An investment fund in Estonia
Investment funds are organizations that manage their investors’ funds by accumulating the savings of physical persons and legal…
Investment funds are organizations that manage their investors’ funds by accumulating the savings of physical persons and legal entities with the purpose of joint investment via the purchase of securities rather than tangible productive assets. Establishing an investment fund in Estonia is seen as a feasible step as this country is a member of the European Union, Eurozone, and the Schengen zone. Apart from that, Estonia enjoys a developed economy and a stable political situation. In 2017, Estonia introduced the Investment Fund Act, which made the investment market of the country even more attractive. More and more entrepreneurs are showing interest in opening investment funds here.
Fund registration: how to register an investment fund in Estonia
To register an investment fund in Estonia you need to open a fund and appoint the Fund Manager. The requirements to be fulfilled to establish the fund are as follows:
- Registered joint-stock company;
- Constituent documents – shareholders’ resolution, statute, internal regulations, etc;
- Introduced AML/KYC policies;
- A bank account, securities account, and a corporate account at one of the Estonian banks;
- Appointed auditor;
- Authorized capital deposited to the corporate account.
Regarding the fund structure, the company must consist of at least five physical persons, not less than three of whom must be members of the board of directors, whereas the rest (at least one) act as managers. When applying for a license, the company is also required to submit information about the board and management members, the auditor, and the internal auditor, along with the list of shareholders and their details.
The managers of the company must be certified by the Financial Supervisory Authority. At that, the regulator requires the authorized capital of at least 125,000 EUR.
When talking about small alternative investment funds (AIF), the managing company must obtain not a license but a permit by the FI which significantly simplifies the procedure (required authorized capital starts from 2,500 EUR) while the fund must obtain the AML license for a financial institution from the Financial Intelligence Unit.
AIF must comply with one of the following limitations:
- Only professional investors may participate;
- No more than 150 investors from one European country;
- The annual amount of raised funds must be less than 2.5 mln EUR;
- Value of the fund share – not less than 100,000 EUR.
The final step is the registration of the small alternative investment fund at the Commercial Register in the form of a partnership where the managing company acts as the general partner and the investors are trusted partners. AIF registered in Estonia may serve as the base for:
- Cryptocurrency funds;
- Crowdfunding;
- Real estate funds;
- Venture funds.
The procedure of AIF registration in Estonia
To summarize the abovementioned, we can divide the registration process for a small investment fund in Estonia into the following stages:
- Managing fund registration;
- Obtaining a registration permit from the Financial Supervisory Authority of Estonia;
- Obtaining the AML license;
- AIF registration at the Commercial Register.
The whole process of investment fund registration takes up to 130 days.
Benefits of registering a small investment fund in Estonia
The AIF registration in the Republic of Estonia gives you a large number of advantages, among which are:
- Management of joint funds of up to 500 mln EUR;
- Simplified registration process;
- Universal investment portfolio;
- Investor confidentiality;
- Each investor’s share size confidentiality;
- Limited liability.
Turn-key service on Estonian investment fund registration
If you are interested in getting the whole range of services for registration of an investment fund in Estonia, feel free to address the SBSB legal experts. We will manage all the issues concerning the registration and licensing and assist you in establishing an investment or hedge fund on beneficial terms. The service can be ordered via our Telegram chat or by filling in the online application form at the website.
How much does it cost to register investment fund in Estonia?
You can find out our service rates in the course of a consultation with one of our specialists. The price is calculated individually depending on the number of additional services, terms, company specifics, and other factors. A detailed consultation should help you get the numbers you need.
