Private placement rules and law in Liechtenstein

1. Summary of private placement provisions for fund interests (if applicable)

As one of the first countries in the EEA  Liechtenstein has fully adopted the AIFM Directive into national law, i.e. the Law on Alternative Investment Fund Managers (“AIFMG-L”). Since 2016 the EEA countries (Norway, Ireland and Liechtenstein) have also adopted the AIFMD into EEA law. That means that distribution in or from Liechtenstein follows 100% the distribution rules of the AIFMD. One of the impacts of the implementation is that there is no longer a general definition of “private placement” in national law.

All AIFs are subject to the above provisions. Generally, the exemption above is directed at professional investors. Where units or shares of an AIF are marketed to professional investors only, measures must be taken to prevent marketing to private investors, in particular by way of:

  1. appropriate design of the subscription form;
  2. references in the documentation of the AIF; and
  3. the exclusion of marketing of units or shares to private investors in the distribution agreements.

Professional investors are defined as investors which are considered to be professional clients or which may be treated as professional clients within the meaning of Annex II to Directive 2014 / 65 / EU.

2. Other forms of possible placement options for fund interests outside fund regulations

As an exemption from the general authorisation rule, unsolicited business with Liechtenstein residents does not trigger any licensing requirement in Liechtenstein. Therefore, there is no restriction on the right of persons and entities domiciled in Liechtenstein to request the services of any entity on their own initiative. Financial services and transactions requested on the client’s own initiative without any prior solicitation and marketing are therefore not subject to any licensing requirements in Liechtenstein.

3. Consequences of non-compliance with placement regimes for fund interests

There are no mandatory contractual consequences. However, the marketing of units or shares without compliance with the requirements of AIFMG-L and AIFMV could lead to damages claims by investors.

In the case of non-compliance with relevant provisions, the District Court shall impose imprisonment for up to one year or a fine of up to 360 daily rates upon a person who, inter alia, acts as an AIFM without authorisation, markets units or shares of an AIF which may only be marketed to professional investors to private investors without the required approval or authorisation or acts as an distributor without the required authorisation.

Should circumstances appear to endanger investors, the reputation of Liechtenstein as a fund centre or the stability of the financial system, the Liechtenstein Financial Market Authority may, in particular, without prior warning or setting of a deadline, require the suspension of issue of units or shares or prohibit the marketing of them.

4. Private placement rules for non-fund investments available

Generally, all public offerings of an offeror or issuer in or to Liechtenstein residents are subject to a duty to prepare a prospectus. This includes the offering of securities negotiable on securities market, shares equivalent to equity or shares of legal entities, bonds and other securitised debts and any other securities qualifying as transferable securities.

However, the prospectus duty does not apply according to Article 3 of the Law of 10 May 2019 implementing Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (EEA Securities Prospectus Implementation Act; EWR-WPPDG) in accordance with Article 3 (1) of Regulation (EU) 2017/1129, insofar as: 

  1. these offers are not subject to notification in accordance with Article 25 of Regulation (EU) 2017/1129; and 
  2. the total consideration of such an offer in the EEA is less than a monetary amount calculated over a period of 12 months which shall not exceed EUR 8,000,000 or the equivalent in CHF.  

Generally, the obligation to publish a prospectus according to Article 1 (4) of Regulation (EU) 2017/1129 is exempted in the following cases:

  1. if the offer is directed solely at qualified investors;
  2. if the offer is directed at fewer than 150 non-qualified investors in each State;
  3. if the offer price does not exceed EUR 100,000 or the equivalent in another currency over a period of twelve months; or
  4. if the denomination per unit or per investor amounts to at least EUR 100,000 or the equivalent in another currency.

Qualified investors according to the Article 2(e) of Regulation (EU) 2017/1129 are persons or entities that are listed in points (1) to (4) of Section I of Annex II to Directive 2014/65/EU, and persons or entities who are, on request, treated as professional clients in accordance with Section II of that Annex, or recognised as eligible counterparties in accordance with Article 30 of Directive 2014/65/ EU unless they have entered into an agreement to be treated as non-professional clients in accordance with the fourth paragraph of Section I of that Annex. For the purposes of applying the first sentence of this point, investment firms and credit institutions shall, upon request from the issuer, communicate the classification of their clients to the issuer subject to compliance with data protection laws.

In addition, the Regulation (EU) 2017/1129 provides for several other exemptions which depend on the nature of the security (securities offered in connection with a takeover, shares representing, over a period of 12 months, securities that are traded on a regulated market etc.).