The Financial Services Board of South Africa (FSB), now renamed to Financial Sector Conduct Authority (FSCA), is a supervisory body of financial services industry in South Africa under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act). The company that intends to conduct Forex business on a discretionary basis must obtain a Category I or Category II Discretionary FSP license with FSCA.
Annual levy paid by a licensed FSP is calculated by FSCA depending on the total gross premiums (as reported by an auditor/accounting officer) and on number of Key Individuals and Representatives in FSP.
Entities registered both in and outside South Africa can apply for a license with FSCA.
The application for Category II license includes excessive amount of paperwork, continuous liaising with FSCA and local presence of an applicant in South Africa in order to pass regulatory exams and attend verification at a local bank. The proposed activity of a company-applicant, identity and background of all appointed individuals/entities will be closely investigated by the Regulator.
In order to maintain adequate management and control of the business it is required to appoint a Representative, at least one Key Individual and a compliance officer; all the persons must be registered with FSCA. At least 1 Key Individual must be resident in South Africa in order to effectively take part in company management. Each Key Individual and Representative must pass certain regulatory examinations that are held on regular basis in South Africa or UK.
A licensee must have an account in a local bank for depositing initial capital and further use for corporate needs.
A licensed company is subject to strict compliance reporting and constant monitoring of its activity by a compliance officer who submits the same to FSCA.
Company structure and staff:
- Minimum of 1 shareholder (can be legal entities or natural persons)
- Minimum of 1 director (can be only natural persons)
- A Representative
- At least 1 (preferably 2) Key Individuals
- A Compliance officer
- External auditor(s)
The process may be very lengthy – approximately 1 (one) year
- Corporate income tax – 28%
- No withholding taxes
- Capital gains tax – 18,6%
The FSP shall maintain current assets which are at least sufficient to meet current liabilities
Accounting requirements – Annual submitting of audited financial statements
Local office – Not Required
Registered office – Required
Local employees – Required (Key Individual)
Regulatory examinations (for Key Individual(s) and Representative(s)) – Required
Professional Indemnity Cover – Required (R5 million Rand (around 350,000 USD))
In order to obtain a license, the following steps will be carried out:
- Gathering of relevant KYC documents for initial verification
- Registering Key Individual(s) and Representative(s); attending regulatory exams
- Establishment of an external company/branch/shelf company in South Africa (if applicable)
- Preparation of business plan and necessary manuals and procedures, obtaining the insurance
- Opening a bank account in a local bank, deposit of capital
- License application with FSCA
- The FSCA will conduct necessary investigations and make questions/comments regarding the application with need to be clarified/fulfilled
Supporting Documents Required
In order to obtain license, our Law Firm will fill all necessary application forms and also acquire apostilled corporate documents.
It is noted that the following documents will be required from all individuals involved:
- Notarized passport
- Notarized 2ndID
- Certified Utility Bill
- Notarized Clean Criminal Record
- Bank reference Letter
- 2 Character Reference Letters issued by professionals
- Certified Diplomas of Higher Education
- Detailed CV dated and signed by the applicant
- Detailed business plan
- Manuals (will be drafted by our Law Firm): Anti Money Laundering policy, security policy and procedures and others if requested by the regulator)
All documentation shall be provided in English language or translated to English by a professional and certified by Notary Public.
A Category I FSP renders financial services other than the financial services mentioned in Categories II, IIA, III and IV. Indicate whether the applicant will be furnishing advice (A) and/or whether the applicant will be rendering intermediary services (B) in
Category II – Discretionary FSP
Category I Discretionary FSP’ means a discretionary FSP as defined in the Notice of Codes of Conduct for Administrative and Discretionary FSPs, 2003. A discretionary FSP renders intermediary services of a discretionary nature as regards the choice of a particular financial product referred to in the definition of ‘administrative FSP’ but without implementing any bulking.
Category IIA – Hedge Fund FSP
‘Hedge Fund FSP’ means a Hedge Fund FSP as defined in the Notice of Codes of Conduct for Administrative and Discretionary FSPs, 2003. A Hedge Fund FSP must also apply for a Category II license.
Category III – Administrative FSP
Administrative FSP’ means an administrative FSP as defined in the Notice of Codes of Conduct for Administrative and Discretionary FSPs, 2003. An administrative FSP renders intermediary services in respect of financial products referred to in paragraphs (a), (b), (c) (excluding any short-term insurance contract or policy), (d) and (e), read with paragraphs (h), (i).
Category IV – Assistance Business FSP
Assistance Business FSP’ means an FSP that renders intermediary services in relation to the administration of assistance policies on behalf of the Insurer to the extent agreed to in terms of a written mandate between the insurer and the Assistance
If you have any questions or require a free initial consultation, please do not hesitate to contact the Law Firm of G. Vrikis & Associates LLC at [email protected], +357 22 261 777 or +357 25 261 888 or please visit our offices in either Nicosia or Limassol.