Undertakings for Collective Investment in Transferable Securities (UCITS) are investment funds that have been established and authorised under a harmonised European Union (EU) legal framework under which a UCITS established and authorised in one EU Member State can be sold cross border into other EU Member States without a requirement for an additional authorisation. This so-called “European passport” is central to the UCITS product and enables fund promoters to create a single product for the entire EU rather than having to establish an investment fund product on a jurisdiction by jurisdiction basis. 

Regulatory Authority and Laws in Force 
The Undertakings for Collective Investments in Transferable Securities Law 200(I)/2004 provides the legal framework for the registration, regulation and marketing of local and foreign funds in Cyprus. 

The administrative supervision of the implementation of the provisions of the Law has been assigned to the Cyprus Securities and Exchange Commission (“CySEC”). The CySEC shall supervise the operation of UCITS and Management Companies, as well as, to the extent that this Law applies to them. 

Legal Nature of UCITSs 
A UCITS shall be an undertaking the sole object of which is the collective investment in transferable securities and/or in other liquid financial assets from the public, and which operates on the principle of risk-spreading and the units of which are, at the request of holders, redeemed, directly or indirectly, out of this undertaking’s assets 

Distinction of UCITSs 
UCITS may be divided into sub-categories on the basis of terms, conditions and criteria, including their continued obligations concerning the structure of their assets in the various types of transferable securities or other liquid financial assets in which they invest; these terms, conditions and criteria, including their continued obligations, shall be defined by the CySEC. 

Legal Form of UCITSs 
A local UCITS can take one of the following legal forms: 

• Mutual Funds; 
• Variable Capital Investment Companies 

Mutual Funds 
The mutual fund is a pool of assets which may be comprised by transferable securities, money market instruments and cash in the form of bank deposits. The assets of the mutual fund belong to the unit holders of the fund and its operation is defined by a regulation. The fund is managed by a mutual fund management company. The assets of the mutual fund are kept under a custodian. The mutual fund has no legal personality and is represented by the management company in any case of dispute. 

Variable Capital Investment Companies 
Variable Capital Investment Companies are limited liability companies whose issued share capital is variable and equal to the value of the assets of the company after deduction of its liabilities. These companies have the exclusive purpose of investment of their pooled assets in transferable securities, money market instruments, and cash in the form of bank deposits. The company may manage its own assets but not the assets of other companies. The assets of the company are kept under a custodian. 

Supervision of UCITS in Cyprus 
To set up and operate either a Mutual Fund or a Variable Capital Investment Company in Cyprus the permission of the CySEC is required. Also the permission of the CySEC is required for all foreign UCITS that are based in another EU member state and wish to market their units or shares in Cyprus. 

Licensing 
UCITS to operate must have received in advance official authorization from the competent authorities of the Member State in which they are established or from the member state of origin. The authorization is a passport for all Member States. 

Time to the market 
The Management Company must be notified within two months from the submission of the application about the authorization or rejection of the application. If the Variable Capital Investment Company hasn’t designated a Management Company then the CySEC notify the relevant parties within six months from the submission of the application about the approval or rejection of the application. In both circumstances the CySEC must explain the reasons for the possible rejection. 

Reporting 
The Management Company for each Mutual Fund managed, and the Variable Capital Investment Company shall submit to CySEC and make available to the investors the following: 

• A prospectus containing essential elements set by CySEC which must be kept up to date. 
• An annual report for each financial year. 
• A semi annual report (for the first six months of year). 
• A summarized statement of assets and expenses at the end of the first, second and third quarter of the year. 
• A summarized statement of assets and expenses by the end of the last quarter of the financial years which also must contain an additional profit and loss account and information about the profit-sharing throughout the year. 
• Publication in the daily local press of the net value of the assets, the number of outstanding shares and the units’ net value and issue and redemption price. 

Transparency 
Investors must have the opportunity to watch easily the course of their investment, without having specialized knowledge. The regulation provides a series of informative papers to be available for investors such as the document named as “Basic information for investors”, and other information referred above to the reporting section that the Management Company or the Variable Capital Investment Company obliged to prepare. All these and especially the prospectus and the basic information for investors are presented precisely and in an easily understandable way in order to allow investors evaluating the company, determine whether they would redeem their shares or not, and assess their risks. Therefore, transparency for the real condition of the UCITS will be achieved. 

Assets Portfolio 
The assets must be held by a depositary independent of and distinct from the management company. Depositary services may be provided by either: 

• Banks or co-operative credit institutions both: 

             a. licensed for the purpose by CySEC; 
             b. based in Cyprus or operating there through a branch. 

• Cyprus companies authorised by CySEC which have provided adequate financial and professional guarantees. 

Safekeeping of the following can be delegated to an officially authorised depositary abroad: 

• Foreign transferable securities. 
• Other liquid financial assets. 
• Shares in Cyprus companies listed overseas. 

This delegation must be notified to the management company and does not release the depositary from liability for the assets concerned. CySEC can replace a depositary if it: 

• Finds a serious violation of its obligations. 
• Considers replacement necessary for the protection of investors’ interests. 

Investment Restrictions 
UCITS can only invest in the financial instruments set out in Directive DI200-2004-01, which include: 

• Transferable securities, money market instruments and financial derivative instruments, which are admitted to: 

          a. or traded on a regulated market in a member state; 
          b. or traded on a regulated market which constitutes a controlled market of a member state;
          c. listing on a stock exchange in a third country. 

• This is provided the choice of stock exchange or market: 

          a. is provided for in the fund rules, memorandum or articles of association, or the articles of            association of the investment company; and 
           b. has been approved by CySEC. 

• Financial derivative instruments dealt in over-the-counter (OTC derivatives), subject to certain safeguards. 
• Units of both:

           a. UCITS authorised in member states under the UCITS Directive; 
           b. other collective investment undertakings that are subject to a comparable level of regulation and provide comparable investor protection. 

• Deposits with credit institutions which are repayable on demand or which mature in no more than 12 months, provided that the credit institution either: 

              a. has its registered office in a member state; 
              b. is subject to prudential accepted by CySEC as equivalent to those in Cyprus. 

• Money market instruments issued by regulated issuers and underwritten by an appropriate body such as a central bank or state or local authority. 

A UCITS cannot: 

• Invest in precious metals. 
• Invest more than 10% of its assets in newly issued securities.
• Have an aggregate exposure under financial derivatives contracts that exceeds its NAV. 
• Invest more than 10% of its assets in transferable securities or money market instruments issued by the same body. 
• Invest more than 20% of its assets in deposits made with the same body. 

Borrowing Restrictions 
The investment company, the management company and the depositary acting on behalf of a UCITS cannot contract loans, unless the loans are back-to-back (that is, where companies in different countries borrow offsetting amounts from each other in each other’s currency). 

The following may also apply: 

• An investment company or management company acting on behalf of a UCITS can borrow, for a period up to three months, up to 10% of the UCITS net assets to satisfy applications for redemption of units (if the sale of securities is considered disadvantageous). 
• An investment company can borrow up to 10% of its net assets to acquire immovable property essential for the direct pursuit of its activities. 
• A management company can borrow up to 15% of its own funds, provided that the loan is to acquire immovable property essential for the direct pursuit of its business. 

In addition, the loans referred to in the first two bullet points above must not exceed 15% of the investment company’s net assets in aggregate. 

Tax Treatment of UCITS in Cyprus 
UCITS are subject to taxation under the Income Tax Law of 2002, the Special Contribution for the Defence of the Republic Law of 2002, the Capital Gains Tax Laws of 1980 to 2002 and the Immovable Property Tax Laws of 1980 to 2002. 

The following main rules apply: 

• companies are subject to tax on profits at 10%. Profits include interest received by collective investment schemes, after deduction of any costs (including financing costs) of earning it; 
• there is no taxation of capital gains in Cyprus, apart from gains on disposal of real property in Cyprus and on disposal of shares in companies holding that property; 
• gains on disposal of securities are exempt from tax. The definition of securities includes units in collective investment schemes. Gains from the redemption of units or other participations in UCITS constitute a sale or disposal of securities, and are subsequently tax exempt; 
• dividend income is exempt from corporate income tax. It is also exempt from special defence contribution (SDC tax), unless: 

            a. more than 50% of the paying company’s activities result directly or indirectly in investment                 income;
             b. the foreign tax is significantly lower (that is, 5% or less) than the tax burden in Cyprus. 

In addition, if a Cyprus-resident UCITS does not distribute a dividend within two years from the end of the tax year, both: 

• 70% of accounting profits are deemed to have been distributed; 
• SDC at 3% is imposed on that part of the deemed dividend distribution which applies to shareholders or unitholders who are Cyprus residents. 

If a Cyprus-resident UCITS is wound up, both: 

• any profits earned in the five years before dissolution which have not been distributed or deemed to have been distributed are considered as having been distributed on dissolution; 
• the proportion attributable to Cyprus-resident shareholders or unitholders are subject to SDC tax at 3%. 

Dissolution under a qualifying reorganisation scheme is entirely tax exempt. 

Application for the recognition of UCITS 
The application for the recognition of a UCITS is mainly two stages procedure: 


Stage 1: Application 
For a licence to be granted to local and foreign funds, a duly completed application form and supporting documentation must be submitted to CySEC. 

Stage 2: CySEC Review 
CySEC must determine the application within six months of submission of a complete application. Failure by CySEC to reach a decision within this time limit is subject to judicial review before the Supreme Court under Article 146 of the Cyprus Constitution. CySEC can request further clarifications or additional information as it deems appropriate to allow it to fully evaluate the application and ensure that the applicant complies with the Investment Services and Activities and Regulated Markets Law of 2007 (Law 144(1) of 2007) (Investment Services Law) and any Directives issued under it.

According to the Ministry of Education and Culture of the Republic of Cyprus, it was and it still is the official governmental policy and aim to establish Cyprus as a regional educational and research center, which will attract international scholars and students.

Higher education in Cyprus consists of public and private institutions of university and non-university level (namely higher education colleges). Ever since 1989, when the University of Cyprus was established, the sector of higher education was growing steadily and within expectations up until 2005 when a radical development in the sector was witnessed. The cornerstone for this development was the legislative process that led to the enactment of the Private Universities (Establishing, Operating and Control) Law 2005. This legislation afforded private individuals the ability to form and administer privately owned Universities.

Numbers speak for themselves and the official 2011 Annual Report of the Ministry of Education and Culture, pictures this growth in various graphs and tables. Bottom line is that even in the hard global financial times, people and especially foreigners as concerns Cyprus, chose to still educate themselves with students numbers rising in comparison to those of previous years.

Here are some numbers describing the current situation of higher education in Cyprus. Currently more than 30.000 students are studying in private and public higher education institutions, 10.000 more than back in 2005. In addition the number of Cyprus students studying abroad is decreasing in favor of an increasing number of Cyprus students studying Cyprus institutions. On the other hand the numbers of foreign students studying in Cyprus doubled since 2005 and this trend is expected to continue in the coming years.

Furthermore, privately owned institutions of University and non-University level, account for more than 2/3 of the enrolled students in all educational institutions in Cyprus. The same applies with the appointed academic staff, whereby privately held institutions appoint 2/3 of the total of academia in Cyprus.

With these numbers in mind one must not forget that Cyprus is also committed to the Europe 2020 initiative which was developed as the European Commission’s policy blueprint for recovery from the crisis and for social and economic growth over the next decade, has inevitably influenced the Cyprus Higher and Tertiary Education policy. Europe 2020 sets out the Commission’s ideas for reviving the European economy and creating smart, sustainable, inclusive growth. 

Education and training policies are the main key, if Europe is to meet its ambitions. Modernizing universities and opening up university education to more people are important for smart growth; building quality and access in basic education and lifelong learning will help deliver inclusive growth.

The 2020 strategy proposes five headline targets. On education, the Commission recommends efforts to cut the school dropout rate to below 10% from the current 15% and to increase the number of young people with a university degree or diploma from less than a third to at least 40%. The other targets are increasing the employment rate to at least 75%, boosting spending on research and development to 3% of GDP (it is currently only 2%, significantly less than in the US and Japan), lifting 20 million people out of poverty and achieving the EU’s 20/20/20 climate change and energy goals (20% reduction in greenhouse gas emissions, 20% of EU energy to come from renewable resources, 20% reduction in energy use).

All the above are evidence and reasonable expectations why Private Education in Cyprus will continue to grow as an economic sector, continue benefiting those engaged in it, but also re-boost the economy of the whole island. If that is the case then those engaged in it can stop worry about the drought.

Following the enactment of the new Betting Law 2012, the newly formed National Betting Agency, approved and published the application forms for a Class A Betting Services License. The forms include the Class A Operator application form, the Class A representative application form and the Class A Authorised Premises application form.

It is reminded that the new legislation provides for two Classes of lawful betting services. Class A Betting Services is the license designed for services that are to be provided on – shore through local premises by the operator himself or his authorized representatives. The second Class of lawful betting services namely Class B Betting Services concerned those betting serviced provided online and have no connection to an on shore activity.

The applicable requirements for a Class A betting activities license in Cyprus are the following:

1. Incorporation of Corporate Entity (Cyprus) limited by share

Class A Betting Services License is granted only to corporate entities. The entity may be either a Cyprus company or a foreign company limited by shares. In case of an overseas company is intended to be used, a Cyprus Branch needs to be established. In either case the main activity of the company must be betting services and its issued and paid up share capital must be at least of Euro 500.000. This means that the shareholder must have proof of paying the capital in the company which capital may be used for materializing the company activities and services.

That company as a matter of law and practice will need to have:

• One or more registered Shareholder(s). The registered shareholder(s) may be the real beneficiary(ies) or a trustee shareholder. Cyprus law recognizes the medium of a trustee shareholder holding the shares on behalf of the real beneficiary. In any case there is a respective duty on the company to declare the real beneficiaries having more than 5% interest in the share capital of the company. Strictly speaking shareholders are not responsible for the activities of the company and in any case their liability will not exceed the unpaid amount of their share in the company.
• One or more registered Director(s). The registered director(s) may be the real beneficiary(ies), an appointed third party, or a nominee director. The directors of the company are exercising the powers of the company and are responsible for the offences committed in so far as they are aware of the circumstances giving rise to the offence.
• One registered Secretary. A list of the duties of the secretary can be found in the document titled Company’s Secretary Responsibilities. Briefly, the duties comprise of statutory reporting and secretarial compliance.
• An official Registered Address. This is the address which the company declares to the authorities in order to receive all relevant communication directions and requests. It is always advisable that the registered address be connected in a way to the registered secretary so that compliance and information be exchange swiftly

The people that appear in this company must share the following characteristics:

1. They must have no criminal conviction for a related offence.
2. They must have completed their 25th year of age
3. They must be proper for the appointment, something that will be judged on their current financial condition and record, such as their financial means available from the provision of the relevant services and in case of previous convictions the nature of the conviction and the height of the imposed penalty.

Apart from the company’s officers Cyprus law and/or practice requires from a corporate entity to have:

External Auditors who proceed with the statutory audit of the financial affairs of the company and prepare the annual accounts of the company.

Even though not specifically provided by legislation it is advisable that a company has proper legal consulting available at a daily basis.

2. Bank Guarantee

Any application for a Class A Betting Services License must be accompanied by a bank guarantee for the amount of Euro 550.000 from a local or EU banking or cooperative institution with effect up to 6 months after the expiry of the intended period of the license (i.e one or two years). The law specifically provides that the said bank guarantee must create an irrevocable liability to the bank or cooperative institution to pay any amount which the licensee is required to pay but nevertheless neglects to pay, to:

1. Any player who participating in bets and won thereunder,
2. The Republic of Cyprus as bet tax,
3. The National Betting Committee as contribution.

The law also provides that should the Committee acknowledges that the bank guarantee does not cover the 10% of the annual turnover of the said company, it may request the raising of the guaranteed amount up to such amount so as the 10% of the annual turnover is covered.

3. The ability and suitability of the Class A recipient

The company to be licensed must be able to exhibit:

• that it has or is able to retain, sufficient funds and to maintain a minimum reserve which ar fixed from the Committee, so that the payment of players wins-proceed are safeguarded,
• that it maintains a proper (computerized) control system and audit control of the services provided,
• that it applies the terms and conditions which were set by the committee to safeguard the players,
• that it ensures the suitability of the operation of any equipment used,

4. Computerised System of Slip Marking

The applicant for a Class A License needs to submit an application to the Committee to have its computerised system of slips’ marking approved. In general all prescriptions of the relevant system must be described but in particular the application needs to describe,

1. the General procedures that will be followed,
2. the particulars and prescriptions, of the software to be used
3. the accounting systems and procedures,
4. the procedures and the samples for the maintenance, security, upkeep and transfer of the equipment,
5. the procedures for the creation and maintenance of the security installations, including the general compliance and internal controls in relation to the access to critical systems,
6. the disaster recovery plan,
7. satisfactory data maintenance system
8. and any other information that the Committee might request.

The above also apply in cases of amending or altering the computerised system. The costs of audit of the computerised system will be the applicant’s burden but currently the Authority does not disclose such costs.

It should be noted that the necessary equipment, which includes the electromechanical parts and the software of the computerised system for slips marking should be located and remain located in the Republic of Cyprus.

5. Application and License Fee

For a one year Class A license the fee is Euro 30.000 and Euro 45.000 for a two years license. For a one year representative license the fee is Euro 2000 and Euro 3000 for a two years representative license.

6. Annual Accounts

Every Class A licensee needs to submit to the authority the latest by the 30th of June every year, annual accounts for the previous year, audited from an accredited auditor which must include, the total amount that has been paid by the licensee in relation to bets placed during the said year, the total amount of pay-outs irrespective of the period in which they were placed, the names of the authorised representatives and particulars of sums paid to them as commission and any other information that may be requested by the authority.

7. Books and records

The licensee is responsible to maintain in a specific book the particulars relevant to every betting slip, or other document ;or electronic data which was delivered to the licensee, and to submit declaration of the amount collected or the amount that has become collectable either by himself or any of his representatives.

8. Betting Tax

Every licensee pays to the Republic of Cyprus a 10% tax on the clean revenue from bets and a 3% contribution on the clean revenue from bets for every calendar month. The Clean Revenue is determined as an X minus Y, whereas X equals to the total amount paid to the licensee in relation to bets held by himself and Y equals to the total amount of payouts to winning players. Betting tax is payable at the end of every calendar month.