Cyprus introduced in May 1999, a legislation enabling the establishment and regulation of International Collective Investment Schemes ("Schemes").

 

Under the above legislation, the Central Bank of Cyprus is the regulatory and supervisory authority for Schemes and may, upon a written application, recognise a company incorporated under the Cyprus Companies Law, a trust created under the International Trust Law or a partnership registered under the Partnership and Business Names Law, as an International Collective Investment Scheme.

 

Law 47(I)/1999, later amended by law 63(I)/2000, appoints the Central Bank of Cyprus as the Regulatory authority for the ICISs which has the authority also to monitor and inspect every ICIS, its manager and trustee.

 

Under the above legislation, therefore, a Scheme may take one of the following forms:

  1. International Fixed Capital Company (IFCC)         
  2. International Variable Capital Company (IVCC)         
  3. International Unit Trust Scheme (IUTS)         
  4. International Investment Limited Partnership (IILP)

 

All four legal types of Schemes can either be of limited or unlimited duration.

 

It must be noted that the Central Bank of Cyprus recognises, for the time being, only Private Schemes i.e., Schemes which have up to 100 investors.  Such Schemes must appoint a Custodian which must be a Cyprus bank, unless specifically exempt by the Central Bank of Cyprus. 

 

 It must also be noted that Private Schemes which do not have a physical presence in Cyprus, must appoint a company to carry out the administration work of the Scheme.  The said company must be based in Cyprus and be approved by the Central Bank of Cyprus.

 

The information for the ICIS are found in the Central Bank of Cyprus website.

 

International Fixed Capital Company (IFCC)

The initial minimum capital requirement (issued and fully paid-up) for an IFCC which will be marketed to the public at large or to experienced investors has been set at USD 200.000. IFCCs which are private ICISs are exempt from the requirement of having a minimum capital.

An IFCC must appoint a manager and a trustee and the procedures to be followed in appointing a manager shall be set out in the company’s constitutional documentation. The Directors must also be competent and suitable.

The managers and trustees of an ICIS must act independently of one another and must be approved by the Central Bank.

A manager must satisfy the Central Bank that having regard to the investment policy and the particular investment objectives of the ICIS for which it acts as manager, the ICIS has sufficient financial and operational resources to meet its liabilities, as well as sufficient investment expertise to conduct its business effectively.


A trustee can only be either:
 

(a) a bank licensed to carry on business in or from within Cyprus or in a country which in the opinion of the Central Bank exercises adequate banking supervision in its jurisdiction and which has such minimum paid up share capital as the Central Bank may from time to time prescribe; or

(b) any other person other than a bank referred to in paragraph (a) above, which provides trustee services to the public at large in or from Cyprus and which is adequately supervised or in a country which in the opinion of the Central Bank exercises adequate financial regulation and which has such minimum paid up share capital as the Central Bank may from time to time prescribe; or

(c) a company incorporated in the Republic which is a subsidiary of a person referred to in paragraphs (a) or (b) above, provided that its liabilities are fully guaranteed by that person.

 

International Variable Capital Company (IVCC) 

The provisions applicable to the IFCC in general apply to the IVCC, however the minimum share capital of the company must be equal to the net asset value of the shares of the company at any time in issuance.



 

International Unit Trust Scheme (IUTS) 

The provisions applicable to the IFCC and IVCC in general apply to the IUTS. The assets of an international unit trust scheme are vested in and entrusted to a trustee to be held in accordance with the trusts created under the trust deed and are dealt with by the manager in accordance with and subject to the trusts contained in the trust deed.

The proceeds of sale of any units of an international unit trust scheme and any income in respect of the assets of an international unit trust scheme that are not distributed to the unit-holders are the assets of an IUTS and are subject to and dealt with by the manager in accordance with the trusts created under the trust deed.


International Investment Limited Partnership (IILP)
 

The provisions applicable to the IFCC and IVCC in general apply to the IILP taking into consideration however the Partnership and Business Names Law instead of the Company law. Also, instead of a manager we have the General Partner. A manager and a general partner must satisfy the same requirements. A limited partner is not entitled to and does not have the power to take part in the conduct of the business of the IILP.