The operating licence for a fund manager in Estonia
The main and permanent work of a
fund management company in Estonia is to manage the assets of a fund
established as a company or a contractual fund. A management company in Estonia
may manage several funds. Alongside fund management, the management company may
provide the following services:
- managing a securities portfolio within the meaning of the Securities Markets Act;
- investment advice;
- holding fund units or shares for clients;
- fund management services within the meaning of the Investment Funds Act for funds whose assets it does not manage.
A licence is needed to operate as a fund manager in Estonia, and this is issued and can be withdrawn by Finantsinspektsioon.
The operating form for a fund manager
A fund management company in Estonia is a business whose main work is to manage investment funds or securities portfolios. Fund management means managing the issuance of a fund’s shares or units, deciding the investment of the fund’s assets, keeping accounts of the fund’s assets, and conducting other operations directly related to these activities. A management company may manage several funds.
The operations of fund managers are regulated by the Investment Funds Act. The law requires public investment funds, including pension funds, to have an operating licence as a fund manager in Estonia, and this is issued by Finantsinspektsioon. Operating licences are also needed by fund managers in Estonia who want to manage euro funds and large-scale alternative investment funds.
To manage a small fund, the fund manager in Estonia should apply for an operating licence as a small fund manager or register its activities with Finantsinspektsioon. Small fund managers in Estonia can only manage non-public investment funds, meaning their business is primarily aimed at professional investors.
A management company of an unlicensed small fund that does not wish to apply to Finantsinspektsioon for an operating licence as a small fund manager must register its activities with Finantsinspektsioon. Finantsinspektsioon’s supervision over registered unlicensed small fund managers in Estonia is limited to the registration process and later collection of statistical reporting.
Cross - border fund management companies
Within the European Union, fund management companies established in one member state have the right to offer investment funds in other member states. Ordinary investors can publicly be offered regulated euro funds (UCITS) internationally, while professional investors can non-publicly be offered alternative investment funds (AIF, EuVECA). Investment funds offered internationally in Estonia must follow the regulations of the European Union directives in their operations, and must also follow the rules in the legislation of the Republic of Estonia, primarily the Investment Fund Act.
Finantsinspektsioon does not directly supervise investment funds offered internationally, as this is the responsibility of the financial supervision authority of the home country of the investment fund.
Unlicensed small fund managers
A management company in Estonia of an unlicensed small fund that does not wish to apply to Finantsinspektsioon for an operating licence as a small fund manager in Estonia must register its activities with Finantsinspektsioon.
To register, the applicant must submit to Finantsinspektsioon the data and document required by the Investment Funds Act in the form described. The application must also submit a legal analysis that shows the circumstances of the investment fund and its management and the need for registration.
Finantsinspektsioon’s supervision over registered unlicensed small fund managers in Estonia is limited to the registration process and later collection of statistical reporting.
Specialised fund management
The directly applicable regulations of the European Union allow management companies to register activities additionally for specialised fund management. Registration and related issues are set out in more detail in the regulations for specialised fund management (EuVECA, EuSEF, ELTIF, and MMF).
If there is more questions about fund manager license in Estonia please do not hesitate and ask for assistance to our lawyers in Estonia at info@gencs.eu.