Cyprus Financial Licenses
Cyprus as a business destination holds all the tax efficient features of a modern financial centre with the necessary infrastructure for running investment companies and other structures for fund management. Cyprus is offering flexible legislative framework to all Alternative Investment Funds types as well as investment firms on the island.
Click here to read more about the benefits of Cyprus as a business destination.
Cyprus Investment Firms (CIFs)
There are 3 categories of CIF licence available in Cyprus:
- Eligible: Low regulatory protection for clients: To deal with regulated institutions.
- Professional: Medium regulatory protection for clients: To deal with Professional Clients.
- Retail: Highest level of regulatory protection for client: To deal with all types of clients.
To read about CIF minimum capital requirements, click here: Cyprus CIF Information.
Alternative Investment Funds (AIFs)
Cyprus legislation provides for two types of Alternative Investment Funds (AIFs), the first is without investor limitations and the second type of AIF has a limited number of persons. Choosing to incorporate an AIF has a number of significant advantages:
- The types of available investments are free from Regulator restrictions.
- Subject to Regulator approval, AIFs can be self-managed.
- AIFs can be set-up as umbrella funds with numerous different sections.
- AIFs can be listed on Cyprus Stock Exchange and other EU stock exchanges with no limit on the number of investors.
- Services supplied by the Fund Investment Manager are VAT exempt.
- the ‘‘Company’’ legal form of an AIF can take advantage of the double tax treaty network of Cyprus.
The Initial Capital of the AIF, as appropriate, shall be consisted of cash or assets relevant to the investment policy of the AIF, free from any kind of charge, as follows:
- Common Fund: €125,000 minimum
- Investment Company (Fixed/variable capital):
- Externally-Managed: €125,000, or
- Self-Managed: €300,000. More information on variable capital investment companies can be found here.
- Limited Liability Partnership: €125,000.
- The AIF must maintain and apply appropriate risk management systems to monitor its risk with regards to its operations, its position, and the overall risk profile of its portfolio.
- The AIF must maintain the appropriate organisational structure to minimise conflict-of-interest risk.
- AIF Management of Operations: By at least 2 natural persons with sufficient experience and specialisation (who cannot participate in the management of the depositary).
- The AIF must appoint a Depositary to entrust the assets of the AIF for safe-keeping.
- The AIF must develop and be in compliance with its Common Fund Rules
- The AIF must comply with all obligations regarding disclosure to investors (Prospectus, annual report, half-yearly report, rules & instruments of incorporation)
For minimum investment requirements and more information: Cyprus AIFs
Cyprus Alternative Investment Funds with Limited Number of Persons (AIF - LNP)
In accordance with Cyprus AIF Legislation, the establishment of an AIF-LNP is allowed, provided that it shall not fall within the scope of the AIFM Law nor shall be managed by an AIFM and, additionally, its incorporation documents or partnership agreement:
- Defines specifically that the relevant fund is only addressed to professional or/and well informed investors.
- Limits the number of its unit holders, including the co-holders, to the maximum limit of 75 persons.
- Does not allow the issue of bearer shares.
For further reading on AIF general requirements: Cyprus AIF & AIF LNP.
Eltoma Corporate Services can prepare the application files in accordance with CySEC compliance procedures. Contact us to obtain a Cyprus AIF-LNP license.
Read about other types of financial companies availble for fund licensing.