Cyprus transposes the EU’s Funds Marketing Directive into national law
On 18 October 2021, Cyprus transposed Directive (EU) 2019/1160 with regard to cross-border distribution of collective investment undertakings (the Marketing Directive) into local law, by amending:
- The Alternative Investment Fund Managers Law 2013 (the AIFM Law)
- The Open-Ended Undertakings for Collective Investment Law 2012 (the UCI Law)
The Marketing Directive seeks to harmonise the treatment of the fund's distribution by UCITS managers and AIF managers (AIFMs).
As relevant, the amendments to the AIFM Law:
- Introduce clear rules relating to Cyprus AIFMs engaging in “pre-marketing” (defined below) in an EEA member state and EEA AIFMs engaging in pre-marketing in Cyprus
- Enable Cyprus AIFMs to de-notify arrangements made for the marketing of units of an AIF it manages, subject to certain conditions
- Require Cyprus AIFMs, intending to market units or shares of an AIF to retail investors in the EEA, and EEA AIFMs, intending to market units or shares of an AIF to retail investors in Cyprus, to make certain facilities available relating to the provision of information handling
“Pre-marketing” for these purposes means the provision of information or communication, direct or indirect, on investment strategies or investment ideas by an EEA AIFM or on its behalf, to potential professional investors domiciled or with a registered office in the EEA in order to test their interest in an AIF or a compartment which is not yet established, or which is established, but not yet notified for marketing, in that Member State where the potential investors are domiciled or have their registered office, and which in each case does not amount to an offer or placement to the potential investor to invest in the units or shares of that AIF or compartment.
As relevant, the amendments to the UCI Law:
- Enable Cyprus UCITS marketing units to investors in an EEA member state and EEA UCITS marketing units to investors in Cyprus to de-notify arrangements made for such marketing, subject to certain conditions
- Require both Cyprus UCITS intending to market in an EEA member state and EEA UCITS intending to market units to investors in Cyprus and to make facilities available for the performance of certain tasks by investors
- Require that the notification made by a Cyprus UCITS intending to market in an EEA member state or an EEA UCITS intending to market in Cyprus, contains all details necessary, including the address, for the invoicing or for the communication of any applicable regulatory fees or charges by CySEC and information on the above mentioned facilities available to investors