The Liechtenstein investment fund centre has a legal basis that is focused on clients and investor protection. Investment fund law comprises three pillars: the Act on Certain Undertakings for Collective Investment in Transferable Securities (UCITS Act, 2011), the Law on Alternative Investment Fund Managers (AIFM Act, 2013) and the Investment Undertakings Act (IUA), which was revised in 2016.
With the transposition of the EU’s Directive on Undertakings for Collective Investment in Transferable Securities (UCITS V) into the Act on Certain Undertakings for Collective Investment in Transferable Securities (UCITS Act), traditional funds will be subject to re-regulation. Its implementation essentially imposes extensive obligations on the depositories of UCITS funds as well as increased liability.
Access to the EU market is central to the competitiveness of both the Liechtenstein financial and investment fund centre. Liechtenstein investment companies have been legally entitled to administer and sell UCITS funds across national borders for several years as a result of the adoption of EU law in the EEA Agreement. Since October 2016, Liechtenstein investment fund providers have also been able to use the EU passport for alternative investment fund managers (AIFMs).
The AIFM Directive serves to increase the transparency of the activities of the alternative investment fund managers and the alternative investment funds (AIFs) they manage vis-à-vis investors and the supervisory authorities. A number of alternative investment fund managers have already been issued with a relevant licence by the Liechtenstein Financial Market Authority (FMA).
The latter replaces the IUA from 2005 and applies to four clearly defined domestic investment fund categories. The new investment fund law regulates most notably the fund business model for single investors that was specially set up in Liechtenstein.