Financial regulation

The financial activities carried out by the following entities require the authorization of the Capital Market Commission (CMC): 

• securities brokerage firms;
• securities distribution companies;
• investment companies;
• asset management companies;
• securities and real estate investment fund management companies;
• venture capital companies;
• venture capital fund management companies;
• brokers, investment advisors and independent financial analysts.

In particular, the following investment services and activities in securities and derivatives require authorization:

• the reception and transmission of orders on behalf of others;
• the execution of orders on behalf of others;
• portfolio management for third parties;
• investment advice, including the preparation of studies, financial analysis and other general recommendations;
• underwriting and placement with or without a guarantee in a public offer for distribution;
• assistance in connection with public offerings of securities;
• registration and deposit of securities and derivative securities and services related to their safekeeping, such as cash or guarantee management;
• the granting of credit, including the lending of securities, intended exclusively for the purpose of carrying out transactions in securities and derivative instruments involving the grantor of credit; and
• foreign exchange services and safe-deposit box rental for the sole purpose of providing investment services.

Generally

To carry on banking business an entity must be authorized by APRA to be an ADI.

All financial activity requires regulatory authorization by ASIC when it is carried on by way of financial services or consumer credit business in Australia.

The following activities are likely to require authorization, if they have sufficient connection with Australia:

• providing financial services, such as advice and dealing in respect of financial products, investment products, non-cash payment facilities, arrangements for the management of financial risk, derivatives, shares and managed investment schemes;
• engaging in Australian financial securities activities, such as arranging and underwriting services in ‘financial products’ in the wholesale markets;
• providing deposit-taking services, such as accepting deposits; and
• engaging in consumer credit activities, relating to consumer leases, consumer credit contracts, credit assistance and securing payment obligations.

Financial Sector (Shareholdings) Act 1998

Acquisitions of shareholdings are covered by the Financial Sector (Shareholdings) Act 1998 (Cth) (FSSA). The FSSA restricts individual shareholdings in financial sector companies to a 20% stake. A financial sector companies is:

• an authorised deposit-taking institution; or
• an authorised insurance company; or
• a holding company of an authorised deposit-taking institution or an authorised insurance company.

The Treasurer may approve a higher percentage stake limit if it is in the national interest to do so or the person is a fit and proper person and the company is new or recently establish, with assets below a certain threshold amount.
If a person obtains practical control of the Australian company, as declared by the Treasurer, then steps will need to be taken to end the practical control.

Foreign Investment Policy

The Australian government’s regulation of foreign investment has two main aspects. The first is the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and the regulations made under FATA. The second consists of various ministerial statements and policy guidelines issued from time to time.

The Treasurer, assisted by the Foreign Investment Review Board (FIRB), administers this regulation. The Australian government has the power to block notifiable proposals determined to be contrary to the national interest or may impose conditions on an approval.

FIRB is a non-statutory body to advise the Treasurer and the Australian government on Australia’s foreign investment policy and its administration. FIRB examines foreign investment proposals and advises the Treasurer whether or not they comply with the policy. It also generally advises the Australian government on foreign investment matters and can assist foreign investors to ensure their proposals (and their associates) confirm with government policy.

For business acquisitions, foreign persons should obtain approval for the acquisition of:

• a substantial interest in an Australian corporation or in an offshore company having Australian assets; or
•  control of an Australian business, the value of which exceeds the prescribed limits.

A substantial interest exists if the foreign person (and any associates) has 20% or more or several foreign persons (and any associates) have 40% or more of the share capital or voting power in the corporation. Different thresholds apply for designated sectors such as agribusiness.

Foreign persons will require approval for the acquisition of interests in certain types of Australia real estate, depending on its value.

All foreign government investors must obtain approval before making a direct investment in Australia, starting a new business or acquiring interests in land regardless of the value of those acquisitions. Foreign government investors includes bodies politic, entities in which foreign governments or their agencies and related entities have an interest of 20% or more (or such entities from more than one foreign country having an aggregate interest of 40% or more) and entities that are controlled by foreign governments or their agencies or related entities.

Notification and approval of foreign investment will differ depending on the type of transaction and the type of investor (ie. private sector or foreign government investor). Applications are typically considered within 30 days and a further 10 days to notify the applicant, however this period may be extended, and in the case of the Treasurer making an interim order, by up to a further 90 days.

A person must not perform any regulated activities in Belgium unless authorized or exempt.

The following businesses would usually be deemed to be carrying on regulated activities and require authorization under Belgian law:

• credit institutions;
• investment firms: stockbroking firms, portfolio management or investment advice companies;
• insurance or reinsurance undertakings;
• payment institutions and electronic money institutions;
• settlement institutions and institutions equivalent to settlement institutions;
• consumer credit providers;
• intermediaries in banking and investment services;
• intermediaries in consumer credit and mortgage credit;
• intermediaries in insurance and reinsurance;
• Undertakings for Collective Investment in Transferable Securities (UCITS) and their management company; and
• Alternative Investment Funds (AIFs) and their management company.

The main types of financial institution in Brazil are as follows.

Investment banks

Investment banks are financial institutions of a private nature specializing in:

• operations of temporary equity participation;
• financing production activities, providing fixed or working capital; and
• managing third parties’ assets.

Investment banks are also allowed to:

• practice, on their own account or at the request of a third party, sale and purchase operations of (a) precious metal and (b) bonds and securities;
• operate, on their own account or under the request of a third party, in stock exchange and future exchange markets (under a specific authorization from the Brazilian Securities Commission (CVM));
• operate under all kinds of credit granting to finance fixed or working capital;
• participate in bonds and securities issuance, subscription to resale and distribution processes (under a specific authorization from CVM);
• operate in the foreign exchange market (under a specific authorization from the Central Bank);
• coordinate the reorganization of companies or group of companies by means of consulting services, acquisition of equity stake and/or financing; and
• manage companies, the corporate purposes of which are directly linked with financial market operations.

Commercial banks

Commercial banks are financial institutions, of private or public nature, specializing in:

• short- and medium-term financing for the supply of capital to individuals, commerce and industry;
• cashing of drafts;
• granting credit facility;
• collecting cash and time deposits;
• fund raising to perform on lending operations; and
• acting as service providers, including services provided through convention with other institutions.

Securities brokers (CTVM)

Securities brokers are financial institutions of a private nature specializing in:

• operating in stock exchanges;
• subscribing solely or jointly with other authorized companies to resale bonds and securities;
• intermediating public offers and distributing bonds and securities;
• purchasing and selling bonds and securities for themselves or for third parties, with due regard to the regulation issued by CVM and Central Bank;
• managing portfolios and the custody of bonds and securities;
• being responsible for the subscription, transfer and authenticity of:
  • endorsement;
  • split of portfolios;
  • receipt and payment of redemption proceeds; and
  • interest and other incomes related to bonds and securities;
• acting as trustee;
• incorporating, organizing and operating funds and investment clubs;
• incorporating investment companies – foreign capital and administration of their respective portfolios of bonds and securities;
• acting as issuer agents of certificates and share book entering services;
• issuing certificates of deposit for shares;
• intermediating foreign exchange transactions;
• purchasing and selling precious metal, for themselves or for third parties, according to Central Bank’s regulation;
• operating in commodities and future exchange, for themselves or for third parties, according to Central Bank’s and CVM’s regulation;
• intermediating, advising and giving technical assistance to transactions and activities related to the capital and financial markets; and
• practicing other activities authorized by CVM and Central Bank.

Securities dealerships (DTVM)

Securities dealerships are financial institutions of a private nature specializing in:

• subscribing solely or jointly with other authorized companies to resale bonds and securities;
• intermediating public offers and distribution of bonds and securities;
• purchasing and selling bonds and securities for themselves or to third parties, with due regard to the regulation issued by CVM and Central Bank;
• managing portfolios and the custody of bonds and securities;
• being responsible for the subscription, transfer and the authenticity of
  • endorsements;
  • splits of portfolios;
  • receipt and payment of redemption proceeds; and
  • interest and other related to bonds and securities;
• acting as trustee;
• incorporating, organizing and operating funds and investments clubs;
• incorporating investment companies – foreign capital and administration of their respective portfolios of bonds and securities;
• acting as an issuer agent of certificates and share books entering service;
• intermediating foreign exchange transactions;
• purchasing and selling precious metals, for themselves or for third parties, according to Central Bank’s and CVM’s regulation;
• operating in the barter exchange for themselves or for third parties, according to Central Bank’s and CVM’s regulation;
• intermediating, advising and giving technical assistance to transactions and activities related to the capital and financial markets; and
• practicing other activities authorized by CVM and Central Bank.

Generally

Foreign investment in certain industry sectors such as telecommunications, transportation, broadcasting and banking will generally require prior approval by the applicable regulatory authority.

Investment Canada Act (Canada)

Foreign investment in Canada is regulated by the Investment Canada Act (Canada). Non-Canadians who propose to acquire control of an existing Canadian business must either (depending on whether certain prescribed monetary thresholds for the investment are exceeded):

• file a notification prior to the implementation of the investment or within 30 days thereafter; or file an application for review prior to implementation of the investment.

 

Non Canadians who establish a new Canadian business must file a notification.

With certain exceptions, an application for review triggers a pre-closing waiting period (which may be several weeks or longer), meaning that approval of the Minister of Innovation, Science and Industry is required before the transaction may close. [If the investment involves acquisition of control of a cultural business, approval is required from the Minister of Canadian Heritage.]  Such approval will be provided if the relevant Minister is satisfied that the transaction will result in a ‘net benefit’ to Canada. Investors normally must provide commitments in order to secure such approval.

The federal cabinet, in consultation with the Minister of Innovation, Science and Industry, ‎may also order a review of an investment by a non-Canadian ‎where there are reasonable grounds to believe the investment could be a injurious to national security. Such a review is possible for foreign investments constituting less than an acquisition of control and regardless of financial thresholds. This applies to a non-Canadian that acquires an interest in or establishes a Canadian business or, in certain circumstances, an entity carrying on all or part of its operations in Canada.

Competition Act (Canada)

 

Where the prescribed financial thresholds are exceeded, the parties must notify the Commissioner of Competition (head of the Competition Bureau) about the proposed transaction and observe the prescribed waiting periods. Completion of the transaction cannot take place unless and until the Commissioner issues an Advance Ruling Certificate (ARC) or waives the requirement to notify, or the statutory waiting period has expired.

Before closing and for up to one year thereafter, the Commissioner may challenge a merger of any size where it is likely to lessen or prevent competition substantially. The Commissioner’s challenge is made by way of an application to the Competition Tribunal.  The Commissioner typically seeks an order to block a merger or to require divestiture of assets.  Parties to a merger may voluntarily seek approval from the Commissioner (in the form of an ARC or “no-action letter”) if there are concerns with respect to the competitive impact of the transaction.

Investment in real property

In Alberta, Saskatchewan, Manitoba and Québec, the investment in farm land by non-Canadians is regulated and restricted. Each province has a different definition of who is considered to be a non-Canadian. In Québec, the investment in farm land by non-residents of Québec and foreign-controlled entities is also regulated and restricted.

In Prince Edward Island, the investment in land by non-residents of Prince Edward Island is regulated and restricted.

Securities

Any regulated financial activity in Québec requires an authorization from the Autorité des marchés financiers. For instance, any firm providing money or insurance services has to be registered with the Autorité des marchés financiers.

Consumer credit

In addition to federal consumer protection laws, each province and territory in Canada has enacted consumer protection legislation. Generally, consumer protections cannot be waived and the prescribed disclosure must be provided to the consumer prior to entering into an agreement with the consumer (eg the total cost of credit or borrowing, as well as any particular fees, must be disclosed to the consumer). Consumer protection laws in some provinces also prohibit clauses that provide that a foreign law governs the consumer agreement or that provide that the consumer is not permitted to bring a class action or be a member of a group bringing a class action.

Generally

• Accepting deposits in a customary manner from the public
• Acting as a principal or on behalf of a third party in the brokerage of money or loans represented by securities or any other credit titles
• Exhibiting in store or offices signs of advertisement containing any expressions indicating to be a financial company
• Public offer of securities
• Management of third party funds and individual portfolios.

Consumer credit

Regarding granting consumer credits, such activities are only regulated in connection to interest rates (they do not require special authorization).

Generally

• Credit institutions (which are further categorized into banks, finance corporations, financing companies and finance cooperatives)
• Financial services entities
• Capitalization corporations
• Insurance companies
• Insurance intermediaries

Consumer credit

No financial, banking or credit institution may operate in Colombia without the prior approval of the Superintendency of Finance.

Subject to prior approval of the Superintendency of Finance, foreign banks may operate in Colombia through their subsidiaries established and incorporated in Colombia.

Under Law 1328 of 2009, foreign banks, as of 16 July 2013, are permitted to operate through their ‘branches’ and are not obligated to incorporate a Colombian subsidiary. Operations through these branches will be subject to prior approval by the Superintendency of Finance. Among others legal requirements, branches have to meet the same minimum capital requirements as independent entities do.

Each credit institution must be separately authorized by the Superintendency of Finance before it may develop and provide financial services. Furthermore, the activities of credit institutions are subject to limitations and restrictions, including limitations and restrictions relating to the extension of credit, risk concentration, investments, conditional operations, foreign currency loans and negotiations, and the administration of third-party funds. One of the principal restrictions on financial activities is that banks may not acquire or hold products, merchandise, shares of corporations, income bonds, or other similar securities, except:

• when the bank has received those goods or securities as collateral for loans it has made; or
• with respect to shares, when they are issued by companies where banks are permitted to hold investments (mainly financial affiliates).

Banks are also subject to other limitations, including limitations on lending activities.

Generally

A person must not carry on a regulated finance and investment activity in the Czech Republic unless authorized or exempt.

The activities of the entities that are supervised by the Czech National Bank (CNB) require authorization. As part of its supervision of the financial market, CNB performs supervision over: legal entities and natural persons, other property associations with a designated purpose and groups of persons and property associations with a designated purpose, and is charged with obligations under the Czech laws in the area of banking, capital market, insurance business, pension insurance or pension schemes.

Consumer credit

Consumer credit activities, including credit broking, operating an electronic system in relation to lending and entering into a regulated credit agreement as lender are regulated activities.

Unless exempt agreements (see below), these activities can only be offered by firms who are authorized and listed on the 'lists of regulated institutions and registered financial market entities'.

The available exemptions relate to the nature of the agreement, the lender and the borrower, and the number of repayments to be made. For example, some credit agreements for the purposes of the repeated services or deliveries of goods are exempt agreements.

Generally

A person must not carry on a regulated activity in Finland unless authorized or exempt.

A financial activity requires regulatory authorization when it is identified as a specified activity in relation to a specified investment, it is carried on by way of business in Finland and it does not fall within any of the available exemptions.

The operations of a credit institution, investment firm, fund management company, alternative investment fund manager, custodian or insurance company can only be pursued by entities that have been granted authorization by the Finnish Financial Supervisory Authority (FIN-FSA). Virtual currency providers must be registered in the register of virtual currency providers maintained by the Financial Supervisory Authority (FIN-FSA).

Authorizations are regulated in the Credit Institutions Act, Investment Firms Act, Alternative investment fund manager Act, Mutual Funds Act, Insurance Companies Act and Act on Virtual Currency Providers. However, some of these acts include provisions which include conditions which also apply when the operations are not regarded as authorized business.

Consumer credit

Consumer credit activities are regulated activities. These activities can only be offered by firms that have been authorized by the FIN-FSA or equivalent authority in another EEA member state or registered as loan providers in accordance with the Act on Registration of Certain Loan Providers and Credit Brokers. The Consumer Protection Act applies to provision of consumer credit. In addition, the Act on Residential Property Consumer Credit Intermediaries regulates providing residential property consumer credit to consumers.

Consumer is defined in the Consumer Protection Act as a natural person who acquires consumer goods and services primarily for a use other than his or her business or trade (elinkeinotoiminnassaan).

Save for certain exemptions provided for in the Monetary and Financial Code (Code monétaire et financier), any person who/which provides finance or investment services, on a regular basis, is required to be authorized by either the Prudential and Resolution Supervisory Authority (Autorité de contrôle prudentiel et de résolution) (ACPR) or the Financial Markets Authority (Autorité des Marchés Financiers) (AMF).

In particular, the following financing and investment activities require authorization from the regulators or a registration:

• banking services (including, without purporting to be exhaustive, receipt of repayable funds from the public and credit);
• payments services;
• issuance and management of electronic money;
• investment services;
• crowdfunding; and
• management or marketing of alternative investment funds (AIFs).

Banking services are subject to the banking monopoly, which especially applies to the paragraphs on giving and taking guarantees and securities below. In this respect, when transferring a loan and related security, it should be considered whether the transferor was or is duly licensed to provide a credit and whether the transferee is duly licensed (or passported) to act as a transferee.

Generally

A person must not carry on a regulated activity in Germany unless authorized or exempt.

A financial activity generally requires regulatory authorization when it either qualifies as banking business (eg deposit taking business) or the provision of financial services (eg the provision of investment advice).

Consumer credit

Credit business generally qualifies as licensable banking business and requires prior authorization by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin).

A person shall not carry on a deposit-taking business in Ghana without a license issued by the Bank of Ghana. In addition to taking money on deposit, deposit taking business are permitted to engage in financial activities such as lending, financial leasing, investment in financial securities, participation in securities issues and provision of services related to those issues, electronic banking, money transmission services and issuing and administering means of payment including credit cards, travelers checks, bankers’ drafts and electronic money. 

A person cannot establish or maintain a securities exchange, unit trust or mutual fund, or carry on business as a market maker or market operator in the securities market without a license issued by the Securities and Exchange Commission. Market operators include broker-dealers, investment advisors, trustees, custodians, fund managers or underwriters. 

Banks and financial institutions which do business in the capital market other than as custodian, trustee, primary dealer, nominee, registrar, issuing house and underwriter, must incorporate a subsidiary company and obtain a license for that subsidiary. 

A person cannot act as a representative of a market maker or market operator without a license.

Generally

Under Hungarian law, carrying on finance and investment activities by way of business is subject to government authorization. By way of business shall mean gainful (for-profit) economic activities performed on a regular basis for compensation, involving the conclusion of deals which have not been individually negotiated.

The following financial and investment activities are subject to authorization:

• financial services and financial auxiliary services (such as taking deposits and receiving other repayable funds from the public, credit and loan operations, financial leasing, money transmission services or the issuance of electronic money);
• investment services, investment ancillary services and commodity exchange services (such as dealing on own account, portfolio management, granting credits and loans to investors or investment research and financial analysis); and
• services provided under the Act CXX of 2001 on the Capital Market (such as the activities of any stock exchange, central securities depository, clearing house, central counterparty established in Hungary)

Consumer credit

Consumer credit activities, including credit broking, operating an electronic system in relation to lending and entering into a regulated credit agreement as lender are regulated activities.

A person must not carry on a regulated activity in Ireland unless authorized or exempt.

Generally speaking, the Central Bank of Ireland regulates the activities of:

• credit institutions, credit servicing firms, investment firms, funds, fund service providers;
• insurance and reinsurance companies;
• moneylenders, mortgage and credit brokers and intermediaries;
• bureaux de change, electronic money institutions, money transmission businesses, payment institutions; and
• credit unions, among others.

One point of note is that commercial lending is not of itself a regulated activity in Ireland (unless the lender is engaged in deposit-taking or carrying on other banking business); however, certain regulatory reporting requirements may apply to such lenders.

Generally

In general terms, the performance in Italy of one or more of the following financial activities requires an authorization:

• savings collection;
• payment and e-money services;
• the provision of investment services;
• granting financing in any form vis-à-vis the public (ie to third parties on a professional basis) (this activity includes the granting of loans, including the issue of guarantees replacing the credit and guarantee commitments, financial leasing, the purchase of receivables for valuable consideration, consumer credit, mortgage credit, loans backed by pledges, the issue of guarantees, the opening of a documentary credit facility, the acceptance, endorsement or commitment to grant a facility, as well as any other form of issuing guarantees and credit commitments); and
• collective asset management activities.

Consumer credit

The Consolidated Banking Act defines a consumer credit agreement as a contract by which the lender grants or undertakes to grant credit to a consumer in the form of a deferred payment, loan or other similar financing, also in relation to real estate consumer credit. In this context, pursuant to the Consolidated Banking Act, 'consumer' shall mean a natural person acting for purposes unrelated to a business or professional activity (if any) carried out by the same. Such definition includes all financings granted by professionals (banks or authorized intermediaries) vis-à-vis consumers. Specific transparency and disclosure obligations vis-à-vis consumers are provided for by the Consolidated Banking Act and by the Transparency Provisions. The Transparency Provisions have been amended in order to, inter alia, introduce product oversight and governance requirements for retail banking products, including consumer credit. As a consequence credit institutions shall now make sure to design and bring to the market products with features, charges and risks, that are appropriate for the interests, objectives and characteristics of a pre identified target clientele (so called “target market”). The Consolidated Banking Act also lists a set of exclusions, in relation to which the consumer credit regime shall not apply.

Generally

Combined provisions of the General Rules of the CREPMF and the Regulation 09/2010 provide for the financial and investment activities that require authorization.

Under the General rules of the CREPMF, the following activities qualify as investment activities that require an approval (agrément): issuing and distributing securities; trading and intermediation on the securities market; trading and intermediation on the derivatives market; organization and operation of stock exchanges; organization and operation of commodities and futures exchanges; management of securities portfolios and custody of securities; and provision of investment advice.

Persuant to article 8 of Regulation 09/2010, the following activities require an authorization from CREPMF and BCEAO: the issue, the exposure, the sale of securities of foreign states, public authorities or foreign companies and international institutions; the solicitation of residents with the aim of constituting deposit funds with foreign private individuals and offshore establishments; any publicity or marketing…, edited on the territory of a WAEMU’s Member State with the aim of investing offshore funds or subscribing to operations related to offshore real estate constructions.

Consumer credit

Consumer credit activities, including hire-purchase and rental with option purchase, discount, reverse repurchase, acquisition of receivables, guarantees, purchase financing, leasing and service delivery are regulated activities.

Furthermore, these activities can only be offered by firms who are authorized and listed on the financial services register.

 

Generally

An individual or a firm cannot undertake certain financial and investment business activities unless duly authorized.

The Banking Act requires a license from the Prime Minister for the conduct of banking activity. Banking activity includes the acceptance of deposits or instalment savings, the administration of loans and bill discounting.

A financial instruments business or financial instruments intermediary service cannot operate without prior registration. Activities which fall within the scope of a financial instruments business and providing a financial instruments intermediary service includes the sale and purchase of securities, market transactions in derivatives, public offerings and private placements. Similar activities conducted by a financial instruments business operator or a registered financial institution also require authorization.

Consumer credit

A financial instruments business lending money or an intermediary service providing for the borrowing of money must register under the Money Lending Business Act. The Prime Minister or a competent prefectural governor has the authority to order a lending business to improve its operations, suspend its business altogether or rescind its registration.

Generally

A person must not carry on a regulated activity in Luxembourg unless authorized or exempt (known as the general prohibition).

Any activity dealing with financial matters, advice or money constitutes a financial activity. The existence of a money flow is an important indication to establish whether an activity qualifies as a financial sector activity. However, the Commission de Surveillance du Secteur Financier shall decide for each specific activity whether authorization is required.

• Specified activities include accepting deposits, dealing in, managing, arranging and advising on investments, and establishing collective investment schemes.
• Specified investments include deposits, shares, debt instruments, options, futures, units in a collective investment scheme and government and public securities.

Consumer credit

Consumer credit activities, including credit broking, operating an electronic system in relation to lending and entering into a regulated credit agreement as lender are deemed regulated activities.

The granting of consumer loans requires prior authorization unless covered by the exemptions set out in article L. 224-3 of the Luxembourg Consumer Code, including inter alia granting of loans for an amount below €200 and above €75,000 and loans granted to acquire or maintain ownership of real estate land, or an existing building or a building to be constructed.

Activities regulated by the Financial Services Commission

Generally 

No person shall carry out or hold themself as carrying out any financial services in Mauritius without a license issued by the Financial Services Commission. 

Specific Activities 

These include financial service providers/activities such as distribution of financial products, specialized financial services/institutions, including credit finance and factoring, dealing in, managing, arranging and advising on investments and establishing collective investment schemes and closed-end funds. 

Activities regulated by the Bank of Mauritius 

• Banking Businesses
• Foreign Exchange Dealers
• Money Changers
• Moneylenders
• Non-Bank Deposit-taking institutions

Generally

Main regulated activities include:

• retail banking activities (operation of deposit accounts);
• consumer lending;
• public offering of securities;
• crowdfunding and electronic wallets;
• securities brokerage (trading in securities and other investments);
• investment and asset management (managing investment funds, including distribution and appraisal entities);
• insurance and bonding issuance and brokerage;
• establishment of representative office of foreign financial institutions; and
• investment advisory services (rendering portfolio management and investment advisory services in a regular and professional manner).

Consumer credit

Consumer lending is also a regulated activity that requires governmental authorization.

Activities requiring authorization include:

• receiving funds from the public;
• credit transactions;
• issuing means of payment to customers and their management;
• foreign exchange transactions;
• transactions on gold, precious metals and coins;
• life and health insurance, assistance, credit insurance and any other insurance transactions;
• leasing of movable or immovable property;
• investment services (including, in particular, the management of financial instruments, trading of financial instruments on own account or on behalf of third parties or the receipt and transmission of orders on behalf of third parties).

Generally

A financial entity must not carry on a regulated activity unless authorized or exempt.

Among others, the following finance and investment activities require, in principle, authorization:

• providing banking activities;
• providing investment firm activities (eg provision of execution only services, investment advice, portfolio management, equity based crowdfunding and dealing in financial instruments);
• offering alternative investment fund or undertaking for collective investment management and marketing;
• offering and/or servicing of financial products, eg investment objects and consumer credit;
• brokerage and advisory services in relation to financial products, eg investment objects and consumer credit; and
• attracting, obtaining or having the disposal of ‘callable funds’ (eg crowdfunding).

Callable funds are deposits and other repayable funds as entailed in the definition of a credit institution under the Capital Requirements Regulation (Regulation (EU) 575/2013). No authorization, but an exemption is required for financial entities in this regard. With this exemption, financial entities may for example give out bonds to the public which would normally be covered by a restriction on these activities for which authorization is required.

Consumer credit

The following activities require, in principle, authorization:

• directly or indirectly offering credit to a consumer and/or managing or performing a credit agreement with a consumer;
• providing advisory services to a consumer in relation to credit; and
• performing brokerage activities to a consumer in relation to credit (this authorization requirement may, under certain circumstances, apply to debt collection agencies).

Generally

The Financial Markets Conduct Act 2013 (FMCA) requires managers of managed investment schemes, supervisors of managed investment schemes and debt issuers, independent trustees of restricted superannuation schemes, issuers of derivatives, providers of discretionary investment management services, and crowd funding and peer-to-peer lending platform providers to be licensed. From 29 June 2020 providers of financial advice services will also be required to be licensed under the FMCA.

Consumer credit

The Financial Services Providers (Registration and Dispute Resolution) Act 2008 requires businesses that provide a financial service to be registered and be a member of an approved dispute resolution scheme.

A financial service means:

• a financial advisor service;
• a broking service;
• a licensed non-bank deposit taker;
• a registered bank;
• dealing with investment portfolios and securities;
• being a creditor under a credit contract;
• operating a money or value transfer service;
• issuing and managing means of payments such as credit and debit cards;
• a licensed market service;
• acting as a custodian of a registered scheme;
• operating a financial product markets;
• changing foreign currency;
• trading financial products or foreign exchange on behalf of other persons;
• providing forward foreign exchange contracts;
• acting as an insurer;
• giving financial guarantees;
• participating in a regulated offer of financial products as the issuer or offeror; and
• acting in any of the following capacities in respect of an offer of regulated products or financial products:
• as an issuer;
• as a supervisor; or
• as an investment manager.

A person or entity wishing to use the word ‘Bank’ or related words in its name is required to be registered under the Reserve Bank of New Zealand Act 1989.

Financial activities may only be conducted by authorized banks, credit institutions and finance undertakings. When stipulated in the Financial Institution Act 2015 chapter 5, foreign credit institutions may also 'passport' their and/or conduct financial activities in/to Norway.

‘Financial Activities’ means the granting, intermediating or furnishing of guarantees for credit or otherwise participating in the financing of activity other than one's own, except for:

• business related to public institutions or a fund that is intended for special credit purposes;
• business conducted by a foundation that does not have as its purpose to conduct business activities, or the county administrator's management of financial assets pursuant to the act on custody (Vergemålsloven);
• credit or guarantees provided on behalf of the company's or the group's employees;
• credit provided by the seller of a good or service;
• business conducted as a financial agent or a financial advisor; or
• financial services that are conducted only in isolated cases.

Examples of finance and business activities that require authorization include banks, credit institutions, finance undertakings, payment institutions, electronic money institutions, insurance companies, life insurance companies, general insurance companies, credit insurance companies, pension funds and loan intermediaries.

Generally

An individual or company must not carry on any regulated activity in Peru unless authorized or exempted (known as the general prohibition).

A financial or banking activity requires regulatory authorization to carry out specific activities in Peru where such activities do not fall within any of the available exemptions.

• Specific activities include activities such as accepting deposits; dealing in, managing, arranging and advising on investments; and establishing collective investment schemes.
• Specific investments include deposits, shares, debt instruments, options, futures, units in collective investment schemes, and government and public securities.

Generally

A person must not carry on a regulated activity in Poland unless authorized or exempt from the duty of authorization (known as the general prohibition).

Regulated finance and investment activities include:

• banking;
• insurance;
• payment services;
• securities brokerage and trading;
• investment funds; and
• pension funds.

Consumer credit

Consumer credit activities are subject to certain statutory requirements in Poland. Loan companies which are not banks or credit institutions are not required to be authorized in order to grant consumer credits. However, it is a prerequisite for such loan companies and for loan intermediates to obtain an entry in the register of loan institutions or, respectively, the register of loan intermediaries maintained by the Polish Financial Supervision Authority.

According to the Act of 12 May 2011 on Consumer Credit, a consumer loan is a loan granted to a consumer which is not exceeding PLN255,550 (approx. €59,000).

Generally

Regulatory authorization is necessary for the carrying out of financial, investment and insurance and reinsurance activities in Portugal.

• Investment activities include activities such as receiving and transmitting orders regarding financial instruments, executing orders in the name of third parties, portfolio management, registering and depositing transferable securities and investment advice.
• Banking activities include activities such as accepting deposits and other repayable funds, lending, financial leasing and money broking.
• Insurance and reinsurance activities include dealing in life insurance.

Generally, financial and investment activities may only be professionally rendered by authorized credit and financial institutions. However, certain consulting activities might also be provided by other authorized individuals.

Consumer credit

Activities involving consumer credit are consdered as a regulated activity. Only credit institutions and financial companies can carry out credit operations and therefore they must obtain regulatory authorization.

Issuance of means of payment and e-money

The issuance of payment instruments and e-money are regulated activities and only firms authorized by the Bank of Portugal as payment and electronic money institutions are allowed to carry out such activities.

Generally

The following require authorization:

• commercial banks;
• securities broker-dealers;
• investment advisors;
• financial advisors;
• lenders;
• small loan lenders;
• mortgage banks;
• credit card issuers;
• investment companies (mutual funds);
• cooperatives (credit unions);
• financial intermediaries;
• insurance companies;
• insurance brokers;
• insurance agencies;
• international insurers;
• international banking entities; and
• international financial entities.

Consumer credit

The following require authorization:

• commercial banks;
• financial intermediaries;
• lenders;
• credit unions;
• small loan lenders;
• mortgage banks; and
• credit card issuers.

As a general rule, the performance without authorization of any activities or operations for which the laws regulating the financial sector require authorization is prohibited and, in most cases, gives rise to criminal liability.

Under Romanian law, it is generally prohibited for any individual or legal entity (other than a credit institution) to pursue activities such as attracting deposits or other repayable funds from the public.

Furthermore, professional lending is a regulated activity, which may exclusively be undertaken by regulated entities, such as credit institutions, non-banking financial institutions or payment services providers which perform lending activities in relation to payment services.

Offering investment services and managing investment vehicles are also comprehensively regulated activities, and require authorization by the Financial Supervisory Authority.

Generally

Certain types of activities are subject to licensing by the Central Bank of Russian Federation (CBR), including:

• performance of banking operations;
• organization of an exchange;
• professional activities on the securities market (brokerage activity, dealer activity, forex-dealer activity, depository activity, repository activity, securities management and maintenance of a securities owners register);
• activities of joint-stock investment funds and non-governmental pension funds; management of joint-stock investment funds, mutual funds and non-governmental pension funds; special depositary of joint-stock investment funds, mutual funds and non-governmental pension funds; and
• clearing and insurance activities.

CBR's permission must be obtained, for example, in order to establish a credit organization with foreign investments in Russia, for a Russian credit organization to establish a branch or subsidiary abroad, or for Russian issuers to issue securities abroad.

Accreditation by the CBR is required for representative offices of foreign credit organizations, informational agencies that disclose information on the securities markets, and others.

Some types of activities can only be performed after a firm is added to the official register by the CBR (such as microfinance organizations, credit rating agencies or investment platforms operators) or after it enters into a self-regulated organization on a financial market.

Consumer credit

Consumer credit activities are generally performed by credit organizations (which include banks and non-banking credit organizations that are only allowed to perform a limited number of banking operations). Consumer credit activities can also be performed by some non-credit financial organizations, such as microfinance organizations, credit cooperatives or pawnshops.

The performance of banking operations by credit organizations requires a license from the CBR, while non-credit financial organizations must be added to a register of authorized organizations maintained by the CBR.

Federal Law 'On Consumer Credit (Loan)' sets out the framework for consumer credit and contains restrictions and implied terms which protect an individual.

Generally

Combined provisions of the General Rules of the CREPMF and the Regulation 09/2010 provide for the financial and investment activities that require authorization.

Under the General rules of the CREPMF, the following activities qualify as investment activities that require an approval (agrément):

issuing and distributing securities; trading and intermediation on the securities market;
trading and intermediation on the derivatives market;
organization and operation of stock exchanges;
organization and operation of commodities and futures exchanges;
management of securities portfolios and custody of securities; and
provision of investment advice.
 

Moreover, pursuant to article 8 of Regulation 09/2010, the following activities require an authorization from CREPMF and BCEAO:

the issue, exposure, sale of securities of foreign states, public authorities or foreign companies and international institutions;
the solicitation of residents with the aim of constituting deposit funds with foreign private individuals and offshore establishments; and
any publicity or marketing, edited on the territory of a WAEMU Member State with the aim of investing offshore funds or subscribing to operations related to offshore real estate constructions.
 

Consumer credit

Consumer credit activities, including hire-purchase and rental with option purchase, discount, reverse repurchase, acquisition of receivables, guarantees, purchase financing, leasing and service delivery are regulated activities.

Furthermore, these activities can only be offered by firms who are authorized and listed on the financial services register.

Generally

The following are key areas of finance and investment activities regulated and/or requiring authorization in Singapore:

• commercial banking activities including receiving money on current or deposit account, paying and collecting checks and making advances to customers and in particular (merchant banking activities must be conducted and operated within the Guidelines for Operation of Merchant Banks issued by the Monetary Authority of Singapore);
• finance companies in the business of, inter alia, borrowing money from the public by acceptance of deposits and issuing certificates or other documents acknowledging indebtedness to the public, as well as providing credit facilities;
• insurers carrying on insurance business in Singapore, including direct life and/or general insurance business, life and/or general reinsurance business or captive insurance;
• activities relating to securities, futures and fund management, including, among other things, dealing in securities, trading in futures contracts, leveraged foreign exchange trading, advising on corporate finance, fund management, real estate investment trust management, securities financing, providing credit rating services and providing custodial services for services;
• financial advisory services, including advising others on investment products, issuing research reports covering investment products, marketing of collective investment schemes, and arranging life policies for others, other than a contract of reinsurance;
• money brokers who provide broking services dealing with banks and financial institutions licensed, approved, registered or regulated by the Monetary Authority of Singapore for direct access to money brokers in Singapore;
• money-changing and remittance business involving the buying and selling of foreign currency notes;
• business trusts that run and operate business enterprise;
• trust companies which provide trust or trustee services for investment and wealth management purposes, such as succession planning; and
• payment and settlement systems.

Generally

A person must not carry on a regulated activity in Slovakia unless authorized or exempt.

Activities supervised by the National Bank of Slovakia require authorization. As part of its supervision of the financial markets, the National Bank of Slovakia is responsible for the supervision of legal entities and natural persons charged with obligations under the laws of Slovakia in the area of banking, capital markets, insurance business, pension insurance or pension schemes, as well as with the supervision of the property associations with a designated purpose and groups of persons and property associations with a designated purpose charged with the same obligations as stated above.

Consumer credit

Pursuant to the Slovak Act on Consumer Credits and Other Credits and Loans for Consumers a creditor is only entitled to provide consumer credit if it has been authorized to do so by the National Bank of Slovakia.

Generally

Provision of credit and other regulated activities

A person who is required to register as a credit provider but who has not done so must not offer, make available or extend credit, enter into a credit agreement or agree to do any of those things without first having registered as a credit provider with the National Credit Regulator. A credit provider includes:

• any person who extends credit under a credit facility;
• a mortgagee under a mortgage agreement; and
• a lender under a secured loan agreement.

A person must apply to be registered as a credit provider if the total principal debt owed to that credit provider under all credit agreements (as defined in the National Credit Act) exceeds the prescribed threshold. With effect from 1 November 2016, the current threshold has been set at ZAR nil. This has far-reaching consequences as companies providing employee loans will be required to register as credit providers in terms of the National Credit Act. A credit arrangement will only fall within the definition of 'credit agreement' in terms of the National Credit Act if the person providing the credit will earn some form of fee (such as interest).

Banks, pension funds and other collective investment schemes are also required to obtain licenses from the relevant regulators in order to carry on their businesses. In relation to legislation applicable to these entities, see Law and regulation. 

Provision of advice

A person may not act or offer to act as a financial services provider, unless such person has been issued with a license by the registrar of financial services. A financial services provider is any person who as a regular feature of such person's business provides any recommendation, guidance or proposal of a financial nature in respect of the purchase of, or investment in, any financial product, the conclusion of any transaction aimed at the incurring of any liability or the variation of any term relating to a financial product.

Persons not domiciled in South Africa must also obtain a license in order to provide financial advice in South Africa.

Consumer credit

See above in relation to entities which are required to be registered as credit providers and financial services providers.

Generally

A person must not carry on a regulated activity in Spain unless authorized, registered or exempt.

A financial activity requires regulatory authorization and/or registration when it is identified as a specified activity in relation to a specified investment, it is carried on by way of business in Spain and it does not fall within any of the available exemptions.

• Specified activities include activities such as accepting deposits, mortgage lending, dealing in, managing, arranging and advising on investments, and establishing collective investment schemes.
• Specified investments include deposits, shares, debt instruments, options, futures, units in a collective investment scheme and government and public securities.

Consumer credit

Consumer credit activities are not regulated activities. However, the granting of mortgage loans to individuals or consumers requires prior registration of the mortgage provider in a designated register in the event that such mortgage provider is not a credit institution.

In any event, the granting of consumer credit in Spain is subject to complying with the requirements under Law 16/2011, dated 24 June, on the credit agreements for consumers.

Generally

Generally, a company which offers financial services aimed to the public must be authorized by the Swedish Financial Supervisory Authority (Finansinspektionen), unless there is an applicable exemption. The requirement for authorization is contained in different pieces of legislation depending on the type of business.

The Banking and Financing Act 2004 (Lag (2004:297) om bank och finansieringsrörelse) is generally applicable to banking and financing business, which includes:

• payment services via general payment systems;
• the receipt of funds which are available to the creditor within 30 days of demand; and
• commercial operations which involve the acceptance of repayable funds from the public, the granting of loans, the provision of guarantees for loans or, for financing purposes, the acquisition of claims or the granting of rights to use personal property (ie leasing).

Consumer credit

A company which gives or processes consumer credit must be authorized by the Swedish Financial Supervisory Authority (Finansinspektionen), unless the company is authorized under any other legislation or if the business is exempt from authorization.

Generally

A person must not carry on a regulated activity in Thailand unless authorized or exempted.

A financial activity requires regulatory authorization when it is identified as a regulated activity in relation to a regulated investment and it does not fall within any of the available exemptions.

• Regulated activities include, without limitation, activities such as accepting deposits, dealing in, managing, arranging and advising on investments, and establishing collective investment schemes.

• Regulated investments include, without limitation, equity instruments, debt instruments, options, futures and units in a collective investment scheme eg mutual funds, property funds, funds for foreign investors and infrastructure funds.

Consumer credit

Regulated consumer credit activities include, without limitation, the operation of an electronic system in relation to  credit cards, personal loans, nano finance, PICO financing, payment gateway services, electronic money, clearing house services and the settlement of payment.

Unless exempted by law, these activities can only be offered by qualified companies who are licensed and supervised by the Ministry of Finance and the Bank of Thailand.

It might be worth noting that currently there is a draft Bill on the Regulated Financial Service Providers, e.g. hire purchasing, leasing and factoring. Once this bill become enacted as an act, certain consumer financial services will become regulated services.

Generally, financial services shall be provided by an authorized entity included in the local registry of financial institutions. Some specific types of services require additional licenses.

The below services are deemed to be financial services:

• banking and associated transactions;
• capital market transactions;
• issuance and/or servicing and clearing of payment documents, payment cards, travellers' cheques and other forms of payment provision;
• transactions relating to mortgage assets for the purpose of issuing mortgage-back securities;
• fiduciary management of financial assets;
• money transfer and remittance;
• lending (including financial facilities);
• currency exchange activity;
• financial leasing;
• provision of guarantees and suretyship;
• insurance services and fully funded pension provision;
• factoring;
• asset management for construction finance or real estate finance; and
• others.

Generally

A person must not carry on a regulated activity in the UK unless authorized or exempt (known as the general prohibition).

A financial activity requires regulatory authorization when it is identified as a specified activity in relation to a specified investment, it is carried on by way of business in the UK and it does not fall within any of the available exclusions.

• Specified activities include activities such as accepting deposits, dealing in, managing, arranging and advising on investments, and establishing collective investment schemes.
• Specified investments include deposits, shares, debt instruments, options, futures, units in a collective investment scheme and government and public securities.

Consumer credit

Consumer credit activities, including credit broking, operating an electronic system in relation to lending and entering into a regulated credit agreement as lender are regulated activities.

Unless exempt agreements, these activities can only be offered by firms who are authorized and listed on the financial services register. The available exemptions relate to the nature of the agreement, the lender and the borrower, the number of repayments to be made and the total charge for credit. For example, credit agreements exceeding £25,000 that are entered into exclusively or predominantly for the purposes of the business of the borrower are exempt agreements.

Generally

A person must not carry on a regulated activity in the UK unless authorized or exempt (known as the general prohibition).

A financial activity requires regulatory authorization when it is identified as a specified activity in relation to a specified investment, it is carried on by way of business in the UK and it does not fall within any of the available exemptions.

• Specified activities include activities such as accepting deposits, dealing in, managing, arranging and advising on investments, and establishing collective investment schemes.
• Specified investments include deposits, shares, debt instruments, options, futures, units in a collective investment scheme and government and public securities.

Consumer credit

Consumer credit activities, including credit broking, operating an electronic system in relation to lending and entering into a regulated credit agreement as lender are regulated activities.

Unless exempt agreements, these activities can only be offered by firms who are authorized and listed on the financial services register. The available exemptions relate to the nature of the agreement, the lender and the borrower, the number of repayments to be made and the total charge for credit. For example, credit agreements exceeding £25,000 that are entered into exclusively or predominantly for the purposes of the business of the borrower are exempt agreements.

Generally

Everything that is classified as financing and investment activities under various legislation.

Any licensed financial activites onshore in the UAE is governed by the UAE Central Bank. Depending on the category of activity, different rules and regulations and circulars will apply. Accordingly, interested parties should refer to the UAE Central Bank website where all current laws, regulations and circulars are provided. The scope of licensed financial activites is relatively broad and are listed in the New Banking Law. The board of directors of the Central Bank has also the power to review the list of licensed financial activities and add, exempt or remove certain activiites from that list.

Any offshore entities conducting business activities within the UAE will need to be appropriately licensed by the UAE Central Bank. The types of licenses generally issued by the UAE Central Bank include commercial bank, investment companies and investment consultation, branches of foreign licensed institutions.

Anticipated regulatory changes

We understand that the UAE is contemplating reforming the financial services sector's regulations, which is intended to cover, among other things, custody, collective investments and broker dealing. The UAE has recently enacted the New Banking Law. As a result, a number of regulations and circulars are expected to be implemented in the next two to three years. The New Banking Law states that the Central Bank will establish an electronic guideline (i.e. a rulebook) which will include all regulations, standards, decisions and circulars issued by the Central Bank.  Such electonic guideline will be published and regularly updated on the Central Bank’s website. This will be a welcome change in the UAE (and follows the position adopted by the Dubai Financial Services Authority).

However, there currently exists something of a vaccum and market participants and practictionners should pay a close attention to the upcoming implementing regulations.

Lending

It will depend on the jurisdiction in which the products are being offered.

Broker-dealers

Any activity involving the offer or sale of securities, or the solicitation of an offer to purchase securities requires registration, including retail and institutional brokerage, proprietary trading and market making, and M&A activity that involves transactions in securities (as opposed to pure asset sales).

Investment Advisers (as defined in the Investment Advisers Act of 1940)

Engaging, for compensation, in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.