In September, after the summer break, the article-by-article discussion of the bill concerning the Establishment and Operation of Fund Management Companies and Related Matters for 2024 will commence.

The bill aims to create an additional layer of services for collective investment management through the operation of fund management companies, adding to the already existing level of fund managers. It is believed that this bill enhances the specialization of the sector, improving services for fund managers and investors. The discussion began last April, with several stakeholders, although supportive of the bill, expressing reservations about specific provisions.

Τhe Chairwoman of the Parliamentary Committee on Finance, Christiana Erotokritou, who convened today, also added that there is not enough time to complete the article-by-article discussion of the bill before the Parliament closes for the summer holidays; hence, the discussion will start in September.

A representative from the Ministry of Finance mentioned that the Ministry believes the bill and its provisions are correct. "We don’t believe any modification is needed, but we are here for other proposals," he added.

Regarding the Central Bank’s reservations about the provision for the retention of money by these organizations, he explained that this is done within the framework of corresponding provisions for investment service companies (CIFs) and administrative service companies (ASPs) and clarified that these companies do not accept deposits for investment purposes.

Concerning the provision for the two executive directors, he noted that it is not necessary to have two additional non-executive directors, as suggested by the CBC, since these directors act on behalf of the fund managers, and therefore no further oversight is required.

Regarding civil liability, the representative from the Ministry of Finance mentioned that the provision of 1% of the assets has been reduced to 0.5%.

Kyriakos Iordanous, General Director of SELK, described the bill as "boring" because it introduces criteria for setting up a company, the company’s capital, provisions that create "an additional burden on a company that essentially takes on a subcontract from the fund manager." He also referred to the provisions for civil liability and regulatory obligations in the compliance sector. At this point, he reminded that after the sanctions imposed in 2022, "the way we handle these issues has changed." Additionally, he mentioned the obligation to submit an annual report four months after the end of their financial year, noting that this provision concerns listed companies.

He also referred to the provision for a capital of €50,000 for the establishment of these companies and expressed doubts about whether there will be interest from entities to enter this sector.

The Cyprus Bar Association agreed with SELK’s observations and added that it would send article-by-article comments. However, they initially noted that licensing for legal and accounting services is redundant since licenses are already issued.

The Investment Funds Association expressed support for the bill, as did the Association of Administrative Service Providers, noting that they share SELK’s concerns.

On behalf of DISY, MP Onoufrios Koullas said that they view the bill positively and believe it improves our operational environment. However, as an initial observation, he expressed the opinion "that we might have more unnecessary regulations than needed."

From AKEL, MP Andreas Kavkalias requested a memorandum with all observations on the points that cause concern. He also expressed some concern about the actual beneficiaries of these companies.