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On 29 May 2025, the House of Representatives passed the Investment Funds Administrators Law, L.101(I)/2025, marking a pivotal advancement in Cyprus’s financial regulatory regime. Published in the Official Gazette on 18 June 2025, the Law introduces a standalone legal framework for the regulation and supervision of fund administrators—a sector previously operating under the broader umbrella of fund manager legislation.
This legislative development establishes a distinct regime tailored to the operations of fund administration companies, bringing Cyprus into closer alignment with leading EU and global jurisdictions. For the first time, investment fund administrators are subject to direct licensing and supervision by the Cyprus Securities and Exchange Commission (CySEC), ensuring a higher level of regulatory consistency and oversight.
Under the Law, fund administrators are required to maintain minimum capital reserves—€50,000, or €125,000 where additional services are provided—carry professional indemnity insurance, and operate from a registered and central office located in Cyprus. Governance standards are enhanced through obligations relating to board structure, internal controls, and risk management. In addition, the Law imposes robust compliance, reporting, and anti-money laundering obligations, reflecting a clear commitment to operational integrity and investor protection.
The scope of permitted activities includes core administrative services such as maintaining investor registers, calculating net asset values, and processing investor transactions for both UCITS and Alternative Investment Funds. While these functions were previously referenced under existing legislation and EU directives, they are now unified within a coherent and purpose-built legal structure.
Investor confidence is further safeguarded through provisions addressing conflicts of interest, mandatory disclosure requirements, and reinforced governance mechanisms. CySEC is granted broad enforcement powers to ensure adherence, including the imposition of sanctions where necessary.
The enactment of this Law significantly enhances the regulatory clarity and professionalism of Cyprus’s fund services sector. By setting a defined operational and supervisory framework, the Law strengthens the jurisdiction’s credibility and appeal to international asset managers seeking a stable and transparent European base. It represents a strategic step forward in Cyprus’s ongoing effort to modernise its financial services landscape and support sustainable growth in the investment funds industry.
For more information, please contact Demosthenes Mavrellis ([email protected]) or your usual contact at Chrysses Demetriades & Co LLC.
Author: Demosthenes Mavrellis, Partner
