New Law on Alternative Investment Funds Adopted

November 13, 2019

New Law on Alternative Investment Funds Adopted

November 13, 2019

Milan Samardžić

Milan Samardžić


Petra Sretković

Petra Sretković


On its way to becoming an EU Member State, Serbia has been harmonizing its law with the EU acquis. Within the Negotiating Position of the Republic of Serbia for Chapter Nine – “Financial Services”, the RS undertook, inter alia, to transpose Directive 2011/61/EU of the European Parliament on management of alternative investment funds in the national legal framework of the RS by adopting a separate law governing alternative investment funds.

The Alternative Investment Funds Act (Act), entered into force on 19 October 2019 and will be applicable upon expiration of six months from the day of its entry into force, that is, from 20 April 2020, while the provisions governing small investors, public offering and cross-border activity shall be applied from 1 January 2021 or from the date of accession of the RS to the European Union.


The Act defines establishment, activity, and operations of Alternative Investment Fund Management Companies, as well as establishment, organization, and management of Alternative Investment Funds (AIFs), types of alternative investment funds, depositary activities and duties, as well as the competencies of the Securities and Exchange Commission.

Key provisions of the Act which shall start to apply six months after the entry into force of the Act, are the ones regarding:

Managers of alternative investment funds (AIFM) which are legal entities headquartered in the RS whose primary activity is the management of one or more alternative investment funds on the basis of a license issued by the Securities Commission.  The AIFM is established in the form of a limited liability company or a joint stock company which is not a public company, while a large AIFM is established in the form of a two-tier joint stock company. Depending on the value of the portfolio of AIFs managed by the AIFM, the Act differentiates two types of AIFM: small and large.  If the value of the portfolio of AIFs managed by AIFM exceeds 75 million EUR (or 25 million EUR if AIFs use financial leverage), the AIFM must be organized as a large AIFM.  Consequently, if the value of the portfolio of AIFs managed by AIFM amounts to less than the above figure, it can be organized as a small AIFM.  The main difference between small and large AIFM is that some provisions like additional capital, minimum number of the Management Board, compliance monitoring, risk and liquidity management, etc. do not apply to small AIFMs.  There are also capital requirements that AIFM must satisfy in order to conduct business operations.  For a large AIFM, 125.000 EUR in RSD equivalent, 300.000 EUR in RSD equivalent of a closed fund which has its own legal entity with internal management, and 70.000 EUR in RSD equivalent for a small AIFM, or 150.00 EUR in RSD equivalent of a closed-end fund which has its own legal entity with internal management.

Different organizational forms of AIFs: An AIF may be organized as an AIF which can be marketed publicly or as one which can be marketed only to professional investors and semi-professional investors (investors who invest at least EUR 50,000 into one AIF and have proven knowledge and experience in capital markets).  AIFs which can be marketed only to professional and semi-professional investors can be organized in different forms, including venture capital funds and private equity funds.

Depositary: An AIF must have a depositary which is appointed by the AIFM.  In RS, the depositary may be a credit institution with headquarters therein, which has the approval of the Depositary Commission for a specific fund. A depositary is responsible for monitoring the AIFs’ cash flow and keeping AIFs’ assets. The depositary is liable to the AIFM and its members or shareholders.

Article 3 of the Act specifies entities to which the Act does not apply (holding companies; voluntary pension fund management companies, and voluntary pension funds; insurance and reinsurance companies; supranational institutions; national, regional, and local authorities and bodies or other institutions managing funds that support pension and social security systems, etc.).


The objectives of the Act are to provide a greater degree of protection in case of risky investments in alternative investment funds and to define in more detail the rules with respect to alternative investment fund management companies.

Aside from the new legal concept and harmonization with EU law, the goal of this Act is to develop micro, small, and medium-sized enterprises through alternative forms of financing, i.e. through venture capital funds and private equity funds.

The Securities Commission shall enact bylaws which will further regulate AIFMs, AIFs, and depositaries within six months from the entering of the Act into force.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.


Milan Samardžić , Partner

Petra Sretković, Trainee


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