THE ALTERNATIVE INVESTMENT FUND MANAGERS REGIME – A NEW ERA FOR THE FUNDS INDUSTRY

On July 5, 2013 Cyprus transposed into law the EU Alternative Investment Fund Managers (AIFM) Directive by introducing the Alternative Investment Fund Managers Law (AIFML).

Choosing Cyprus as the place of establishment of an AIFM holds multiple benefits, such as the local favorable tax regime, Cyprus network of double tax treaties, comparably low establishment and maintenance costs and of course taking advantage of the passporting features of the directive itself across the EU.

Our firm has already auspiciously assisted in the successful application of a major European Institutional Group for an Alternative Investment Fund Manager licence in Cyprus under the AIFM law, and facilitated with all relevant EU passporting procedures.

Moreover, our firm maintains a specialised team of associates, who stand ready to assist you with high-value, cost-efficient services, undertaking all necessary arrangements and steps for the successful application of an AIFM license.

To obtain the full brochure on the AIFML, you may email us at: info@cyplaw.com and we shall provide you with the pdf version of this file.

ALTERNATIVE INVESTMENT FUNDS

You may view below our full brochure on Alternative Investment Funds:

April 2015

History

The Alternative Investment Funds Law of 2014 (the “Law”) came into force in July 2014 replacing and repealing the International Collective Investment Schemes Law of 1999 (the “ICIS Law”) in an effort to bring together under a single supervisory authority, namely the Cyprus Securities and Exchange Commission (“CySec”), all Cyprus investment firms, products and asset managers. The Law adopts relevant EU Directives on asset management and updates the funds’ regime in Cyprus; it applies to Alternative Investment Funds (the “AIFs”) established in Cyprus regulating effectively the responsibility and role of persons involved in the activities of the AIFs (such as directors, custodians, external managers etc.) and provides rules for the ongoing operations of the AIFs, their transparency requirements and supervision. Certain specialised arrangements inter alia insurance business, employee participations schemes and securitisation SPVS (special purpose vehicles) are excluded from the armpit of the Law.

What is an AIF and how can it be structured?

The purpose of an AIF is a collective investment undertaking to raise external capital from a number of investors with a view of investing such capital in accordance with a defined policy for the benefit of those investors, and which has not been authorised as a UCITS fund. 

The Law permits the establishment of two types of AIFs: 

• An AIF for an unlimited number of persons, which can be marketed to (i) the public or (ii) to a well informed and/or professional investor. 
• An AIF which can be marketed to well informed and/or professional investors, whose number cannot exceed 75 (AIF-LNP). Among these two types of AIF, the AIF-LNP is the most lightly regulated type - it is not subject to minimum capital requirements or investment restrictions.

A professional investor is an investor who is considered a professional client, under the MiFID (Markets in Financial Instruments Directive) or may on request be treated as such. A well informed investor is an investor who is not a professional investor but is aware of the risks related with the proposed investment and shows that he has the necessary experience and knowledge to be able to evaluate the appropriateness of the investment in the AIF. A retail investor is neither a professional nor a well-informed investor.

An AIF may be structured in one the following ways: 

• a limited partnership; 
• a limited liability company with shares which can be either of a fixed or of a variable capital; 
• a mutual/common fund (only available for AIF with no limited number of investors).

How can an AIF be used?

The AIF can be used as: 

• An umbrella fund with multiple investment compartments enabling the management of different pools of assets with distinct investment policies in segregated sub-funds within the AIF. 
• A mutual/common fund where the investors are all co-owners of the assets of the AIF. 
• A family or closed pool fund for a limited number of investors.

Public offerings of the AIF shares/units and listings in stock markets are possible increasing in this way the participation of potential investors and promoting transparency and marketability.

Custodian

The custodian / depositary is no longer a role to be undertaken strictly and solely by banking or credit institutions, the duties of the custodian / depositary can be undertaken by any investment firm or other similar in nature entity which can be particularly attractive for real estate and private equity funds.

In case the AIF-LNP’s assets are not eligible for custody, the requirement for the appointment of a custodian/depositary may be waived for an AIF-LNP or may be performed (as stated above) pursuant to the provision of clause 23(5) of the Law by “an entity which performs depositary functions within the context of its professional or business activities, for the performance of which is subject to professional registration recognised by legal, regulatory or administrative provisions or by rules of professional conduct and can provide sufficient financial and professional guarantees that it will perform sufficiently its depositary duties and meet the commitments associated with these duties”.

Other AIF Characteristics 

• Open-ended and Close-ended funds: in open-ended funds the investors have the right to redeem/repurchase their units/shares upon request either at any time or at regular intervals not exceeding one year; in close-ended funds the investors have the right to redeem/repurchase their units/shares upon request either at regular intervals exceeding one year but not exceeding five years or at a specific time as specified in the AIF’s constitutional documentation. 
• An AIF can be either self-managed provided that the regulations of the Law are complied with, or it can be managed by an external manager, such as an Alternative Investment Fund Manager authorised pursuant to the Alternative Investment Fund Managers Law of 2013, or a UCITS (Undertakings for Collective Investment in Transferable Securities) management company or a Cyprus Investment Firm. An AIF-LNP may also be managed by a management company set up for the exclusive purpose of managing the specific AIF-LNP subject to CySec approval. AIFs with unlimited number of persons are subject to a minimum capital of at least Euro 125.000 or Euro 300.000 in the event such an AIF with unlimited number of persons is self-managed.

Tax and other Benefits 

• Flat rate of 12.5% corporate tax 
• Profits realised from redemption from holdings in other companies (including AIFs) are not subject to income tax 
• No taxation on capital gains 
• No withholding tax on dividend distributions received by a non-Cyprus tax resident 
• The AIF can take advantage of the Cyprus double tax treaty network 
• Services provided by the investment manager of an AIF are not subject to a VAT charge 
• The regulatory requirements and timing required for the processing of the licensing application are reasonable 
• Low set-up and operations costs compared to other jurisdictions.

What we can do for you: 

Advise you on the set up and structure of an AIF. Assist with the incorporation of an entity to be licensed as an AIF, including drafting all constitutional documentation required. Prepare the licensing application package (including all documents and forms required under the legal regime) for CySec and where applicable for the Registrar of Companies in Cyprus, following up with the processing of the application and liaising with CySec and other local authorities until such time as the AIF is fully operative. Provide legal support throughout the AIF’s application process and operation. Provide ongoing administration and legal services for the AIF throughout its life.

How we can help you:

Clerides Anastasiou Neophytou is a leading law firm in Cyprus specialising in corporate, commercial, and tax law and M&A transactions. We are top ranked in tax law and highly recommended in corporate and M&A by well-known international agencies ranking law firms worldwide. Our associates and staff stand ready to assist you with efficient, high value cost efficient services to help you structure your transactions in Cyprus.

For further information please contact us at:

Clerides, Anastassiou, Neophytou LLC

Limassol, Cyprus

Tel: +357 25 274050

info@cyplaw.com

This material has been prepared by professionals of Clerides, Anastassiou, Neophytou LLC. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Clerides, Anastassiou, Neophytou LLC accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.

Clerides, Anastassiou, Neophytou LLC provides corporate and commercial legal services, to public and private international and local clients spanning multiple industries. Please visit our internet site at www.cyplaw.com for a full description of our services and representative transactions. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior permission of the publisher.

CYPRUS INTERNATIONAL TRUSTS

You may view below our full brochure on Cyprus International Trusts:

June 2014

History

In 1992, Cyprus enacted The International Trusts Law, which complemented and modernised the existing Trustee Law, an action which has proven to be a “successful step” towards rendering Cyprus a favourable jurisdiction attracting foreign investors from all over the world for the creation of international trusts. The 1992 International Trusts Law was further amended in early 2012 to adapt to the changing circumstances of the business world, strengthening in this way even more the position of Cyprus as one of the most attractive trust jurisdictions by providing a flexible, secure and modern legal and taxation framework. The International Trusts Law of 1992 to 2013 now seems to be more easily adaptable to the business needs of today’s ever growing requirements.

Concept

The Trust is a fiduciary arrangement/agreement whereby an individual (Settlor) either during one’s lifetime or upon death places assets under the control of a third party (Trustee), to hold and manage the assets on behalf and for the benefit of another third party (Beneficiary). It is common but not compulsory for a Trust to have a Protector to whom the Settlor may give the right to restrict the rights and powers of the Trustee, veto the latter’s decisions, or even appoint or terminate the appointment of a Trustee.

Few words on what constitutes the Cyprus International Trust (CIT) 

A CIT can be established if the Settlor and any Beneficiary (with the exception of a charitable organization) are not Cyprus tax residents in the calendar year preceding the year of the creation of the Trust, thus Settlors can now relocate to Cyprus after establishing a CIT and Beneficiaries no longer need to be non-Cyprus tax residents during the life of the Trust. At least one of the Trustee(s) must be a resident of Cyprus. A CIT has no limit as to the period of its duration; a Trust may continue to be valid and enforceable for an indefinite period. A beneficiary can be an individual (including an unborn person) or a legal person. Purpose trusts are allowed and the trustee may have an interest in the trust property. Trustees are permitted to hold, maintain and/or invest in movable and immovable property located in Cyprus and elsewhere, which also includes investing in shares of a company incorporated in Cyprus. The Settlor has the right to reserve many powers, inter alia, revoke or amend the provisions of the Trust, to appoint or remove any Trustee, Inspector, Protector or Beneficiary of the Trust and is able to limit the Trustees’ powers. For a CIT that is governed by Cyprus Law, subject to the terms of the trust document, any inheritance laws of both Cyprus and other jurisdictions cannot interfere with the effect of a CIT thus giving exclusivity to the trust laws of Cyprus as regards CITs by excluding conflict of laws. All matters of the CIT, subject to the terms of the trust document, are determined under Cyprus law while at the same time a CIT may be changed to another foreign law.

Benefits 

The income and gains of a CIT which are earned or deemed to be earned from all sources (in and out of Cyprus) are subject to Cyprus tax only in the event of a beneficiary being a Cyprus tax resident; In the case of a beneficiary who is not a Cyprus tax resident, only income or gains earned or deemed to be earned from Cyprus sources are subject to Cyprus tax; There is no inheritance tax or estate duty in Cyprus; CITs and their bank deposits in Cyprus banks are not subject to exchange control; There are no reporting requirements for CIT; Registration of the CIT is not compulsory, apart from registering the CIT with one of the three authorities in Cyprus supervising and regulating the provision of trustee services by giving some specific information on the CIT such as name, address, date of creation etc. to be in line with EU and local anti-money laundering laws; Anonymity and confidentiality of the individuals creating a CIT and of their beneficiaries are safeguarded by provisions of the law; Asset protection for minors and other family members, against spendthrift beneficiaries or against risks arising in contract or otherwise from transactions entered into by the Settlor, or even against potential liquidation or bankruptcy of the latter; Very low and competitive cost prices for setting up and maintaining a CIT, with a stamp duty payable to the Cyprus authorities not exceeding Euro 450.

What we can do for you:

Advise you on the creation of a CIT and draft all required legal documentation in relation thereto. Set up and manage trustee companies to offer their trusteeship services to a CIT. Advise you about all issues relating to a CIT, including trustee powers, beneficiary rights etc., and for any other matter that may be of concern to you in relation to the creation of a CIT or of an existing CIT. Review and interpret trust deeds and other trust related documentation. Advise on tax matters relating to the creation and maintenance of a CIT. For further information please contact Dimitra Papadopoulou at d.papadopoulou@cyplaw.com 

How we can help you:

Clerides Anastasiou Neophytou is a leading law firm in Cyprus specialising in corporate, commercial, and tax law and M&A transactions. We are top ranked in tax law and highly recommended in corporate and M&A by well-known international agencies ranking law firms worldwide. Our associates and staff stand ready to assist you with efficient, high-value, cost-efficient services, to help you structure your transactions in Cyprus.

For further information please contact us at:

Clerides, Anastassiou, Neophytou LLC

Limassol, Cyprus

Tel: +357 25 274050

info@cyplaw.com 

This material has been prepared by professionals of Clerides, Anastassiou, Neophytou LLC. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Clerides, Anastassiou, Neophytou LLC accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.

Clerides, Anastassiou, Neophytou LLC provides corporate and commercial legal services, to public and private international and local clients spanning multiple industries. Please visit our internet site at www.cyplaw.com for a full description of our services and representative transactions. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior permission of the publisher.

An interview by Mr. Stavros Clerides regarding CAN which appeared in Gold Magazine recently

You may visit here the interview delivered by Mr. Stavros Clerides regarding C.A.N. LLC which appeared in Gold Magazine recently.

C.A.N. Press Release as it appeared in Gold News

The latest publication of the Legal 500, one of the world’s largest independent and most distinguished legal referral guides which ranks law firms and lawyers internationally on the basis of merit, has awarded top tier status to Cyprus law firm Clerides Anastassiou Neophytou LLC.

The Limassol-based law firm has been highly recommended in the practice areas of Corporate and M&A and Banking and Finance for Cyprus. 

The Legal 500 further distinguished and ranked Partner Stavros Clerides as a leading individual in Tax in its elite "Leading lawyers" list of Europe, Middle East & Africa 2015,

Additionally, several lawyers of the firm were highly recommended and praised for their work, including Effie Anastasiou and Stephanos Evangelides. Lawyers of the firm have been praised by the directory for “going the extra mile and thinking outside the box to provide innovative solutions”. 

With regards its Corporate and M&A work, the institution considered and praised the firm as “one of the best firms in Cyprus”. 

The Legal 500 Series' analysis of law firm capabilities extends to over 100 jurisdictions worldwide, is used by commercial and private clients, corporate counsel, CEOs, CFOs and professional advisers, (as well as by other referrers of work both nationally and  internationally) and the series is widely chosen for its definitive judgement of law firm capabilities. 

The Holding Company Regime leaflet

Please download here the Holding company regime leaflet 2015 revised version