 Overview of legal framework
 Authorisation process
 Analysis of main fund managers’
obligations
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Overview of legal framework
Introduction
 UCITS and AIFs are funds. A fund raises money
from a number of investors to invest it as per a
predetermined policy for the collective benefit of
the investors.
 UCITS are open funds whereas AIFs can be
open or closed funds.
 AIFM/ MC -managing one or more funds
 Permitted activities
• portfolio management and risk management
• administration
• marketing
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The Framework’s benefits
 Modern framework equivalent to established
financial centers(full transposition of
European Directives including ESMA
Guidelines)
 European passport
 Completeness
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The Framework
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UCITS Law 78(I)/2012
Regulation 584/2010 implementing UCITS Directive
AIFM Law 56(I)/2013
Regulation 231/2013
Regulation 447/2013 implementing AIFM directive
(opt-in procedure)
Regulation 448/2013 implementing AIFM directive
(Member state of reference procedure)
Regulation 345/2013 on EuVECA
Regulation 346/2013 on Social entrepreneurship
funds
New AIFs law (pending)
CySEC’s directives, circulars and guidelines
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CySEC’s directives issued upon UCITS Law (78(I)/2012)
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6 directives regarding Management Companies
25 directives regarding UCITs
1 directive regarding the transfer of registered
seat
1 Directive regarding custodians
1 directive regarding Marketing of foreign AIFs.
AIFM Law (56(I)/2013 & Regulation 231/2013
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Only 5 directives regarding Fund Managers
Due to the Regulation
The Law regulates The Fund managers and
Custodians not the funds
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New AIFs law (pending)
 Replaces the current ICIS Law
 Final stages pending parliament
approval
 A number of directives to complete the
framework are WIP
 Comprehensive framework allowing
many different types of funds
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Authorisation process
 Highly recommended to have a meeting with CySEC’s
authorisation department before submitting the
application
 Submit complete application
 Initial review for completeness and request for missing
documents
 Thorough review of the application file and letter with
comments, suggestions and clarifications
 Submission of information as per above step
 Final review and preparation of report to the Board with
officer’s recommendation for approval/rejection or
conditional approval.
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Authorisation conditions for MC/Fund manager
 Capital requirements
 Fit and proper test of shareholders, directors and other
senior management
 Head office/registered address in the republic
 Organisational structure
 Ability to demonstrate adherence to the obligations of
the Law (IOM)
 CySEC requires detailed information about the funds
under management or to be managed to evaluate the
adequacy of the above.
 Authorisation does not mean automatically the entity
can manage any UCITS/AIF.
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Authorisation Forms
AIFM
Form F56/2013/02 - Annex I of Directive DI56-2013-01
AIFM and UCITS MC
Form F56/2013/04 - Annex II of Directive DI56/2013/01
AIFM and UCITs MC
UCITS MC
Form F78-2012-01 - Annex 1 of Directive DI78-2012-01
UCITS fund
Form F78-2012-05 – Annex 1 Of Directive DI78-201207
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Analysis of main fund managers’ obligations
• Human and technical resources
• Decision Making procedures
• Administrative and accounting procedures,
control and safeguard arrangements for
electronic data processing
• Internal control mechanisms (incl.
permanent compliance function and internal
audit function)
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Organisational structure and effective
internal reporting
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Analysis of main fund managers’
obligations
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Adequate and orderly records
Business continuity policy
Valuation procedures
Code of conduct – Act in the client’s best interest
Best execution arrangements and policy
Personal transactions rules
Conflicts of interest
Recording of portfolio transactions
Recording of subscription and redemption orders
Recordkeeping requirements
Exercising voting rights
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Analysis of main fund managers’ obligations
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Complaints handling procedures
Delegation provisions
Remuneration provisions
Transparency provisions
Risk management
 identify, measure, manage and monitor
appropriately all risks relevant to each
AIF market, liquidity and counterparty
risks, and operational risks
Thank You
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