Directive DI131-2014-03 on the categorisation of
Alternative Investment Funds and other matters
(Directive) was issued in December
2015 by the Cyprus Securities and Exchange Commission
(CySEC).
The Directive identifies specific categories of alternative
investment funds (AIF) and imposes
certain additional requirements for AIFs which fall within
each of those categories. An AIF falls within a category based
on the main type of assets it invests in. CySEC has since
issued further guidance on the Directive in Circular No C117
(Circular) to clarify the provisions of
the Directive.
- CySEC clarified that an AIF is not required to include in its name any distinctive feature in relation to its "main category of assets". However, if an AIF does choose to do so, such feature should be consistent with its investment policy and strategy as set out in the AIF's documents (eg instruments of incorporation and the Offering Memorandum).
- It is worth noting that exceptions from (a) and (b) above apply in relation to Loan AIFs and Money Market AIFs.
- As concerns an AIF's right to choose which category of AIF it falls under, the Circular also clarified that if an AIF has a "main category of assets" in accordance with the provisions of the Directive, then such AIF is considered to fall within the relevant category and is obliged to comply with the rules applicable to that category. A main category of assets is identifiable when an AIF invests 60 per cent or more into a particular type of asset.
The Circular is a welcome clarification by CySEC, making the obligations of AIFs caught by the Directive clearer and more easily identifiable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
