Cyprus is becoming one of the fastest growing investment fund centres in Europe through the prompt response to legislative and regulatory needs and its strong financial services sector which is at the forefront of industry developments.
Since 1999 with the introduction of the law for Collective Investment Schemes, the country has continuously developed as a regional domicile for investment funds and managers. The growth of the investment fund sector is founded on the social and political stability of Cyprus and on a pragmatic legal and regulatory environment that is continuously evolving through constructive consultation between the regulator and the private sector.
Under Cyprus law, there are two distinct types of investments funds: Alternative Investment Funds (AIF) and Undertakings for Collective Investment in Transferable Securities (UCITS).
Alternative investment Funds
The enactment of the Alternative Investment Funds (AIF) law in July 2014 aligned the Cyprus legal and regulatory framework with EU directives on asset management, with the aim to enhance transparency and investor protection.
Following on-going efforts to modernize its fund framework, Cyprus introduced a new law offering more investment structuring possibilities and upgraded rules for the authorization, on-going operations, transparency requirements and supervision of Cyprus AIFs, as well as the regulation on the role and responsibilities of their directors, depositaries and external managers.
In July 2018, Cyprus further upgraded its legislative framework reflecting the latest market demands and introducing a new product called the Registered Alternative Investment Fund (RAIF) which offers new opportunities for a quick and cost-effective fund launch.
AIFs that are established under domestic Cyprus fund legislation can be sold on a private placement basis or marketed to professional investors across the EU under the Alternative Investment Fund Managers Directive (AIFMD) passport.
An AIF can take the following legal forms and be established with limited or unlimited duration:
Undertakings for Collective Investments in Transferable Securities (UCITs)
UCITS are collective investment schemes, principally designed for retail investors, established and authorised under the harmonised European Union (“EU”) framework. UCITS funds in Cyprus are governed by Law No. 78(I)/2012 (the “UCI Law”), transposing the UCITS IV Directive into national law.
UCITS may be structured either as a Common Fund or as a Variable Capital Investment Company (VCIC). If structured as a Common Fund, an external manager must be appointed while if a VCIC, it may be self-managed by its Board of Directors. In both cases, the assets of a UCITS must be held under custody. Umbrella Funds UCITS funds may be structured as single funds or as umbrella funds, allowing many separate compartments and different share classes.
Our list of Fund Services include:
For more information on how we can help funds and related institutions, please contact a member of our team today.