25.09.2017

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Want to set up small alternative funds?

In Estonia, ordinarily, a small fund manager does not need a license, except when managing public limited fund or common fund (According to §306 (2) of the Investment Funds Act), but nevertheless the fund manager needs to register its activities with the Financial Supervision Authority. In this way OÜ Baltcap Infrastructure Management, OÜ Baltcap Growth Fund Management and Wise Guys Holding OÜ registered their activities at the Financial Supervision Authority.

Under the Investment Funds Act, an investment fund can be contractually established or set up as a public limited liability company, limited partnership or a defined benefit pension fund as an employer. Under the new Investments Funds Act, which came into force on January 10, 2017 it is now possible to create trust funds for joint private and venture capital investment. According to §3 (6) of the Investment Funds Act, a small fund manager is someone, who directly or indirectly holds alternative funds with a total assets of not more than EUR 100 million. Similarly, if the total assets do not exceed EUR 500 million, provided that the portfolio of alternative funds consists of non-leveraged alternative funds, and in the five years following the date of each investment of the alternative fund, it is not possible to use the right to redemption of units or shares.

A small fund manager, who does not already have an activity license, must register its activities with the Financial Supervision Authority without delay and start fulfilling the information obligation upon commencement of the management of the fund. According to the law, it is necessary to submit a written application to the Financial Supervision Authority and the decision on registration is usually made within two months from the date of receipt of the correct application form for registration. Small fund managers can only manage non-public funds. Minimum reporting requirements for a management company are derived from EU law. The information requirements are set out in Regulation (EU) No 231/2013. The Financial Supervision Authority publishes information on funds established or established on the website of the Financial Supervision Authority within one month of receipt of information. A small fund manager must submit an annual report to the Financial Supervision Authority on the funds it manages.

According to the information provided on the website of the Financial Supervision Authority, the Financial Supervision Authority registered on 12 June 2017 three fund managers. The main activity of OÜ Baltcap Infrastructure Managements is the management of private and venture capital funds. BaltCap created a € 100m infrastructure fund to invest in infrastructure projects in Estonia, Latvia and Lithuania, through which local and international institutional investors support the development of the Baltic economies. Baltcap Growth Fund Management OÜ was registered as a manager of the European Venture Capital Fund in addition to registering as a small fund manager. The Venture Capital Fund focuses on investing in early-stage companies with higher growth potential and risk levels. BaltCap Growth Fund makes investments in the amount of 0.5 to 3 million EUR and the fund is 50 million EUR. The Financial Supervision Authority also registered the activities of Wise Guys Holding OÜ as a small fund management company. The main business of the company is business advisory and other management consulting and startup wise guys administration.

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