Obtaining a license for an investment fund (UIF, ZPIF, AIF)

Investment funds play a key role in the modern financial market, allowing investors to effectively manage their assets and diversify risks. In various legal systems, the activities of such funds require licensing, and the procedure for obtaining a license for an investment fund can vary significantly depending on the type of fund, its structure and geographical location. In this article we will review the process of obtaining a license for UIF (unit investment fund), CLIF (closed-end unit investment fund) and AIF (alternative investment fund), as well as the key features of each of these types of funds.

Mutual Investment Fund (MIF)

Mutual funds are among the most popular types of funds in various jurisdictions. These funds allow investors to invest in a variety of assets such as securities, real estate, cash, and many others. The main objective of a mutual fund is to create and manage a portfolio of assets while maximizing returns for participants.

Requirements for obtaining a license for mutual funds:

Registration of the fund: The fund must be registered with the relevant country regulator.
Regulatory compliance: Compliance with all laws and regulations governing investment funds, including investor protection and financial reporting provisions, is required.
Financial Transparency: The fund must ensure that its financial reporting and operations are transparent.
Minimum Capital: There is generally a minimum capital requirement for mutual funds, which must be fully paid up at the time of commencement of operations.
Articles of Association of the fund: To obtain a license, an itemized charter that governs the internal procedures of the fund must be submitted.

Closed unit investment fund (CLIF)

A ZPIF is an investment fund in which only a limited number of participants can invest. These funds are often oriented towards higher returns, but their risks are also much higher. This type of fund is most often used for investment projects in real estate, private companies, startups, etc.

Requirements for obtaining a license for a ZPIF:

Authorized capital: For ZPIFs, the minimum capital may be higher than for open-end mutual funds. Capital requirements vary depending on country-specific legislation.
Registration with the regulator: A ZPIF must be registered with the state body that regulates such funds.
Limitation on the number of investors: Unlike mutual funds, ZPIFs are limited by the number of participants, and often this number can range from a few to a few dozen investors.
Strategy specification: Funds are obliged to clearly define and approve their investment strategy and provide investors with all necessary information for decision-making.

Alternative Investment Fund (AIF)

AIFs are a type of fund that typically invest in riskier assets such as venture capital projects, hedge funds, cryptocurrencies, real estate and other alternative assets. AIFs can be closed-end or open-end and offer flexible terms to investors, making them attractive to professional and institutional investors.

Requirements for obtaining a license for AIF:

Registration with the appropriate authority: In some jurisdictions, AIFs need to be licensed by the financial regulator, e.g., in the European Union this is the process of registration with a national authority or in Europe through a passporting system.
Financial strength and soundness: AIFMs must demonstrate their financial strength and ability to manage risk. The regulator insists on financial reporting and risk analysis.
Confidentiality and investor protection: AIFMs must comply with strict investor data protection and privacy requirements.
Alignment with EU law: Some AIFMs are required to comply with EU legislation, such as fund management directives.

Process for obtaining an investment fund license

Company registration

To obtain a license, it is necessary to register a legal entity and create the foundation's charter, which prescribes the basic rules and procedures.
Compliance with legal requirements

The fund must comply with all legal requirements for investor protection, financial reporting and capital.
Preparing and submitting an application

It is necessary to prepare an application that includes all necessary documents, such as the foundation's charter, information about its activities, financial statements and other documents.
Review of the application by the regulator

After the application is submitted, the regulator verifies compliance with the requirements and decides whether to issue a license.
Obtaining a license and starting operations

Once the fund is approved, the license is issued and the fund can begin operations, attracting investors and carrying out investment operations.

Obtaining an investment fund license is a complex process that requires compliance with many requirements, both in terms of financial stability and legal compliance. Professional lawyers and consultants specializing in financial services can significantly simplify the process of obtaining a license and assist in drafting the relevant documents.

Our Services

Law&Trust International offers services for obtaining licenses to establish investment funds of various types, including mutual funds, ZPIFs and AIFs. We help our clients with the execution of all necessary documents, interaction with regulatory authorities and provide full legal support of the process of obtaining a license.
If you want to create an investment fund, our specialists are ready to help you at all stages - from registration to obtaining a license and complying with regulatory requirements. Ask us for advice and we will help you succeed in the financial sphere!