What this chapter covers
An alternative investment fund (AIF) is any collective investment undertaking that does not hold a UCITS licence. In Cyprus the fund itself is governed by the Alternative Investment Funds Law 124(I)/2018, and its manager by the AIFM Law 56(I)/2013, which transposes the EU AIFM Directive. The first notes cover the legal forms of an AIF, its initial capital and minimum assets, and what it may invest in.
The middle notes deal with the AIF manager (AIFM): which managers the law catches, how they are authorised and capitalised, their conduct and conflicts of interest, their pay rules, and risk and liquidity management. The last group covers organisation and valuation, reports to investors and CySEC, and who may invest in an AIF and how AIFs reach retail investors.
Some of the exam material differs from the law in force. Parts of it still follow the repealed 2014 AIF Law, the AIFM Law has referred to the EU's digital operational resilience rules (DORA) since February 2025, and EU rules on liquidity management tools have applied since April 2026. Each note teaches what the exam tests and says what applies today.
The 11 topics
Each note starts with a short answer and a table of the facts to remember.
The funds
- What is an AIF in Cyprus, what forms can it take, and how must it be organised?What an AIF is, its three legal forms in Cyprus, self-managed and externally managed funds, and the governing body.7 min
- How much initial capital and how many assets must an AIF have, and by when?Initial capital of an internally managed AIF, the minimum assets every main-regime AIF must raise, and the deadline.€125,000€500,00012 months5 min
- What may an AIF invest in, and how are transactions with related parties controlled?What an AIF may invest in, investing in funds of the same manager, and deals with related parties.6 min
The AIF manager
- Which managers fall under the AIFM Law, and how can CySEC change, suspend or withdraw an authorisation?The thresholds for the full AIFM Law, sub-threshold managers, material changes, and suspension or withdrawal of authorisation.€100m / €500m7 min
- How is an AIFM authorised, and how much capital must it hold?Who may be an AIFM, the authorisation timetable, initial capital, the 0.02% top-up and guarantees.€300,000 / €125,0000.02%7 min
- What general principles must an AIFM follow, and how must it handle conflicts of interest?General conduct principles, fair treatment of investors, the five conflict pairings and prime brokers.6 min
- What remuneration rules apply to an AIFM's staff?Who the pay policy covers, who adopts it, variable pay in fund units, deferral and guaranteed bonuses.50%40%7 min
- How must an AIFM manage risk, leverage and liquidity?Separating risk management, leverage limits, the liquidity management system and the liquidity tools applying since April 2026.7 min
Valuation, transparency and investors
- What organisation must an AIFM have, and how must AIF assets be valued?Resources and controls, compliance and internal audit, and who values AIF assets and how often.At least yearly7 min
- What must an AIFM report to investors and to CySEC?The audited annual report, what investors learn before they invest, and regular reporting on risk and leverage.6 months7 min
- Who may invest in an AIF, and how can AIFs be marketed to retail investors in Cyprus?Professional, well-informed and retail investors, the CySEC permit for retail marketing, and marketing by other managers.7 min
The numbers to know
Every figure in this chapter, with the note that explains it.
| Figure | What it is | Note |
|---|---|---|
| €500,000 | Minimum assets an AIF under the main regime must raise from investors within 12 months of authorisation, which CySEC may extend by up to 12 months | Topic 2: How much initial capital and how many assets must an AIF have, and by when? |
| €300,000 · €125,000 | Initial capital of an internally managed AIF that is its own AIFM, and of an external AIFM | Topic 5: How is an AIFM authorised, and how much capital must it hold? |
| 0.02% | Extra own funds on the value of portfolios above €250 million, with €10 million as the cap on the total | Topic 5: How is an AIFM authorised, and how much capital must it hold? |
| €100m · €500m | Assets up to which a manager is outside the full AIFM Law; the higher figure applies only if its AIFs are unleveraged with no redemption rights for five years | Topic 4: Which managers fall under the AIFM Law, and how can CySEC change, suspend or withdraw an authorisation? |
| 50% · 40% | Minimum share of variable pay in fund units or equivalent instruments (unless AIFs are under half of what the manager runs), and minimum share deferred for at least three to five years (60% for particularly high amounts) | Topic 7: What remuneration rules apply to an AIFM's staff? |
| 6 months | Deadline for the audited annual report of an AIF after the end of its financial year | Topic 10: What must an AIFM report to investors and to CySEC? |