Tirana, Albania

Undertakings for Collective Investment: Albania Adapts Itself to European Standards

By Evis Jani, Gjika & Associates, Attorneys at Law

On 30 April 2020, the Albanian parliament approved Law 56/2020 “On the Undertakings for Collective Investment” (Law 56/2020) which entered into force on 20 June 2020. This legal change is being undertaken at a time when the market dynamics of investment funds have undergone major developments that do not meet the requirements of European markets.

Law 56/2020 regulates the establishment, registration, and operation of (i) fund managing companies, (ii) managing companies of undertakings for collective investment with public offer and alternative investment fund managers (AIFM), (iii) depositary of undertakings for collective investment, and (iv) undertakings for collective investment (UCI).

Further, the new law regulates the sale and marketing of UCI established in Albania or abroad, through local and foreign fund managing companies, and marketing and management of UCI outside Albania by management companies established in Albania.

Law 56/2020 intends partial harmonisation of Albanian legislation with the EU directives, namely, Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations, and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS Directive), and Directive 2011/61/ EU of the European Parliament and of the Council of 08 June 2011 on alternative investment fund managers and amending Directives 2003/41/ EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (AIFMD Directive).

Additionally, such law intends to (i) make the fund sector more attractive to the investors, create a wider range of funds suitable for Albanian and European markets, mobilise more savings in capital markets and the economy, and (ii) increase the protection of the investor by increasing the requirements related to the evaluation and calculation of the price of collective investment enterprises with public offer.

Main New Provisions Introduced by Law 56/2020

  1. In line with EU requirements, the management company wishing to manage both undertakings for collective investment on transferable securities (UCITS) and open-ended funds or public offering intervals that are alternative investment funds, must have two licenses: (i) a license as a management company of UCITS and (ii) a license as alternative investment fund managers (AIFM). The same need for two licenses would apply to the depositor of UCITS and alternative investment fund (AIF). However, as a transitional provision until Albania joins the EU as a member, the law provides for the possibility of operating with a single license as a management company and as depositors, thus enabling the entity that has a license as a management company of UCITS, to manage AIF as well.
  2. Investors are classified into professional investors and non-professional investors.
  3. Foreign investments are recognised for public offering, based on the UCITS Directive.
  4. New forms of organisation are introduced, such as AIF, in compliance with the UCITS Directive.
  5. There are specific rules for the licensing, operation, and supervision of AIFM for professional clients and the managing companies authorised for the management of funds with public offer.
  6. More competencies for Financial Supervisory Authority (FSA) as the regulatory authority have been introduced, such as the right to conduct investigations, in addition to inspections, of any entity established and licensed under this law.
  7. There are specific rules on the cross-border management and marketing of UCI to comply with the requirements of the UCITS. However, such provisions shall enter into force upon issuance of specific regulation by FSA, but not later than the date Albania joins the EU.
  8. There are specific rules on the procedures related to the merger and acquisitions of funds, as well as on the liquidation and dissolution of the funds, the managing companies, and the depositors.

Key Issues

The following types of UCI may be established under Law 56/2020:

  1. UCI with public offer, which may be established only by licensed companies established in Albania and may be organised as:
    a. Undertakings with open participation in the form of a contract (investment fund); or
    b. Contract-shaped interval funds; a new form that suits low-liquidity securities markets because they sell and repay quotas only twice a year (technically these are alternative investment funds); or
    c. Enterprises with closed participation in the form of a company (fixed capital investment company) and in the form of a contract (investment funds) which are suitable for non-liquid investments, such as real estate.
  2. Foreign investments recognised for public offering under the UCITS Directive and any UCITS licensed in an EU country may be advertised in any EU member state or EEA. This is possible by the “recognition” process of UCITSs. However, the automatic “recognition” of UCITS will be applicable when Albania becomes an EU member.
  3. AIF offered to professional clients, which can be open-funded, openended, or closed-ended investment funds, closed-end investment companies, or limited partnerships. AIF offered only to professional investors must be registered with the FSA for sale to professional investors in Albania, regardless of whether they are domestic or foreign funds.

For the purpose of operating as a UCI, a fund-management company, AIFM, depositor, or AIF depositor, a license should be obtained from the FSA. As soon as it is licensed or recognised by the FSA any UCI, fund management company, AIFM, depositor, or the depositor of AIF should register. The registration of the each of the above is published in the FSA website.

For tax purposes, the UCI is considered as the owner of the securities or all assets, as well as the last beneficiary. The management services provided to UCIs is VAT exempted.


Evis Jani

Evis Jani

GGI member firm
Gjika & Associates, Attorneys at Law
Law Firm Services
Tirana, Albania
T: +355 4 24 00 900
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Published: GGI Insider, No. 108, July 2020 l Photo: Matthias Krüttgen - stock.adobe.com

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