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Foreign Banks Operating in Cyprus

The establishment of a Representative Office in the Republic of Cyprus by banks established in other countries.

According to the provisions of section 8 of the Banking Laws of 1997 to (Νο.2) of 2009, as may be amended from time to time (the “Law”), an institution which is entitled under the laws of another country to carry on business which substantially corresponds to banking business, may establish a Representative Office in the Republic, only with the prior approval of the Central Bank of Cyprus (“CBC”).

A Foreign Institution, which wishes to establish a Representative Office in Cyprus, must submit an application to the CBC.

The CBC may grant an approval for such an establishment subject to   conditions it considers proper to impose or without any conditions. The CBC, therefore, if the application is successful, grants an approval to the Applicant which is, generally, subject to the following conditions.

First of all, subject to the provisions of the Law the objectives, functions and business, in general, of a Representative Office, shall be confined to the conduct of purely liaison activities, including, inter alia, the following:

(i)           the provision, upon request, of factual information relating to the products and services of the Applicant,

(ii)         the conduct of research work into the economy of the Republic (including the gathering of financial and commercial information) to inform accordingly/be used by the Applicant,

(iii)        liaising with customers of the Applicant in the Republic,

(iv)        the   undertaking   of   credit   assessments   and   reports   on   entities   incorporated/operating in the Republic on behalf of the Applicant, and

(v)          the promotion, in general, of the Applicant’s interests among potential customers in the Republic.

Likewise, the Representative Office shall not engage in any form of banking business or in the business of accepting deposits as defined in section 2 of the Law or book any banking business in its name or in the name of the Applicant or in the name of any of the Applicant’s branches in countries other than the Republic or engage in any financial transactions, except where necessary for and incidental to the maintenance of the Representative Office in the Republic or provide investment services or purport to provide investment services and/or perform or purport to perform investment activities on a   professional basis in the Republic.

Also, the Representative Office shall be distinctly located from the office of any financial or any other undertaking and its activities should be kept separate from those of any other financial or any other undertaking operating in Cyprus. The Representative Office shall employ its own staff. Furthermore, it shall annually prepare financial statements as if it were a separate legal entity and submit them to the CBC within 4 months of the end of each financial year, after they have been audited in accordance with the International Standards of Auditing by external auditors appointed by the Applicant and approved by the CBC. The external auditors, in preparing their report on the annual financial statements, shall also have the special duty to report directly to the CBC any instances where the operations of the said Office have not, in their opinion, been in compliance with the conditions of this approval. The Representative Office may use the word “bank” or any grammatical variation thereof as part of its name, provided that this is the same name as the one under which the Foreign Institution to which it belongs and provided   that this name is used in Cyprus in conjunction with the description “Cyprus Representative Office”.

An annual fee shall be paid to the CBC as reimbursement to the latter of the cost of its supervisory function.

Finally the Applicant shall upon finalizing all necessary formalities and prior to the Representative Office commencing any operations must submit a true copy of the certificate issued by the Cyprus Registrar of Companies under section 347 of the Companies Law, indicating that the Applicant has registered a place of business in the Republic and a written undertaking that it has observed the conditions attached to the approval and that it shall at all times comply with these conditions.

N. Pirilides & Associates LLC is in a position to provide guidance and advice as well as assist clients wishing to establish a Representative Office in the Republic and/or apply for such a licence. For any enquiries and/or questions, please contact us at info@pirilides.com.