Home / CY AIFM Law of 2013 / PART ΙΙ – AUTHORISATION OF AIFMs / Section 9 - Initial capital and own funds. 

Initial capital and own funds.

9.-(1) An AIFM which is an internally managed AIF shall have an initial capital of at least EUR 300,000.

(2) Where an AIFM is appointed as external manager of AIFs the AIFM shall have an initial capital of at least EUR 125,000.

(3) Where the value of the portfolios of AIFs managed by the AIFM exceeds EUR 250 million, the AIFM shall provide an additional amount of own funds. That additional amount of own funds shall be equal to 0.02% of the amount by which the value of the portfolios of the AIFM exceeds EUR 250 million but the required total of the initial capital and the additional amount shall not, however, exceed EUR 10 million.

(4) For the purpose of paragraph (3) of this section, AIFs managed by the AIFM, including AIFs for which the AIFM has delegated functions in accordance with sections 20 to 21, but excluding AIF portfolios that the AIFM is managing under delegation, shall be deemed to be the portfolios of the AIFM.

(5) Irrespective of paragraph (2) of this section, the own funds of the AIFM shall never be less than the amount required under Article 21 of Directive 2006/49/EC.

(6) An AIFM may not to provide up to 50% of the additional amount of own funds referred to in paragraph (3), if it benefits from a guarantee of the same amount given by a credit institution or an insurance undertaking which has its registered office -

(a) in a Member State; or

(b) in a third country where it is subject to prudential rules considered by the Commission as equivalent to those laid down in Union law.

(7) To cover potential professional liability risks resulting from activities AIFMs may carry out pursuant to this Law, both internally managed AIFs and external AIFMs shall either -

(a) have additional own funds which are appropriate to cover potential liability risks arising from professional negligence; or

(b) hold a professional indemnity insurance against civil liability arising from professional negligence which is appropriate to the risks covered.

(8) Own funds, including any additional own funds as referred to in sub-paragraph (a) of paragraph (7), shall be invested in liquid assets or assets readily convertible to cash in the short term and shall not include speculative positions.

(9) With the exemption of paragraphs (7) and (8) of this section and of the Regulation (EU) No 231/2013 and of the other delegated acts adopted by the European Commission pursuant to paragraph 9 of Article 8 of the Directive 2011/61/EU, this section shall not apply to AIFMs which are also UCITS management companies.