The South African FSP Licence, Laid Out Honestly

Read this first

Two facts that reframe every FSP pitch

First, there is no fixed minimum share capital in rand for a Category I or II FSP - true and misleading at once. Board Notice 194 of 2017 replaces the capital floor with maintained financial soundness: assets over liabilities, a positive current ratio, and liquid assets of at least 8/52 of annual expenditure for Category II, tested on Form A returns.

Second, the FSCA does not approve the sale of an FSP's shares - it approves the people. A new key individual may not manage or oversee the business until approved (section 8(4)(b)), and a licence lapses outright when the business goes dormant (section 11(1)(c)). Scope is blunt too: a FAIS licence authorises South African business and passports nowhere.

The five categories

BN 194 section 3 - and the Category II myth

Board Notice 194 of 2017 draws the map in section 3: "Category I FSPs, i.e. FSPs who are not Category II, IIA, III or IV FSPs; Category II FSPs, i.e. discretionary FSPs; Category IIA FSPs, i.e. hedge fund FSPs; Category III FSPs, i.e. administrative FSPs; and Category IV FSPs, i.e. assistance business FSPs."

One error dominates pages ranking for this route: Category II described as an "investment advice" licence. It is not. Advice sits in Category I; Category II is the discretionary FSP licence - intermediary services of a discretionary nature under client mandate (Board Notice 79 of 2003): portfolio and wealth managers, and forex or CFD account managers trading under mandate. One entity may hold several categories on one licence - the dual Category I and II pattern - and then meets the most onerous of the financial soundness requirements (BN 194 s.50).

Category II precision

Table 2 products and the three-year experience rows

BN 194 Annexure One Table 2 lists twenty Category II product rows - shares, money market instruments, bonds, derivative instruments, CIS participatory interests, forex investment, securities and instruments, and hedge fund CIS interests among them. Experience is tested per product: three years for most of those rows, two for CIS participatory interests, and the key individual needs at least one year in the management or oversight of Category II services (section 18). One boundary matters for trading firms: managing client positions under mandate is Category II; issuing OTC derivatives as principal needs a separate ODP authorisation under the Financial Markets Act.

Fit and proper

Four pillars - and where the real capital story lives

BN 194 tests four pillars. Honesty, integrity and good standing - reaching every director, member, trustee or partner (section 8(10)) and, since General Notice 1 of 2022 narrowed the Joint Standard 1 exemption, significant owners too. Competence - a recognised qualification, the regulatory exams, class-of-business training and 6 to 18 CPD hours per cycle. Operational ability - a fixed physical business address, a bank account, at least one approved key individual per class of business, and FIC Act compliance: FSPs are accountable institutions under Schedule 1 item 12. Financial soundness - Chapter 6 and Table B.

The capital story in plain terms: nothing asks a Category I or II applicant for rand share capital. What is demanded is continuously maintained liquidity, with "assets" counted net of goodwill, intangibles and related-party loans, and a hard bar on anyone insolvent or in business rescue. The R3 million additional-asset floor exists - but only for Categories IIA and III.

People

Key individuals, representatives and the approvals that bite

Section 8(3) makes the licence personal: the FSCA grants only if it approves the key individuals - the people managing or overseeing the financial services. Exams come before approval (section 26(6)); the FSP needs one key individual per authorised class of business. An FSP with more than one key individual, or any representatives, appoints a compliance officer - separately approved under section 17. Representatives carry RE5 and their own experience rows.

Two more duties: experience lapses after five consecutive years out of the activity (section 16), and the General Code of Conduct (section 13) obliges guarantees or professional indemnity and fidelity cover - Board Notice 123 of 2009 minimums of R1 million for most Category I and II profiles, R5 million where client funds are held, within six weeks of authorisation.

Fees as published

R16,313 - and the levy that is not revenue-based

Application fees sit in FSCA General Notice 1 of 2024, effective 1 October 2024: a Category II authorisation costs R16,313, with a 10% discount for simultaneous multi-category applications. Every other per-category and key-individual amount is in the notice's table - pull figures from the notice itself; numbers circulating on commercial pages are frequently converted, rounded or wrong.

Annual levies are formula-based under Government Notice 6889 in Government Gazette 53742 (28 November 2025): a Category II, IIA or III FSP pays R8,299.80, plus R575.45 per key individual and representative, plus 0.0020578% of "the total value of investments managed or administered on behalf of clients", capped at R2,766,600; Category I or IV pays R3,983.90 plus the per-head amount. The levy is not a percentage of revenue - revenue appears nowhere in the schedule. A separate FAIS Ombud levy applies. The full cost anatomy is in what an FSP licence actually costs in South Africa.

Timeline honesty

No statutory deadline - a 60-working-day commitment, non-binding

Applications run through the FSCA's FAIS e-portal on forms FSP1 to FSP13. Section 8 is the test: the FSCA assesses the applicant, approves each key individual, may impose licence conditions, and gives reasons for a refusal. The FAIS Act sets no decision deadline - no statutory processing period exists.

What exists is the FSCA's Service Level Commitments of 26 March 2024: new Category I and II authorisations within a maximum of 60 working days of a complete, error-free application with the fee paid - published commitments, not law, and the document reserves the right to vary them. Two teeth: the clock runs only on a complete file, and failing to answer an information request within 30 calendar days sees the application treated as withdrawn, fee forfeited. Consultancy "8-12 week" figures are estimates, not standards; what the FSCA's own statistics show about weak files is in the CASP scoreboard analysis.

The acquisition rail

No share-sale approval - the gates are people

South Africa's change-of-control regime is the inverse of the UK and EU regimes SKY7 documents. Section 158 of the FSR Act - the significant-owner approval gate - applies, on its own words, "only to" eligible financial institutions (banks, insurers, market infrastructures), collective investment scheme managers, and institutions prescribed in Regulations. A FAIS FSP is none of these: buying its shares needs no prior FSCA approval of the transaction itself - no equivalent of the UK's section 178 notice.

That is not a loophole; the gates sit on people. An incoming key individual may not "take part in the conduct, management or oversight of the licensee's business" until approved (section 8(4)(b)) - RE1, plus RE3 for Category II, and a year of oversight experience in hand before the deal, not after. A replacement compliance officer needs section 17 approval, a new auditor section 19. Non-KI directors are notified within 15 days (section 8(10)); significant owners meet the Joint Standard 1 honesty-and-integrity requirements and notify within 30 days; the ownership change itself runs as a licence variation with a published 30-working-day service commitment. None of this is automatic - the FSCA decides, and may re-set licence conditions when it evaluates a new key individual (section 8(5)(b)).

Three deal-killers: a licence lapses when the business goes dormant (section 11(1)(c)) - a "shelf" FSP may have nothing left to sell; experience lapses after five years out of practice (section 16); and a target in financial-soundness early warning cannot pay dividends without prior written FSCA approval (section 49(4)). Sequencing follows: line up the approvable key individual before signing. Full mechanics are in the key individual guide; the strategic trade-off is in buy vs apply fresh. The live entities this rail leads to are below.

Shelf honesty

Section 11(1)(c) is why dormant pitches collide with the law

The secondary market offers dormant FSPs as a shortcut. Read section 11(1)(c) first: a licence lapses "where the business of the licensee has become dormant". Genuine trading history is a value driver - the FSCA removes licences at scale for non-submission of statutory returns alone. The honest alternative is an operating entity. SKY7's live lots are exactly that: an FSCA Category II discretionary FSP for sale and a dual Category I and II crypto-authorised FSP - details on the lot pages, pricing on request.

Market depth

12,401 licensees - and a regulator that uses its powers

A deep market: 12,401 authorised FSPs at 31 March 2025, up from 11,890 a year earlier, with 779 new FSPs approved in FY2024/25 (FSCA Integrated Report 2024/25). Dated snapshots - the next report, due around October 2026, will move them; verify before relying on the counts.

The other side of depth is enforcement. The Regulatory Actions Report 2024/25 records 382 licence withdrawals - most for non-submission of statutory returns - plus 51 administrative penalties totalling R119.8 million and 131 debarments. Closest to this route: Banxso (Pty) Ltd, an online trading provider finally withdrawn on 4 July 2025, with press reporting roughly R2 billion in penalties that December. This regulator polices its register.

One acronym, two regimes

SA-CASP is not MiCA-CASP

One vocabulary note decides which rulebook applies. In South Africa, a crypto asset service provider (CASP) is licensed as an FSP under this same FAIS regime - the FSCA declared crypto assets a "financial product" in 2022, pulling crypto advice and intermediary services into Categories I and II. An SA-CASP is an FSCA-supervised FSP licence, not an authorisation under the EU's MiCA regulation, and neither regime passports into the other. The crypto route has its own page: the South African CASP licence; the full comparison is in SA-CASP vs MiCA-CASP.