Investor Compensation Fund
In accordance with Markets in Financial Instruments Directive (MiFID II) of the European Union and the Investment Services and Activities and Regulated Markets Law of 207 of Cyprus Law 87 (Ι)/2017, Coverdeal Holdings Ltd is a member of the Investor Compensation Fund (ICF).
The objective of the ICF is to secure claims of Clients against Cyprus Investment Firms (CIFs), members of the ICF, through the payment of compensation in the event of the CIF being unable:
• to return to Clients funds owed to them or funds which belong to them but are held by the CIF in the context of providing investment services to the said Clients
• to hand over to Clients financial instruments which belong to them and which the CIF holds, manages or keeps said instruments on their behalf.
The ICF does not cover Professional Clients or Eligible Counterparties but only Retail Clients of CIFs.
The amount of compensation payable to each covered client is calculated in accordance with the legal and contractual terms governing the relation of the covered client with the Company, subject to the off-set rules applied for the calculations of the claims between the covered client and the Company.
The calculation of the compensation payable derives from the sum of the total established claims of the covered client against the Company, arising from all covered services provided by the Company and regardless of the number of accounts of which the customer is a beneficiary, the currency and place of provision of these services.
The valuation of the financial instruments pertaining to the compensation payable to the covered client is carried out based on the value of the day:
a) of publication of a court ruling which has the effect of suspending the investors ability to lodge claims against it based on reasonable grounds directly related to the financial circumstances of the Investment Firm which has subscribed to the Fund;
b) of publication of the decision of the Cyprus Securities and Exchange Commission that an Investment Firm, which has subscribed to the Fund, is unable to meet any of its duties arising from its customers’ claims in connection with the covered services it has provided, as long as such inability is directly related to its financial circumstances in respect of which no realistic prospect of improvement in the near future seems foreseeable.
Insofar as the amount of the claim determined exceeds the amount of twenty thousand Euros (€20.000), the claimant receives as compensation the amount of twenty thousand Euros (€20.000) or 90% of the covered investor’s claim, whichever is lower.
Preconditions for the Initiation of the Compensation Payment
The Fund initiates the compensation payment procedure when at least one of the following preconditions is fulfilled:
a) the Cyprus Securities and Exchange Commission has determined by Resolution that the Company is unable to meet any of its duties arising from its investors-clients claims, in connection with the covered services it has provided, as long as such inability is directly related to the Company’s financial position which has no realistic prospect of improvement in the near future, or
b) a judicial authority has on reasonable grounds, directly related to the financial position of the Company, made a ruling which has the effect of suspending the clients’ ability to lodge claims against the Company.
Upon issuing a decision by the Cyprus Securities and Exchange Commission or by the Court in accordance with paragraph a) or b) above respectively, on the commencement of the compensation payment procedure, the Fund will publish in at least three national newspapers an invitation to the covered customers to make their claims against the Company arising from the covered services, designating the procedure for the submission of the relevant applications, the deadline for their submission and their content.
Under applicable Regulations the ICF does not compensate the following investor categories:
1. The following categories of institutional and professional investors:
• Investment Firms (IFs)
• Legal entities associated with the member of the Fund and, in general, belonging to the same group of companies
• Cooperative credit institutions
• Insurance companies
• Collective investment organizations in transferable securities and their management companies
• Social insurance institutions and funds
• Investors characterized by the member as professionals, upon their request, in accordance with articles 14 and 15 of the Code of Professional Conduct of IFs.
2. States and international organizations.
3. Central, federal, confederate, regional and local administrative authorities.
4. Enterprises associated with the member of the Fund, in accordance with the Fifth Schedule of the Law 144(I).
5. Managerial and administrative staff of the member of the Fund.
6. Shareholders of the member of the Fund, whose participation directly or indirectly in the capital of the member of the Fund amounts to at least 5% of its share capital, or its partners who are personally liable for the obligations of the member of the Fund, as well as persons responsible for the carrying out of the financial audit of the member of the Fund as provided by the Law, such as its qualified auditors.
7. Investors involved in enterprises connected with the member of the Fund and, in general, of the group of companies, to which the member of the Fund belongs, positions or duties corresponding to the ones listed in paragraphs (5) and (6).
8. Second-degree relatives and spouses of the persons listed in paragraphs (5), (6) and (7), as well as third parties acting for the account of these persons.
9. Apart from the investors referred to in subsection (2) of section 55 of the Law 144(I), Investors-Clients of a member of the Fund responsible for facts pertaining to the member of the Fund that have caused its financial difficulties or have contributed to the worsening of its financial situation or which have profited from these facts.
10. Investors in the form of a company, which due to its size, is not allowed to draw a summary balance sheet in accordance with the Companies Law or a corresponding law of a Member State of the European Union.
11. The persons who are subject to an ongoing criminal investigation in accordance with the provisions of Prevention and Suppression of Money Laundering Activities Law of 2007, as amended time to time, are not eligible to receive any compensation.
• In the cases of paragraphs 2.1 [(5), (6), (7) and (8)], the Fund suspends the payment of compensation informing the interested parties accordingly, until it reaches a final decision as to whether such cases apply.