Introduction
In the current unprecedented geopolitical unrest, companies’ directors face new challenges. Since 28 February 2026, the United States and Israel have been conducting a major joint military operation against Iran — codenamed Operation Epic Fury by the US and Operation Roaring Lion by Israel — targeting Iran’s nuclear infrastructure, military command and regime leadership. Iran’s Supreme Leader Ali Khamenei was killed in the opening strikes, and Iran has responded with large-scale ballistic missile and drone attacks across the Gulf region and beyond. Companies with business operations, personnel, or financial exposures linked to the Middle East, the Gulf states, or counterparties connected to sanctioned Iranian entities are now confronted with a rapidly evolving and deeply complex operational environment. As with every conflict, the greatest and most irreversible loss remains that of human life — and directors bear a duty to place the safety and wellbeing of their people at the forefront of every decision.
In this article, we highlight the growing considerations of company directors having business operations, directly or indirectly in the Middle East, the Gulf region, or in business relationships with Iranian-connected or sanctioned entities. We separate the considerations applicable to regulated companies, while the ones we list under private companies apply in both cases.
- Regulated companies and reporting obligations
Some of the primary considerations of directors of regulated companies include:
- Business continuity: Announcement to their clients or stakeholders clarifying the ways in which business continuity will be achieved in the months to follow;
- AML and Risk Manuals: Update internal client acceptance policies, risk manuals, addressing the latest issued sanctions, and record the possible disruptions to businesses and how these disruptions may affect cash-flow;
- Risk Factor Disclosures: Prepare relevant risk factor disclosures to regulators addressing the way in which the political unrest is expected to impact the company’s business;
- Evaluation of the Board: Given the ever-evolving global sanctions list, it may be worthwhile to consider whether the composition of the Board of Directors requires to be updated;
- Shareholding structures: A review of a company’s articles of association may be required to evaluate whether the current geopolitical situation coupled with the list of sanctions triggers any provisions that can trigger a change in a company’s shareholding structure.
Private companies with headquarters and personnel in Cyprus and presence in the Middle East — Cyprus’ Position and the UK Sovereign Bases
Having headquarters in Cyprus has once again become a focal point of the broader geopolitical crisis, despite Cyprus having no direct involvement in the US–Israel–Iran conflict. The Republic of Cyprus has publicly and emphatically stated that it is not party to any military operation and wishes to maintain its longstanding humanitarian and neutral positioning. However, the island’s geography and its unique constitutional legacy place it involuntarily at the centre of events. The United Kingdom retains sovereignty over two military Sovereign Base Areas (SBAs) on Cyprus — RAF Akrotiri near Limassol and Dhekelia in the east — under treaties dating from Cypriot independence in 1960. On 1 March 2026, RAF Akrotiri was struck by an Iranian-made Shahed drone, causing minor runway damage and no casualties. Two further drones were intercepted the following day. Following Iran’s retaliatory strikes across the Gulf, the UK agreed on 1 March to allow the US to use British bases for strikes against Iranian missile sites — though not for strikes on political or economic targets within Iran. The IRGC subsequently threatened to strike Cyprus directly, while Cyprus condemned the UK for insufficient communication and has not ruled out renegotiating the terms of the SBA treaties. Greece has deployed frigates and F-16s to assist in Cyprus’ air defence, and NATO Secretary General Mark Rutte confirmed the alliance would defend NATO territory. While Cyprus itself is not a NATO member, the SBAs, as British Overseas Territory, can invoke NATO’s Article 5 provisions. For companies with headquarters, personnel, or investments in Cyprus, this situation presents a materially changed risk environment. A few points directors should urgently note include:
- Employee continuity: Imperative to safeguard the payment of salaries and other resources available to employees of companies whose cashflow/income depends on sanctioned institutions or ones based in the areas affected by war;
- Airspace disruptions and travel risks: Multiple countries across the Gulf and Eastern Mediterranean have closed or restricted their airspace. Companies with staff travelling to or from Cyprus, Israel, Lebanon, the Gulf states, or Iran should immediately assess travel safety, consider temporary relocation of personnel, and establish remote working protocols;
- Financial obligations: issues like debt repayment or access to capital are crucial in conditions of severe currency fluctuations and restrictions applied to the payment in certain currencies. Directors should receive immediately advice on how to navigate financial obligations with various financial institutions;
- Contractual obligations: List existing contractual obligations and specify the ones that can no longer be met. Have their legal team review the contracts for clauses which identify next steps;
- Insurance policies: Evaluate the applicability of insurance coverage including for specific language that excludes conflict or war;
- Cybersecurity: Evaluate existing protective software for potential leaks or ‘holes’ that could render data vulnerable to a potential attack;
- Investment protection: Evaluate the existing legal documentation, or arrangements in place that could serve in protecting investments;
- Directors may also be required to consider:
- Letting staff go;
- Reducing salaries;
- Reducing employee benefits;
- Ceasing operations;
- Closing down businesses or business sectors;
- Defaulting on loan repayments;
- Defaulting on rental payments;
A few steps which directors may be required to take to keep abreast of these unparalleled conditions, include:
- Be informed of the latest sanctions list;
- Be aware of the latest Cyprus government decisions and announcements;
- Be aware of commodities prices with particular focus on the fluctuating oil prices as the shift in demand and supply is estimated to have considerable effect in all key business sectors;
- Take professional advice on how to structure or re-structure investments;
- Refer to company’s latest financial position and apply the most severe scenarios for a projection of actions the following months may require;
- Consider that companies are separate entities -ringfence assets and obligations where appropriate to avoid blending assets or liabilities that may be affected;
- Take professional advice on the management of contractual obligations;
- Evaluate possibilities of payments via fintech payment institutions;
In conclusion:
Company directors all over the world are once more called upon to navigate through extremely turbulent times, and once more, the humanitarian considerations of the present geopolitical unrest, take centre stage. The US–Israel–Iran conflict, which escalated rapidly from diplomatic breakdown to open warfare within days of late February 2026, has demonstrated once again that geopolitical risk can materialise with extraordinary speed, and that the ripple effects of military conflict reach far beyond the immediate theatre of war. For companies and their boards, this is not a time for passivity. The situation is live, evolving by the hour, and its consequences — for supply chains, sanctions exposure, financial counterparties, insurance coverage, cybersecurity posture, and the safety of personnel — require urgent and active board-level attention.
For companies headquartered in Cyprus in particular, the situation carries an additional dimension: an island that has sought consistently to position itself as a place of stability and neutrality now finds itself the subject of military threats as a consequence of the presence of British sovereign bases on its territory — bases over which the Republic of Cyprus has no operational control. Directors of Cyprus-based companies should seek immediate legal and strategic advice, communicate transparently with their stakeholders, and document the steps taken to manage risk in this environment. Legal, accounting and other business professionals can offer a secure network that updates, offers alternatives and assists in achieving business continuity, investment protection and above all protection of the human capital affected by this rapidly unfolding situation.
For more information on the ways in which we can assist and advise directors facing these new challenges, feel free to reach out to Managing Partner and Board Advisor Stella Koukounis at s.koukounis@solsiduslaw.com
