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Open an Investment Fund in Cyprus

Open an Investment Fund in Cyprus

Cyprus is an important destination on the financial industry map and foreign investors who come are attracted by the idea of setting up investment funds in a well-regulated country. The Cypriot legislation on investment funds is quite extensive, as it encompasses its national laws that are adapted to the EU regulations.

If you decide to open an investment fund in Cyprus, our local specialists can guide you through the entire procedure. Below, you can read about the main steps and procedures associated with the creation of a fund in this country.

Laws to respect when setting up a Cyprus-based investment fund

In order to launch an investment fund in Cyprus, one must first complete a thorough verification of the legislation to respect. The main laws that apply to such financial vehicles are:

  • – the International Collective Investment Schemes Law;
  • – the Investment Services Law;
  • – the Prevention and Suppression of Money Laundering Activities Law;
  • – theTransparency Act;
  • – the Consolidated Market Abuse Act.

To these, the 2009/65/EC Directive on undertakings for collective investment in transferable securities (UCITS) and the 2014/91/EU Directive on UCITS depositary functions, remuneration policies and sanctions are added.

If you want to open an investment fund in Cyprus, you must first decide on its type and the legal vehicle it will operate under.

Our company formation specialists in Cyprus are at your service when it comes to the incorporation of a legal vehicle under which you can set up a fund.

Types of investment funds in Cyprus

There are several types of investment funds that can be created in Cyprus. These are divided into two categories which are further split into sub-categories.

If you want to open an investment fund in Cyprus, you can choose between open-ended and closed-ended funds that are further divided into:

  • – UCITS (undertakings for collective investment in transferable securities) funds;
  • – AIF (alternative investment funds).

Each has its own advantages, but also comes with strict requirements.

The establishment of a fund can be explained by our consultants who can also help you open a company in Cyprus.

How to create an UCITS fund in Cyprus

If you want to open an investment fund in Cyprus and decide for an UCITS, you must know that its main objective is investing in liquid financial instruments and/or transferable securities. The main principle under which it operates is based on risk spreading and the units can be redeemed or purchased back out of the fund’s assets at the request of the investors. The main advantage of an UCITS fund is that it can operate in all EU countries, as long as the vehicle under which it operates is registered in an EU member state.

The AIF in Cyprus

The other major category of funds in Cyprus is made of Alternative Investment Funds that are available for retail and professional investors. They enable the pooling of assets from various investors and operate based on well-defined investment policies.

If you want to open an investment fund in Cyprus, you can rely on our advisors no matter the type of fund you decide on.

The Company Law is the main act providing for the legal entities under which investment vehicles can operate in Cyprus. These can take corporate or non-corporate forms, as it follows:

  1. investment companies which are corporate forms that can be used for the creation of funds;
  2. limited partnerships which are non-corporate forms tailored to the needs of such funds;
  3. common funds which are quite non-corporate forms often employed in Cyprus.

The registration of any of the legal entities above relies on specific documents. In the case of investment companies, the Memorandum and Articles of Association must be prepared. In the case of limited partnerships an agreement must be drafted, while the common fund will rely on the rules of creation.

The establishment of a Cypriot investment fund enters the attention of our company registration officers who can help you set it up.

The main aspects to consider when opening a fund

As a European Union member state, Cyprus benefits from many advantages, among which the possibility of an investment fund to operate in other states without additional licenses.

From a taxation point of view:

  • – funds opened as investment companies are subject to the corporate tax imposed at a flat rate of 12.5%;
  • – a notional interest deduction of up to 80% is also available for new equity under special conditions;
  • – investors can also take advantage of Cyprus’ extended network of more than 60 double tax treaties.

For more information on why you should open an investment fund in Cyprus, please contact our local advisors.