No licence required

Swiss Chamber of Commerce in The Netherlands railway station

European clients

Pursuant to section 2:96 FSA it is not allowed to provide investment services in The Netherlands without a licence of the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM):

Article 2:96 Licence for performing investment services or activities
– 1. It is prohibited to provide investment services or perform investment activities without a licence granted for that purpose by the Authority for the Financial Markets.
– 2. Upon application, the Authority for the Financial Markets may, whether for a specific period of time, grant a full or partial dispensation from paragraph 1 if the applicant shows that the interests which the present Part, Part III ‘Prudential Supervision Financial Enterprises’ and Part IV ‘Conduct Supervision Financial Enterprises’ seek to protect are sufficiently protected otherwise.

Translation of Artikel 2:96 Wet op het financieel toezicht.

Investment services are included in annex I to directive 2014/65 2 (Mifid II) and include the reception and transmission of orders in relation to one or more financial instruments, execution of orders on behalf of clients, portfolio management and investment advice (regarding financial instruments).

SCCN exclusively introduces professional investors to entrepreneurs and does not provide investment advice as specified in art. 1:1 FSA. Closing the deal itself is a serious undertaking. Usually, a bank, a specialized attorney, a valuation expert and an accountant will be required when finalizing the deal. SCCN’s sole introductions do not qualify as an investment service. Therefore, SCCN does not require a licence to provide investment services in The Netherlands.

US clients

The Securities Act of 1933 is the federal law that requires that securities sold to the public are registered with the SEC and that complete information about the seller and the stock offering is made available to investors. Section (4)(a)(2) of the Securities Act exempts “transactions by an issuer not involving any public offering”, When deciding whether an offering qualifies for the non-public exemption of S (4)(a)(2), the test created by the landmark case Securities and Exchange Commission v. Ralston Purina Co. is generally utilized. The case shows that financially sophisticated investors do not need the protections of disclosure under the Securities Act of 1933. Thus, if this requirement is met, the issuing company meets the Section 4(a)(2) exemption. Sophisticated investors are defined by the SEC as those who “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment” (Rule 506(b) of Regulation D). 

SCCN targets closed groups of Professional Investors only. The term Professional Investor is defined in article 1:1 of the Dutch Act on the Financial Supervision (Wet op het financiële toezicht):

a. bank b. management company of a collective investment scheme; c. management company of a pension fund or of a comparable legal person or corporation; d. collective investment scheme: e. investment firm; f. national or regional government body, or government body administering the public debt; g. central bank; h. financial institution; i. international or supranational organisation governed by public law or comparable international organisation; j. market maker; k. enterprise of which the main activity is investing in financial instruments, implementing securitisation programmes or other financial transactions; l. pension fund or comparable legal person or corporation; m. person or corporation trading for its own account in commodities and derivatives on commodities; n. local firm; o. legal person or corporation that meets two of the following requirements: 1°. a balance sheet total of € 20,000,000 or more; 2°. A net turnover of € 40,000,000 or more; 3°. equity capital of € 2,000,000 or more; and p. insurer.

Therefore, the closed groups of professional investors that SCCN targets, “have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.”. Thus, US entrepreneurs meet the non-public exemption of S (4)(a)(2), and do not require registration by the SEC.

In addition, securities offering, whether private or public, made by an issuer outside of the United States in reliance on Regulation S need not be registered under the Securities Act. The Regulation S safe harbours are non-exclusive, meaning that an issuer that attempts to comply with Regulation S also may claim the availability of another applicable exemption from registration. Regulation S is available for offerings of both equity and debt securities.