The way ASI manages (both externally and internally) is according to Act dated 27 May 2004 on investment funds and the management of alternative investment funds (hereinafter ‘Investment Funds Act’) subject to the value of the assets included in the investment portfolios of alternative investment companies managed or intended to manage by ASI. The Investment Funds Act provides that such activities require an authorisation from the KNF or an entry in the ASI management register.
According to Article 70 zb section 1 The Investment Funds Act does not require the authorisation of the Commission and may be executed on the basis of an entry in the ASI management register if the total value of the assets included in the investment portfolios of alternative investment companies which the ASI manager intends to manage or manage does not exceed the amount expressed in PLN equivalent 100,000,000 EUR, and where the ASI manager manages only companies that do not use the AIF leverage and in which participation rights can be redeemed after at least 5 years from the time of their acquisition — equivalent amounts 500 0000 0 EUR.
Therefore, exceeding the limits described above creates an obligation to submit an application to the KNF for authorisation to carry out the activities of an ASI manager.
It should also be indicated that the management activities of the ASI manager of the Union AIF can only be carried out by the external management of the ASI authorised by the ASI manager.
It follows that the manager of an alternative investment company may carry out the activities envisaged under Article 70e(1) Act only in the form of a capital company established in the territory of the Republic of Poland, provided that the Commission is authorised to carry out activities by the ASI manager or, in the case of the management of investment portfolios of relatively low value, provided that an entry in the ASI management register is obtained.
From the point of view of the capital market participants, and especially from the perspective of entities planning to start operations using ASI as a type of investment vehicle, as well as investors intending to invest their funds through ASI or investing in the rights of participation of ASI (shares or shares respectively), it is important to know that there are some differences between the way in which ASI manages its activities on the basis of the KNF permit obtained and the performance of its management activities on the basis of an entry in the ASI management register.
Under the legal regime for asset managers with values exceeding the limits referred to above, the licensing process, the ongoing supervision, as well as the performance requirements were shaped in the same way as the investment fund companies.
As regards ASI managers, on the basis of an entry in the ASI management register, the start-up and performance requirements have been relaxed and the supervision exercised by the Financial Supervision Commission has been limited in principle to an annual survey of the assets remaining in the management of those entities.
Therefore, according to the content Article 70 zb section 4 The Investment Funds Act to the ASI Manager, who carries out certain activities under Article 70e(1) without the authorisation of the Commission, the provisions shall not apply after being entered in the management register of ASI.
Article 70ba-70bd, Article 70d, Article 70f(3-12), Article 70g-70j, Article 70l-70r and the provisions of Chapters IIIb, IV, XII and XIII.
An entity applying for registration in the management register of ASI does not need to hold and maintain a certain amount of own capital, to adopt a number of internal rules on how to carry out activities related to the management of alternative investment companies, in particular concerning conflicts of interest, protection of confidential or professional information, remuneration policy, risk management and liquidity management, valuation of assets of managed alternative investment companies, entrusting activities to other entities, information, publication and reporting obligations.
The ASI, which is only subject to an entry in the ASI management register, shall not apply Article 70ba The Investment Funds Act, on the development and publication of a policy of commitment to a listed company, and on reporting on its implementation. Application is also excluded. Article 70bc, subject to the obligation to submit annual information on the compliance of the investment strategy adopted and its implementation with the arrangements for the placement of assets in admitted shares on a regulated market.
ASI, which is only subject to entry in the ASI management register, is not obliged to have a depositary (Division IV The Investment Funds Act, which holds the assets of an alternative investment company and keeps a register of all its assets, and acts as an entity controlling activities carried out by an alternative investment company and managing ASI to ensure that they carry out regulated activities in accordance with the law and internal regulations of ASI.
The entities included in the ASI management register do not have the same strict information obligations, including reporting obligations to the Commission as to the ASI managers who have been authorised. The legal differentiation of the statutory obligations imposed on licensed ASI managers and registered ASI managers is also reflected in the rules governing the supervision by the Commission of appointed entities in their activities.
ASI’s management, which is only disclosed in the Commission’s ASI management register, is supervised in a limited manner, primarily to monitor the size of the assets of the companies they manage and the categories of investments and markets they invest in in order to identify potential systemic risks generated by all ASI managers when the ASI manager, who has been obliged to obtain the Commission’s business authorisation under the Investment Funds Act, is subject to ongoing supervision by the Commission to monitor whether the supervised entity complies with the rules of law or internal regulation governing the performance of the activities, or whether the ASI manager is not in breach of the scope of the authorisation granted or of the interests of alternative investment company investors in the course of its current business.
It is important to know that there are some differences between the way ASI manages on the basis of the KNF permit obtained and the performance of ASI management activities on the basis of an entry in the ASI management register
In addition, ASI’s management accounts shall not apply to ASI managers which are only disclosed in the Commission’s management register. Article 70d The Investment Fund Act on the conditions to be met by the ASI management bodies.
Consequently, the Commission does not verify the qualifications and professional experience of the members of the company's bodies or of other persons responsible for asset management, examine the current economic situation of the applicant and the financial opportunities for future operations, including financial data, of the shareholders and the capital group of the applicant in the administrative procedure for inclusion in the ASI management register.
Application is also excluded. Article 70f(3-12) Act on investment funds, which are regulations concerning obligations related to the marketing of ASI in the Republic of Poland. In addition, ASI does not apply to those managers Article 70g The Investment Funds Act on the possibility of transferring ASI management activities to another entity in the form of a written contract.
Article 70h The Investment Funds Act deals with the principles of valuation of ASI assets and the possibility of entrusting valuation activities to another external entity designated by the ASI manager. The application of this provision is also excluded. In addition, the provisions on the possibility to redeem participation rights in ASI shall not apply.
The ASI manager, on the basis of an entry in the register, is not obliged to implement and apply a remuneration policy establishing the principles of remuneration of persons whose tasks include activities that significantly affect the risk profile of the ASI manager or its management ASI, which is provided for under Article 70j The Investment Fund Act.
Furthermore, the ASI manager on the basis of an entry in the register is not obliged to comply with the envisaged under Article 70n In the case of the external manager of the ASI, the law on investment funds of rigors relating to the amount of initial capital for the performance of an activity, which is at least equivalent to 125,000 EUR and in the case of an internal ASI manager is at least equivalent 300,000 EUR.
As regards ASI managers on the basis of an entry in the register, the obligation to apply Article 70l-70r The Investment Funds Act, which deals with the detailed rules for the performance of activities by the ASI manager, the obligations to hold equity at least at the statutory level, as well as the obligations to notify the change in the ownership structure of the ASI manager.
In addition, the Investment Funds Act provides for the exclusion of the provisions of Chapter IIIb, which focus on the principles of taking control of non-listed companies and listed issuers, inter alia, by ASI and Union AIF, the provisions of Chapter IV concerning the functioning of the depositary of an alternative investment company as already mentioned above), the provisions of Chapter XII, concerning cross-border activities, and the provisions of Chapter XIII, concerning professional secrecy and cooperation with supervisory authorities.
In conclusion, entities acting on the basis of an entry in the ASI register have significantly reduced and simplified organisational, capital and information requirements. Moreover, these simplifications reduce the scope of interference by the Financial Supervision Commission with their activities. They do not have to appoint a depositary, hire investment advisers or draw up appropriate documentation to inform clients about their activities.
Author: Michał Wasilenko
Lawyer, Senior Associate in the Legal Department, member of the Bar Association in Lublin, graduate of the Faculty of Law and Administration at Maria Curie-Skłodowska University in Lublin. He specializes in commercial and civil law law.