International Investment Schemes

On 25 November 2007, Cyprus became compliant with the EU Directive known as MiFID (Markets in Financial Instruments Directive 2004/39/EC), which is aimed at harmonizing the operation and provision of investment services across Member States. A new law was passed in Cyprus – the Investment Services and Activities and Regulated Markets Law 144(1) 2007, which replaced the Investment Firm Law 2002.

Investment institutions are now obliged to provide their clients with more information with regard to their activities, products and transactions as well as warning them about any risks that the products that they offer might entail. Such companies must have measures protecting clients from any conflict of interest, risk management procedures and for the prevention of money laundering.

All enterprises involved in the activities and operation of regulated markets which deal with investment services must be licensed by the Cyprus Securities and Exchange Commission. A licence should be obtained by the company if it describes its services as one of the following: investment service, investment activity, regulated market, stock exchange, financial services, stock broking services, broker; any other similar words in different languages cannot be used without a licence.

The Cyprus Securities and Exchange Commission is entitled to issue separate directives if clarity is needed on the provisions of the law, for example, Directive DI 144-2007-01 (about the licensing and operation of investment companies) and Directive DI 144-2007-02 (professional competence of investment firms), Directive DI 144-2007-03 (submission of an application to grant or extend Cyprus Investment Firm authorisation), Directive DI 144-2007-04 (on the charges and annual fees of investment firms and the natural persons employed by them), DI 144-2007-05 (regarding capital adequacy), DI 144-2007-06 (regarding large exposures of CIFs), DI 144-2007-07 (market transparency requirements).

So thanks to the new law and directives, Cyprus is able to afford better protection to the interests of clients of investment service providers.

Our team monitors the latest trends emerging in the legislative sector of investment services and provides legal assistance in relation to all aspects of investment service provision, including the process of incorporating investment companies, contractual relations, dispute resolution and issues relating to the stock market.

Some of our cases in this area include:

  • Chiraco v. Aiantas Investment Company – Poor administration of share portfolio