Licensing of Cyprus investment firms

Cyprus Investment Firms (CIF) Licensing

Operating and Licensing a regulated Investment Firm in Cyprus might be challenging since the regulatory environment is constantly changing and the whole process of licensing might be time consuming and costly. 

We can assist you:

A. Licensing Phase

1. Preparation or review of the full application package that needs to be submitted to CySEC. 
2. For already established investment firms we can set up a branch abroad or offer our services cross border. 
3. Review your existing application and modify the requirements before the Submission
4. Preparation or review of the application for existing investment firms that need to increase their services i.e (entering NFT, Crypto etc) 

B. Compliance once the CIF is been established

• Preparation of ICAAP Report (Internal Capital Adequacy Assessment)
• Preparation of quarterly Capital Adequacy Reports (COREP)
• Preparation of Internal Audit Report
• Preparation of Suitability Report
• Calculation of Profit (STP and Market Maker)
• Assessment of trades execution
• Conduct of external Audit
• Management Accounts
• Consultation on Compliance, Accounting and Tax matters

C. Traditional services offered to CIFs in our capacity as accountants and auditors:

• Back office accounting work
• Outsourced payroll work
• Outsourced tax, vat, payroll taxes compliance and execution
• Ad Hoc advisory on all matters

The Application Requirements

A Cyprus Investment Firm (a “CIF”) is an entity who is licensed and supervised by CySEC, is entitled to provide investment services across the European Union and EEA member states via the EU Passporting System, the CIF must operate under the 5th Directive 2014/65/EU. 

For a company to receive a licence from CySEC and to operate as a CIF, an application package has to be submitted for approval. The documents that will need for the application package are the following: 

1. CIF Application package documents
2. CySEC application form. 
3. Directors, key personnel and shareholders with special participation information ( Qualifications certificates, CV, other documents etc)
4. Company legal documents (Certificate of Incorporation, Memorandum, and Articles of Association, etc.).
5. Group structure.
6. Organisational structure.
7. Clean criminal records and Certificates of Good Standing of the shareholders with special participation, the Board of Directors and employees of the company. The Clean criminal records must be issued from the country of residence. 
8. Company’s Internal Operations Manual for all activities and operations.
9. Business plan of the first 3 years.
10. Anti-money laundering and know-your-client procedures (due diligence) must be also filed. 
11. The below provisions should also be taken into consideration in the application package:

CIF Requirements

• The board of directors should be two executive and two independent non-executive members.
• Board majority members shall be Cyprus residents.
• The CIF Memorandum of Association must clearly state that the firm operates as an investment company under the provisions of Law Law 87(I)/2017 and that the company offers investment services with the scope of its licence. 

Fees & Capital Requirements:

The CIF Companies in Cyprus must have an initial capital of €200.000 but the capital requirements vary depending on the licence type.

Capital requirements for CIF Companies are mostly based on the activities of your firm.

We demostrate below the licensing capital requirements per category:

A. Licensed Activities

• Reception and transmission of orders in relation to financial instruments
• Execution of orders on behalf of clients
• Portfolio management
• Provision of investment advice

Capital Requirements: €75,000  The Funds are not withhold 

Capital Requirements: €100,000  The Funds are  withhold 

B. Licensed Activities

• Reception and transmission of orders in relation to financial instruments
• Execution of orders on behalf of clients
• Portfolio management
• Provision of investment advice
• Dealing on own account
• Financial instruments underwriting / Placing financial instruments on a firm commitment basis. 
• Placing of financial instruments without a firm commitment basis
• Operating a Multilateral Trading Facility
• Operation of an Organised Trading Facility

Capital Requirements: €750,000  The Funds are  withhold 

Financial instruments are: 

• transferable securities
• money market instruments
• units in collective investment undertakings
• Options, futures, swaps, forward rate agreements and other derivative contracts
• financial contracts for differences.

CySEC’s annual fees (euro)

a) Fixed charge of  €5000 to €10,000 depending on which services are provided

b) Variable fee based  on the turnover, provided that the turnover exceeds €500.000, as below:

• 0.75% – between €500.001 – €1.000.000
• 0.1875% – between €1.000.001 – €5.000.000
• 0.1125% – between €5.000.001 – €10.000.000
• 0.0975% – if exceeding €10.000.001.

The above is calculated based on the annual audited financial statements.

CIFs that provide services in relation to CFDs shall pay an additional €3.000.

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