CySEC has issued Circular C435 in order to inform Cyprus Investment Firms (‘CIFs’) which intend to provide investment and/or ancillary services and/or perform investment activities in the territory of Czech Republic, to CNB’s regulatory rules regarding the persons that are allowed to provide such services.
On 24 March 2020, the Czech Parliament adopted the Act No. 119/2020 Coll., which amended Act No. 256/2004 Coll., (hereinafter the “Amended Act”), being the Czech national law transposing MiFID II. Under Section 25 of the Amended Act, investment firms established in other EEA Member States providing cross-border services to retail clients and professional clients on request under MiFID II passport are allowed to provide services under the freedom to provide services (i.e. without establishing a branch), with respect to Article 57 TFEU, only on a temporary or occasional basis.
Pursuant to Section 25 of the Amended Act, if non-Czech investment firms are presumed to provide investment services to retail and professional on request clients on a permanent basis, such firms will be under a strict obligation to establish a branch in the Czech Republic, and may only provide investment services under Article 35 of MiFID II (establishment of branch). The requirement for the establishment of a branch does not apply for investment services provided to professional clients by default (as per Section 2a of the Amended Act).
Section 25(1) of the Amended Act provides as follows:
“A foreign person authorised by the supervisory authority of another EU member state to provide investment services may provide investment services, for which it has such authorisations of its supervisory authority of the home state, in the Czech Republic without location of a branch in the Czech Republic in compliance with the EU legislation, temporarily or occasionally, if it is not investment services provided to professional clients pursuant to Section 2a, to whom investment services can be provided in this way even permanently. The CNB shall inform this person without undue delay that it has received data from the supervisory authority of the home state concerning the intended provision of investment services by this person in the Czech Republic.”
Our team at FiveComply remains at your disposal and can help you comply with the abovementioned obligations.