Types of Investment Funds in Cyprus
Updated on Monday 11th September 2017
Rate this article 2 reviewsbased on
Cyprus became a very solid destination for investment purposes and starting with 2013, the assets under management held by the investors tripled in value. The Cypriot legislation for investments follows the legal framework which is applied in other top European investment jurisdictions, such as Luxembourg and Ireland. Businessmen interested in how to start a fund in Cyprus may set up numerous types of vehicles following the European Union’s (EU) directives, including the undertakings for collective investment in transferable securities (UCITS) and the alternative investment funds (AIFs). The latter types of funds are very popular in this country, offering a flexible range of companies that can be registered as AIFs.
UCITS in Cyprus
The UCITS funds are regulated in Cyprus following the EU’s Undertakings for Collective Investment in Transferable Securities (UCITS) IV Directive, which offers the opportunity to perform investment activities in all EU’s member states, as long as the vehicle is registered in one EU country.
The procedure on how to start an investment fund as an UCITS can vary depending on the country in which is registered, and numerous jurisdictions have adopted internal regulations related to the manner in which such activities can be carried out. However, UCITS should comply with a set of regulations regardless of the state in which they were authorised, such as:
• maximum 20% of the fund’s net assets can be used for transferable securities;
• the fund’s net assets may be invested in other collective investment schemes (CIS);
• UCITS may invest maximum 20% of the net assets in one CIS.
International CIS in Cyprus
Foreign businessmen may also set up a hedge fund startup or an international collective investment scheme (ICIS), which can take the form of one of the following:
• investment company with variable capital;
• investment company with fixed capital;
• unit trust;
• limited partnership.
The incorporation requirements for this type of vehicle stipulates that the manager of the fund must be registered in Cyprus, operating as a financial services company.
AIFs in Cyprus
AIFs represent one of the most popular types of funds registered in Cyprus and an increasing investment field. At the moment, the country has registered 58 AIFs which received authorizations from the Cyprus Securities and Exchange Commission.
One of the main advantages of the fund refers to the fact that it may be set up by all types of investors, ranging from retail investors to professional investors.
More details on the Cypriot funds can be provided by our partners and investors are invited to contact our team of affiliates in Cyprus for in-depth advice on the capital and taxation requirements imposed to each vehicle.