CYPRUS INVESTMENT FIRMS (CIFs)

The Cyprus Investment Firms Law 144(I)/2007 provides the legal framework for the provision of investment and ancillary services as well as specific provisions regarding capital requirements, the establishment of branches, authorization and supervision of Cyprus Investment Firms (CIFs).

For CySEC to grant CIF authorisation, a formal application procedure needs to be followed, and certain requirements must be met, the most important of which are stated below.

The board of directors of a Cyprus Investment Firm shall consist of at least two executive members and two independent non-executive members.  The management of a CIF must be undertaken by two persons (four-eye principle) who shall be of sufficiently good reputation and have sufficient experience as to ensure the sound and prudent management of the CIF.

CySEC requires to be informed of all shareholders, their shareholding and details of the ultimate beneficial owners. 

The investment services and activities which are regulated by the Law and subject to the granting of a license are the following:

Investment Services

·         Reception and Transmission of orders in relation to financial instruments

·         Execution of orders on behalf of clients,

·         Dealing on own account

·         Portfolio Management

·         Investment Advice

·         Underwriting of financial instruments

·         Placing of financial instruments

·         Operation of Multilateral Trading Facility

The CIF may also offer a range of the below regulated non-core activities:

Ancillary services:

·         Safe keeping and administration

·         Safe-custody,

·         Granting credits or loans,

·         Provision of professional advice on capital structures industrial strategy etc.

·         Foreign Exchange services.

·         Investment Research and financial analysis.

·         Services related to underwriting

It should be noted that no license is granted for the operation of a CIF in relation to the provision of ancillary services only.

Upon amendment of the Law144(I)/2007, the requirements for the initial capital of the CIFs has been amended as follows:

1. The minimum initial capital for a CIF holding client’s assets and providing one or more of the following is €125.000:

Reception and transmission of orders
Execution of orders on behalf of clients
Portfolio management

2. The minimum initial capital for a CIF providing reception, transmission or execution of orders and/or investment advice without handling clients’ assets is €50.000.

3. The minimum initial capital for a CIF providing and/or conducting one or more of the following is € 730.000:

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

Our firm can help by incorporating the entity to be licensed, preparing the various documents (Memorandum and Articles, Business Plan, Internal Manual Procedures, AML Manual, questionnaires, application and information document), submitting on your behalf to CySEC the application package, following up the processing and promoting your application with Cyprus Securities and Exchange Commission and activating the license by submitting to the regulatory authorities the supplementary information required.

For further information on this topic please contact

Ms. Maria Pitta (mariapitta@pittaslegal.com) at SOTERIS PITTAS & CO LLC,

by telephone (+357 25 028460) or by fax (+357 25 028461)

The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.