#caif #funds #financialservices #moi #aleo

The Alternative Investments Funds Law of 2014 was enacted by the House of Representatives on 10th July 2014 and came into force on 18th July 2014. The new law replaces the International Collective Investment Schemes Law (ICIS) of 1999.
 
Under the applicable Cypriot legislation, namely the AIF Law, the Cyprus Securities and Exchange Commission (“CySEC”) is the regulatory and supervisory authority for AIFs and may, upon a written application, recognise a FIxed or Variable Capital Company, a Common Fund or a Partnership as a AIF.

Following the enactment of the new Betting Law 2012, the newly formed National Betting Agency, approved and published the application forms for a Class A Betting Services License. The forms include the Class A Operator application form, the Class A representative application form and the Class A Authorised Premises application form.

It is reminded that the new legislation provides for two Classes of lawful betting services. Class A Betting Services is the license designed for services that are to be provided on – shore through local premises by the operator himself or his authorized representatives. The second Class of lawful betting services namely Class B Betting Services concerned those betting serviced provided online and have no connection to an on shore activity.

The applicable requirements for a Class A betting activities license in Cyprus are the following:

1. Incorporation of Corporate Entity (Cyprus) limited by share

Class A Betting Services License is granted only to corporate entities. The entity may be either a Cyprus company or a foreign company limited by shares. In case of an overseas company is intended to be used, a Cyprus Branch needs to be established. In either case the main activity of the company must be betting services and its issued and paid up share capital must be at least of Euro 500.000. This means that the shareholder must have proof of paying the capital in the company which capital may be used for materializing the company activities and services.

That company as a matter of law and practice will need to have:

• One or more registered Shareholder(s). The registered shareholder(s) may be the real beneficiary(ies) or a trustee shareholder. Cyprus law recognizes the medium of a trustee shareholder holding the shares on behalf of the real beneficiary. In any case there is a respective duty on the company to declare the real beneficiaries having more than 5% interest in the share capital of the company. Strictly speaking shareholders are not responsible for the activities of the company and in any case their liability will not exceed the unpaid amount of their share in the company.
• One or more registered Director(s). The registered director(s) may be the real beneficiary(ies), an appointed third party, or a nominee director. The directors of the company are exercising the powers of the company and are responsible for the offences committed in so far as they are aware of the circumstances giving rise to the offence.
• One registered Secretary. A list of the duties of the secretary can be found in the document titled Company’s Secretary Responsibilities. Briefly, the duties comprise of statutory reporting and secretarial compliance.
• An official Registered Address. This is the address which the company declares to the authorities in order to receive all relevant communication directions and requests. It is always advisable that the registered address be connected in a way to the registered secretary so that compliance and information be exchange swiftly

The people that appear in this company must share the following characteristics:

1. They must have no criminal conviction for a related offence.
2. They must have completed their 25th year of age
3. They must be proper for the appointment, something that will be judged on their current financial condition and record, such as their financial means available from the provision of the relevant services and in case of previous convictions the nature of the conviction and the height of the imposed penalty.

Apart from the company’s officers Cyprus law and/or practice requires from a corporate entity to have:

External Auditors who proceed with the statutory audit of the financial affairs of the company and prepare the annual accounts of the company.

Even though not specifically provided by legislation it is advisable that a company has proper legal consulting available at a daily basis.

2. Bank Guarantee

Any application for a Class A Betting Services License must be accompanied by a bank guarantee for the amount of Euro 550.000 from a local or EU banking or cooperative institution with effect up to 6 months after the expiry of the intended period of the license (i.e one or two years). The law specifically provides that the said bank guarantee must create an irrevocable liability to the bank or cooperative institution to pay any amount which the licensee is required to pay but nevertheless neglects to pay, to:

1. Any player who participating in bets and won thereunder,
2. The Republic of Cyprus as bet tax,
3. The National Betting Committee as contribution.

The law also provides that should the Committee acknowledges that the bank guarantee does not cover the 10% of the annual turnover of the said company, it may request the raising of the guaranteed amount up to such amount so as the 10% of the annual turnover is covered.

3. The ability and suitability of the Class A recipient

The company to be licensed must be able to exhibit:

• that it has or is able to retain, sufficient funds and to maintain a minimum reserve which ar fixed from the Committee, so that the payment of players wins-proceed are safeguarded,
• that it maintains a proper (computerized) control system and audit control of the services provided,
• that it applies the terms and conditions which were set by the committee to safeguard the players,
• that it ensures the suitability of the operation of any equipment used,

4. Computerised System of Slip Marking

The applicant for a Class A License needs to submit an application to the Committee to have its computerised system of slips’ marking approved. In general all prescriptions of the relevant system must be described but in particular the application needs to describe,

1. the General procedures that will be followed,
2. the particulars and prescriptions, of the software to be used
3. the accounting systems and procedures,
4. the procedures and the samples for the maintenance, security, upkeep and transfer of the equipment,
5. the procedures for the creation and maintenance of the security installations, including the general compliance and internal controls in relation to the access to critical systems,
6. the disaster recovery plan,
7. satisfactory data maintenance system
8. and any other information that the Committee might request.

The above also apply in cases of amending or altering the computerised system. The costs of audit of the computerised system will be the applicant’s burden but currently the Authority does not disclose such costs.

It should be noted that the necessary equipment, which includes the electromechanical parts and the software of the computerised system for slips marking should be located and remain located in the Republic of Cyprus.

5. Application and License Fee

For a one year Class A license the fee is Euro 30.000 and Euro 45.000 for a two years license. For a one year representative license the fee is Euro 2000 and Euro 3000 for a two years representative license.

6. Annual Accounts

Every Class A licensee needs to submit to the authority the latest by the 30th of June every year, annual accounts for the previous year, audited from an accredited auditor which must include, the total amount that has been paid by the licensee in relation to bets placed during the said year, the total amount of pay-outs irrespective of the period in which they were placed, the names of the authorised representatives and particulars of sums paid to them as commission and any other information that may be requested by the authority.

7. Books and records

The licensee is responsible to maintain in a specific book the particulars relevant to every betting slip, or other document ;or electronic data which was delivered to the licensee, and to submit declaration of the amount collected or the amount that has become collectable either by himself or any of his representatives.

8. Betting Tax

Every licensee pays to the Republic of Cyprus a 10% tax on the clean revenue from bets and a 3% contribution on the clean revenue from bets for every calendar month. The Clean Revenue is determined as an X minus Y, whereas X equals to the total amount paid to the licensee in relation to bets held by himself and Y equals to the total amount of payouts to winning players. Betting tax is payable at the end of every calendar month.