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Asset management company - Investment firm - Investment Fund: Incorporating of a Investment firm

Incorporation of Investment Firms  

Our Law firm incorporates investment firms on behalf of our clients in the EEC (e.g. Germany, Liechtenstein, Cyprus) and in other countries (Belize, Cayman Islands, Panama, Mauritius). Furthermore we offer the incorporation of a New Zealand OFC.

If incorporating an investment firm one has to consider the law of the country where the firm is incorporated and the country where the services will be offered. Incorporating an investment firm within the EU / EEC, a license will be acknowledged by other member states without new application in further EU / EEC states: To carry out its business, UCITS (undertakings for collective investment in transferable securities) must receive prior official authorization granted by the competent authorities in the Member State in which they are located, or their home Member State, i.e. the Member State in which their registered office and head office are situated. The authorization granted is valid in all Member States.

The business and operation of the UCITS are governed by the principles applicable in the home Member State. Thus, the home Member State draws up the prudential rules which govern the operation of the UCITS. Any changes to the status of the UCITS such as a delegation are notified to the competent authorities in the home Member State. Business activity of investment firms outside the EEC / EU is granted by most laws, if the competent authorities of third countries agreed to cooperate with authorities in those jurisdictions where the services are offered. The same applies in the context of tax relevant data.

CYPRUS INTERNATIONAL COLLECTIVE INVESTMENT SCHEMES

Introduction

The ideal location, placed among three continents (Europe, Asia and Africa), the excellent infrastructure and the high level of professional services (banking, consultancy, etc.) along with the competitive tax system, make Cyprus the rising star of the European Financial Services sector. Cyprus investment vehicle is suitable both for EU inbound and outbound investments. There are no investment activities that are inappropriate for the Cyprus tax environment. However, there are investment activities which are indeed ideally suited to the Cyprus tax environment such as:

  • Investment funds
  • Financial companies
  • Royalty companies
  • South Europe, Middle East, Russia and Central and Eastern Europe head office operations

The European enlargement and the accession of Cyprus to the EU opens up a window of opportunity to investors who would like to invest in the EU or who wish to invest from the EU.

An IClS can take the following legal forms:

  • International fixed capital company
  • International variable capital company
  • International unit trust scheme, and
  • International investment limited partnership

All four types of ICIS may be established with limited or unlimited duration and may be structured in such a way as the promoters may determine, provided however, that adequate protection is in place for the unit holders.

TYPES OF ICIS

Taking into account the investment policy and the particular investment objectives, an ICIS may be designated as:

  • An ICIS marketed to the general public;
  • An ICIS marketed solely to experienced investors1; or
  • A private international collective investment scheme (only 100 or less investors)

[1] "Experienced investor" is a natural or legal person that provides financial services or frequently enters into investment transactions of substantial size taking into account all the risks involved.

INTERNATIONAL FIXED CAPITAL COMPANY

This is an International Investment Company that is incorporated under the companies law and recognized to operate as an international fixed capital company by the ICIS law. Its assets and unit holders are non residents of Cyprus and the share capital of the company cannot increase or decrease.

Initial minimum capital has been set to EUR 100,000 which will be marketed to the public or to experienced investors. Fixed capital companies which are private international collective investment schemes (can have 100 or less investors) are exempted from this requirement.

INTERNATIONAL VARIABLE CAPITAL COMPANY

This is an International Investment Company that is incorporated under the company's law and recognized to operate as an international variable capital company by the ICIS law. Its assets and unit holders are non-residents of Cyprus and the share capital of the company may vary according to the investors participating in or exiting the company. That means that the amount of the share capital of the company shall be equal to the net asset value of the shares of the company at any time in issuance; and that the share capital of the company may be divided into a specified number of shares without assigning any nominal value (par value).

INTERNATIONAL UNIT TRUST SCHEME

This is an International trust created under the International Trusts Law recognized to operate as an international unit trust scheme by the ICIS law.

A trust is legally defined as a relationship created – inter vivos or on death – by a person (the settlor) who places assets under the control of the trustee for the benefit of a third party (the beneficiary). These assets are like a separate "fund" and are not part of the trustee's own estate.

The title of the trust assets stands in the name of the trustee and the trustee is empowered and duty bound to manage the assets held in trust in accordance with the terms of the trust agreement.

Under section 2 of the International Trust Law, a trust qualifies for a Cyprus International Trust where:

  • the settlor is not a permanent resident in Cyprus;
  • at least one trustee is a permanent resident in Cyprus;
  • no beneficiaries are permanent residents in Cyprus; and
  • the trust property does not include any immovable property in Cyprus.

INTERNATIONAL INVESTMENT LIMITED PARTNERSHIP SCHEME

This is a limited partnership that is registered under the Partnership and Business Names Law and which is recognized to operate as an international investment limited partnership by the ICIS law.

The partnership must appoint a general partner who acts as the manager of the fund and who is responsible for any debt and obligations of the scheme that may arise. Limited partners are also members of the scheme and their liability is limited to the amount they have contributed to the scheme. A legal entity can also be a partner with limited liability.

The partners or unit holders of the fund that have limited liability should not take part in the conduct of the business of the scheme or have the power to contract on behalf of the international investment limited partnership. All contracts, deeds, instruments, letters and documents whatsoever shall be entered into, drafted, signed and executed by the general partner on behalf of the international investment limited partnership.

REGULATORY FRAMEWORK

Under the law 47(I)/1999 regulating ICIS, the Central Bank has been designated as the regulatory and supervisory authority of ICIS2. Other laws which are in force and applicable to the ICIS are the Cyprus Companies Law, the Business Names Law (except from those parts which are specified by the law) and the International Trust Law.

(2) Since May 2002 any ICIS which is intended to be offered to the general public requires clearance by the Cyprus Securities and Exchange Commission.

LICENSING REQUIREMENTS

In order to establish an ICIS the prior approval of the Central Bank of Cyprus (the Bank), as the regulatory and supervisory authority for ICIS, their managers and trustees, has to be obtained.

In order to obtain such approval, the Bank must be provided with such information so as to be satisfied as to the competence of the directors, promoters, managers or trustees, as the case may be, and that their probity is such as to render them suitable to act in their respective capacities.

TAXATION

ICIS are subject to tax like any other entity. This translates to the following basic highlights:

  • Unified corporate rate of 10% for both international and local business enterprises.
  • Adoption of the residency basis rather than source basis as the criteria of taxation.
  • Exemption of profits from the disposal of securities
  • Dividend income is exempt in most cases
  • No withholding tax on payments of dividend, interest and royalties to non-residents
  • Capital gains realized on immovable property held outside Cyprus are outside the scope of capital gains tax

In a nutsheII what is significant for ICIS is:

  • Exemption from tax on foreign dividends
  • Exemption from tax on profit from sale of securities
  • No withholding tax on income repatriation by the

ICIS PROCEDURE GUIDELINE FOR THE SETTING-UP OF INTERNATIONAL COLLECTIVE INVESTMENT SCHEME

ICIS must be approved by the Central Bank of Cyprus, which is the regulatory and supervising authority for the schemes, for their managers and their trustees. To this end, a written application to the relevant supervising authorities must be submitted as follows:

  • In the case of an international fixed capital company and an international variable capital company the written application must be submitted by or on behalf of the company.
  • In the case of an international unit trust the written application must be submitted by the trustee of the trust.
  • In the case of an international investment Iimited partnership the written application must be submitted by or on behalf of the limited partnership.

In order to recognize the scheme, the supervising authorities must be satisfied that:

  • The directors, the promoters, the managers, and the trustee of the scheme are competent and honest, and that the manager, the general partner, and the trustee (as the case may be) act independently of one another. Requirements of qualification and/or licensing of the aforementioned persons will be determined by the authorities from case to case, but we can advise once we received a project description from the client;
  • The manager meets the necessary requirements as per the legislation and the regulations;
  • The trustee meets the requirements as per the legislation and regulations:
  • The general partner meets the requirements of a manager;
  • The name of the scheme is not undesirable.

Additionally, the supervising authorities must be satisfied that the constitutional documentation and the offering memorandum of the scheme contain the information prescribed by the supervising authorities and that they are in a form acceptable to the supervising authorities.

Finally the scheme will have to submit to the supervising authorities other documentation and information as prescribed.

REPORTS

Annual Reports must be prepared by the managers in relation to each ICIS and must contain, as a minimum, the following:^

1. Financial statements

2. Information on borrowing

3. Portfolio information

4. Report by Trustees

5. Report by Auditors

Half-yearly reports are prepared by the managers in relation to each ICIS and must contain, as a minimum, financial statements consisting of

  • Balance sheet
  • Income & expenditure account
  • Statement of the sources from which the total income of the ICIS has been generated - Statement of duties, charges, and fees paid out
  • Statement of income distribution or allocation

We assist with the creation of an ICIS by advising on:

  • The constitutional documentation and the offering memorandum of the scheme
  • The application of the scheme for recognition by the supervising authorities

Our licensed experts and auditors can further assist with:

  • Administrative services to the scheme (calculate net asset value and prepare annual accounts and periodical financial reports in accordance with the laws and regulations)
  • Audit services to the scheme
  • The management of the scheme (fund management software capabilities, investment expertise, ensure compliance with investment strategy of the fund)

INVESTMENT COMPANY PANAMA

At the moment the Government is legislating regarding the issuing of electronic money and FOREX, and intends to put all of this under the Brokerage houses and National Securities Commission. At the moment it is not regulated specifically, but the Banking Superintendence suspends the operation of any company that offers electronic money that is not licensed either under the banks, the financial services or the regulations on receipt & sending of money (Money Gram / Western Union) rules. So, if you operate outside of any of these, then the Banking Superintendent steps in to shut it down.

This would definitely require full licensing here in Panama. And this requires a considerable amount of capital, in addition to requiring strict documentation and applications.

The requirements for getting a brokerage license here in Panama and getting operational are pretty comprehensive.

Below I send you an overview (rather than the detailed list) on the most common services required in that particular context, although it is merely a summary.

You would be looking at approximately $45- $65,000.00 in expenses (legal + licenses) to get up an running, without including the accountants full fees or your offices, employees, etc.

Besides our law firm and its affiliates offer all services necessary to incorporate a company and obtain a license, also nominee directors/shareholders.

Due to the fact, that I am participating a meeting in a few minutes I'll send you further information and fees tomorrow with a separate email.

Investment company Belize

Belize Offshore Company Incorporation and application for a license from the International Financial Services Commission (IFSC) to operate within a licensed activity


Any applicant submitting an application to the IFSC for a license should be able to meet the following criteria:

• Each shareholder, director and company secretary must provide notarized passport copy, utilities bill, bank statement, Curriculum Vitae, bank reference and professional reference from an accountant or solicitor

• Each shareholder, director and company secretary must have a clean criminal history and obtain relevant evidence from local / national police department as confirmation.

• At least one person appointed to the Board of Directors should be able to demonstrate experience and/or qualifications relating to the business activities for which a licence is required

• The shareholders of the Company should be able to meet the minimum paid up share capital requirement for their chosen licensed activity (see below list for paid up capital requirements). The share capital must be deposited into a bank account held within Belize and retained within this account at all times throughout the duration of the company offering such licensed activities.

• The Company principals should provide a business plan outlining business forecasts, the reasons why they are believed attainable, and the short and long term plans for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals

ETC can make arrangements for the full application process from start to finish, which will include the following steps;

• Incorporation of an International Business Company.

• Opening of a corporate account in Belize for the deposit of the minimum paid up share capital.

• Preparation and submission of an application (application forms and Biographical Affidavits) to the Belize government for the appropriate licence, including ongoing communication with the International Financial Services Commission during the application and payment of disbursements to the relevant government agencies.

The following list confirms the licensed activities which we can assist with, along with the IFSC application fee, annual license fee, and our fee;

CELL COMPANY MAURITIUS

A GBC 1 can also be structured in the form of a Protected Cell Company (PCC). The PCC is a legal structure made up of cellular and non-cellular assets. It provides legal segregation of assets attributable to each cell of the company whether owned by individuals or body corporate. The PCC offers a wide range of applications as set out under Protected Cell Companies (Amendment of Schedule) Regulations 2005.

Applying for a FS-4.1 Category 1 Global Business License

An applicant for a Category 1 Global Business License must submit the following forms/documents to the FSC, through a Management Company.

1. The application form duly filled in and signed

2. The certified supporting documents

3. The applicable processing fees and relevant fees

A GBC 1 is tax resident in Mauritius and may apply for a Tax Residence Certificate from the Director General of the Mauritius Revenue Authority should this be required by the tax authorities in the jurisdiction in which the company is conducting its business.

Investors may benefit from an extensive network of Double Taxation Agreements (DTAs). Entities holding a Category 1 Global Business License wishing to avail to the benefits of a tax treaty must obtain a Tax Residence Certificate issued by the Mauritius Revenue Authority.

Administration & Control

The Commission generally wishes to satisfy itself that, as far as possible, substance and central administration is in Mauritius. To this end, the Fund must have a local administrator, a local custodian, and a local auditor. The requirement that central administration is situated in Mauritius implies that:

• the accounts are kept and the accounting documents are available in Mauritius;

• the share register is kept in Mauritius;

• issues and redemptions of shares are carried out in Mauritius;

• calculation of the Net Asset Value (NAV) is carried out in Mauritius.

• two directors who are resident in Mauritius

• qualified secretary resident in Mauritius

• bank account is maintained in Mauritius with an offshore bank and investments are made via that bank account

• board meetings are initiated and chaired in Mauritius.

Regulation

Funds registered with the Financial Services Commission in Mauritius are commonly structured as companies incorporated under the Companies Act 2001 and licensed as a company holding a Category 1 Global Business License under the Financial Services Development Act 2001. The Funds can be structured as two tier funds, or increasingly as single tier funds. These funds invest in a wide range of investment products, including portfolio or fixed income securities and venture capital.

Registration Requirements

A Collective Investment Company needs to be approved by the Financial Services Commission before it commences business. In considering an application, the Commission needs to be satisfied about the following:

• the track record and credentials of the promoters;

• the fund structure;

• the objectives of the fund;

• the investors and the market targeted;

• types of investment the fund will be dealing in;

• the track record of the investment manager, custodian, and administrator;

• compliance with regulations in third countries, as appropriate (e.g. SEBÍs approval if investment is to be made in India).

The Commission may give an approval in principle so as to enable all constitutive documents to be prepared and the company to be incorporated, if the requirements above have been met.

Also, an investment adviser established overseas may give asstiance to the Fund for the management of its assets. Further may management decisions in relation to investment and disinvestment being executed overseas.

The requirement for the location of the issuance and redemption of shares in Mauritius does not preclude foreign intermediaries from participating in the placing and redemption operations as distributors or nominees. The Commission insists on the independence of the manager, the trustee and the custodian.

In appropriate circumstances, it is also possible to establish a management or advisory company in the sector to take advantage of the beneficial tax regime.

After incorporating the company, we provide the following services with respect to the ongoing activities of the fund:

• Provide registered office address.

• Provide two directors and qualified secretary who are resident in Mauritius.

• Open a bank account.

• Provide local signatories for bank account.

• Provide administrator and registrar, and carry out NAV calculations.

• Preparation of quarterly accounts to the authorities.

• Prepare and file tax returns.

 
 
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