Clearing Agency Application Guidelines

Clearing Agency Application Guidelines FINANCIAL SERVICES AUTHORITY Bois De Rose Avenue P.O. Box 991 Victoria Mahé Seychelles Tel: +248 4380800 Fax: +248 4380888 Website: www.fsaseychelles.sc Email: enquiries@fsaseychelles.sc Version: 27th May, 2025

Page 2 of 17 Table of Contents

1. INTRODUCTION...................................................................................................................................3
2. SCOPE ..................................................................................................................................................3
3. PURPOSE .............................................................................................................................................4
4. CONSIDERATION..................................................................................................................................4
5. DEFINITION OF CLEARING AGENCY LICENCE AS PER THE SECURITIES ACT.........................................5
6. CLEARING AGENCY LICENCE APPLICATION..........................................................................................5
7. SUBMISSION OF APPLICATION............................................................................................................7
8. OFFENCE..............................................................................................................................................7
9. ADMINISTRATIVE PROCESS OF LICENCE APPLICATIONS......................................................................7
10. SERVICE STANDARDS ...........................................................................................................................8
11. GRANTING OF LICENCE .......................................................................................................................8
12. FITNESS AND PROPRIETY.....................................................................................................................9
13. CONDITIONS TO A CLEARING AGENCY LICENCE..................................................................................9
14. RENEWAL OF LICENCE AND EXEMPTION ..........................................................................................10
15. REVOCATION AND SUSPENSION OF CLEARING AGENCY LICENCE ....................................................10
16. ALTERATION OF FACTS DISCLOSED IN APPLICATION.........................................................................11
17. COMPLIANCE OFFICER ......................................................................................................................11
18. AUDITOR............................................................................................................................................11
19. AUDITED ACCOUNTS .........................................................................................................................11
20. GENERAL CONDITIONS......................................................................................................................12
21. NOTIFICATIONS TO THE AUTHORITY .................................................................................................12
22. EXEMPTIONS AND CONCESSIONS .....................................................................................................13 Appendix 1 ........................................................................................................................................14 Appendix 2 ........................................................................................................................................15 Appendix 3 ........................................................................................................................................17

Page 3 of 17

1. INTRODUCTION 1.1. The Financial Services Authority (“FSA/Authority”) is issuing the Clearing Agency Application guidelines in conjunction with the Securities Act, 2007 (“the Act”) to provide guidance and assistance in matters relating to applications of Clearing Agency Licence. 1.2. The regulatory framework surrounding securities agencies is pivotal in ensuring the integrity and efficiency of financial markets. The Act provides the necessary requirements for companies seeking licenses to operate as a Clearing Agency. 1.3. This delves into detailed requirements outlined in the Act for obtaining a licence to operate as a Clearing Agency as referred to in Section 25 of the Act and aims to provide clarity and guidance to these licensed persons. 1.4. These guidelines are not intended to be comprehensive nor replace or override any legislative provisions. Therefore, applicants are advised to read these guidelines in conjunction with the Securities Act, 2007. 1.5. This guideline establishes the procedure for applying for a Clearing Agency Licence and processes outlined throughout this guideline has been adapted to best fit the Seychelles regime. 1.6. Enquiries relating to the Clearing Agency Licence Application should be forwarded to the Authority: By Post: Director of Capital Markets and Collective Investment Scheme Supervision Financial Services Authority P.O. Box 991 Bois de Rose Avenue Victoria Mahé Seychelles By e-mail: capitalmarkets.supervision@fsaseychelles.sc Telephone: +248 4 380 800
2. SCOPE 2.1 Section 4 (1) (d) & (i) of the Financial Services Authority Act, 2013 (“FSA Act”) permits the Authority to receive, review and determine applications and to develop appropriate regulatory and supervisory mechanisms for the efficient and effective administration of the Authority. 2.2 As a result, to ensure consistency and accountability in the standards of applications, these guidelines highlight and establish the criteria required to be approved by the Authority for Clearing Agency.

Page 4 of 17 2.3 These guidelines aim to provide clarity to the applicants. The FSA takes into account that such practice may cause certain disruption in the business practice, specifically if the Authority determination is crucial for the operation. 2.4 In light of the above and to ensure that the process is effective and timely applicants are advised to observe these guidelines when submitting an application for the Clearing Agency. 2.5 The FSA acknowledges the significant differences that exist in the organisational and legal structures of applicants and the nature and scope of the business activities conducted. As a result, the guidelines provided in this document serve as the minimum standards expected to be followed for submission of the application. 3. PURPOSE 3.1 These guidelines are applicable whereby an application is required to be submitted to the FSA. 3.2 The application does not guarantee the grant of a licensee. The Authority shall only grant a license dependent on if approval is granted, the licensee must comply with the criteria and any additional requirements set by the Authority. 3.3 This guideline is not exhaustive or binding on the Authority. The licensing system allows the Authority to exercise its discretion and the Authority’s approach will vary depending on the specific circumstances of the applicant. 4. CONSIDERATION 4.1 Companies interested in applying for licenses to operate as a clearing agency should conduct the following: 4.1.1 Regulatory Compliance Review: Conduct a thorough review of the Securities Act and associated regulations to understand the requirements and obligations for operating in the securities market. 4.1.2 Documentation Preparation: Prepare all necessary documentation, including constitutional documents, rules, and other relevant information, in accordance with the prescribed forms provided by the Authority. 4.1.3 Fee payment and submission: Ensure compliance with the fee payment requirements and any additional information requests from the Authority.

Page 5 of 17 4.1.4 Communication and Transparency: Maintain transparency and open communication with the Authority throughout the application process, addressing any queries or concerns promptly. 4.1.5 Ongoing Compliance: Upon successful licensing, continue to adhere to regulatory requirements and fulfill ongoing obligations to ensure continued compliance and the integrity of the securities market. 4.2 By following these steps and demonstrating a commitment to regulatory compliance, companies can navigate the application process smoothly and contribute to the growth and stability of Seychelles' securities market. 5. DEFINITION OF CLEARING AGENCY LICENCE AS PER THE SECURITIES ACT 5.1 As per the Act, Clearing Agency refers to a company whose business is the provision of services for the clearing and settlement of transactions in securities, while being licensed by the Authority. 5.2 As a result, the Authority will only grant licence to a company to operate as a Clearing Agency where it is satisfied that the company’s sole activity is – (a) in the interest of the investing public; and (b) for the proper regulation of services for the clearing and settlement of transactions in securities contracts on a securities exchange. 5.3 Section 24 and Section 25 of the Act also outline the specific requirements and documents that must be submitted with the application. Furthermore, they detail the obligations that need to be fulfilled to meet the Authority's expectations. 6. CLEARING AGENCY LICENCE APPLICATION 6.1 According to the Act, only a company incorporated under the Companies Act may apply for a licence to the Authority to operate as a clearing agency. 6.2 An application submitted to the Authority for a Clearing Agency Licence must comprise of the following documents: (i) A cover letter1 signed by the applicant or the agent of the applicant (ii) A completed Application Form 1 The cover letter must include reasons the applicant is applying for the licence and a list of all the documents that have been included in the application pack.

Page 6 of 17 (iii) The prescribed application fee (i.e. US$4,000) (iv) Certified true copies of the constitutional documents of the applicant (refer to Appendix 1) (v) Personal Questionnaire Forms completed by each Director or any other key persons of the applicant (refer to Appendix 2) (vi) Questionnaire Form for Shareholders and Beneficial Owners completed by each shareholder and beneficial owner that hold no management position in the proposed Clearing Agency (refer to Appendix 2) (vii) Audited Financial Statements of the applicant for the past 2 years except in the case of an applicant who was incorporated within the last 12 months (viii) The last Audited Financial Statements of the controlling owners of the applicant if the controlling owner is a non-individual (ix) Proof of source of funds or wealth (x) Proof of Physical Place of Office (Title Deed of Premises or Lease Agreement for premises or Sub Leasing Agreement and consent letter from the owner of the premises stipulating that the lessee can sublease) (refer to Appendix 3) (xi) A copy of the insurance quotation (appropriate to the proposed nature and size of the business) of the applicant (xii) Letter of confirmation from such Securities Exchange with which the applicant proposes to make clearing arrangements (xiii) A detailed Business Plan (xiv) Internal Operations Manual (xv) Client Service Agreement or Terms of Business (xvi) Conflict of Interest Policy (xvii) Compliance Manual (xviii) Anti – Money Laundering Manual (xix) Complaints Handling Manual (xx) Business Continuity Plan (xxi) Any other information the Authority may require 6.3 In order to increase the efficiency of the application process, the Authority may pre-approve standard manuals and policies from service providers to be used in future applications. 6.4 Where pre-approved documents are submitted as part of an application, the applicant shall make a declaration on whether any changes have been made to each of the pre-approved document and indicating the relevant paragraph or section of the document where the changes have been made. 6.5 The Authority will only process an application if the application fee and the complete application has been submitted.

Page 7 of 17 6.6 During the processing of the application, the Authority may request additional information or supporting documents for the purpose of determining the application. 6.7 A person who supplies, to the Authority, information in connection with an application which he knows or reasonably knows is false or misleading, is guilty of an offence and liable to conviction to a fine of US$25,000. 7. SUBMISSION OF APPLICATION 7.1 All applications seeking the approval of the Authority must be addressed and either hand￾delivered or mailed to: The Chief Executive Officer Financial Services Authority P.O. Box 991 Bois De Rose Avenue, Victoria Mahé Seychelles 7.2 All application forms and other documents are available from the Authority’s website (www.fsaseychelles.sc). 8. OFFENCE Pursuant to Section 127 of the Act, any person who commits an offence as a clearing agency licensee of the Authority, or who commits an offence other than in accordance with a licence granted by the Authority, is liable to summary conviction: (a) In the case of an individual to a fine of US$50,000 or the equivalent in Seychelles Rupees or to imprisonment for one year or both; (b) In the case of a company, to a fine of US$100,000 or the equivalent in Seychelles Rupees and if the offence is a continuing offence, the individual or company is liable to a further fine not exceeding US$250 or the equivalent in Seychelles rupees, for failing to supply any particulars which that person is required to supply, for every day that the offence continues after conviction. 9. ADMINISTRATIVE PROCESS OF LICENCE APPLICATIONS 9.1 The Authority will initiate the processing of a complete application, only upon payment of the required application fee. The following steps will then be carried out:

Page 8 of 17 Step 1: Acknowledge receipt of the application. Step 2: Carry out an initial review of the application to assess whether the application is complete according to the requirements detailed herein. ) Step 3: Begin to process the application if the application is deemed to be complete; or return the application to the applicant if the application is deemed to be incomplete, highlighting the area(s) of deficiencies.2 Step 4: Request for additional information or supporting documents for consideration of the application from the applicant, if necessary. Step 5: Inform the applicant on whether the application has been approved for licensing or not. 9.2 A person who supplies, to the Authority, information in connection with an application which he knows or reasonably knows is false or misleading, is guilty of an offence. 10. SERVICE STANDARDS 10.1 The Authority’s current Service Standards for processing the application for a Clearing Agency, from receipt of a completed application for consideration by the Authority, is six months. 10.2 It is important to note that this service standard will only be achievable if all the requisite information/documents are provided at the time the application is lodged. The Authority is not responsible for delays arising from the submission of incomplete applications. The following is to be further noted: (a) The Authority will only process complete applications. Applications that are deemed to be incomplete will be returned to the applicant. Applicants will have a period of 3 months for resubmission of the application. (b) Applications not submitted within the 3 months cut-off period will be considered as void and a new application would have to be lodged along with payment of the required application fee, should the applicant remain interested in proceeding further with the application. 11. GRANTING OF LICENCE 11.1 The Authority will only grant licence to operate as a Clearing Agency if satisfied that: 2 Please note that the Authority may provide general and brief guidance on the area(s) of deficiencies, but it is the responsibility of the applicant to engage suitable professionals or service providers to ensure the completeness of the application.

Page 9 of 17 (a) it is appropriate to do so in the public interest; (b) the applicant has financial resources sufficient for the proper performance of its functions; (c) the applicant has adequate arrangements and resources for the effective monitoring and enforcement of compliance with its rules; (d) the applicant is able to provide clearing services which would enable a securities exchange to ensure the performance of transactions effected on the market; and the default rules of the applicant satisfy the requirements of section 26 of the Act; (e) the applicant is fit and proper to be licensed as a clearing agency. 11.2 The Authority has discretion in granting or refusing a licence. The Authority may in dealing with an application take into consideration matters other than those mentioned above including, but not limited to, ensuring that all other parties to an application (e.g. legal advisors and company secretaries) are of satisfactory repute. In the event that the application is successful and the licence is issued, the Authority may publish on its website or other publications, the name of the licensee and contact details. 12. FITNESS AND PROPRIETY When considering the fitness and propriety of the applicant the Authority shall have regard to the applicant’s: (a) financial status (b) educational or other qualifications or experience having regard to the nature of the application (c) ability to perform his proposed function competently, honestly and fairly (d) reputation, character, financial integrity and reliability 13. CONDITIONS TO A CLEARING AGENCY LICENCE 13.1 Activities permitted under the Clearing Agency Licence are only those that are contained within the licence and are limited to only such business as stated. The Clearing Agency must comply with the conditions contained in its licence. 13.2 The Authority may impose conditions on a licensee which includes but is not limited to limiting the nature and scope of the business carried on by the licensee.

Page 10 of 17 14. RENEWAL OF LICENCE AND EXEMPTION 14.1 The Clearing Agency Licence granted under the Act is valid unless suspended, revoked or surrendered. 14.2 The annual licence fee shall be US$8,000 as prescribed in the Securities (Forms and Fees) (Amendment of Second Schedule) Regulations, 2024. The annual licence fee shall be subject to review by the Minister from time to time. 14.1 If a Clearing Agency Licence is not first granted in the month of January, February or March, the first annual licence fee payable as per paragraph 14.2 shall be reduced on a quarterly pro-rata basis, calculated having regard to the quarter in which the licence was first granted. 14.2 The Clearing Agency Licence shall in January of each year — (a) pay the annual licence fee as prescribed by the Regulations; and (b) lodge with the Authority a compliance certificate in the prescribed form. 14.3 If the annual licence fee is not paid by the due date, an additional fee will be charged. This fee will be one twelfth of the annual licence fee for each month or part of a month that the fee remains unpaid. 14.4 The Authority may, for good cause, waive any additional fee imposed. 15. REVOCATION AND SUSPENSION OF CLEARING AGENCY LICENCE 15.1 The Authority has the discretion to revoke or suspend a clearing agency licence under the following circumstances: (a) has discontinued operating a clearing agency; (b) has not met any of the obligations required under the Act; or (c) is operating in a way that harms the public interest. 15.2 If the Authority suspends the clearing agency licence, the suspension may be for the period, or until the happening of an event which the Authority considers appropriate. 15.3 The Authority will not revoke or suspend the clearing agency licence without first giving the holder of the licence an opportunity to be heard.

Page 11 of 17 16. ALTERATION OF FACTS DISCLOSED IN APPLICATION The Clearing Agency licensee will need to provide written notice to the Authority of: (a) any proposed alteration to, or (b) the occurrence of any event that it knows may materially affect the information provided to the Authority in relation to the application, where the proposal or event takes place while the application is pending a decision from the Authority. 17. COMPLIANCE OFFICER 17.1 Pursuant to Section 23 of the Financial Services Authority Act, 2013, each licensee should appoint a Compliance Officer who will be responsible for the maintenance of adequate systems and controls to ensure compliance with the Act, regulations, codes, guidelines and directives issued by the Authority. 17.2 The appointed Compliance Officer may be a member of the Board of Directors. 17.3 As part of a licence application, an applicant shall, in line with Section 6 of this guideline submit a Personal Questionnaire Form and supporting documents for the proposed Compliance Officer. 18. AUDITOR 18.1 A licensed Clearing Agency is required to have its accounts audited annually by an auditor. The Auditor must be a member (and in good standing) of an accountancy body in compliance with section 2(1)(a) of the Act or a member of any other accountancy body as approved by the Authority. 18.2 The licensee must appoint an Auditor within 30 days of being licensed under the Act, who is acceptable to the Authority. A director, officer, employee, shareholder or partner of the licensee or a partner or employee of such a person shall not be eligible for appointment as an auditor. 18.3 Upon application, the applicant must notify the Authority of their proposed Auditor. 19. AUDITED ACCOUNTS 19.1 A licensed Clearing Agency must have its accounts audited annually according to the International Financial Reporting Standards. 19.2 The licensed Clearing Agency must submit to the Authority its audited accounts within 4 months of the end of each financial year or within such extension period allowed by the Authority.

Page 12 of 17 19.3 Under section 75(3), the Authority has the power, at any time, to direct a Clearing Agency to have its accounts audited and submitted to the Authority. 20. GENERAL CONDITIONS The Clearing Agency licence granted under the Act is subject to the following conditions: (a) The licence is personal to the applicant and cannot be transferred. (b) The clearing agency must promptly notify the Authority in writing of: (i) Any proposed change to, or (ii) Any event that it knows may materially affect, any matter for which it has provided information to the Authority. (c) The clearing agency must obtain the consent of the Authority before making any changes to its constitution or control. (d) The clearing agency may only conduct business related to providing clearing and settlement services and must not engage in any other business activities. 21. NOTIFICATIONS TO THE AUTHORITY 21.0 Licensees are advised to read carefully the conditions described their licence as they may impose on the licensee’s obligations in addition to those specifically mentioned in the Act. 21.1 The Authority must be notified, in writing, within 7 days of: (a) Any change of: (i) name and address of the licensee (ii) name and address of each director, company secretary and shareholder (iii) location of the premises at which records or other documents of the licensed business are kept (b) Any disciplinary action taken against the licensee including an order of suspension or revocation of a licence. (c) Appointment, Removal or Resignation of an Auditor. (d) Any change in the business of the licensee which causes it to cease its business as a Clearing Agency.

Page 13 of 17 22. EXEMPTIONS AND CONCESSIONS Schedule 3 of the Act grants exemptions and concessions from the applicability of certain legislative enactments. 22.1. Business Tax Act Clearing Agencies can benefit from a tax rate of 1.5% applicable on the assessable (gross) and zero withholding tax rate on dividends or interest payable, provided that the substantial activity requirements are met by the Clearing Agency. 22.2. Substantial Activity Requirements 22.2.1. To meet the substantial activity requirements, the Core Income Generating Activities of the Clearing Agency must be undertaken in a physical office in Seychelles by: (a) employing an adequate number of suitably qualified persons to carry out the core income generating activities; and (b) incurring an adequate amount of operating expenditures for such activities. 22.2.2. The substantial activity requirements are considered to have been met if the middle office and back office activities are conducted in Seychelles even though the front office activities may be undertaken outside Seychelles. Example: Front Office Carried outside Seychelles CIGA: Entering in agreements with other persons with a view to acquire, dispose of, subscribe for or underwrite securities or in any other way which effects or cause to effect a securities transaction. Middle Office Carried in Seychelles Back Office Carried in Seychelles E.g. Meeting with clients who wish to acquire or dispose of securities. E.g. Compliance and Risk Management. E.g. Human resources, Information Services, Internal accounting substance requirements ✓

Page 14 of 17 Appendix 1 List of Constitutional documents Certified true copies of the following documents: • Certificate of Incorporation • Memorandum and Articles of Association • Certificate of Good Standing • Notice of Situation of Registered Office or any change thereof • Particulars of Directors and Secretaries • Audited financial statements for the past 3 years

Page 15 of 17 Appendix 2 Due Diligence Requirements

1. The completed Personal Questionnaire Forms by all directors, compliance officer and key persons in connection with the application, should be accompanied by: • 1 certified true copy of passport(s) • 1 recent passport-sized photograph signed at the back by the certifier • 1 certified proof of residential address that is not older than three months e.g. utility bill (water and/or electricity) and/or bank statement and/or tenancy agreement • 1 original bank reference from each bank with which you are affiliated and/or a report from Credit Rating Agency from Country of Residence (if available) • Certified copies of stated higher academic qualifications • Certified copies of stated professional qualifications • Certified copies of stated membership to professional bodies • Detailed job description of your proposed role or position • Latest Employment references (if applicable) • A list of directorships, partnerships, other business interests or affiliations (if applicable) • Original Police Character Reference/certificate not older than three (3) months from the Country in which the applicant resides or its equivalent • Tax Clearance Certificate from the Country in which the applicant resides or its equivalent • Politically Exposed Person Self-Declaration Form
2. The completed Questionnaire Form for Shareholders and Beneficial Owners by all shareholders and beneficial owners who do not have a management position in the company should be accompanied by: • 1 certified true copy of passport(s) • 1 recent sized passport photograph signed at the back by the certifier • Proof of Appointment as Nominee E.g. Declaration of Trust, Deed of Indemnity or its equivalent • 1 certified proof of residential address that is not older than three months e.g. utility bill (water and/or electricity) and/or bank statement and/or tenancy agreement • 1 original bank reference from each bank with which you are affiliated and/or a report from Credit Rating Agency from Country of Residence (if available) • A list of directorships, partnerships, other business interests or affiliations (if applicable) • Original Police Character Reference/certificate not older than three (3) months from the Country in which the applicant resides or its equivalent • Tax Clearance Certificate from the Country in which the applicant resides or its equivalent • Politically Exposed Person Self-Declaration Form • Evidence of source of fund/wealth
3. Due Diligence documents for entity shareholders should include the following:

Page 16 of 17 (a) Companies • Certificate of Incorporation • Memorandum and Articles of Association • Notice of Situation of Registered Office or any change thereof • Particulars of Directors and Secretaries • Audited financial statements for the past 3 years • Certificate of Good Standing (b) Foundations • Foundation Charter • Register of Founder(s), Counsellor(s), Beneficiaries and Protector(s) (if applicable) • Certificate of Good Standing (c) Trusts • Trust Deed • Declaration of Trust • Register of Trustee(s), Settlor, Beneficiaries and Protector(s) (if applicable) (d) Limited Partnerships • Limited Partnership agreement • Register of General Partner(s) and Limited Partner(s)

Page 17 of 17 Appendix 3 Proof of Physical place of Business and Office Criteria Proof of Physical place of Business should include the following: • Title Deed of Premises or Lease Agreement for premises; or • Sub Leasing Agreement and consent letter from the owner of the premises stipulating that the lessee can sublease. The office identified in Seychelles must satisfy, but not limited, to the following criteria: • To be fully furnished, in safe and suitable working conditions meeting required safety criteria, and appropriate to conduct operation; • Should not contain any health and safety hazards (e.g. exposed electrical wires, tripping hazards, damaged walls/ceiling/floor, etc...); • Should have a designated bathroom/toilet area for the staffs; • Should have a local telephone connected and working. (In the event that it is a mobile phone number, kindly provide proof of registration under the company’s name); • Should have a stable internet connection (e.g. Local Area Network (LAN), Broadband, Wireless Broadband, or Fibreoptics etc…); • Should have a minimum of one (1) desktop computer/laptop; • Should have a designated space, either physically or digitally to store and keep business records of the company; and • Should contain a minimum of one (1) fire extinguisher for fire safety purposes.