Obtaining of the license for investment activities in Estonia | Law&Trust International

Obtaining of the license for investment activities in Estonia

The present article is informative one and is primarily for those who are interested in obtaining permit for investment activity within the territory of Estonia.

The Securities Market Act regulates the rules for the provision of investment services in Estonia. In view of the fact that this jurisdiction is part of the European Union, the current rules in the sphere of finance are based on "The Markets in Financial Instruments Directive II" (MiFID II).

The license for investment activity in Estonia shall be obtained once and has no limitations with regards to the validity period. It is this license that will allow your company to have the right to conduct investment activities not only in Estonia, but also throughout the EU, and it will only be necessary to notify the relevant authorities of the member countries of the EU.

Further, the information is based on the Estonian law "Securities Market Act":

Information about participants of the Estonian securities market

Professional participants of the securities market are the following:

  • Securities exchanges which are legal entities establishing conditions for trading in currency and securities, forming and declaring their prices;
  • Intermediaries in the securities market which are natural persons and legal entities engaged in selling and buying securities;
  • Investment fund that is established and managed by the managing company. Such fund invests funds received by selling investment certificates in securities of other issuers.

Professional participants of the Estonian securities market - Licensing of their activities

Such participants are obliged to:

    • Have corresponding license to conduct activities;
    • Submit applications regarding license on conducting activities to professional participants of securities market;
    • Indicate in the application for issuing license the data on the persons who will be the managers of the licensed activity and be responsible for it. Also, it will be necessary to indicate the data on their previous financial activities, as well as professional qualifications.

Information regarding investment and accompanying services in Estonia

Regarding the concept of

Investment services and operations in Estonia

  • the point at issue is about:

    • Receiving and transferring orders with regards to one or more financial instruments;
    • Operating at own expense;
    • Investment advice;
    • Placement of financial instruments without the commitment of the undertaking;
    • Operation at the plurilateral trading platform;
    • Execution of orders (on behalf of the client or clients);
    • Investment portfolio management.

Accompanying services in Estonia

  • the point at issue is primarily about:

    • Services related to underwriting;
    • Investment services and activities, as well as accompanying services which are associated with derivative financial instruments;
    • Exchange of foreign currency (but in the event when it is related to the provision of investment services);
    • Investment researches and financial analysis or other forms of general recommendations related to transactions with financial instruments;
    • Storing and managing financial instruments of the clients;
    • Granting credits or loans to the investor for making transaction regarding one or several financial instruments;
    • Providing advice on the structure of capital, commercial strategy and related issues and consultations and services for mergers and acquisitions of enterprises.

What documents are necessary to apply for obtaining investment license in Estonia?

Initially, in order to obtain license, the Company's Board of Directors shall submit special application. It is required to attach to this application the following:

Application :

    • Annual report of the company
    • Memorandum of Association
    • The company's charter with amendments
    • Data on conducted audits and on the auditor (name, place of residence, personal code)
    • Information about companies in which the applicant company or members of the management are owners of 20% and more share
    • Personal information about shareholders
    • Document on the basis of which the investment company assumes the obligation to contribute to the Guarantee Fund
    • List of shareholders of the company with indication of personal code, number of shares and number of votes belonging to each shareholder
    • Accounting policy, regulations
    • Agreements with representatives or independent agents
    • Instructions for the use of computer systems and electronic equipment
    • Internal control rules to combating legalization of income (money laundering) received through criminal means and financing of terrorism
    • Three-year business plan
    • List of members of the Board of Directors (surname, name, personal code, date of birth, place of residence, workplaces for the last 5 years, list of duties performed in the company and extent of responsibility)
    • Structure of the group to which the applicant belongs, with the provision of information on the whole chain up to the beneficial owners who are natural persons
    • Documents confirming the amount of own funds with the attachment of the auditor's report, or documents confirming the source of funds, which in turn form the authorized capital

Who will be denied in issuing financial license in Estonia?

Financial license in Estonia is not issued if:

  • Natural person does not have appropriate professional qualifications;
  • Legal person does not have the opportunity to use the services of relevant specialist having professional qualifications and license;
  • The applicant does not have working premises which meet the requirements set by the supervisory authority for securities;
  • The applicant with previously revoked license;
  • The applicant who failed to comply with other requirements provided for by the Law "On the Securities Market", or set on its basis.

FI (financial inspection) carries out the Supervisory fee from the enterprises of the financial sector, the percentage of this fee depends on the type of financial company. The two main elements of the Supervisory Fee are the capital component (CC) and the extensional component (EC).

For more detailed information concerning the issue under discussion, apply for the lawyers of Law & Trust International. Our specialists will be able to provide full consultation by phone, in chat or during personal conversation at the company's office.

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