Despite the entry into force of the Act amending the Act on Investment Funds and some others Act dated 3 March 2016, and, together with its obligation to adapt its activities to the requirements referred to in the Act and to continue its activities as ASI's manager, a number of entities have not submitted an application for authorisation to carry out their activities by an ASI manager or for an entry in the management register.
Recently, there has been increased activity of investors using ASI to carry out investment projects.
Interest in the use of the ASI structure increased after the amendment of tax rules, thanks to which since January 2019 income (revenue) of alternative investment companies, obtained from the sale of shares (shares), shall be exempt from corporation tax, subject to the statutory conditions.
Many investors are still not sure whether they are still required to obtain an entry in the management register or to obtain an authorisation, as required by the amendment of the Fund Act, i.e. whether their existing investment vehicle is a collective investment undertaking.
Definition of an AIF-type collective investment undertaking
In accordance with the guidelines developed by ESMA, an AIF-type collective investment undertaking shall have the following characteristics:
- • the undertaking has no general commercial or industrial purpose;
- • the company collects together the capital raised from its investors to invest in order to generate a combined return for those investors;
- • the holders of units or shareholders of the undertaking, as a collective group, do not have a daily right to decide or control.
According to Article 54(1) Act amending the Fund Act, entities that on the date of entry into force of that Act (4 June 2016) carry out asset collection activities from many investors, in order to invest them in the interests of these investors, in accordance with a particular investment policy, and are not investment funds, were obliged to adapt their activities to the provisions of the Investment Funds Act and to manage alternative investment funds on time 12 months from the date of entry into force of the amending act, that is to the day 4 June 2017 Failure to comply with the obligation resulting from Article 54 The amending act shall result in the performance of the ASI management activities by entities without authorisation or without prior entry in the ASI management register, of criminal liability.
Check details in the training:
Alternative Investment Companies (ASI) in practice – investment management and capital raising. Practical workshops
Criminal provisions
As per content Article 287(1) Act, which, without the required permission or contrary to the conditions laid down in the Act, carries out an activity involving the placement of securities, money market instruments or other property rights, the assets of natural persons, legal persons or non-legal entities collected by means of a proposal to conclude a contract the object of which is to participate in that undertaking is fined to 10,000,000 PLN and sentences imprisonment to years 5.
In addition, according to Article 295 Act which, without the required permission or registration, carries out the activities referred to, inter alia, under Article 70e(1) Act, subject to fine until 5,000,000 PLN or sentences imprisonment to years 5, or both of these penalties together.
In view of the above very severe sanctions for the conduct of an activity consisting in placing in securities, money market instruments or other property rights, assets of individuals without the required authorisation or registration, it is recommended that an in-depth analysis of existing business ventures be carried out. In order to avoid criminal liability, it will be necessary to submit an application for entry in the ASI management register or an application for authorisation if KNF determines the risk of the investment vehicle being considered as a collective investment undertaking of the AIF.
Author: Maciej Tuszyński
Legal Manager in the Legal Department. Lawyer, member of the District Bar Council in Warsaw, graduate of the Faculty of Law and Administration of the University of Warsaw. He specializes in commercial and civil law law. He has professional experience, which includes litigation and comprehensive legal advice on the day-to-day service of economic operators, in particular commercial law companies. As part of his work at the law firm, his practice focuses on corporate, civil and economic matters.