Malta Forex Company

Malta Forex Company Formation Packages

€11950 – Malta Forex Company License

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The Forex industry is one of the most dynamic industries available on the international markets, with trillions of dollars being traded on a yearly basis.  Malta has established itself as a reputable financial center, attracting a critical mass of Forex Investments companies, including some household names.

As financial service specialists, our in-house team, can assist you in all your needs for the licensing of Forex investment companies.  We pride ourselves at providing a one-stop solution for all your Forex licensing needs, providing expert advice all throughout the handling of the application process, advising on all facets and aspects of the License as well as providing clients with effective turnkey solutions to complement his business.

Legal assistance

We can assist you with ALL services relating to the licensing process, including the following documents:

• the completed form “Application for an Investment Services License”;
• covering letter (template included in the Application form);
• Auditor’s Confirmation (template included in the Application form);
• supporting Board Resolution;
• a completed financial resources statement form;
• projected profit and loss account and balance sheet for the three years after the License is issued;
• where appropriate, copies of the last three years audited accounts of the applicant and other relevant related companies;
• Memorandum and Articles of Association (or Partnership Agreement) of applicant;
• specimen copies of the insurance policies and draft schedule/cover note (where applicable), and ‘Insurance Checklist’;
• completed Personal Questionnaire forms for each shareholder, director, and senior officer of the applicant (the PQs should include a certified copy of the person’s passport and a conduct certificate);
• Memorandum and Articles of Association of corporate shareholders of the applicant;
• a chart which illustrates the internal operational structure of the applicant’s business (this should show names, reporting lines and roles);
• Where the applicant Company/Partnership forms part of a Group, a diagram showing the relationships between the applicant and other members of the Group. The “family tree” submitted should give details up to the ultimate beneficial owner(s), showing percentage sizes of holdings in each entity; unless (a) the entity has one ultimate beneficial owner with a holding of over 50% of the voting rights or (b) no less than fifty ultimate beneficial owners who between them account for over 50% of the voting rights. If (a) or (b) apply, it will only be necessary to give details of the ultimate beneficial owners with holdings of 10% or more.

In addition to the aforesaid legal review, we can also extend our assistance to the following services:

Turnkey solutions

Forex Investment Companies must ensure that they are well equipped – in terms of human capital, logistics and staffing to undertake the licensable conditions inherent in their License.  Substance is a pivotal condition for the regulator, in assessing the suitability of the License holder.  The Authority must be satisfied that the licensable activity is undertaken by a competent team of professionals, in an identified premises, and not be a shell / brass plate operation.  In other words, although Forex Investment Companies may be cutting-edge internet operations, the under-the-hood scenes is very much brick-and-mortar.

We seek to facilitate this fundamental aspect of the licensing process by providing effective substance – both in terms of physical premises (segregated office space) as well as manning and human resources.

Malta Company Formation Services

The License holder of the Malta Forex Investment Company must be a body corporate.  We cater for all corporate needs, from incorporation to the day-to-day services, including registered and, subject to availability serviced offices, COREP and regulatory filings, bookkeeping etc;

Payroll and Relocation Assistance

Assistance in the relocation of directors, managers and employees of the License holder.  We assist high ranking officers of the licensed entities to benefit from bespoke tax schemes aimed at minimizing the personal tax bill of individual shareholders under the Highly Qualified Person Rules (thereby benefiting from a flat-rate 15% personal income tax threshold).  We assist in all work permits, liaising with Malta Immigration Authorities, as well as payroll services for all employees.

Turnkey solution

The MFSA will expect a physical office with manned personnel, which is why we provide you with a turnkey solution to ensure a seamless and quick-fix solution

Please note that our turnkey solution is based on two levels, both of which are essential pre-requisites to the License.

Turnkey Services and Officers

The applicant needs to have the requisite presence (in terms of physical staff) and board members / senior officers which are ‘fit and proper’.  In order to do so, FBS can provide such ‘fit and proper’ person as well as manned office space that are acceptable to the MFSA.  Our services include the following:

• Local anti-Money Laundering reporting officer, as required by law;
• Local Compliance Officer as required by law;
• Two (2) resident directors partaking the posts of MLRO/Compliance Officer and local directorship;
• Company secretarial services;
• Attendances at meetings of the board meetings and annual general meeting;
• Keeping of minute books for the aforesaid meetings;
• Liaising with the designated auditors;
• Liaising with MLRO / CO / directors for all matters pertaining to the License holder;
• Assistance to License holder and its officers during compliance visits by the MFSA

Turnkey Premises

Tied to the aforesaid is the notion that the License holder must conduct his business form an appropriate premises – with segregated office space and all the necessary infrastructure conducive to the smooth running of the business.  Our turnkey solutions include:

• Segregated office space with dedicated filing cabinet;
• Personalised telephone number;
• Personalised fax number;
• Door signage;
• Use of photocopying / scanning facilities;
• Hosting of server into dedicated rack space within office premises;
• I.T Support services for trouble-shooting;
• Use of generator support services;
• Insurance cover for premises;
• Office cleaning facilities;
• Use of video-conference facilities (subject to pre-booking);
• Secondment of FBS employee for reception / client-handling at reception / meetings management and basis secretarial support (reasonable volumes)

Please do not hesitate to contact us for any further detail or clarification which you may require.

Malta FOREX Licensing Process

Background

Malta has strongly established itself as a strong financial services centre, attracting a critical mass of fund managers, fund administrators, custodians, investment services firms and now also FOREX investment companies.

The carrying out of investment services in or from Malta is a licensable activity under the Investment Services Act, Chapter 370 of the Laws of Malta.  Applicants shall, subsequent to an assessment of their integrity and competence, be granted an investment services licence from the Malta Financial Services Authority (“MFSA”).

Licensable Activity

There are four (4) categories of Investment Services Licences, as follows:

Category 1a

Licence Holders authorised to receive and transmit orders in relation to one or more financial instruments and, or provide investment advice and, or place instruments without a firm commitment basis but not to hold or control clients’ money or customers’ assets;

Category 1b

Licence Holders authorised to receive and transmit orders, and, or provide investment advice in relation to one or more instruments and, or place instruments without a firm commitment basis solely for professional clients and, or eligible counterparties but not to hold or control clients’ money or customers’ assets;

Category 2

Licence Holders authorised to provide any Investment Service and to hold or control clients’ money or customers’ assets, but not to operate multilateral trading facility or deal for their own account or underwrite or place instruments on a firm commitment basis;

Category 3

Licence Holders authorised to provide any investment service and to hold and control Clients’ Money or Customers’ Assets;

Category 4

Licence Holders authorised to act as trustees or custodians of collective investment schemes.

Forex Companies

Forex Companies dealing on own account require a Category 3 Investment Services Licence, whereas forex traders acting as a riskless principal (a “white label partner”) – which involves the execution of two matching trades (one with the client and one offsetting trade with another principal) entered at the same time and price, with the entity acting as counterparty to both transactions (margin-making), would require a Category 2 licence.

By definition FOREX is restricted solely to the trading of currencies, however a licence holder is able to (i) deal in financials instruments for own account and to provide any other type of investment service covered by the individual licence; (ii) if wanted operate an investment company / market operator that brings together third-party buying and selling interests in financial instruments and currencies in a multilateral trading facility (MTF) – Category 3 licence.

For more detailed information on the reporting and monitoring requirements for MTFs, please contact us.

Passporting Rights and Use of Financial Instruments

Whilst the provision of a FOREX is a licensable activity under the Act, it may not be necessarily so under the Markets in Financial Instruments Directive (“MiFID”), which may mean that passporting rights to EU Member States may not apply. This is because the acquiring and holding of investment services does not fall within the definition of “Instrument” set forth in MiFID.

However, where the provision of FOREX includes the use of financial instruments, such as derivatives, futures, options, swaps in relation to securities, currencies, interest rates or yields and/or the provision of a MiFID ancillary service, then the provision of the FOREX service may be eligible for passporting rights (irrespective of the investment licence category)

Application Process

The application process both for a Forex trader dealing on own account and one acting as a riskless principal, is divided into three (3) distinct phases, as follows:

Preparatory

It is strongly advisable that the promoters and/or their representatives set up a meeting with the MFSA to discuss the proposal.  A comprehensive (written) description of the proposed activity should be provided to the MFSA prior to the meeting.

Following the discussion of the proposal, the promoters should submit a draft (rather than a final) application form, together with the supporting documentation, which shall be vetted by the MFSA for the assessment of the promoter.  The ultimate decision regarding the classification of the investment service licence shall lie with the MFSA.

Pre-Licensing

Once the review of the draft application and supporting documents have been completed and the draft licence conditions have been agreed, the MFSA shall issue an “in principal” approval for the issuance of the licence.

The applicant shall finalise all outstanding matters, such as the incorporation of the Company, and the submission of the signed copies of the revised application form together with the supporting documents in their final format.

After all pre-licensing issues have been resolved, then an investment services licence shall be issued.

Post-licensing / Pre-Commencement of Business

The applicant may be asked to satisfy a number of post-licensing matters prior to the commencement of business, and to comply with the ongoing requirements set forth in paragraph below.

Licensing fees

Upon submission of the draft application, an application fee of €2,000 would be payable to the MFSA, and €4,000 upon the issuance of the category 3 licence.

An annual supervisory fee will be payable thereafter, calculated on the basis of the company’s revenue: €4,000 for revenue up to €250,000 and €350 per tranche or part thereof for further tranches of €250,000 up to a maximum of €5,000,000.

In the case of a category 2 licence, the application fee is of  €1,500 would be payable to the MFSA, and €3,000 upon the issuance of the category 2 licence.

An annual supervisory fee will be payable thereafter, calculated on the basis of the company’s revenue: €3,000 for revenue up to €250,000 and €350 per tranche or part thereof for further tranches of €250,000 up to a maximum of €5,000,000

Click here for full summary of fees applicable to investment services

Licensing process

Upon registration of the company, a registration fee would be payable to the Registry of Companies. The amount of such fee is calculated on the basis of the company’s authorised share capital, up to a maximum of €2,250 where the authorised share capital exceeds €2.5 million.

The authorised share capital for a category 3 licence holder shall be calculated in the manner set forth below.

Incorporation Fees

Upon registration of the company, a registration fee would be payable to the Registry of Companies. The amount of such fee is calculated on the basis of the company’s authorised share capital, up to a maximum of €2,250 where the authorised share capital exceeds €2.5 million.

The authorised share capital for a category 3 and a category 2 licence holder shall be calculated in the manner set forth below.

Share Capital Requirements

Category 3 licence holders are subject to Capital Resources Requirement, which is calculated as follows:

• Initial Capital (€730,000); and
• the sum of the Non-Trading Book business risk components, the Trading Book risk components, the Commodities Instruments risk component, the Large Exposures risk component, the Foreign Exchange risk component, and the Operational risk component.

Category 2 licence holders are subject to Capital Resources Requirement, which is calculated as follows:

• Initial Capital (€125,000); and
• own funds, which are the higher than either(i) the initial capital; (ii) the sum of all the risk components calculated in terms of the rules but excluding the operational risk component; or (iii) fixed overheads requirements.

Taxation

Malta has experienced a robust growth in investment services, and boasts a number of FX companies which have successfully applied for the investment service licence. The investment services market is complemented by the attractive fiscal incentives offered by Maltese tax laws to shareholders of Maltese companies, upon a final distribution of dividends.

Shareholders are entitled to a 6/7ths refund on the standard rate of tax at 35% leaving a tax leakage of just five per cent (5%). Furthermore, foreign tax paid can be taken into account for purposes of the refund calculation, subject to the maximum refund not exceeding Malta tax paid.  Effectively, it is possible to envisage situations where no Maltese tax leakage would be suffered by the Maltese Company, in the manner set forth below:

*632 (6/7ths of 737)

Conclusion

The growth which Malta has experienced in this sector shows that it is very well-placed to offer its services to investment firms interested in obtaining a license to provide services in relation to FOREX.

Contact one of our officers to initiate the licensing process for a Maltese FOREX. Simply fill in the contact box below or contact us by email on enquiries@fbsmalta.com or by calling at +356 2338 1500