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Cyprus – Defamation within the ambits of a Shareholders’ Meeting.

Introduction
The right to attend, speak and debate within a shareholders’ meeting, whether extraordinary or annual, is governed by the provisions of Cyprus Companies Law, Cap. 113, in conjunction with the provisions of the company’s Articles of Association.

The right to speak however, does not constitute a right to voice an opinion which might be defamatory to other individuals or corporations. This matter concerns, mostly, public companies which numerous shareholders rather than private companies; however, private companies should also be aware of such matters.

What is a Defamatory statement?
Cypriot Defamation Law is founded on the Civil Wrongs Law, Cap. 148, as amended. The Civil Wrongs Law has been interpreted by Cypriot Courts in accordance with the principles of legal interpretation applicable in England and the expressions used in it are presumed so far as are consistent with their context, and unless otherwise expressly provided, to be used with the meaning attached to them under English Law and shall be construed in accordance therewith (see Aganthangelou v. Mousoulides & Sons (Successors) (1980) 1 CLR 272).

Under Cyprus Law, there are two (2) main types of defamation:

  • libel (a publication in permanent form); and
  • slander (a publication in transitory form).

This distinction is important when it comes to Court claims, as in the cases where slander is claimed, the plaintiff will be required to prove that he has sustained special damages, unless the exceptions listed in s. 17 (3) of the Law are applicable, whilst in the case of libel, special damages do not need to be proved.

In accordance with our Civil Wrongs Law, s. 178 (1) therein, the definition of defamation may be found as it is provided that a civil wrong consists of the publication by any person by means of print, writing, painting, effigy, gestures, spoken words (see Sotiris Damianou v. Ioanni Ioakim (2006) 1 CLR 219) or other sounds, or by any other means whatsoever, including broadcasting by wireless telegraphy, of any matter which:

  • imputes to any other person a crime;
  • imputes to any other person misconduct in any public office;
  • naturally tends to injure or prejudice the reputation of any other person in the way of his profession, trade, business, calling or office;
  • is likely to expose any other person to general hatred, contempt or ridicule; or
  • is likely to cause any other person to be shunned or avoided by other persons.

In light of the above, the most likely situation within a shareholders’ meeting is a statement made at a meeting which may be defamatory if it reflects on a person’s reputation and tends to lower him in the estimation of right-thinking members of society generally or to make them shun or avoid him. The company would only be liable for defamatory statements made by a person who was shown to have acted as its servant or agent. The Chairman, the directors and anyone else answering questions on behalf of the company at the meeting should be aware of the risk that any statement they make could be defamatory. Certain defences exist to a claim of defamation, including justification, qualified privilege and fair comment on a matter of public interest (s. 19 of our Civil Wrongs Law):

  • The defence of justification exists if the maker of the statement can show that the words were true in substance and fact (see Glafx Ltd v. Loizia (1984) 1 CLR 729 – the defendant is not allowed to present his own version of the defamatory words in order to prove their truthfulness; no less than the truth of the words, as these are mentioned in the Particulars of Claim, must be proved).
  • The defence of Privilege can be divided into the categories of absolute and qualified privilege. This is where the right to freedom of speech outweighs the personal right to reputation because doing so would best serve the public interest. Qualified privilege is covered by s.21 of the Civil Wrongs Law. This defence can succeed only in the event where the publication was brought about in good faith and with the contention that it was true. The defence of qualified privilege will cover any statements at a meeting about matters of concern to the meeting because all members present will have a corresponding interest in receiving the information. However, qualified privilege is not available where a statement is made with malice or if the statement is made to persons who do not have a corresponding interest in receiving it. Consequently if, for example, the press are present at the meeting, this may cause difficulties. There is authority to suggest that qualified privilege will not be lost if the press (or other strangers) are present at the meeting in the normal course of business. However, qualified privilege wilt be lost if the maker of the defamatory statement expressly invited them. If the business of the company inevitably involves discussion of an area where there is potential for defamatory statements, the company may, in an exceptional case, want to consider excluding the press and other strangers from the meeting to ensure that qualified privilege is not lost.

However, it would be a serious step to decide to exclude the press and would probably generate further press interest.

  • Finally, the defence of fair comment applies to an expression of an opinion on a matter of general public interest, as for instance, matters of central and local government or administration, the behavior of public persons the police, works of art, books, cinematic or theatrical works, television and radio broadcasts, etc. For the defence to succeed, the defendant must prove that the publication consisted of an opinion or comment but not of a declaration of fact (see Journalistic Company C.L.S. Ltd, et al. v. Christakis Philippou (1998) CLR 958) and the alleged defamatory comment or opinion must be examined within the context of the entire publication and not out of context (see Stefis A. Stephanou v. Michael Hjiefthymiou, et al. (1976) 1CLR 225). It may be unlikely that this defence will apply to a meeting because a company’s affairs are unlikely to be matters of public interest.

In light of what is discussed above, it is imperative that the shareholders, and the Chairman of the meeting (being the person who is in control of the procedures and proper order) are made aware of the potential risks involved by any opinions raised as with regards to defamation proceedings.

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