Licensing of investment brokerage company in Latvia

Brief description of the process:

Step 1. Determine the list of services provided. The extent of the license and the

requirements to the amount of the authorized capital depend on the foregoing.

In accordance with the Law "On the Market of Financial Instruments", a brokerage company is entitled to provide the following investment services:

• acceptance and execution of applications of investors regarding transactions with financial instruments;
• execution of applications of investors for transactions with financial instruments at the expense of investors or third parties;
• individual management of financial instruments of clients;
• initial offering of financial instruments, if the brokerage company does not redeem emission and does not guarantee its redemption;
• redemption of the emission of the initial offering of financial instruments;
• execution of applications of investors for transactions with financial instruments at the expense of the brokerage company;
• provision of advisory services related to transactions with financial instruments;
• support of the multilateral trading system.

Step 2. Establishment of the company. Select the form of activity, determine the composition of the management and the board (if necessary). Form - LLC or JSC.

A shareholder may be a person:

• the identity of whom can be checked;
• who has an impeccable reputation;
• who has a stable financial position, which can be confirmed documentarily;
• and also who meets other requirements of the Law.

Authorized capital:

• 50 000 EUR if the company provides investment services listed in clauses 1, 2, 3, 4 or 7 (see above);
• 125 000 EUR if the company provides investment services listed in clauses 1, 2, 3, 4 or 7 (see above) and is going to hold the client’s financial instruments and money;
• 730 000 EUR if the company provides investment services listed in clauses 5, 6 or 8 (see above).

Management - at least 2 members.

Board - at least 3 members. Availability of the board is optional.

Members of the Management/Board are approved by the Commission on Financial and Capital Markets (the regulator in Latvia).

Step 3. Licensing

Licensing of the company in the Commission takes 3-6 months after the submission of all necessary documents (business plan, policies, procedures, etc.).

Documents required for obtaining a license:

1. Application specifying the investment services and related investment services that the Brokerage Company intends to provide.
2. Information about shareholders and source of origin of funds*.
3. Information about the members of the management and the board (if established).
4. Balance sheet and calculation of capital adequacy.
5. Policies and procedures governing the creation and functioning of the internal control system of the Brokerage Company.
6. Business plan for the nearest 3 years.
7. Procedures regulating the provision of investment services by the Brokerage Company and related investment services.

* If the shareholder / participant is a legal entity, it is necessary to provide information about the ultimate beneficial owner (in Latvia it is always an individual). And you need to take into account that the Commission on Financial and Capital Markets (regulator) has the right to request the provision of additional information on any of the above points.

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