One possible structure for a fund manager
Fund management company
Setting up a fund management company in Sweden requires authorisation by the Swedish Financial Supervisory Authority, pursuant to the Swedish Mutual Funds Act (2004:46). The fund management company is then entitled to manage one or more mutual funds (UCITS, Undertakings for Collective Investment in Transferable Securities). The regulation of mutual funds is largely harmonised within the EU.
Capital adequacy, organisational structure, ownership and management assessment, compliance, and risk management, amongst others, must all be met in order to be granted authorisation to conduct fund management operations. The applicant must also be able to demonstrate that the operations can be conducted in a sound and well-ordered manner.
The authorisation covers both fund management and related activities such as marketing and administration. Once authorisation is granted, the fund management company may be set up and manage mutual funds and use the EU passporting regime to market the funds in other Member States.
Read more about mutual funds (UCITS) >>
AIF manager
AIF manager operations may, under Swedish law, be conducted either with authorisation by the Swedish Financial Supervisory Authority or, for smaller operations, through registration. The appropriate regime depends on the scale, structure, and target investor base of the business. The regulatory framework is based on Directive 2011/61/EU on Alternative Investment Fund Managers (the AIFM Directive) and has been implemented into Swedish law through the Swedish Alternative Investment Fund Managers Act (2013:561) (LAIF).
Authorisation is required for AIF managers managing funds with significant assets under management. These managers are subject to a comprehensive regulatory framework, including requirements on organisation, reporting, and investor protection. Authorised AIF managers may market their funds to professional investors across the EU under the passporting regime. They may also, under certain conditions, market funds to non-professional investors, which in Sweden requires a special marketing authorisation by the Swedish Financial Supervisory Authority.
AIF managers below certain thresholds for assets under management are instead subject to registration. These AIFs may be marketed to professional investors and, under certain conditions, to so-called semi-professional investors in Sweden. They may not, however, use the passporting regime for cross-border marketing within the EU.
An AIF manager may be either internal or external. For an internal AIF manager, the manager and the fund are one and the same legal entity, while for an external AIF manager, the manager and the fund are two separate legal entities.
- Registered AIF manager
Registered AIF managers are subject to a simplified regulatory regime. Registration is available for managers of alternative investment funds (AIFs) whose total assets under management do not exceed EUR 100 million, where leverage is used, or of EUR 500 million where no leverage is used and the capital is locked for at least five years.
Registered AIF managers may not provide additional services, such as discretionary portfolio management or investment advice. The AIFs they manage may be marketed to professional investors and, under certain conditions, to so-called semi-professional investors in Sweden. Registered AIF managers may not, however, use the passporting regime for cross-border marketing within the EU.
- Authorised AIF manager
Applying for authorisation to operate as an AIF manager under the LAIF (authorised AIF manager) is appropriate for managers of larger alternative investment funds (AIFs) with more extensive fund management activities. They are, therefore, subject to a more comprehensive regulatory framework
Authorisation entails compliance with detailed requirements relating to organisation, capital, risk management, and reporting. At the same time, it offers certain advantages, such as the ability to market funds to professional investors across the EU under of the passporting regime . Authorised AIF managers may also, under certain conditions, market AIFs to non-professional investors, which, in Sweden, requires a special marketing authorisation issued by the Swedish Financial Supervisory Authority.
If you would like to learn more or seek guidance on establishing and operating fund activities in Sweden, we encourage you to contact one of our associate members.