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Corporate Services Blog

Offshore implementation of the Alternative Investment Fund Managers Directive

10/12/2013

There are changes occurring across the entire offshore environment due to the Alternative Investment Fund Managers Directive (AIFMD) which was to be implemented across Europe from 22 July 2013. This is to ensure that any undertaking for collective investment raising monies from a number of investors with a view of investing them in accordance with a defined investment policy otherwise known as alternative investment funds (AIF’s) has a more uniform law throughout Europe to regulate these.

The Cayman Islands, the British Virgin Islands and Cyprus are just three examples of popular offshore jurisdictions that have been busy to ensure that they meet the relevant conditions in order to market their AIF’s within the EU.

As the requirements mean that certain conditions should be met before non-EU countries are able to market their AIF’s within the EU both the Cayman Islands and the BVI have entered into twenty five memorandum of Understandings with European countries which will enable the continued marketing of funds from both jurisdictions to be marketed throughout the majority of the European Union. Both the Cayman Islands and the BVI have expressed enormous satisfaction that these agreements have been concluded securing the future of their funds and have expressed commitment to securing further memorandums with the remaining countries.

Cyprus being a member of the EU has from the 5 July 2013 implemented its own legislation with regards to AIFMD. The provisions that are applicable in all EU Member States are also now applicable in Cyprus. The main provisions include;

- Cyprus Securities and Exchange Commission (CySEC) as the authority for the supervision of Cypriot AIFM’s
- Limited Liability Companies by shares will now be the eligible form for setting up a Cypriot AIFM
- Minimum initial capital for a Cypriot AIFM is set at 125,000EUR
- Localisation of the depositary of a Cypriot AIF in another Member State possible until 2017 providing the depositary is a credit institution
- Subject to certain conditions AIF’s are able to appoint a depositary that is not a credit institution
- Provisions ensuring re-domiciliation of an EU or non-EU AIFM to Cyprus have been adopted

There are various rules concerning the AIF’s in Cyprus with registration and on-going compliance varying significantly depending on the assets value and expert advice from a firm such as Chesterfield should be obtained before contemplating entering into one.

The regulations provide a much better platform for the protection of the investors and in complying with this directive all jurisdictions have shown their commitment to ensuring that their reputations as respected jurisdictions for funds is maintained. They have also ensured that they are recognised and valued in Europe for some time to come.


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