What this chapter covers
A UCITS is an open-ended fund that invests money raised from the public in transferable securities and other liquid assets, spreads its risk and redeems units when investors ask. In Cyprus, UCITS and their management companies are governed by the Open-Ended Undertakings for Collective Investment Law 78(I)/2012, which transposes the EU UCITS Directive. The first notes explain the two legal forms, the depositary and master-feeder structures.
The middle notes cover what a UCITS may invest in and the limits that spread its risk, borrowing, valuation and redemptions, and the documents investors receive. The last group deals with management companies: licensing and capital, delegation and revocation, and passporting funds and management services across the EU.
Several rules now differ from the exam material. It still repeats some depositary rules that were replaced in April 2016. Since October 2021, facilities for investors have replaced the local paying-bank duty, and since January 2023 a PRIIPs key information document has satisfied the key investor information duty. EU changes on liquidity management tools and delegation, due in 2026, were not yet Cyprus law in September 2026. Each note teaches what the exam tests and says what applies today.
The 10 topics
Each note starts with a short answer and a table of the facts to remember.
UCITS and their structure
- What is a UCITS, and how do common funds and VCICs differ?What makes a fund a UCITS, and how common funds and variable capital investment companies (VCICs) differ.7 min
- What does a UCITS depositary do, and when can it delegate, resign or be replaced?The depositary's oversight and safekeeping duties, delegation of safekeeping, resignation, replacement and liability for lost assets.3 months8 min
- How do master-feeder UCITS structures work?How a feeder invests at least 85% in one master, the agreement between them and CySEC's approval.85%6 min
Investing and dealing
- What may a UCITS invest in, and what limits apply?Eligible assets and the spreading limits for issuers, deposits, counterparties and state-backed securities.10% / 40%35%20%9 min
- What may a UCITS borrow, how are its assets valued, and when can redemptions be suspended?Temporary borrowing, valuation and dealing rules, paying redemptions and suspending them.10% of NAV4 working days7 min
- What must a UCITS publish for investors, and by when?The prospectus, annual and half-yearly reports, NAV calculation and the key investor information document.4 months2 months8 min
Management companies and passports
- How is a UCITS management company authorised and capitalised, and how can it be replaced?Who may manage UCITS, permitted activities, initial and additional capital, licensing and replacing the management company.€125,0000.02%8 min
- When can a UCITS management company delegate its functions, and when must CySEC revoke its licence?Conditions for delegating functions, the letter-box limit, and when CySEC must revoke a licence.12 months6 min
- How does a UCITS market its units in other EU countries?The notification procedure for marketing a UCITS in another Member State, and facilities for investors.10 working days7 min
- How do UCITS management companies operate in other Member States?Branches and cross-border services of management companies, and which authority supervises what.2 months1 month8 min
The numbers to know
Every figure in this chapter, with the note that explains it.
| Figure | What it is | Note |
|---|---|---|
| 85% | Minimum share of a feeder UCITS's assets invested in units of its master UCITS | Topic 3: How do master-feeder UCITS structures work? |
| 10% · 40% | Most a UCITS may put in one issuer, and the cap on the total of holdings above 5% each | Topic 4: What may a UCITS invest in, and what limits apply? |
| 20% | Most a UCITS may deposit with a single bank | Topic 4: What may a UCITS invest in, and what limits apply? |
| 4 working days | Deadline for paying redemption proceeds | Topic 5: What may a UCITS borrow, how are its assets valued, and when can redemptions be suspended? |
| €125,000 + 0.02% | Initial capital of a UCITS management company, plus 0.02% of portfolios above €250 million, with the increase capped at €10 million | Topic 7: How is a UCITS management company authorised and capitalised, and how can it be replaced? |
| 10 working days | Time CySEC has to forward a complete marketing notification to the host authority | Topic 9: How does a UCITS market its units in other EU countries? |