Foreign investors interested in investing in Cyprus can set up a forex company, which carries out activities on the local and international trading markets. A forex company provides assistance to other investors by offering advice on investment opportunities in the forex market. Forex companies are required to obtain special permits for their activities, and our team of experts in company formation in Cyprus can assist in this matter.
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How do I register a forex company in Cyprus?
Although most of the companies are registered following the same procedure, the forex company is incorporated in a different manner, as it must comply with both the regulations prescribed by the Cypriot Company Law, as well as with those regulating the investment activities.
The registration process starts following the classical approach, applicable to all companies with operations in Cyprus. The company will have to be registered under a legal entity, receive approval from the Registrar of Companies for the proposed trading name of the business, or prepare the statutory documents, which must be drafted with the assistance of a legal specialist. Further on, the company’s documents will have to be submitted at the Registrar of Companies.
Companies with commercial activities are required to register for tax purposes and for social contributions. It is also necessary to have a business address and to set up a corporate bank account for the newly incorporated company.
Are there specific licensing procedures to follow to operate a forex company in Cyprus?
After the registration procedure is completed, the investor will need to obtain a Forex Trading License, which is issued by the Cyprus Securities and Exchange Commission.
It is important to know that the minimum share capital of the company is set up in order to support the specific activities of the business (such as investment advice for investors or trading activities through a forex platform). The 2014 Law on Investment Services and Activities and Regulated Markets provides the provisions for the share capital.
What are the types of forex licenses available in Cyprus?
There are 3 types of licenses you can apply for when opening a forex company in Cyprus:
- the basic license: this business permit is available for providing investment advice, portfolio management services, and execution of orders;
- the Straight-Through Processing (STP) or market maker license: this is the standard authorization, enabling companies to direct clients’ orders to the liquidity pool;
- the dealing on own account authorization: this is also known as a full license, and it allows the forex company to process clients’ orders in-house, meaning the customer can trade directly with the broker.
The latter type of forex license also enables the Cypriot company to hold clients’ money in custody.
What are the main requirements to obtain a forex license in Cyprus?
The most important aspect to pay attention to is the share capital: each type of license has different issuance conditions, as presented below:
- at least EUR 50,000 is required for a basic license;
- the minimum amount for a market-making license is EUR 125,000;
- for a dealing on own account license, the minimum share capital is EUR 730,000 due to the fact that it also enables holding clients’ money.
In terms of documents, they are the same, no matter the type of license you plan to apply for.
What are the documents to obtain a forex license in Cyprus?
The following papers must be filed with the Cyprus Securities Exchange Commission to obtain a forex license:
- the standard application form;
- details on the company’s shareholders, directors, and other key officers (managers and secretary);
- the Articles of Association;
- the Certificate of Registration;
- proof of the local address;
- the structure of the company and its organization;
- a 3-year business plan;
- the internal procedures manual;
- the Anti-Money Laundering and Know-Your-Client regulation books.
Apart from these, which are required for the company, for each shareholder and director (natural persons), the following documents must be prepared and filed:
- ID or passport copies;
- evidence of their residential address;
- resume indicating their financial industry knowledge and experience;
proof financial education background; - clean criminal record;
- proof of financial good standing;
- a questionnaire supplied by the Commission with the answers of each officer.
How long does it take to obtain a forex license in Cyprus?
The license is issued in 4 to 6 months from submission of the documents, provided there is no problem with the paperwork. This makes Cyprus one of the most advantageous countries to open a forex company in. By comparison, a similar license is issued in about 9 months in Malta.
Businessmen interested in receiving more details on the forex companies in Cyprus can address our team of Cyprus company formation consultants.