On 7 June 2019 the Cyprus Securities and Exchange Commission (“CySEC”) issued a circular related to Alternative Investment Fund Managers (“AIFMs”).
CySEC sought to remind AIFMs of the requirement for raising capital from investors within 12 months from the date that the funds under their management (or the Alternative Investment Fund (“AIF”) itself if the AIF is internally managed) were granted authorisation.
Particular reference was made to section 14 of the Alternative Investment Funds law of 2018 (124(I)/ 2018) (“AIF Law”) which stipulates, inter alia, that the AIF must within 12 months from the date that its authorization was granted raise EUR500,000 worth of capital from investors.
Moreover, in accordance with section 129 of the AIF Law, inter alia, an Alternative Investment Fund with Limited Number of Persons (“AIFLNP”) must within 12 months from the date that its authorization was granted raise at least EUR250,000 worth of capital from investors, and for the purposes of this section the capital commitments shall not be included in the calculation of the minimum level of assets. However, in the case of an umbrella AIF the requirement for a minimum level of assets applies to each investment compartment. Whereas, in the case of an internally managed AIFLNP the calculation of the minimum level of assets excludes the aforesaid initial capital requirement.
Furthermore, pursuant to section 136 of the AIF Law, inter alia, a Registered Alternative Investment Fund (“RAIF”) shall comply with the aforesaid section 14 of the AIF Law as regards the minimum amount of assets raised by investors, albeit to the extent that they do not conflict with the provisions of the Alternative investment Fund Managers Law (56(I)/ 2013 as amended) (“AIFM Law”).
Importantly, funds authorized or registered following the entry into force of the AIF Law should raise from investors the amount of capital stated in sections 14, 129 and 136, subject to their type, within 12 months from the date of their authorization or registration.
Once the required amount or raised capital is reached for each fund or investment compartment under management, AIFMs must at the earliest possible notify CySEC by completing and submitting the relevant form. If such notification is not received within 12 months from the date of the fund’s or investment compartment’s authorization or registration was granted, CySEC may proceed with withdrawal of the authorization accordingly.
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