The Liechtenstein parliament has unanimously given the green light to the government’s alternative investment fund managers’ law (AIFMD). According to the Liechtenstein government, parliament’s approval of the law establishes a second legal basis for the Principality’s fund industry, in addition to the law on Undertakings for Collective Investment in Transferable Securities (UCITS).
Vaduz Castle, Liechtenstein Picture by Michael Gredenberg
The Liechtenstein government highlights the fact that political stability, an attractive tax law, and favorable geographic location in the Swiss franc zone, coupled with membership of the European Economic Area (EEA) enable the Principality to offer unique location advantages. This combination together with other favorable conditions make Liechtenstein an interesting location for managers of alternative investment in the international fund market, the government adds.
The EEA-compliant framework of the law and the market-orientated shaping of national legislation will serve to promote the Liechtenstein fund center as an attractive and competitive location for the international fund industry, the government insists, emphasizing that improved investor protection and strong, internationally networked supervision will also promote the stability of the Liechtenstein fund center as well as confidence in the functioning of the financial market as a whole.
Liechtenstein’s “flexible” law provides for the introduction of the European Union (EU) passport, allowing EU-wide marketing to professional investors, and places greater personal and organisational requirements on managers, their business partners, and the financial market authority (FMA).
Welcoming parliament’s decision, Liechtenstein’s Prime Minister Klaus Tschütscher emphasized the fact that there is a broad consensus among key stakeholders on the common AIFM strategy. Noting that the Principality endeavors to be “interesting for both existing and new customers,” who particularly value stability in times of uncertainty, Tschütscher explained that the AIFMD will further strengthen the Liechtenstein fund center.
Tschütscher predicted that many fund or wealth managers from Austria, Germany, Switzerland and other countries will be interested in Liechtenstein as a location, and that larger wealth managers will also elect to settle in the Principality.
Director of Liechtenstein’s Office of International Financial Affairs Katje Gey underscored that the AIFMD creates a competitive legal basis in accordance with European law, for Liechtenstein as a future-orientated AIFM location. Liechtenstein is the first country in Europe to transpose the lessons from the financial crisis into national law, to prevent as far as possible investor losses and systemic risks arising from inadequate supervision, while at the same time increasing the competitiveness of the fund center, Gey said.
Gey maintained that the further development of the Liechtenstein fund center is one of the central and most promising areas. Gey underscored the attractiveness of the location for managers of alternative investments and stressed the importance of access to innovative products in a structured regulatory framework for existing investors.
The law is due to enter into force on July 22, 2013.