Analysis of AIF regulation implementation in the Republic of Moldova and the Republic of Cyprus

Abstract

Modern financial relationships between investors and beneficiaries evolved, seeking efficient management of financial resources. Alternative Investment Funds (AIFs) gain a greater role in international financial intermediation bringing plenty of benefits for market participants and the market as a whole: flexible investment tool, lesser administrative burden, wide diversity of asset classes, favourable taxation, market diversification and others. Legal regimes are important to promote investments and the employment of AIF as investment tools. The stable operation of AIFs in many EU countries is attributed to clear and efficient regulation. The Republic of Moldova adopted the EU AIF regulatory regime in 2020 but does not register the same success as many EU financial centres. The supposition is that the law is not being implemented as expected and that there are other structural factors requiring regulators’ attention. The aim of the paper is to compare the national AIF regime with one of the successful cases in the EU and determine which factors within the compared jurisdictions may hinder the appropriate application of AIF law in Moldova. The data used for the paper are official sources, legislation and market data. The methodology is mostly qualitative based on analysis and synthesis. Findings suggest that the adoption of EU AIF-related legislation had a beneficial effect on modernising Cypris AIF regulation. In order to develop the national AIF market, it is necessary for intersectoral cooperation of regulators to eliminate structural weaknesses and create incentives for AIF application. CZU: 336.714:347.73(478); JEL: K2, K23, K29; DOI: https://doi.org/10.53486/cike2022.53