Poland has yet to adopt regulations implementing AIFMD, but that does not mean that nothing will change on the Polish market for private equity and closed investment funds in the next few months, before the new regulations are enacted here.
The deadline for implementation of the Alternative Investment Fund Managers Directive (2011/61/EU) into the law of the member states was 22 July 2013. AIFMD, as the directive is known, sets forth the rules for managers of alternative investment funds, i.e. funds which do not qualify as UCITS (undertakings for collective investment in transferable securities, as defined in the UCITS Directive (2009/65/EC), such as Polish open investment funds). Alternative funds, which take various legal and organisational forms, were not subject to uniform regulation before within the EU, and consequently there was no uniformity with respect to the possibility of offering participation in such investments in member states other than the one where the fund was based.
AIFMD defines alternative investment funds in terms of the purpose of their activity, i.e. as collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors but do not require authorisation under the UCITS Directive. As with the UCITS Directive, the issue of the legal form of the funds is left to the member states.
AIFMD introduces a licensing requirement for AIF managers and a number of organisational requirements (such as a licence and minimum capital) and operating requirements designed to protect investors (e.g. concerning conflicts of interest and risk management). Following solutions adopted for UCITS, AIFMD also introduces the possibility of offering and sale of units or shares in AIFs in the territory of other member states. A condition for marketing units or shares in another member state is notification of the competent supervisory authority in the host member state, which is done via the competent supervisory authority in the home member state of the AIF (AIFMD Art. 32).
Due to the failure to implement AIFMD yet in Poland, the question arises whether certain provisions of AIFMD may be applied directly in Poland under the rule of direct effect set forth in numerous cases decided by the European Court of Justice. The Polish Financial Supervision Authority recently addressed this issue, taking the position in a statement dated 31 August 2013 that with respect to entities based in Poland, there are no grounds for direct application of AIFMD because it is first necessary to establish the criteria under which the set of entities based in Poland which are regarded as AIFs under Polish law can be determined. But this is no barrier to foreign entities deemed to be AIFs in their home jurisdiction which has already implemented AIFMD wishing to market units or shares in AIFs to professional clients in Poland. Conducting the notification procedure in the home member state pursuant to AIFMD Art. 32 is a condition, however.
The possibility of marketing units or shares of AIFs in Poland based on direct application of AIFMD will be a breakthrough from the existing approach to offering participation in collective investment undertakings other than UCITS-type funds. It will mean that some investors in Poland will be able not only to participate in closed investment funds in Poland or make investments abroad, but also invest in closed funds or private equity funds which qualify as AIFs in other EU member states.
With respect to non-public offering of opportunities to participate in collective investment undertakings, this will break the dominance of Polish closed funds. Previously, the Investment Funds Act has prevented broader offering in Poland of foreign investment funds other than UCITS-type funds (open funds).
It should be stressed, however, that alternative funds from other EU member states may be offered only to professional investors, i.e. chiefly financial institutions and other entities, including individuals, who have requested to be treated as professional investors. This does not, however, exclude a situation in which foreign alternative funds are offered in Poland pursuant to a public offering within the meaning of the Public Offerings Act of 29 July 2005. In that case, AIFMD gives priority to the prospectus regime over the regime provided in AIFMD Art. 32.
While AIFMD Art. 32 provides foreign fund managers the opportunity to offer participation in foreign AIFs based in other EU member states to professional investors in Poland, AIFs based in Poland will have to wait before pursuing the same opportunity in other member states, until regulations implementing AIFMD are adopted in Poland, designating the entities that will be regarded as alternative investment funds.
Draft guidelines for the Alternative Investment Funds Act in Poland, dated 6 September 2013, have been published (in Polish) at the website of the Government Legislation Centre.
Marcin Pietkiewicz, Capital Markets and Financial Institutions practices, Wardyński & Partners