Čeština
SETTING UP AN ALTERNATIVE INVESTMENT FUND
Under Section 15 of Act No. 240/2013 Coll., on Management Companies and Investment Funds (the Act is also known by the abbreviation ZISIF), an alternative fund means an entity authorised to manage assets in a manner comparable to fund management. It is kept in a list of the Czech National Bank, but it is not subject to its supervision. In practice, it is the Czech alternative to a family & friends fund.
The purpose of such funds is the collective investment of resources on the basis of a predetermined and approved strategy. These funds are suitable above all for those persons who have an interest in carrying out a business activity consisting of the management of other persons' assets, comparable to the so-called management of an investment fund.
The advantages of alternative investment funds include their affordability, undemanding administration, speed of formation (it can be done within a few weeks) and low running costs. Their disadvantages, however, include the restriction that the manager must not raise funds from the public.
Our firm has been dealing with the setting up of alternative funds for several years. On our team we therefore have quality advisers and lawyers who are able to respond flexibly to the requirements of our individual clients and set up a fund smoothly and quickly, with all the necessary legal requisites.
Enquire about fund formation More about the formation process
Who is an alternative investment fund for?
Brokerage
Wealthy
Stock exchange
Property and asset
RESTRICTIONS ON AN ALTERNATIVE INVESTMENT FUND
- It must not be offered publicly.
- It must not use the designation "investment fund" or "fund" in its name.
- It must carry out an audit once a year to demonstrate that it has a maximum of 20 clients; the audit is sent to the CNB.
- The CNB does not exercise supervision over an alternative fund.
- for the duration of its operation it must state on orders, business letters, invoices, contracts and websites that it is not subject to CNB supervision.
PRICE FOR SETTING UP AN ALTERNATIVE INVESTMENT FUND
Our price for setting up an alternative investment fund is usually from CZK 109,000 excl. VAT. The final price depends on the complexity of the specific case and therefore on the time spent. If you're interested, contact us via the enquiry form further down the page. After an initial meeting we'll be happy to give you a more precise price estimate too.
THE PROCESS OF SETTING UP AN ALTERNATIVE FUND
1.
Determining the company on which the fund is registered
First of all, it is necessary to determine the company on which the fund is registered. The most commonly chosen entities include an s.r.o. Here you have the option of registering it on an existing company or setting up a new one. Bear in mind, however, that if you decide to set up a new one, it will take you some time (you can find out how to arrange a company in our Company formation section).
2.
Obtaining a Legal Entity Identifier (LEI)
The next point in setting up the fund is obtaining an LEI number. This is mandatory for funds that trade on the stock exchange. You can arrange LEI registration yourself through the Central Securities Depository, or you can skip this step and leave it to us. The reason it is necessary to obtain an LEI number is that it will allow you to open a brokerage account. To speed up the processing, you can apply for it together with the application for entry with the CNB.
3.
Application for registration with the CNB
As we already mentioned above, once the contractual documentation is complete, an application must be filed with the CNB. The CNB will normally register the fund within 5 working days. The application can be filed via the CNB's data box (datová schránka) or through the CNB's electronic filing room. To be able to file an application for registration with the CNB, you need to provide an investment strategy. This means a description of the activities the fund will carry out with the entrusted funds in order to achieve a profit. Should a situation arise during the fund's operation where the investment strategy needs to be changed, this intention must first be notified to the CNB.
4.
Tasks during the fund's operation
An integral part of setting up and registering an alternative fund also involves further tasks that are closely related to it. These include, among other things, keeping accounts and filing a corporate income tax return. The obligations of an alternative fund under Section 15 of the ZISIF also include regular reporting to the CNB:
- OFZ (CNB) 36-01 "Report of the manager within the meaning of Article 3(3) AIFMD" (ROFOS36) – annual basis, by 31 January of the following year
- OFZ (CNB) 37-01 "Report on the managed fund within the meaning of Article 3(3) AIFMD" (ROFOS37) – annual basis, by 31 January of the following year
Frequently asked questions about alternative investment funds
Specifically, this is Act No. 240/2013 Coll., entitled the
(1) A legal person that is not authorised to manage investment funds and that, in the Czech Republic, on a gainful trade or similar basis, manages or intends to manage assets consisting of pooled monetary funds or things valuable in money collected from investors, or acquired for those monetary funds or things valuable in money, for the purpose of their collective investment on the basis of a determined strategy for the benefit of those investors, must file an application for entry in the list kept by the Czech National Bank under Section 596(e) and be entered in that list. The first sentence does not apply to the management of the assets of an investment fund. A person entered in the list kept by the Czech National Bank under Section 596(e) is not authorised to exceed the decisive limit.
(2) Management of assets under the first sentence of paragraph 1 is involved where the legal person that manages or intends to manage them has its registered office in the Czech Republic.
(3) Upon a petition by the Czech National Bank or by a person with a legitimate interest in the matter, the court shall dissolve a legal person that is not entered in the relevant list under paragraph 1 and order its liquidation, or shall decide that the administration of a trust fund or other arrangement ends where it concerns a trustee or other administrator not entered in the relevant list under paragraph 1. Before deciding, the court shall grant the legal person or the administrator a reasonable period to remedy the situation.
You can find the full wording of the Act, for instance, on the Zákony pro lidi website here.
An alternative investment fund is any legal person with a registered office in the Czech Republic that intends to manage (in other words, administer) assets pooled from a group of investors for the purpose of their collective investment on the basis of a predefined strategy, and that is registered with the CNB. The most common forms here include an s.r.o. or a joint-stock company. If you need to set up such a fund, just let us know. If you don't yet have the aforementioned company set up for this purpose, we'll be glad to help you with that too.
The price depends on the complexity and scope of registering the fund and starts at CZK 70,000 + VAT. After a telephone or in-person consultation, you'll of course receive a more specific price offer from us for setting up the fund.
Through an alternative investment fund you can invest in almost anything you can think of. For example, it may be investments in various forms of cryptocurrencies (or crypto-assets), private projects (private equity), commodities (gold, silver, oil, grain), classic shares or bonds, various derivatives (CFDs, options, futures) or property development projects. It is also not unusual for a fund to invest in collectors' items (paintings, stamps, coins). If you need to set up such a fund, just let us know.
The maximum volume of assets under the management of an alternative investment fund is set either at EUR 100 million (the basic limit) or EUR 500 million (the higher limit). How do they differ? The higher limit can be used if (to put it very simply) leverage is not used. If you need to set up such a fund, just let us know.
Just as with a qualified investors' fund, in an alternative investment fund assets may be pooled from an unlimited range of so-called qualified investors. The minimum investment of each starts at EUR 125,000. At the same time, the fund may also approach a limited number (20 persons) of non-qualified investors, who need not meet these conditions. Are you looking for exactly this form of managing not just your own assets? If you need to set up such a fund, just let us know.
Specifically, it will be:
- Identification of the manager of the alternative fund (e.g. an s.r.o.)
- Information about what the fund will invest in
- Basic information about the fund's focus and investment strategy
- The expected volume of assets under management
- Further information depending on the type of services and the scope of the application
If you decide to request our help with setting up an alternative investment fund, we'll of course then go through all the details with you in depth.
The application is filed in electronic form in Czech and can also be filed on the basis of a power of attorney. Entry means the CNB records the alternative fund. If the application contains the required information and meets the requirements, the CNB will enter the alternative investment fund within 5 working days of the day on which the application was delivered to it.
If the alternative fund is successfully registered, it is then obliged in particular to comply with the AML rules (submitting a system of internal policies to the Financial Analytical Office within 60 days of formation), annual reporting to the CNB, the obligation to state that the fund is not subject to CNB supervision, the area of sustainability (SFDR), a key information document (KID) and possibly to apply for the allocation of an LEI (should it wish to trade in investment instruments, including derivatives).
REQUEST A QUOTE — SETTING UP AN ALTERNATIVE FUND
Please fill in the form below and, on that basis, we'll contact you within 24 hours and get started on everything needed. If you'd like to discuss anything first, simply call us on +420 602 654 355 (we're available on weekdays 9:00–17:00) or email us at [email protected].
