Cyprus had already transposed the AIFMD into national law earlier in July, in the form of the Alternative Investment Fund Managers Law of 2013 (Law 56(I) of 2013: the AIFM Law).
The AIFM Law applies to AIFMs registered in Cyprus or another member state which manage one or more AIFs, and to non-EU AIFMs which market one or more AIFs in a member state or manage one or more EU AIFs (an EU AIF is an AIF which is authorised or registered in a member state under the applicable national law or which has its registered office or head office in a member state). It designates the Cyprus Securities and Exchange Commission (CySEC) as the competent body for the authorisation and supervision of AIFMs in Cyprus.
The concept of an AIF is very broadly defined in the AIFM Law as any undertaking for collective investment raising funds from a number of investors with a view to investing them in accordance with a defined investment policy for their benefit, apart from undertakings for collective investment in transferable securities.
Each AIF covered by the AIFM Law is required to have a single AIFM, which is responsible for ensuring compliance with the AIFM Law. The AIFM may be an external manager or, if the legal form of the AIF makes this possible, the AIF itself.
AIFMs registered in Cyprus must take the form of a company limited by shares with a registered office and management in Cyprus. An AIFM which is an internally managed AIF must have an initial capital of at least €300,000 ($406,000); for external AIFMs the minimum capital requirement is €125,000, together with additional capital if the amount of funds under management exceeds €250 million. They must also hold insurance cover or sufficient additional own funds to cover potential claims in respect of negligence.
There is a transitional period of one year for fund managers operating in Cyprus to comply with the new law.