New Balkans Law Office (https://www.newbalkanslawoffice.com) regularly advises clients on therequirements for incorporation, registration and approval of AIFMs and AIFs. Wehave recently been through all of the administration steps for the set-up,registration and approval of AIFM and AIF entities within Bulgaria (https://www.newbalkanslawoffice.com/nblo-advised-on-the-registration-of-an-aifm-and-aif-in-bulgaria/). Our significant experience positionsus well to legally support AIFMs and AIFs in their day-to-day activities,concerning any of their commercial, investment and regulatory matters.

Defining an AlternativeInvestment Fund and Manager of Alternative Investment Funds

The Alternative Investment Fund (‘AIF’) and the Manager of Alternative InvestmentFunds (‘AIFM’) were introduced inthe European Union under Directive 2011/61/EU. The AIF is a collectiveinvestment undertaking where investors raise capital for investments under adefined investment policy. The AIFM is the legal person controlling the AIF’sactivities, in particular by managing its risk compliance and investmentportfolio. 

While AIFMs and AIFs are not consideredwidespread in Bulgaria, their significance will grow as they provide riskmitigation and a unique opportunity for many investors, including retailinvestors, to participate in projects collaboratively with significant value.

AIF’s Advantages

The main advantages of AIF include, butare not limited to, the following:

●       Simplicity – an AIF may be structured under a widevariety of forms (legal entities or other types of legal forms), allowinginvestors to choose the most appropriate structure for their investments.

●       Richness – compared to traditional investments,which encompass conventional investment strategies (e.g., public stocks, fixedincome, and cash),  an AIF may invest ina wide range of assets (e.g., real estate, art, digital assets, and manyothers) that fall outside of the mainstream investment world.

●       Transparencyand predictability– an AIF offers a high degree of legal certainty, as its regulatory structureneeds to be fully clear on its compliance, decision-making, types of assetssubject to investments and risk management.

●       Easyto configure -setting up an AIF is easier than other legal entities that publicly collectassets.

●       Harmonisation – an AIFM can market an AIF across theEU, allowing investments to be made by investors of different Member States (asthe legal framework relating to AIF’s marketing is unified at an EU level).

You can read more publications from the New Balkans Law Office at the links below.