)/2007).

In addition, Regulation (EU) No 596/2014 on market abuse, as implemented in Cyprus by the Market Abuse Law 102(I)/2016, applies to joint venture negotiations and implementation. Listed companies are required to identify and appropriately manage inside information and to avoid insider dealing and market manipulation, including through the adoption of appropriate confidentiality measures and internal controls during the negotiation and execution of the joint venture.

From a corporate governance perspective, listed companies are subject to the Cyprus Corporate Governance Code, which sets standards relating to board composition, independence, the appointment of independent non-executive directors and the management of conflicts of interest. These obligations are of particular relevance in joint venture arrangements involving shared control, board representation or related-party considerations.

The tax treatment of a joint venture in Cyprus depends primarily on the legal form adopted.

A contractual joint venture does not constitute a separate legal or taxable entity. As a result, profits and losses arising from the joint venture accrue directly to the participants and are taxed at the level of each participant in accordance with their respective entitlements.

Partnership joint ventures are treated as tax transparent. The partnership itself is not subject to corporate income tax; instead, profits and losses are generally attributed to the partners and taxed in their hands based on their profit-sharing arrangements and individual tax status.

A corporate joint venture established as a Cyprus company is treated as a separate taxable person and is subject to Cyprus corporate income tax on its taxable profits at the standard rate of 12.5%. Dividends distributed to resident corporate shareholders are generally exempt from taxation under Cyprus law.

EEIGs are tax transparent. Any profits or losses arising from the activities of an EEIG are attributed directly to its members and taxed at their level in accordance with their applicable tax regimes.

In contractual joint ventures and partnership joint ventures, profit allocation and distribution are primarily governed by the terms agreed between the parties in the joint venture or partnership agreement.

In the case of a corporate joint venture, profit distributions are subject to the applicable capital maintenance principles under Cap. 113. Dividends may only be declared and paid out of distributable profits and not out of capital. The declaration and payment of dividends must also comply with the company’s articles of association, which typically regulate shareholder entitlements, dividend rights attached to different classes of shares, and approval requirements.

For EEIGs, profits are treated as profits of the members and are allocated in accordance with the terms of the founding agreement or, in the absence of specific provisions, in equal shares among the members.

Deadlocks in joint ventures commonly arise where decision-making authority is evenly balanced between the parties, particularly in 50:50 structures.
Joint venture agreements and, in the case of corporate joint ventures, the shareholders’ agreement and articles of association typically include mechanisms designed to resolve deadlocks and preserve business continuity.

In corporate joint ventures, deadlock provisions commonly provide for escalation mechanisms, under which unresolved matters are referred to higher levels of management. Additionally, board-level voting solutions such as the grant of a casting vote to the chairperson or appointing an independent or rotating chairperson can be employed. In some cases, the agreement may also provide for the involvement of a neutral third party, pre-agreed by the parties, to issue a recommendation or binding decision in order to break the deadlock.

Deadlock provisions may also include alternative dispute resolution mechanisms, such as mediation or arbitration, particularly where technical or valuation issues are involved. These mechanisms are intended to facilitate resolution while preserving the ongoing commercial relationship between the parties.

Finally, where deadlocks cannot be resolved through governance mechanisms, exit strategies are frequently incorporated into shareholders’ agreements. These can include share transfers or provisions for one party to buy out the other’s participation based on an agreed valuation methodology. Such mechanisms are designed to allow the joint venture to continue under a revised ownership structure, rather than defaulting to dissolution.

Joint venture agreements typically address exit and termination at the outset, reflecting whether the venture is established for a specific project or purpose, or as an ongoing commercial arrangement. Accordingly, the agreement will usually specify whether the joint venture is intended to operate for a fixed term, until completion of a defined objective, or on a continuing basis, and will regulate exit and termination provisions on that basis.

In project-driven joint ventures, termination is commonly linked to the completion of the agreed project or the expiry of the contractual term. In corporate joint ventures, exit is more frequently achieved through contractual mechanisms which allow a party to disengage from the venture without necessarily terminating the underlying business. In this context, share transfer provisions are a key component of joint venture agreements in Cyprus, regulating transfers between the joint venture parties or to third parties.

Buy-out provisions are also frequently included as an exit mechanism, allowing one joint venture party to acquire the participation of the other following specified trigger events, such as persistent deadlock or where a party elects to exit the venture. The consideration payable under such provisions is usually determined by reference to an agreed valuation methodology or an independent valuation process.

Joint venture agreements also typically provide for termination for cause, including material breach, insolvency or analogous proceedings, or where the continued operation of the joint venture becomes unlawful or impossible. In practice, termination for breach is often subject to prior written notice and, where agreed, a period allowing the defaulting party to remedy the breach before termination rights arise.

Finally, joint venture agreements commonly permit termination by mutual agreement of the parties, allowing the parties to bring the joint venture to an end where its commercial rationale no longer exists.

Under Cyprus law, restrictive covenants agreed between joint venture parties, including non-compete and non-solicitation obligations, are subject to the general principles governing restraint of trade under Cyprus Contract Law, Cap. 149, and the constitutional protection of the freedom to carry on a lawful profession, trade or business. As a result, restrictions on post-exit or post-termination activity are approached with caution and assessed by reference to their reasonableness, proportionality and connection to a legitimate business interest. At present, the enforceability of post-termination non-compete obligations under Cyprus law remains uncertain, as there is no settled Supreme Court authority directly addressing such restrictions.

In joint venture arrangements, restrictive covenants are most frequently included in shareholders’ agreements and related commercial contracts rather than in employment documentation. While Cyprus courts have not developed a distinct body of jurisprudence specific to joint ventures, the prevailing approach reflects common-law restraint-of-trade principles, under which broad non-compete obligations that materially restrict a party’s ability to conduct business following exit are exposed to a heightened risk of unenforceability.

Non-solicitation obligations are generally viewed as less intrusive than non-compete clauses and are therefore more likely to be enforceable where they are narrowly framed and directed at protecting identifiable interests arising from the joint venture, such as client relationships, contractors or employees engaged in the joint business. Cyprus case law, albeit largely in the employment context, indicates that restrictions focused on preventing targeted solicitation, rather than competition as such, are more readily justifiable where they go no further than reasonably necessary to protect goodwill and confidential connections.

Across all restrictive covenants, proportionality remains the guiding principle. Clauses are more defensible where they are limited in duration, geographic scope and subject matter, and clearly linked to the activities of the joint venture itself. Overly broad restrictions risk being treated as void, and Cyprus courts are generally reluctant to reform or narrow overly broad provisions, save where severable obligations can be upheld without altering the substance of the restraint.

Accordingly, Cyprus practice tends to favour carefully defined non-solicitation and confidentiality obligations over expansive non-compete provisions, particularly following termination or exit from a joint venture. Where non-compete restrictions are agreed, they are typically confined to clearly identified competing activities, for a limited period, and justified by reference to the protection of goodwill, confidential information or other proprietary interests generated through the joint venture.

Joint venture agreements involving Cyprus typically provide for disputes to be resolved either before the Cyprus courts or by arbitration, depending on the parties’ agreement. Domestic arbitration is governed by the Arbitration Law, Cap. 4, while international commercial arbitration is governed by the International Commercial Arbitration Law, Law 101/1987 (as amended). Cyprus is a contracting state to the New York Convention, and arbitral awards are recognised and enforced by the Cyprus courts in accordance with the applicable statutory framework.

Joint venture parties enjoy broad contractual freedom to select both the governing law and the dispute resolution mechanism, including foreign governing law and international arbitration, provided that the relevant clauses are clearly agreed and do not conflict with mandatory provisions of Cyprus law or public policy. In practice, arbitration is frequently preferred in cross-border joint ventures due to confidentiality considerations and the relative ease of enforcement of arbitral awards.

Joint venture activity in Cyprus is largely driven by sector-specific investment trends, with joint ventures remaining a commonly used structure in construction and real estate development, particularly for large-scale and capital-intensive projects. Cyprus’ EU membership and established corporate and tax framework continue to support development activity, in which joint ventures are frequently used to combine capital, industry expertise and risk allocation.

Another key area of activity is the energy sector, particularly in the context of renewable energy projects and broader energy infrastructure initiatives. In line with EU policy objectives and national energy planning, joint ventures continue to be used to facilitate investment in solar and other renewable energy projects, as well as in ongoing cross-border energy-related initiatives involving both local and international partners, which may include regional interconnection projects and offshore hydrocarbon exploration. While commercial offshore hydrocarbon production is not yet underway, these developments underscore the potential role of collaborative investment structures in the energy sector.

Joint ventures are also increasingly used in technology and innovation-driven sectors, including fintech and other regulated digital activities, where Cyprus’ pro-innovation regulatory environment, educated workforce and evolving financial services ecosystem continue to attract foreign participants seeking local platforms for growth. In these sectors, joint ventures are commonly used to combine technological expertise with regulatory familiarity and market access, supporting market entry and strategic collaboration in emerging digital industries.

Looking ahead, a significant development expected to influence joint venture structuring over the next year is the introduction of the Cyprus FDI screening regime, which enters into force on 2 April 2026. The new framework introduces a formal review process for certain foreign investments in strategic sectors and is likely to affect transaction planning, timelines and conditions precedent for joint ventures involving non-EU investors. As a result, regulatory considerations are expected to play an increasingly prominent role in the early structuring of cross-border joint ventures.