Cyprus Funds & EU Legal Framework
The implementation of the EU regulatory framework of the UCITS IV Directive and the Alternative Investment Fund Managers Directive (“AIFMD”) is drastically changing the fund industry both within and outside the EU.
The Prospectus Directive and the Markets in Financial Instruments Directive (MiFID) , both transposed into Cyprus national legislation, provide issuers with a single EU passport for prospectuses and managers to promote their services in all EU member states. Fund managers, custodians, administrators and promoters seeking to raise funds and maximize returns for their clients must choose a jurisdiction to domicile (or transfer) their fund and/or their own operations taking into account the requirements of the new European Directives as well as their regulatory, tax and cost implications. Here is where Cyprus comes in as the new, cost efficient, lowest EU tax member state with great infrastructure, a cosmopolitan way of life and well educated work force, offering to fund managers an attractive place either to relocate or register their fund and manage it from another member state as per the MiFID.
Cyprus can offer the same EU advantages at a fraction of the cost of its counterparts in Luxembourg, Ireland and the UK. The local presence of hedge fund managers is growing and funds such as IKOS and Albourne Partners bear testimony to a trend that industry experts predict is set to rise: Cyprus as a preferred jurisdiction for fund domicile and fund management.