- Registration of a Cyprus Investment Firm (CIF)
- Listing on the Emerging Companies Market (ECM) and the regulated stock exchange market in the Republic of Cyprus
In today’s world of economic progression and innovation, the need for expansion in the field of financial services is ever so poignant. Companies, providing any form of financial advisory or brokerage services, are required by law to have the necessary license that is strictly regulated and evaluated by the issuing committee. Although at times a time-taking and difficult process, licensing your business does not only ensure legitimacy of operations but also provides security and trust for your clientele. Our firm is highly experienced in obtaining a variety of financial licenses on an international level and can provide the necessary support throughout the entire process as well advise on the best possible jurisdiction for a particular type of license based on your particular business activity, target market and operational circumstances. Our legal team can also prepare detailed legal and tax opinions that will provide the client with a clear understanding of the steps that need to be taken, any possible liabilities and benefits catered to your specific business model.
With today’s online accessibility to any service or market the possibilities for flexibility in terms of business set up location and target market are limitless. Businesses of any economic activity are free to set base and obtain licensing in any country in the world most favorable for their particular circumstances. For example, a betting and gambling business is most advantageously set up in Curaçao, Malta or Isle of Man due to ease of license obtainment and special tax incentives specifically catered to this particular activity. Similarly, a banking or financial advisory license would be most easily attained in Puerto Ricco, Domenica or Luxembourg. When it comes to public stock trade and the forex industry, which is ever so popular today, The Republic of Cyprus has a lot to offer, which is why we have outlined some of the basic benefits and registrational procedures below for the convenience of our clients.
THE FOREX INDUSTRY IN THE REPUBLIC OF CYPRUS
The Republic has been issuing broker licenses since 1988 and has since picked up quite the popularity, especially after its acceptance in the EU. Currently there are more than 200 Forex Brokers headquartered on the Island. More so, iFXEXPO – the largest business to business FX event in the world is now annually conducted in Limassol, attracting thousands of field professionals from all over the globe. The FX infrastructure is now so advanced and developed in the country that it has become completely self-efficient - local brokers can acquire digital marketing, liquidity, operating platforms, legal, accounting and banking services, multilingual staff hire as well as their training and certification all from within the Republic. This accumulation of such a comprehensive retail investment industry on the island is mostly due to the favorable 12.5% corporate income tax rate that the country offers along with a number of various incentives and regulatory enticements, that all in all make the jurisdiction a very cost-effective and compellent solution for this type of business. Furthermore, as the country is a member of the European Union and the European Economic Area, it is also subject to the Markets in Financial Instruments Directive (MiFID) which allows for a single, simplified regulatory framework throughout the entire EU as well as the use of the single passporting principle which permits the provision of services to customers in any EU member state.
The Cyprus Securities and Exchange Commission (CySEC) which is the supervisory Authority in charge of regulating, licensing and overseeing the investment services market in the Republic of Cyprus, although stern and stringent at times, offers an investor friendly environment with full support of the open market concept. Unlike, many other jurisdictions worldwide, CySEC does not impose limitations on Forex Trading, allowing local brokers to offer alluring financial products such as CFD and binary options which are prohibited by many other countries. Cyprus is also taking a very welcoming approach to cryptocurrency and blockchain investment and is currently drafting a legislation that will help regulate Distributed Ledger Technology (DLT) business ventures. As of now, Cyprus does not impose any capital gains or dividend tax on cryptocurrencies, which is a very dominant incentive for relevant trading firms and investors alike.
REGISTRATION OF A CYPRUS INVESTMENT FIRM (CIF)
Whether you wish to open a forex trading, broker service, portfolio management, investment or financial advisory firm in Cyprus you will be required to obtain a Cyprus Investment Firm License. The core legal framework, registrational procedures and operational requirements of investment and ancillary services in Cyprus is governed by the Cyprus Investment Firms Law 144(I)/2007 and adopts provisions from the Markets in Financial Investments Directive. As such, a CIF license is valid throughout the EU and thus opens doors to a very large and diversified market whilst maintaining a relatively low and efficient tax rate. What’s more due the Republic’s advantageous location, a CIF can act as regional office for operation within the Middle East countries.
In terms of tax advantages, Cyprus Investment Firms that are headquartered, fully staffed and operated from the island and as such are classified as local tax residents subject to corporate income tax in the Republic enjoy enticing benefits and incentives. They are fully exempt from tax on dividends from own investments, including the mandatory 15% tax on dividend distribution imposed to its citizens by the Russian Federation, withholding tax on payments to its non-resident shareholders, Special Defense Contribution tax on dividends received from resident and non-resident companies as well as capital gains tax from sale of shares, bonds or debentures.
For more detailed information on Cyprus Investment Firms including registrational procedures, regulatory framework and capital requirements, please read the full article here or contact our team for a consultation.
LISTING ON THE EMERGING COMPANIES MARKET (ECM) AND THE REGULATED STOCK EXCHANGE MARKET IN THE REPUBLIC OF CYPRUS
In order for a company to be able to openly offer its shares to the public, it must be registered or converted into a public company and must be listed on the relevant stock exchange. In Cyprus the requirements and procedures for the registration of public company are fairly straightforward - the particularities and structural requirements of which are described in more detail in our Registration of a Company in the Republic of Cyprus article.
A public company, in addition to being able to issue advertisement for offering shares to the public, provided it is compliant with the prospectus provisions set out in sections 37-46 of the Companies Law, can also gain access to the European capital markets through listing on one of the stock markets established in the Republic of Cyprus. Currently, the Cyprus Stock Exchange (CSE) operates as a Regulated Market and a Multilateral Trading Facility – The Emerging Companies Market (ECM), based on the other similar non-regulated European markets. Although the Main and Alternative Markets are segments of the Regulated Market, the ECM can be used for trade in shares, bonds, rights, warrants, Global Depositary Receipts (GDR), treasury bills and collective investment schemes, including those not listed on the Cyprus Security Depositary and Central Registry. Listing on any one of these markets, offers access to the CSE’s fully automated computer trading system, consisting of the Central Registry Depository and Clearing & Settlement system.
For more detailed information on listing on the ECM and the Regulated Market in the Republic of Cyprus including advantages and best uses, registrational procedures, continuous annual obligations and prospectus requirements, please read the full article here or contact our team for a consultation.
Contact our team for more information or a complimentary consultation on any issue of interest.
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