Registered Alternative Investment Funds (RAIF)

Description/Characteristics

In July 2018, Cyprus further upgraded its legislative framework reflecting the latest market demands and introducing a new product called the Registered Alternative Investment Fund (RAIF) which offers new opportunities for a quick and cost-effective fund launch.

Flexible and dynamic legal framework

The Reserved Alternative Investment Fund (RAIF) can be set-up within a very short timeframe. It will not be subject to the approval and/or supervision of the CySEC regulatory authority and will benefit from the structuring flexibility also applied to the other types of Cyprus investment funds.

The Reserved Alternative Investment Fund (RAIF) will be managed by an authorized AIFM and as such will be indirectly subject to the AIFMD regime. The AIFM regulation will be fully applicable with the related investor protection and this new fund will benefit from the marketing passport granted to the AIFM. The Reserved Alternative Investment Fund (RAIF) should be able to adopt any fund strategy, invest in any asset class and, under certain conditions, not be required to diversify its portfolio of assets.

The marketing of the units of the RAIF may start once the RAIF is successfully registered in the RAIF Register.

A RAIF is exclusively aimed at well-informed investors and/or professional investors, it is not possible to be marketed to retail investors. Furthermore, a RAIF must invest a minimum of EUR 500.000, which must be realized within the first year of its establishment

Legal Forms

A RAIF can take the following legal forms:

• Variable Capital Investment Company (VCIC)
• Fixed Capital Investment Company (FCIC)
• Limited Partnership
• Common fund

A RAIF may also operate as an Umbrella Fund structure, with more than one investment compartments (sub-funds).

Depository Requirements

The eligible depositaries for a RAIF include Credit Institutions, Investment Firms or an institution under prudential regulation and supervision, and recognized by the Member State as eligible to be appointed as depositaries.

Appointment of a Depository for the safekeeping of the RAIF's assets is mandatory for all types of RAIFs.

Advantages

• Cost-Effective Vehicle
• May be used until converted to AIF
• No minimum capital requirement, but minimum investment is required
• May be open-ended or close-ended
• RAIFs can be set-up as umbrella funds with multiple compartments, allowing the management of different pool of assets
• No Investment Restrictions (except setting up as funds of funds, money market funds or Loan Origination Funds)
• RAIF can have an unlimited Number of Investors
• No limitation for the assets managed
• No taxation of capital gains
• Passporting Rights for fund distribution within the EU
• Supervision at the level of the AIFM managing the RAIF(s)