RAIFs in Cyprus
REGISTERED ALTERNATIVE INVESTMENT FUNDS (RAIFs) IN CYPRUS
The Alternative Investment Funds Law 2018 (AIF Law, Law 124(I) 2018), that came into force on 31/07/2018 introduced a new fund management vehicle known as the Registered Alternative Investment Fund (RAIF).
A major advantage of the RAIFs is that they are not regulated by the Cyprus Securities and Exchange Commission (CySEC) to commence operations as long as they are externally managed by an Alternative Investment Fund Manager (AIFM) established in Cyprus or in another EU Member State. As a result, the time and cost of establishing an AIF in Cyprus will be reduced.
The key features of a RAIF are:
They do not require license but a mere registration with the CySEC.
They are not regulated by the CySEC. Instead, they will be under the supervision of the appointed external alternative investment fund manager; there are minimum reporting requirements.
There are no minimum capital requirements in respect of setting up a RAIF;
There are no Investment Restrictions, with the exception that RAIFs cannot be set up as Funds of Funds, Money Market Funds or Loan Origination Funds;
They may be set up as investment companies (with variable or fixed capital), limited partnerships and mutual funds;
The Units of RAIFs may be listed;
RAIFs may be structured in the form of an umbrella fund, maintaining a number of legally segregated sub-funds or multiple investment compartments.
A Registered Alternative Investment Fund (RAIF) may have an unlimited number of investors;
The assets under management of a RAIF are subject to no limitation.
Key requirements for a RAIF
They must be externally managed by an AIFM established and licensed in Cyprus or an EU AIF.
The Alternative Investment Fund Manager will provide the services to the Registered Alternative Investment Fund (RAIF), which are mandatory for "normal" Alternative Investment Funds, such as internal compliance and investor compliance, risk management, internal compliance audit etc.;
Alternatively to an Alternative Investment Fund Manager, a Regulated Alternative Investment Fund may be managed by a UCIT Manager licensed in the EU or a Cyprus Investment Firm (CIF), if the Cyprus RAIF is set up as a partnership and if the RAIF invests minimum 70% of its funds in illiquid assets (real estate property, ships, planes etc.) and if the RAIF is closed-ended;
RAIFs are Exclusively addressed to professional and/or well informed investors;
Even though there are no initial capital requirements, a RAIF must possess assets of at least €500,000 for each investment compartment within 12 months from the date of its registration in the RAIF register, through the means of capital raising form investors.
The CySEC must only be notified about the setup of a Registered Alternative Investment Fund (RAIF) and the RAIFs particulars, including its management etc.; CySEC will maintain a special register for RAIFs; once the CySEC confirms that an RAIF has been included in the special register, an RAIF may start to operate.