One of the jurisdictions in which foreign investors interested in hedge fund startups can set up an investment vehicle is Liechtenstein, a country which has adopted the Alternative Investment Fund Manager Directive (AIFMD). Although Lienchtenstein is not a member state of the European Union, the country is a member of the European Economic Area (EEA), which provides a regulatory framework for investment funds compatible with the European Directives. 
 

The legislation applicable to investment funds in Liechtenstein was modified to incorporate the directives imposed by the European Union.  At the moment, businessmen interested in how to open an investment fund must know that the main rules of law are the following: 

•    Liechtenstein’s Certain Undertakings for the Collective Investments in Transferable Securities Act;
•    Liechtenstein’s Alternative Investment Fund Managers Act (AIFMA). 

Although the AIFMA is already applicable in Liechtenstein, it is important to know that the passport regime applicable to funds incorporated in Europe is not available in this country. The main reason related to this aspect refers to the fact that the EEA Treaty has not incorporated this regulation yet. 

 

Investors interested in the procedure of starting a hedge fund in Liechtenstein will need to comply with the requirements imposed by the Liechtenstein Financial Market Authority (LFMA), which is the main regulatory body for any investment fund registered here. 

Hedge funds in Liechtenstein will need to obtain a license issued by the LFMA, regardless of the type of activities carried out by the fund. 

As a general rule, in other European countries, such as Luxembourg or Netherlands, the investment fund can be registered as an open-ended vehicle or closed-ended. The main difference is given by the rights the investors have in terms of issuing shares and other similar assets. 

However, in Liechtenstein, the applicable legislation does not distinguish between alternative investment funds registered as open-ended or closed-ended. Other forms of entities may also be used to establish various kinds of funds. For a variety of businesses, the Cayman Islands segregated portfolio company, for example, works well. If you choose to use this sort of entity, our affiliates can advise you on its main uses and advantages.

Businessmen are invited to contact our team of affiliates in Liechtenstein for more details on the investment legislation and the business opportunities that can arise in this country. For more details on how to start a hedge fund in Liechtenstein or in any other country, please visit our online magazine periodically.