Funds & Fund Managers
MAP S.Platis offers continuous support and modular solutions tailored for the funds industry. Our specialised team can assist with all phases of a fund’s lifecycle, from the establishment of the Fund and its authorisation by the CySEC to ongoing operational requirements. The legal framework in Cyprus affords prospective Fund Managers with a bouquet solution ranging from establishing a Management Company for Undertakings in Collective Investments in Transferable Securities (UCITS) to an Alternative Investments Fund Manager (AIFM) and/or self-managed funds.
Authorised Fund Managers
CySEC-authorised fund managers benefit from the status of the Republic of Cyprus as a full member of the European Union (EU), which provides them with unfettered access (EU passport) to the European Economic Area or EEA (EU member-states plus Liechtenstein, Norway and Iceland). As such, aspiring fund managers may choose one of two solutions that benefit from the single EU passport:
- Acquire a license as an AIFM, authorised under Cyprus national transposition of the AIFM Directive. An AIFM may also acquire as part of its authorisation a UCITS management license. This attractive dual licencing regime allows AIFMs to manage UCITS and Alternative Investment Funds (AIFs) established in the EEA and market the shares/units of these Funds within the EEA. It should be noted that, under the passporting regime, AIF units/shares may only be sold to investors categorised as professionals.
- Acquire a license as a UCITS Management Company authorised under Cyprus national transposition of the UCITS Directive. A UCITS Management Company may manage UCITS established in the EEA and market units/shares of UCITS to retail and professional Investors on a cross-border basis.
Mini AIF Managers (subthreshold AIFMs)
CySEC has introduced the Mini AIF Manager (subthreshold AIFM) regime unique to Cyprus for managers of AIFs small in assets that are not captured by the AIFM Law (i.e. fund managers that manage funds whose assets do not exceed the thresholds of the AIFMD). The Mini AIF Manager regime allows companies to set up an efficient and cost-effective structure to manage AIFs irrespective of whether these AIFs are established in Cyprus, in the EU or in third countries.
AIFs and UCITS
Cyprus affords an easy-to-set-up fund management regime; a fund (either an AIF or UCITS) can be set up as a variable capital investment company, a fixed capital investment company, a limited liability partnership (LLP) or as a mutual fund.
Once the legal entity has been set up, it may proceed with submitting an application for authorisation by CySEC either as a UCITS under the Undertaking of Collective Investments (UCI) Law (the national transposition of the UCITS Directive) or as an AIF under the AIF Law. It should be noted that umbrella structures are possible for all set ups. Moreover, such funds can be either externally or internally managed (except in the cases where funds are set up in the form of mutual funds and LLPs). Once the legal entity has been set up and authorised by CySEC, the UCITS Management Company or the AIFM (as applicable) may initiate the procedure to market the units/shares of the Fund in the EEA on a cross-border/passporting basis.
CySEC has implemented attractive solutions for the establishment of funds in Cyprus with the adoption of a unique national legislation. With respect to AIFs, CySEC has introduced the AIF with Limited Number of Persons/Investors (AIFLNP), an AIF whose assets must be below the AIFMD thresholds and may be exempted from appointing a depositary. AIFLNPs can be self-managed or externally managed by entities exempted from the scope of the AIFMD.
CySEC, in 2018, introduced the concept of registered AIFs (RAIFs). A RAIF is always externally managed by an authorised AIF Manager (AIFM) under the AIFMD or where the RAIF is below the AIFMD thresholds it can be managed by a Mini AIF Manager (applicable only for certain RAIF types). RAIFs are not subject to authorisation by CySEC, however AIFMs intending to manage a RAIF will be required to submit a notification to CySEC for the inclusion of the RAIF on CySEC’s RAIF registry prior to distributing RAIF units to possible investors.
During the pre-authorisation phase: MAP S.Platis can assist in the following ways (non-exhaustive):
- Setting up the entity to be authorised;
- Drafting, submitting and promoting the authorisation application to CySEC;
- Assisting with client enquiries regarding the authorisation process, and;
- Communicating with CySEC on behalf of the client.
The authorisation/registration process requires comprehensive attention to the documentation submitted to CySEC. Different timeframes apply for each type of authorisation/registration envisaged, as per the relevant legislations, from the date of submission of a complete application/notification package. In particular, the following timeframes apply although these may vary depending on the completeness of information submitted to CySEC:
- One month for the registration process of a RAIF
- Six months for the authorisation of an AIF and an AIFLNP
- Three months for the authorization of an AIFM. CySEC may prolong this period for up to three additional months, where it considers it necessary due to the specific circumstances of the case and after having notified the applicant accordingly.
- Six months for a UCITS Management Company.
- Two months for UCITS managed by a Management Company and six months in case of a Variable Capital Investment Company that has not designated a Management Company.
It is imperative that prospective fund managers and/or funds have partnered with an application promoter that is able to deliver tangible results in order to avoid unnecessary and costly delays.
Post authorisation: MAP S.Platis can offer ongoing support with respect to Funds’ and Fund Managers’ operational requirements, including but not limited to:
- Drafting relevant anti-money laundering (AML)policies, investors’ Know Your Clients’ (KYCs) processes and Acceptance Procedures, as well as updates;
- Risk Management Consulting (assessing the Company’s procedures, systems and controls with respect to the Risk Management Function);
- Administration Consulting Services with regards to marketing materials, publications prepared, etc.;
- Assistance with the selection and initial due diligence of prospective Delegates;
- Proactive monitoring of regulatory developments and on-time notification of new requirements as applicable;
- Assistance in drafting internal operations procedures that will cover all requirements under the relevant regulatory framework;
- Updates with respect to regulatory revisions and assistance in adapting to the new requirements;
- Ad hoc health checks in order to assist Funds and Fund Managers in identifying possible risk areas of non-compliance and proposing remedial solutions;
- Preparation and promotion of applications regarding license extensions;
- Regulatory transaction reporting automated solutions (such as EMIR, REMIT and MiFID);
- Assistance with preparing the relevant disclosures to Regulators and Investors where and as applicable;
- Licencing extensions as required;
- HR solutions and assistance in screening suitable candidates for Portfolio Managers, Risk Managers, Compliance Officers and other key personnel;
- Training to employees by setting up in-house seminars that are tailor-made based on the Company’s specific needs;
- Internal audit services as per the requirements of the regulatory framework;
- Preparation of Offering Memorandum.
For more information on our services and how we can assist you, please feel free to contact us