Is the Provision of Investment Services Regulated in Greece?
Yes, the provision of investment services, such as investment advice, portfolio management and orders execution on financial instruments, is heavily regulated under the MiFID II regime (implemented in Greece via Law No. 4514/2018) and closely supervised by the Hellenic Capital Market Commission (HCMC). Consequently, the provision of such services to the Greek market requires the prior issuance of a license by the aforementioned competent regulator.
The Licensing Procedure
The licensing procedure requires the filing of a very broad set of documents including, among others, (a) the organizational structure of the firm (b) details regarding major shareholders and ultimate beneficiaries (c) internal policies and functions which ensure compliance with organizational requirements and standards of conduct.
It shall be noted that the management of mutual funds requires a different licensing procedure, pursuant to Art. of Law No. 4099/2012, which provides that such entities shall have as a sole purpose the management of UCITS (or an AIFM license, if the relevant fund qualifies as an AIF under the AIFMD).
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Establishment of the Corporate Entity
Upon the approval of the HCMC, the corporate entity to provide the relevant services shall be formed. This essentially means that the candidate entity shall first file draft articles of association, along with a series of other supportive documents, which will be assessed and approved by the regulator (HCMC). Once the licensing procedure is successfully concluded, the corporate entity is fully formed.
There is an alternative option of going through the regulatory procedure with a pre-existing corporate entity (which, in any case, shall be in the form of a Greek Société Anonyme – Anonimi Eteria).
What is The Cost of Establishing the Investment Firm?
There a series of costs and administrative fees associated with the establishment of a regulated investment firm in Greece, which roughly break down to the following:
- HCMC registration fees: Depending on the exact spectrum of the regulated services to be provided through the firm as well as the financial instruments to be offered, registration fees can range from EUR 12,000 to EUR 20,000.
- Minimum share capital: For a firm engaging in investment advice, portfolio management and orders execution (which is a standard setup for firms operating in Greece), the minimum share capital required by law is EUR 125,000. This may increase up to EUR 730,000 is the services include dealing on own account.
- Legal fees: These will greatly depend on the envisaged activities and the length of the files to be drafted and/or reviewed prior to the licensing procedure. In a standard setup (i.e., including the core investment services), legal fees may be in the area of EUR 25,000. Contact us to get the most competitive fees in the Greek market, from top-rated legal professionals.
- Incorporation cost: Will depend on the corporate setup and can range from EUR 500 to EUR 3,000, if the corporate entity is established before a public notary.
- Investment Guarantee Fund Contribution: Initial contribution of EUR 150,000 (may vary depending on the exact spectrum of investment services offered).
Timeline of Incorporation
Starting from the date a complete file of documents is submitted before the HCMC, a time period of approximately 6 months is required for the assessment and the granting of the investment firm license. This may vary depending on the backlog of applications.
An additional period of 15 to 30 days is required for the corporate establishment (i.e., the registration of the investment firm with the Greek Corporate Registry).
Other Important Factors to Consider
The investment firm must have local staff certified by the HCMC for the provision of the applicable investment services (e.g., investment advisors certified for the provision of investment advice, brokers certified for the performance of orders’ execution etc.), as well as other internal roles, such as a Money Laundering Reporting Officer (MLRO), Compliance Officer, Data Protection Officer (DPO), Risk Officer, Internal Auditor etc.
The investment firm must also have at least two directors with proper HCMC certification (“four eyes principle”) who will run its business. Local offices must also be obtained via a purchase or lease before the establishment of the investment firm.
It is worth noting that the HCMC performs a thorough and detailed assessment of all documents, with emphasis to the shareholders’ and local directors’ “fit and proper”, the source of money as well as the financial capability of the founders, the business plan, program of operations, compliance mechanisms to be put in place by the new entity etc. The quality and reliability of local HCMC-certified staff is crucial for the granting of the HCMC license.