SCSS Senior Management led by Yiannos Christofides – CEO, Yervant Bohdjalian, General Manager as well as Board Members George Christofides and Shavasb Bohdjalian had extensive contacts with delegates to the Summit and discussed among others topics such as new investment opportunities and key trends and challenges.

SCSS Fund Management Ltd., is a regulated Alternative Investment Fund Management (AIFM) regulated by the Cyprus Securities and Exchange Commission (CySEC) and has received regulatory permission to manage four Alternative Investment Funds (AIFs) active in the Private Equity, Fixed Income and Real Estate sectors.

Demetra Kalogerou, Chairwoman of the Cyprus Securities and Exchange Commission, discussed the latest changes in the regulatory and supervisory landscape of the fund industry. “Cyprus is a safe, responsible place to do business globally,” she said, according to Gold Magazine.

Kalogerou said that substantial improvements and legislation amendments will create all the necessary preconditions for growing the collective investment sector, which is expected to contribute substantially in our country`s economy.

The proposed amendments will be made in registered funds, mini-managers, and regulatory framework for fund administrators. These amendments will contribute to the further development of the fund industry in Cyprus.

She also mentioned “we authorised the setup of one of the few EuVECA Funds, which complies with the relevant European Regulation on Venture Capital Funds”. These funds will help new innovative business in Cyprus, such as sectors in IT and energy, to set up and become more competitive.

She continued by saying that based on EFAMA statistics the “net sales of European investment funds rose to an all-time high of €725 billion in 2015 and assets under management broke through to €12 trillion thanks to a growth rate of 11%. Also, investment fund assets worldwide increased 5.9% during the fourth quarter of 2015 to €36.94 trillion at the end of 2015, and the year asset growth reached 12%.”

Finally, Kalogerou thanked the government and the Finance minister for their contribution in the effort of CySEC to the budget for the employment of extra new personnel by 2016 that will help fulfil the on-going work of CySEC.

John Hourican, CEO of Bank of Cyprus, gave a keynote presentation, at the International Funds Summit. In his speech, he explained why Cyprus is considered to be a useful investment for funds.

Cyprus has a number of advantages such as regulation and tax framework, however what should be improved is the ease of doing business, Hourican said, according to Gold Magazine.

He added that Cyprus has “great laws”, which is a real advantage and stressed that all bodies should ensure to maintain this advantage.

Hourican made reference to Cyprus’ ability to grow out of debt, with a forecast to grow by more than 2% of the GDP this year. He further pointed out that everyone should act  in order to achieve this forecast.

Another advantage of Cyprus is its EU membership, according to Hourican. He explained that “Cyprus is the eastern gateway of the European Union and we must use it as an advantage”.

He also said that “Cyprus has a highly educated employment force”, and continued, “Cyprus has a unique opportunity to become something more than it is”.

Hourican also claimed “the funds industry (in Cyprus) could reach more than 3 trillion euros”.

“So can we (Cyprus) compete? Yes we can,” he concluded.

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The issue of substance, which is open to interpretation in the case of Holding Company structures is resolved given that effective management of the AIF is carried out by an EU approved and licensed AIF Management company such as SCSS Fund Management Ltd, an EU based and authorized Alternative Investment Fund Manager (AIFM), regulated by Cyprus Securities & Exchange Commission (CySEC).

Transparency

Cyprus is home to thousands of Holding company structures that own or control thousands of companies in Russia, Ukraine, India and other EU member states. In the majority of cases, the same Cypriot Holding companies are owned in turn by offshore companies, whose only objective is to drain the profits out of Cyprus to offshore zones in order to avoid paying any taxes.
Tax authorities from Russia to Romania, Ukraine to UK and India to other jurisdictions are flatly rejecting such structures, which is why the only alternative is the establishment of an AIF, managed by an AIFM which will take over the Cypriot holding company and remove all the middle-buffer subsidiaries and offshore companies from its Group structure and become transparent.
Taxes will need to be paid by the Cyprus based AIF, but after the deduction of expenses and once all the offshore companies have been removed from the structure.
Such a transparent and regulated structure will also be more acceptable for bank compliance and when dealing with other regulators or authorities and be in a much stronger position to pass its transactions.

Substance

The previous practice whereby a Cyprus holding company was established with majority of board members based in Cyprus according to which such a structure would claim that effective management is carried out from Cyprus is nowadays flatly rejected by tax authorities in Russia, Ukraine and other jurisdictions.
Such tax authorities correctly understand that inexperienced directors with limited experience and knowledge of the underlying assets are not the effective managers of the venture and it is obvious that effective management is carried out on location of assets in Russia, Ukraine, India and other countries.
With the establishment of an AIF in Cyprus and the appointment of a regulated AIFM such as SCSS Fund Management Ltd., as the management company of the AIF, the issue of substance is immediately addressed, since management is now carried out from Cyprus by a regulated AIF management company.
SCSS Fund Management Ltd., is entitled to outsource some of the management functions to investment advisors or managers on location where the asset is based but subject to notification and consent of the CySEC under whose supervision both the AIFM and the AIF operate.
About SCSS Fund Management Ltd
SCSS, the acronym of success, is an independent Alternative Investment Fund Manager (AIFM) regulated by CySEC, license number (AIFM04/56/13) based in Cyprus.
SCSS (www.scssfunds.com) specializes in managing AIFs and has received authorization from CySEC to manage Private Equity, Real Estate and Fixed Income AIFs.
SCSS offers customized solutions to clients who wish to set-up or re-domicile existing funds from other jurisdictions and exploit the benefits of EU domiciled AIFs.

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