Procedure of establishing investment firms in Cyprus

Establishing investment firms in Cyprus

The present article deals with the Cyprus Investment Firms (abbreviated as CIF), and after reading the information, you will be aware of all the important provisions concerning the establishment of firm of this type in Cyprus, starting with familiarization the list of documents and ending with the actual formation of the CIF.

If it is necessary to give clear definition of the CIF, this notion can be defined as investment firm and Cypriot company operating in accordance with a license issued by the relevant regulatory authority of the CSEC, by providing investment operations and services to third parties.

NB*: Full name of the abbreviation CSEC is the Cyprus Securities and Exchange Commission

The abovementioned definition makes strong emphasis on the fact that the CIF is under the guidance of the Cyprus Securities and Exchanges Commission  (CSEC).

We suggest more detailed consideration and familiarization yourself with the operations which the CIF can provide.

What investment services and operations can the CIF provide and what opportunities does the foregoing give:

• Granting of reception and transfer of orders with regard to one or several financial instruments;
• Carrying out orders on behalf of clients;
• Providing operation at own expense;
• Investment portfolio management;
• Providing investment advice;
• Guaranteed placement of financial instruments and / or placement of financial instruments on the basis of firm commitments;
• Possibility of placing financial instruments without the obligation of the firm;
• Opportunity to operate at plurilateral trading platform.

Cyprus Investment Firms are entitled to provide and supplement services that can be designated as accompanying ones. They are subject to less strict control, and after the firm is convinced of the absence of a conflict of interest, it cooperates (can cooperate) and shares personnel with departments (department) providing investment services.

What accompanying services the CIF can provide or provides:

• Provision of storage and management of financial instruments of clients. This includes also depository storage and related services;
• Credits or loans to investors are granted to carry out transactions on one or several financial instruments;
• Consultations regarding the structure of capital and commercial strategy are provided;
• Provision of investment services (exchange of foreign currency);
• Other forms of general recommendations relating to transactions with financial instruments, such as investment research and financial analysis;
• Provision of services related to guaranteed placement;
• Provision of investment services, as well as accompanying services related to derivative financial instruments.

Information concerning the costs associated with the establishment of the CIF (Cyprus Investment Firm)

The main costs can be tentatively divided into 2 groups:

1. When establishing: license to be obtained, actual formation of the company, authorized capital of CIF;
2. When managing: costs on employees, basic operating costs.

The vast majority of expenses is the costs on employees and the authorized capital of the CIF.

The authorized capital of the Cyprus Investment Firm (CIF)

The amount of the authorized capital depends on the main line of business of the CIF.

• When the amount of the authorized capital of the CIF equals to 200 000 EUR, the Cyprus firm provides one or more investment services (possible services are listed below) and  it is also possible to manage the client's funds / financial instruments.
  - Orders are executed on behalf of the client;
  - Orders are accepted and transferred in accordance with financial instruments;
  - Investment consultations are provided;
  - investment portfolio management.
• Cyprus company is required to have the authorized capital in the amount of one million euros (€ 1,000,000) in cases when the CIF provides one or more investment services and / or performs the following investment transactions listed below:
  - Conducting transactions on personal account;
  - placement (guaranteed placement) of financial instruments on the basis of firm commitments;
  - cooperation and operation at international trading platforms.

Cyprus Investment Company - information concerning the costs on employees

These costs are very tangible, because according to the regulations, each department should be staffed individually. The staff of employees should include risk manager, compliance officer and general manager.

Professionals in a certain field of activity shall receive salary of forty thousand euros (€ 40,000), and management personnel shall receive even more.

Personnel in the region according to ordinary CIF that provides services for accepting and transferring orders, as well as managing investment portfolio can cost 200,000 euros a year. Moreover, it is possible to require net capital to be maintained at the level of similar sum.

Information about the notification of the passport of the Cyprus Investment Company

The CIF offers investment and accompanying services in other member states, by establishing representative office in the member state or without establishing representative office, without the permission of the manager and the host Member State.