Operating licences and Registration of alternative investment fund managers

The management and operation of alternative investment funds are governed by Act No. 45/2020 (in icelandic) on Alternative Investment Fund Managers.

Entities managing alternative investment funds must either be authorised to do so or be registered with the Central Bank of Iceland (CBI).

An alternative investment fund is a collective investment undertaking, including investment compartments thereof, which raises capital from investors with a view to investing it collectively in accordance with a previously disclosed investment policy for the benefit of those investors and which is not authorised as a UCITS pursuant to Act No. 116/2021 on Undertakings for Collective Investment in Transferable Securities (UCITS), cf. Point 29 of the Paragraph 1 of Article 3 of the Act on Alternative Investment Fund Managers.

An alternative investment fund manager managing one or more alternative investment funds must obtain authorisation where the total assets under its management exceed the equivalent of:

1. EUR 100 million in Icelandic krónur, based on the official reference exchange rate as published from time to time; or
2. EUR 500 million in Icelandic krónur, based on the official reference exchange rate as published from time to time, where the manager manages only alternative investment funds that are unleveraged and in respect of which no redemption rights may be exercised during a period of five years following the date of the initial investment in each alternative investment fund, cf. Article 6 of the Act.

An alternative investment fund manager may also, subject to specific authorisation, provide the following services. In providing such services, the manager must comply with Act No. 115/2021 on Markets in Financial Instruments:

1. Asset management.
2. Investment advice.
3. Safekeeping and administration of units or shares of collective investment undertakings.
4. Reception and transmission of orders in relation to financial instruments.

An application for authorisation as an alternative investment fund manager must be submitted in writing and accompanied by the required information, cf. Chapter II of the Act. The CBI has prepared an overview of the information that it requires to accompany an application.

The CBI supervises the activities of alternative investment fund managers and alternative investment funds, cf. Chapter XI of the Act.

As part of the processing of an application for authorisation as an alternative investment fund manager, the CBI assesses the fitness and propriety of the manager’s board members and managing director pursuant to Article 14 of the Act, cf. Articles 52 and 52a of Act No. 161/2002 on Financial Undertakings.

As part of the processing of an application for authorisation as an alternative investment fund manager, the CBI may be required to assess whether its shareholders are suitable to hold a qualifying holding pursuant to Article 16 of the Act, cf. Chapter VI of the Act on Financial Undertakings.

An application for registration as an alternative investment fund manager must be submitted in writing and accompanied by the required information. The CBI has prepared an overview of the information that it requires to accompany an application.