Cyprus Investment Firms ("CIFs")

The provision of investment and non-core services in the Republic is governed by the Investment Firms Act No.144 (I) of 2007 which incorporates into the Cyprus legal order the provisions of MIFID. The Cyprus Securities and Exchange Commission, as the competent Supervisory Authority, may grant an authorization to an undertaking, whether existing or under formation, for the provision of the investment and non-core services enumerated in the said authorization. This can be done if the applicant’s objectives comply with the Investment Firms Act and have been approved by the Cyprus Securities and Exchange Commission and provided the applicant has the appropriate shareholders and the requisite organizational and administrative structure and personnel.

Investment services subject to authorization include any of the following services:

- Reception and transmission, on behalf of investors, of orders in relation to one or more financial instruments;
- Execution of such order (above), other than for own account;
- Dealing in financial instruments for own account;
- Managing of investment portfolios in accordance with mandates given by investors where such portfolios include one or more financial instruments;
- Underwriting in respect of issues of financial instruments as these are defined in the Act.

Non-core services subject to licensing include any of the following services:

- Safekeeping and administration in relation to one or more financial instruments;
- Safe custody services;
- Granting of credits or loans to clients to enable them to carry out transactions in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction;
- Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and acquisitions;
- Services connected to underwriting;
- Investment advice concerning one or more financial instruments;
- Foreign-exchange services where these are connected with the provision of investment services.

An authorization shall not be granted for the provision of non-core investment services only.

Requirements and particulars for the incorporation of the investment firm

The application to the Cyprus Securities and Exchange Commission for the grant of an authorization shall enumerate the investment and non-core services with regard to which the authorization is requested and shall be accompanied by:

a) a business plan, including a full operations schedule stating in particular the investment and non-core services which the applicant proposes to provide and its organizational structure, a presentation of the relevant plan for its prospected financial growth for the first two financial years and the names of at least two experienced and reliable persons who shall direct its business;

b) an excerpt of the criminal record, certificates of non-insolvency and resumés of the members of the applicant’s Board of Directors, its executives and shareholders;

c) a draft of the applicant’s internal regulation, including in particular the applicant’s internal control and risk management mechanisms;

d) a draft organization schedule of the applicant;

e) a description of the applicant’s computer network and electronic infrastructure;

f) a draft resolution for the prevention of the legalization of the proceeds of criminal activities.

The minimum fully paid share capital of an investment firm is 212.500 EUR, where the investment firm has been granted authorization for the provision of the following investment services only, or at least any one of them:

a) reception and transmission, on behalf of investors, of orders in relation to one or more financial instruments;

b) execution of client order in relation to financial instruments.

The above investment firm may not provide any other investment services.


Where an authorization includes the investment service of managing client investment portfolios, the minimum fully paid up share capital of such investment firm shall amount to at least 255.000 EUR, without prejudice calling to the payment of a higher share capital.


The minimum fully paid up share capital of an investment firm shall amount to at least 1.020.000 EUR, where the investment firm has been granted authorization for the provision of at least one of the following investment services:


a) sale and purchase of financial instruments for own account;

b) provision of underwriting services in respect of issues of financial instruments.

Duties payable for the examination of applications

Service Rendered	Duty
Examination of application for grant of an authorization	5.100 EUR
Examination of application amendment to an authorization	1, 700 EUR
Examination of any other application	510 EUR

Taxation

Brokerage activity-10%
Trading for own account-0%
Management of investment portfolios-10%
Undewriting-0% (subject to certain conditions)


Advantages

Favourable tax treatment
Passport for operations in Europe
Cyprus is a respectable jurisdiction



Other institutions authorized to operate within the Republic:

According to the provisions of the Banking Law (No. 66(I) of 1997), a credit institution authorised and supervised by the competent authorities of another Member State of the European Union may provide in Cyprus investment services as well as non-core investment services without the need of a licence to be granted by the Central Bank of Cyprus. Such a credit institution may operate in Cyprus by either establishing a branch or by offering services on a cross-border basis for which it has received an authorisation by the competent authorities of its home Member State.


An investment firm, excluding credit institution, which has received an authorization in a Member-State of the European Union and is supervised by the competent authorities of that Member-State may operate within the Republic through a branch or by offering services on a cross-border basis for which it has received an authorization by the competent authorities of its home Member-State. This can be done without the need of an authorization to be granted by the Cypriot Supervisory Authorities, subsequent to a relevant notification by the competent authorities of its home member state, addressed to the Cyprus Securities and Exchange Commission.


An investment firm with a registered office in a third country must receive an authorization from the Cyprus Securities and Exchange Commission in order to establish a branch in Cyprus or provide cross-border investment services in the Republic without establishing a branch.


Our services in connection to the incorporation of an investment firm in Cyprus:

- the preparation of the application for obtaining the authorisation from the Cyprus Securities and Exchange Commission;
- the development of an appropriate corporate and organisational structure;
- the preparation of the business plan;
- the preparation of the policies and procedures manual, including the internal regulation for internal control and risk management mechanisms and measures for the prevention of the legalization of the proceeds of criminal activities;
- the provision of Money Laundering and Compliance Officers;
- the provision of non-executive Members of the Board of Directors.

 

 

 

Registration Cyprus Company 

KDC Chartered Accountants Limited is a firm of qualified professionals with offices in Nicosia and Limassol. Our firm is built upon the principles of Integrity objectivity and technical excellence.