Updated: November 19, 2024
A Cyprus Investment Firm “CIF” is an entity that provides investment services and activities in the Republic. It can also be a third-country firm operating through establishing a branch in Cyprus. They shall be set, licensed, and authorized to act under the below legislation:
“Law Which Provides For The Provision Of Investment Services, The Exercise Of Investment Activities, The Operation Of Regulated Markets And Other Related Matters Law 87(I)/2017” (from now on the “Law”)
Under the same Law, the Cyprus Security and Exchange Commission (CySEC) processes applications for the licensing of Cyprus Investment Firms. It also regulates and issues guidelines and regulations on the activities and operations of the CIFs.
A Cyprus Investment Firm, depending on its license, can offer the following services:
The type of investment services to be offered are the following:
The CIF requires minimum regulatory capital to be authorized to operate. This capital must be available at the beginning of the process and kept throughout the licensed activity.
| Minimum regulatory capital requirements | ||
| Activities | Capital in Euro | |
| I. | Dealing on Own Account Underwriting or placing on a firm commitment basis | 750.000 |
| II. | Reception and transmission of orders Execution of orders Portfolio management Investment advice Placing of financial instruments without a firm commitment basis (not permitted to hold client money or securities belonging to clients) | 75.000 |
| III. | Operation of an Organized Trading Facility | 750.000 |
| IV. | With activities other than those referred to above | 150.000 |
Legal identity
A Cyprus Investment firm can only exist as a legal entity (company). As such, it must:
The operations of the company will be the ones of an investment firm offering investment and ancillary services
Read more about Cyprus company formation.
Substance
The CIF shall have a physical presence and a head office in Cyprus. This office can be either rented or owned. It shall also employ sufficient employees to carry out the business operations.
Documents
For the preparation of an application to CySEC for a CIF license, the following are needed:
Board of directors
A CIF shall have at least two managing directors, according to Article 9(16) Law 87(Ι)/2017 regarding the provision of investment services, the exercise of investment activities and the operation of regulated markets. The majority of the board must be Cyprus residents.
Directors have to be Fit and Proper according to CySEC’s requirements:
Appointing foreign nationals as directors is not restricted. However, decisions affecting the management and control of the investment firm must be made in Cyprus. The above will allow the CIF to benefit from the favourable Cyprus Tax regime.
Other employees not being directors
Any other employees who will provide investment services and act as the Compliance Officers of the CIF must:
CySEC’s application charges:
Depending on the license type and the license extension, charges may vary.
CySEC’s annual fees (euro)
The above is calculated based on the annual audited financial statements.
CIFs that provide services concerning CFDs shall pay an additional €3.000.
CySEC must reply within six months of submitting a duly completed application. The reply will either grant a CIF license or refuse the application.
After the initial communication, our compliance department will collect the required KYC information from the client for due diligence. At the end of stage 1, we sign an engagement letter between the client and our firm.
We design and build the CIF’s structure according to the client’s specific needs. Once this is completed, we draft the Memorandum of Association according to the requirements of the Law. We will also provide qualified non-executive director candidates (if needed) and proceed with the company’s formation.
Our firm will draft and finalize the following:
The below are completed by our firm:
We assist with the provision of all the necessary documentation and certificates.
The application form (87-00-01) for the Authorization of CIFs (DOC, 188 KB).
Filing of the CIF’s application together with the supporting documentation to CySEC.
We promote the CIF’s application to CySEC. We provide CySEC with any necessary replies and maintain open communication regarding application inquiries and proposals.
Issuance of authorization certificate and registration of the CIF in the registry.
Cyprus Investment Firm’s responsibilities do not end upon receiving the license. CySEC will still regulate the CIF. So it must comply with the obligations and requirements as provided by the Law and the relevant directives. Otherwise, the license can be revoked at any time.
Our firm also provides post-authorization services, which include but are not limited to:
Our team is made up of professionally qualified lawyers. Also, we have financial advisors with reputable experience in the legal, corporate, and financial services sectors.
Due to the specific nature of the licensing process, it is crucial to acquire services from experienced and professional consultants. In cases where CySEC rejects an application, appeal procedures can take up to two years. In the meantime, the company’s shareholder(s) cannot operate anywhere in the EU.
We provide complete services for your CIF license application, which include:
Our payment policy is as follows:
What are the requirements for the Cyprus Investment Firm?
A Cyprus Investment Firm (CIF) must have registered offices in the Republic of Cyprus, at least two executive directors and a minimum capital of EUR 750,000 if it deals on its own account. To operate, the CIF needs to obtain a license from the Cyprus Securities and Exchange Commission (CySEC).
The CIF will engage only in the activities mentioned in the license unless permission is given in exceptional circumstances or such activities are ancillary to those mentioned in the license. However, a CIF cannot offer ancillary services only. The activities may be extended upon application.
The board of directors must be composed of people with good reputations, skills and experience. The CIF must allocate resources for the training of the board members. CySec will charge an application fee and an annual fee. It also has the authority to revoke the license, for example, if the CIF does not use it within 12 months from the issue date.
What investment services are provided by the Cyprus Investment Firm?
The law defines an investment firm as any legal person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis.
The investment services the CIF provides are investment advice, portfolio management, brokerage services, dealing with own accounts, Forex trading, underwriting financial instruments and/or placing financial instruments on a firm commitment basis, and certain other activities specified in the law. Note that the CIF can only provide the services mentioned in its license.
How to obtain a Cyprus Investment Firm license?
You must apply to the Cyprus Securities and Exchange Commission to obtain a Cyprus Investment Firm license. Only legal persons (companies) can apply, so you must register a company in Cyprus.
Moreover, you must file the required documentation, have the required amount of capital (EUR 750,000 but less for some types of activity) and satisfy certain structural demands. You will apply and pay a fee to CySEC, which will answer within six months. The company’s memorandum must state that it is an investment firm offering investment and ancillary services. The head office must be in Cyprus.
Together with the application, the company must file a business plan and an internal operation manual, including its AML procedures and questionnaires filled out by board members and shareholders. The required capital is EUR 750,000. The board must be adequately skilled, have clean criminal records, and not be on a bankruptcy list. The majority of the board must be Cyprus residents.
George K. Konstantinou
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