In December 2020, CySEC introduced a Temporary Permission Regime (TPR) so as to allow UK firms to continue to provide investment services without a requirement for a physical presence in Cyprus. Permission is granted under the condition that they only offer their services to eligible counterparties and/or professional clients based in Cyprus. CySEC has recently issued a Policy Statement (available here) relating to its decision to further amend Directive 87-04. This is part of an effort to ensure the smooth transition of UK groups operating under the TPR, until they establish a physical presence in Cyprus.
Reviewing applications for the establishment of a physical presence within the Republic is a cumbersome procedure, and in light of these difficulties, CySEC has proceeded with amending Directive 87-04, allowing companies operating under TPR to continue to operate under this regime, until the review of their relevant application is completed. Upon the respective approval, a period of an additional six months is granted for the smooth and compliant onboarding of clients to the Physical Establishments and/or for such establishment to become fully operational, as applicable.
The Policy Statement concerns UK companies operating under TPR where either they per se, or their group, as the case may be:
▪ attempted to continue their activities by acquiring a physical presence in Cyprus, either by establishing a third-country branch or by establishing a new CIF or by acquiring stakes, including qualifying stakes, in an existing CIF and whose applications have not been fully evaluated yet;
▪ will seek to continue their activities through the establishment of a physical presence in Cyprus by filing a relevant application by 31 December. Prospective applicants were included to avoid negatively affecting applications that are in the process of finalization and submission to CySEC.
The entities that will be able to continue to operate based on TPR after 31 December 2021, will be published in a relevant section of the CySEC website. The remaining TPR entities will have to cease their activities in the Republic by 1 January 2022.
For more information, please speak with Ioannis Sidiropoulos or your usual contact at Elias Neocleous & Co LLC.