Share Capital Requirement

The exchange commission stipulates the minimum issued and paid up share capital that an investment firm should commit to before commencing operations. The required capital depends on the services that the investment firm in question intends to provide.

Therefore, based on the decision as to what services will be applying for authorization, it can be assessed how much share capital is required. The minimum share capital requirement is intended as a tool for assessing whether the CIF has enough own capital to meet obligations.

 

The following table summarizes the minimum share capital that is needed based on the different investment services:

 

No.
Investment Service
Holds Clients’ money and / or clients’ financial instruments
Does Not hold Clients’ money and /or Clients’ financial instruments, and which for that reason may not at any time place themselves in debt with their Clients 
Provides one or more of the following investment services and / or performs the following investments activities
1 Reception and transmission of orders in relation to financial instruments.  200,000 EUR  80,000 EUR

N/A

2 Execution of orders on behalf of clients.  200,000 EUR  N/A

N/A

3 Portfolio Management.  200,000 EUR  N/A

N/A

4 Provision of investment advise.  200,000 EUR  80,000 EUR or 40,000 EUR and Professional , Indemnity Insurance.

N/A

5 Dealing on own account.  N/A  N/A

1,000,000 EUR

6 Underwriting of financial instrument and / or placing financial instrument basis.  N/A  N/A

1,000,000 EUR

7 Placing of financial instruments without a firm commitment basis.  N/A  N/A

1,000,000 EUR

8 Operating of Multilateral Trading Facility (MTF).  N/A  N/A

1,000,000 EUR

It should also be emphasized that the minimum share capital requirement does not lapse after the authorization is granted. The investments firm's total accounting equity [retained earnings + shareholders’ capital] cannot fall under the initial share capital requirement. For example, if initial share capital requirement was 200,000 EUR, the total equity cannot fall below 200,000 EUR. If this does occur the exchange commission will request an injection of additional funds into the company in order to bring total equity above the minimum threshold.

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