How to establish a qualified investor fund: legal and regulatory requirements

JUDr. Jakub Dohnal, Ph.D., LL.M.
JUDr. Jakub Dohnal, Ph.D., LL.M.
14.5.2026 | ARROWS law firm

Establishing a Qualified Investors’ Fund (QIF) is a complex process in which even minor oversights can lead to a rejected registration, sanctions, or later supervisory issues. Our article will guide you through all legal steps, highlight common mistakes, and point out practical risks that founders often underestimate. You will learn what requirements the fund and its partners must meet, what changed in 2024 and 2025, and how to avoid the most common problems. 

The photograph shows a specialist consulting on the establishment of a qualified investors’ fund.

Basic terms and definitions

A qualified investors fund (abbreviated as QIF) is a lawful vehicle for pooling capital from experienced and high-net-worth investors for the purpose of joint investing. It is a regulated entity subject to supervision by the Czech National Bank (CNB). QIFs differ from standard collective investment funds mainly in that they are not intended for the public and may invest in a substantially broader range of assets, from shares and bonds to real estate, private equity, or cryptoassets.

Unlike unregulated investment structures such as “friends and family” arrangements or informal investment clubs, a QIF provides investors with protection through a depositary. The depositary holds their assets separately from the assets of the manager. At the same time, the fund is governed by Act No. 240/2013 Coll., on Management Companies and Investment Funds (the “AMIF Act”), which defines obligations, restrictions, and administrative procedures.

How does a QIF differ from other funds? Primarily in that the entity establishing and managing the fund (the so-called manager or fund administrator) is not required to provide investors with the same level of protection and information as public funds. At the same time, it benefits from a lower regulatory burden in return.

It does not have to comply with all measures applicable to funds offered to the public, such as strict limits on concentrating assets in a single investment or detailed ongoing reports for individual investors. 

Practically speaking, if you want to lawfully raise money from multiple people for a specific project, you must either obtain a licence as a standard investment company or establish a QIF and meet its less demanding—yet still binding—requirements. For cross-border structures or investors, it is often necessary to assess how EU rules and jurisdictional overlaps apply, which is where our International Law team can help with the legal setup and documentation. In practice, at this stage it is also typically assessed whether, and to what extent, authorisation or registration with the regulator is required, which is also covered by our services in the area of CNB licensing and investments.

Legal framework and legislation governing QIFs

In the Czech Republic, QIFs are regulated by Act No. 240/2013 Coll., on Management Companies and Investment Funds (the AMIF Act), which entered into force in 2013 and has since been amended many times. 

It is supplemented by implementing regulations, in particular Decree of the Czech National Bank No. 244/2013 Coll., on the detailed regulation of certain rules under the Act on Management Companies and Investment Funds. This decree specifies in detail capital requirements, risk management, and internal control.

At the same time, QIFs are governed by EU legal acts, in particular AIFMD (Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers) and the newer AIFMD II (Directive (EU) 2024/927 of the European Parliament and of the Council of 11 March 2024). With effect from 16 April 2026, it amends Directive 2011/61/EU and introduces a number of new and stricter rules.

The Czech Republic is currently working intensively on transposing AIFMD II into its legal system through an amendment to the AMIF Act. If the fund’s strategy includes property acquisitions or holding real estate through SPVs, it is useful to account for typical pitfalls described in Hidden Risks in Real Estate SPVs in the Czech Republic And How to Protect Your Investment. If a fund is considering raising capital through alternative routes, it may be useful to compare the transposition developments with the rules for offerings without a prospectus, which we summarise in the article Raising capital without a securities prospectus: When can companies issue investments of up to EUR 5 million without regulatory approval. This means that entities establishing a new fund in January and February 2026 must already anticipate stricter rules. In practice, the financing side (including credit facilities, depositary arrangements and leverage limits) often requires coordination with Banking & Insurance counsel to ensure the structure remains compliant under the new regime. These will take effect during their first operating season.

The aim of the regulation is twofold: on the one hand, to protect investors—specifically their capital and access to information. On the other hand, to prevent systemic risk, i.e., a situation where improper conduct by a fund or a group of funds would seriously destabilise the financial sector.

What has changed recently in particular? From 1 July 2026, the requirements for the minimum investment commitment will be tightened with full effect to EUR 125,000. 

Until that date, transitional regimes with more liberal rules existed. At the same time, the regulator is taking a growing interest in so-called managers under Section 15 of the AMIF Act, i.e., managers with a lower regulatory burden due to the size of assets under management—whose numbers are increasing and whom the CNB wants to supervise more closely. As mentioned above, AIFMD II introduces mandatory liquidity management tools, enhanced supervisory reporting, and stricter outsourcing rules. Because these changes also affect fundraising and investor documentation, it can be helpful to compare them with the thresholds and conditions discussed in Raising Capital Without a Securities Prospectus: When Can Companies Issue Investments of Up to €5 Million Without Regulatory Approval?. From a practical perspective, when setting up governance and control mechanisms it is advisable to take into account broader corporate considerations as well, where we provide support as part of our corporate law, holdings, and structures services.

Structural decision: which type of QIF to choose

Once you decide on a qualified investors fund, the first decision is the choice of legal form and management regime.

A QIF can be established in several legal forms. Most commonly, a SICAV (Société d'Investissement à Capital Variable) is chosen, which is a French term for a joint-stock company with variable share capital. 

A SICAV is a legal form that allows relatively easy issuance of new fund shares when new investors enter.

It also allows their redemption when investors wish to cash out their interest. The advantage of a SICAV lies in its flexibility—the fund can exist long-term without having to be wound up, and investors have a high degree of liquidity. If a foreign investor (e.g., from outside the EU) is entering the fund structure, we recommend also reviewing the regulatory limits and notification obligations described in the text Foreign investments in companies: What management must watch out for when an investor from a non-EU country enters. The second option is an open-ended unit fund, which is usually a less flexible construct, but in practice is rarely used for QIFs because a SICAV offers better options for structuring different share classes and sub-funds.

Another option is closed-end joint-stock companies and limited partnerships issuing investment certificates, which the legislation has newly made available. These forms are suitable where the founders want a strictly closed structure without ongoing entry and exit of new investors. The limited partnership issuing investment certificates has gained popularity thanks to its flexibility in setting up relationships between investors and governance.

In practice, in the Czech Republic, according to available data, more than 95% of new funds are established as SICAVs. Mainly because they offer an optimal combination of flexibility, tax efficiency and the ability to structure sub-funds more easily. Examples include different share classes for different types of investors or with different investment focuses.

The second key decision concerns whether the fund will manage its assets itself (a self-managed fund) or entrust portfolio management and administration to an external manager—an investment company with the relevant authorisation (a non-self-managed fund).

A self-managed fund provides its own investment management, risk management, internal audit and compliance. The advantage is that you have full control over the investment process and do not have to pay an external manager. 

The disadvantage is that you must secure all required staffing, technical and capital resources yourself. Specifically, this means you must hire experienced investment managers and risk managers.

You must build your own technological infrastructure for portfolio monitoring, asset valuation and reporting. You must also meet strict capital requirements: initial capital of at least EUR 1 million, which must not fall below the prescribed level over time. Last but not least, you must undergo a full licensing procedure with the Czech National Bank (ČNB), which takes 6–12 months.

A non-self-managed fund, by contrast, entrusts management to a licensed investment company. The advantage is that you do not have to deal with licensing yourself; a simpler registration with the Czech National Bank (ČNB) is sufficient (typically weeks to months), and you do not need to build your own team of investment managers. 

Disadvantage: you pay management fees (typically 0.5–1.5% per year), you have less direct control over day-to-day decisions, and you must find a credible manager that you “procure” as a service.

So which type should you choose? For smaller funds with 2–10 investors and own capital of around CZK 100–500 million, a non-self-managed fund managed by an experienced investment company is usually sufficient. For larger funds that want to invest long-term and independently, it makes sense to go down the route of a self-managed fund. Examples include large private equity groups or real estate funds with their own team.

Minimum investment amount, number of investors and capital requirements

One of the most common questions from founders is: how much money do we have to raise from each investor?

As of 1 July 2026, the requirements for the minimum investment amount will be unified. Each qualified investor must invest at least EUR 125,000 (or the equivalent in Czech crowns, typically around CZK 3.1 million). 

The previous option to invest CZK 1 million with an appropriateness test, which ZISIF (under Section 272(2)) allowed for natural persons with sufficient experience and knowledge, becomes practically irrelevant for newly established funds after this date. The investor will only confirm by a written declaration that they are aware of the investment risks.

Important change: effective from 1 July 2026, the definition of a qualified investor is tightened, placing greater emphasis on the minimum investment amount than on other mechanisms previously in force.

In practical terms: if you are establishing a new fund in 2026, assume that each investor must contribute at least EUR 125,000.

The fund must have at least 2 qualified investors; there is no upper limit. This means that you (the founder) and one additional investor are sufficient. A typical arrangement is: the founder, who contributes own capital to the fund or guarantees the initial assets, and then n investors who join over time.

What initial assets must the fund have? This differs by type: for a non-self-managed fund managed by an external investment company, the fund must have initial capital of at least EUR 1 million within the first 12 months after registration. For a self-managed fund, the initial capital must reach at least EUR 1 million, also within 12 months.

This means that if you plan to raise assets gradually, you must ensure that you reach this amount within the first year. If you fail to do so, you may face an obligation to adopt remedial measures or to wind up the fund. We often see that it takes founders longer to secure the first “large” investor. In the meantime, they have already paid for the fund, the licence, the administrator—and the fund is stalled. One solution is for the founder to contribute an adequate amount to the fund in the first months, to make it clear that the fund is not just on paper. 

Our attorneys in Prague strongly recommend planning this strategy in advance to avoid surprises.

Fund organisational structure: manager, administrator and depositary

Every fund, regardless of whether it is self-managed or non-self-managed, must have three key components: the manager (asset manager), the administrator and the depositary.

The manager is the person or institution that decides which assets the fund will invest in, when to buy, when to sell, and how to manage risks. In a self-managed fund, the manager is the fund itself, represented by its management. In a non-self-managed fund, the manager is a licensed investment company that the fund “hires” under a contract.

The manager must have authorisation from the Czech National Bank (ČNB) to carry out this activity. This means that if you establish a non-self-managed fund and want to manage it yourself, you must first obtain an investment company licence, which is a particularly demanding process. 

Most founders therefore hire an existing licensed investment company, which becomes the manager of their fund.

The manager’s obligations are extensive: keeping records and training the investment team, monitoring portfolio performance and updating valuations. Further, reporting any suspicious transactions (AML compliance), managing risks and ensuring that the fund remains within the scope of its statute. Last but not least, ensuring that the fund’s assets are never commingled with the manager’s own assets.

The administrator is the person who ensures all back-office administrative activities. The point is to allow the manager to focus all attention on investment decision-making. The administrator typically maintains the register of investors, their contributions and holdings.

It also calculates the fund’s net asset value (NAV – Net Asset Value), manages accounting and financial reporting. It receives and processes subscription and redemption requests. If the fund has more than one share class, it keeps separate records for them. 

It prepares reports for the Czech National Bank (ČNB) and the tax authorities. The administrator must also be an investment company with the relevant authorisation. Some companies act as both manager and administrator of the same fund; others are purely administrative. The administrator must also ensure that investors’ funds are not commingled with the fund’s own funds or the administrator’s own funds.

An important role is played by the depositary, which is usually a bank. The depositary does not make investment decisions, but it has a crucial oversight function. Specifically, it holds the fund’s assets in its accounts and vault (custody function). It verifies that every transaction carried out by the manager is authorised and lawful.

It monitors that assets are not transferred somewhere without reason, and it checks asset valuations and share pricing. It is the first line of defence for investors if the manager were to act unlawfully. 

A depositary is mandatory for every fund without exception. If a fund is unable to find a bank willing to provide depositary services, the fund cannot exist at all. In practice, only a limited number of banks provide depositary services, and therefore the founders of some funds must secure a depositary in advance, even before submitting an application to register the fund with the Czech National Bank (ČNB).

The key is the legal and functional autonomy of these three entities. The law very strictly prohibits the roles of the manager and the depositary from being concentrated in a single person—this would constitute a conflict of interest. The administrator may be the same as the manager (and in practice often is), but the depositary must be independent.

In practice: If you are establishing a non-self-managed fund, the usual structure looks like this: the fund (a legal entity—most commonly a SICAV) issues shares and represents investors. The investment company (licensed) acts as the manager and administrator. A bank acts as the depositary.

Three core agreements are entered into between these entities: a management agreement (between the fund and the investment company), an administration agreement (between the fund and the investment company), and a depositary agreement (between the fund and the bank). 

Attorneys at our Prague-based law firm routinely draft or review these agreements because they contain technical details that are not obvious at first glance. Examples include what happens if the bank ceases to act as depositary, how disputes over asset valuation are resolved, or what rights and obligations the contracting parties have in crisis situations.

Registration process with the Czech National Bank

Once you have the structure prepared (legal form, selected manager, administrator and depositary), the key step follows: registration of the fund with the Czech National Bank.

The registration procedure differs depending on whether the fund is self-managed or non-self-managed. For a non-self-managed fund, the fund formally “secures” its manager and administrator, usually the same investment company. The investment company submits to the Czech National Bank an application to enter the fund in the list of qualified investor funds. Approval timeframe: typically 20–60 days, sometimes less if the documentation is in order. A full licensing procedure is not required— a standard registration process is sufficient.

For a self-managed fund, the fund must secure its own internal team or hire a specialist for management. The fund, or rather its founders, submits to the Czech National Bank an application for authorisation to carry out the activities of a self-managed fund. Approval timeframe: 6–12 months, sometimes longer if the Czech National Bank identifies deficiencies.

A significantly stricter review takes place: the Czech National Bank verifies personnel, IT systems, risk management, internal controls, etc. What documentation is typically required? Extensive. The basic list includes legal documents such as the founders’ deed or the fund’s articles of association, the fund statute, a template investor agreement between the fund and investors, and agreements with the manager, administrator and depositary.

Further financial and operational documents include: a financing plan and cash-flow projections, a description of the investment strategy and risks. Also a risk management policy and antitrust procedures, the organisational structure and CVs of key persons, internal regulations (e.g., compliance guidelines, AML/KYC procedures). 

AML/KYC documentation is also important: a comprehensive anti-money laundering and counter-terrorist financing policy, client identification procedures, and a transaction monitoring plan.

Other documents include a statement on banking security and insurance, and relevant registry extracts for all key persons. This involves dozens of pages of documentation. Many initiators underestimate the time and cost of preparing this package. Attorneys at our Prague-based law firm typically prepare this documentation or at least review it. This is not only about legal review, but also about confirming that the documents contain all information the Czech National Bank typically expects.

Once you submit the application, the Czech National Bank will typically acknowledge receipt (timeframe: within 3 business days). This is followed by a phase in which the Czech National Bank reviews the documentation in detail. During this period, the Czech National Bank may send a list of additional questions, i.e., a request to supplement the filing. The reasons may vary: an unclear description of the investment strategy, missing information about the depositary or the manager, insufficient specification of risks.

Further reasons may include suspicion of insufficient capitalisation, or doubts regarding AML/KYC procedures. The deadline to respond is usually 30–60 days. If you do not provide sufficient explanations or documents within this time, the application may be rejected. And then you have to go back to the beginning—correct the documents and submit a new application, which means several more months of delay.

The most common reasons for rejection or delay are an incomplete or unclear fund statute, where investment restrictions are not clearly defined, or information on fees or exit terms is missing. Another issue is that the depositary or administrator has not yet obtained the relevant authorisation, or there is an insufficient description of risk management or liquidity, especially if the fund invests in illiquid assets.

It may also be suspicion of conflicts of interest or internal conflicts, for example where the founder grants themselves an excessively high success fee. Last but not least, errors in AML documentation or unclear sources of initial capital. Attorneys at our Prague-based law firm have seen all of these issues in practice. Experience shows that thoroughly prepared documentation in advance, taking into account Czech National Bank precedents and current supervisory communications, very significantly increases the chance of approval without major delays.

Capital requirements and fund capital

One of the most complex aspects of the regulation of qualified investor funds (FKI) is capital requirements. This is not just a single fixed amount that the founder contributes at the beginning. It is a dynamic concept that changes over the life of the fund.

At the time the fund is established (usually upon registration or shortly thereafter), the fund must reach initial capital. The amount varies by type: for a non-self-managed fund, it is at least EUR 1 million, which must be reached within 12 months of registration. For a self-managed fund, also at least EUR 1 million, also within 12 months.

What counts towards initial capital? It is not just cash. It includes: paid-up registered capital (money contributed by shareholders), share premium (a premium on the issue of shares), reserve funds, and retained earnings from previous years. For self-managed funds, there is currently discussion as to whether investment portfolios should also be counted towards initial capital.

The Czech National Bank issued clarifying statements in 2022 and 2025, which imply that portfolios are included, but only if they are valued at fair value and are subject to the same controls as other assets. 

Practical situation: Many founders think it is enough to contribute EUR 1 million and the rest will “come” from investors during the first year. That is not entirely correct.

If you plan to raise assets from investors gradually, you must ensure that you reach the initial capital within the first year. One common strategy is for the founder to contribute an adequate amount at the outset so the fund meets the requirement. The initial contribution is then gradually “diluted” as investors add their stakes.

However, reaching initial capital is not the end of the story. The fund must continuously maintain a certain minimum level of capital, calculated differently depending on the type.

For a non-self-managed fund, the manager’s capital requirement is calculated as the higher of one quarter of average annual overheads (expected for the next year) or a fixed minimum amount of EUR 125,000 (under Section 5a of Decree No. 244/2013 Coll.). This means that the more the fund “charges” in administration, the more capital the manager must have. If the fund has administrative costs of EUR 2 million per year, the capital requirement is EUR 500,000. If it is EUR 500,000 per year, EUR 125,000 is sufficient.

For a self-managed fund, the rules are more complex. Since 2022, the requirements have increased, and capital is now calculated only from items relating to the fund’s administrative operations. This is therefore not investment capital that constitutes the assets of the fund itself. The minimum amount is EUR 300,000 (pursuant to Section 5 of Decree No. 244/2013 Coll.).

Important: If the fund’s average capital over the last 6 months falls below the prescribed minimum level, the manager or the self-managed fund must, without undue delay, adopt remedial measures. Alternatively, it must decide to wind up the fund.

Practical issues: The fund’s profit may be high, but if it is reinvested (remains in the portfolio), it does not increase the manager’s capital, and the manager may therefore find itself in a situation where the fund is growing but its own capital is stagnating. If the fund has not yet raised sufficient funds from investors and the founder has not “topped it up”, there is a risk that the fund will not meet the capital requirements. Some funds address this by “borrowing” from a bank or obtaining a guarantee – but this brings its own risks and additional costs. 

Our attorneys in Prague recommend that the fund’s business plan clearly sets out how compliance with the capital requirements will be ensured. You should clarify what contribution the founder will make, what the expected administrative costs are, and how the capital level will be monitored.

Investment strategy and asset restrictions

One of the major differences between an FKI and standard funds is the flexibility of the investment strategy. An FKI can choose a highly diverse strategy – from a conservative bond portfolio to high-risk private equity investments or crypto-assets.

The law provides that FKIs may invest in any assets they choose – subject to certain restrictions. Typically, these include investment instruments (shares, bonds, funds, ETFs), derivatives (options, futures, CFDs), and commodities (gold, silver, oil).

Further, real estate (directly or through companies/SPVs), crypto-assets (Bitcoin, Ethereum, etc., directly or via derivatives), collectibles (paintings, stamps, coins, vintage cars), private debt and loans, and interests in private companies (private equity). The only condition is that the depositary and the manager agree to the given asset and that it can be valued at fair value.

Although an FKI may choose various assets, the law nevertheless prohibits an excessively high concentration in a single asset. The basic rule is: an FKI may not invest more than 35% of the value of its assets in a single asset (pursuant to Section 243(2) of ZISIF). This means that if the fund has assets of CZK 100 million, a maximum of CZK 35 million may be invested in one listed company, one property, etc.

However, there are exceptions. If the fund has assets exceeding EUR 10 million and the number of investors is high, it may avoid the restriction. Specifically, the formula must be met under which the value of assets in EUR millions is higher than 174 divided by the fifth root of the number of investors (pursuant to Section 243(3) of ZISIF). For example, with 2 investors, assets must exceed EUR 100 million to avoid the restriction. With 20 investors, assets must exceed EUR 16 million. With 35 investors, assets must be approximately EUR 10 million.

This means that smaller funds with less than EUR 100 million must strictly comply with the 35% limit. Larger funds (dozens of investors, hundreds of millions) can afford greater flexibility. 

Attorneys at our Prague-based law firm routinely support clients in setting an investment strategy that also complies with the asset concentration limits. Sometimes this involves detailed calculations and structuring, for example how to invest in multiple properties in the same location without breaching the 35% rule.

Fees and incentive mechanisms

How do financial managers and fund founders make money from this? The answer lies in the fee structure and mechanisms that align their interests with those of investors.

Entry fees are paid at the moment an investor purchases fund shares. Their purpose is to cover distribution costs – the remuneration of the adviser, bank, or intermediary who brought in the investor. In the past, they typically ranged from 2–7%, but today, due to competition, it is common for a fund not to charge them at all, or for them to be very low (0.5–1%).

Management fees are paid annually for managing the fund. They typically range from 0.5–1.5% per year, commonly expressed as a percentage of assets under management (AUM). It is important to read the fund’s statute and understand what is included in management fees. Sometimes administrative costs, depositary services, and audit are included; sometimes these items are invoiced separately.

Exit fees are paid if an investor leaves the fund earlier than the planned investment horizon. This is a tool to protect other investors – if everyone could exit at any time without penalties, the fund could face a liquidity crisis. A typical setup is, for example: 5% if you exit within the first 3 years, 3% during years 3–5, 0% after 5 years.

Success fee (performance fee) is also important to mention. It is a percentage of the return by which the fund exceeds a certain benchmark level. Typically, the return is split between investors and founders, for example 80:20, where the founder receives 20% of the excess return. Success fees are particularly common in private equity and venture funds, where the level of risk is high and the founder brings expertise and contacts to the project.

Hidden costs are something an investor can hardly avoid, but should be aware of. These include, for example, depositary fees (charged by the bank), audit fees (charged by the auditor), and legal fees (if the fund retains lawyers during its operation). Also brokerage fees or the spread when buying/selling assets, and fees for statements and reporting to the Czech National Bank (ČNB).

All these items must appear in the fund’s statute; if they are not there, there is a risk of suspicion of concealment and unethical conduct. Attorneys at our Prague-based law firm always carefully check that the fee model in the statute is transparent and that clear dividing lines are established between the money taken by the founder and the money that remains for investors.

Many funds today use so-called share classes, which allow different groups of investors to have different terms. An example could be: Class A: Standard investors with a “normal” return (no success fee). Class B: Founders and their close associates with a “preferential” right to part of the return (with a lower success fee or a guaranteed minimum).

And Class C: Late investors with an adjusted entry (higher entry fee, but with a lower success fee). Such structures are legal and common, but they must be very clearly documented in the statute and term sheets to ensure transparency and to prevent disputes.

Most common questions about the legal set-up of a fund

1. Can we set up an FKI without a lawyer?
Theoretically yes, but in practice it is strongly discouraged. Preparing the statute, agreements, and documentation for the Czech National Bank (ČNB) is technically complex and contains many procedural nuances that a lawyer will spot but a layperson will not. This includes, for example, correctly defining the final provisions of the statute, setting the legal regime of the shares, or properly distinguishing between ČNB instructions and market practice standards. Mistakes in these areas are difficult to remedy later.

2. How long does it take to register a fund with the Czech National Bank (ČNB)?
Non-self-managed fund: typically 20–60 days, sometimes less. Self-managed fund: 6–12 months, sometimes longer. It all depends on how quickly you respond to follow-up questions and how complete your initial documentation is.

3. What happens if we do not attract enough investors in the first year and fail to meet the capital requirement?
You must take remedial measures – this usually means that the founder contributes additional capital, or you decide to wind up the fund. This applies even if you have six months for the fund to get above the minimum threshold.

4. Can foreign persons establish an FKI in the Czech Republic?
Yes, provided they meet all other conditions (capital, depositary, administrator, etc.). The documentation will be more extensive, but in principle there is no obstacle. You will need to verify the identity of the foreign founders, their legal status in their country of origin, etc.

Risks and mistakes when establishing funds

Over the years, attorneys at our Prague-based law firm have seen a number of recurring mistakes that later cause problems.

A poorly drafted fund statute is a key document. If you forget an important point in it, for example how fund assets will be distributed upon liquidation, what happens to profits, or how disputes between investors will be resolved, it is difficult to fix later. Any amendment to the statute requires the consent of the Czech National Bank (ČNB) and is administratively demanding.

Insufficient AML/KYC procedures are an area where failures are common and where significant fines may be imposed. If the fund does not adequately verify investors and the sources of their capital, it may face fines of up to tens or hundreds of millions of Czech crowns (depending on the seriousness of the breach under Act No. 253/2008 Coll.). Potentially, it may also lose its licence. 

Attorneys at our Prague-based law firm always ensure that funds have formalised and professionally sound anti-money laundering procedures.

Poorly chosen depositary or administrator: If you choose a depositary that later loses its authorisation, or an administrator that is unable to provide high-quality services, you may find yourself in a situation where the fund “fails” operationally. The selection of these partners should be cautious and legally secured with high-quality agreements.

Insufficient initial capital: We understand that no one wants to invest their own money at the outset, but the law is clear – without initial capital, the fund does not exist. If the founder assumes it will “come from investors” and then it does not, the fund ends up in breach of the law.

Potential issues

How ARROWS helps (office@arws.cz)

Rejection of the registration application due to incomplete or incorrect documentation

We prepare a comprehensive documentation package that meets all ČNB requirements and is based on its current supervisory standards. Before filing, we review it and ensure there is no reason for a request for supplementation.

A fine from the ČNB for insufficient AML/KYC procedures or non-compliance with them

We design and implement robust AML/KYC policies and procedures tailored to the type of fund. We provide team training and ongoing compliance monitoring.

A dispute between investors regarding rights within the fund

We draft clear and legally sound statutes that unambiguously define the rights and obligations of each investor group. We prevent disputes that would later lead to problems.

Removal from the register, or removal by intervention of the ČNB, due to breaches of capital requirements

We set up a control system that regularly monitors the capital level and alerts you in advance if you are approaching the lower threshold. We ensure the fund has a plan to maintain compliance.

Inability to find a high-quality depositary or administrator

We have a network of partners in the financial services sector and can recommend reliable depositaries and administrators. We assist you with selection and contract negotiations.

New requirements from 2026: AIFMD II and other changes

The year 2026 brings several significant legislative changes that funds must take into account. The most important is the implementation of AIFMD II, which will enter into force on 16 April 2026.

AIFMD II is the largest revision of the rules for alternative funds since 2011. It responds to changes in the investment industry (the rise of illiquid assets, outsourcing, etc.), and it also aims to harmonise the rules for alternative and standard funds.

Key changes for FKI: mandatory liquidity management tools. Open-ended funds that redeem their units at investors’ request will have to implement at least two liquidity management tools from a harmonised list. For example, temporary redemption suspensions, reduced redemption limits, or the spreading of redemptions over time. The aim is to protect funds from a crisis where all investors want to exit at once.

Further tightening of outsourcing: If a fund delegates key activities to third parties, it will have to report to the ČNB in detail who performs those activities, how it controls them, and what its capacities are. The manager remains responsible for all delegated activities, regardless of to whom they are entrusted.

New rules for loan-originating funds: Funds that provide loans will not be able to use the “originate to distribute” model (grant a loan and immediately sell it). 

They will have to retain at least 5 percent of the risk. At the same time, fixed leverage caps will be introduced: for open-ended funds 175 percent of NAV, for closed-ended funds 300 percent. Last but not least, enhanced transparency and reporting: managers will have to provide more information to the ČNB and investors, especially on the structure of delegated activities, liquidity risks, and exposure to “key counterparties”.

From 2026, a change in the tax regime for investment funds is also expected. The legislation distinguishes between so-called “basic investment funds” (which will retain the preferential corporate income tax rate of 5 percent under Section 17 of the ZISIF) and other funds of qualified investors. The latter should be subject to the standard corporate income tax rate of 19 percent.

This distinction depends on meeting the statutory conditions, in particular as regards the nature of the assets in which the fund invests and its purpose. This means that funds of qualified investors that invest, for example, in real estate, photovoltaic power plants, or other “non-standard” assets may face a higher tax burden if they do not meet the conditions for the “basic investment fund” regime. This will affect investor returns and should be taken into account when estimating profitability.

As mentioned above, from 1 July 2026 each qualified investor must invest at least EUR 125,000. This means that older regimes with lower minimum investments and any suitability test are being gradually phased out for newly established FKI and will no longer be relevant.

What does all of this mean for a fund founder? Above all, if you are establishing a new fund in 2026, you should already take into account the stricter AIFMD II rules. The fund statute should already include liquidity management mechanisms; if you plan outsourcing, you should have clearly defined control and reporting procedures; and if you work with lending or leverage, you must know the new limits. Attorneys at our Prague-based law firm are already helping clients implement these rules today so that their newly established funds do not “fall out” of compliance once the new rules fully apply.

Practical tools and steps: how to do it

If you have decided that you want to establish a fund, what steps should follow?

Phase 1: preparation and planning (takes 2–4 months)
  1. Define your objective: Clearly write down what you want the fund to invest in, what your time horizon is, and what return you expect. Without a clear objective, everything else becomes more complicated.
  2. Choose the legal form: Decide whether it will be a SICAV (flexible) or a closed joint-stock company or a limited partnership with investment shares (for club investments).
  3. Select the manager and administrator: If you do not want to manage the fund yourself, find a licensed investment company to manage the fund for you. Assess not only the fees, but also their experience and their ability to understand your investment strategy.
  4. Find a depositary: Approach banks and find out whether they are able and willing to provide depositary services for your type of fund. This sometimes takes longer than expected.
  5. Consult a lawyer: Our Prague-based attorneys can help you design an optimal structure that meets legal requirements while also being tax-efficient.
Phase 2: preparation of documentation (takes 4–8 weeks)
  1. Drafting the fund statute: A key document. It should include a detailed description of the investment strategy, limitations, fees, investors’ rights, procedures for entry and exit, etc.
  2. Investor agreement: A template the investor will sign; it sets out the legal framework of the relationship between the investor and the fund.
  3. Agreements with third parties: Agreements with the manager, administrator, and depositary.
  4. AML/KYC policy: A detailed document describing how the fund will screen investors and their sources of capital.
  5. Other: Risk management plan, organisational structure, CVs of key persons, internal policies, etc.

Attorneys at a Prague-based law firm typically prepare this documentation using templates and industry best practices, tailored to your specific fund.

Phase 3: filing the application with the Czech National Bank (ČNB) (takes 20–60 days for approval)

Once you have all documentation prepared, you submit it to the Czech National Bank (ČNB) via the online portal or in person. ČNB has 3 business days to acknowledge the application. The review then begins.

During this period, be prepared for requests for additional information—they will almost certainly come. Responses should be fast and high-quality. Attorneys at a Prague-based law firm know what responses ČNB expects and can help you prepare them.

Phase 4: after registration (months 1–12)

Once you receive a written decision from ČNB on the fund’s registration, you can commence operations. But that is not the end: first and foremost, you must reach the minimum initial capital (for a non-self-managed fund, EUR 1 million).

You must then start onboarding investors and screening them (KYC procedures). You must make the first investments in accordance with the statute, keep detailed accounting and valuations, and liaise with the depositary, administrator, and auditors. All of this is operationally demanding. Attorneys at a Prague-based law firm can help not only with the legal setup, but also with ongoing advice and oversight during the first months.

Most common questions about qualified investor funds

1. Does a qualified investor fund (FKI) always have to have a depositary?
Yes, without exception. A depositary is not an optional element, but a statutory requirement under Czech law. If you cannot find a bank willing to work with you, you cannot register the fund. In practice, depositary services are provided by a limited number of banks, especially larger ones or those with asset management-focused units.

2. To how many investors can I publicly offer my shares?
An FKI is not intended for the public and you cannot offer its shares freely. You may offer shares only to so-called qualified investors. If you attempted to offer shares to the public or to fewer than 2 investors, you would be in breach of the law and could face a fine. If you are interested in a broader offering, you would need to choose a different type of fund, which has more complex regulation but allows public offerings.

3. As the founder, can I take all profits from the fund?
Legally, you can structure it so that, as the founder, you receive a “success fee” or another profit-sharing mechanism—this is common and lawful. However, you must not set it up in a way that makes investors feel “cheated”. It must be clear how profit distribution works, and it must be described in detail in the statute. Attorneys at a Prague-based law firm can advise you on how to set up an incentive structure that is both fair and legal.

4. What happens if the fund behaves improperly (e.g., the manager misuses the fund for personal purposes)?
ČNB may carry out an inspection if it has suspicions. If it finds breaches of the law, it may order remedial measures, impose fines, restrict the fund’s activities, or, in the worst cases, decide to wind up the fund. Investors also have the right to claim damages in Czech courts. The depositary, acting as a “diligent watchdog”, should detect such conduct before more damage occurs. This is why choosing a high-quality depositary is so important.

5. What share of profits can I keep as the manager?
This is purely a matter of agreement with investors and should be set out in the statute. Typically, a fund is divided into “management fees” (0.5–1.5% per year) and a “success fee” (20–30% of profit above a certain threshold). Nothing prevents a manager from “taking a lot”—if it is in the statute and investors sign off on it. In practice, however, no serious investor will agree to such terms.

6. How much will it cost in total to establish the fund?
It depends on the complexity. At a minimum, you should budget for: legal fees for preparing the documentation: CZK 50,000–200,000; administrator fees for registration and initial setup: CZK 30,000–100,000; depositary fees: CZK 5,000–20,000 per year (a flat fee, plus transaction fees); audit fees: CZK 10,000–50,000 per year (depending on the size of the fund); plus your own capital: at least EUR 1 million. 

Final summary

Establishing a qualified investor fund is a lawful and efficient way to raise capital from experienced and high-net-worth investors without the need to obtain a banking licence. At the same time, it is a complex process that requires attention to detail, a deep understanding of legal and regulatory requirements, and high-quality preparation of documentation.

Key points in summary: The fund must have a clearly defined legal form (most commonly a SICAV), a high-quality manager, administrator and, in particular, a depositary that monitors all movements. Capital requirements are not one-off—you need to maintain them over the long term. The investment strategy must be clearly described in the statute and must also comply with legal limits. A prime example is the 35% concentration in a single asset. Finally, the fee model must be transparent and fair to avoid any doubts about the founder’s intentions.

The year 2026 brings tighter regulation and stricter requirements (AIFMD II, new minimum subscriptions, tax changes). If you want to create a stable legal foundation for your fund, you should take these new rules into account from the very beginning.

To avoid common mistakes, loss of time, and potential fines, it is very sensible to engage an expert lawyer already at the preparatory stage. Attorneys at a Prague-based law firm have extensive experience in setting up funds and know all the “nooks and crannies” of the regulatory framework. 

We can assist you with preparing the fund statute, agreements, AML policies, communication with the CNB, and ongoing supervision of compliance with regulatory requirements. We also have a network of reliable partners—asset managers, administrators, and depositaries—whom we can recommend.

If you have a specific plan and want to implement it safely and without legal surprises, contact us at office@arws.cz. We will advise you on which decisions to make, how to structure the fund, and what steps to take next.

Most frequently asked questions about qualified investor funds

1. Is a qualified investor fund the same concept as a venture capital fund?
No, they are not the same. A qualified investor fund is a legal term (an umbrella designation for all funds intended only for qualified investors). A venture capital fund is a functional term (a designation for a fund that invests in startups and early-stage companies). A QIF may be a venture capital fund, but it does not have to be—it may also be a real estate fund, a bond fund, or a fund investing in commodities. If you are setting up a venture capital fund, it will almost certainly be a QIF, but the reverse is not true.

2. What are the most common legal pitfalls when establishing a QIF?
From our experience: most often, we see founders fail to think through the fee structure and incentives for founders vs. investors. This later leads to disputes or to the fund not being attractive to investors. The second common mistake is insufficient preparation of documentation for the CNB—some companies think they can “handle it themselves” and then end up with a rejected application. The third mistake is underestimating AML/KYC procedures—these are not just “paperwork,” but real protection for investors and the fund itself. Our attorneys in Prague see all of these issues and can prevent them. Contact us at office@arws.cz.

3. If I have a financial problem in my business, can I solve it by establishing a QIF and raising capital?
It is a tempting idea, but be careful. A QIF is not a “rescue tool” for companies in trouble. Investors in a QIF give you money with the expectation of future returns—not to save your business. If you have serious problems in your business, you do have the right to look for investors, but you must be honest with them and provide all relevant information. If you were to conceal problems and try to save your business using QIF funds without their knowledge, this could constitute a breach of the duty of due managerial care, fraud, or another form of misuse of information, leading to serious legal consequences, including criminal liability. Rather, think of a QIF as a tool for new ambitious projects that have clear potential but simply lack capital.

4. What are the tax implications for me as a founder?
As a founder, you are an individual. If you “take” a success fee or other income from the fund, you will have to tax it as business income. The rate ranges from 15–23 percent, depending on the amount of income and other circumstances. The fund itself pays corporate income tax at a rate of 5 percent, or 19 percent for certain types from 2026. These fund-level taxes do not directly affect you as a founder—they are taxes of the fund itself. However, if you wish to maximize your net income, you should consult a tax advisor regarding the optimal structure and timing of income. Our attorneys can be your partners in these consultations.

5. What if the asset manager or depositary changes during the life of the fund?
This is technically possible, but administratively and legally complex. You must find a new asset manager/depositary, notify the CNB, ensure a smooth transfer of assets, etc. For this reason, it is very important to choose the right partners when establishing the fund—partners you can “stick with” and trust. If you chose an unstable asset manager and later had to replace them, it would be a problem. Our attorneys in Prague will help you select the right partners and prepare high-quality agreements designed so that, if necessary, the transition can be carried out without unnecessary complications.

6. Is it better to establish a QIF in the Czech Republic, or abroad (e.g., in Luxembourg)?
This is a legitimate question, especially if you have foreign investors. A QIF in the Czech Republic is regulated by Czech legislation and the CNB—meaning you are subject to Czech audits and direct supervision. A Luxembourg fund would be subject to Luxembourg regulations and could have certain advantages, for example in tax planning. But on the other hand: if you want access to the Czech market, you must still comply with Czech laws. The decision on where to establish the fund should be part of a global tax and legal strategy and should not be made without consulting a tax advisor and an attorney. Our Prague-based law firm has experience with international funds and can help you with this choice. Our ARROWS International network also has contacts in countries where QIFs are commonly established.

Notice: The information contained in this article is of a general informational nature only and is intended for basic orientation in the matter under the legal framework as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we maintain professional liability insurance with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

Read also: