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1. Investor Compensation Fund for IF Clients

What is the Investor Compensation Fund for IF Clients
The Investor Compensation Fund for IF Clients (“ICF”) is the Fund of its members, established pursuant to Article 59(1) and (2) of Law 144(Ι)/2007 which provides for the Provision of Investment Services, the Exercise of Investment Activities, the Operation of Regulated Markets and other Related Matters (“the Law”) as an investor compensation fund for CIF clients other than credit institutions and its powers and functions are regulated by the provisions of the Law and of the Directive 144-2007-15 of the Cyprus Securities and Exchange Commission (“CySEC”) for the Continuance of the Operation and the Operation of the IF Investor Compensation Fund (“the Directive”). 

2. Purpose of the ICF

What is the purpose of the ICF and who may submit an application for compensation?!
The purpose of the ICF is to secure the claims of covered clients against the ICF members through the payment of compensation, if the necessary preconditions are fulfilled. 

All non-professional investor-client of an ICF member who is covered by the ICF for claims against such member, arising out of the covered services provided by the member, may apply for compensation.

The applicant may be natural or legal persons, or a union of persons or a group of assets devoid of legal personality.

Applicants need not be Cypriot citizens. Foreigners residing in Cyprus, as well as Cypriots or foreigners residing abroad, may also apply.

3. When can applications be lodged

When can applications be lodged?!
In all cases and provided one of the preconditions mentioned in sub-paragraph (1) of Paragraph 3 of the Directive is fulfilled, the claims must arise out of the investment services provided by the ICF members or the ancillary service of paragraph (1) of Part II of the Third Schedule of the Law, including the clients of branches of ICF members established in Member States.
 
The ICF may also compensate investors to whom investment services or the ancillary service of paragraph (1) of Part II of the Third Schedule of the Law are provided, either through a branch of an ICF member which, albeit not established within the territory of the Republic, has a place of business therein and has subscribed to the ICF, or through an ICF member which, albeit having no place of business in the Republic, nevertheless provides the said services therein on a cross-border basis.
 
The ICF does not cover the applicants set out in the Second Schedule of the Directive, as well as applicants who may be covered but who apply to the ICF for compensation, in respect of claims against an ICF member who was a member of the ICF in relation to the covered services, after one year from the loss of membership status has elapsed.
 
Furthermore, the ICF pays no compensation in respect of claims arising out of transactions involving individuals, convicted of a criminal offence for the said transactions, pursuant to the Prevention and Suppression of the Legalisation of Proceeds from Illegal Activities Law of 2007

4. Amount of compensation

What is the amount of compensation paid to investors?
The maximum amount of compensation paid to applicants, who will be deemed as eligible for compensation, is twenty thousand EUR. The said coverage applies to the total amount of claims by a applicant against an ICF member, irrespective of the number of accounts, the currency and the place of provision of the service.

5. Initiate the compensation payment process and what is the procedure followed

When is the compensation payment process initiated and what is the procedure followed?!
Within a reasonable timeframe upon CySEC ascertaining either that an ICF member cannot fulfill its obligations arising out of clients’ claims or, following a court ruling, issued on grounds of the financial situation of an ICF member, which has the effect of suspending the ability of the clients of the ICF member to lodge claims against the said member for the satisfaction of their claims, then CySEC issues a decision to initiate the compensation payment process by the ICF.
                                           
Before reaching such decision, CySEC may invite the member of the ICF to set out its views within a short deadline, which cannot be less than three working days from such invitation.
 
CySEC may, on certain conditions, extend by up to three months the issue of the decision to initiate the compensation payment process by the ICF.
 
CySEC publishes the information relating to its decision in the Official Gazette of the Republic and on its website.
 
Following the decision to initiate the compensation payment process, the ICF publishes, in at least three newspapers of national coverage, an invitation to covered clients to submit their claims against the ICF member in respect of the covered services, designating the procedure for submitting the relevant applications, the deadline for the submission (being not less than five months and not greater than nine months from the publications) and their content, as provided in more detail in Part V of the Directive.
In exceptional cases, followed by an announcement published in at least three newspapers of national coverage, the ICF may extend the deadline for the submission of compensation applications by up to three months. 
Compensation applications must include -
- the applicant’s name;
- the applicant’s address, telephone and fax numbers, and email address, if any;
-  the applicant’s client code with the ICF member;
- the particulars of the covered services agreement between the ICF member and the applicant;
- the type and amount of the alleged claims; and
- evidence giving rise to the alleged claims and their amount.
The ICF may request additional information through a relevant publication in at least three newspapers of national coverage and the Official Gazette of the Republic. 
The ICF designates at least one qualified accountant and at least one advocate, with knowledge on capital market issues, who evaluate the applications submitted to the ICF and recommend to the ICF’s Administrative Committee their acceptance in total or in part or their rejection.
 
To ascertain the claims of an applicant against an ICF member, as well as any counterclaims of the member, the books kept and the particulars issued by the ICF member as well as the supporting evidence produced by the applicant are taken into consideration.
 
The amount of the compensation payable to each covered client is calculated in accordance with the legal and contractual terms governing the relationship of the covered client with the ICF member, subject to the set-off rules which apply for the calculation of the claims between the covered client and the ICF member.
 
The valuation of the financial instruments pertaining to the compensation payable to the covered client is carried out based on their value at the day-
 
(a) of the publication of the relevant court ruling; or
(b) the publication of the relevant decision of the CySEC.
The payable compensation derives from the sum of all established claims of the covered client against the ICF member, arising out of all covered services provided by the member and irrespective of the number of accounts of which the applicant is a beneficiary, the currency and place of provision of these services.
 
Insofar as the amount of the claim exceeds twenty thousand EUR (€20.000), the applicant receives as compensation the lump sum of twenty thousand EUR (€20.000).
 
Insofar as a member of the ICF provides services to its clients through a branch situated in a third country, the amount of the maximum compensation payable to the clients of the said branch is equal, per client, to the lump sum paid by any investor compensation scheme in operation in the said third country, however, such amount cannot,  exceed the fixed maximum amount of twenty thousand EUR(€20,000) payable by the ICF.
 
If no investor compensation scheme is in operation in the third country, the maximum amount of payable compensation per client of the branch is equal to an amount corresponding to three thousand four hundred and seventeen EUR (€3.417).
 
This amount is determined in the currency of the said third country at the beginning of operation of the branch and is readjusted on January 1st of every second calendar year following the year during which it was previously determined, based on the average exchange rate as determined by the Central Bank of Cyprus for the currency pertaining to the said country on December 31st of the immediately preceding year.
 
Upon completion of the valuation, the ICF issues minutes listing the clients of the ICF member who are are entitled to compensation  indicating the amount of money each one of them is entitled to receive and communicates such minutes to CySEC and the ICF member within five working days from its issue. Its finding is also communicated to each affected client no later than fifteen days from the issue of the minutes.
 
The ICF is obliged to pay the compensation to each covered client-applicant within three months from sending to the CySEC the minutes listing the compensation beneficiaries.

6. Submit an application

How to submit an application
An application to the ICF may be submitted in one of the following two ways:

(a) By filling in the online application form which can be found on the website of CySEC;
(b) By submitting a simple letter to the offices of the ICF, accompanied by all supporting evidence.

The letter/application may:
 
(a) be sent by post to the following address:
 
      Investor Compensation ICF for IF Clients, 27 Diagorou Str., 1097 Nicosia, Cyprus.
 
(b) be delivered by hand to the offices of the ICF, at the following address:
 
      Investor Compensation ICF for IF Clients, 27 Diagorou Str., 1097 Nicosia, Cyprus.

When submitting an application, make sure to include at least the following information:
 
· Particulars of the applicant (name, address, Identity Card / Passport No., telephone and fax numbers and email address).
· The name of the ICF member against which the application is submitted and the client code and/or the applicant’s investment account No.
. Copy of the covered services agreement between the ICF member and the applicant.
. The type and amount of alleged claims by the applicant.
. Copy of the statement of account from the transactions platform that you used.
. Copy of the statement of deposits and withdrawals from the account held with the ICF member.
. Copies of documents that prove the applicants deposits to the ICF member (e.g. swift transfers, deposit orders, debit advice etc).)
· Description of the facts and evidence giving rise to the alleged claims by the applicant and the amount of such claims with specific references to actions or omissions of the ICF member.
· Any other evidence or supporting documents to demonstrate that the applicant is entitled to apply for compensation.
· Reference and copies of any correspondence with the ICF member concerned.
. Written confirmation that the information included in the application/letter as well as all the documents accompanied it are correct and true.

7. General

General Information
Before submitting any application to the ICF, applicants should study the relevant provisions of the Law and the Directive. The existence of a valid claim by the applicant is a basic precondition for receiving the compensation.
 
Finally, the ICF may demand from any applicant to whom compensation was paid to return such compensation, if it establishes a posteriori that there was a reason to reject the application in accordance with the provisions of the Directive.
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