According to the AAIF, the following investors fall within the scope of private placement exemptions:
- qualified investors;
- professional investors and persons treated as such at their own request under the Croatian Capital Markets Act (“CMA”); and
- management board members and employees of AIFM managing the respective AIF, provided that such an employee is either directly included in investment activities of the respective AIF, or in a senior position in the respective AIFM with experience in providing asset management services. To rely on this exemption, such employees need to sign a statement in writing confirming the use of the respective exemption and acknowledging the fact that private placement AIFs are usually offered exclusively to qualified or professional investors. AIFM needs to inform the Croatian Financial Services Supervisory Agency (“HANFA”) of its intention to use this exemption.
According to the AAIF, qualified investors are defined as investors which:
- possess sufficient experience and expertise for understanding the AIF investment risks and provided that the AIF investment is in line with their investment objectives; and
- for the purpose of AIF investment, are willing to contribute the minimum payment of EUR 53,080 or equivalent in another currency, in accordance with such AIF's rules, satisfying at least one of the following two conditions:
- the value of investor's net assets is at least EUR 265,440 or the equivalent in another currency;
- the investor works or has worked in the financial sector for at least one year in professional activities that require investment knowledge comparable to investments in the AIFM, or its operations, either for investor's own account or for the account of others, including management, acquisition or disposal of assets of the same type as the assets of AIF.
According to the CMA, professional investors are defined as clients who possess sufficient experience, knowledge and expertise to make their own investment decisions and can properly assess the risks that these incur (such clients include, subject to relevant approval or oversight of the national regulator: investment companies, credit institutions, insurance companies, collective investment schemes and management companies of such schemes, pension funds and management companies of such funds, pension insurance companies, commodity and commodity derivatives dealers, and local firms pursuant to the Regulation (EU) No 575/2013).
The following legal persons are also considered professional investors if they, in relation to the previous financial year, meet at least two of the following requirements:
- total assets of at least EUR 20,000,000;
- net income of at least EUR 40,000,000; or
- own funds of at least EUR 2,000,000.
The following entities are also considered professional investors: national and regional governments, public bodies that manage public debt, central banks, international and supranational institutions such as the World Bank, the International Monetary Fund, the European Central bank, the European Investment Bank and similar international organisations as well as other institutional investors whose main activity is investing in financial instruments without any need for obtaining relevant approvals or supervision of their activities, including entities incorporated for the purposes of securitization of assets or other finance transactions.
There are clients (including public institutions, local and regional municipalities, legal and natural persons) which can be considered as professional investors upon their request, if they meet two out of three prescribed conditions:
- the client has carried out ten transactions of significant value on the relevant market at an average frequency of ten per quarter over the previous 12 months;
- the size of the client’s financial instrument portfolio exceeds EUR 500,000; or
- the client works or has worked in the financial sector for at least one year, on the position which requires knowledge of the transactions or services envisaged.
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