On June 4, 2016 amendments to the Act on Investment Funds (the “Act”) entered into force. The purpose of the amendment is implementation in the Polish legal system AIFMD (Directive 2011/61/EU of 8 June 2011 regarding managers of alternative investment funds).
The regulation introduces to Polish law the concept of alternative investment funds (“AIF”), which includes—in addition to pre-existing close-ended funds and specialized open-end investment funds—the concept of the alternative investment company.
AIF is an institution established for the purposes of collective investment organizations, whose business activities include collecting assets from a number of investors in order to allocate the assets in the interest of those investors in pursuit of a defined investment policy. The fund shall not be an UCITS fund (i.e. a fund having an open nature, such as the Polish open-ended investment fund).
Alternative investment company can operate as:
- a company: a joint stock company or a limited liability company ‒ in this case the alternative investment company is considered to be an internally managed AIF; or
- a partnership: a limited partnership or limited joint-stock company ‒ which must be managed by an external AIF manager in the form of a corporation.
An external manager can manage more than one alternative investment company (acting as the general partner in each of them), and can also manage an EU alternative investment fund (under certain conditions).
A manager of an alternative investment company requires a license from the Polish Financial Supervision Authority (“FSA”) or registration in the register of alternative investment company managers maintained by the FSA. In order to be compliant with the Act’s requirements, the manager acting based on a license has to follow a number of regulatory requirements, in particular, on equity requirements, having in place proper internal procedures and setting up an investment policy and investment strategy for each alternative investment company managed by it.
Importantly, there is a deadline of June 4, 2017 for entities to adjust to all regulatory requirements and obtain authorization from the Polish FSA to act as a manager of an alternative investment company (external and internal).
Acting as manager of alternative investment company without the required authorization is subject to penal liability. There is a maximum fine of PLN 10 million and imprisonment of up to 5 years for any person who, without the required authorization, performs activities consisting in investing assets of natural persons, legal persons or organizational units without legal personality, in securities, money market instruments or other property rights, where such assets are collected by offering a contractual arrangement under which the person concerned participates in such an undertaking.
The Polish FSA will likely seek to identify entities on the market which collect funds from investors to invest them in line with a specific investment policy.