Vanuatu Securities Dealer License

Introduction to Vanuatu securities dealer license 

• A Vanuatu Securities Dealer License is a permit that grants individuals or businesses the authority to participate in activities related to securities within the Republic of Vanuatu, an island situated in the South Pacific renowned as a hub for international offshore financial services. 
• This license encompasses various securities operations, such as serving as a broker for both equity and debt securities, including those listed in the United States. Its recognition extends globally, with numerous prominent international securities broker-dealers holding licenses in Vanuatu. 
• The license is granted by Minister of Finance and Vanuatu Financial Services Commission (VFSC). The governing Act overseeing the granting of securities dealer licenses serves a dual purpose: firstly, it establishes the framework for the issuance of such licenses, and secondly, it enforces penalties for individuals or corporations engaging in securities activities without proper authorization or employing deceitful tactics to encourage investments in securities.  

When do you require Vanuatu securities dealer license? 

• To operate as a securities dealer in Vanuatu, you will be obligated to obtain Vanuatu securities dealer license. This license is granted by Ministry of Finance upon the submission of the application to the Vanuatu Financial Services Commission (VFSC). 
• The license is also required to prevent money laundering and financing of terrorism. These licenses enhance the credibility and goodwill of the securities dealer as this license demonstrates a high commitment of the individual regarding their operations in the regulatory framework.  
• By acquiring these licenses an individual is enabled to provide a range of services including managing investment portfolios, operating with securities (buying and selling), and offering Forex (FX) services and commodity trading & brokerage services. 
• Majorly Vanuatu securities dealer license is required to: 
• Dealing with securities: By obtaining these Vanuatu securities license an individual or any legal entity can get involved in the business of dealing with securities, such as buying, selling, or managing investments and portfolios for clients 
• Operating in Vanuatu: The Vanuatu securities license is required to those businesses operating in Vanuatu because they must have a physical presence in the country and are also obligated to maintain certain systems and requirements. 
• If you are unsure whether your business requires the securities dealer license, Tetra Consultants is there to resolve your confusion through ours regulatory compliance consulting services. Our experts can also conduct thorough research into your business to provide you with the correct information. 

What can a Vanuatu Securities Dealer License be used for? 

• This license authorizes trading in forex, commodities, and securities like shares, bonds, and options, as well as managing investment portfolios for clients. It’s particularly beneficial for investment and fund management institutions, such as brokerage firms or hedge funds, whose clients seek to invest in securities not permitted or subject to costly compliance in their home jurisdictions. 
• By operating through a Vanuatu-incorporated entity licensed for securities dealing, these institutions can legally bypass such constraints. The definition of “dealing in securities” encompasses the intention to profit, extending to foreign exchange transactions intended for client profit rather than mere currency exchange. This includes cryptocurrencies, e-money, and payment services. Tetra Consultants facilitates the acquisition of this license, enabling institutions to efficiently navigate regulatory hurdles and expand their investment offerings while remaining compliant with applicable laws and regulations. 

Type of Securities Dealer License in Vanuatu  

• Tetra Consultants assists our international clients to secure Vanuatu securities dealer license. Our team will provide the full-service package of Vanuatu company registration, corporate bank account opening, hiring of local qualified directors, sourcing local physical office and license application. Tetra Consultants has ample experience in this field and will be able to accurately advise our clients. 
• In Vanuatu Securities Dealer License, licenses are granted under the Dealers in Securities (Licensing) Act [Cap 70 of the laws of Vanuatu], which encourages many individuals and corporate entities to obtain these licenses.  
• To apply for a Vanuatu securities dealer license, Tetra Consultants can help you file an application while adhering to all the requirements prescribed by the name of Minister responsible for commerce. 
• The licenses have been characterized in two parts a) principal license b) representative’s license  
• Principal licenses are those licenses that provide the authority to the holder to operate as a principal and offer a wide range of financial services. On the other hand, representative licenses are those licenses that allow the holder to represent a principal and offer financial services on their behalf. 
• Both licenses are granted by the Minister of Finance Vanuatu Financial Services Commission (VFSC) and are regulated by the Vanuatu Dealers in Securities (Licensing) Act. 
• There are 4 classes of principal licenses, Class A, Class B, Class C, and Class D principal’s licenses   

Class A principal’s license 

• Those businesses that carry on in any of the following securities will require a class A principal’s license. Those activities are:  
• Debenture stocks; or 
• Loan stock, bonds; or 
• Dertificate of deposit; or 
• Proceeds of Foreign Exchange 

Class B principal’s license 

• Those businesses that carry on activities that deal in futures contracts and derivative products but not limited to futures and options.  

Class C principal’s license 

• Any business dealing in the following securities: 
• Shares in share capital of a corporation; or 
• Proceeds of precious metals; or 
• Proceeds of commodities; or 
• A right despite whether conferred by warrant, subscribe for shares or debt securities; or 
• A right under depository receipt; 
• An option to acquire or dispose of any security falling within any other provision of the Act; or 
• A right under a contract for the acquisition of securities. 

Class D Principal’s License 

• These licenses are provided to those businesses dealing with digital assets. Only licensees already holding Class A, B, and C licenses are eligible to apply for a Class D license.  

Mandatory requirements for Vanuatu securities dealer license 

• For any individual or legal entity trying to obtain a securities dealer license, they must meet the statutory requirements as guided. The point to be kept in mind here is that the following statutory requirements are generalized, and the requirements may vary depending on the business entity. Thus, the generalized statutory requirement for obtaining Vanuatu securities dealer license are as follows: 

Company structure: 

• A minimum of one shareholder who can be a legal person with no residency requirement. 
• A minimum of one director who needs to be a natural person with no residency obligations. 
• The director must have 5 years of relevant professional knowledge and expertise of the investment business 
• An Anti-Money Laundering officer (AML) who must be the resident of Vanuatu. 
• An alternative AML officers 

Requirements for manager(s)/ director(s) 

• The manager must be a natural person 
• The manager or director must reside in Vanuatu for at least 6 months within each year. 
• The manager or director Must have at least 5 years’ experience dealing in securities and be competent to meet the obligations of a licensee as required by VFSC. 

Confidentiality 

• The applicant of Vanuatu securities license must keep updated information on registered agent and office details confidential. 
• The applicant of Vanuatu securities license must keep updated information on shareholders and beneficial owners confidential. 
• The reports of any complaints received from investors must be kept confidential.  

Registered agent 

• The company must appoint a registered agent with a registered address. 

Physical premises 

• The company must operate from a physical premise located in Vanuatu, which maintains:  

1. A filing system 
2. A management and accounting system.
3. A business continuity system 
4. A software system and server (for non-international companies) 

Deposits 

• Deposit of VT 5,000,000 (approximately USD 47,000) with the Registrar of the Supreme Court at Port Villa. 

Audit requirements 

• After 12 months of operation, the applicant must submit an audited financial statement. 
• The financial statement must be done by approved auditor in Vanuatu who is experienced in the auditing of Vanuatu securities dealer’s license. 
• The financial statement must show the latest profits and loss report and balance sheet. 

Types of reports to be filed for Vanuatu securities dealer license 

• To maintain Vanuatu securities dealer license, Tetra Consultants will guide the licensee to file various reports with the Vanuatu Financial Services Commission (VFSC). The requirement for reports might vary depending on your business thus, we at Tetra Consultants can help you in obtaining of securities dealer license through our offshore financial license services which will also include filing of necessary documents and reports as guided by the authorities. 
• Thus, the several types of reports must include: 

Audited financial statements: 

• Once the company has completed 12 months of operations, Tetra Consultants will guide the licensee to submit an audited financial statement showing the latest profit and loss report and balance sheet. 
• The financial statement must be prepared by an independent auditor. 
• The financial statement must be submitted 3 months after the anniversary date of the licensee’s operation. 
• The financial statement must be prepared in accordance with the International Accounting Standard, or another standard agreed upon by the VFSC Commissioner. 
• The licensee must obtain the approval of the VFSC Commissioner prior to engaging an independent auditor. 

AML/CFT Annual Report: 

• Tetra Consultants will guide the applicant to submit report which must outline the measures taken to prevent illegal financial activities and ensure compliance with Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulations. 
• The report must demonstrate that the licensee has continuously satisfied the AML/CFT requirements set by the Vanuatu Financial Services Commission (VFSC). 
• The report must include a detailed business plan that outlines the licensee’s strategies, objectives, and financial projections. 
• The report also includes the declaration made by the company directors and shareholders, stating that they meet the VFSC’s fit and proper criteria, including integrity, competence, and financial soundness. 

Quarterly Statistical Report: 

• The report must be submitted to the Vanuatu Financial Services Commission (VFSC). 
• The report also includes: 
• Number of investors and amount of funds invested 
• Number of products offered to investors detailing the number of each product offered 
• Details on what jurisdiction the product was offered 
• Details of vetting process of investors and criteria used 
• Number of employees 
• Number and value of transactions 
• Any other relevant information required by the VFSC 

Penalties for non-reporting 

• There are various penalties for non-reporting the reports for a Vanuatu securities license which includes fines and imprisonment. 
• If you have failed to follow the common reporting standard, the penalty for which can be a fine not exceeding VT 1,000,000 or imprisonment for a term not exceeding 1 year. 
• If you fail to file an audited financial statement, you can be subjected to penalties issued by Vanuatu Financial Services Commission. 
• The VFSC has the power to issue fines not exceeding 125 million VUV for various violations by license holders, including non-compliance with reporting requirements. 

• When applying for a Vanuatu forex license, the applicant must provide a government-issued certificate verifying the absence of any criminal records and a declaration stating no history of bankruptcy. Providing false information in this regard can lead to penalties.
• The VFSC can revoke a financial dealer license for assorted reasons, including non-compliance with reporting requirements. Priorly, VFSC has been issuing the notice regarding their intentions to revoke financial dealer licenses for reasons such as complaints of suspicious activity, problems with withdrawals, and failure to respond to the Commission’s letters. 
• Non-compliance can also result in significant reputational damage, which can lead to the loss of customers and business. 

Timeline to secure Vanuatu securities dealer license 

• Generally, you can expect your license application to take time around 2 to 3 months after the engagement with Tetra Consultants starts. This process will include applications reviewed individually and may require any new necessary documents for additional support to application and providing added information.  
• Once engagement with Tetra Consultants starts, you can expect your Vanuatu company registration to be done within one week. Our experts can help you with diverse services helping you to acquire securities license through offshore company incorporation, offshore financial license services and many more services. 

Tax obligations for Vanuatu securities dealer license 

• In Vanuatu, securities dealers enjoy a highly favorable tax environment. Not only are they subject to a 0% corporate tax rate, but they also have no tax obligations on foreign-sourced income, capital gains, and dividends. Moreover, the absence of income, inheritance, and capital gains taxes further enhances the appeal of operating in Vanuatu. 
• This jurisdiction offers a no-tax regime on offshore profits, coupled with minimal stamp duty on domestic share transfers. These tax advantages make Vanuatu an extremely attractive location for securities dealers seeking to maximize profitability and minimize tax liabilities. 
• Tetra Consultants offers comprehensive services to assist securities dealers in managing their accounting and tax obligations. Our expert team ensures compliance with Vanuatu’s tax regulations, enabling businesses to navigate the complexities of international tax laws while capitalizing on the benefits of operating in a tax-efficient jurisdiction like Vanuatu. 

What are the documents required to apply for Vanuatu securities dealer license? 

• If you are willing to obtain a securities license, Tetra Consultants can provide you with the detailed list of documents required and can also draft and notarize (if required) the legal documents on your behalf.  
• Below-listed list is the generalized list which may vary depending on the business entity and business requirements 

To apply for a Vanuatu Securities Dealer License, the following documents are required: 

• Notarized passports copy of all beneficial owners, directors, shareholders, and bank account signatories 
• Curriculum Vitae (Résumé) of all beneficial owners, directors, shareholders, and bank account signatories 
• Original proof of address (utility bill) of all beneficial owners, directors, shareholders, and bank account signatories 
• Certified copy of the constitution documents of the company 
• Business plan 
• Audited financial statement (approved auditor in Vanuatu who is experienced in the auditing of Financial Dealers license) showing the latest profit and loss report and balance sheet 
• AML/KYC policies and procedures 
• Disclosure of internet-related business or e-commerce business 
• VFSC Fit and Proper Declaration 
• Proof of identity and address for directors, shareholders, and beneficial owners 
• Proof of compliance with capital requirements 
• Proof of paid application fees 

Insurance/ professional indemnity cover for Vanuatu securities dealer license 

• To safeguard investor funds against financial losses, it’s imperative for licenses to obtain adequate insurance coverage, including professional indemnity insurance for partners, employees, former partners, and consultants. This insurance provides crucial protection linked to the company’s activities and must be produced separately as a document. Each licensee is required to maintain a minimum insurance cover of VT 5,000,000 for each claim, with an aggregate cover not less than VT 50,000,000. Additionally, a maximum deductible amount of VT 500,000 is specified. Tetra Consultants ensures seamless acquisition of the necessary insurance coverage, guiding licensees through the process to ensure compliance and mitigate risks effectively. 

How to apply for a Vanuatu securities dealer license? 

• Tetra Consultants will assist you in Vanuatu company registration for obtaining Vanuatu securities dealer license by providing a local company address and local company secretary. Typically, the process of obtaining Vanuatu securities license should take around 2 to 3 months. 
• Upon Vanuatu company registration we will proceed with corporate bank account opening for your company as it is necessary for the company applying for Vanuatu securities license to have a bank account. You can expect your corporate bank account to be ready in 4 weeks. 
• Thus, there are various other steps also which are required to obtain securities license. The generalized steps of obtaining a securities dealer license are as follows: