Application Processing Monitoring the processing of the application with the regulator, and liaising with the parties involved

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1 Investment Funds The use of foreign companies for investment fund activities is a widely spread practice amongst international investors. Abacus offers a comprehensive solution for investment funds and related management companies and is flexible in making services available according to your needs. We are experts in many types of investment funds and would be delighted to assist you with the structuring, set-up and administration of your investment activities. The critical factor that separates Abacus from other firms in this space is our in-depth knowledge of the industry and our commitment to understanding the economics of any given deal, thereby ensuring that the governing documents reflect these economics prior to starting operations. We record all aspects of our clients' transactions and store key parameters (e.g. conversion ratios, expiration dates, payment schedules and restrictions). Periodically, valuations can be updated to allow for the monitoring of overall fund performance. In addition, and because we have invested in what we consider to be top technology in the industry, Abacus can generate multiple customised reports that will assist you and your clients at all times. Our dedicated Investment Funds Team here in Cyprus, works with investors and managers of offshore hedge funds and private equity funds to help them structure, establish and administer their Cyprus and Cayman investment vehicles to best meet their strategies and requirements of the investors. We advise on all aspects of the life of private Cyprus and Cayman funds including structuring, formation, administration and closure under various planned scenarios. Our team has unrivalled experience and depth in both jurisdictions, with a strong and growing reputation for the quality and timeliness of our advice. With a client base that includes a number of reputable investors, some of the most respected managers with fund structures in our focus markets and the respect of the leading law firms in the global funds industry, our Investment Funds Team provides investors and managers with quality advice on all aspects of their private Cyprus and Cayman Islands funds. 1

2 Fund Registration Abacus can assist with the registration of funds in Cyprus and Cayman Islands. Set out below is an example of the procedure which Abacus can undertake to make an application for the registration, monitor the process and offer all required services after the Fund has secured the licence. Pre-application Incorporation of entity Assistance with preparation of M&A Completion of Application documents Review of Agreements Information Memorandum assistance Application Processing Monitoring the processing of the application with the regulator, and liaising with the parties involved Post-application Fund Administration Secretarial Support Accounting work Liaising with auditors / legal advisors and providing the necessary support Information required for the Application Although the application forms may differ from each jurisdiction, the core information required is as follows: Proposed name and type of scheme Names of directors, promoters, trustees, etc Description of the investment financial objectives Description of proposed funding arrangements and risk management practices Memorandum and Articles of association or Trust Deed or Partnership Agreement Agreements entered into by the Fund(management agreement, trustee/custodian agreement) Questionnaires for officers and/or promoters of the scheme as well as for legal entities who own more than 10% of the share capital of the fund Information on the manager and the trustee/custodian of the Fund personal questionnaires of officers and significant shareholders questionnaire for legal entities who control the manager/custodian all officers of trustee/custodian must be persons of integrity and have appropriate level of knowledge 2

3 Cayman Islands: The Mutual Fund Law (section 4(1)) specifies that a mutual fund operating in and from the Cayman Islands must have a license unless a licensed mutual fund administrator is providing its principal office; it meets certain criteria which allows for funds to be registered, or it is exempt from regulation. Set out below is a summary of the legal forms for setting-up an investment fund in the Cayman Islands: Limited Partnership Unit Trust Company (including segregated portfolio companies) Categories of Regulated Mutual Funds: Licensed Mutual Fund Application is made to Cayman Islands Monetary Authority (CIMA) for a licensed Fund. The licence may be issued at CIMA s discretion. This method would be appropriate for mutual funds wishing to accept subscription amounts below US$100,000 but which do not propose to appoint a Cayman Islands mutual fund administrator. Administered Mutual Fund To be approved as an administered mutual fund, the fund must have a CIMA-licensed mutual fund administrator providing its principal office. The regulatory responsibility for the administered fund, which has more than 15 investors and which is not a licensed or registered mutual fund, is placed largely in the hands of a licensed Mutual Fund Administrator. Registered Mutual Fund A Registered Fund must have either a minimum aggregate equity interest of CI$80,000 (US$100,000) purchasable by a prospective investor or the equity interests must be listed on a stock exchange approved by CIMA. Some forms of Mutual Funds do not have to be regulated and can be set up in the form specified below: Exempted Company The exempted company may redeem or purchase its own shares and may therefore operate as an open-ended corporate fund. Closed-ended corporate funds can also be established using the ex empted company and it is a relatively straightforward procedure to convert from one to the other. 3

4 Cayman Islands (cont.): Segregated Portfolio Company An exempted company can also be established as a "Segregated Portfolio Company" ("SPC") with protected cells or portfolios. The SPC makes it possible to provide a means for different groups to protect their assets when carrying on business through a single legal entity. Exempted Limited Partnership The exempted and limited partnership provides a second unincorporated vehicle and it can be formed as easily as the exempted company or the unit trust. Unit Trust The unit trust is usually established under a trust deed with the investors' interest held as trust units. Taxation of Cayman Islands Funds: Not subject to income, capital gains or withholding taxes Exempted Company granted a tax holiday for at least 20 years Exempted partnerships granted a tax holiday for a maximum of 50 years Exempted trusts granted a tax holiday for a maximum of 50 years 4

5 Alternative Investment Funds (AIFs): The Alternative Investment Funds Law of 2014 (the AIF Law ) was enacted by the Cyprus parliament on 10 July 2014 and entered into force following its publication in the Official Gazette. The AIF Law replaces and repeals the International Collective Investment Schemes Law (the ICIS Law ), which has been in place since Under the AIF Law, the supervisory authority has changed from the Central Bank of Cyprus to the Cyprus Securities and Exchange Commission ( CySEC ), bringing all investment products, asset managers and investment firms under a single regulatory body. The law creates a new institutional framework governing the establishment and operation of Alternative Investment Funds in the Republic Cyprus, providing transparency and protection in the field of collective investments, while it brings the legislation which regulates the international collective investment schemes into line with European law and similar arrangements that are promoted in other EU Member States. The AIF Law defines an AIF as a collective investment undertaking that raises external capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and that has not been authorized as a UCITS. Various structures and schemes are excluded from the AIF Law. Such schemes and structures are holding companies, schemes covered by the Social Insurance Law or the law regulating Insurance Business, occupational benefit and retirement schemes, employee participation schemes or employee savings schemes, securitization special purpose entities and approved investment companies listed on the Cyprus Stock Exchange. The AIF Law provides for two classes of AIF: AIFs available to an unlimited number of investors ( unlimited )t AIFs available to 75 investors or fewer ( restricted ). The AIF available to unlimited investors may be marketed to all investors, including retail investors. The AIF available to 75 investors or fewer may be marketed only to well-informed or professional investors. The definition of a professional investor follows the Markets in Financial Instruments Directive 2004/39/EC. A well-informed investor is an investor not considered to be a professional investor who confirms in writing that he is a well-informed investor and has been notified of the risks associated with investing in the AIF in question, and invests at least 125,000 in the AIF or has been evaluated by a bank or regulated investment business as a well-informed investor possessing the appropriate expertise and knowledge to assess the suitability of the investment. AIFs may be structured as variable or fixed capital companies or as limited partnerships, In addition, unlimited AIFs may be structured as a mutual fund. The unit trust structure provided for by the ICIS Law is no longer available. 5

6 Alternative Investment Funds (AIFs): The AIF Law introduces new structuring options which were not available under the previous legislative framework: Umbrella structures with multiple investment compartments, which allow the management of different pools of assets with distinct investment policies, with the each such pool of assets being ring-fenced Common contractual funds, which are commonly used in other jurisdictions, where investors participate as co-owners of the assets of the AIF Enables public offerings of shares of AIFs to take place, in contrast to the position under the ICIS Law, where only private placements were allowed. Securities issued by AIFs may also be listed, which increases liquidity, marketability and transparency and widens the potential investor base The role of depositary is no longer reserved to credit or banking institutions and may, subject to specified conditions be undertaken by other entities. The enactment of the new AIF Law marks a long-awaited modernization of Cyprus s investment funds regime. Combined with the island s stable and transparent political legal and commercial infrastructure, its reliable and familiar common-law legal system and the excellent professional and financial services available at a competitive cost, it should transform Cyprus into a major force in the international funds market. Cyprus s tax regime is particularly beneficial, offering a corporate income tax rate of 12.5%, among the lowest in the EU, full exemption from tax on gains from trading in securities and a generous participation exemption regime on foreign dividends in conjunction with an extensive network of double tax treaties for international tax planning. 6

7 Fund Administration: Abacus can undertake the fund administration of any fund mentioned above, in accordance with the requirements of the Offering Memorandum and the Articles of Association. Our administrative services are designed for clients seeking traditional offshore funds as well as those who wish to establish funds within the EU environment and regulatory sphere. Abacus provides full-service concept, development, and administration solutions for a range of third-party funds including fund development, corporate, fiduciary, valuation and registration services. Our fund administration services cover all asset types including equity, cash and alternative asset investment funds including non-financial assets such as real estate or trading companies. The administration services will include, but not limited to, the following: Calculation of the Net Asset Value (NAV) including the calculation of the funds income and expense accruals; Preparation of semi-annual and annual accounts; Maintenance of the fund s financial books and records; Payment of the funds expenses; Reconciliation of daily and monthly Broker Statement; Follow up settlement of daily trades, assuring that the proper dividend and interest are received, updating price of securities of client; Calculation and payment of dividends and distributions (if required); Supervision of the orderly liquidation and dissolution of the fund (if required); Maintenance of the Funds statutory records. Assistance and cooperation with the annual audit function. FEES Regular research shows that our administration fees remain extremely competitive when compared to other EU jurisdictions and respective service providers.the administration fees will depend on the following: If the fund is open or closed ended Number of investors expected Volume of transactions per month Value of the fund Type of investments Please contact us for a customised proposal and anything else you might need. 7

8 truly international truly professional truly world class Contact us: Costas Hadjicosti - Director costas.hadjicosti@abacus.com.cy Arianthi Court, 2nd Floor, 50 Agias Zonis Street, CY-3090 Limassol, P O Box 56183, CY-3305 Limassol, T