Home / CY AIF Law of 2018 / PART I: INTRODUCTORY PROVISIONS / [02] Interpretations

2. Interpretations

(1) In this Law, unless the context provides otherwise -

“common fund” means a group of assets that belong jointly and severally to its unitholders, which is authorised to operate as an AIF under Chapter 2 of Part II or can operate as a RAIF under Part VIII∙

“senior management” means the natural persons who effectively conduct the business of the external manager or of the AIF, in case the AIF is internally managed, and, as the case may be, the executive members of the governing body who effectively conduct the business of the external manager or of the AIF, in case the AIF is internally managed∙

“initial capital” means the minimum own funds which -

(a) are required by this Law∙ and

(b) shall be comprised of -

• the issued and paid up capital of share classes not created for investment purposes, plus share premium accounts but excluding cumulative preferential shares∙ and

• reserves of share classes not created for investment purposes, excluding revaluation reserves, and profits and losses of share classes not created for investment purposes, brought forward as a result of the application of the final profits and losses of the previous year∙ and

(c) are cash or assets readily convertible to cash∙

“prime broker” means any of the following:

(a) a credit institution,

(b) an investment firm,

(c) other entity which -

• is subject to prudential regulation and ongoing supervision,

• offers services to professional investors primarily to finance or execute transactions in financial instruments as counterparty and

• may also provide other services such as clearing and settlement of trades, custodial services, securities lending, customised technology and operational support facilities∙

“secondary market” has the meaning attributed to the terms

“regulated market” and “multilateral trading facility” by article 2(1) of the Investment Services and Activities and Regulated Markets Law and includes, in the case of a regulated market, the part of the market which is an independent regulated market∙ (i)

“marketing” or “marketing of units” means a direct or indirect offering or placement at the initiative of the external manager or on behalf of the external manager, of units of an AIF it manages, to investors -

(a) domiciled in the European Union or in a third country, in case they are natural persons∙ or

(b) having their corporate seat or with a registered office in the European Union or in a third country, in case they are legal persons∙

“distribution” means the payments by an AIF to its unitholder, excluding the payments which relate to the redemption or repurchase of units∙

“traded AIF units” means the units or the category of units of a traded AIF, which have been listed on a secondary market for trading∙

“traded AIF” means an AIF, either open or closed ended, the units of which have been listed on a secondary market for trading∙

“International Financial Reporting Standards” has the meaning attributed to this term by article 2(1) of the Companies Law∙ (ii)

“governing body” means the body -

(a) with ultimate decision making authority in an external manager or the AIF, in case the AIF is internally managed, comprising the supervisory and/or the managerial functions∙ and

(b) which is, as the case may be, the board of directors in a company or the general partner in a limited partnership∙

“AIFM” means AIFM of the Republic or EU AIFM or non-EU AIFM∙

“non-EU AIFM” has the meaning attributed to this term by article 2(1) of the Alternative Investment Fund Managers Law∙ (iii)

“AIFM which is an internally managed AIF” means an internally managed AIF which is an AIFM of the Republic∙

“AIFM of the Republic” has the meaning attributed to this term by article 2(1) of the Alternative Investment Fund Managers Law∙

“EU AIFM” has the meaning attributed to this term by article 2(1) of the Alternative Investment Fund Managers Law∙

“registered office” means -

       (a) in relation to a company, the registered office referred to in article 102 of the Companies Law∙

(b) in relation to overseas company, the address referred to in article 347(1)(d) of the Companies Law∙

(c) in relation to a limited partnership, the principal place of business referred to in article 51(1)(c) of the General and Limited Partnerships and Business Names Law∙ (iv)

“qualifying holding” means the direct or indirect holding in a company, or the direct or indirect holding or interest in a limited partnership, which -

(a) represents at least ten per cent (10%) of the capital or the voting rights∙ or

(b) makes it possible to exercise a significant influence over the management of the company, in which that holding subsists, or of the limited partnership, in which that holding or interest subsists∙

“auditor” has the meaning attributed to the term “statutory auditor” by article 2(1) of the Auditors Law∙

“indicative Net Asset Value (iNAV) of the AIF” means the intra-day, interim value, representing the net asset value of the AIF, based on the most recent, at the time of valuation, information and in accordance with the rules of the secondary market, where the units of the AIF are traded∙

“indicative price of traded AIF units” means the intra-day, interim value, representing the price of the AIF’s units, based on the most recent, at the time of valuation, information and in accordance with the rules of the secondary market, where the units of the AIF are traded∙

“consolidated financial statements” has the meaning attributed to the term “group accounts” by article 2(1) of the Companies Law∙

“externally managed AIF” means an AIF authorised to operate subject to the provisions of Chapter 2 of Part II∙

“externally managed AIFLNP” means an AIFLNP authorised to operate subject to the provisions of Part VII∙

“external manager” mean a person appointed to manage the investments of an AIF or RAIF or AIFLNP, including the AIF which is an internally managed AIF and the AIFLNP which is an internally managed AIFLNP∙

“FATF” means the Financial Action Task Force for the Combat against Money Laundering and Terrorist Financing, which was established by the 15th G-7 Summit that was held in Paris on the 14th to 16th of July 1989∙

“professional investor” means an investor who is considered to be a professional client or may, on request, be treated as a professional client within the meaning of the Second Appendix of the Investment Services and Activities and Regulated Markets Law∙

“well informed investor” means every investor who is not a professional investor, but fulfils the following criteria:

(a) the investor confirms in writing -

• that he has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks associated with the prospective investment and that he is aware of the risks associated with the prospective investment∙ or

• that his business activity is related to the management, acquisition or sale of assets, either on the investor’s own account or on behalf of third parties, and are of the same type as the investments of the AIF∙ and

(b) 

• invests at least €125.000 in the AIF∙ or

• has been assessed by a credit institution, an AIFM, a UCITS Management Company, an IF or an external manager of AIFs authorised in the Republic or another Member State for the management of AIFs whose assets do not exceed the limits provided for in article 4(2) of the Alternative Investment Fund Managers Law or the corresponding article 3(2) of Directive 2011/61/EU, and the above assessment shows that he has the necessary knowledge and experience in financial and business matters, to evaluate the merits and risks associated with the AIF’s prospective investment based on the AIF’s investment policy∙ or

• is employed by one of the persons referred to in subparagraph (ii) of paragraph (b), receiving total remuneration that takes him into the same remuneration bracket as the natural persons who effectively conduct the business of the person referred to in subparagraph (ii) of paragraph (b) or the executive members of their governing body, who effectively conduct the their business∙

(c) by way of derogation from paragraphs (a) and (b), the investor is a person who effectively directs the business of the AIF or its external manager or is a person engaged in the AIF’s investment management functions∙

“Securities and Exchange Commission” means the Cyprus Securities and Exchange Commission, governed by the Cyprus Securities and Exchange Commission Law∙

“investment compartment” means the investment compartment of an AIF, established and operating as an AIF which may create investment compartments, which is a separate group of assets∙

“investment firm” or “IF” has the meaning attributed to the term “Investment Firm” by article 2(1) of the Investment Services and Activities and Regulated Markets Law∙

“business” in relation to the external manager or the AIF or the AIFLNP, in case the AIF and the AIFLNP are internally managed, means the AIF management activities referred to in article 6(1), and the terms “management of partnership business” and “administration of partnership business”, in relation to a limited partnership, shall be interpreted accordingly∙

“internally managed AIF” means an AIF incorporated either as an investment company or a limited partnership with separate legal personality, which is authorised to operate subject to the provisions of Chapter 2 of Part II∙

“internally managed AIFLNP” means an AIFLNP incorporated either as an investment company or a limited partnership with separate legal personality, which is authorised to operate subject to the provisions of Part VII∙

“company” means -

(a) company, within the meaning given to this term by article 2(1) of the Companies Law∙ or

(b) a company legally incorporated in another member state or third country∙

“UCITS Management Company” has the meaning attributed to the term “Management Company” by article 2(1) of the Open Ended Undertakings for Collective Investment Law, including management companies authorised by another member state, subject to a legislation harmonising Directive 2009/65/EC∙ (v)

“investment company” means a variable capital investment company or a fixed capital investment company∙

“fixed capital investment company” means a company incorporated subject to the Companies Law as a company limited by shares and which is authorised to operate as an AIF subject to the provisions of Chapter 2 of Part II or as an AIFLNP subject to the provisions of Part VII or which may operate as a RAIF subject to the provisions of Part VIII, as a fixed capital investment company in accordance with the relevant provisions of this Law∙

“variable capital investment company” means a company incorporated subject to the Companies Law as a company limited by shares and which is authorised to operate as an AIF subject to the provisions of Chapter 2 of Part II or as an AIFLNP subject to the provisions of Part VII or which may operate as a RAIF subject to the provisions of Part VIII, as a variable capital investment company in accordance with the relevant provisions of this Law∙

“limited partnership” or “partnership” means a limited partnership registered subject to the General and Limited Partnerships and Business Names Law, with or without separate legal personality, which is authorised to operate as an AIF subject to the provisions of Chapter 2 of Part II or as an AIFLNP subject to the provisions of Part VII or which may operate as a RAIF subject to the provisions of Part VIII, as a limited partnership in accordance with the relevant provisions of this Law∙

“limited partner” means a limited partner or limited partner by shares, within the meaning given to these terms by article 2 of the General and Limited Partnerships and Business Names Law∙

“retail investor” means an investor who does not qualify as a professional investor nor as a well informed investor∙

“Registrar” -

(a) with regards to a company incorporated subject to the provisions of the Companies Law, has the meaning attributed to the term “the registrar of companies” by article 2(1) of the Companies Law∙

(b) with regards to a limited or general partnership, has the meaning attributed to the term “Registrar” by article 2 of the General and Limited Partnerships and Business Names Law∙

“depositary” means the legal person entrusted with at least one of the depositary tasks set out in article 24 of the Alternative Investment Fund Managers Law∙

“subsidiary” has the meaning attributed to this term by article 2(1) of the Companies Law or a corresponding law of a member state or third country∙

“own funds” has the meaning attributed to this term by article 4, paragraph 1, point 118) of Regulation (EU) No. 575/2013∙

“fund rules” in relation to AIF or RAIF, shall mean the fund rules of the common fund which must be made in writing and satisfy the provisions of this Law∙

“Regulation (EU) No. 231/2013” means the act of the European Union titled ‘Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision’∙ (vi)

“Regulation (EU) No. 575/2013” means the act of the European Union titled ‘Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012’ as recently amended by Regulation (EU) 2017/2401 of the European Parliament and of the Council of 12 December 2017∙ (vii)

“Regulation (EU) No. 583/2010” means the act of the European Union titled ‘Commission Regulation (EU) No 583/2010 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website’∙ (viii)

“instruments of incorporation” means -

(a) in the case of an AIF or RAIF or AIFLNP, incorporated as an investment company , the articles of association and the instrument of incorporation of the Companies Law, the content of which shall comply with the provisions of this Law∙ and

(b) in the case of an AIF or RAIF or AIFLNP, registered as a limited partnership, the partnership agreement of the General and Limited Partnerships and Business Names Law, the content of which shall comply with the provisions of this Law∙

“registered alternative investment fund” or “RAIF” means the AIF which may operate as a registered AIF subject to the provisions of Part VIII∙

“relevant legislation” has the meaning attributed to this term by article 2(1) of the Cyprus Securities and Exchange Commission Law∙

“capital commitment” means the contractual commitment of an investor to provide the AIF with an agreed amount of investment on request by the external manager or the AIF, in case the AIF is internally managed∙

“member state” means any Member State of the European Union or another state that is a contracting party to the Agreement on the European Economic Area, signed at Oporto on the 2nd of May 1992 and adjusted by the Protocol signed at Brussels on the 17th of March 1993, as this Agreement was amended by the Agreement on the Participation of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic in the European Economic Area of 2004 and of the Final Act (Ratifying) Law of 2004, as the Agreement is, from time to time, further amended or replaced∙ (ix)

“master AIF” means an AIF in which another AIF invests or has an exposure, in accordance with the definition “feeder AIF” provided in this section∙

“unit account” means the account opened in the name of the unitholders or joint unitholders when they become owners of units in an AIF∙

“unit” or “AIF unit” means the unit of a common fund or the share of an investment company or the share or interest of a limited partnership, according to the legal type of the AIF∙

“unitholder”, in relation to AIF, means the holder of a unit or of a fraction of a unit∙

“parent undertaking” has the meaning attributed to this term by article 2(1) of the Companies Law or by a relevant law of a member state or third country, as the case may be∙

“leverage” means the method by which -

(a) the external manager increases the exposure of an AIF it manages to risk∙ or

(b) the AIF, in case it is internally managed, increases its exposure to risk,

whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means∙

“directive” means the regulatory administrative act of the Securities and Exchange Commission, which is published in the Official Gazette of the Republic∙

“Directive 2009/65/EC” means the act of the European Community titled ‘Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009, on the coordination of laws, regulations and administrative provisions relating to undertakings of collective investments in transferable securities (UCITS)’, as recently amended by Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014∙ (x)

“Directive 2011/61/EU” means the act of the European Parliament and of the Council titled ‘Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on the Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010’, as recently amended by Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014∙ (xi)

“AIF” or “Alternative Investment Fund” means collective investment undertakings, including investment compartments thereof, which -

(a) raise capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors∙ and

(b) do not require authorisation pursuant to article 9 of the Open Ended Undertakings for Collective Investment Law or pursuant to the legislation of another Member State which harmonises article 5 of Directive 2009/65/EC∙

“AIF with limited number of persons” or “alternative investment fund with limited number of persons” or “AIFLNP” means an AIF authorised by the Securities and Exchange Commission to operate as an AIFLNP, subject to Part VII, or which was permitted to operate as an AIFLNP subject to article 120(1)(a) of the Alternative Investment Funds Law∙ (xii)

“umbrella AIF” means an AIF established and operating as an AIF with more than one investment compartments or which has been converted to and operates as an AIF with more than one investment compartments∙

“general partner” has the meaning attributed to this term by article 2 of the General and Limited Partnerships and Business Names Law∙

“OECD” means the Organisation for Economic Cooperation and Development established in 1960 by the Convention for the Organisation for Economic Cooperation and Development∙

“UCITS” has the meaning attributed to this term by article 2(1) of the Open Ended Undertakings for Collective Investment Law∙

“credit institution” means -

(a) if the entity is established in the Republic, a bank or a cooperative credit institution, within the meaning of article 2(1) of the Business of Credit Institutions Law∙ or

(b) if the entity is established in a member state, a credit institution, within the meaning of point (1) of Article 4(1) of Regulation (EU) No. 575/2013∙ or

(c) if the entity is established in a third country, an entity carrying out similar activities to the undertaking defined in point (1) of Article 4(1) of Regulation (EU) No. 575/2013 and which is subject to the law of a third country which applies prudential supervisory and regulatory requirements at least equivalent to those applied in the Union∙ (xiii)

“offering document” means the document containing information about the AIF or the AIFLNP or the RAIF, as the case may be, and which is not subject to the provisions of the Public Offer and Prospectus Law∙ (xiv)

“persons engaged in AIF activity” means the external manager, the AIF in case it is internally managed, the AIF’s depositary and the persons marketing AIF’s units∙

“persons who effectively direct the business” means the members of the governing body and the senior management of the external manager or the AIF, in case the AIF is internally managed∙

“primary AIF units” means the AIF units which -

(a) are issued and redeemed at a price calculated based on the net asset value of the AIF, following the submission of an application directly to the AIF, which can only be submitted by specifically authorised persons, and where the price of the said units or redemption result is expressed in cash or securities representing the investment policy of the AIF∙ and

(b) thereafter, are assigned to AIF units which are traded in the relevant secondary market, to be sold or purchased by investors∙

“durable medium” means a letter or text, transferred through fax or an electronic message or any other way of recording and distributing information∙

“close links” means the situation between two or more persons, in which two or more persons -

(a) are linked by participation, namely ownership, directly or by way of control, of 20% or more of the capital or voting rights of a company or a limited partnership or a common fund∙ or

(b) are linked by control, namely the relationship between a parent undertaking and a subsidiary, as referred to in article 148 of the Companies Law or a similar relationship between a natural or legal person and an undertaking; for the purposes of this paragraph, a subsidiary undertaking of a subsidiary undertaking shall also be considered to be a subsidiary of the parent undertaking of those subsidiaries∙ or

(c) are permanently linked between them by a control relationship∙

“partnership agreement” means a written agreement drawn up as initial text by the general partner and approved by the Securities and Exchange Commission, detailing the terms for handling cases and the conduct of business of the limited partnership, as the case may be, after any amendments, additions or revisions∙

“related person” means any of the following -

(a) the parent undertaking or the subsidiary of the AIF or of the persons who effectively direct the business of the AIF∙

(b) the subsidiary of the parent undertaking of the AIF or of the persons who effectively direct the business of the AIF∙

(c) any other company which is not subsidiary of the AIF or of anyone of the persons who effectively direct the business of the AIF, but in which the AIF or any of the persons who effectively direct the business of the AIF hold, for their own benefit, at least 20% of its issued capital or its shares with voting rights∙

(d) a limited partnership or a trust which holds an interest of 20% in the AIF or in any of the persons who effectively direct the business of the AIF∙

“third country” means a country that is not a member state∙

“feeder AIF” means an AIF which -

(a) invests at least 85% of its assets in units or shares of a master AIF∙

(b) invests at least 85% of its assets in more than one master AIFs where those master AIFs have identical investment strategies∙ or

(c) has otherwise an exposure of at least 85% of its assets to such a master AIF∙

“financial instrument” has the meaning attributed to this term by article 2(1) of the Investment Services and Activities and Regulated Markets Law.

(2)(a) In this Law and in any acts with regulatory content issued pursuant of the present Law, any reference to a Directive, Regulation or Decision or other legislative act of the European Union, shall mean the said act as corrected, amended or replaced from time to time, unless it appears otherwise from the text.

(b) In this Law and in any acts with regulatory content issued pursuant of this Law , any reference to a law or regulatory administrative act of the Republic, shall mean the said law or act as corrected, amended or replaced from time to time, unless it appears otherwise from the text.

(i) 87(I)/2017

(ii) Cap.113, 9 of 1968, 76 of 1977, 17 of 1979, 105 of 1985, 198 of 1986, 19 of 1990, 46(I) of 1992, 96(I) of 1992, 41(I) of 1994, 15(Ι) of 1995, 21(Ι) of 1997, 82(Ι) of 1999, 149(Ι) of 1999, 2(Ι) of 2000, 135(Ι) of 2000, 151(Ι) of 2000, 76(I) of 2001, 70(Ι) of 2003, 167(Ι) of 2003, 92(Ι) of 2004, 24(Ι) of 2005, 129(Ι) of 2005, 130(Ι) of 2005, 98(Ι) of 2006, 124(Ι) of 2006, 70(Ι) of 2007, 71(Ι) of 2007, 131(Ι) of 2007, 186(Ι) of 2007, 87(Ι) of 2008, 41(I) of 2009, 49(Ι) of 2009, 99(Ι) of 2009, 42(Ι) of 2010, 60(Ι) of 2010, 88(Ι) of 2010, 53(Ι) of 2011, 117(Ι) of 2011, 145(Ι) of 2011, 157(Ι) of 2011, 198(Ι) of 2011, 64(Ι) of 2012, 98(Ι) of 2012, 190(Ι) of 2012, 203(Ι) of 2012, 6(Ι) of 2013, 90(I) of 2013, 74(I) of 2014, 75(I) of 2014, 18(I) of 2015, 62(I) of 2015, 63(I) of 2015, 89(I) of 2015, 120(I) of 2015, 40(I) of 2016, 90(I) of 2016, 97(I) of 2016, 17(I) of 2017, 33(I) of 2017, 51(I) of 2017, 37(I) of 2018, 83(I) of 2018

(iii) 56(I) of 2013, 8(I) of 2015, 97(I) of 2015

(iv) Cap. 116, 77(I) of 1977, 54(I) of 2011, 146(I) of 2011, 147(I) of 2014, 144(I) of 2015, 95(I) of 2016.

(v) 78(I) of 2012, 88(I) of 2015, 52(I) of 2016.

(vi) OJ of the EU: L 83, 22.3.2013, p.1.

(vii) OJ of the EU: L 176, 27.6.2013, p.1∙L 347, 28.12.2017, p.1.

(viii) OJ of the EU: L 176, 10.7.2010, p.1.

(ix) 17(III) of 2004∙OJ of the EU: L 130, 29.4.2004, p.11.

(x) OJ of the EU: L 302, 17.11.2009, L 257, 28.8.2014, p.186.

(xi) OJ of the EU: L 174, 1.7.2011, p.1∙L 173, 12.6.2014, p.349∙

(xii) 131(I) of 2014, 11(I) of 2015.

(xiii) 66(I) of 1997, 74(I) of 1999, 94(I) of 2000, 119(I) of 2003, 4(I) of 2004, 151(I) of 2004, 231(I) of 2004, 235(I) of 2004, 30(I) of 2005, 80(I) of 2008, 100(I) of 2009, 123(I) of 2009, 27(I) of 2011, 104(I) of 2011, 107(I) of 2012, 14(I) of 2013, 87(I) of 2013, 5(I) of 2015, 26(I) of 2015, 35(I) of 2015, 71(I) of 2015 ,93(I) of 2015, 109(I) of 2015, 152(I) of 2015, 168(I) of 2015, 21(I) of 2016, 5(I) of 2017, 38(I) of 2017, 169(I) of 2017, 28(I) of 2018.

(xiv) 114(I) of 2005, 144(I) of 2012, 63(I) of 2013, 166(I) of 2014, 86(I) of 2015, 33(I) of 2016.