N. Pirilides & Associates LLC


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Alternative Investment Funds

The Alternative Investment Funds Law of 2014 (the “AIF Law”) was enacted by the Cyprus House of Representatives on 10/07/2014 and was published in the Official Gazette of the Republic of Cyprus (on 25/07/2014).  The AIF Law repeals the International Collective Investment Schemes Law 47(I) 1999 (the “ICIS Law”) the former legislative framework for investment funds, which has been in place since 1999.
The AIF Law shall be further supplemented by directives issued from time to time by the Cyprus Securities and Exchange Commission (“CySEC”), which is the competent regulatory and supervisory body for AIFs under the AIF Law, which has replaced the former regulator of ICIS- the Central Bank of Cyprus.
All investment products (UCITS and AIFs) as well as asset managers (Alternative Investment Fund Managers (“AIFMs”), UCITS Management Companies and Cyprus Investment Firms (CIFs)) are now under one regulatory body.
Changes introduced by the AIF Law are in line with recent EU directives on asset management, with emphasis given on transparency rules and investor protection.
Scope of the AIF Law
The AIF Law lays down rules for the authorisation, on-going operations, transparency requirements and supervision of AIFs of the Republic.
It also applies to some extent, to persons engaged in the activities of AIFs such as directors, custodians and external managers.
An AIF is a collective investment undertaking which:
  • raises external capital from a number of investors,
  • with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and
  • has not been authorised as a UCITS.
Entities such as holding companies, entities for occupational retirement, employee participation schemes or employee savings schemes, securitisation special purpose entities, social security schemes covered by Law 59(I)/2010, entities covered by the law regulating Insurance Business 35(I)/2002 and approved investment companies of the Cyprus Stock Exchange are excluded from the scope of the AIF Law.
Types and forms of AIFs
  • AIFs are categorised into the following two types:
1.Unlimited number of persons, which may be marketed to (i) retail or (ii) well-informed and/or professional investors, 
2.Limited number of persons (being 75), which may be marketed to well-informed and/ or professional investors.  
Professional Investor is any investor that is considered, or may be treated on request, as a professional client as defined in the Markets in Financial Instruments Directive 2004/39/EC (“MiFID”).
Well-informed Investor is an investor not considered to be a professional investor who meets the following criteria: 
(i)he confirms in writing that he is a well-informed investor and has been notified of the risks associated with investing in the AIF in question, and
(ii) either:
(a)his investment in the AIF is at least EUR 125,000; or
(b)he has been evaluated as a well-informed investor either by a banking institution, or a MiFID compliant investment firm, or UCITS management company, or AIFM, and further that he has the appropriate expertise and required knowledge to assess the suitability of the investment. 
AIFs may be structured in four forms
Variable or fixed capital company, limited partnership and (only for Unlimited number of persons AIFs) common fund. The unit trust, which was a structure, provided for by the ICIS Law is no longer available.
Main features of the AIF Law
The AIF Law has introduced new structuring options which were not possible under the ICIS Law, such as: 
  • Umbrella structures with multiple investment compartments, which permit the management of different pools of assets with diverse investment policies, the assets and liabilities of each such pool of assets being ring-fenced;
  • Common funds, which are contractual fund structures where investors participate as co-owners of the assets of the AIF. 
  • Option to make public offerings of shares/units of AIFs (the offering of ICIS shares/units was restricted to private placement only);
  • Possibility of listing, which increases the AIF’s potential investor base and enhances marketability and transparency; 
  • The Depositary function may now be undertaken, in certain cases, by an entity other than a credit/banking institution, subject to certain conditions. This may aid in the structuring and operations of AIFs not directly investing in financial and money market instruments, such as private equity and real estate funds.
N. Pirilides & Associates LLC deals with the registration of Alternative Investment Funds and our services include the following: 
  • Advice and application to the Cysec to obtain approval and incorporating the entity with the Registrar of Companies.
  • Assistance in drafting the constitutional documentation and the offering memorandum of the scheme.
  • Provision of administrative services to the scheme.
  • Audit services to the scheme
  • Management of the scheme 
  • Legal Advice for the scheme
  • Acting as promoters of the scheme etc.