An amendment of the Alternative Investment Funds Managers (AIFMs) Law, 56(I)/2013, aiming at harmonising Cyprus legislation with EU Directive 2013/14 was recently approved by the Parliament. According to the amending legislation:
• AIFMs shall implement adequate risk-management systems in order to identify, measure, manage and monitor appropriately all risks relevant to each alternative investment fund (AIF) investment strategy and to which each AIF is or may be exposed. In particular, AIFMs shall not solely or mechanistically rely on credit ratings issued by credit rating agencies as defined in Article 3(1)(b) of EU Regulation 1060/2009;
• Taking into account the nature, scale and complexity of the AIFs’ activities, the Cyprus Securities and Exchange Commission, shall monitor the adequacy of the credit assessment processes of AIFMs, assess the use of references to credit ratings in the AIFs’ investment policies and, where appropriate, encourage mitigation of the impact of such references, with a view to reducing sole and mechanistic reliance on such credit ratings;
• Authorised external AIFMs shall engage in the alternative investment fund activities included in Section 6(3) of the law in a cumulative manner.