Cyprus International Collective Investment Schemes
Cyprus introduced in May 1999, a legislation enabling the establishment and regulation of International Collective Investment Schemes ("Schemes").
Under the above legislation, the Central Bank of Cyprus is the regulatory and supervisory authority for Schemes and may, upon a written application, recognise a company incorporated under the Cyprus Companies Law, a trust created under the International Trust Law or a partnership registered under the Partnership and Business Names Law, as an International Collective Investment Scheme.
Under the above legislation, therefore, a Scheme may take one of the following forms:
International Fixed Capital Company (IFCC)
International Variable Capital Company (IVCC)
International Unit Trust Scheme (IUTS)
International Investment Limited Partnership (IILP)
All four legal types of Schemes, can either be of limited or unlimited duration.
The ICIS’s are classified under three categories depending on the identity and number of their investors:
Public Schemes
Schemes addressed to experienced investors
Private Schemes
The sole object of an ICIS is the collective investment of funds of the unitholders. ICISs are subject to tax like any other entity. In a nutshell what is significant for ICISs is:
the exemption from tax on foreign dividends
Exemption from tax on profit from sale of securities as defined
No withholding tax on income repatriation by the ICISs
The UCITS law 225(I) 2002 provides the legal framework for the registration, regulation and marketing of local and foreign funds in Cyprus. Under this law UCITS is considered to be any organisation whose sole aim is to collectively invest publicly collected capital, in transferable securities via stock markets, banking deposits and any other investments and whose operation is based on the principle risk of diversification and whose units can be liquidated by the unit holder on request using the assets of the organisation.
As such the following are not considered to be UCITS under the law:
UCITS which are not open ended
UCITS that do not market to the public in Cyprus or other EU member states
UCITS that based on their fund rules or constitutional documents only make their units available to the public in other countries except Cyprus.
UCITS for which due to their investment and borrowing policy the rules of the law 225(I) 2002 are not suitable.
Under this law, local UCITS may take the following legal forms: Mutual Funds
