EUROPEAN INVESTMENT MANAGEMENT LICENSE AND INVESTMENT FUND LICENSING

Cost-effective pan-European investment and investment fund management vehicle. The requirement for equity capital is EUR 125 000.

EU directive 2009/65/EC on the Coordination of Laws, Regulations and Administrative Provisions Relating to Undertakings for Collective Investment in Transferable Securities (UCITS) allows investment managers licensed in one European Union (EU) member state to offer their investment funds to all European investors. The EU directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD) allows pan-European marketing of investment funds to be designed for alternative (professional) investors. A license issued in one EU/EEA member state is fully passportable to all other 27 member states covering the world’s biggest single financial market of 450 million potential clients. National regulators in other EU member states are not allowed to make any barriers or set additional requirements. Modern financial infrastructure and favourable legislation make Lithuania one of the most attractive places to investment managers targeting the single European financial market. Nasdaq, the creator of the world’s first electronic stock market, is strongly operating in Lithuania and the Baltic States and has established Nasdaq Technology and Business Support Competence Center in Vilnius. Nasdaq Stock Exchanges in Tallinn, Riga and Vilnius form the Baltic Market, the core idea of which is to minimize the differences between the markets in order to facilitate the cross- border trading. Central Securities Depository of Lithuania, Latvia and Estonia is owned by Nasdaq and provides high-level depository services.

One Investment Management and Investment Fund license for all Europe

The investment management companies registered in Lithuania are allowed to incorporate and manage investment funds registered in other EU member states. For instance, the fund management company registered in Lithuania can manage investment funds registered in other jurisdictions, like Luxembourg, keeping assets of the fund in Luxembourg depository and using the services of Luxembourg-based brokers and investment advisers to distribute the funds. This creates a safe, efficient and cost-effective pan-European investment management vehicle. Modern Lithuanian regulation allows fund managers to reside outside Lithuania by letting them to be near their clients all the time. The possibility to outsource relatively cheap NAV calculation, investor’s relations or other managerial functions from local service providers gives a strong competitive advantage.

Friendly and business-oriented Investment Management and Fund regulation

The Bank of Lithuania (Central bank and the Regulator) came out from the watchdog’s role, committed to consult and support star-ups and not punish them during the first year of operation for minor infringements. Business-oriented regulatory behaviour and significantly lower financial institution’s incorporation, licensing and maintenance costs makes Lithuania the preferred jurisdiction for investment advisers and manages from around the world.

Reasons why Lithuania is the top jurisdiction for Investment Management and Fund licensing

The reasons why Lithuania is one of the top jurisdictions in the EU for Management Companies and Investment Funds licensing:

  • Business-oriented regulation and fast licensing process.
  • Existing financial market infrastructure and a big pool of professionals.
  • No particular requirement for the company’s management to reside in Lithuania.
  • Documents can be submitted in English.
  • Regulatory “Sandbox”. The Bank of Lithuania is committed to support newly incorporated companies.
  • Startup visa. Special visas for the citizens of non-EU/EEA countries running innovative businesses in Lithuania.

ECOVIS experience in investment management and fund licensing

Being a part of ECOVIS International consulting network operating in more than 90 counties around the world, ECOVIS ProventusLaw is currently considered to be the most experienced financial licensing advisor in Lithuania. ECOVIS experience starts from the incorporation and licensing of the first Lithuanian modern investment fund NSEL 30 Index fund and Fund’s Management Company 15 year ago. In Lithuania, ECOVIS licensed more than 35 financial institutions including such big companies as deVere, Nium, Contis Group. ECOVIS ProventusLaw provides all necessary services including preparation of licensing documentation, business plan, representation at the Bank of Lithuania (Regulator) during the licensing procedure, company incorporation, office registration, advice on IT, HR, compliance and other issues arising during business incorporation in Europe. When the licensing procedure is completed, ECOVIS offers accounting, reporting, audit, compliance and legal services for the operational business.

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Kęstutis Kvainauskas

Lawyer, attorney at law, partner of the law firm.

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