EU rules on alternative investment fund managers transposed

19.12.2014 EU rules on alternative investment fund managers transposed

On 18 December 2014, the Seimas of the Republic of Lithuania adopted the Law on Management Companies of Collective Investment Undertakings Intended for Professional Investors (the “Law”), which transposed Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers, as well as other related EU rules.

The Law should come into effect on 1 January 2015.

The Law will fully apply (including the requirement to obtain a license for activities from the Bank of Lithuania, capital requirements, requirements for operations and limitation of risks, requirements to inform investors, etc.) to:

(i) leveraged management companies of collective investment undertakings (“CIUs”), which manage CIUs (the “Management Companies”), the total assets of which under management are worth at least EUR 100 million, also to

(ii) Management Companies, the total assets managed by which are worth at least EUR 500 million, provided they manage only unleveraged CIUs that do not grant investors redemption rights during a period of at least 5 years from establishment of each relevant CIU intended for professional investors.

Management Companies, that do not meet the conditions above, will be subject to the following main requirements:

(i)  the duty to register with the Bank of Lithuania;

(ii) during registration to present information about the Management Company and about managed CIUs and their investment strategies;

(iii) the duty to regularly provide information to the Bank of Lithuania about the offered investment units or shares and about the main positions and risk concentration in the managed CIUs.

CIUs regulated by the Law will be allowed to act in the form of an investment fund or investment company established in the Republic of Lithuania. An investment company, which intends to commence its operations according to the Law, will be allowed to be established as (a) a public limited liability company, (b) a private limited liability company, (c) a general partnership, (d) a limited partnership.

Mantas Gofmanas, a senior associate of TGS Baltic, says that adoption of the Law in fact finalises adoption of the main national rules for regulated CIUs, permitted in Lithuania. Thus, in addition to CIUs that operate under the Law on Collective Investment Undertakings, also in addition to CIUs intended for informed investors that operate under the Law on Collective Investment Undertakings Intended for Informed Investors, the adopted Law provides for new regulation of CIUs which are intended for professional investors.

It is also important that the Law harmonises the regulation of CIUs intended for professional investors with the rules applicable throughout the EU. Thus, from now on Management Companies, operating under the Law and licensed in Lithuania, will have the right to provide services and advertise CIUs managed by them in the single EU market in accordance with unified requirements.