Savva & Associates Cyprus

Unlocking Investment Opportunities: The Rise of Registered Alternative Investment Funds (RAIF) in Cyprus

Registered Alternative Investment Funds (RAIFs) in Cyprus have become a significant part of the island’s investment framework, offering a flexible and cost-efficient vehicle for investors looking to capitalize on opportunities across various asset classes. This article draws upon insights from Savva & Associates, a leading provider of tax and advisory services, to explore the advantages and regulatory framework of RAIFs in Cyprus, highlighting why the jurisdiction has become an attractive option for fund managers and investors alike.

It is important to recognize the significant contribution of Charles Savva, Managing Director of Savva & Associates, in the development of the early legislation for alternative investment funds in Cyprus. His active involvement in the Administrators Committee of the Cyprus Investment Funds Association has been instrumental in shaping the legal framework. Savva & Associates has been a pivotal player in the Cyprus funds industry from its early days, offering comprehensive support and expertise to clients navigating the complexities of investment fund operations in Cyprus.

Advantages of RAIFs in Cyprus
Cyprus offers a comprehensive toolbox for setting up RAIFs, which are known for their quick and cost-effective launch processes. The regime for RAIFs is designed to provide flexibility, allowing for a range of investment strategies and structures without the need for direct authorization from the Cyprus Securities and Exchange Commission (CySEC). This approach significantly reduces the time and costs associated with fund establishment and operation, making it an attractive option for fund promoters seeking efficiency and speed to market.

The legal and regulatory framework in Cyprus is continuously updated to ensure investor protection and transparency, while also providing fund promoters with stability, cost, and tax efficiency. RAIFs in Cyprus have become popular vehicles for investment in private equity, real estate, and through family offices, leveraging the jurisdiction’s favorable tax regime and strategic location at the crossroads of Europe, Asia, and Africa.

Regulatory Framework and Operational Details
The RAIF regime allows for a wide range of investment strategies and can be set up as an Alternative Investment Fund (AIF) with various structures, including fixed capital, variable capital, and limited partnerships, providing flexibility in terms of legal form and investment objectives. RAIFs operate under the supervision of a licensed Alternative Investment Fund Manager (AIFM), which can be based in Cyprus or another EU member state, ensuring adherence to the EU’s regulatory standards while benefiting from the passporting rights within the EU.

One key feature of RAIFs is the requirement for the appointment of a depositary, which enhances investor protection through the oversight of fund assets. This aspect, along with the regulatory framework governed by CySEC, aligns Cyprus with EU directives and regulations, ensuring a high level of transparency and investor confidence.

Savva & Associates plays a pivotal role in advising and assisting clients in the fund industry, offering a ‘one-stop’ service for fund set-up, structuring, regulatory support, tax advice, and more. The firm’s expertise and comprehensive service offering underscore the benefits of choosing Cyprus as a jurisdiction for RAIFs, highlighting their leadership in guiding investment managers and informed investors through the intricacies of the Cyprus funds industry.

Key Technical Details and Requirements

  • Minimum Investment Threshold: A RAIF must have a minimum of EUR 500,000 in assets under management (AUM) within the first year of its establishment.
  • Types of Investors: RAIFs are designed exclusively for well-informed and professional investors, including those investing a minimum of EUR 125,000 or those classified as well-informed by a credit institution, among other criteria.
  • Unlimited Number of Investors: Unlike certain other fund structures, RAIFs can have an unlimited number of investors.
  • ISIN Assignment: Each RAIF is assigned a unique ISIN (International Securities Identification Number), enhancing its global recognizability and facilitating international transactions.
  • Time to Formation: The entire procedure for the establishment of a RAIF aims to be completed within 2 weeks, although it can take up to one month in some cases.

Conclusion
The RAIF regime in Cyprus offers a compelling proposition for fund promoters and investors, providing a combination of regulatory efficiency, cost-effectiveness, and access to the European market. The continuous development of the legal and regulatory framework, coupled with the expertise of advisory firms like Savva & Associates, ensures that Cyprus remains an attractive destination for alternative investment funds. As the global investment landscape evolves, Cyprus is well-positioned to continue its growth as a leading fund jurisdiction, offering innovative solutions and professional support to the international investment community.

For those considering establishing a RAIF or exploring investment opportunities in Cyprus, consulting with industry experts like Savva & Associates can provide valuable insights and guidance, ensuring a smooth and successful fund setup and operation.

For comprehensive insights and guidance, we invite you to reach out to our team at:

Charles Savva
Managing Director

BA, MBA, TEP, CA

[email protected]

+357 22516671

Mina Pieri
Senior Manager

FCCA, MBA

[email protected]

+357 22510207

Christos Tsaousis
Senior Manager

FCCA, BSC

[email protected]

+357 22510206

We look forward to addressing your questions and providing the necessary guidance for your business needs.