Answer ... The establishment and operation of alternative investments funds (AIFs) in Cyprus is regulated by the Alternative Investments Funds Law of 2018 (124(I)/2018). The Cyprus Securities and Exchange Commission (CySEC), the competent authority, is responsible for issuing circulars and directives which also govern AIFs in Cyprus as secondary legislation.
The EU AIF Managers Directive (2011/61/EU), which relates to fund managers, was transposed into national law by the Alternative Investment Funds Manager Law of 2013, 56(I)/2013 (AIFM Law), as amended from time to time.
Answer ... The AIF Law applies to:
- AIFs with a limited number of persons (AIFLNPs), which can have a maximum of 50 unitholders; and
- registered AIFs (RAIFs).
Answer ... The AIF Law regulates the establishment and operation of AIFs, AIFLNPs and RAIFs in Cyprus. To the relevant extent, it also regulates the marketing of units of EU or third-country AIFs in Cyprus. Part III of the AIF Law applies to EU and third-country AIFs that wish to market their units in Cyprus.
Answer ... The EU regulations governing the operation of funds and AIFMs are directly enforceable in Cyprus, as Cyprus is an EU member state. Additionally, the directives of the European Parliament and Commission – which, together with the regulations, constitute the EU framework for AIFs – have been transposed into national law and are enforceable.
Answer ... CySEC is the competent authority under the AIF Law for the licensing and supervision of AIFs in Cyprus. CySEC has the authority to approve or reject applications for the authorisation of AIFs and AIFLNPs. Although they are not subject to any authorisation requirements, RAIFs are indirectly supervised through their AIFM and must be registered in the register of RAIFs maintained by CySEC, by way of notification addressed to CySEC.
CySEC may issue circulars and directives regarding the implementation of the relevant national laws and the exercise of its supervisory authority. Additionally, CySEC may impose administrative penalties in case of infringement of the AIF Law or its directives, and has the authority to suspend and/or withdraw the authorisation of a regulated entity.
Answer ... Cooperation between the regulator and its counterparts in other jurisdictions is essential, due to the cross-border nature of the activities of regulated entities within the scope of the AIF Law. CySEC actively cooperates with its counterparts by concluding bilateral and multilateral agreements in the form of memoranda of understanding, and by participating in other committees and groups together with the national committees of other countries. Such groups include:
- the European Securities and Market Authority;
- the European Systemic Risk Board;
- the International Organization of Securities Commissions; and
- the Mediterranean Partnership of Securities Regulators.