Bulgaria, due to its attractive tax regime, coupled with its EU Member status, its implementation of the Markets in Financial Instruments Directive (MiFid), and regulatory regime has proved to be the perfect jurisdiction for the incorporation and operation of FX companies.
According to the Bulgarian legislation only licensed and registered investment intermediaries can provide FX trading/investing services. So such a company need to be licensed by the Financial Security Commission (FSC) as an investment intermediary and comply with the legal requirements set out by the Markets in Financial Instruments Act, some of which are: minimum capital, requirements about the directors of the firm, etc.
Every FX brokerage firm licensed by the Financial Security Commission (FSC), falls under MiFID, the regulatory regime for investment services across the 30 European Economic Area member-countries. As such, it receives a license valid across the EU.
FX brokerage firms licensed by the FSC can offer investment services, establish representative offices or establish fully-operational branches in any desired location within the European Union without any additional requirements from that EU Country, while being directly supervised by the FSC in Bulgaria.
Minimum Capital Requirements
The initial capital requirements were configured as below (investment intermediaries in general):
- € 50 000 – investment services: reception and transmission of orders in relation to one or more financial instruments, including intermediating for conclusion of transactions in relation to financial instruments; provision of investment advice to clients. The investment intermediary does not hold clients’ money or/and clients’ financial instruments.
- € 125 000 -investment services: reception and transmission of orders in relation to one or more financial instruments, including intermediating for conclusion of transactions in relation to financial instruments; execution of orders on behalf of clients; portfolio management; holds clients’ money or/and client’s financial instruments.
- € 750 000 – full scope of investment services, including: the above-mentioned (2.); dealing in financial instruments on own account; operation of a multilateral trading facility.
A Bulgaria FX company having a license as investment intermediary, must be managed and represented jointly by at least two persons meeting certain requirements. Some of them are:
- Having higher education and professional experience necessary for management of the business of the investment intermediary in accordance with the services and activities the intermediary provides
- Having no conviction for a premeditated offence at public law
- Being under no effective disqualification from occupying a position of property accountability
General Conditions to grant a license:
Some of the conditions are:
- The Memorandum of the Company must have specific clauses regarding the nature of this business
- The applicant company must fulfill the minimum capital requirements as set out above
- The company has physical office space in Bulgaria
- The suitability of the shareholders. As with the directors, the shareholders pass a fit and proper test, especially a background check whereby FSC is satisfied that they have a clean criminal record as well as experience in the business
Application Procedure – General Outline:
- Registration of a firm and preparation of the full set of documents necessary to obtain the license
- Filling the license application before the FSC
- Examination of the application by the commission and issuing a decision
- Issuing a license
FSC Application Fees:
There is an initial administrative cost for applying for license, depending on the case, and the fees are € 2150 and € 5100