How to Obtain a SICAV License in the Czech Republic:

Are you a foreign investor or international company considering an investment fund in the European Union? This guide provides clear, actionable answers for establishing a licensed SICAV in the Czech Republic, a premier European safe harbour. If you are looking for an English-speaking lawyer to navigate the Czech National Bank's licensing process, you will find the specific steps, requirements, and strategic advantages outlined here. We will explain how to leverage this powerful investment vehicle.

Do you need advice on this topic? Contact ARROWS Law Firm at office@arws.cz or call +420 245 007 740. Your question will be answered by "Mgr. Marek Hučík", an expert on this topic.

Why Choose a Czech SICAV for Your International Investments?

For international investors, selecting the right jurisdiction and legal structure is a critical strategic decision. The Czech Republic offers a unique combination of stability, tax efficiency, and structural flexibility through the SICAV (société d'investissement à capital variable), making it an increasingly attractive base for European investment activities.

A Gateway to Europe: The Power of a Licensed EU Fund

Establishing an investment fund within the Czech Republic provides the immediate advantage of a licensed European company, a status that carries significant weight in the global financial community. This offers a robust and transparent alternative to traditional offshore jurisdictions, which are facing increasing regulatory pressure and scrutiny worldwide. 

As a stable member of the European Union, the Czech Republic provides a "safe European harbour" with a spotless reputation, robust asset protection under EU law, and access to a large network of international double taxation treaties.

The legal framework for Czech investment funds is harmonized with core EU directives, including the Alternative Investment Fund Managers Directive (AIFMD) and regulations for Undertakings for Collective Investment in Transferable Securities (UCITS). This ensures that a Czech SICAV operates under a regulatory standard recognized and trusted by the world's leading financial institutions, simplifying cross-border operations and capital raising.

This highly developed legal protection exists within a market that still holds significant growth potential. The Czech capital market is considered less saturated than those in traditional fund destinations like Luxembourg or Ireland, with local investment habits historically leaning towards more conservative, bank-based financing. 

This environment presents a distinct opportunity for sophisticated foreign investors who can introduce innovative strategies and capital to a market with untapped potential. In essence, the Czech Republic offers a compelling proposition: the growth dynamics of an emerging market combined with the legal security and investor protection of a mature European jurisdiction.

Unlocking Tax Efficiency: The 5% Corporate Tax Advantage

One of the most compelling reasons to establish a SICAV in the Czech Republic is the highly preferential corporate income tax rate. While standard Czech corporations are subject to a 19% tax on profits, qualifying investment funds benefit from a significantly lower rate of just 5%. This is not an incidental loophole but a deliberate legislative feature designed to foster the growth of the fund business and attract international capital.

This advantageous tax rate transforms the SICAV from a mere investment vehicle into a powerful tool for strategic financial planning. For many international businesses, it serves as the catalyst for onshoring activities previously held in less transparent offshore centers. By consolidating assets within a Czech SICAV, a company can achieve substantial tax optimization while operating within a legitimate and respected EU framework. The structure is versatile enough to serve as a holding entity for a wide range of assets, including real estate, private equity, and venture capital portfolios.

The ability to create legally and financially segregated sub-funds further enhances this strategic capability. A single licensed SICAV can house multiple, distinct investment strategies, effectively acting as a diversified, tax-efficient European headquarters for a company's entire investment portfolio. This allows businesses to restructure their global operations, move away from problematic offshore entities, and build a respectable, consolidated, and highly profitable European presence.

Built for Flexibility: Variable Capital and Strategic Sub-Funds

The full Czech name for a SICAV is akciová společnost s proměnným základním kapitálem, or a joint-stock company with variable share capital. This structure is the key to its operational flexibility. Unlike a traditional company, a SICAV's capital can increase or decrease as investors purchase or redeem their shares, without requiring complex amendments to the commercial register or formal shareholder resolutions. This "open-ended" nature provides superior liquidity for investors and simplifies capital management for the fund's operators.

The SICAV's most powerful feature is its ability to create an unlimited number of sub-funds. Each sub-fund operates as a separate, ring-fenced pool of assets and liabilities, with its own distinct investment strategy and its own class of investment shares. This allows a single SICAV to function as an "umbrella fund," offering tailored investment opportunities to different groups of investors under one efficient administrative and regulatory roof. For example, one sub-fund could focus on Czech real estate, another on European tech startups, and a third on global bonds, all while benefiting from shared operational costs and a single license.

The SICAV Licensing Process with the Czech National Bank (ČNB)

Obtaining a license for a SICAV involves a thorough approval process with the Czech National Bank (ČNB), the country's central bank and financial market supervisor. A successful application requires careful preparation and a clear understanding of the regulatory requirements.

Choosing Your Path: Self-Managed vs. Non-Self-Managed SICAV

The first strategic decision is whether to establish a samosprávný (self-managed) SICAV or a nesamosprávný (non-self-managed) one.

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A self-managed SICAV obtains a full license from the ČNB, allowing it to manage its own investment portfolio and perform its own administration. This path offers complete autonomy and control over the fund's operations. However, it comes with a significantly higher regulatory burden, including more stringent capital requirements and a more rigorous and lengthy licensing process.

A non-self-managed SICAV, by contrast, does not require a full license. It is only registered with the ČNB and must appoint a fully licensed external investment company to manage its assets. This option is faster, less expensive, and administratively simpler to establish, but it requires ceding management control and sharing fees with the external manager. ARROWS provides expert legal consultations to help clients evaluate these trade-offs and select the structure that best aligns with their business goals.

Meeting the ČNB's Key Requirements: A Checklist for Success

The ČNB's review process is designed to ensure that any licensed entity is stable, well-managed, and trustworthy. Applicants must demonstrate their fitness across three core pillars: Personnel, Capital, and Organization.

Personnel Requirements: The individuals nominated for senior management positions must be "sufficiently specialised and suitably qualified," with proven expertise in the financial sector. They must also meet the ČNB's high standards for moral fitness and trustworthiness, which involves a detailed assessment of their professional history.

Capital Requirements: The capital structure of a SICAV is unique and involves three distinct concepts:

1. Registered Share Capital (Zapisovaný základní kapitál): This is the nominal capital associated with the fund's founder shares, which carry voting rights. Czech law allows this to be as low as 1 CZK, greatly simplifying the initial corporate registration process.

2. Initial Capital (Počáteční kapitál): This is the regulatory capital that the fund's management entity must hold. For a self-managed SICAV, this amount is set by law and typically starts at €125,000, depending on the scope of the license. The origin of these funds must be fully transparent and documented.

3. Fund Capital (Fondový kapitál): This represents the total assets raised from investors through the sale of investment shares. For most funds, this capital must reach a minimum threshold of €1,250,000 within 6 to 12 months of the fund's establishment.

Organizational Requirements: The applicant must submit a comprehensive package of internal documentation that proves its operational readiness. This includes a detailed and realistic business plan with financial projections, a description of the services to be provided, and a robust internal control system. This system must include documented procedures for compliance, risk management, internal audit, and anti-money laundering (AML/CFT) measures. ARROWS specializes in drafting this legally required documentation to meet ČNB standards and prevent future penalties.

The Application Journey: From Submission to Approval

The licensing process begins with the preparation of a detailed application and its numerous annexes, which are then submitted to the ČNB's official contact point. By law, the ČNB has up to six months to make a decision, though this period can be paused if the regulator requests additional information or clarification. In practice, foreign investors should anticipate a timeline of 6 to 12 months from submission to final approval.

Throughout this period, maintaining clear and proactive communication with the ČNB is crucial. ARROWS manages this entire journey for its clients, from the initial drafting of documents to representing the applicant before the ČNB, ensuring that any queries are addressed swiftly and accurately to facilitate a smooth and successful outcome.

Navigating Legal & Financial Risks: How ARROWS Protects Your Investment

While the Czech SICAV structure offers immense benefits, its establishment and operation involve navigating a complex and evolving legal environment. Proactive risk management and expert legal counsel are essential for long-term success.

The Evolving Legal Landscape: A Risk and an Opportunity

The primary legislation governing Czech investment funds is Act No. 240/2013 Coll., on Management Companies and Investment Funds (AMCIF). Since its introduction, this act has undergone numerous amendments to better align with EU directives and resolve conflicts with general Czech corporate law. The most recent significant changes took effect in July 2024, demonstrating the dynamic nature of the regulatory landscape.

This constant legal evolution means that compliance is not a one-time event but an ongoing process. Foreign entities cannot simply rely on a translated version of the law, as crucial nuances and recent changes may be missed. Key areas, such as the specific tax treatment of sub-funds, have been the subject of "interpretive disputes" and recent court rulings, while the legal framework for sub-funds has been described as "fragmentary" or incomplete. 

This environment makes specialized, up-to-the-minute legal counsel a fundamental necessity. ARROWS' value lies in its continuous monitoring of these legislative and judicial developments, protecting clients from compliance risks they might not even know exist.

Risk Mitigation Tables

The following tables outline common risks faced by foreign investors during the licensing and operational phases of a SICAV and detail how ARROWS provides targeted legal services to mitigate them.

Navigating the SICAV Licensing Process

Legal Risk and Potential Issues	How ARROWS Helps
Incomplete or Incorrect Application: Submission of an application that fails to meet the ČNB's formal and substantive requirements, leading to delays or outright rejection.	ARROWS provides comprehensive legal consultations to structure the application correctly and drafts all legally required documentation to ensure full compliance from the outset.
Failure to Prove Origin of Capital: Inability to provide transparent, verifiable documentation (tax returns, financial statements) for the initial capital, raising red flags with the regulator.	We guide you in collating the necessary financial proofs and prepare a legal opinion confirming the transparency and soundness of your capital, satisfying ČNB scrutiny.
Unrealistic or Flawed Business Plan: Submitting a business plan with weak financial projections or an unclear operational strategy, which the ČNB deems non-viable.14	Our team, in collaboration with financial experts, helps you develop a robust and realistic business plan, including financial forecasts and a clear development strategy, that meets regulatory expectations.
Unsuitable Management Personnel: Nominating individuals for key management positions who lack the required professional qualifications or fail the ČNB's "trustworthiness" assessment.	ARROWS assists in vetting potential managers and prepares the detailed documentation needed to demonstrate their competence and fitness, preventing personnel-related rejections.
Inadequate Internal Control Systems: Failing to design and document sufficient internal regulations for AML, risk management, compliance, and internal audit.18	We specialize in the preparation of internal company policies, drafting a complete set of interrelated regulations that form a robust and compliant internal control system.
Prolonged Review and ČNB Queries: The application stalls due to repeated requests for information from the ČNB, delaying your business launch and increasing costs.	ARROWS provides full representation before public authorities, managing all communication with the ČNB proactively and responding to queries swiftly and accurately to keep the process moving.

What’s the Next Step? Partnering with ARROWS for a Smooth Launch

Successfully establishing and operating a licensed SICAV in the Czech Republic is a powerful strategic move for any international investor. Navigating its complexities, however, requires an experienced local partner with deep knowledge of both Czech and international law.

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Your Strategic Partner in the Heart of Europe

ARROWS is a leading Czech law firm with a proven track record of guiding foreign clients through the intricacies of the local legal system. Our lawyers have extensive experience supporting over 150 joint-stock companies and 250 limited liability companies, giving us unparalleled insight into Czech corporate and regulatory matters. Through our ARROWS International network, built over 10 years and now operating in 90 countries, we combine deep local expertise with a truly global perspective, ensuring we understand the cross-border challenges and opportunities our clients face.

A Comprehensive Suite of Services

We offer an end-to-end solution designed to ensure your fund is not only licensed successfully but operates on a foundation of long-term compliance and success. From the initial legal consultations on structuring your SICAV and drafting all legally required documentation for the ČNB, to representing you before the public authorities and providing professional training for your employees, our team manages every step of the process.

Contact Us to Discuss Your Project

Whether you are a startup founder with an innovative business idea or an established corporation seeking to optimize your European investments, our team is ready to help. Contact ARROWS today for an initial consultation to discuss how a Czech SICAV can achieve your financial goals. We welcome innovative business ideas and can even connect clients with mutual business or investment interests.