Alternative Investment Funds
In 2014, Cyprus introduced the Alternative Investment Funds (AIFs) Law. The Law introduced a regulatory regime for undertakings in collective investments, including compartments thereof which;
Raise capital from a number of investors with a view of investing said capital in accordance with a well-defined investment policy for the benefit of those investors and do not require authorisation as an Undertaking in Collective Investments in Transferable Securities or UCITS.
These AIFs are subject to authorisation and ongoing prudential regulation by CySEC.
The framework provides for the characteristics of the AIFs that can be set up in one of the following legal forms:
- As a mutual fund;
- As an investment company in the legal form of a limited liability company with shares, and;
- As a limited liability partnership.
An AIF that is set up as an investment company can be self-managed (i.e., does not appoint an external fund manager.) In the case of AIFs set up as mutual funds or as limited liability partnerships, these must always be externally managed by a Fund Manager.
Where the assets of the AIF do not exceed the thresholds set by the AIFMD, the AIF can be managed by either an Investment Firm authorised under the MiFID Directive or a UCITS Management Company. In cases where the assets of the AIF exceed the aforesaid threshold, said AIF is always managed by an entity authorised under the AIFMD.
Where the AIFs are not managed by entities authorised under the AIFMD, the AIF Law of 2014 sets the obligations, which are (non-exhaustive list):
- Appointment of a Depositary;
- Reporting and disclosures to investors;
- Marketing rules;
- Reporting to CySEC, and;
- Organisational requirements for the Investment Firm or UCITS Management Company as applicable.
The AIF Law of 2014 also introduces a novel AIF type, that of the AIFLNP (AIF with Limited Number of Persons). This new vehicle allows for the establishment of an AIF with up to seventy-five investors and which does not require any initial capital. This type of AIF can be self-managed, externally managed by the entities mentioned previously or managed by a special purpose company incorporated with the sole purpose of managing AIFLNPs. In addition to the above, the AIFLNPs can be exempted from the requirement to appoint a depositary.
With its multifaceted experience in the financial sector, MAP S.Platis can offer the following services in relation to AIFs and AIFLNPs:
- Setting up the entity(ies) to be authorised as an AIF or AIFLNP;
- Submitting and promoting the AIF or AIFLNP authorisation application to CySEC;
- Setting up the internal procedures of the AIF or AIFLNP;
- Ongoing Compliance Support;
- Internal Audit;
- Staffing solutions;
- External Audit solutions, and;
- Fund Administration.
For more information, please feel free to contact us