An Alternative Investment Fund (AIF) must have an Alternative Investment Fund Manager (AIFM) or simply called manager, responsible for compliance with the Alternative Investment Fund Manager Law. This can be
- through an external (AIFM) manager, by the AIF, responsible for managing the AIF, or
- internally managed, where the board may choose to not appoint an external manager i.e. the AIF acts as its own internal AIFM. Such an AIF can only hold assets under the threshold of;
- EUR 100 Million, including assets acquired through leverage, or
- EUR 500 Million, where no leverage is employed, and the unitholders have no redemption rights for 5 years.
The AIFM must at least engage in the portfolio management and risk management core investment management functions when managing an Alternative Investment Fund (AIF).
In the course of collectively managing an AIF, the AIFM may be authorised to perform Administration functions, Marketing services, and activities related to the assets of the AIF, namely services necessary to meet the fiduciary duties of the AIFM, facilities management, real estate administration activities, advice to undertakings on capital structure, industrial strategy and related matters, advice and services relating to mergers and the purchase of undertakings and other services connected to the management of the AIF and the companies and other assets in which it has invested.
An external AIFM may also be authorised to provide the following MiFID services, subject to compliance with the relevant MiFID rules without separate MiFID authorisation being required. These are management of portfolios of investments, including those owned by pension funds and institutions for occupational retirement, in accordance with the mandates given by investors on a discretionary, client-by client basis, along with the provision of portfolio management services outlined above, an AIFM may further be authorised to provide non-core services including
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- investment advice
- safe-keeping and administration in relation to shares or units of collective investment undertakings
- reception and transmission of orders in relation to financial instruments.
The Cyprus Securities and Exchange Commission (CySEC) is the regulator for investment funds (AIF, RAIF, AIFLNP) and investment fund managers (AIFM) in Cyprus. CySEC is the supervising authority for UCITS as well and among other things, CySEC is responsible to apply the Laws, examine applications, issue directives and generally supervise the operation of AIF and AIFMs in the Republic of Cyprus. The Alternative Fund Managers Law applies to:
- AIFM based in Cyprus managing Cyprus based AIF, RAIF or of another EU Member State or 3rd country,
- an EU or 3rd country AIFM managing Cyprus based AIF and RAIF.
- AIFM based in Cyprus, marketing units or shares of AIFs and RAIFs they manage in other EU Member States or third countries.
- An EU or third country AIFM marketing units or shares of AIFs and RAIFs they manage in Cyprus.
The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.