Qualified Investors’ Funds (FKI) in the Czech Republic: Practical Guide

JUDr. Jakub Dohnal, Ph.D., LL.M.
JUDr. Jakub Dohnal, Ph.D., LL.M.
11.5.2026 | ARROWS law firm

A qualified investors’ fund (FKI) is a popular tool for professional investors and capital groups that want to delegate the management of their assets to experts. In the Czech Republic, it is a legally regulated investment vehicle that offers significant flexibility while also imposing specific obligations. If you are considering establishing an FKI, joining one, or have questions about its operation, you should understand not only the theoretical fundamentals but, above all, the practical impact on your business and tax position.

The photograph shows a specialist addressing matters relating to a qualified investors’ fund.

What a qualified investors’ fund is and its legal framework

A qualified investors’ fund (Fond kvalifikovaných investorů, “FKI”) is an investment vehicle understood as collective investment managed by an asset manager on behalf of several investors. Investors contribute capital to the fund and, in return, obtain shares in the fund’s returns and assets. Unlike funds intended for the general public, FKIs are intended exclusively for qualified investors and are subject to less stringent regulation.

In the Czech Republic, an FKI is regulated primarily by Act No. 240/2013 Coll., on Management Companies and Investment Funds (the “ZISIF”). This legislation, transposing the European Alternative Investment Fund Managers Directive (AIFMD), sets out specific rules for the establishment, operation, management, and liquidation of an FKI. Before commencing its activities, an FKI must be approved and registered by the Czech National Bank (ČNB), which supervises the financial market.

Key characteristics of an FKI include:

  • Investor: qualified investors only.
  • Definition of a qualified investor: These are entities that meet the criteria under Act No. 240/2013 Coll., on Management Companies and Investment Funds (ZISIF), and related legislation governing investment in qualified investors’ funds. They include, for example, professional clients (banks, insurance companies, investment firms), or natural or legal persons who invest at least the equivalent of EUR 125,000 and provide a written declaration that they are aware of the risks associated with the investment. Another option is where the investor demonstrates experience or knowledge and invests at least CZK 1,000,000.
  • Fund manager (asset manager): Must hold the relevant authorisation  (or the investment fund itself may act as the manager if it is an investment fund in the legal form of an investment company (a so-called self-managed investment fund)).
  • Management fee: Typically set out in the fund’s constitutional documents, in particular in the statute or the management rules.
  • Settlement: Must be carried out in accordance with statutory and contractual requirements that form part of the fund documentation.

The legislative framework for FKIs is continuously evolving, particularly in light of European initiatives. In recent years, reporting and transparency requirements in the area of sustainability (ESG reporting) have been significantly strengthened, affecting many FKIs as well. These rules, based primarily on the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD), impose additional formal and legal obligations on funds, which will be reflected in their reporting in 2025 and 2026.

How a qualified investors’ fund works in practice

An FKI’s activities take place in several phases, each with its specific rules and requirements:

Phase 1: Establishment and registration

The first step is the preparation of the fund’s constitutional documents. For the most common form of an FKI, an investment company with variable share capital (SICAV), the key document is the statute, which must describe in detail:

  • the investment strategy and the type of assets in which the fund invests
  • the fee structure and costs
  • the rights and obligations of investors
  • the mechanism for entering and exiting the fund
  • other requirements under the ZISIF

All documents must comply with the ZISIF and professional standards. Once the documentation has been prepared, an application for registration is filed with the ČNB. The ČNB typically decides on the approval of the statute within 60 days of submitting a complete application.

Many entities encounter their first issue here: an insufficiently drafted statute, an unclear description of the investment strategy, or formal errors lead to the application being returned for revision. This extends the timeline and increases costs.

Phase 2: Capital raising and fund management

After registration and obtaining the authorisation, the fund may start accepting investors. Each new investor must be verified as a qualified investor before being admitted.

If an entity that does not in fact meet the criteria of a qualified investor were to be among the investors, the fund faces significant fines from the ČNB and, theoretically, even the loss of its authorisation. Confirmation of meeting the conditions is archived.

The fund manager then manages the capital in accordance with the statute (or other constitutional documents). It must keep detailed records of all transactions, assets, returns, and fees. All of this information becomes part of audits and reports that the fund periodically submits to the ČNB and other relevant authorities.

Phase 3: Reporting and compliance

The Czech National Bank and other relevant authorities receive various reports from the fund:

  • Annual financial statements with the audit report
  • Regular reports on compliance with the investment policy and risks
  • Conflict of interest reports
  • Sustainability reports (so-called ESG reporting) under  and, where applicable, other regulations

Since 2023, with the full effectiveness of certain parts of SFDR Level 2 and with the introduction of obligations arising from the CSRD for larger entities (for the 2024 financial year with reporting in 2025, and for other companies with reporting in 2026), ESG reporting requirements for FKIs have tightened significantly. This means additional formal and legal obligations that many older funds had to address in cooperation with attorneys.

Phase 4: Investor exit and liquidation

An investor may exit the fund by selling its interest or otherwise in accordance with the fund documentation (e.g., the statute or the management rules). If the fund is in liquidation, it must settle with all investors in a clearly defined manner in advance. Disputes often arise here regarding the fair allocation of assets if the processes are not clearly set.

Practical questions on establishing and managing an FKI

1. What are the exact conditions for a qualified investor?
    A qualified investor may be a natural person who meets the conditions. They make a written declaration that they are aware of the risks of investing in a qualified investors’ fund and, at the same time, invest at least:

  • EUR 125,000, or
  • CZK 1,000,000, provided that the fund administrator or manager confirms in writing that the investment corresponds to their financial background, investment objectives, and investment experience.

2. Must the fund be registered even if it has a small number of qualified investors?
    Yes, every FKI that falls under the regulation of ZISIF must be duly registered with the CNB (Czech National Bank) and is subject to its supervision. The number of qualified investors may be small (e.g., two founding investors), but this does not change the obligation to register and comply with the regulatory requirements. Operating a fund without proper registration would be illegal, and all transactions could be challengeable.

3. What if, over time, the number of investors decreases to one?
    If the fund became a single-investor fund, it would cease to meet the essence of collective investment and would lose its status as an investment fund under ZISIF. In such a case, the fund would have to initiate a liquidation process or transform into another legal form that would correspond to the number of investors and the applicable regulation. This situation cannot be ignored; it is necessary to communicate with the CNB regarding the next steps.

Tax and regulatory aspects of an FKI

Income tax on investments in an FKI depends on several factors: who the investor is (an individual or a legal entity), the legal form of the FKI, and the type of income generated (dividend, interest, capital gain).

For individuals, returns from units in an FKI are usually taxed at the standard personal income tax rate (currently 15%). There are exceptions for long-term holding of investment instruments (the so-called time test) or certain types of funds, but the general rule is 15%.

For legal entities, returns form part of taxable income and are subject to the standard corporate income tax rate (currently 19%).

Key risk: Many entities misinterpret the tax status of their FKI and do not pay the correct taxes, which then leads to sanctions from the Financial Administration, including penalties and default interest. The attorneys at ARROWS, a Prague-based law firm, will help you set up tax reporting correctly and avoid fines.

Another significant regulatory aspect is the obligation to keep a proper register of units and changes of owners. This is particularly crucial for an FKI in the form of a SICAV for transparency and legal certainty. If an investor waives their units or sells them, this change must be properly recorded. If it is not, disputes over ownership and the inability to properly enforce rights arising from the units may occur.

Table of the most common risks and their solutions

Potential issues

How ARROWS can help (office@arws.cz)

Incorrect investor classification – The investor does not meet the criteria of a qualified investor but is in the fund; the CNB discovers this during an audit.

We will verify the status of each potential investor under the applicable legislation, ensure proper documentation to evidence their qualified status, and, if a breach is identified, assist with communication with the CNB and with identifying remedial measures.

Breach of obligations towards the CNB – The fund does not submit reports on time, does not process ESG data, or does not keep a proper register, or the fund’s statute does not reflect reality; significant fines may be imposed.

We will implement comprehensive compliance procedures, monitor all deadlines, ensure correct and timely reporting and communication with the CNB, and, where necessary, represent you in administrative proceedings or inspections.

Disputes between investors regarding the value of units or settlement – An investor complains that they were misled or disagrees with the value of their position upon exit.

We will set up the contractual framework and the fund’s constitutional documents (e.g., the statute) clearly and transparently to minimize future disputes.

Incorrect tax reporting – The fund or the investor did not report returns correctly, leading to sanctions from the Financial Administration.

We will map all tax obligations of the fund and its investors, prepare correct tax filings, and, in the event of an audit or dispute with the Financial Administration, represent you and assist with communication.

Issue with fund liquidation – The fund wants to terminate, but investors cannot agree on settlement, or it is unclear how the assets will be allocated.

We will prepare a complete liquidation plan in accordance with Czech law and the fund documentation, ensure transparent settlement, communicate with the CNB, and resolve any disputes between participants so that the liquidation proceeds smoothly.

Who a fund of qualified investors is suitable for

An FKI has its group of ideal users, but also a group for whom it may not be suitable.

An FKI is suitable for:

  • Groups of entrepreneurs or investors who want to delegate the management of their assets to a professional manager and thereby share costs and specialist know-how.
  • Capital groups and family offices seeking an efficient and regulated alternative to direct ownership of real estate, financial assets, or other assets.
  • Foreign investors who want to invest in a portfolio of Czech or selected assets without the complications of individual ownership and with regulatory certainty.
  • Institutional investors such as pension funds, insurance companies, or corporate investors looking for a way to efficiently manage a certain part of their portfolio.
  • Owners of real estate or companies who want to manage their real estate portfolio or company portfolio long-term within a transparent and managed structure, with the option of gradual transfer of assets.

An FKI may not be suitable for:

  • An individual who wants to invest a smaller amount – minimum investments in an FKI are usually high (from hundreds of thousands up to millions of Czech crowns or euros).
  • Investors who require maximum liquidity – exiting an FKI takes longer than withdrawing from a standard bank account or selling a tradable security and is tied to the fund’s contractual terms.
  • Entities that do not want the burden of regulation and audits – an FKI involves regular reporting, supervision, audits, and related administration.
  • Entities without a clear investment strategy – before establishing or entering an FKI, you need to have a clear idea of what you want to invest in and why.

The attorneys at ARROWS, a Prague-based law firm, can help you assess whether an FKI is suitable for your specific situation and compare it with other forms of shared asset management, such as trust funds or holding structures.

Most common questions on FKI regulation and legislative changes

1. How does an FKI differ from a standard public fund?
    The main difference lies in the circle of investors and the related level of regulation. An FKI is intended exclusively for qualified investors and is subject to less stringent rules than funds for the general public (retail funds). Retail funds may have an unlimited number of investors, including small individual investors, and are regulated more strictly with a view to consumer protection.

 

2. What has changed in regulation in recent years?
    Significant changes have occurred primarily in the area of ESG reporting. With certain parts of the SFDR Regulation becoming fully effective as of 2023 and with the introduction of the CSRD Directive, which affects reporting for the 2024 financial year (publication in 2025) and further in 2026, FKI (especially those classified as “Article 8” or “Article 9” funds) must report in greater detail on the impact their investments have on the environment and society. This requires a review of internal processes and documentation. Attorneys from ARROWS, a Prague-based law firm, assist with updating documentation and processes in line with these new requirements.

3. What is the auditor’s role?
    The auditor is an independent expert who verifies the fund’s financial statements each year and the compliance of its operations with applicable legal regulations and its statutes. The audit is mandatory and its results are reported to the Czech National Bank (ČNB). If the auditor were to identify significant deficiencies or errors, the fund would have to adopt remedial measures.

4. Can I participate in an FKI even if I am not an investor from the Czech Republic?
    Yes, foreign investors may become members of an FKI provided they meet the definition of a qualified investor under Czech legislation and any additional conditions arising from the fund’s documentation are met. However, it is crucial to carefully assess the legal and tax implications for the foreign investor, especially with regard to their tax residency and regulation in their country of origin.

5. How long does FKI registration with the Czech National Bank (ČNB) take?ČNB has a statutory period of 60 days to assess an application for approval of an investment fund’s statutes. In practice, this period may be extended if ČNB returns the documents for completion due to deficiencies. With high-quality legal preparation from ARROWS, a Prague-based law firm, the risk of the application being returned and the process being prolonged is significantly reduced.

Related questions on FKI legal documentation

1. What must the statutes or founding documents of an FKI contain?
    The statutes (for a SICAV) or other founding documents (for other forms of FKI, e.g., a trust fund) must describe in detail the investment objectives, strategy, permitted risks, fees, investors’ rights and obligations, entry and exit mechanisms, settlement mechanisms, asset valuation rules, and other relevant information. The documents must be clear, accurate, and complete. Errors or ambiguities in these documents often lead to disputes between investors or criticism from ČNB.

2. What role do Participation Agreements or subscription declarations play?
    In addition to the fund’s founding documents (e.g., the statutes), the individual contractual relationship between the fund and the investor is usually established by a subscription declaration or a participation agreement. These documents specify the investor’s specific rights and obligations vis-à-vis the fund and must be consistent with the fund’s general documents (the statutes). They should be clear and should not deviate from the statutes. Proper and precise drafting of these documents is key to legal certainty for both parties.

3. Do all documents have to be in Czech?
    The official version of documents submitted to ČNB must always be in Czech. For foreign investors, certified translations into a foreign language (e.g., English) can be prepared, but the Czech version remains legally binding for the purposes of Czech regulation.

Final summary

A fund of qualified investors is an efficient and legally robust instrument for the professional management of pooled assets in the Czech Republic. That is precisely why it works best when everything is done according to the rules—from correctly classifying investors, through drafting the statutes, to consistently fulfilling obligations towards ČNB.

The practical reality, however, is that the legal and regulatory framework is complex and includes many specific obligations, breaches of which are common. Errors in documentation, incorrect tax reporting, compliance issues, or disputes between investors may lead to significant fines from the regulator, infringements of rights, sanctions, or protracted court disputes.

If you want to establish an FKI, join one, or address issues with an existing fund, it is safer and more efficient to work with attorneys who understand the matter from the outset. Attorneys from ARROWS, a Prague-based law firm, are well versed in investment law, ČNB regulation, and fund administration. They can assist you from document preparation, through communication with regulators, to resolving practical issues and disputes.

If you are interested in advice regarding FKI, have questions about regulation, or want to address a specific issue, contact the ARROWS team at office@arws.cz.

Most frequently asked questions about funds of qualified investors in the Czech Republic

1. What is the minimum contribution to an FKI?
    The law does not set a uniform minimum contribution for an FKI; the fund itself determines it in its statutes or founding documents. Typically, this is an amount ranging from hundreds of thousands to several million Czech crowns (e.g., in line with the definition of a qualified investor, which often refers to an investment equivalent to EUR 125,000). If you have a smaller amount of capital, verify the terms of the specific fund. Attorneys from ARROWS, a Prague-based law firm, will help you understand the terms and, if appropriate, negotiate with the fund.

2. Can I sell my interest in an FKI?
    Selling an interest is usually possible, but it must comply with the fund’s articles and other constitutional documents. In some cases, the consent of the fund manager or other investors is required (so-called pre-emption right). The sale may also be subject to income tax (typically 15% for individuals, unless the time test is met). If you wish to sell, the attorneys at ARROWS, a Prague-based law firm, will help you formulate the offer and ensure the transaction is handled correctly from both a legal and tax perspective.

3. What happens to my interest if the fund manager gets into trouble?
    The fund’s assets are strictly segregated from the assets of the fund manager. If the fund manager were to face financial difficulties or insolvency, your assets in the fund should not be at risk, as they are considered the assets of the fund’s investors, not of the manager. Compliance with this principle is supervised by the fund’s depositary and the Czech National Bank (ČNB). The attorneys at ARROWS, a Prague-based law firm, can help you verify the security and insurance of your assets.

4. What are the tax consequences of investing in an FKI?
    Investing in an FKI as such (i.e., subscribing for units) is generally not taxed. Taxation applies only to income generated by the fund and subsequently distributed to investors (e.g., dividends, interest, capital gains). The tax rate is typically 15% for individuals and 19% for legal entities. The attorneys at ARROWS, a Prague-based law firm, will ensure the correct setup of tax reporting for both the fund and the investors.

5. Is an FKI regulated even if all investors are from abroad?
    Yes. If an FKI operates in the Czech Republic (e.g., it has its registered office here, is established under Czech law, or is managed by an entity licensed by the Czech National Bank (ČNB)), it is subject to Czech legislation and ČNB regulation regardless of where the investors come from or where the investments are located. The attorneys at ARROWS, a Prague-based law firm, can assist with the proper registration process and compliance with Czech as well as relevant international regulations.

6. How is an FKI liquidated?
    Liquidation of a fund means the gradual monetisation of all fund assets, settlement of liabilities, and subsequent payment of the liquidation balance to investors according to their interests. The procedure must comply with the fund’s articles and the Act on Investment Companies and Investment Funds (ZISIF). Liquidation may take several months to years depending on the complexity of the fund’s portfolio. The attorneys at ARROWS, a Prague-based law firm, will ensure a transparent and legally compliant liquidation process, including communication with the Czech National Bank (ČNB).

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic guidance on the topic based on the legal status as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS, a Prague-based law firm, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we are insured for professional liability 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 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.

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