We undertake the establishment and management of Cyprus Private Funds.
The Cyprus Private Fund acts as a collective fund in that it enables a number of investors to add collectively their assets and have them professionally managed and invested by independent managers/entities. Providing a flexible investment strategy, the Cyprus Private Fund can be established with limited or unlimited duration and may take any form the promoters decide to such as a Private Equity Fund, Bond Fund, Hedge Fund, Property Fund, or a fund with a combined investment policy.
The establishment and regulation of private funds in Cyprus were initially governed by the International Collective Investment Schemes Law 47(1)/1999. Under this Law, the Regulatory Authority for private funds in Cyprus was the Central Bank of Cyprus. Now this law has been substituted by the Alternative Investment Funds Law 131(I)/2014, to comply with EU legislation. With the exception of the provisions of section 120, the new law transferred the regulatory and supervisory powers to the Cyprus Securities and Exchange Commission (CySEC). In the new Law, a private fund is referred to as an “Alternative Investment Fund with Limited Number of Persons” (whereas previously it was known as a “Private International Collective Investment Scheme”). To be classified as one, its incorporation documents or partnership agreement must specifically define that the relevant fund is only addressed to professional and/or well informed investors, it must limit the number of its unit holders to the maximum of 75 persons and it must not allow the issue of bearer shares.
A Cyprus Private Fund can be established as an International Investment Company (either “International Fixed Capital Company” or “International Variable Capital Company”), or as an International Investment Limited Partnership. The Law imposes no minimum capital requirements and the appointment of an external Investment Manager is only mandatory where it takes the form of a partnership. Nevertheless, whether the fund is self-managed or has appointed an external manager, the manager is subject to registration in accordance with section 4(3) of the Alternative Investment Fund Managers Law 56(I)/2013. The assets of a manager of an alternative investment fund with limited number of persons will have to be entrusted to a depository with a registered office in the Republic or in another Member State or third country under the condition that the CySEC has signed with the competent authorities of the third country a Memorandum of Understanding and Exchange of Information. This requirement is lifted where the fund’s total assets do not exceed the amount of five million euro, or where the instruments of incorporation or the partnership agreement of the fund limit the number of its unit holders to up to five persons.
Tax benefits & Cost savings
The Cyprus Private Fund is subject to the favourable tax regime of the island and can benefit from its plethora of Double Tax Treaties. Moreover, the establishment of an alternative investment fund with limited number of persons, and the subscription, redemption or repurchase or the transfer of its units are exempted from Stamp Duty. Besides the fact that no minimum capital requirement is required for a Cyprus Private Fund, the set-up costs of the private fund and costs such as administration, custodian fees, audit, legal services, accounting, are considerably less in Cyprus compared to other jurisdictions.