Client Case April 2015 - CySec licensed financial company, fees, and how to proceed.

Client Initial Request:

We need to apply 2 CIFs and also market maker license for each firm. Is the share capital requirement for each company still EUR 250,000? After we deposit funds for the share capital, can we use the funds?

Please allow us to introduce our background.

We are a forex company from Australia with licenses from both Australia and New Zealand(More...). We plan to apply for 2 independent companies in Cyprus.

One will be with the same name as our company, UNION STANDARD INTERNATIONAL GROUP PTY LTD(It will be established as a company not a branch.) The main operation will be forex and binary options will be a second operation.

The other company will mainly run binary options. The name of the other company will be given to you later once it's set. We are not sure if we will run forex in the other company. The directors and shareholders for these 2 companies will be different due to our market strategies.

We hope to get licenses for both companies in three months. Please provide us detailed quotes, payment procedures and service agreement for your service. Thank you.

We let you know our background because we would like to know if there's any method to fasten the application process. If our background will make the application more complicated, we can set up and apply licenses for these 2 companies independently without letting the authority know our background and the licenses we hold now.

We hope to get licenses for these 2 companies within or around 3 months. We will apply 2 licenses at the same time. Will your company provide us discount for your service charges? We need detailed quote for your service, payment procedure and service agreement. Thank you.

The capital required for one or more of the above services is ? 200.000:

1. Reception and transmission of orders
2. Execution of orders
3. Portfolio management
4. Provision of investment advice

Portfolio management includes the services of 'market maker'.

The capital required for one or more of the following services is ? 1.000.000:

1. Dealing on own account
2. Underwritting
3. Placing of financial instruments without a firm commitment basis
4. Operation of Multilateral Trading Facilities

After depositing the capital, part of it can be utilized by the company eg investments but for calculating the monthly capital adequacy, a weighting factor is taken for assets other than cash is taken into consideration.

The cost for setting up a Cyprus company (before your discount) is as follows:

Incorporation

?

Incorporation costs 1.950

Appostile of documents 250

Opening of bank account

in a Cyprus bank 350

2.550

(b)Annual maintenance fees

Registered office fee (if required) 450

Company Secretary fee (if required) 350

TOTAL 2,900

Taking into consideration that the client will set up 2 companies, our proposed fee per company for preparing the business plan, the operations manual and completion and submission of all necessary forms and documents. and follow up with Cysec is ?18.500 plus 19% Vat. We can invoice part of our fee as consulting services to a foreign company to avoid VAT. In addition, there will be approximately ?8.000 -9.000 actual out of pocket expenses ( mainly fees payable to CYSEC).

Our fee is proposed to be paid as follows:

• ?9,000 + VAT (if applicable) upon signing this engagement letter
• ?6,000 + VAT (if applicable) upon submission of the application to CySec
• ?3,500 + VAT (if applicable) upon securing CySec license.

I am attaching a list with the docs that must be provided to CYSEC , the payable fees and the amounts that needs to be deposited to 'Investors Compensation Fund'.

We estimate that we can get the licence within 3-4 months from the date of filing the application and it is important we get immediate response from client on queries / additional information that CYSEC may ask us to provide.

It will be an advantage if the owners of the 2 companies already have a licensed financial company in Australia.