Investment Fund License in Lithuania
An investment fund is an asset accumulated from the deposits of investors, which the investment fund manager (management company) invests in shares, bonds, money market instruments, other securities or their combinations, real estate, etc. The set of these investment instruments is called the investment portfolio of the fund. Investment funds and investment companies are also called collective investment entities. The principal differences of these investment instruments are determined by the fact that the investment company is a legal entity (for example, a joint-stock company), it should correspond not only to property and investment activities, but also the regulation of legal entities, while the investment fund has no legal personality.
After the fund participant makes a deposit, the money is converted into investment units, taking into account the price of this unit. All assets of the fund are divided into investment units belonging to fund participants. The fund participant can earn by increasing the value of the fund’s share, on dividends, interest, etc.
Investment funds are characterized by:
- Small amounts can be invested (no minimum amount is specified);
- allows you to achieve a greater variety of investments than could be achieved by investing in person;
- professional participants of the financial market, licensed and controlled by the Bank of Lithuania – fund managers (managing companies) take care of the creation of an investment portfolio.
Directive ЕU 2009/65/EU on the harmonization of laws, rules and administrative regulations concerning collective investment enterprises in transferable securities (UCITS) allows investment managers licensed in one European Union (EU) Member State Offer their investment funds to all European investors. EU Directive 2011/61/EC on Managing Alternative Investment Funds (AIFMD) allows planning of pan-European marketing of investment funds for alternative (professional) investors. The license issued in one EU/EEA Member State is fully compliant with all other 27 Member States, covering the world’s largest single financial market with 450 million potential customers. National regulators in other EU member countries are not allowed to create any barriers or impose additional requirements. Modern financial infrastructure and favourable legislation make Lithuania one of the most attractive places for investment managers, oriented towards the single European financial market. Nasdaq, the founder of the world’s first electronic stock exchange, is active in Lithuania and the Baltic States and has established the Nasdaq Centre of Competence for Technology and Business Support in Vilnius. Nasdaq stock exchanges in Tallinn, Riga, and Vilnius form the Baltic Market, the main idea of which is to minimize differences between markets to facilitate cross-border trade.
Single investment management license and investment fund for Europe
Investment management companies registered in Lithuania are allowed to establish and manage investment funds registered in other EU member countries. For example, a fund management company registered in Lithuania may manage investment funds registered in other jurisdictions such as Luxembourg, To keep the assets of the fund with the Luxembourg depository and to use the services of Luxembourg brokers and investment advisers for the disbursement of funds. This creates a safe, efficient and cost-effective pan-European investment management system. The modern Lithuanian regulation allows fund managers to live outside Lithuania, allowing them to stay close to their clients all the time. The ability to outsource relatively cheaply the net worth of assets, investor relations or other management functions of local service providers provides a strong competitive advantage.
Friendly and business-oriented investment management and fund management
The Bank of Lithuania (Central Bank and Regulatory Authority) – withdrew from the role of observer, pledging to advise and support start-ups, rather than to punish them during the first year of operation for minor infractions. Business-oriented regulatory behaviour and significantly lower costs of establishing, licensing and servicing financial institutions make Lithuania the preferred jurisdiction for investment advisers and managers from around the world.
Lithuania is the leading jurisdiction for investment management and licensing of funds
The reasons why Lithuania is one of the leading jurisdictions in the EU for licensing management companies and investment funds:
- Business-oriented regulation and fast licensing process.
- Existing financial market infrastructure and a large pool of professionals.
- There are no requirements for the management of the company to live in Lithuania.
- Documents may be submitted in English.
- The regulatory «sandbox». The Bank of Lithuania strives to support the newly created companies.
- Starting visa. Special visas for citizens of non-EU/EEA countries, leading innovative business in Lithuania.
Company in Lithuania UAB specializes in providing legal advice to foreign individuals and companies that plan to do business in Lithuania and would like to obtain a license of investment fund. Contact our legal team who are ready to help you get the necessary license in Lithuania, providing legal support and support throughout the licensing process.