On 4 June 2016 entered into force of the Act of 31 March 2016 amending the Investment Funds Act and certain other laws (the ‘Amendment Act’).
According to the current statutory definition, Alternative Investment Company (ASI) is one from alternative investment fund forms (hereinafter referred to as ‘AFI’), other than a specialised open investment fund or closed investment fund. Alternative Investment Company does not constitute a ‘separate’ organisational form.
ASI may operate in the form of both a capital company and a limited partnership or a limited partnership.
An alternative investment fund is a joint investment institution whose business, including through a dedicated sub-fund, is to raise assets from a number of investors in order to invest them in the interests of those investors in accordance with a specific investment policy, which is not a fund operating in accordance with Community law governing the rules on collective investment in securities (UCTIs).
Each collective investment institution shall have a management entity. The ASI manager is required to manage ASI, in particular manage the investment portfolio and risk. ASI’s managers play a role close to the company of investment funds, but regulation of requirements and conditions is much less stringent.
ASI Management Types
Possible two ASI management types:
- Internally managing ASI where ASI is a capital company. Then ASI is also its manager. In practice, this means that the management is the management board of the capital company, and the whole case is the management of the ASI.’
- externally managing ASI, where ASI is a limited partnership or limited partnership and managing ASI is a subsidiary of the company. Only a capital company may be a Complementary. Then we are dealing with the separation of ASI and ASI's managing officer. This structure is referred to as ‘external management of ASI’.
The Act regulates the rules of operation of ASI managers, both internally and externally.
Depending on the value of assets forming part of the ASI investment portfolios managed or managed by the ASI manager, it is necessary to obtain an authorisation from the Financial Supervision Authority (hereinafter ‘the KNF’) or an entry in the ASI management register maintained by the KNF.
The ASI manager listed in the register does not have to meet many very restrictive requirements imposed by law on licensed ASI managers. In this case, the supervision of KNF will also be limited.
Preferential tax rules
Operating in the form of ASI is attractive due to preferential tax rules:
- income (revenue) obtained in the tax year from the sale of shares is tax-free, provided that the divested shares have held no less than 5% shares in the capital of a company whose shares are disposed of continuously for a period of time two years, subject to the fact that income (income) is obtained from the sale of shares in a company in which the property located directly or indirectly in the territory of the Republic of Poland or the right to such properties does not exceed 50% the value of the assets of such a company;
- the ASI is not subject to the so-called ‘small capitalisation’ rule in terms of crediting the cost of debt financing to the cost of obtaining income. This means that ASI may include in its revenue costs any costs associated with the acquisition of debt financing without having to take into account the limits indicated in the provisions of the CIT Act;
- It is possible to benefit from the dividend exemption where the ASI takes the form of a capital company and meets the conditions laid down in the CIT Act for that exemption.
Although the legislation allows the creation of an Alternative Investment Company from 2016, it is only in recent times that there is an increase in interest in this form of investment activity not only because of tax preferences, but also because it is an attractive method of carrying out investments in shares of other commercial law companies.