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Investment Funds

Gateway to the European Union and high-growth markets

ENVIRONMENT

Cyprus

The modernisation of the legislative and regulatory framework helped Cyprus to emerge as a jurisdiction of choice for Fund Managers and Alternative Investment Funds (‘‘AIFs’’).

The Cypriot regulatory authorities in an effort to enhance and grow the Funds Industry have worked diligently to offer a comprehensive tool box and new structuring options competitive to those of other established fund jurisdictions.

The continuous efforts made towards the alignment of national legislation with the latest EU Directives along with the enactment of the Alternative Investment Funds Law in 2014 have created an attractive and competitive environment.

The transposition of the Undertakings for Collective Investment in Transferable Securities (UCITS) IV Directive in 2012 as well as the Alternative Investment Fund Managers Directive (AIFMD) in 2013 offer outstanding possibilities for cross-border and global fund distribution benefiting from an efficient and reliable Fund infrastructure.

AT A GLANCE

Cyprus AIFs
 AIFs  AIFs with Limited Number of Persons
Legal forms
  • Common fund (CF)
  • Variable Capital Investment Company (VCIC)
  • Fixed Capital Investment Company (FCIC)
  • Limited Partnership (LP)
  • Variable Capital InvestmentCompany (VCIC)
  • Fixed Capital Investment Company (FCIC)
  • Limited Partnership (LP)
Eligible Investors Professional and/or Well – Informed Investors or Retail Investors Professional and/or Well – Informed Investors
Minimum Capital Requirement EUR 125.000 or EUR 300.000 for selfmanaged AIF/AIFM.
The requirements apply to each investment compartment, when the AIFis established as an Umbrella Fund
Not Subject to Minimum Capital Requirement
Investment Manager Can be self-managed by their Board of Directors (in the case of a company) or appoint a fund manager Can be self-managed (in the case of a company) or appoint a fund manager
Assets Under Management
  • No restrictions if AIFM appointed
  • Up to 100 ml including leverage or 500 ml with no use of leverage and no redemption rights for 5 years if not AIFM appointed
Up to 100 ml including leverage or 500 ml with no use of leverage and no redemption
rights for 5 years
Depositary
  • Mandatory appointment of a local Depositary if managed by an AIFM
  • Cyprus, EU, or in a third country based if AIFM not appointed. May be waived in case the total assets of the AIF are not subject to custody.
  • Cyprus, EU or in a third country based.
  • May be waived if one of the following criteria is met:
    – total assets of the Fund < 5 ml
    – up to 5 Investors
    – total assets of the Fund are not subject to custody

ADVANTAGES

The choice of a Cyprus AIF has a number of significant advantages:

  • Modern regulatory framework in line with relevant EU Directives
  • No restrictions regarding the type of investments
  • The application process is fairly simple and not time consuming
  • An AIF can be self-managed by its Board of Directors, subject to the approval of the Regulator
  • AIFs can be set-up as umbrella funds with multiple investment compartments, allowing the management of different asset pools with separate investment policies
  • AIFs without limitations as to the number of investors can be listed on Cyprus Stock Exchange and other recognized EU stock exchanges and if marketed to retail investors can be traded
  • Cyprus AIF benefit from significant tax incentives (no withholding tax on dividend distributions for foreign Investors and CY corporate entities, no taxation of capital gains etc.)
  • The services provided by the Investment Manager and Fund Administrator are not subject to VAT
  • The AIF can take advantage of the double tax treaty network of Cyprus
  • Full transparency through annual audited reports to CySEC
  • Supervised by a competent, accessible and business friendly Regulator
  • No onerous ongoing reporting requirements to the Regulator
  • Low set up and maintenance costs

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Cyprus AIFs?