International Collective Investment Schemes (ICISs)

Introduction

The International Collective Investment Schemes Law, which was introduced in May 1999, is a further milestone in the development of Cyprus as a truly international financial center. The law provides the legal infrastructure for the registration of International Collective Investment Schemes (ICISs), which can be accommodated by an international fixed capital company, an international variable capital company, an international unit trust scheme and an international investment limited partnership, the object of which is the collective investment of funds.

Advantages of Using ICISs in Cyprus

The advantages of using Cyprus for incorporating an international investment unit scheme are:

The wide choice of vehicles (as described above) to be used for the establishment of a scheme with the variable and fixed capital companies having a limited life if needed
A legal structure based on English common law and on a ‘one’ piece legislation for all the aspects of the collective schemes
Full compatibility with the EU ICISs, not only in respect of open-ended schemes but also in respect of other schemes also
Tax exemption on profits from disposal of securities
The use of the favourable provisions of the double tax treaties of Cyprus
The capital of the collective investment schemes can be denominated in any currency
Low setup and maintenance fees compared to the traditional EU jurisdictions.

Procedure for the setting up of ICISs in Cyprus

ICISs must be approved by the Central Bank of Cyprus or the Cyprus Stock Exchange Committee (CySeC) upon submission of a written application by the interested parties. In order to approve the scheme, the Central Bank/CySec must be satisfied that:

The scheme contains the constitutional documentation, the offering memorandum as well other documentation and information required by the bank
The directors, the promoters, the managers and the trustee of the scheme are competent and ethical and that the manager, the general partner, and the trustee in each case act independently of one another
The manager meets the necessary requirements as per the legislation and the Central Bank/CySec regulations
The trustee meets the necessary requirements as per the legislation and the Central Bank/CySec regulations
The general partner meets the requirements of a partner
The name of the scheme is approved.

Schemes which are private or aim to attract a maximum of 100 investors generally fall under the supervision and regulation of the Central Bank. Schemes which are marketed to the general public or aim to attract more than 100 investors are supervised/regulated by the CySec. Following the approval of the scheme the Central Bank/CySec will categorise it as:

A scheme to be marketed to the general public
A scheme to be marketed solely to the experienced investors
A private international collective investment scheme.

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