The provision of investment and ancillary services in Cyprus is governed by the Investment Services and Activities and Regulated Markets Law 144(I)/2007 (the “Law”), which implements the relevant EU Directive in the field of Investment Services.

The Cyprus Securities and Exchange Commission is the competent supervisory authority to grant an authorization for the provision of investment and non-core services specified in said authorization.

Investment Services

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

  • Reception and transmission of orders in relation to one or more financial instruments;
  • Execution of orders on behalf of clients;
  • Dealing on own account;
  • Portfolio management;
  • Investment advice;
  • Underwriting of financial instruments and/ or placing of financial instruments on a firm commitment basis;
  • Placing of a financial instrument without a firm commitment basis;
  • Operation of a Multilateral Trading Facility.

A Cyprus Investment Firm must apply for at least one of the above regulated services.

A Cyprus Investment Firm may also offer any of the ancillary services stated below, subject to licensing:

  • Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash collateral management;
  • Granting credits or loans to an investor to allow him to carry out a transaction 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 as well as advice and services relating to mergers and the purchase of undertakings;
  • Foreign exchange services where these are connected to the provision of investment services;
  • Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments;
  • Services related to underwriting.

An authorization shall not be granted solely for the provision of ancillary services.

The financial instruments that may be the subject of the investment services and activities are the following: 

  • Transferable securities;
  • Money-market instruments;
  • Units in collective investment undertakings;
  • Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivative instruments, financial indices or financial measures which may be settled physically or in cash;
  • Options, futures, swaps, forward rate agreements and any other derivative contracts relating to (i) commodities, which must be settled in cash or may be settled in cash at the option of the parties or (ii) commodities which can be physically settled provided that they are traded, (iii) climate variables, freight rates, emission allowances;
  • Derivative instruments for the transfer of credit risk;
  • Financial contracts for difference.

Requirements and particulars for the incorporation of a Cyprus Investment Firm

An application to the Cyprus Securities and Exchange Commission for the granting of an authorization must be submitted together with the information and documents that will accompany it.

More specifically, the application must be accompanied by the following:

a) A business plan, including a full operation schedule stating in particular the investment and the 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.

In order for an application to be accepted it must be accompanied by a confirmation of the Cyprus Investment Firm that it possesses or will possess the capital required as its initial capital. The firm must also confirm that it will undertake to block the capital in a bank account held by a credit institution if this is requested by the Cyprus Securities and Exchange Commission. The initial capital requirements of a Cyprus Investment Firm are mentioned here below.

Initial Capital Requirements

The minimum initial capital of a Cyprus Investment Firm that holds clients’ money and/or clients’ financial instruments is €125.000 (Euro One hundred twenty five thousand), where the investment firm has been granted authorization for the provision of the following services:

  • The reception and transmission of orders in relation to financial instruments;
  • The execution of orders on behalf of clients;
  • Portfolio management;
  • Provision of investment advice.

The minimum initial capital of a Cyprus Investment Firm that provides investment services relating to the reception and transmission of orders in relation to financial instruments and/or investment advice (without the handling of client funds/instruments) is €50.000 (Euro Fifty Thousand) or €40.000 (Euro Forty Thousand).

The minimum initial capital of a Cyprus Investment Firm providing any of the following services is €730.000 (Euro Seven Hundred Thirty Thousand Euros):

  • Dealing on own account;
  • Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis;
  • Placing of financial instruments without a firm commitment basis;
  • Operation of a Multilateral Trading Facility.  

The minimum initial capital of a Cyprus Investment Firm also registered under the Insurance Services and other Related Issues Law 2002 N. 35(I)/2001 to provide insurance intermediary services is Euro 40.000 (Euro Forty Thousand) or Euro 20.000 (Euro Twenty Thousand).

Duties payable for the examination of applications

 Services rendered  Duty paid
Examination of application for grant of an authorisation EURO 5,100.00
Examination of application amendment to an authorization EURO 1,700.00 
Examination of any other application EURO 510.00 

Taxation

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

Advantages

  1. Favourable tax treatment;
  2. Passport for operations in Europe;
  3. 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.