Cyprus Alternative Investment Funds
The establishment of Alternative Investment Funds in Cyprus is permitted only subject to the provisions of the law 2018 L.124(I) of 2018. The Cyprus Securities and Exchange Commission (CySEC) is the regulatory authority, responsible under the AIF Law for the licensing and supervision of Alternative Investment Funds in Cyprus.
There are three types of Alternative Investment Funds that can be set up in Cyprus. It is the Alternative Investment Fund of unlimited number of investors (AIF), the Alternative Investment Fund of Limited Number of Investors (AIFLNP) and finally the Registered Alternative Investment Fund (RAIF).
An AIF may be established taking one of the following legal forms:
- as a common fund or
- as an investment company, registered subject to the Companies Law either as a company limited by shares or as a variable capital investment company or
- as a limited partnership, with or without separate legal personality, registered subject to the General and Limited Partnership and Business Names Law.
The AIF can be internally or externally managed by an authorised External Manager.
An AIF may operate as a RAIF – Registered Alternative Investment Fund, in accordance with the provisions of the law, when all of the following apply:
- the RAIF is an externally managed AIF,
- the RAIF is addressed to professional and/or well informed investors, and
- its fund or instruments or incorporation, as the case may be, shall specify that it is subject to the provisions of the law.
The RAIF is managed by an authorised Alternative Investment Fund Manager (“AIFM”), which will be responsible for the supervision of the RAIF. Under certain circumstances the manager man not be an AIFM.
The AIFLNP – Alternative Investment Fund for Limited Number of Investors may be setup-
- either as an internally managed AIFLNP, where it does not appoint an external manager, if it is established as an investment company or a limited partnership with separate legal personality and the assets under its management do not exceed the thresholds of article 4(2) of the Alternative Investment Fund Managers Law
- or as an externally managed AIFLNP, where it appoints an external manager to perform the investment management functions.
Cyprus based funds and their investors can benefit from a favourable tax environment. An AIF will be subject to Corporation tax at 12.5% on the resulting net profits without any imposition of taxes on the net assets of the Fund.
The transformation of the investment funds regime in Cyprus in combination with the island’s strategic geographic position, attractive tax environment and the experienced professional service sector has made Cyprus the rising star of the EU funds jurisdictions.
As the value of assets under fund management in Europe is increasing with a consistent growth rate, Cyprus with steady and important steps to the right direction, will play a significant role in the future of the global funds industry.
For more information and guidance get in touch with our lawyers or email Michalaki, Pitsillidou & Co LLC Lawyers Legal Consultants,
Tel. +357 99345000
Fax +357 25 660097