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EU AIFMD and the Cyprus Fund Industry

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Q. What is AIFMD and what does it mean for Cypriot firms?

A. The Alternative Investment Fund Management Directive (AIFMD) is the EU Level II Regulation transposed into the AIFM Law that regulates every Cyprus based legal person that manages one or more Alternate Investment Firms (AIF) whether these AIFs are Cyprus, EU or non-EU based. From 2015 on the AIFM Law shall also apply to non-EU AIFMs having designated Cyprus as their Member State of Reference for their management and/or marketing activities in the EU.

Q. When does AIFMD take effect in Cyprus?

A. Cyprus transposed the AIFMD by means of legislation, the Law 56 I/2013 ("AIFM Law") on July 5, 2013. The EU AIFMD provisions are directly and uniformly applicable in all EU Member States including Cyprus.

Q. Can a Cyprus Investment Firm (CIF) who is licensed by the CySEC to do Portfolio Management also manage a Cypriot International Collective Investment Scheme (ICIS)?

A. No. CIFs shall be excluded from directly managing ICIS under the scope of the AIFMD since the management of such an ICIS will be subject to a collective portfolio management license.

Q. Is an AIFM the same as a UCITS manager for an ICIS?

A. No. In addition to managing an ICIS in Cyprus AIFMs authorized under the AIFMD will be allowed to manage any type of non-UCITS (AIF) throughout the EU subject to passporting rights, i.e. EU wide distribution.

Q. What about the UCITS IV Directive in Cyprus?

A. An investment manager authorized under the AIFMD will also be able to obtain authorization under the UCITS IV Directive, in order to also manage UCITS investment schemes, but a CIF or UCITS only management company cannot manage an AIF.

Q. Will a CIF still be able to provide investment management services under AIFMD?

A. Yes. A CIF will be able to provide investment management services, either to UCITS or non-UCITS, but only as a delegate of the collective portfolio manager.

Q. What about a CIF that is already acting as the principal manager of an ICIS?

A. If the CIF is effectively managing the AIF, and intends to continue managing it, then it will have to renounce on its CIF status and apply to be authorised as an AIFM.

Q. What other choices does a CIF have other than to renounce its CIF status?