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N. Pirilides & Associates LLC

A LEADING LAW FIRM WITH A REPUTATION FOR EXCELLENCE

Offering high-quality and effective legal advice

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FINANCIAL INSTITUTIONS CONSULTING

Our dedicated team of lawyers and other consultants is always on hand to provide specialist support and legal expertise in order to consult, support and fully assist with matters pertaining to Financial Institutions by leveraging our establishment’s expertise and our expert network.

Key services offered: 

  • Dealing with issues of Fraud / Misconduct / Financial crime in Financial services  
  • International and Cyprus Investment Firms (CIF) in Forex FX, CFD, and or Securities
  • Cyprus E-Money Electronic Money Institutions (EMI) under the Cyprus Central Bank (CBC)
  • Listing on Emerging Companies Market (ECM) of the Cyprus Stock Exchange (CSE)
  • Funds in Cyprus under the Cyprus Securities and Exchange Commission (CySEC)
  • Corporate Services for Financial Institutions

 

Dealing with issues of Fraud / Misconduct / Financial crime in Financial services  

Our dedicated team of lawyers can consult and assist investors and/or financial institutions in relation to issues of Fraud, Misconduct and or Financial crime, and provide all legal support required in this regard.
 
International and Cyprus Investment Firms (CIF) in Forex FX, CFD, and or Securities
 
Our advisory team is currently one of the service providers that has been reliably successful in obtaining licenses and registering Cyprus Investment Firms (CIFs), as well as arranging the required set-up, with experience of more than a decade and on both EU MIFID I and MIFID II regimes. The Cyprus Securities and Exchange Commission (CySEC) is the regulator for Investment Firms (Cyprus Investment Firms) established in Cyprus. Such firms or groups include operations of Brokerage, Agency, Principal/Market Maker, Asset/Portfolio Management, Advisory etc. Groups may include multiple investment firms with licenses in Cyprus (CySEC) as well as additional jurisdictions depending on their strategy and group-structuring. Furthermore, relatively lighter setups might be feasible in cases of Institutional/Professional business strategies.
 
Multiple types of services/activities can be part of the same licensed entity in Cyprus. CIFs offer strategic advantages, incl. but not limited to EU wide passporting of services, and access to banking and payment institutions. The minimum capital requirements range between EUR-level 50k-125k-730k, and furthermore the establishment must demonstrate strong managerial credentials/background in its field. Ensure plenty of financial resources available for capital and, and for the cost of a fully-fledged and staffed operation in the country with management in CY. Allow for approx. half year (or less depending on the case) for the licensing project. Fast track with CySEC, when offered, carries an additional fee to the regulator, and may bring down licensing time to estimated 2-3 months.
 
The consultation for a CySEC application includes, among others, the following:

(i) Our expert assistance in preparing the CySEC’s License Application, with the characteristics applicable to the client:

  • Guidance in providing information, documentation and certificates
  • Consultation on CIF structure and on initial setup
  • Preparation of required Manuals in accordance with applicable CySEC regulation
  • Guidance on the relevant business plan
  • Review of the required questionnaires of shareholders, directors and of other departmental officers. As well as liaising to identify potential management and/or directors when necessary and available.

(ii) Complete, pre-vet and submit on behalf of the Company the necessary/appropriate application to CySEC, follow up the said application up to completion, and guide on the subsequent license activation requirements.

Cyprus E-Money Electronic Money Institutions (EMI) under the Cyprus Central Bank (CBC)

A strong reference is made to EMI, and not just Payment Institutions (PI) due to the fact that EMI entails all those capabilities of a PI plus key additional ones. The most identifiable differences between an EMI and a PI is the EMI’s ability to issue electronic and provide its clients with an electronic purse (E-Wallets), and its ability to hold clients’ funds for more than 24 hours. If the envisaged business model calls for holding retail or corporate clients’ funds (balances) for more than 24 hours and providing all sorts of payment (transfer) options, then the EMI is the option to take. In our opinion, if the initial capital requirement is not an issue, the EMI will allow greater operational flexibility and a stronger product offering making it a better option overall. An interested party in need of arranging EMI services may also be approved by the CBC to become Agent of an existing EMI. This also serves as an initial approval and endorsement if a future EMI establishment project is of interest.

About CBC EMI application:
The Central Bank of Cyprus is the regulator for Electronic Money Institutions (EMI) established in Cyprus. The Minimum capital requirement for an EMI is at EUR-level 350k, and furthermore the establishment must demonstrate strong credentials/background in its field. Ensure plenty of financial resources available for the cost of a fully-fledged and staffed operation in the country with management in CY, and most importantly robust EMI systems acceptable to the regulator. Allow for approx. half year (or less depending on the case) for the licensing project.

Listing on Emerging Companies Market (ECM) of the Cyprus Stock Exchange (CSE)

The Emerging Companies Market of the Cyprus Stock Exchange (ECM, CSE) is very similar to what the AIM is for the London Stock Exchange, but with what could be deemed relatively more relaxed listing rules.
At the time, for new start-ups a public company can be formed with 10-12 shareholders, and then list the shares on the ECM/CSE. Indicatively a whole listing process may take approx. 1 month. The CSE maintains the Share Registry in electronic format. The CSE will also provide the ISIN code, available through Bloomberg/Reuters and closing prices are updated daily on the CSE’s web site, which is also available in English. If the listed company wishes to hold an Initial Public Offering (IPO) after its application is approved, then it may do so with relatively simplified procedures on a case by case basis (up to certain monetary level or number of investors).

Funds in Cyprus under the Cyprus Securities and Exchange Commission (CySEC)

  • Alternative Investment Funds for Retail or Professional/Well-informed Investors (AIF)
  • Alternative Investment Funds for Limited Number of Persons who are Professional/Well-informed Investors (AIFLNP)
  • Registered Alternative Investment Funds for Unlimited or Limited Professional/Well-informed Investors (RAIF) – does NOT require a CySEC license application

In broad terms, these fund types can have use for venture capital, investment- & financing- purposes, as well as in certain cases family office structure, and for the protection of assets, while at same time they all offer tax advantages.
 
Funds’ setups can provide a clear separation between ownership of investment and the management control on the investment (fund); that is, where the management is not performed by the owners of the investment (unit holders) but by the fund’s managers (external or internal).
 
Such funds include externally or internally managed AIFs with either unlimited or limited number of investors, as well as with either a single compartment or an umbrella structure (multiple compartments of investments).
 
Key Briefing:

  • Where a fund is internally managed, the 4-Eye principle applies, and the Executives must have the relevant expertise. Where a fund is externally managed, this can be a regulated investment firm, sub-threshold/mini manager, SPV dedicated to the fund.
  • When assets exceed the AIFMD thresholds of 100M EUR leveraged or 500M EUR unleveraged, the fund must be managed by an Alternative Investment Fund Manager (AIFM).
  • The Alternative Investment Fund for Limited Number of Persons (AIFLNP) appears historically to be the most popular type of fund created in Cyprus (in form of Variable Capital Co, VCIC), and we observe also an increase of interest in Registered Alternative Investment Funds (RAIF).
  • An AIFLNP for professional/well-informed investors requires licensing by CySEC, can be internally or externally managed, does not have restrictions in relation to risk taking/spreading and liquidity provisions, and under certain conditions does not require a depositary/custodian. It is limited to max. 50 professional or well-informed investors (unit holders) in aggregate in the whole fund. Its assets under management should remain under the AIFMD thresholds.
  • A RAIF for unlimited (or limited) number of professional/well-informed investors does not require licensing by CySEC, as it is externally managed by a regulated Alternative Investment Fund Manager (AIFM) and gets registered via the AIFM with a relatively faster procedure than a CySEC license application of another form of AIF. A RAIF can take, among others, the form of an incorporated Cyprus VCIC or Common Fund.

About CySEC AIF AIFLNP application:
 
The Cyprus Securities and Exchange Commission (CySEC) is the authority, responsible under for the licensing and supervision of Alternative Investment Funds (AIF & AIFLNP), as well as Alternative Investment Fund Managers (AIFManager) in Cyprus.
 
The operation of an AIFLNP is subject to the prior granting of authorization, if CySEC approves such application and setup, and particularly approves the below main elements:

  • The relevant application;
  • The AIFLNP's instruments of incorporation; offering memorandum
  • The choice of external manager, or in case of internally managed AIFLNP, the persons who effectively shall conduct the business of the AIFLNP; and
  • The choice of the depositary/custodian, if required/appointed.

The minimum capital requirements start from relatively low and vary depending on the case with lesser overall requirements applicable if externally managed by an AIFManager or if a RAIF under an AIFManager.
 
An AIF or AIFLNP setup entails among others and depending on the case: risk management, compliance, fund administration, internal audit, external audit, depositary (Bank, CIF, other).
 
Allow for approx. half year (or less depending on the case) for the AIF licensing project.  A RAIF does NOT require CySEC license application.
 
Corporate Services for Financial Institutions

Multilysis (our corporate service providing firm) can be of assistance to other practical matters relating to establishment of Financial Institutions by providing, inter alia, the following services:

  • Registration of companies in Cyprus and a large number of other foreign jurisdictions
  • Acting as Secretary at an annual fee
  • Providing Registered Office facilities at an annual fee
  • Providing Directors services at an annual fee
  • Providing book-keeping services
  • Corporate structuring-Management & Administration services           
  • Tax Consulting
  • Services relating to the establishment and operating of bank accounts in Cyprus and abroad etc.
  • Arranging for the Audit of companies (Internal & External)
     

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