Alternative Investment Funds

Alternative Investment Funds are regulated by the Alternative Investment Funds Law of 2014 and the Supervisory Authority in the (CySEC) of Cyprus.

DEFINITIONS

Mutual Fund: ‘Mutual Fund’ means a group of assets authorized as a mutual fund by Cyprus Securities and Exchange Commission (CySEC) and all procedures are followed for obtaining each authorization.

AIFM

AIFM’ means the alternative investment funds manager which falls within the scope of the Alternative Investment Fund Managers Law.

Auditor

‘Auditor’ means a person qualified under the Companies Law to be appointed as an auditor of a company.

External manager

‘External manager’ means any of the following persons which manages an AIF in accordance with the provisions of this Law:

(a) an AIFM;

(b) a UCITS management company;

Professional investor

‘Professional investor’ means an investor which is considered to be a professional client or may, on request, be treated as a professional client within the meaning of Annex II of the Investment Services and Activities and Regulated Markets Law as amended.

Well informed investor

‘Well informed investor’ means every investor which is not a professional investor and fulfils the following conditions:

(a) the investor confirms in writing that he is a well-informed investor and that he is aware of the risks related with the proposed investment; and

(b) either his investment in the AIF amounts, at least, to €125 000, or he is assessed as a well-informed investor, either by a credit institution that falls within the scope of the Banking Laws as amended, or by an Investment Firm, or by a UCITS management company and the above mentioned assessment shows that he has the necessary experience and knowledge to be able to evaluate the appropriateness of the investment in the AIF.

Investment company

‘Investment company’ means a variable capital investment company or/and a fixed capital investment company.

Fixed capital investment company

‘Fixed capital investment company’ means a company established in accordance with the Companies Law, and operates as a fixed capital investment company in accordance with Chapter 2 of Part II of this Law.

Variable capital investment company

‘Variable capital investment company’ means a company established in accordance with the Companies Law and operates as a variable capital investment company in accordance with Chapter 2 of Part II of this Law.

Depositary

‘Depositary’ means the legal entity, as this is defined, accordingly to the AIF Law in case of an alternative investment fund with limited number of persons, to which the assets of the AIF are entrusted for safe-keeping, which are not financial instruments within the meaning of the Investment Services and Activities and Regulated Markets Law, as depositary, in accordance with AIF Law, an entity which performs depository functions within the context of its professional or business activities, for the performance of which is subject to professional registration recognized by legal, regulatory or administrative provisions or by rules of professional conduct and can provide sufficient financial and professional guarantees that it will perform sufficiently its depositary duties and meet the commitments associated with these duties may be appointed.

The assets of an alternative investment fund manager with limited number of persons shall be entrusted to a depositary, with a registered office in the Republic or in another Member State or third country under the condition that the Securities and Exchange Commission has signed with the competent authorities of the third country a Memorandum of Understanding and Exchange of Information and which is either a credit institution or an investment firm or another entity which is subject to prudential regulation and ongoing supervision and falls within the categories of institutions which are defined by the home state eligible to act as depositaries.

Unit

‘Unit’ means the units of a common fund or the shares of a fixed or variable capital investment company or the interests of a limited liability partnership.

Unit-holder

‘Unit-holder’ in relation to an AIF, means the holder of a unit or a fraction of a unit.

AIF

‘AIF’ or ‘Alternative Investment Fund’ means any collective investment undertaking, including investment compartments thereof, which, collectively:

(a) raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors; and

(b) does not require authorization pursuant to the provision of the Collective investments Law or the provision of the legislation of anotherMemberState.

AIF of the Republic

‘AIF of the Republic’ or ‘alternative investment fund of the Republic’ means –

(a) an AIF established in the form of a common fund and is authorized in accordance with Chapter 2 of Part II by the Securities and Exchange Commission; or

(b) an AIF established in the form of an investment company, is authorized by the Securities and Exchange Commission and the addresses of its registered office and of its central offices are located in the Republic; or

(c) an AIF established in the form of partnership, is authorized by the Securities and Exchange Commission and the address of the main place of conduct of its activities is located in the Republic.

Alternative Investment Fund with limited number of persons

‘Alternative Investment Fund with limited number of persons’ (LNP) means the AIF authorized by the CySEC , having a maximum of 75 investors ( UNITHOLDERS) and must be marketed only to professionals or well-informed investors.

UCITS

‘UCITS’ means an undertaking for collective investments in transferable securities, which falls within the scope of application and the provisions of the Open-Ended Undertakings for Collective Investments Law.

Partnership agreement

‘Partnership agreement’ means a written agreement drawn up as initial text by the general partner, is approved by the Commission and relates to the handling of cases and the conduct of operations of the limited liability partnership, as applicable, after any amendments, additions or revisions.

Limited liability partnership

‘Limited liability partnership’ or ‘partnership’ means a partnership registered in accordance with the General and Limited Partnerships and Trade Names Law, which is recognized to operate as a limited liability partnership in accordance with the AIF Law in the case of an Alternative Investment Fund with limited number of persons.

Set-up forms

An AIF may be set up in one of the following legal forms:

(a) as a mutual fund;

(b) as an investment company in the legal form of a limited liability company with shares;

Where the AIF is established –

(a) in the legal form of a common fund, its name will include the term ‘common fund’;

(b) in the legal form of an investment company, its name shall include the term ‘fixed capital investment company’ or ‘variable capital investment company’, as appropriate; and

(c) in the legal form of a limited liability partnership, its name shall include the term ‘limited liability partnership’.

AIF management

The AIF management means the activity that includes, at least, the service of the portfolio management of the AIF and specifically:

(a) the management of the investments of the AIF and the management of the risks associated with the operations of the AIF;

(b) the administration of the AIF, which includes the following services which may be provided through associate firms who are qualified and approved by the CySEC to provide such services.

(i) legal and accounting AIF management services;

(ii) disclosure of information services and services to the unitholders of an AIF;

(iii) valuation and pricing, including tax returns;

(iv) regulatory compliance monitoring;

(v) maintenance of unit/shareholder register;

(vi) distribution of profits of the AIF;

(vii) unit/shares issues and redemptions;

(viii) contract settlements, including certificate dispatch;

(ix) record keeping;

AIFs are regulated by CySEC and our Demetrios A. Demetriades LLC is a regulated law-firm by the Cyprus Bar Association and Special Member in the Cyprus Investment Fund Association (CIFA). Within our law firm we involve other professionals regulated by the Cyprus Bar Association. We undertake to suggest reputable and acceptable personalities for AIF to be licensed and accepted by CySEC and the clients may choose their own investment manager, custodian or auditors so long as these persons or firms are accepted by CySEC.

The AIF may be:

(a) either self-managed, where it does not appoint an external manager, if it is established as an investment company and one of the following applies:

(i) the assets of the portfolio of the AIF, including any assets acquired through use of leverage, in total do not exceed a threshold of EUR 100.000.000;

(ii) the assets of the portfolio of the AIF, where the AIF does not employ leverage and its unit-holders have no redemption rights exercisable during a period of 5 years following the date of initial investment in each AIF, do not exceed a threshold of EUR 500.000.000;

(iii)the persons that sign the instruments of incorporation of the investment company under incorporation or the members of the board of directors, in case of an incorporated company, decide not to appoint an external manager, but to exercise internal management in accordance with the provisions of the Alternative Investment Fund Managers Law of 2013, either obligatory in case the assets of the portfolio of the investment company exceed the thresholds of subparagraphs (i) or (ii), accordingly, or by choice, because they choose to opt in the Alternative Investment Fund Managers Law of 2013, then the investment company is considered as an AIFM and falls within the scope of the Alternative Investment Fund Managers Law of 2013.

(b) or externally managed, where it appoints an external portfolio manager, who;

(i) is an AIFM authorised in accordance with the Alternative Investment Fund Managers Law of 2013; or

(ii) where subparagraph (i) does not apply, may operate as, either, an AIFM authorised in accordance with the Alternative Investment Fund Managers Law, or as a management company authorised in accordance with the Open-ended Undertakings for Collective Investments Law, or as an IF authorised in accordance with the Investment Services and Activities and Regulated Markets Law, as amended.

Each self-managed AIF and each external manager of an AIF, where they are not authorised AIFMs, are subject to registration in accordance with the provisions of the Alternative Investment Fund Managers Law.

An AIF is established:

(a) either as an alternative investment fund of the open-ended type, where its unit-holders have the right to redeem or repurchase their units upon request,

(i) at any time, or

(ii) at regular intervals which do not exceed one year and are defined in the fund rules or the instruments of incorporation of the AIF;

(b) or as an alternative investment fund of the closed-end type, where its unitholders have the right to redeem or repurchase their units upon request,

(i) at regular intervals that exceed one year, but shall not extend for more than five years and are defined in the rules or instruments of incorporation of the AIF; or

(ii) at a specific time that is defined in the fund rules or the instruments of incorporation of the AIF.

AIFs with more investments compartments

An AIF may consist of more than one investment compartments, each of which is subject to the provisions of the Law as a separate AIF. An AIF that consists of more than one investment compartments constitutes a single legal entity.

Each investment compartment of the AIF may issue units which correspond to the assets of the specific compartment. The value of the units may vary by investment compartment.

The unit holders’ rights derive from the assets of the relevant compartment they have invested in; each investment compartment is liable for the obligations created from its establishment and operations or its dissolution. The rules or the instruments of incorporation of the AIF may define derogations from this paragraph.

The rules or instruments of incorporation of the AIF shall refer to the fact that it operates with multiple investment compartments.

An investment compartment of an AIF may invest in another investment compartment of the same AIF (target compartment), where that option is provided in the rules or the instruments of incorporation of the AIF.

Authorisation of an AIF

The commencement of operations of an AIF requires the prior authorization and communication of the authorization by the Securities and Exchange Commission.

The commencement of operations of a self-managed investment company in accordance with AIF Law, requires the prior authorization and communication of the authorization by the Securities and Exchange Commission.

Where the AIF shall take the legal form of a common fund, its external manager, in addition to the application for authorization, shall submit to the Securities and Exchange Commission the following:

(a) a statement regarding the commitment to deposit the initial assets of the common fund;

(b) the name and any other information that identify and certify the appropriateness of the external manager of the common fund and the identity of the person or the persons employed in the external manager which shall be responsible for the management of the common fund;

(d) a statement by the depositary confirming that it agrees to exercise the depositary duties for the common fund, in accordance with this Law;

(e) the identity of the person or persons appointed by the depositary as responsible for monitoring the activity of the common fund;

(f) the common fund’s draft rules signed by its external manager;

(g) the common fund’s draft prospectus;

(h) the common fund’s draft key information document.

Where the AIF shall take the legal form of a self-managed investment company in the case of an investment company, the persons that will sign the instruments of incorporation of a company under incorporation, in the case of an existing company, the members of its board of directors and in the case of an investment company that appoints an external manager, its external manager; the relevant applicant, in addition to the application for authorisation, shall submit to the Securities and Exchange Commission the following:

(a) the name and the address of the registered office and of the central headquarters of the investment company;

(b) sufficient information, including a curriculum vitae, for the members of the board of directors of the company and the persons managing its operations, so as the Commission will be in a position to evaluate their appropriateness and experience for the specific position;

(c) in case an external manager is appointed, its name and any other information that identify and certify its appropriateness, and information about the person or persons of the external manager, that will be responsible for the management of the portfolio of the company;

(d) in case an external manager is appointed, a statement confirming that it agrees to exercise the portfolio management of the company;

(e) a statement from the depositary confirming that it agrees to exercise the depositary duties for the portfolio of the company, in accordance with provisions of this Law, without prejudice to the case where a depositary shall not be appointed in accordance with of section 23(2);

(f) the identity of the person or persons appointed by the depositary as responsible for monitoring the activity of the company;

(g) the company’s draft instruments of incorporation;

(h) the company’s draft prospectus;

(i) the company’s draft key investor information document.

Taxation of AIF

There are no specific models of taxation applicable for AIFs. Thus, an AIF structured as a private limited liability company has the same tax advantages as any other Cyprus tax resident company. The main tax advantages are following:

a) No tax on profits from sale of Qualified Securities;

b) No withholding tax on the payment of dividends, interests, royalties to non-residents;

c) No taxation on incoming dividends from abroad ( subject to conditions);

d) No withholding tax on redemption of units ;

e) One of the lowest corporate tax rates in EU(12,5%) ;

f) Extensive Double Tax Treaty Network;

g) Applicability of all EU Directives;

h) Favourable Cyprus Intellectual Property (IP) tax regime;

i) Tax losses carried forward for 5 years;

j) Increased demonstration of substance to foreign tax authorities through the operation via an AIF;

k) No stamp duties on the subscription, redemption or transfer of units.

Limited Liability Partnership

The CySEC will not grant authorization to AIF if it considers that external manager does not satisfy the conditions of the AIFM law where the manager is AIFM or where the external Manager does not meet the qualifications.

Where the AIF shall take the legal form of a limited liability partnership, the external manager which shall exercise the duties of the general partner, in addition to the application for authorisation shall submit to the Securities and Exchange Commission the following:

(a) the name and address of the registered office and the place of the basic activity of the partnership;

(b) the name and any other information that identifies and certifies the appropriateness of the general partner to act as the external manager and information about the person or persons of the general partner, which will be responsible for the management of the portfolio of the partnership;

(c) a statement by the general partner confirming that it accepts to exercise the duties of the external manager of the partnership, which was authorised as AIF and that it shall undertake its portfolio management;

(d) a statement by the depositary confirming that it agrees to exercise the depositary duties for the portfolio of the partnership, in accordance with this Law, subject to the case where a depositary shall not be appointed in accordance with section 23(2);

(e) the identity of the person or persons appointed by the depositary as responsible for monitoring the activity of the partnership;

(f) the draft partnership agreement;

(g) the draft partnership prospectus;

(h) the draft partnership key investor information document.

Taxation on Limited Liability Partnership

A Cyprus Limited Liability Partnership is not considered as a legal entity from a Cyprus Tax perspective. Thus, it is the partners who will be subject to taxation in accordance with the transactions that will be concluded by the partnership.

Management

The management of the operations of the AIF shall be conducted by at least two natural persons, with sufficient experience and specialisation.

The members of the governing body of the AIF, the persons who effectively conduct the business of the AIF and the members of the governing body and the persons who effectively conduct the business of the external manager of the AIF shall not participate in the governing body or senior management of the depositary.

The members of the governing body and the persons who effectively conduct the business of the AIF shall disclose to the governing body of the external manager of the AIF any of their capacity that may cause a conflict of interest situation during the exercise of their duties as such, especially their capacity as members of the governing body or persons that effectively conduct the business of another AIF or collective investment scheme, or of another manager than the one managing the specific AIF.

External manager

The entity that will undertake the duties of the external manager of an AIF of section 6(2)(b), as far as its organisational requirements, its way of operation and, especially, the amount of capital, the own funds, the granting of authorisation and the revocation of the authorisation, its obligations regarding the submission of information to the Securities and Exchange Commission, its assigned responsibilities in the course of exercise of its activities and the delegation to a third person, shall, accordingly, fall within the scope:

(a) of the Alternative Investment Fund Managers Law, where it is established as an AIFM; and

(b) of the Open Ended Undertakings in Collective Investments Law, where it is established as a management company of collective investment schemes.

The external manager may resign from the management of the AIF only where a substitute has been appointed in accordance with the provisions of this Law, unless the AIF after the resignation of its external management becomes a self-managed AIF.

The replacement of the external manger of the AIF, for any reason, is subject to the Securities and Exchange Commission’s approval. The Commission shall also approve the new external manager, after taking into consideration the unitholders’ interests.

The previous external manager shall remain totally liable with the new one for all its actions and omissions until the transfer of its duties to the new external manager.

The replacement of the external manager of the AIF shall produce a relevant amendment to the rules or the instruments of incorporation of the AIF, which shall be communicated to its unit-holders in accordance with the provisions of the rules or the instruments of incorporation accordingly

AIF depositary

Over the AIF depositary, where the AIF is self-managed in accordance with section 6(2)(a)(iii) of this Law or externally managed by an AIFM, the following provisions shall apply.

The assets of the AIF shall be entrusted for safe-keeping to a depositary, which:

a) has its registered office in the Republic or in another member state of the EU or in a third country,

b) is either a credit institution or investment firm or another category of institution which is subject to prudential regulation and ongoing supervision and which falls within the categories of institution which have been defined by their home state as eligible to be a depositary.

For the safekeeping of the AIF’s assets, which are not financial instruments within the meaning of the Investment Services and Activities and Regulated Markets Law, as depositary an entity which performs depositary functions within the context of its professional or business activities, for the performance of which is subject to professional registration recognised by legal, regulatory or administrative provisions or by rules of professional conduct and can provide sufficient financial and professional guarantees that it will perform sufficiently its depositary duties and meet the commitments associated with these duties, may be appointed.

The appointment of a depositary shall be evidenced by a written contract between the depositary and the external manager of the AIF, or the AIF itself, in case it is self-managed, which shall regulate the flow of information deemed necessary to allow the depositary to perform the depositary functions as set out:

(a) in the Alternative Investment Fund Managers Law, where the external manager is an AIFM; or

(b) in this Law, in all other cases.

The Depositary of the AIF shall be liable, in accordance with the laws of the Republic, to the AIF, to the investors of the AIF or its external manager for any loss suffered by any breach of its obligations.

Where the depositary intends to resign from its duties, it shall notify its intention, in writing, to the external manager of the AIF, or to the AIF itself, where it is self-managed, at least three months before its resignation and notify CySEC.

Subscription of units

The units of the AIF shall be issued on the name of the unit-holder and shall not have a nominal value.

The subscriptions and redemptions of units shall take place in accordance with the conditions included in the rules or the instruments of incorporation of the AIF and which may be specified in its prospectus.

The AIF may issue units of different classes, which are defined in its rules or instruments of incorporation.

For the marketing of units of AIFs and the subscription by the unit holder, the following is necessary:

(a) an application for subscription in units submitted to the external manager of the AIF or to the AIF itself, in case it is self-managed, in writing or electronic form;

(b) acceptance of the rules or instruments of incorporation of the AIF;

(c) full payment of the amount due for the acquisition of the units, as this is determined on the basis of the issue price of the units in cash, or, where this is acceptable by the external manager or the self-managed AIF, in the form of assets in which the AIF is allowed to invest in accordance with its investment policy, which are valued in accordance with the provisions specified in the fund rules or instruments of incorporation.

Redemption of units

The redemption or repurchase of units of an AIF shall take place in accordance with the conditions stated in the rules or the instruments of incorporation of the AIF, as these may be further specified in its prospectus. The units are redeemed at the redemption price of the next scheduled redemption date after the submission of the redemption application, as this price is specifically determined in the rules or instruments of incorporation of the AIF. The rules or instruments of incorporation of the AIF shall set the final date for the submission of redemptions’ applications so that the redeemed units get the redemption price of the next scheduled redemption date, after the submission of the application.

For the redemption of units of the AIF, the unit holder shall submit a written or electronic application to the external manager of the AIF or to the self-managed AIF.

It is provided that the submission of an application for redemption of units under conditions is not allowed.

The value of the redeemed units of an AIF shall be paid in cash, or in case of a tradable AIF, in securities related with the composition of the index replicated in the AIF’s portfolio. The relevant payment shall take place within the period provided in the rules or the instruments of incorporation of the AIF.

An application to shift from one investment compartment of the AIF to another investment compartment of the same AIF or from one AIF to another, is equivalent with an application for redemption of units of the original AIF, or its investment compartment and with the subscription of units in the new AIF or the new investment compartment of the same AIF.

Suspension of redemption

The suspension of redemption or repurchase of units of an AIF is only allowed in exceptional cases where this is demanded by the circumstances or in cases provided in the rules or instruments of incorporation of the AIF and in any case, if this is justified by the interest of the unit-holders. The relevant suspension of redemption or repurchase requires the previous decision of the external manager of the AIF of the self-managed AIF and the relevant authorisation of the Securities and Exchange Commission and it is notified to the competent authorities of the other countries where the units of the AIF are marketed.

Prohibition of redemption

The issue or redemption or repurchase of units is not allowed:

(a) for as long as the AIF which is not self-managed, has not an appointed external manager;

(b) for as long as the AIF has not appointed a depositary although it is obliged to do so in accordance with:

i. the Alternative Investment Fund Managers Law, where the external manager is an AIFM; or

ii. the provisions of this Law in all other cases;

(c) where the external manager of the AIF, which is not self-managed or the depositary of the AIF is dissolved or put into liquidation, or administration or similar procedure and a replacement has not been appointed.

Common Fund

The Common Fund is a pool of assets which shall fulfill the following conditions:

(a) It is the subject of collective management to the benefit of its unitholders, which are co-owners of each of the assets that comprise its portfolio and are liable only up to the amount of their contribution, which is expressed in units of the common fund;

(b) it is separated from the entity that manages it and is not liable for the obligations of this entity or its unit-holders, but is only subject to the obligations and the expenses provided for in the Law or are specifically stated in its regulation;

The common fund has no legal personality, while its unit-holders shall be legally represented by its external manager with regard to the legal relationships arising from the management of the common fund and to their rights regarding its assets:

It is provided that where the external manager represents the unit-holders of the common fund, it shall act on its own name, underlying however, that it acts on behalf of the common fund.

It is also provided that the external manager shall manage the common fund, exclusively in the interest of its unit-holders and shall exercise all the rights that derive from the assets of the common fund.

The unit-holders of the common fund shall not be liable for any actions or omissions of the external manager or the depositary, in the exercise of their duties. The common fund shall not be liable for the obligations of its external manager and the depositary.

The property of the common fund shall be divided in units or fractions of units on the name of the unit-holder, each of which shall represent the same percentage on its total assets. The rights derived from the units shall be exercised in relation with the percentage of total assets that they represent, with the exemption of the voting rights, which shall be exercised in accordance with the whole unit.

Common Fund – dissolution and liquidaton

(a) in case the Securities and Exchange Commission revokes its authorisation in accordance with section 50;

(b) after a relevant decision of its external manager, if he considers that the continuation of the operation of the common fund is not in the interests of its unit-holders;

(c) when the period of its operation provided in its rules, lapses, unless the rules are amended before the end of the period of operation of the common fund, so that the period of its operation is extended or becomes indefinite;

(d) with the occurrence of an event, that according to the rules of the common fund constitutes a reason for its dissolution;

(e) in the case of dissolution, resignation, liquidation or revocation of authorisation of the external manager or the depositary and a replacement is not appointed;

(f) in case of redemption of the total of its units;

(g) upon decision of its external manager, in case the assets of the common fund are reduced to the one fourth of the minimum and the reduction lasts for more than six months;

(h) upon decision of the external manager, which may he receive in case the common fund assets are reduced so that they become less than the two thirds of the limit of the minimum assets, as this is defined in the fund rules.

Revocation of authorization

a) in case its external manager does not submit the certification regarding the deposit of the initial assets of the common fund on time;

b) in case the authorisation to the common fund was granted on the basis of false or misleading information, or with any other irregular means.

c) and if the external manager does not comply with the terms of authorisation of the common fund or with its obligations as these are derived from.

General provisions

The investment company shall operate as a fixed or variable capital investment company, while it shall either be self-managed or appoint an external manager to manage its portfolio .

The investment company has the legal form of a limited liability company with shares, whose sole purpose is the collective management of its portfolio, carrying out the relevant transactions to the benefit of its shareholders, either by itself where it shall be self-managed, or through the appointment of an external manager.

In case of a variable capital investment company, the procedure of increase and reduction of its capital shall be determined in its instruments of incorporation.

An existing company, which at the date of application of this Law is registered in accordance with the Companies Law as an approved investment company or investment company and whose shares are listed in a regulated or non-regulated market in the Republic, may convert in a variable capital investment company and operate as an AIF.

Self-managed investment company

Where the investment company has not appointed an external manager :

(i) the application for authorisation is accompanied by the operations manual, which includes, at least, the organisational structure of the investment company;

(ii) the persons who effectively direct the business of the investment company are of sufficiently good repute and experienced, also in relation to the kind of the activity it exercises.

(iii) where close links exist between the investment company and other natural and legal persons

(iv) the investment company has the appropriate shareholding structure, the required organisational structure and staff and the appropriate economic and technical resources in order to be in the position to provide its services in accordance with the provisions of the Law.

Reduction of the capital

Where the capital of an investment company is reduced below the two thirds of the minimum capital, as this is defined in its instruments of incorporation, the board of directors of the company shall call for a general meeting of the shareholders to decide on the dissolution of the company.

The general meeting shall be called so that it will convene within forty days from the reduction of the capital by two thirds, or one fourth, as applicable.

Where the instruments of incorporation of the investment company do not provide for a general meeting of its shareholders, the board of directors of the company shall communicate the reduction in its capital by two thirds or a one quarter to the Securities and Exchange Commission, which may demand the dissolution of the investment company and its liquidation.

Dissolution

The investment company is dissolved:

(a) in case its authorisation is revoked by the Securities and Exchange Commission; or

(b) after the end of its duration, where its instruments of incorporation provide for a definite period, unless these are amended to prolong the duration of the investment company or to become of indefinite period; or

(d) in case its total shares are redeemed; or

(e) after a decision of the general meeting of its shareholders; or

(f) where its external manager or depositary is dissolved, resigned, put into liquidation or its authorisation has been revoked and has not been replaced, subject to the case of a self-managed investment company or an investment company that has not appointed a depositary.

g) CySEC to apply to the court for the appointment of liquidator.

Revocation authorization investment company by CySEC

(a) if the company does not make use of its authorisation within twelve months from the date of the communication of the authorisation to it, or it expressly renounces its authorisation or, if it ceases to exercise the activities covered by its authorisation for a time period longer than six months;

(b) if the authorisation granted was based on false statements or on other irregular means;

(d) if the investment company declares in writing to the Securities and Exchange Commission that it wishes to revoke its authorisation.

Partnership

Where an AIF operates in the form of a limited liability partnership, it shall be registered in accordance with the provisions of the General and Limited Partnerships and Trade Names Law and its exclusive purpose shall be the collective management of its own portfolio through its general partner, acting to the benefit of its partners. The duties and obligations of the external manager are undertaken by the general partner.

For the purposes of this Law, where the AIF is established in the form of partnership, any references to the external manager shall be deemed as reference to the general partner and the provisions of the partnership Law will be applicable.

Limited partnership

General partner of an AIF shall:

(a) exercise the management of the partnership and represent the partnership against third parties; and

(b) be responsible for all the debts and liabilities of the partnership; and

Limited liability partners

The limited liability partners:

(a) shall not be responsible for the debts or the liabilities of the partnership, beyond the amount of their contribution and beyond the value of the units acquired; and

(b) do not interfere in the management of the partnership; and

The partnership must provide for the duration and termination of the partnership.

Possibility of merger

Merger is allowed in one of the forms, of an AIF with one or more such AIFs, as long as these operate in the legal form of a common fund or an investment company, on the condition that all participants in the merger shall address the same categories of investors, either professional, or well informed or retail, in accordance with the provisions of this Chapter and the provisions of sections 201A to 201ΚΔ of the Companies Law regarding mergers shall not apply to the merger of the investment companies that participate in the merger.

Merger plan

The merging and receiving AIFs shall draw up a common merger plan, which shall include the following information:

(a) an identification of the type of merger and the particulars of the AIFs involved;

(b) the framework and the rational of the impeding merger;

(d) the criteria for the valuation of the assets and where applicable, of the liabilities as at the date of the calculation of the exchange ratio;

(e) the method of calculation of the exchange ratio;

(f) the applicable rules regarding the transfer of assets and the exchange of units; and

(h) the effective date of the merger.

Merger plan must be presented to the CySEC and CySEC may require more information to be included.