Home / CY AIF Law of 2018 / PART ΙΙ: PROVISIONS REGARDING THE ALTERNATIVE INVESTMENT FUNDS / Chapter 8: Special provisions / Part 1 - Common fund / [52] Dissolution and liquidation of the common fund.
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52. Dissolution and liquidation of the common fund.
(1) The common fund is dissolved for one of the following reasons:
(a) in case the Securities and Exchange Commission withdraws its authorisation in accordance with article 53
(b) after a relevant decision of its external manager, if he considers that the continuation of the operation of the common fund is not in the interests of its unitholders
(c) when the period of its operation provided in its rules, lapses, unless the rules are amended before the end of the period of operation of the common fund, so that the period of its operation is extended or becomes indefinite;
(d) with the occurrence of an event which, according to the fund rules of the common fund, constitutes a reason for its dissolution
(e) in the case of dissolution, resignation, liquidation or withdrawal of authorisation of the external manager or the depositary and a replacement is not appointed;
(f) in case of full redemption of its units;
(g) following a relevant decision by its external manager, in case the assets of the common fund are reduced to the one fourth (1/4) of the minimum assets provided for in article 14(1) and this reduction lasts for more than six (6) months∙ before the common fund raises the assets provided for in article 14(1), it shall not be considered to have been reduced;
(h) following a relevant decision by its external manager, which can be taken in case the common fund assets are reduced and fall below the two thirds (2/3) of the minimum assets requirement, as specified by article 14(1):
It is provided that, the external manager shall disclose, without undue delay, the fact that the assets of the common fund were reduced as mentioned in this section, to the Securities and Exchange Commission which may demand the dissolution of the common fund.
(2) The unitholders of the common fund and their lenders may not request the dissolution of the common fund and the distribution of its assets.
(3) The following shall apply in case of dissolution and liquidation of a common fund:
(a) the dissolution of the common fund is followed by its liquidation, which results to the distribution of its assets, under the responsibility of its liquidator. The common fund shall be considered as dissolved and liquidated once the information provided for in section (5) is communicated to the Securities and Exchange Commission.
(b) The external manager of the common fund is appointed as liquidator, unless the dissolution is due to a fact provided in paragraph (e) of section (1) and is related to the external manager; in this case the liquidator of the common fund is appointed by the depositary. Where the fact provided in paragraph (e) of section (1) is related to the depositary, the liquidator is appointed by the Securities and Exchange Commission by its decision, and article 25(3) to (5) shall apply proportionately.
(c) The liquidator shall not delegate its duties regarding liquidation to a third party.
(d) In case the liquidator does not exercise its duties diligently, the Securities and Exchange Commission may appoint a replacement of the liquidator following the request of any person who has a legitimate interest therein.
(4) (a) Where the common fund is under liquidation, the issue of new units is not possible, unless it serves the purpose of liquidation. The redemption of units is still possible provided that the equal treatment of the unitholders is ensured.
(b) The depositary of the common fund shall exercise its duties until the process of distribution of its assets finishes. The unitholders shall be satisfied from the liquidation proceeds when any kind of claim against the common fund is settled.
(5) The result of the distribution of the common fund’s assets shall be showed in a special report of an independent auditor, which is communicated to the Securities and Exchange Commission and to the competent authorities of the countries where the units of the common fund are marketed, while the relevant report shall be at the disposal of its unitholders at the points of marketing of its units:
It is provided that, the auditor of the common fund shall be considered independent for the purpose of application of this section.
(6) The dissolution of the common fund and the reasons for its dissolution are communicated, immediately, by the external manager to the depositary of the common fund, its unitholders and the Securities and Exchange Commission. The external manager shall submit to the Securities and Exchange Commission, without undue delay, a copy of the above mentioned communication to the unitholders and the depositary of the common fund.
(7) In case the common fund is an umbrella fund, its dissolution takes place when its last remaining investment compartment is dissolved, in accordance with article 9(7).
(8) The Securities and Exchange Commission may, by means of a directive, specify any technical matter or detail regarding the application of this article.
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