Alternative Investment Funds



Under the applicable Cypriot legislation, namely the Alternative Investment Funds Law of 2014 131/2014 (AIF Law), as amended, CySEC is the regulatory and supervisory authority for AIFs and may, upon a written application, authorize a Company, a Common Fund or a Partnership as an AIF or AIF Limited Number of Persons (AIF LNP).


Applicable legislation includes, inter alia, the following:


Legal Forms■ Variable Capital Investment Company (VCIC)
■ Fixed Capital Investment Company (FCIC)
■ Limited Partnership
Eligible InvestorsProfessional [1] and/or Well-Informed Investors [2]
Number of InvestorsUp to 75 [3]
Minimum Capital
Not subject to Minimum Capital Requirements
Investment ManagerCan be self-managed by their Board of Directors
(in case of a Company) or appoint an External Manager [4]
Assets under
■ Up to EUR 100 million using leverage or
■ 500 million with no use of leverage and no
redemption rights for 5 years
DepositaryMay be waived [5]
Creation of Multiple
Investment Compartments
Different classes of
shares to be issued


4.1 Legal Forms Explained

From our understanding of the services you seek to provide, it is our opinion that these would fall within the scope of an authorised AIF LNP.

Under the AIF Law, CySEC may, upon a written application, authorise a Company, a Common Fund or a Partnership as an AIF or AIF LNP.

The various legal forms in which an AIF-LNP can manifest in are analytically described as follows:

Fixed Capital Investment Company (FCIC)

  • Incorporated under Cyprus Companies Law.
  • Its share capital cannot vary and remains fixed.
  • Legally segregated sub-funds of the FCIC can be created.

Variable Capital Investment Company (VCIC)

  • Incorporated under the Cyprus Companies Law.
  • Its share capital varies according to the participating investors at any given time.
  • The share capital of the company is equal to the net asset value (NAV) of the shares of the company at any time.
  • The VCIC is the most common form of AIF LNP formed in Cyprus.
  • Legally segregated sub-funds of the VCIC can be created

Limited Liability Partnership (LLP)

  • A limited liability partnership registered in accordance with the General and Limited Partnerships and Trade Names Law.
  • As with all limited partnerships, there must be a General Partner who exercises the management of the LLP and is responsible for the debts and liabilities of the LLP.
  • The limited liability partners are not responsible for the debts and liabilities of the LLP, beyond the amount of their contribution.
  • A limited liability partnership can also have corporate entities acting as partners.

4.2. Application Procedure and Requirements

A comprehensive application must be submitted to CySEC in order to obtain an AIF- LNP authorisation.

Application Form for AIF LNP authorization

The Application Form accompanied with, inter alia, the following6:

  • Draft Private Offering Memorandum (Prospectus)
  • Draft Instruments of Incorporation
  • Details of the Directors and shareholders
  • Details of the Key Service Providers (External Auditor/Internal Auditor/Compliance Officer/Risk Manager
  • Personal Questionnaire Forms for the Directors and shareholders, along with original personal documentation (Clean Criminal Records, Non-Bankruptcy Certificates, Certified Passport/Identity Cards)
  • Personal Questionnaire Forms for the Internal Auditor, the Compliance Officer and the Risk Manager along with original personal documentation (Clean Criminal Record, Non-Bankruptcy Certificates, Certified Passport/Identity Cards), if requested by CySEC
  • Internal Operations Manual
  • Proposed Organizational Structure
  • Proposed Business Plan

CySEC’s Application Fees

For an AIF LNP with no investment compartment 1.300 EUR and in case of an AIF
LNP with several investment compartments 1.300 EUR plus 300 EUR for each 15
investment compartments to be followed apart from the 1st one and 250 EUR from
the 16th investment compartment and afterwards.


Investment Manager

  • Currently the appointment of an external Investment Manager is not mandatory in the case of an AIF-LNP formed as an FCIC or VCIC. An AIF-LNP formed as a Limited Liability Partnership must appoint an investment manager who undertakes the duties and responsibilities of the general partner.
  • If managed internally, the persons carrying out the internal management must be approved as to their investment experience and capacity by CySEC.
  • The external investment managers who can be appointed to manage an AIF-LNP (depending on the type and size of the investments) are: a UCITS management company, a licensed Investment Firm (from any part of the world, subject to conditions) or an entity whose sole purpose is the management of the specific AIF-LNP.
  • We can provide both properly qualified individuals acting as Investment Managers of an AIF-LNP or appropriately licensed companies both from Cyprus and abroad.


  • When a custodian/depositary is required and the AIF-LNP is below the AIFM thresholds then the custodian/depositary can be a credit institution, a Cyprus Investment Firm or any other entity to be determined as eligible.
  • The custodian/depositary shall bear responsibility for holding and safeguarding the assets placed under the AIF-LNP, should these be tangible or intangible assets.
  • We maintain excellent approved intermediary relationships with banks in Cyprus and within and outside Europe and can arrange for the appointment of a suitable custodian.
  • For substance purposes, we strongly recommend a Cyprus based custodian/depositary be appointed.

Fund Administrator

  • The Fund Administrator renders services with regards to book-keeping and accounting, compliance, reporting, filing, share issue, transfer and redemption and other relevant services.
  • The Administrator must be approved by CySEC and our expectation at present is that CySEC will require the administrator to be based in Cyprus.

External Auditors

  • A qualified professional Cyprus auditor must be appointed upon formation of the AIF and will attend to the annual audit.

Internal Auditor

  • A qualified and knowledgeable professional internal auditor must be appointed upon formation of the AIF.


CySEC will require a period of four (4) – six (6) months to review the Application in question.

[1] The AIF Law defines a professional investor as an investor who is considered to be a Professional Client or may, upon the investor’s request, be treated as a professional investor within the meaning of Annex II of the Investment Services and Activities and Regulated Markets Law, as amended.

[2] The AIF Law defines a well-informed investor as being a non-professional investor who fulfils the following conditions:

  • Confirms in writing that he is a well-informed investor and that he is aware of the risks related with the proposed investment; and
  • Either invests a minimum of EUR 125,000 in the AIF, or he has been evaluated by a bank or a regulated investment business as a well-informed investor possessing the appropriate expertise and knowledge to assess the suitability of the investment

[3] In case of multiple investment compartments, the limit of 75 applies to the total number of investors and not to each investment compartment separately.

[4] In case of Limited Partnership, a manager should always be appointed which takes the role of the General Partner.

[5] Depositary is not required for AIF LNP if;

  • Assets under management are less that 5 million EUR or
  • Investors are less than 5; or
  • Investments are not subject to custody (e.g real estate)

[6] Enclosures to the application may vary, depending on the Organisational and shareholding structure of the AIF, the type of the AIF (self-managed or externally managed, appointing or not a Depositary etc.)

Contact us for more information

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