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The Open – Ended Type Collective Investment Undertakings (Amendment) Law of 2015
Area(s) of Practice: Banking and Secured Financing, Corporate and Commercial Law

An amendment of the Open – Ended Type Collective Investment Undertakings Law, 78(I)/2012, (UCITS Law) was recently approved for the purpose of better harmonisation with certain provisions of EU Directives 2009/65, 2013/14 and 2014/91 regulating the operation of UCITS.

The main provisions of the amending legislation are the following:

• No UCITS shall pursue activities without a prior licence granted and notified by the Securities and Exchange Commission;
• Entities that satisfy capital adequacy and prudential supervision requirements under the Investment Services Law, 144(I)/2007, are allowed to act as depositaries in Cyprus;
• The obligation imposed on depositaries to co-sign the reports and accounts of the Common Fund under Section 10(3)(e) is deleted.
• The shares of a Variable Capital Investment Company may be listed in a stock exchange market operating in a third country upon certain conditions.
• Investors, including UCITS, should avoid relying solely or mechanistically on credit ratings or using them as the only parameter when assessing the risk involved in the investments made by them.
• The prospectus of the UCITS shall include information on investments in a third country in which they intend to invest at least 35% of their assets. 
• The listing for trading on a stock exchange market of UCITS units dealt in on a regulated market under Section 45 is extended.
• UCITS valuation of assets shall be conducted by the Management Company on a periodic basis and at least once every fifteen days according to EU law and the net asset value shall be published on the webpage of the Management Company.
• New Section 110(4) states that the Securities and Exchange Commission may allow a Management Company not to provide up to 50% of the additional amount of own funds referred to in Section 110(2)(a), if it benefits from a guarantee of the same amount given also by a credit institution operating within the territory of a third country provided that the prudential supervision rules applied in that country are equivalent to those applied in the EU.
• The obligation of the Management Company to submit quarterly reports to the Securities and Exchange Commission under Section 114 is deleted.

Furthermore, the Law ensures better regulation of the procedures regarding distribution, redemption or suspension of redemption of units, as well as more effective implementation of the provisions regarding co-beneficiaries and the dissolution of Common Fund. It also simplifies the procedures regarding the date on which a merger, a division or a withdrawal of a licence takes effect.

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