Cyprus Alternative Investment Funds

Recent Trends and Benefits.
A growing capital of an investment fund image
A unique financial instrument
Why Cyprus?
AIF's legal framework in Cyprus is fully harmonized with EU Laws and Regulations while the applicable tax regime is approved by both EU and OECD.

Alternative Investment Fund, AIF is a variable capital investment company (VCIC), which is established to attract capital from investors according to the issued license, for further investment in alternative investment projects in accordance with the adopted investment policy and under the supervision of a controlling body. AIFs are commonly used by advanced investors to diversify portfolios, balance risks and reduce costs.

Cyprus’ ambition to enhance its International business center status with the capture of a bigger piece of the lucrative fund management business has to lead to a substantial amendment of its legislative and regulatory framework to accommodate the demands of fund managers, the investors and most importantly the European Union and International trends in regulation and compliance.

This has given rise to the Alternative Investment Fund law of 2018 and, subsequently, together with the Cyprus preferential tax environment has given a significant growth of the fund market in Cyprus, both in terms of value of assets and in terms of number of AIFs.

Competitive advantages of Cyprus AIFs:

  • Flexibility: Any asset can be included in the investment strategy of the AIFs;
  • Regulation: EU directives/business friendly jurisdiction (no onerous reporting requirements);
  • Low set-up and operational costs;
  • It can take either a single scheme form or an umbrella one with more than one compartment;
  • No capital gains tax on disposal of shares/units by the holders (for Real Estate Funds);
  • No withholding tax on income repatriation or dividends paid to foreign unitholders;
  • No subscription tax on the net assets of the Fund;
  • Under circumstances, it is exempted from appointing a licensed manager or a depositary;
  • Annual audited and half-yearly reports are to be sent to the CySEC and the Investors;
  • Modern legislation taking into consideration new market realities and conditions.

Cyprus AIFs are a versatile and flexible investment tool offering transparency, security and enough regulation to provide confidence to any investor. The Cyprus Securities and Exchange Commission (CySEC) is the responsible authority for the authorization and supervision of AIFs. An AIF is only granted a license by the CySEC in respect of raising capital from a number of investors, with a view of investing it in accordance with a defined investment policy for the benefit of those investors.

A Cyprus AIF can be private with a limited number of investors or can be listed to the Cyprus or European Union Stock Exchange with an unlimited number of investors. It can be customized in a way to suit specific investors or investments. It can take the form of a single scheme or an umbrella scheme with more than one compartment (sub-funds), where the assets and liabilities of each compartment are segregated by law.

There is no public disclosure that the AIF must make, except in cases where the AIF is listed on the Stock Exchange or other regulated markets where the relevant legislative framework of the secondary market applies.



Recent trends where AIFs can be used:


Reasons to operate from Cyprus:
  • Substance;
  • EU Member State compliant with UE Laws and Regulations, eurozone member;
  • Shareholder Protection/Flexibility;
  • Strategic Location between three continents, access to the Middle East;
  • Family office planning;
  • An extensive network of double tax treaties allowing efficient structuring;
  • An AIF is treated identically as any other Cypriot entity hence enjoys 12,5% flat corporation tax on annual net profits earned worldwide;
  • Alternative ways of financing;
  • Listing opportunities to the Cyprus Stock Exchange or other recognized markets;
  • Private equity and Real Estate Investments;
  • Transparency: Annual audited and half-year reports to be sent to the Cyprus Securities and Exchange Commission (CySEC) and the Investors;
  • Wealth Management & Asset Protection Solutions. 
  • Supervised by the SyCEC with ongoing reporting boosting investors' confidence. 


The Law provides two general categories of AIFs:

1) Alternative Investment Funds with Limited Number of Persons (AIFLNP)

2) Alternative Investment Funds with Unlimited Number of Persons (AIFUNP)



  • The number of investors limited to 50 and may only be marketed to “Professional” and/or “Well-Informed” investors.
  • Maybe marketed to either (i) “Professional” and/or “Well-Informed” or (ii) “Retail” investors.
  • Investor shares are transferable, except in cases where a transfer results in the number of investors > 50.
  • Investor shares are freely transferable based on any restrictions or procedures noted in the AIF’s constitutional documentation.
  • May not be listed or traded but may be registered on a special registry kept with the Cyprus Stock Exchange. May obtain an ISIN, a unique 12-digit alphanumeric code.
  • May be listed or traded on a regulated market or MTF (Multilateral Trading Facility).
  • Not subject to investment restrictions (may invest in any asset such as real estate, equities, derivatives in any combination/ratios).
  • May be subject to investment restrictions for the purpose of risk-spreading and ensuring liquidity.                                                     
  • No minimum share capital requirements.
  • Subject to minimum capital requirements.
  • Under certain circumstances, the scheme is exempted from appointing a licensed manager or a depositary.
  • If externally managed, the manager needs to fulfill certain licensing requirements. Must appoint a depositary.
  • Assets under management must not exceed the thresholds set by Alternative Investment Fund Managers Directive 2011/61 / EU.
  • Suitable for wealthy families / private clients.


Cyprus Alternative Investment Fund organisational Chart


Business structure of AIFs




Board of Directors

The Board of Directors (in the case of self-managed AIFs) has the management responsibility for approving and periodically reviewing the overall business strategies and policies of the Fund. Understanding the major risks, setting acceptable thresholds for these risks and ensuring that the Risk Manager takes the steps necessary to identify, measure, monitor and control these risks; approving the organizational structure; and monitoring the effectiveness of the internal control system. The Board of Directors is ultimately responsible for ensuring that an adequate and effective system of internal controls is established and maintained. They are also responsible for promoting high ethical and integrity standards, and for establishing a culture within the organization that emphasizes and demonstrates to all levels of personnel the importance of internal controls.

Portfolio Management

The Portfolio Manager (usually a position assigned to one of the two executive directors) is responsible for the planning, implementation, execution, and supervision of the portfolio management of the Fund. The Board of Directors has the authority to approve any proposals from the portfolio manager concerning the purchase or otherwise acquire, sell or otherwise dispose of, convert and invest in assets related to the Fund’s investment strategy. It is the Portfolio Manager’s responsibility to implement the Fund’s investment management strategy set by the Board of Directors which shall also include:

  • Monitor the overall performance of the investment portfolio and any material deviations from return objectives.
  • Formulate and implement the Fund’s investment policy, asset allocation, investment goals, and objectives.
  • Oversee, review and monitor the investment portfolio risk and Fund’s risk tolerance.

Risk Management

The Risk Manager’s responsibility is to identify any potential risks to the profitability or viability of the Fund, identify and assess threats, put plans in place for if things go wrong and advise how to avoid, reduce or transfer risks. In other words, the Risk Manager is responsible for undertaking studies to formulate the Fund’s risk management framework:


  • Formulating and evaluating the risk management framework.
  • Use appropriate methods to mitigate and manage risk.
  • Defining, in cooperation with the Board of Directors, the limits of risk-taking.
  • Submitting proposals to the Board of Directors for corrective measures in the event of divergence from the acceptable risk targets and ensuring their effective implementation.



The Secretary of the Company prepares and distributes Board meeting notices to the Directors and participate in the meetings of the Board of Directors. The Secretary prepares the agenda of each meeting and records all documents presented during the meeting. Minutes of meetings and resolutions are also prepared by the Secretary.

Compliance /Anti-Money Laundering (AML) Function

The Regulatory Compliance Officer monitors on an ongoing basis the Fund’s compliance with the relevant laws and regulations and takes actions in cases where non-compliance is identified. In addition, the Compliance Officer identifies and prioritizes the areas of potential compliance risk, which may lead to damage to the Fund’s reputation or to any financial loss (i.e. penalties). The Compliance Officer’s duties include responsibility for the Fund’s compliance with the governing legislation and regulations as well as the Directives issued by the regulatory bodies from time to time.

The AML Compliance Officer is responsible for ensuring compliance with the Anti-Money Laundering Law and anti-money laundering Directives issued by CySEC, as well as the identification and reporting of any money laundering activity to the relevant authorities. The AML Compliance Officer is also responsible for the overall monitoring of the Investor acceptance procedures performed by the Fund Administrator.

Internal Auditor

The Internal Auditor monitors internal operations and performs regular audits to ascertain whether executed operations adhere to prescribed and documented standards and quality. The Internal Auditor also notifies the Board of Directors of any detected inconsistencies and works with the relevant persons and department heads on the creation and execution of plans to correct deviations.

External Auditors

The financial statements of the Company are audited annually by the Auditor in accordance with International Financial Reporting Standards (IFRS). The Auditors have a statutory obligation to report to the authorities any irregularities which come to their attention during the audit of the Fund or any acts or omissions observed while performing their duties. The Auditors must also confirm in their report that the Fund is in compliance with the provisions of the Alternative Investment Funds Law of 2018.

Legal Advisers

The Legal Advisers of the Fund undertake to provide legal consulting to a range of daily or ad hoc issues of the Fund. Such work may include, but is not limited to, the following:

  1. Assistance with drafting the investment management contracts or agreements that govern the structure.
  2. Review the contracts or agreements already entered into.
  3. Assistance with the employment contracts in place between fund management executives.
  4. General ongoing legal support

Fund Administration

The administration department of the Fund carries out all the administrative duties and tasks of the Fund, while it also acts as the primary and central point of contact of third parties with the Fund. In particular, the administration function includes, among others, the following:

  • Accounting management services;
  • Disclosure of information services and services to the Registered Holders;
  • NAV calculation and pricing, including tax returns;
  • Assistance with regulatory compliance monitoring;
  • Maintenance of the Register;
  • Issues and redemptions of Investment Shares;
  • Contract settlements;
  • KYC/AML collection;
  • Record keeping;
  • The central point of receiving inquiries from existing and potential Investors;
  • Sending Subscription Application Packages & Redemption/Transfer Request Forms to new and existing Investors;
  • Subscription Confirmations and allocation of Investment Shares upon Subscription;
  • Statement of Periodic NAV;
  • Redemption Statements and allocation of Redemption Money;
  • All other types of communication to the Investors.
Stelios Americanos & Co. LLC

can assist you in all the requirements and stages of the setup and ongoing administration of the AIF.

  •  Registration and set up – helping you to choose the right type of AIF according to your needs;
  •  Licensing application – preparation, filing and follow up of the application;
  •  Fund administration – maintaining the accounting books, calculating the net asset value and coordinate the different
  • management sections of the funds as well as investor relations (KYC/AML checks);
  •  Compliance and Reporting requirements to the Regulator – we assist in the preparation of all the reports ensuring their
  • compliance with the laws and regulations and the terms of the license;
  •  Corporate and secretarial support – preparation of directors’ minutes, annual returns, resolutions, certification and
  • legalization of documents, keeping the various registries up to date;
  •  Taxation support – providing taxation advice as to the various investments and distributions the fund may execute;
  •  Legal support – preparation and review of various agreements, investment contracts and overall supervision of the legal
  • aspects of the AIF and its transactions;
  •  Registered Office;
  •  Internal audit services;
  •  External Audit services through licensed auditors;
  •  Creation of compartments (sub-funds) in already established and fully operating umbrella funds.

Entrust Stelios Americanos & Co. LLC to be your professional service provider and it would make a fast and successful implementation of your investment project!

Логотип юрфирмы Stelios Americanos and Co. Адвокаты и консультанты
Коллаж с курсом на инвестиции в Кипр
please contact us for more information

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