Home / CY AIF Law of 2018 / PART VΙI: ALTERNATIVE INVESTMENT FUNDS WITH LIMITED NUMBER OF PERSONS / [128] Depositary.

128. Depositary.

(1) Subject to the provisions of section (4), the assets of the AIFLNP shall be entrusted for safekeeping to a depositary which-

(a) has its registered office in the Republic or in another member state, or a third country provided that:

• in the third country where the depositary is established, the depositaries are subject to prudential regulation and supervision, including minimum capital requirements,

• the third country where the depositary is established is not listed as a Non-Cooperative by the FATF,

• the third country has signed an agreement with the Republic, which fully complies with the standards laid down in Article 26 of the OECD Model Tax convention on Income and on Capital and ensures an effective exchange of information in tax matters including any multilateral tax agreements, and

(b) is a credit institution or an investment firm, or another category of institution established in a member state that is subject to prudential regulation and supervision and which falls within the categories of institutions determined by member states as eligible to be appointed as depositaries∙

It is provided that, for the purposes of this paragraph, an investment firm could also be an undertaking authorised by a third country for the provision of safekeeping and administration of financial instruments for the account of its clients, including custodianship and related services such as cash/collateral management, which is subject to prudential regulation and supervision, including minimum capital requirements, which have the same effect as Union law and are effectively enforced.

(2) By way of derogation from section (1), the AIFLNP which, in accordance with its investment policy, invests in assets which are not subject to custody, as provided by article 24(3)(a) of the Alternative Investment Fund Managers Law, may appoint as depositary an entity performing depositary functions within the context of its professional or business activities, for the performance of which the entity is subject to professional registration recognized by the law, or an administrative authority or by professional conduct rules∙ the entity has to provide sufficient financial and professional guarantees to be able to effectively perform the depositary functions and to fulfill any obligation arising out of such undertaking.

(3) The depositary of the AIFLNP is entrusted with the tasks provided for in article 24(3) of the Alternative Investment Fund Managers Law.

(4) The AIFLNP may not appoint a depositary -

(a) where its total assets shall not exceed the amount of five million euros (€5.000.000) or its equivalent in another currency, and in case the AIFLNP operates as umbrella AIF, the total assets of all investment compartments shall be calculated for the purposes of this paragraph∙ or

(b) where its instruments of incorporation limit, throughout the operation of the fund, the number of unitholders to a maximum of five (5) natural persons and in case the AIFLNP operates as umbrella AIF, the number of unitholders participating in all investment compartments shall be calculated for the purposes of this paragraph∙ or

(c) the portfolio of the AIFLNP consists of assets subject to custody, the value of which does not exceed ten per cent (10%) of its total assets and-

• its instruments of incorporation shall limit, throughout the operation of the fund, the number of unitholders to a maximum of twenty five (25) natural persons and in case the AIFLNP operates as umbrella AIF, the number of unitholders participating in all investment compartments shall be calculated for the purposes of this paragraph∙ and

• each one of its unitholders invests at least five hundred thousand euros (€500.000) in the AIFLNP.

(5) 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 depositary and the safekeeping of the AIFLNP’s assets.