The proposed Law on Alternative Investment Funds (AIF) aims to enhance the business environment, promote the development of AIFs in Montenegro, and establish an appropriate regulatory and supervisory framework in line with EU regulations, the government stated after the text of the new law was approved at the last session.
According to the Ministry of Finance’s report on the regulatory impact analysis, the law will create greater opportunities for the establishment of different types of AIFs, making the fund market more attractive, competitive, and appealing to those choosing this form of investment.
As outlined in the proposed law, an AIF is an investment fund that collects capital from investors and invests it according to an established investment policy for their benefit. It does not represent a subject for collective investments in transferable securities, as defined by the laws governing open investment funds.
By adopting this law, the regulatory framework in this field will be improved, AIF management companies will be licensed, measures and control mechanisms will be introduced in the operations of AIF management companies, market competition will be encouraged, and the legal framework will be separated from the regulations governing open investment funds with public offerings.
The law foresees that the Securities Market Commission will supervise the implementation of this law. It will have the authority to request access to any document or information from individuals related to the operations of a management company or AIF, conduct inspections with or without prior notice, and request records of phone conversations and data transactions.
The Commission will also have the right to demand the cessation of any activities that are contrary to the law, request asset freezing or seizure, impose temporary bans on business activities, and take any other measures necessary to ensure continuous compliance of the AIF management companies with the law.
Furthermore, the Commission will have the authority to revoke operating licenses, file criminal charges, or request audits or investigations by auditors or experts. The minimum capital of management companies will depend on their category, specifically the total value of the AIF assets they manage.
The law stipulates that only companies licensed to manage AIFs can do so, and companies must submit requests to the Commission for the establishment, organization, and management of AIFs.
The regulation encourages the creation of AIFs and AIF management companies, boosting market competition. It is noted that the development of AIFs could lead to administrative burdens for the Securities Market Commission, should the need arise to increase staffing, but no business barriers are being introduced.
This legal solution was developed with the participation of the Securities Market Commission staff, supported by experts from the German Federal Financial Supervisory Authority.
