Certain activities and services are regulated and can only be provided if a license is obtained. In Cyprus, the governing authority is The Cyprus Securities and Exchange Commission (CySEC) which examines applications for such licenses and issues the licenses when such applications are approved. The primary legislation governing the provision of investment services and for the regulation and registration of Cypriot Investment Firms is Law 114 (I)/2007.
Some of the advantages of Cypriot Investment Firms (CIF) are:
- Corporate tax rate at 12.5%
- No capital gains tax on the disposal of securities
- No withholding tax on the payment of dividents to non-resident shareholders
- Double tax treaties with almost 50 countries
- A Cyprus Investment Firm can offer services in any country of the European Union and several other countries.
Below is a list of investment and ancillary activities which are regulated in Cyprus and require a license from CySEC.
- Receiving and transmitting orders on behalf of an investor relating to financial instruments;
- Execution of orders on behalf of clients/investors;
- Dealing on own account;
- Managing investment portfolios;
- Offering advice in regards to investments;
- Underwriting in regards to financial instruments and/or placing of financial instruments on a firm commitment basis;
- Placing of financial instruments without a firm commitment basis;
- Operating a Multilateral Trading Facility.
- Administration and safekeeping of financial instruments on behalf of clients;.
- Granting loans or credits to financial instruments where the firm granting the loan or credit is involved in the transaction;
- Advising in relation to undertakings on industrial strategy, capital structure and other relevant matters;
- Advising or offering services in regards to mergers and acquisitions;
- Offering foreign exchange services which are related to the provision of investment services;
- Offering services which are related to underwriting;
- Conducting research related to investments and financial analysis or other services of similar nature which are related to transactions in financial instruments;
Depending on the nature of the services offered a CIF must have an initial capital which could be as low as €40.000 or as high as €1.000.000. Dealing on own account, underwriting of financial instruments, placing of financial instruments with or without a firm commitment basis and operation of a Multilateral Trading Facility all require a minimum capital of €1.000.000. Our firm can advise as to what capital would be required depending on the business plan of the company which intends to offer investment and /or ancillary services.
- Offering advice in regards to all aspects of the process of setting up a CIF and the operation of the CIF after the license has been obtained.
- Preparing the application to obtain the license from CySEC and managing all relevant steps until the license is granted.
- Preparing or assisting in the preparation of the business plan.
- Advising on the organisational requirements for a CIF and preparing or assisting in the preparation of the internal regulations of the CIF.
- Designing or assisting in designing the departmental structure of the CIF so it will comply with the relevant legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.