Home / CY AIF Law of 2018 / PART VΙI: ALTERNATIVE INVESTMENT FUNDS WITH LIMITED NUMBER OF PERSONS / [125] Externally and internally managed AIFLNP.

125.Externally and internally managed AIFLNP.

(1) The AIFLNP may be setup-

(a) either as an internally managed AIFLNP, where it does not appoint an external manager, if it is established as an investment company or a limited partnership with separate legal personality and the assets under its management do not exceed the thresholds of article 4(2) of the Alternative Investment Fund Managers Law∙

(b) or as an externally managed AIFLNP, where it appoints an external manager to perform the investment management functions, which is authorised and operates as -

• a UCITS Management Company established in the Republic and which may manage collective investment undertakings other than UCITS∙ or

• a CIF∙ or

• an AIF management company authorised in the Republic, for the investment management of AIFs, whose assets under management do not exceed the thresholds of article 4(2) of the Alternative Investment Funds Manager Law and is subject to prudential supervision subject to law of the Republic∙ or

• a company established in a third country, which is authorised to provide the portfolio management service and is subject to prudential regulation regarding the provision of this service∙ or

• any company which, in accordance with its instruments of incorporation, has the sole purpose of providing the portfolio management service to the specific AIFLNP. In this case, the appropriateness of the manager of the AIFLNP is assessed by the Securities and Exchange Commission, on the basis of the information submitted in the file of the application to grant authorisation to the AIFLNP, taking into consideration that the manager has to comply with articles 129(4) and 131∙ or

• a UCITS Management Company authorised by another member state and which may manage collective investment undertakings other than UCITS∙ or

• an AIF management company authorised in another member state, for the investment management of AIFs, whose assets under management do not exceed the thresholds of Article 3, paragraph 2 of Directive 2011/61/EU and is subject to prudential supervision subject to law of its home member state∙ or

• an IF established in another member state.

(2)(a) The external manager of the AIFLNP or the AIFLNP, in case it is internally managed may delegate any of functions of article 6(1) to a third party.

(b) The external manager’s liability, or in case it is internally managed, the AIFLNP’s liability, towards the AIFLNP and/or its investors, shall not be affected by the fact that the AIFM has delegated functions to a third party, in accordance with paragraph (a).

(3) The functions of article 6(1)(a) may be delegated to a third party, provided that the third party is authorised for the purpose of portfolio management and subject to efficient prudential regulation and supervision for providing this service in its home country, in accordance with the legislation of its home country.

(4) (4) The internally managed AIFLNP shall establish and maintain an internal audit and a legal compliance function, which, where appropriate and proportionate in view of the range, nature, scale and complexity of its business, are independent from its other functions and activities.

(5) By way of derogation from article 24(1)(b) and (c) and sections (2) and (3) of this article, for the delegation of functions relating to the AIF’s assets, which are not financial instruments, the external manager or the AIFLNP, in case it is internally managed, may delegate the performance of such functions to a third party which may provide the delegated function within the context of its professional or business activities, for the performance of which is subject to professional registration, recognized by the law or an administrative authority or by professional conduct rules∙ the third party who undertakes the delegated function has to provide sufficient financial and professional guarantees to be able to effectively perform the delegated function and to fulfil any obligation arising out of such undertaking:

It is provided that the external manager’s or the AIFLNP’s, in case it is internally managed, liability shall not be affected by the fact that it has delegated functions to a third party, pursuant to this section.

(6)(a) In order for an AIFLNP to be managed by an AIFM or in case the AIFLNP is internally managed and exceeds the threshold of article 4(2) of the Alternative Investment Fund Managers Law during its operation, the fund becomes subject to the Alternative Investment Fund Managers Law and must comply with the provisions of Part II this Law, applicable to AIFs addressed to professional and/or well informed investors, as well as the provisions of the Alternative Investment Fund Managers Law.

(b) Irrespective of the provisions of paragraph (a), the AIFLNP may submit an application to convert to an AIF subject to the provisions of Part II.

(7) The external manager and the AIFLNP, in case it is internally managed, are subject to registration in accordance with article 4(3) of the Alternative Investment Fund Managers Law.

(8) The Securities and Exchange Commission may, by means of a directive, regulate any technical matter or detail regarding the application of this article, as well as any matter relevant to the appointment of external manager and the management of the AIFLNP’s assets.