Investment Funds 2024 Comparisons

There are three types of AIFs in Poland:

• specialised open-end investment fund (SOEIF);
• closed-end investment fund (CEIF); and
• alternative investment company (AIC).

SOEIF

The sole object of activity of a SOEIF is investing cash means raised through proposing the acquisition of participation units, in securities, money-market instruments and other property rights specified in the AIF Act.

Investors take up participation units in SOEIFs. The participation units of a SOEIF may not be transferred to third parties by a participant (investor). It is possible to limit the group of investors who can become participants of a SOEIF. Participation units of a SOEIF may be redeemed at the request of the participant.

A SOEIF is managed by a society – special entity with permission granted by the PFSA. The society of a SOEIF acts in the form of a joint stock company (commercial company). The society establishes the SOEIF, manages it and represents it in relations with third parties.

Details concerning the opening, existence and liquidation of SOEIFs are regulated in the AIF Act. A SOEIF has separate legal personality and it does not act in the form of a commercial company.

CEIF

A CEIF is an AIF in which investors take up investment certificates. The sole object of activity of a CEIF is investing cash means raised through proposing the acquisition of investment certificates, in securities, money-market instruments and other property rights specified in the AIF Act.

The investment certificates of CEIFs are transferable. Moreover, they may be admitted to trading on a regulated market or alternative trading system.

There is a limited possibility of exit through the redemption of investment certificates by CEIF. Such redemption is regulated and possible only on terms and conditions specified in the statutes of CEIFs.

A CEIF is managed by a society – special entity with permission granted by the PFSA. The society of a CEIF acts in the form of a joint stock company (commercial company). The society establishes the CEIF, manages it and represents it in relations with third parties.

Details concerning the opening, existence and liquidation of CEIFs are regulated in the AIF Act. A CEIF has a separate legal personality and does not act in the form of commercial company.

AIC

The sole object of activity of an AIC is collecting assets from multiple investors in order to invest them in the interest of such investors in accordance with the specified investment policy.

Investors take up shares in an AIC. The shares of an AIC are transferable; however, limitations in this scope may be introduced on the basis of the statutes of AICs. Moreover, a new regulation (effective 29 September 2023), requires the consent in writing of the AIC’s managing party for any transfer of shares in an AIC to an entity other than the investor of this AIC and the AIC’s managing party. The AIC’s managing party will refuse to consent if, after verification, the potential purchaser does not meet the conditions for recognition as a professional client. A transfer of an AIC’s shares performed without the consent of the AIC’s managing party is invalid. This limitation is not applied if at least 50% of rights to participate in the AIC are held by professional clients specified in the AIF Act (eg, AIC’s managing party, society of AIF, investment firm).

An AIC conducts its activity in the form of a commercial company. An AIC may carry out its activity in the form of:

• a limited liability company, a joint stock company or a European company; or
• a limited partnership or a limited joint stock partnership in which the sole general partner is a limited liability company, joint stock company or a European company.

Details concerning the opening, existence and liquidation of the commercial companies are regulated in the Polish Commercial Companies Code.

Each AIC should have a managing party. An AIC’s managing party may be exclusively:

• in the case specified in the first point above – a company being an AIC and carrying out the activity as a party managing the AIC on an internal basis; or
• in the case specified in the second point above – a company being a general partner in an AIC and carrying out the activity as a party managing the AIC on an external basis.

AIC

An AIC is established by its investors and managing party. The AIC and AIC’s managing party are registered in the register of entrepreneurs of the National Court Register. However, before the registration of an AIC in the National Court Register, the AIC’s managing party should be entered in the register of AIC managing parties maintained by the PFSA, or the PFSA should grant permission. Before the registration, the statutes and investment policy of the AIC should be adopted too.

The activity of the AIC’s managing party may be performed on the basis of an entry in the register of AIC managing parties, and therefore without the separate authorisation (licence) of the PFSA, if the total value of assets included in the investment portfolios of the AICs that the AIC’s managing party intends to manage or manages does not exceed the PLN equivalent of EUR100 million, and, where the ACI’s managing party manages only companies that do not use AIF financial leverage and in which participation rights can be redeemed after at least five years from the date of their acquisition, the equivalent of EUR500 million. Exceeding the above limits results in an obligation to obtain a licence granted by the PFSA. In order to obtain the licence, the AIC’s managing party should submit to the PFSA an application for authorisation to perform the activities of an AIC’s managing party.

The majority of managing parties in Poland use a simplified procedure, ie, the obligation of entry to the register but without a separate licence from the PFSA.

The whole process of registration of the AIC and its managing party usually takes several months.

SOEIF and CEIF

SOEIFs and CEIFs may be established exclusively by a society. The society is a management body of SOEIF and CEIF and conducts its activity in the form of a joint stock company. SOEIFs and CEIFs may be established exclusively by the society which obtained a permit to pursue the activity. Permission is granted by the PFSA.

SOEIFs and CEIFs should be registered in the register of investment funds. The register of investment funds is kept by the Circuit Court in Warsaw.

Investors of AIFs are not liable for the obligations of AIFs. This liability is borne by the AIF and the managing party of the AIF in certain cases.

AIFs have several obligations in the field of reporting. Each AIF should prepare its financial statement for each fiscal year pursuant to the Polish Accounting Act of 29 September 2004.

Moreover, SOEIFs should publish an information prospectus and annual and semi-annual financial statements on their websites. The information prospectus should especially contain: the fund’s articles; declaration of the audit firm on the compliance of the methods and rules for appraising the fund’s assets described in the information prospectus with the provisions on accounting of investment funds; and also on the completeness of such rules and their compliance with the investment policy adopted by the fund.

A CEIF which is not a public CEIF should make available to the fund’s participants, upon their demand, annual and semi-annual financial statements.

When transferring the participation units of a SOEIF, issuing investment certificates of a CEIF and marketing an AIC in the territory of Poland, the society, the AIC’s managing party pursuing activity on the basis of a permit should make the information available to the client of the AIF, enabling it to review the same before acquiring participation units, taking up investment certificates or acquiring or taking up participation rights of an AIC. Details of the information available to the client of the AIF are specified in the AIF Act, which covers especially:

• business name (name), seat and address of the AIF;
• business name (name), seat and address of the party that manages the AIF;
• description of the object of activity of the AIF, including a description of its investment objectives and investment policy and investment strategy, in particular a description of the types of assets in which it may invest, the techniques it may employ, types of risk involved in the investment, and any investment restrictions;
• description of the procedures by which the AIF may change its investment strategy or investment policy; and
• description of the methods and rules of valuation of assets.

Another disclosure requirement is imposed on the society of the SOEIF and CEIF. The society shall, within four months from the end of the financial year, submit to the PFSA and funds participants, upon their request, the AIF’s annual statements drawn up separately for each SOEIF and CEIF in which it is a body. The AIF’s annual statement should contain especially:

• balance sheet for a given financial year;
• profits and loss account for a given financial year;
• report on the alternative investment fund’s activity for a given financial year;
• description of material changes in the information listed in the information for the client of an alternative investment fund that took place during the financial year; and
• report from the audit of the annual financial statements of the AIF.

Various types of investors join AIFs; however, Polish regulations establish some limitations in the scope of access for retail investors. In recent times, the AIC has been considered the most popular type of AIF in Poland, particularly due to the more simplified procedure for opening this type of AIF and its continued existence, which is mostly regulated by the Polish Commercial Companies Code.

Legal structures used by alternative fund managers in Poland are regulated and indicated in the AIF Act and the Polish Commercial Companies Code.

As mentioned previously, SOEIFs and CEIFs may be established and managed exclusively by a society. The society conducts its activity in the form of a joint stock company.

An AIC is managed by the AIC’s managing party, which acts as a commercial company. The AIC’s managing party may act as a party managing the AIC on an internal basis (AIC is its own managing party) or as a party managing the AIC on an external basis (a separate company is the managing party of the AIC).

There are some limitations for retail investors in the scope of access to investment in AIFs. Pursuant to the new regulations (with effect from 29 September 2023), an investor in an AIC is an entity that has the right to participate (shares) in an AIC and meets the criteria of a professional client (with some exceptions). A natural person may be considered a professional client if the value of their contribution to the AIC is not less than the PLN equivalent of EUR60,000. This limitation is not applied if at least 50% of rights to participate in the AIC consist of professional clients specified in the AIF Act (eg, AIC’s managing party, society of AIF, investment firm).

Regulatory Regime for AIC and AIC’S Managing Party

The AIC’S managing party should obtain a licence from the PFSA or entry to the register kept by the PFSA. Entry to the register is sufficient (without a licence) if the total value of assets included in the investment portfolios of AICs that the AIC’s managing party intends to manage or manages does not exceed the PLN equivalent of EUR100 million, and, where the AIC’s managing party manages only companies that do not use AIF financial leverage and in which participation rights can be redeemed after at least five years from the date of their acquisition, the equivalent of EUR500 million.

The starting capital for pursuing the activity of:

• the AIC’s managing party on an external basis shall amount to at least the equivalent of EUR125,000 denominated in PLN; and
• the AIC’s managing party on an internal basis shall amount to at least the equivalent of EUR300,000 denominated in PLN.

Moreover, the AIC’s managing party shall notify the PFSA of any material changes to the shareholder structure.

Requirements in the scope of starting capital of an AIC’s managing party and notification about changes to the shareholder structure are not applied in reference to the AIC’s managing party, which is obliged only to obtain entry to the register (without separate permission from the PFSA).

The AIC’s managing party is obliged to notify the PFSA in written form of the intention to market the ASI on the territory of Poland.

Regulatory Regime for CEIF, SOEIF and Society (Managing Party of CEIF/SOEIF)

The following activities are required in order to establish a CEIF and SOEIF:

• a society providing the investment fund with statutes;
• conclusion by the society of a contract with a depositary for performing the function of an investment fund’s depository;
• issue of a permit by the PFSA;
• collection of payments to the investment fund in the amount specified in its statutes; and
• entry of the investment fund in the register of investment funds.

There are some exceptions according to which a permit of the PSFA is not required in reference to establishment of the CEIF – especially in the case of offering an investment certificate within non-public offer.

Moreover, a society of CEIF and SOEIF is a licensed entity and should obtain its licence from the PFSA.

The starting capital of the society for carrying on activity shall be at least the equivalent of EUR125,000 denominated in PLN. If the society carries on the activity of managing portfolios including one or more financial instruments, the starting capital shall be increased to the equivalent of EUR730,000 denominated in PLN.

The initial capital of the society may come exclusively out of documented sources. The means for covering initial capital or acquiring shares may not come from a loan or credit.

The PFSA has some rights in the scope of control changes to the shareholder structure of the society. For example, a subject intending to acquire or take up shares or rights attached to shares in a society, directly or indirectly, in a number which ensures reaching or exceeding respectively 10%, 20%, one third or 50% of the total number of votes at a general meeting or a share in the initial capital, shall be obliged, on each occasion, to notify the PFSA of its intention to acquire or take up shares.

Investment Limitations

A CEIF may invest in certain types of assets specified in the law, including the following:

• securities;
• receivable debts, except for debts to natural persons;
• shares in limited liability companies, including in companies with their seats abroad;
• derivative instruments, including non-standardised derivative instruments;
• property rights whose price depends directly or indirectly on things designated as to their kind, specific types of energy, meters and limits of the volume of production or emission of pollutants, admitted to trading on commodity exchanges; and
• money-market instruments.

Indicated assets should be transferable. The CEIF may also invest in:

• ownership or co-ownership of:
1. land and immovable property within the meaning of the provisions on immovable property management;
2. buildings and premises constituting separate immovable property;
3. sea-going vessels; and
• perpetual usufruct.

There are some limitations according to which a CEIF may not invest in certain assets amounting to more than a certain percentage of total value of the CEIF’s assets (rules of diversification). For example, the CEIF may invest only up to 50% of the value of its assets in participation units or investment certificates of one investment fund or in participation titles issued by one collective investment institution having its seat abroad.

Limitations in the scope of the list of assets which are subject to investment as well as rules of diversification are also established in reference to a SOEIF.

There are no specific investment limitations in reference to AICs; however, each AIC should have its own investment policy which determines the manner of investing its assets.

Foreign investment funds and their managing parties may conduct their activity in Poland as a rule. Specific requirements and limitations are described in the AIF Act.

For example, an AIF from the territory of the European Union (EU AIF) may be marketed in the territory of Poland if the PFSA receives from the competent supervisory authority from the other EU member state (appropriate to the managing party of the EU AIF) a notification on the intention to market such an EU AIF in the territory of Poland.

The rules of conduct of activity in the territory of Poland by foreign funds and management companies are specified in detail in the AIF Act.

If permission or entry to the register (as the case may be) is required in relation to an AIF or its managing party, this process typically lasts several months.

There are some regulations which apply to firms pre-marketing and marketing alternative funds in Poland, particularly:

• the AIF Act;
• the Polish Commercial Companies Code of 15 September 2000; and
• the Act on public offering and conditions for introducing financial instruments to organised trading and on public companies of 29 July 2005.

These legal acts specify in detail the requirements to be met regarding pre-marketing and marketing alternative funds in Poland, including reporting requirements, the list of documentation to be prepared and supervisory powers of the PFSA.

These are described at 2.3.5 Rules Concerning Pre-marketing of Alternative Funds.

AIFs may be marketed to investors subject to the regulations that establish limitations to access to investment in AIF (including limited access for retail investors to investment in AICs).

There are some cases in which an AIF or its managing party should notify or obtain approval of the national regulator (PFSA) prior to the marketing of the AIF taking place. For example, the AIC’s managing party shall be obliged to notify the PFSA in written form of the intention to market an AIC on the territory of Poland.

Where a SOEIF intends to transfer participation units, a CEIF intends to offer investment certificates or an AIC’s managing party pursuing activity on the basis of a permit intends to market on the territory of a member state of the European Union an alternative investment company or an EU AIF which it manages, the society of AIF or the AIC’s managing party shall inform the PFSA about such intention in writing.

Moreover, if participation units of an AIF (eg, shares of an AIC) are offered in the form of public offer, then notification or approval of the PFSA may be required (especially in the case of a public offer with the obligation of the preparation of an issue prospectus or an information memorandum).

Firms which have marketed an alternative fund in Poland have several ongoing requirements including reporting requirements (specified in detail in 2.1.4 Disclosure Requirements).

If an AIC conducts its activity in the form of joint stock company or limited joint stock partnership and offers its shares within a public offer, then the AIC should notify the PFSA about this offer and the number of shares taken up by the investors (notification to the Share Registration System maintained by the PFSA).

Regulations regarding AIF put an emphasis on the protection of retail investors. Therefore, limited access to investment in AIC for retail investors is established (including the minimal amount of investment which would allow recognition of a retail investor as a professional client).

The processes applicable to AIFs (conducted by the PFSA – including entry to the register and granting a licence) are mostly written procedures which require preparation and submission of documents indicated in regulations. However, the PFSA openly allows face-to-face meetings in order to discuss various aspects of the procedure, for example concerning requirements remaining to be met.

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