The New Legislation on the Regulation of Fiduciaries, Administration Businesses and Role of Company Directors incorporates the provisions of Directive 2005/60/EC into national law, which was passed on the 22 December 2012 and sets a border for the fiduciary industry, as well as the administration of businesses and the role of company directors.
The legislation relates to persons and companies, providing relevant fiduciary and other corporate services relating to the administration and management of trusts and companies in or from Cyprus, including:
- Directorship and secretarial services provided by a legal person, including acting as an alternative director or secretary;
- services such as holding of shares of legal persons in a nominee or trustee capacity;
- provision of registered office;
- related to the opening and operating of bank accounts; and
- Services related to the ownership of financial assets on behalf of third parties.
The crucial objectives of the new legislation are to control the provision of relevant services, to establish and enforce licensing procedures for control and supervision of such services.
The new legislation clearly indicates that relevant services may be offered only by persons which are legal entities that hold a license from Cyprus Securities and Exchange Committee (“CySEC”) on registered law firms, audit firms (and any of their subsidiaries) and licensed financial services institutions who are all exempted from the necessity to obtain such license, the aforementioned exempted are regulated by the Cyprus Bar Association or the ICPAC. CySEC will maintain a register of license holders and licenses may be issued on such terms and conditions as CySEC considers appropriate.
Criteria to obtain a CySEC licence:
- Head office must be based in Cyprus;
- The private individuals, ultimate owners of the company must be fully disclosed and such persons must be considered “fit and proper” by CySEC.
- It must be represented, administered and managed in Cyprus by at least two qualified capable persons to sensibly manage it.
- It must employ an in-house legal lawyer or maintain a regular professional relationship with an external lawyer.
- It must employ a compliance officer, who is approved by CySEC.
- Regulated service providers must ensure the existence of appropriate internal control procedures in order to ensure that they have accurate, “up to date” information at all times, in compliance with the law.
- It must employ qualified employees.
CySEC may request at any time that a licence holder should provide any information or documentation that it considers reasonably required for conducting its supervisory role, and in the event of non-cooperation on the part of the licence holder, CySEC may remove and hold any registers, accounts, books, documentation or electronic devices used for the transmission of data for a term of up to 45 days.
Violation of the Law is a criminal offence punishable on conviction by imprisonment of up to five years, or a fine of up to €350,000 or both. If the offence is committed by a legal entity, then any of its directors, managers or responsible auditors may be personally liable if it is proven that he or she agreed or assisted in the commission of the offence. CySEC may also impose an administrative fine of up to €500.000 (or up to €1 million for repeat offences), depending on the severity of the offence.