A Seychelles Securities Dealer license (SDL) is a mandatory legal permit for engaging in securities trading and portfolio management. Companies registered as a Special Licensed Company (CSL) or a Seychelles Domestic Company (SDL) can apply for this license, provided they adhere to the substance requirements rules. The Financial Services Authority (FSA) grants this license upon receipt of the prescribed application and the required fee. If you are gearing up to boost your brokering portfolio with Seychelles SDL, this write-up is all you need to begin your business journey.
A Brief Outlook on the Seychelles’s Financial Governance
The trading sector in Seychelles has experienced significant growth in recent years, driven by increasing demand for investments in securities, bonds, and stocks. That said, investors and brokers are increasingly choosing to operate in the Seychelles' brokering business to capitalize on this thriving demand. Those who want to register as a broker in Seychelles must secure the FSA’s approval.
The Financial Services Authority (FSA) is the primary regulatory body overseeing non-banking financial institutions in Seychelles. It ensures that all such entities adhere to fiscal transparency norms when conducting financial activities within the nation’s territories. To further enhance transparency, the FSA has partnered with the Financial Intelligence Unit (FIU) and the Central Bank of Seychelles (CBS).
Understanding Permitted Activities under the Seychelles Securities Dealer License
The Seychelles Securities Act 2007 regulates all entities involved in brokerage activities and holding an SDL license. Speaking of activities, the licensee can:
- Buy & sell securities
- Engage with forex & CFD brokerage
- Facilitate investment advisory
- Provide portfolio management services
- Conduct investment research
- Age as principal and agent
Benefits of Choosing Seychelles for a Securities Dealer License
Seychelles stands out as the most preferred option among entrepreneurs and investors for brokerage activities. Here is why?
Minimal Upkeep Expenses
Starting and maintaining a security trading firm or broker business in Seychelles is significantly cheaper than in nations like the UK and Japan. For example, in the UK, the cost of establishing a broker-dealer firm ranges from £100,000 to £150,000. Please note that this amount does not include additional expenses, such as clearing form deposits, onboarding costs, and state approval fees.
Additionally, daily operating costs and yearly regulatory compliance can significantly increase this amount. On the other hand, in Seychelles, entities only need to deposit a minimal capital of US$50,000 when starting. Upon registration, SDL holders can withdraw this amount at any time.
Tax-Friendly Framework
Taxation has always been a key highlight of Seychelles. Entities operating as CSL, i.e, Company Special License, are subject to a tax rate as low as 1.5% on offshore earnings. Currently, the Seychelles has double taxation treaties with 28 countries. It allows offshore entities to repatriate profits without incurring double taxation.
Fintech-powered Economy
Comprehensive digitization of Seychelles’s economic sector is underway. It will transform the way banks operate and entities transact. The National Payment System (NPS) and the Central Banking Services (CBS) have played a crucial role in this shift.
Furthermore, this shift is expected to fuel the growth of the fintech ecosystem, which is anticipated to have a significant impact on the financial services sector and the securities trading market. Brokers that have adopted this shift are experiencing tangible improvements in their transaction and deal finalization with end-users.
The combination of AI and ML has contributed to this change as they mitigate the hassle of onboarding. Furthermore, these technologies can make a significant difference by providing on-the-go analysis and insights.
How Do You Apply for a Securities Dealer License (SDL) in Seychelles?
The process of securing SDL commences with incorporating as a domestic entity under the Companies Act 1972. Such entities are referred to as the Special Licensed Company (CSL). Upon successful incorporation, the applicant can apply with the Financial Services Authority (FSA) to secure the SDL. Here is the breakdown of the steps involved with securing a Securities Dealer License (SDL) in Seychelles.
Step 1: Fulfill Corporate Requirements
Adhere to the given conditions in order to become registration-ready
- Arrange the minimal share capital of US$50,000 (Note: You can withdraw this anytime after securing SDL)
- Appoint two directors, preferably with expertise in securities and trading. If you prefer operational secrecy, you can leverage nominee director services.
- Arrange at least two shareholders.
- Register a physical establishment to maintain statutory compliance, record-keeping, and official correspondence.
- Appoint a resident Company Secretary
- Have a compliance office in place to oversee regulatory affairs
- Ensure your business has at least one FSA-licensed SDL representative.
- Maintain professional indemnity insurance
Step 2: Hire an Agent or Partner with a Service Provider
Since securing SDL involves complying with complex legal requirements, it is advisable to partner with a certified agent or a trusted service provider with expertise in Seychelles company formation. These professionals can help you navigate regulatory requirements seamlessly.
Step 3: Select an Apt Name
Ensure your brokerage business has a name that is unique and aligns with established naming conventions. Here are some pointers to remember when going for name reservation:
- The name should be trademark-free.
- It should not indicate any connection with the government institutions or departments.
- It must not entail misleading expressions or words.
Step 4: File the Application
Your agent or service provider will assist you in applying with the RoC, i.e., the Registrar of Companies, along with the necessary paperwork outlined in the Companies Act.
Step 5: Inspection and Grant of Certificate
The submitted documents and application will undergo a compliance check in this process. The dedicated department of FSC will vet these documents for completeness and accuracy. If deemed qualified, the authority will grant the Certificate of Approval, which you must share with the registrar to incorporate your CSL.
Step 6: Intimate FSA for Special License
The registrar will review your application and decide accordingly whether to grant the Certificate of Incorporation. If granted, you or your agent must file the certificate with FSA to secure the Special License.
Documents For Company Incorporation When Applying for SDL
- Certified copy of updated passports
- A Curriculum Vitae
- Certified copies of educational certificates
- Two professional reference letters
- Bank reference letters
- Bank statement reflecting at least US$50,000 in deposits
- Proof of source of funds, i.e, paid-up capital
- Experience letter issued by previous employers
- Tax compliance certificate
- Police criminal certificate
Post-Registration Compliance for Seychelles Brokerage License Holders
- Proper upkeep of statutory registers and documentation is crucial for maintaining compliance. The FSA’s representatives may request any documentation during compliance checks.
- All CSLs must file an annual return with the Seychelles International Business Authority (SIBA) within 90 days from the end of the fiscal year.
- Once registered, all CSLs must appoint auditors within 30 days.
- Written approval from the Securities Authority is mandatory for all licensees seeking services of a certified accountant.
Conclusion
This guide will help you navigate legal requirements with ease when applying for the Securities Dealer license in Seychelles. If you have any questions or concerns, please don't hesitate to contact BSW. Business Setup Worldwide (BSW) can provide you with laser-guided assistance, enabling you to address every legality with precision. Contact us now to book a free consultation.
