Welcoming attendees to today’s prestigious investment event, the Cyprus Investors Summit 2015, President of the Cyprus Investment Funds Association Angelos Gregoriades presented Cyprus’ attributes as a competitive investment funds jurisdiction.
“As I am sure you all know,” he began, “the global investment fund industry has witnessed significant growth in recent years, a trend that is anticipated to continue at the same or at an even greater pace. In parallel, Cyprus’ investment funds industry has gained significant momentum from both local and international fund promoters.”
Cyprus wishes to be at the forefront of the investment funds sector and is prepared to meet this growing demand, he said, with its legal and regulatory framework that incorporates the enhanced regulatory measures adopted at EU level, while also offering investors and fund promoters stability along with cost and tax efficiency.
Furthermore, the enactment of the Alternative Investment Funds Law (AIF Law) in July 2014 provides for a significant modernisation of the related legal framework and offers a comprehensive tool box and new structuring options competitive to those of other established jurisdictions, the CIFA president continued.
Cyprus’ legal framework is all-encompassing and, at the same time, attractive enough to establish investment funds, which can meet diverse investor requirements. An investment fund, he outlined, may be set up in Cyprus as either an Alternative Investment Fund (AIF) or an Undertaking for Collective Investment in Transferable Securities (UCITS). UCITS are regulated at EU-level, with high levels of regulation, requirements for the establishment of risk management procedures and investment restrictions, which collectively achieve high levels of investor protection. On the other hand, AIFs are regulated under national law and encompass transparency, reporting and risk-management requirements similar to UCITS, aiming at investor protection.
“What also plays a crucial role in the successful establishment of Cyprus as a funds jurisdiction is the fact that the competent regulatory authority, Cyprus Securities and Exchange Commission is efficient, effective and approachable, and constantly strives for the creation of a dynamic regulatory framework which is also market sensitive,” he expressed.
While the effects of the eurozone crisis have posed significant challenges for Cyprus, the outlook for rapid recovery is encouraging. Indeed, despite the adverse effects on Cyprus’ macro-economy in 2013, the funds’ industry remained resilient. “It must be acknowledged that the response of the Cypriot authorities was swift and decisive, safeguarding Cyprus’ current and prospective managers, administrators and ancillary support services against financial harm.”
The main components to transform Cyprus into a regional fund centre of excellence are its strategic location, its stable and transparent political infrastructure, its modern legal system based on common law, its full compliance with EU and OECD standards for anti-money laundering and insider dealing and its expert professional and financial services offered at a competitive cost.
More importantly, Gregoriades continued, Cyprus offers one of the most attractive tax regimes in Europe; a corporate income tax rate of 12.5%, full exemption from tax on gains from trading in securities and a generous participation exemption regime on foreign dividends, along with an extensive network of double tax treaties for international tax planning.
“Cyprus is well-positioned to support the full operational lifecycle of an investment fund, providing foreign investors, as well as fund promoters, a uniquely competitive entry point to Europe’s capital markets, as well as the necessary financial instruments that serve to protect and enhance investment value.”
CIFA, which was established in February 2013, acts as the single unified representative body of the industry in Cyprus, representing the sector in economic missions to promote and support the development of the Cyprus Investment Fund industry.
The organisation, the CIFA President concluded, is committed to facilitating the further upgrade Cyprus’ product and service quality on all fronts, to ensure investor protection.