On the 11th of July 2014, the Cyprus Parliament enacted a new law providing for a new institutional framework governing the establishment and operation of Alternative Investment Funds in the Republic Cyprus.

Objective of the AIF Law

The Law, by creating a new institutional framework regarding the establishment and operation of Alternative Investment Funds in Cyprus, aims to enhance transparency and protection of investments and to harmonize as well the national legislation with the EU directives.

The AIF Law provides for two classes of AIF:

• AIF for an unlimited number of investors, which can be marketed to retail or to well-informed and/or professional investors, as defined by the the EU Directive 2004/39/EC (on Markets in Financial Instruments).
• AIF for a restricted number of investors (up to 75), which can be marketed only to well-informed and/or professional investors, as defined by the the EU Directive 2004/39/EC (on Markets in Financial Instruments).

Well-informed investors confirm in writing that they adhere to the status of “well-informed” investors and who should fulfill one of the following conditions:

• Their investment should be at least EUR 125,000

Or

• They should have been assessed by a credit institution, an investment firm or a management company which certifies the investors’ ability to understand the risks associated with investing in such Funds.

The AIF Law will come into force as soon as it is published in the Official Gazette of the Republic of Cyprus.

For more information on the AIF Law and on the transitional options of already existing ICIS, please get in touch.