Cyprus Investment Firm

A CIF is a legal entity authorised to provide investment services and perform investment activities under the Cyprus Securities and Exchange Commission (CySEC). CIFs are governed by the Investment Services and Activities and Regulated Markets Law of 2017 (Law 87(I)/2017), which transposes the EU’s Markets in Financial Instruments Directive II (MiFID II) into Cyprus law.

Registering a Cyprus Investment Firm (CIF) involves meeting several requirements laid down by the Cyprus Securities and Exchange Commission (CySEC) and adhering to the Investment Services and Activities and Regulated Markets Law of 2017 (Law 87(I)/2017) and the European Union’s Markets in Financial Instruments Directive II (MiFID II).

Key Requirements for Registering a CIF:

1. Company Formation: The first step in registering a CIF is to establish a legal entity in Cyprus, usually in the form of a private limited liability company.

2. Board of Directors: A CIF must have a board composed of at least four directors, with two executive and two non-executive directors. At least three of the directors must be Cyprus residents. All directors must possess relevant knowledge and experience in the financial industry and pass the “fit and proper” test conducted by CySEC.

3. Local Resident Staff: The CIF must employ a minimum number of local resident staff members on a full-time basis to fulfill the company’s key functions. The required number of personnel depends on the type of license the CIF seeks.

4. Operational Office: The CIF must maintain a fully operational office in Cyprus, equipped with the necessary infrastructure, technology, and resources to conduct its investment activities effectively.

5. Initial Capital: CIFs must maintain a minimum initial capital, which varies depending on the type of investment services and activities they intend to provide. The minimum capital requirements are as follows:

   • €75,000 for Reception & Transmission, Execution of orders on behalf of clients, Portfolio management, Investment advice without being authorised for holding clients’ funds.
   • €150,000 for STP License (Reception & Transmission, Execution of orders on behalf of clients, Portfolio management, Investment advice).
   • €750,000 for Market Maker License (Reception & Transmission, Execution of orders on behalf of clients, Portfolio management, Investment advice, Underwriting and placing of financial instruments on a firm commitment basis, Dealing on Own Account, Operation of Multilateral Trading Facility)..

The application procedure for obtaining a Cyprus Investment Firm (CIF) license from the Cyprus Securities and Exchange Commission (CySEC) involves a series of steps and documentation to ensure compliance with local and EU regulations. Below is an outline of the requirements and steps for preparing a CIF license application:

1. Business Plan: The applicant must submit a comprehensive business plan outlining the company’s strategy, objectives, target market, and financial projections.

2. Internal Operation Manual: This includes the Anti-Money Laundering (AML) Procedures and outlines the company’s internal policies, processes, and controls for managing its operations and ensuring compliance with relevant laws and regulations.

3. Compliance Policies and Procedures: The CIF must establish clear policies and procedures to ensure compliance with all legal obligations, including investor protection, risk management, and corporate governance.

4. Independent Compliance Unit: The CIF must establish an independent compliance unit staffed with qualified personnel responsible for monitoring and ensuring compliance with applicable laws, regulations, and internal policies.

5. Conflict of Interest Prevention: The organisation and administration of the CIF must be designed to prevent conflicts of interest between the firm, its clients, and its employees.

6. Risk Policy and Management: A CIF must implement a clear risk policy, overseen by a separate risk management unit responsible for identifying, monitoring, and mitigating potential risks.

7. Investment Compensation Fund Membership: CIFs are required to join the Investment Compensation Fund for Clients and comply with its obligations, providing additional protection to clients in case the CIF fails to meet its financial obligations.

8. Compliance Officers and Employees: Any employees providing investment services or acting as Compliance Officers must possess the necessary knowledge and expertise for their assigned responsibilities and be registered in the public register maintained by CySEC.

Once all required documentation and information are prepared, the applicant submits the application package to CySEC for review. The regulator assesses the application for compliance with relevant laws and regulations, the applicant’s organizational structure, and its management and operational capabilities. If the application is successful, CySEC will grant the CIF license, enabling the firm to conduct investment services in Cyprus and across the European Union.

Applying for a Cyprus Investment Firm (CIF) license from the Cyprus Securities and Exchange Commission (CySEC) involves various fees that cover the application process, annual compliance, and, if necessary, license extensions. The following is a breakdown of these fees:

1. 1. Application Charges:
      • €7,000 for the initial CIF license application
      • €3,500 for a license extension application (note that charges may vary depending on the type of license and the specific extension)
   2. Annual Fees:

a) Fixed charge: Ranges from €5,000 to €10,000, depending on the services provided by the CIF.

b) Turnover-based charge: Applicable if the annual turnover exceeds €500,000, calculated as follows:

– 0.75% for turnover between €500,001 and €1,000,000

– 0.1875% for turnover between €1,000,001 and €5,000,000

– 0.1125% for turnover between €5,000,001 and €10,000,000

– 0.0975% for turnover exceeding €10,000,001

These charges are calculated based on the CIF’s annual audited financial statements. In addition, CIFs providing services related to Contracts for Difference (CFDs) are required to pay an extra €3,000 per year.

It is essential to consider these fees when planning to apply for a CIF license to ensure that your firm has the necessary financial resources to cover these costs throughout the application process and ongoing operations.

At Chambers & Co, we provide a comprehensive suite of services to guide you through the entire process of setting up, registering, and operating your Cyprus Investment Firm (CIF).

Our services include:

1. Cyprus Company Registration: We handle the incorporation of your company in Cyprus, ensuring all necessary documentation and legal requirements are met.

2. Advisory Services: Our team of experts will advise you on the best structure for your Cyprus Investment Firm (CIF), taking into account your business objectives and ensuring compliance with regulatory requirements.

3. CIF Application Support: As your promoter, we will guide you through the CIF application process with CySEC, preparing internal policies and procedures, collecting the required information, and assisting you until you receive your CIF license.

Post-Licensing Services:

1. Ongoing Support: Our team can take on the role of Risk Manager and/or Internal Auditor, providing continuous support to your in-house appointed Compliance Officer and Anti-Money Laundering Compliance Officer.

2. Compliance Assistance: We offer ongoing compliance support to our clients, ensuring that they remain up-to-date with regulatory changes and assisting with any changes in management or ownership structure.

With our extensive experience and expertise, Chambers & Co is your ideal partner for establishing and maintaining a successful Cyprus Investment Firm.