Why a CySec licensed services provider affords clients more protection
In March 2014, Savva & Associates (S&A) was granted a license by the Cyprus Securities and Exchange Commission (CySec) to act as an Administrative Services Provider (ASP) under license number 29/196. S&A holds a full ASP license, meaning it is authorized to provide the full spectrum of administrative services provided to international clients setting up Cypriot structures.
At present, there are only 150 licensed ASPs in Cyprus, which is in sharp contrast to the approximately 1,000 service providers currently operating on the island. The majority of service providers operate solely on the basis of a license from the Institute of Certified Public Accountants of Cyprus (ICPAC), or the Cyprus Bar Association (CBA).
CySec is the independent public supervisory authority responsible for the supervision of the investment services market and transactions in transferable securities carried out throughout the EU. CySec was established in accordance with section 5 of the Securities and Exchange Commission (Establishment and Responsibilities) Law of 2001 as a public legal entity. CySec’s mission is to exercise effective supervision to ensure investor protection and the healthy development of the securities market.
The current supervisory framework for the regulation of administrative services has been designed, on commission by the Cyprus government, to ensure:
The ASP Law (the Law) was introduced in December 2012 (Law 196(I)/2012), regulating the provision of administrative services, however resulted in the exemption of most corporate services providers, as indicated by the above statistics. Based on the firms’ ownership structure and not their services, all administrative service providers which are members of the ICPAC and CBA, are exempted from this important Law. Exempted persons are bound by the Directives and Codes of Conduct issued by ICPAC and CBA respectively, however there are compelling differences among the three regulatory frameworks of CySec, ICPAC and CBA, which can be briefly summarized as follows:
These disparities have driven most services providers to change their ownership structures and withdraw their application to CySec as a means of escaping the provisions of the Law. It is worth noting that pursuant to the Law, members of ICPAC and CBA have the option of filing an application to operate on the basis of a license issued to them by CySec just like ASPs. In reality, very few members actually pursue this route and prefer, often for convenience, to operate solely on the basis of their respective licenses issued by ICPAC and CBA.