Retail Investment Funds: amendments to Law 78 of 2012 on open-ended undertakings for collective investment by law 88 of 2015
The concept behind the amendments brought by Law 88 of 2015
Law 78 of 2012 on Open-Ended Undertakings for Collective Investment (UCI Law) transposed into Cypriot Law the European Union (EU) UCITS IV Directive (2009/65/EC) on undertakings for collective investment in transferable securities (UCITS). The competent authority for regulation and supervision of UCITS in Cyprus is the Cyprus Securities and Exchange Commission (CySEC).
The UCI Law can be considered as the piece of legislation marking Cyprus’ efforts to emerge into an investment funds jurisdiction, having regard to the interest that the draft UCI Law had attracted during the consultation process.
The UCI Law has been amended for the first time earlier this year by Law 88 of 2015. The amendments so effected can be classified into following categories:
- Amendments for the purpose of enhancing the competitiveness of Cypriot UCITS, e.g. by no longer requiring that all Cypriot UCITS calculate and publish their net asset value (NAV) daily without taking any distinguishing factor into consideration; or by replacing the requirement for mandatory publications in two local newspapers with the requirement to provide relevant information to investors through a durable medium and through a relevant publication on the management company’s/investment company’s website (as applicable);
- Amendments with a view to initiating the upcoming transposition of the EU UCITS V Directive (2014/91/EU), which is due on March 2016, e.g. by aligning certain of the provisions on UCITS depositaries, within the meaning of section 10 of the UCI Law, with the provisions of the UCITS V Directive;
- Amendments for the purposes of relativising unconditional reliance on credit ratings issued by credit rating agencies by requiring enhancement of risk management policies and procedures; and
Amendments for the purposes of alignment with the EU-wide distinction of investment funds into UCITS and non-UCITS, i.e. Alternative Investment Funds (AIFs), introduced pursuant to the EU AIFM Directive (2011/61/EU). In accordance with the aforesaid distinction any reference to non-UCITS investment funds has been removed from the UCI Law, given that there is in the meantime a dedicated legal framework for all types of non-UCITS. This way the UCI Law becomes a 100% UCITS dedicated piece of legislation.
The present note undertakes to briefly inform on the rationale motivating the amendments to the UCI Law provisions and on their current content following the amendment.