A Variable Capital Investment Company (VCIC) is a type of company with liability limited by shares, with its main characteristic being that these shares do not have a nominal value but rather a variable value. Such a company can be used to operate a collective investment fund.
A VCIC can take the form of either a private or a public company, depending on the type of investment fund, which will accommodate, namely Alternative Investment Funds (AIFs), Alternative Investment Funds with Limited Number of Persons (AIFNLPs), Registered Alternative Investment Funds (RAIFs) and Undertakings for Collective Investment in Transferable Securities (UCITSs).
The initial minimum share capital of such a company will depend on its type, as follows:
Type of VCIC
Minimum initial capital
(a) Internally managed VCIC:
€300.000 for each investment segment.
(b) Externally managed VCIC:
€200.000 for each investment segment.
Internally managed VCIC:
€125.000 for each investment segment.
Internally managed VCIC:
€50.000 for each investment segment.
No minimum initial capital is required.
Recent Amendments to Companies' Law
On 5 November 2021 the Companies’ Law of Cyprus has been amended for what concerns VCICs.
In summary the amendments cover, among others, the following matters:
Contents of the memorandum of association relating to share capital
The Memorandum of Association of a VCIC should state the following in relation to its share capital:
The minimum number of shares should be in line with the minimum initial capital provided by the Open-Ended Undertakings for Collective Investment (UCI) Laws of 2012 or the Alternative Investment Funds Law of 2018 as the case may be.
Each existing VCIC is obliged to submit a special resolution amending its Memorandum and Articles of Association to indicate that is now a VCIC in accordance with the new provisions of the Law within a period of 12 months starting from the date the amendments came into force, that is by 4 November 2022.
In case of non-compliance with the above-mentioned obligation a VCIC will be struck-off from the records of the Registrar of Companies.
Considering that Cyprus is becoming a popular jurisdiction for Alternative Investment Funds, the amendments concerning VCICs aim at creating a more comprehensive and clearer legal framework. Furthermore, it is hoped that they will be pivotal in resolving procedural as well as operational issues faced by the investment funds industry.