Charitable Trusts in Cyprus

Charitable Trusts

A person can dispose any of his assets, either an immovable or a movable property, through a will for charity to be used after his death for a certain purpose and under the restrictions he will impose regarding the use of the property.

The will as such after the death of the testator creates a trust in favour of the beneficiaries mentioned therein, including the charity. In such a case, the will can be registered in the registry of the Supreme Court or the trustee may apply to the Council of Ministers for the issue of a certificate for the registration of the charity as a legal person.

The relevant law in Cyprus is very old and follows the English system, although case law has played an important role in the area of trusts, since charitable trusts derive from the principles of the law of equity. A charitable trust can be created for educational, scientific, medical or other charity purposes and the testator can impose restrictions with regard to the use of the property disposed, the income earned thereof and its disposal or encumbrance.

A charitable trust established by the will exists, irrespective of its registration and the issue of the relevant certificate by the Council of Ministers or even without the will being registered at the Supreme Court. However, its registration leaves no doubt about the existence of the charity institution and affords adequate protection, since it becomes a legal person having representation and the power to sue or be sued under its name, as well as to possess, acquire, transfer, receive bequest and administer its movable and immovable property in its favour.

Moreover, according to the law, the charity institution must prepare and keep annual accounts which are submitted to the Administrative Secretary and they can also be audited by the Auditor General of the Republic.

The Attorney General has wide powers with regard to the charity institutions, since his involvement is necessary for the control of the procedures followed in order to ensure that charity is done for the benefit of the public or the part of the public in favour of whom the charitable trust was established. Where a dispute arises as to the function of the institution, the issue must be referred to the Attorney General who is the one to find a solution or to refer the matter to the Court.

A trust, either charitable or not, can also be created by any other agreement or deed. The certification of such a document by the Registrar of the Supreme Court is accepted as evidence for its contents and its filing. There are no consequences in the event the document creating the charitable trust is not filed with the Supreme Court, since the institution exists without the agreement or the will being registered.

In a recent judgment, the Supreme Court held that the close relatives of the testator had no right to initiate a legal action themselves on whether the property left for charity was used by the charity institution for the purpose of its establishment. The only person entitled to bring the action was the Attorney General, having wide powers under the law. Moreover, the Supreme Court’s jurisdiction has been given to the District Courts which are now competent to try and examine issues of this nature.

In any event, the Attorney General must be a litigant in all procedures under the provisions of the law, with authority at any time to suspend, compromise or authorise the settlement of any issue and no settlement is valid without his approval. His role is essential because he safeguards and controls the functioning of the charity institutions for the benefit of the public.