The Alternative Investment Funds Law of 2018
The Alternative Investment Funds Law (AIF) of 2018 came into the spotlight only in July 2018 with an upgraded legislation and a new AIF regime. The new Law is an enhanced framework of the previous Alternative Investment Funds (AIF) Law of 2014. The enactment of the AIF law of 2014 has aligned the Cyprus regulatory and legal framework with EU derivatives on asset management, with the main aim to enhance investor protection and transparency. Following perpetual efforts to evolve Cyprus fund framework, a new law has been introduced providing upgraded rules for authorisation, transparency requirements and supervision of Cyprus AIFs, ongoing operations, investment structuring possibilities as well as the enhanced role and responsibilities of directors, external managers, and depositaries.
In July 2018, the modern regime of the AIF Law of 2018 follows the latest market demands, introduces the Registered Alternative Investment Funds (RAIFs) and its new legal form – Limited Partnership with a distinguished legal personality. The new RAIF regime, wherefore will not fall under the sphere of regulation of CySEC, while being considered as an AIF by virtue of the law, provides opportunities for more time and cost-effective fund launch.
In an attempt to mitigate the risk exposure to the lack of supervision by CySEC, the new law requires fulfilling the following conditions: applicable only to professionals and/or experienced investors and qualify as a full-scope EU or Cyprus Alternative Investment Fund Manager (AIFM). Although the duties of the AIFM comprise setting and maintaining the fund operation through an effective governance regime including controls and supervision of operations, responsibility lies on the communication with CySEC in operational amendments, such as initiation of liquidation procedures or changes in investment strategy.
The AIF Law of 2018 seeks to offer extensive structuring opportunities and enhance Cyprus’ market status to an attractive jurisdiction and an elevating contender amongst European fund and asset management hubs.
The information provided in this article is for general information purposes only. You should always seek for professional advice suitable to your needs.