Establish a Fund in Cyprus (AIFs / RAIFs / UCITs)
Establish a fund in Cyprus (AIFs/RAIFs/UCITs)
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Investment Funds in Cyprus are authorised and supervised by the Cyprus Securities and Exchange Commission (“CySec”).
The most popular types of investment funds in Cyprus are the Alternative Investment Funds (“AIFs”) and the Undertakings for Collective Investment in Transferable Securities (“UCITS”).
UCITS
Legal framework:
The law regulating the operation and supervision of UCITS in Cyprus is the Open-Ended Undertakings for Collective Investment Law of 2012 (L.78(I)/2012, as amended.
Definition:
UCITS is defined as a collective investment undertaking whose sole object is the collective investment in transferable securities and/or other liquid financial instruments of capital raised from the public; which operates on the principle of risk spreading; and which its units can be redeemed or repurchased, directly or indirectly, out of the undertaking’s assets, at the request of the investor.
Form of the Fund:
UCITS can take the form of a Common Fund, which is a pool of assets which belong jointly and severely to the unitholders, or of a Variable Capital Investment Company (“VCIC”), which has the legal form of a limited liability company with shares.
The fund may be internally or externally managed, however, to be internally managed it must take the form of a VCIC.
Asset Categories:
- Transferable securities
- Money market instruments
- Open ended collective investment schemes
- Deposits with eligible credit institutions
- Financial derivative instruments
AIFs
Legal framework:
The law regulating the operation and supervision of AIFs in Cyprus is the Alternative Investment Funds Law 124(I)/2018, as amended.
Definition:
AIFs are collective investment undertakings which raise external capital from several investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and which have not been authorised as UCITS.
Form:
AIFs can take the form of a Common Fund, Fixed Capital Investment Company, Variable Capital Investment Company and Limited Partnership.
The fund may be internally or externally managed, however, to be internally managed it must take the form of an investment company.
Asset Categories:
Unlike UCITS, an AIF may invest in both securities and non-securities.
Types:
- AIF: Authorisation from CySec is required. The fund may be addressed to an unlimited number of investors, professional, well informed, retail investors. The appointment of a depositary is mandatory.
- AIF with Limited Number of Persons (“AIFLNP”): Authorisation from CySec is required. The fund may be addressed to up to 50 natural persons, on the condition that they are professional and/or well-informed investors. Subject to specific conditions, the appointment of a depositary is not always mandatory.
- Registered AIF (“RAIF”): As long as the RAIF is externally managed by an Alternative Investment Fund Manager (AIFM) established in Cyprus or in another EU Member State, authorisation by CySec is not required. Instead, the RAIF should be registered in the official RAIF register and the relevant notification registration should be sent to CySec. RAIFs may be addressed to an unlimited number of investors, and only to professional and/or well-informed Investors. The appointment of a depositary is mandatory.
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