The Cyprus Investment Funds Association (Cifa) has been given formal membership by the European Fund and Asset Management Association (Efama) during the body’s annual general meeting on 17 June.
Before, Cifa has completed a two year observer status.
A pair of legislative amendments into Cyprus’ alternative investment fund laws is to strengthen the legal and regulatory framework of the local fund management industry by the end of the year.
These amendments will introduce the “Registered Alternative Investment Fund” (Registered AIF) and sub-threshold AIFM or “Mini Manager” regimes.
Cyprus’ funds registered as AIFs under the AIFM directive currently need to be authorized by the Cyprus Securities and Exchanges Commission (CySEC).
They will not need it once the legal amendments previously mentionned will be implemented.
The association said that the registered alternative investment fund may be organized in any legal form available under Cyprus law.
It highlighted the inception of a new partnership structure for all categories of AIFs that will give the option for general partners to elect upon establishment a partnership with a legal personality and thus provide an additional vehicle for the use of fund managers.
Cifa said it has also been decided to introduce a licensing requirement and supervision regime for the Cyprus sub-threshold AIFM, known as “Mini Manager.”
“Such Mini Managers could manage: (i) all categories of Cyprus authorized AIFs, (ii) Registered AIFs taking the form of a limited partnership and (iii) non Cypriot AIFs (subject to the discretion of such competent authority in the other jurisdiction).
“The list of key requirements from the Mini Manager which relate to the governance and other organizational requirements is being discussed with the CySEC, the aim being to provide a reasonable and proportionate sub threshold manager,” the association explained.
Cifa’s president Angelos Gregoriades argued that the transition from a bank-dominated financial system to one with more diverse sources of financing will only be possible if more opportunities for equity funding are created in Europe.
“There is currently limited legislation and regulation binding the investment and movement of funds under €100m across the EU.
“The upcoming adaptations to the alternative investment fund framework in Cyprus will allow a smaller but significant flow of funds to be managed more efficiently, bolstered by the legal and administrative advantages an onshore EU jurisdiction already like Cyprus already has in place.
“Now as a national association of Efama, we look forward to strengthening the right balance between the freedom of operation of the asset manager and the protection of investors.”