Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Investing

FORTIFYING THE CYPRIOT FUNDS’ LEGAL FRAMEWORK

Charles Savva

The Cypriot funds industry has been developing in recent years and is now making significant strides ahead to position itself as a reputable funds’ jurisdiction. The transposition of the Alternative Investment Funds Manager Directive (AIFMD) into national law on the 22nd July 2013 has strengthened the Cyprus funds industry and made the local legislation compliant with the EU regulatory framework.

Charles Savva

Charles Savva

The AIFMD affects both Alternative Investment Fund Managers (AIFMs) in the EU as well as those who market or offer investment management services to EU Alternative Investment Funds (AIFs). The AIFMD Law outlines the rules for supervision, the operation and transparency of AIFMs in Cyprus. In order to obtain authorization, the AIFM will need to file information on itself and the AIF, for which it intends to manage, to the local regulator the Cyprus Securities and Exchange Commission. The information required to be submitted includes details of the shareholders, corporate structure, remuneration policies, valuation and pricing methodology, depositaries as well as investment strategy. Once authorization is granted it will be valid across all EU member states and the European Securities and Markets Authority (ESMA) will keep a central register listing each authorized AIFMs’ details.

By having regulated AIFMs, AIFs will be freely marketed across the EU through passporting. The AIFMD Law regulates the marketing of AIFs and allows a passport for the AIF to be distributed to professional investors (as defined by MiFID) in all other EU states. The EU passporting does not include the marketing and distribution of the AIF to retail investors, as this is subject to the approval of the regulator in each EU state.

Moreover, by having the EU directive transposed into national law, Cyprus offers assurances to investors that the AIF is being managed in line with an EU regulatory framework thus attracting a potentially larger pool of investors.

The Cyprus International Collective Investment Scheme (ICIS) will be classified as a non UCITS (Undertakings for Collective Investment in Transferable Securities) fund and is under the scope of the AIFMD Law. Due to the attractive fiscal benefits offered in Cyprus, including low corporate tax, withholding tax exemptions and an extensive network of double tax treaties, Cyprus AIFs offer foreign investors a tax efficient vehicle through which they can structure their investments. Cyprus AIFs are commonly used to structure investments in private equity as any earning realized from the disposal of such shares, would not be subject to tax in Cyprus.

Moreover, proceeds from the redemption of units in a Cyprus AIF are also tax exempt at the investor level. Cyprus AIFs that own shares in a foreign subsidiary can receive dividends, in most cases, tax exempt in Cyprus.

The enactment and implementation of the Law is a welcome development as it strengthens the legal framework for funds, impacts the way administrators, depositaries, and fund managers operate and provides detailed guidelines on how the supervision of these entities should be governed.

As a result of the recently enacted Law the following benefits have been obtained:

  • An EU-wide “passport” under which AIFMs can provide cross border management and marketing services to AIFs;
  • Detailed regime regarding depositary functions of safekeeping, cash monitoring and oversight;
  • Operating conditions for AIFMs including internal control and compliance, risk management, liquidity management, transparency, delegation arrangements, conflicts of interest, and remuneration policies;
  • Rules regarding third-country undertakings.

For further details regarding the latest developments in the Cypriot funds industry, for identification of tax implications and advise on the licensing and regulatory requirements of Cyprus AIFs please contact Charles Savva at +357 22 516 671, or by email at [email protected]

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post