Following the enactment of the Alternative Investment Funds Law of 2014 (the ‘AIF Law’) by the Cyprus House of Representatives on 10/07/2014, the law will now come into effect upon its publication in the Official Gazette of the Republic.
The AIF Law replaces and repeals the International Collective Investment Schemes Law (the ‘ICIS Law’), which had been the former legislative framework for investment funds since 1999, and could transform Cyprus into a major force in the international funds market.
The AIF Law aligns the funds regime on the island with the latest EU directives on asset management. Whereas under the ICIS Law, International Collective Investment Schemes (‘ICIS’) were regulated and supervised by the Central Bank of Cyprus, the AIF Law gives responsibility of regulation and supervision of alternative investment funds (‘AIFs’) to the Cyprus Securities and Exchange Commission (‘CySEC’) instead. This move now brings all investment products, asset managers and investment firms under a single regulatory body, with a focus on transparency and investor protection.
The new law sets out rules for the transparency requirements, supervision, authorisation and ongoing operations of AIFs on the island, and regulates the role and responsibilities of their directors, custodians and external managers. It also introduces new structuring options, which were not available under the previous legislative framework (such as umbrella structures with multiple investment compartments), and enables public offerings of shares of AIFs to take place, unlike the ICIS Law – where only private placements were allowed – amongst other updates.
