2013 cri­sis over­hauled men­tal­ity of com­pa­nies, says In­fo­cre­dit sur­vey

Financial Mirror (Cyprus) - - FRONT PAGE -

The im­pact of the 2013 fi­nan­cial cri­sis on Cyprus com­pa­nies, as well as on the econ­omy in gen­eral, has been marked by a rapid fall in the rate of bounced cheques and the rise in liq­ui­da­tions, all bench­marks of a con­tract­ing econ­omy, ac­cord­ing to an anal­y­sis com­mis­sioned by the In­fo­cre­dit Group.

The study demon­strates how the mentalities and tac­tics of com­pa­nies have changed over the past six years. This is ev­i­dent from the sig­nif­i­cant de­crease in the Num­ber of Bounced Cheques (down to 1,542 in 2015 from 4,753 in 2012), as well as from the rise in the Num­ber of Vol­un­tary Liq­ui­da­tions, which show a grad­ual in­crease over the last six years, reach­ing a peak in 2015. It is worth not­ing that the drop in the Value and Num­ber of Bounced Cheques is likely to be at­trib­ut­able to un­cer­tainty and mar­ket re­luc­tance to ac­cept­ing cheques as a means of pay­ment (ref: In­fo­cre­dit Group anal­y­sis).

Fur­ther­more, the Num­ber of New Reg­is­tra­tions as well as the Num­ber of Ad­di­tional Reg­is­tra­tions of Busi­ness Names and Part­ner­ships has in­creased, de­spite the drop in the To­tal Num­ber of Reg­is­tered Com­pa­nies since 2014. A de­cline was also ob­served in the Num­ber of Ad­di­tional Reg­is­tra­tions of Over­seas Com­pa­nies.

From 2010 up to 2013 there was a steady in­crease of 14.7% in the num­ber of reg­is­tered com­pa­nies.

Since the events of 2013 there has been a change in the trend and a de­crease of 7.5% in 2014 and 9.5% in 2015. The peak in new reg­is­tra­tions of com­pa­nies ap­peared in 2011 with new ad­di­tions of 19,538 com­pa­nies to the Reg­is­trar’s Ar­chive.

Even though 2013 was the low­est year, there have been 10,847 new reg­is­tra­tions and since then, the num­ber of new reg­is­tra­tions of com­pa­nies showed a steady in­crease of 3% and 0.9% for 2014 and 2015, re­spec­tively.

2014 was the peak year with re­gard to the Num­ber of Dis­solved/Writ­ten-off Com­pa­nies and dur­ing the first two months of 2016, 7,196 com­pa­nies have al­ready been dis­solved/writ­ten-off. In ad­di­tion, 2015 marked the high­est Num­ber of Vol­un­tary Liq­ui­da­tions over this six year pe­riod.

The sur­vey con­cluded that the higher the num­ber of years the com­pany is in op­er­a­tion, the lower the risk in­volved when trad­ing with the spe­cific com­pany.

Also, 2011 marked the low­est num­ber of ad­di­tional reg­is­tra­tions in Busi­ness Names & Part­ner­ships (1,402). Since 2013 we have seen a steady in­crease of 12.2% and 10.8% for 2014 and 2015 re­spec­tively.

Ad­di­tion­ally, 2015 marked the high­est num­ber of new reg­is­tra­tions with a to­tal of 1,829 en­ti­ties be­ing reg­is­tered.

Even though the num­ber of new reg­is­tra­tions of Over­seas Com­pa­nies has de­creased con­sid­er­ably in the last 15 years, the num­bers show a mi­nor in­crease from 2010 un­til 2012, reach­ing 94 ad­di­tional reg­is­tra­tions and then drop again in 2013 to 77. In 2015 the num­ber of new reg­is­tra­tions dropped even fur­ther to a record low of only 71 new reg­is­tra­tions.

The ma­jor­ity of com­pa­nies reg­is­tered at the Reg­is­trar of Com­pa­nies and Of­fi­cial Re­ceiver have been in op­er­a­tion for more than ten years.

Also, more than 30% of reg­is­tered com­pa­nies have been in op­er­a­tion for more than 25 years.

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