Small Alternative Investments Fund (AIF)

The legal environment of the Republic of Estonia provides for the possibility of organizing the collection and attraction of investments, as well as further management of collective assets within the framework of simplified regulation of small alternative investment funds.

• Regulatory authority: Financial Supervisory Authority, FSA
• Regulatory legal act: Investment Funds Act
• Time period for consideration of a petition: up to 60 days

Alternative Investment Fund (AIF) is the most convenient structure for collective investment, in which investors’ assets are attracted for the purpose of their further use and placement in their interests in accordance with a predetermined investment policy under the direction of the company that managed the fund.

The best solution for collective venture capital investments and investing in stocks, bonds, derivatives, currencies, crypto, real estate and other financial assets.

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Our experience and competence enables us to introduce your investment project into the legal environment of the Republic of Estonia and the EU as soon as possible.

THE ADVANTAGES OF A SMALL FUND REGISTRATION IN ESTONIA

Registration of the Small Alternative Investment Fund within the jurisdiction of the Republic of Estonia provides certain advantages, which, among others, include:

• Ample opportunities.
  Management of total assets of up to 500 million euros.
• Easy establishment.
  Simplified registration form in 30-60 days
• Universal investment portfolio.
  Ability to manage stocks, derivatives, cryptocurrencies, real estate and other financial assets and commodities.
• Full confidentiality.
  The lists of the fund’s investors and the size of their investments are not public information
• Liability limitation.
  Material liability of investors is limited to the amount of their investment (contribution)

FUND STRUCTURE

For the functioning of the Small Alternative Investment Fund (AIF), two legal entities must be registered in the Commercial Register of the Republic of Estonia:

Fund Manager

is a commercial organization whose main activity is the management of one or more funds, i.e. the management of financial assets of investors in order to maximize profits with minimal risk. Small Fund Manager has the right to control several funds, but the total assets of the managed funds cannot exceed 100 million euros, or in case if the investments are made for long periods (from 5 years or more) and financial leverage (income gearing) is not used, then the total assets of the funds can reach 500 million euros.

Limited Partnership Fund (LPF)

is the easiest to register, simplest to manage and the most common legal form for the Small Alternative Investment Fund, also called a special fund. LPF, as a form of a legal entity, is a type of Limited Partnership specified in the Commercial Code of Estonia. The members of LPF are: at least one General Partner, whose role is most often assumed by the Fund Manager and at least one Limited Partner, i.e. investor.

STAGES OF FUND REGISTRATION

In order for the fund to start operating correctly in accordance with the legislation of Estonia and the EU, it is necessary to go through the registration and permits obtaining process, which consists of the following stages:

• Registration of a Fund Management Company
  Establishment of a company (Limited Liability Company, LLC), which will act as a Fund Manager. The registration process in the Commercial Register takes from 1 to 5 working days. The company must have at least 2 board members (directors). There are no other additional requirements.
• Obtaining authorization to register the Fund
  To establish the LPF, a fund management company must obtain authorization from the Financial Supervision Authority (FSA). The regulatory authority must provide the constituent documentation of the future Fund, as well as other materials and documents specified in the Law. Time period for consideration of a petition takes up to 60 days.
• Obtaining of AML license by the Fund Manager
  In addition to authorization from the FSA, the Small Investment Fund Manager must also obtain a funding institution’s AML license from the Financial Intelligence Unit (FIU). Time period for consideration of a petition takes up to 60 days. This petition may be submitted in parallel with the LPF registration application to the FSA.
• Registration of the fund in the Commercial Register
  Having the FSA authorization, the LPF registration process in the Commercial Register takes from 1 to 5 working days.

RESTRICTIONS

Certain restrictions are imposed on the activities and certain details related to the process of offering the Fund units to investors.

In accordance with Estonian legal regulations, the Small Alternative Investment Fund does not have the right to publicly offer its units. At the same time, in accordance with the Law, the Fund’s offer is not considered public in the following cases (at least one of the following rules must be observed):

• The total value of the offer of the Fund units does not exceed EUR 2,500,000 during a one-year period for all EU countries;
• The offer for the purchase of the Fund units is made only to investors who purchase Fund units within the framework of each individual offer for at least EUR 100,000;
• Within the framework of the offer for the purchase of units, the nominal value of one unit is at least EUR 100,000;
• The offer to purchase Fund units is made only for professional investors;
• The offer for the purchase of fund shares is made to a maximum of 150 legal entities or natural persons who are not professional investors, for each EU country.

CONTACT US

For individual advice on opening the Small Alternative Investment Fund in Estonia, please contact our specialists by telephone +372 6775544, or use the following electronic communication channels:

• E-mail: klienditugi@kalashnikov.ee
• Skype: kalashnikov.ee
• Viber: +372 82088888
• WhatsApp: +372 82088888
• Telegram: +372 82088888

We will be happy to answer your questions and provide you with high-quality legal support on Estonian financial legislation.