Czech law distinguishes between private and public placements. In general, private placement provisions apply to funds of qualified investors or similar foreign funds. Other types of funds, including local special (non-UCITS) funds, are used for collective investment – i.e. for public placements.
A public placement is regulated by the Investment Companies and Investment Funds Act while any other means of public investment offering is not permitted. Both Czech and foreign investment funds must be registered in the list maintained by the Czech National Bank (the “CNB”) in order to be offered publicly (unless the fund is an UCITS fund, which can be offered publicly upon notification of the home state authority).
On the other hand, a private placement is generally an investment offering:
- to qualified investors (as specified below); or
- to other persons under conditions that such offering:
- satisfies the conditions of the public offering, or
- the investment instruments are offered to no more than 20 persons in a single offering.
Specific conditions apply in respect of a public placement of investments into foreign AIFs managed by foreign AIFM. Private placement is permitted to professional clients only upon a notification of a home member state authority. Private placement to investors other than qualified investors is permitted if the investment is offered to fewer than 20 persons that are non qualified investors or the investment satisfies conditions for a public offering.
Private placement exemptions apply to qualified investors, and/ or professional clients (as the case may be). Qualified investors are defined as any of the following:
- institutional investors and other licensed financial services entities (e.g. banks, brokers, insurance companies, investment companies, investment funds, pension funds, securitisation entities);
- large entities holding certain amounts of assets or having certain levels of turnover;
- a manager of an investment fund;
- an entity directly subordinated to a governmental authority;
- a person or entity which submits a declaration on awareness of the risks connected with investment into the fund of qualified investors with a minimum investment in the fund of:
- EUR 125,000; or
- CZK 1 million (approx. EUR 40,000) while obtaining confirmation of administrator or manager of the fund of qualified investors issued based on the information from the investor that the investment meets the financial background, financial goals and experience of the investor.
- a person or entity which is the founder or shareholder of a different fund of qualified investors which is managed by the same manager and administered by the same administrator having submitted a declaration on awareness of the risks connected with an investment into the fund of qualified investors with a minimum investment contribution in such funds in total of:
- EUR 125,000; or
- CZK 1 million (approx. EUR 40,000) while obtaining confirmation of manager or administrator of the fund of qualified investors issued based on the information from the investor that the investment meets the financial background, financial goals and experience of the investor.
Professional clients are institutional investors, other large entities holding certain amounts of assets or having certain levels of turnover, or clients that required to be considered professional and meet certain additional criteria.
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