Home / CY AIF Law of 2018 / PART ΙΙ: PROVISIONS REGARDING THE ALTERNATIVE INVESTMENT FUNDS / Chapter 6: AIF depositary /  [26] Appointment of AIF Depositary.

26. Appointment of AIF Depositary

(1) Articles 23 to 28 of the Alternative Investment Fund Managers law shall apply in relation to depositaries appointed by an AIFM, which is an internally managed AIF, or by an AIF which is externally managed by an AIFM.

(2) The provisions of this Chapter shall apply in relation to depositaries appointed for an AIF, other than section (1).

(3) Subject to the provisions of section (4), the assets of the AIF 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∙ 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.

(4) By way of derogation from section (3), the AIF 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 fulfil any obligation arising out of such undertaking.