What are the key regulatory steps for establishing a private equity fund in Albania and securing investor commitments?

Hello

Establishing a private equity fund in Albania requires navigating a developing regulatory landscape, with the primary oversight from the Albanian Financial Supervisory Authority (AFSA). The key legal framework is the Law on Collective Investment Undertakings, which governs Alternative Investment Funds (AIFs), the category under which a private equity fund would typically be established.​

Regulatory Approvals and Licensing
To establish a private equity fund in Albania, the primary regulatory body to engage with is the Albanian Financial Supervisory Authority (AFSA). The fund must receive authorization from the AFSA before it can operate.​

The main piece of legislation governing this process is the Law on Collective Investment Undertakings, which came into effect on June 20, 2020. This law provides the framework for the authorization, supervision, and oversight of Alternative Investment Funds (AIFs). While this law is central, Albania's legal framework has been described as somewhat fragmented, with other relevant laws including the Law \"On Securities\" (2008) and the Law \"On Banks in the Republic of Albania\" (2006).​

For the investments the fund plans to make in local small and medium-sized enterprises (SMEs), especially if they qualify as \"strategic investments,\" you may need to comply with Law No. 55/2015, \"On Strategic Investments\". This involves submitting applications to the Albanian Investment Development Agency (AIDA) with detailed documentation.​

Investor Disclosures
When raising capital, firms are required to provide certain disclosures to both regulators and investors. Under the Law on Collective Investment Undertakings, a fund must regularly disclose its risk management processes, including the main markets and instruments it trades in, its principal exposures, and any concentrations of risk. For investments that fall under the \"strategic investment\" category, the investing entity must provide an investment business plan, a financing plan, and an assessment of the project's social and economic impact.​

Formation Timeline
The specific timeline for the formation of a private equity fund in Albania is not detailed in the available information. The process would involve preparing the required legal and financial documentation, submitting an application to the AFSA, and undergoing the authority's review and authorization process.

Ongoing Compliance Obligations
Once established, a private equity fund in Albania has several ongoing compliance responsibilities. These include:​

Continuous Monitoring: The fund will be under constant monitoring by the AFSA.​

Financial Reporting: Firms must file annual, auditor-certified accounts and other periodic financial reports with the AFSA.​

Risk Management Disclosure: Regular reporting on risk management practices, including markets, instruments, and risk concentrations, is mandatory.​

AML/CFT Compliance: The fund must adhere to Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations, which includes performing customer due diligence.​

General Reporting: Other annual filings, audits, and reporting obligations may be required.​

Tax Considerations
Albania's tax policy does not currently offer special holidays or preferential treatment for investments in the capital market, including private equity.​

Taxation of the Fund: Capital gains realized by the fund are generally treated as taxable income and are subject to the corporate income tax rate, which can be 0%, 5%, or 15%.​

Taxation of Investors: For individual investors, income derived from investments is subject to a personal income tax rate of 15%. However, income from dividends is taxed at a lower rate of 8%.​

Capital Gains: The taxable income from the sale of financial securities is calculated as the difference between the sale price and the purchase price. Any losses incurred from the sale of a security can be used to offset taxable investment income from other securities within the same tax year. The tax treatment for income from divestiture is similar to that of passive income sources like government bonds, which some view as a disincentive for venture capitalists.​

Hello

Establishing a private equity fund in Albania requires navigating a developing regulatory landscape, with the primary oversight from the Albanian Financial Supervisory Authority (AFSA). The key legal framework is the Law on Collective Investment Undertakings, which governs Alternative Investment Funds (AIFs), the category under which a private equity fund would typically be established.​

Regulatory Approvals and Licensing
To establish a private equity fund in Albania, the primary regulatory body to engage with is the Albanian Financial Supervisory Authority (AFSA). The fund must receive authorization from the AFSA before it can operate.​

The main piece of legislation governing this process is the Law on Collective Investment Undertakings, which came into effect on June 20, 2020. This law provides the framework for the authorization, supervision, and oversight of Alternative Investment Funds (AIFs). While this law is central, Albania's legal framework has been described as somewhat fragmented, with other relevant laws including the Law "On Securities" (2008) and the Law "On Banks in the Republic of Albania" (2006).​

For the investments the fund plans to make in local small and medium-sized enterprises (SMEs), especially if they qualify as "strategic investments," you may need to comply with Law No. 55/2015, "On Strategic Investments". This involves submitting applications to the Albanian Investment Development Agency (AIDA) with detailed documentation.​

Investor Disclosures
When raising capital, firms are required to provide certain disclosures to both regulators and investors. Under the Law on Collective Investment Undertakings, a fund must regularly disclose its risk management processes, including the main markets and instruments it trades in, its principal exposures, and any concentrations of risk. For investments that fall under the "strategic investment" category, the investing entity must provide an investment business plan, a financing plan, and an assessment of the project's social and economic impact.​

Formation Timeline
The specific timeline for the formation of a private equity fund in Albania is not detailed in the available information. The process would involve preparing the required legal and financial documentation, submitting an application to the AFSA, and undergoing the authority's review and authorization process.

Ongoing Compliance Obligations
Once established, a private equity fund in Albania has several ongoing compliance responsibilities. These include:​

Continuous Monitoring: The fund will be under constant monitoring by the AFSA.​

Financial Reporting: Firms must file annual, auditor-certified accounts and other periodic financial reports with the AFSA.​

Risk Management Disclosure: Regular reporting on risk management practices, including markets, instruments, and risk concentrations, is mandatory.​

AML/CFT Compliance: The fund must adhere to Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations, which includes performing customer due diligence.​

General Reporting: Other annual filings, audits, and reporting obligations may be required.​

Tax Considerations
Albania's tax policy does not currently offer special holidays or preferential treatment for investments in the capital market, including private equity.​

Taxation of the Fund: Capital gains realized by the fund are generally treated as taxable income and are subject to the corporate income tax rate, which can be 0%, 5%, or 15%.​

Taxation of Investors: For individual investors, income derived from investments is subject to a personal income tax rate of 15%. However, income from dividends is taxed at a lower rate of 8%.​

Capital Gains: The taxable income from the sale of financial securities is calculated as the difference between the sale price and the purchase price. Any losses incurred from the sale of a security can be used to offset taxable investment income from other securities within the same tax year. The tax treatment for income from divestiture is similar to that of passive income sources like government bonds, which some view as a disincentive for venture capitalists.​

La création d’un fonds de private equity en Albanie nécessite généralement de structurer le fonds comme un véhicule d’investissement et d’obtenir l’autorisation de l’Autorité albanaise de surveillance financière (AMF), incluant la délivrance de licences pour le fonds et, le cas échéant, pour le gestionnaire de fonds, l’approbation du prospectus/mémorandum de placement privé, des règles internes, la désignation d’un dépositaire et du cadre LBC/conformité. Les investisseurs doivent recevoir des informations préalables intégrales sur la stratégie, les risques, les frais, la gouvernance, l’évaluation et les politiques de sortie ; la constitution prend généralement environ 3 à 6 mois selon la structure et les délais d’examen de l’AMF. Les obligations continues comprennent la communication périodique à l’AMF, les états financiers audités, les rapports aux investisseurs, les contrôles d’évaluation et de conservation, la LBC/KYC, et la conformité à la gouvernance d’entreprise, tandis que la planification fiscale doit traiter de la fiscalité du fonds par rapport au traitement en transparence, des retenues à la source sur les distributions, des plus-values, de la TVA sur les frais de gestion et de l’optimisation des conventions fiscales bilatérales. Nous serions ravis d’évaluer vos objectifs et de proposer la structure réglementaire et fiscale la plus efficace.

Cordialement,

La création d’un fonds de capital-investissement en Albanie nécessite généralement de structurer le fonds comme un véhicule d’investissement et d’obtenir l’autorisation de l’Autorité albanaise de surveillance financière (AMF), y compris la délivrance de licences pour le fonds et, le cas échéant, pour le gestionnaire du fonds, l’approbation du prospectus/mémorandum de placement privé, des règles internes, la nomination d’un dépositaire et le cadre LBC/conformité. Les investisseurs doivent recevoir des divulgations complètes avant investissement concernant la stratégie, les risques, les frais, la gouvernance, l’évaluation et les politiques de sortie ; la constitution dure généralement environ 3 à 6 mois selon la structure et les délais d’examen de l’AMF. Les obligations continues comprennent les rapports périodiques à l’AMF, les états financiers audités, les rapports aux investisseurs, le contrôle de la valorisation et de la conservation, la LBC/KYC et le respect de la gouvernance d’entreprise, tandis que la planification fiscale doit traiter de l’imposition du fonds par rapport au traitement en transparence, des retenues à la source sur les distributions, des plus-values, de la TVA sur les frais de gestion et de l’optimisation des conventions fiscales bilatérales. Nous serions ravis d’évaluer vos objectifs et de proposer la structure réglementaire et fiscale la plus efficiente.

Veuillez agréer,

Cher M. Mohammad,

Merci de nous avoir contactés,

Les questions que vous avez soulevées sont toutes extrêmement pertinentes et mériteraient une discussion plus approfondie adaptée à la structure envisagée et à votre profil d’investisseur.

Nous serions ravis d’organiser un appel afin de discuter de votre dossier en détail et de vous guider à travers le cadre réglementaire albanais applicable.

Merci de nous indiquer vos disponibilités dans les prochains jours, ou n’hésitez pas à proposer un créneau qui vous conviendrait, et nous serons heureux de coordonner en conséquence.

Nos coordonnées : Whatsapp : +355696954854
E-mail : [email protected]

Cordialement,
Shefika Manaj