Cyprus took an important step forward in the field of registration, operation and management of investment funds, after the submission of a draft concerning the Alternative Investment Funds (AIFs). The vote is expected to enhance the flow of investment funds into Cyprus. Considering that many fund managers will have to flee London because of the Brexit, due to growing pressure from the European Union to the country states, to not accept management of investment funds from management firms without a presence in the E.U.
Certain aspects of the draft will make the procedure of registering investment funds very prompt when the applicant is an authorized fund manager, something that fund managers always take into consideration before moving a fund to another country.
According to the draft, an AIF can be established, taking any of the following forms:
- A common fund, or
- as an investment company incorporated under the Companies Law either as a limited liability company with shares or as a variable capital investment company; or
- as a limited partnership with or without separate legal personality registered under the Uniform and Hereditary Cooperatives and Commercial Names Law.
At the same time, an externally managed AIF can become an internally managed AIF with a submission of a request, while satisfying the requirements of the relevant articles of the Law for the internally managed AIFs.
Management of AIF
The management of AIFs includes
- the following minimum investment management functions:
(i) portfolio management, and
(ii) risk management
- Any of the following additional management functions:
- Services to address issues of a legal nature and accounting management services of the AIF
- Information services to customers
- The valuation of AIF portfolio and determination of the value of shares, including any tax KON issues,
- Verification of compliance with the respective current regulatory framework
- Unit-holder register
- Distribution of AIF revenue
- Versions and acquisitions AIF
- Completion of contractual obligations, including sending certificates
- Record keeping
(C) activities related to the assets of the AIF, namely services necessary to meet the outsourcer’s royalty obligations, facility management, real estate management, business consulting on capital structure, industrial strategy and related issues, advice and services concerning mergers and enterprise purchasing, and other services associated with the management of AIF and the companies and other assets in which it invests.
The AIFs, as well as the OEEPPs established and operating in accordance with the law and the persons acquiring shares of the above AIF, are subject to the provisions of the Income Tax Law and the Special Contribution to the Defence of the Republic Law.
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