{"id":112916,"date":"2025-09-11T09:26:38","date_gmt":"2025-09-11T09:26:38","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=112916"},"modified":"2025-09-11T09:26:38","modified_gmt":"2025-09-11T09:26:38","slug":"belgium-alternative-investment-funds","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/belgium-alternative-investment-funds\/","title":{"rendered":"Belgium: Alternative Investment Funds"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-112916","comparative_guide","type-comparative_guide","status-publish","hentry","guides-alternative-investment-funds","jurisdictions-belgium"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Ace Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/09\/Ace-logo.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Ace Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/09\/Ace-logo.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Alternative Investment Funds laws and regulations applicable in Belgium<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the principal legal structures used for Alternative Investment Funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Belgian alternative investment funds (<strong>AIFs<\/strong>) within the meaning of article 4(1)(a) of Directive 2011\/61\/EU as amended from time to time (the <strong>AIFMD<\/strong>) are most commonly structured in the\u00a0form of a limited partnership (<em>commanditaire vennootschap<\/em> \/ <em>soci\u00e9t\u00e9 en commandite<\/em> \u2013 <strong>CommV\/SComm<\/strong>), a private limited liability company (<em>besloten vennootschap \/<\/em> <em>soci\u00e9t\u00e9 a responsabilit\u00e9 limit\u00e9e<\/em> \u2013 <strong>BV\/SRL<\/strong>) or a public limited company (<em>naamloze vennootschap<\/em> \/ <em>soci\u00e9t\u00e9 anonyme<\/em> \u2013 <strong>NV\/SA<\/strong>).<\/p>\n<p>Among these structures, the CommV\/SComm and the BV\/SRL are generally preferred when the legal structure can be freely determined, primarily due to the high degree of flexibility they offer. The CommV\/SComm benefits from a minimal statutory framework, granting managers and investors substantial contractual freedom, provided they comply with mandatory provisions of civil and corporate law. This flexibility makes the CommV\/SComm particularly well-suited for private equity and other alternative investment strategies that require tailored governance and economic arrangements. In contrast, the BV\/SRL remains a regulated legal structure, but has become significantly more adaptable following the entry into force of the Belgian Code of Companies and Associations on 1 May 2019. For example, the concept of share capital has been entirely abolished, allowing for greater flexibility in equity structuring and profit distribution, subject to certain safeguards and statutory limitations.<\/p>\n<p>The choice of legal structure may be constrained by the specific regulatory regime under which the AIF operates. Notable examples include:<\/p>\n<ul style=\"padding-left: 0\">\n<li>a private pricaf (<strong><em>private privak\/pricaf priv\u00e9<\/em><\/strong>): a voluntary tax regime that an AIF can request to adopt, commonly used for private equity investments due to its favourable tax treatment for certain type of investors. This regime is subject to particular regulatory requirements, and the AIF must be structured as a BV\/SRL, NV\/SA, or CommV\/SComm;<\/li>\n<li>specialised real estate investment funds (<strong><em>GVBF\/FIIS<\/em><\/strong>): designed for investments in real estate. This regime is subject to particular regulatory and tax requirements, and the AIF must be structured as an NV\/SA;<\/li>\n<li>public and institutional AIFs: any public AIF (raising equity via public offering) or institutional AIF (raising equity solely from professional investors or those registered as such) must be structured as an NV\/SA. This includes all public and institutional BEVAKs\/SICAVs and BEVEKs\/SICAFs. Please also note that any licensed manager of an AIF (<strong>AIFM<\/strong>) managing a public AIF must be incorporated as an NV\/SA.<\/li>\n<\/ul>\n<p>Ultimately, the selection of the legal structure for a Belgian AIF is determined by various considerations, including\u00a0the\u00a0investment strategy and tax considerations relevant to the fund.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a structure provide limited liability to the investors? If so, how is this achieved?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Investors participating in Belgian AIFs structured as a CommV\/SComm, BV\/SRL, or NV\/SA generally benefit from limited liability. Accordingly, their financial exposure is in principle limited to the\u00a0amount they have committed as equity contributions to the fund.<\/p>\n<p>In the case of a CommV\/SComm, it is important to note that the general partner does not benefit from limited liability. As a mandatory shareholder (and thus investor), the general partner is jointly and severally liable for all debts and obligations of the AIF. To address this potential risk, the general partner is commonly established as a separate legal entity with limited liability, thereby containing exposure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a market preference and\/or most preferred structure? Does it depend on asset class or investment strategy?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Please refer to our answer to question 1.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the regulatory regime distinguish between open-ended and closed-ended Alternative Investment Funds (or otherwise differentiate between different types of funds or strategies (e.g. private equity vs. hedge)) and, if so, how?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Belgian regulatory framework distinguishes between open-ended and closed-ended fund structures as a primary division, generally aligning the choice of structure with the liquidity profile of the underlying assets.<\/p>\n<p>Additionally, certain specialised fund regimes \u2013 such as those for private privaks, real estate funds, and ELTIFs \u2013 are subject to specific regulations considering amongst others their specific purpose, fund&#8217;s operation and tax treatment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limits on the manager\u2019s ability to restrict redemptions? What factors determine the degree of liquidity that a manager offers investors of an Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The ability of a manager to restrict redemptions depends primarily on the fund documentation, as most AIFs and their managers are not subject to hard regulatory limits on redemption restrictions. The documentation sets out the redemption intervals, the conditions under which investors may redeem (if applicable), and the circumstances in which the manager may suspend redemptions. However, investors must be informed \u2013 prior to investing \u2013 of their redemption rights in both normal and exceptional circumstances, as well as the existing redemption arrangements. Please also refer to our answer to question 6.<\/p>\n<p>In practice, the level of liquidity available to investors will depend on factors such as the AIF\u2019s legal structure, its investment strategy, the investor base or the type of AIF (e.g. an ELTIF has specific liquidity requirements). The manager is required to perform stress tests to assess the\u00a0level of liquidity which can be offered.<\/p>\n<p>Finally, managers must ensure (including through stress testing) that each AIF\u2019s investment strategy, liquidity profile, and redemption policy are aligned. This requires that investors can redeem their investments in a manner consistent with the fair treatment of all AIF investors and in accordance with the AIF\u2019s redemption policy and its obligations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are potential tools that a manager may use to manage illiquidity risks regarding the portfolio of its Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The use of tools and special arrangements to manage liquidity should be tailored to the specific circumstances at hand and should, consequently, vary according to the nature, scale and investment strategy of the\u00a0AIF. For most open-ended AIFs and their managers, the Belgian legal framework allows, or requires, the use of liquidity management tools referred to in Directive (EU) 2024\/927 (AIFMD II) such as swing pricing, anti-dilution levies and redemption gates subject to conditions such as: (i) disclosure in fund documentation; (ii) establishment (and disclosure to the Belgian Financial Services and Markets Authority &#8211; <strong>FSMA<\/strong>) of policies on the conditions for their application; (iii) a focus on identifying conflicts of interest that might arise from their use; (iv) periodic reporting on their application; and (v) FSMA notification when activating redemption gates or other liquidity management tools.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on transfers of investors\u2019 interests?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The ability to restrict the transfer of investors\u2019 interests depends primarily on the fund documentation and, in practice, often requires the involvement of the manager. Certain regulatory regimes that a fund may adopt \u2013 such as the ELTIF or the private privak regime \u2013 can either provide for enhanced liquidity or, conversely, impose stricter transfer conditions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other limitations on a manager\u2019s ability to manage its funds (e.g., diversification requirements)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While the AIFMD does not impose strict diversification requirements, certain Belgian fund categories \u2013 notably public AIFs \u2013 may be subject to risk-spreading obligations under national law and regulatory guidelines. Additionally, specific regulatory regimes, such as the private privak regime, ELTIF, or EuVECA regime, can impose further investment restrictions on funds.<\/p>\n<p>Licensed AIFMs are required to implement comprehensive risk and liquidity management systems, monitor and report leverage levels, and appoint a regulated depositary responsible for overseeing fund assets. Sub-threshold AIFMs benefit from a lighter regulatory framework; however, they are still expected to maintain basic risk management practices and appropriately manage conflicts of interest. These regulatory requirements may, in practice, influence the\u00a0development and execution of investment strategies.<\/p>\n<p>Furthermore, Belgian tax ruling practices indicate that portfolio diversification considerations may be relevant and to be taken into account when assessing fund management practices, depending on the asset class of the fund.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the local tax treatment of (a) resident, (b) non-resident, (c) pension fund and (d) sovereign wealth fund investors (or any other common investor type) in Alternative Investment Funds? Does the tax status or preference of investors or the tax treatment of the target investments primarily dictate the structure of the Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Tax treatment at both the fund and investor levels is a key consideration in fund structuring. This treatment depends on several factors, including the fund\u2019s investment focus (e.g. direct investments versus fund-of-funds), its exit strategy, and the legal and tax status of the investors (such as individuals or legal entities). A typical Belgian mid-market closed-ended fund is usually structured to achieve tax transparency, meaning that capital gains on shares in portfolio companies are exempt from tax both at the fund level and at the investor level.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rights do investors typically have and what restrictions are investors typically subject to with respect to the management or operations of the Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The manager of the AIF \u2013 which may be the AIF itself \u2013 is solely responsible for investment management, portfolio management, and risk management. Accordingly, investors generally have limited direct rights in relation to the day-to-day management and operations of the fund.<\/p>\n<p>However, AIFs often put in place certain investor committees to facilitate limited investor involvement. The most common of these, particularly in Belgium, is the investment committee, which \u2013 for the avoidance of doubt \u2013 is not a formal corporate body. It typically includes representatives of cornerstone or strategic investors. The fund documentation may require that certain investment decisions, such as investments exceeding a defined threshold or those outside the scope of the investment policy, be submitted to the investment committee for prior approval. This committee typically also has an oversight role and may be granted certain approval or consultation rights.<\/p>\n<p>Investors may also exert limited governance influence through their right to vote on matters such as the removal of the AIF manager and the approval of the annual accounts.<\/p>\n<p>Beyond these mechanisms and the rights conferred under applicable company law, investors usually benefit from information rights granted under the fund documents. Where the AIF is managed by a licensed AIFM, investors are also entitled to receive an annual report, along with the disclosures required under Article 23 of the AIFMD. These disclosures include, <em>inter alia<\/em>, information on the investment strategy, details of any delegation arrangements entered into by the AIFM, and information on all fees, charges, and expenses borne by investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Where customization of Alternative Investment Funds is required by investors, what types of legal structures are most commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Please refer to our answer on question 1.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are managers or advisers to Alternative Investment Funds required to be licensed, authorised or regulated by a regulatory body?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Belgium, AIFMs are in principle required to obtain a license from the\u00a0FSMA under the Law of 19 April 2014 on Alternative Investment Funds and their Managers, which implements the\u00a0AIFMD.<\/p>\n<p>However, an exemption exists for \u201csub-threshold\u201d managers \u2013 those managing AIFs with assets under management not exceeding EUR 100 million, or EUR 500 million if the AIFs are unleveraged and no redemption rights apply during the first five years of investment.<\/p>\n<p>Sub-threshold managers are not subject to the full AIFMD regime, but must still register with the\u00a0FSMA, submit regular reporting, and comply with basic conduct of business and organisational requirements. Importantly, sub-threshold managers are not entitled to use the\u00a0AIFMD marketing or management passport and may only operate within Belgium unless specific national private placement regimes are available and complied with.<\/p>\n<p>All AIFMs managing public AIFs are required to obtain an (additional) authorisation with the\u00a0FSMA.<\/p>\n<p>Please note that mere fund advisers to an AIFM, who do not exercise discretion, are not required to be licensed under the AIFMD. However, if they provide advice to the AIFM or the\u00a0AIF in respect of financial instruments, an authorisation under MiFID might be required.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are Alternative Investment Funds themselves required to be licensed, authorised or regulated by a regulatory body?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If an AIF is internally managed, meaning it does not appoint an external AIFM, the AIF itself is considered the AIFM and must either obtain a license from the FSMA or register as a sub-threshold manager.<\/p>\n<p>In addition, certain fund-specific \u201cproduct\u201d regimes require the application to be submitted by the fund itself, regardless of whether it is internally or externally managed. These include, but\u00a0are not limited to, the private privak regime, the ELTIF or EuVECA status.<\/p>\n<p>Non-public AIFs can voluntarily apply for such product regime (often for tax reasons), public\u00a0AIFs are obligated to obtain a product authorisation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the Alternative Investment Fund require a manager or advisor to be domiciled in the same jurisdiction as the Alternative Investment Fund itself?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No. Please also refer to our answer to question 18.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there local residence or other local qualification or substance requirements for the Alternative Investment Fund and\/or the manager and\/or the advisor to the fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Belgian AIFMs must have their head office and registered office in Belgium. The FSMA scrutinises the substance of Belgian AIFMs during authorisation and ongoing supervision, ensuring that they are no letterbox entities. Typically, Belgian AIFMs must be able to demonstrate effective local management, staffing, governance and infrastructure, etc.<\/p>\n<p>For AIFs to be considered as registered in Belgium, certain substance requirements apply. These requirements aim to ensure that the fund has a genuine local presence and are particularly relevant for Belgian tax purposes. In particular, an AIF with its registered office in Belgium may still be treated as a non-resident for tax purposes if its main establishment or effective management is located abroad. This could result in the application of foreign tax rules and the loss of access to beneficial Belgian tax regimes, such as the private privak regime (cf.\u00a0above). To avoid these consequences, it is important that the AIF maintains sufficient substance in Belgium, with effective management functions carried out locally.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What service providers are required by applicable law and regulation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Belgian law, the following service providers (other than, as the case may be, an external AIFM) are to be mandatorily appointed:<\/p>\n<ul style=\"padding-left: 0\">\n<li>depositary: required only for funds managed by licensed AIFMs. The depositary performs essential safekeeping, cash monitoring, and oversight functions as mandated by AIFMD;<\/li>\n<li>statutory auditor (<em>commissaris\/commissaire<\/em>): appointment of a statutory auditor is a legal requirement for an AIF, unless managed by a sub-threshold AIFM or required by a specific \u201cproduct\u201d regime (such as is the case for a private privak). The statutory auditor is an independent financial professional responsible for auditing the fund\u2019s financial statements;<\/li>\n<li>in certain situations or for certain AIF \u201cproduct\u201d regimes, such as in case of a GVBF\/FIIS where an independent valuation expert must be appointed, the use of additional service providers may be required.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are local resident directors \/ trustees required?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While there are no formal nationality or residency requirements, the FSMA pays particular attention to local presence when assessing substance requirements (as discussed in our answer to question 15).<\/p>\n<p>Local presence may also be relevant for other legal and regulatory reasons \u2013 for example, to ensure that individuals responsible for anti-money laundering (<strong>AML<\/strong>) compliance possess sufficient knowledge of Belgian AML-legislation and can interact effectively with the FSMA or Belgium\u2019s Financial Intelligence Unit.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rules apply to foreign managers or advisers wishing to manage, advise, or otherwise operate funds domiciled in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>EEA AIFMs seeking to operate AIFs in Belgium must register with the FSMA, with the distinction between fully licensed EEA AIFMs and sub-threshold AIFMs primarily reflected in the\u00a0notification process (European passport notification under Article 33 AIFMD for fully licensed EEA AIFMs and separate domestic notification procedure for sub-threshold AIFMs). Additional requirements apply where the EEA AIFM intends to manage public AIFs.<\/p>\n<p>Non-EEA AIFMs seeking to operate AIFs domiciled in Belgium must in principle obtain a\u00a0separate license with the FSMA and can be exempt from certain licensing requirements under certain conditions (such as adherence to equivalent rules in its home country).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the common enforcement risks that managers face with respect to the management of their Alternative Investment Funds?\u00a0<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The FSMA possesses a broad range of enforcement powers to address any breaches of regulatory requirements. These powers include the ability to impose administrative fines and publish enforcement actions. The FSMA may also take additional actions such as suspending or revoking licenses, mandating corrective measures, or, in severe cases, referring matters for criminal prosecution.<\/p>\n<p>Please also note that FSMA supervision differs depending on whether the AIFM is Belgian or foreign. Foreign EEA AIFMs accessing the Belgian market remain, in principle, under the\u00a0supervision of their home state authorities but are still required to comply with applicable Belgian regulations under certain circumstances and if they manage or market public AIFs in Belgium.<strong><br \/>\n<\/strong><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the typical level of management fee paid? Does it vary by asset type?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Management fees are, in principle, subject to contractual agreement and are not generally limited by regulatory restrictions. However, when retail investors are involved, enhanced disclosure and transparency requirements must be observed.<\/p>\n<p>Typically, management fees are calculated as a percentage of either committed capital or net asset value (NAV), depending on the structure of the fund. Factors influencing the fee structure include whether the fund is open-ended or closed-ended, a fund of funds or a direct investment fund, and whether it is an evergreen or of fixed duration. For example, Belgian mid-market, closed-ended private equity funds with a fixed duration commonly charge annual management fees in the range of 1.50% to 2.50%. These fees are usually calculated on investor committed capital during the investment period, and on NAV during the divestment period (i.e. after the end of the investment phase of the fund).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is a performance fee or carried interest typical? If so, does it commonly include a \u201chigh water mark\u201d, \u201churdle\u201d, \u201cwater-fall\u201d, \u201cpreferred return\u201d or other condition? If so, please explain.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Belgium, performance based compensation structures are a common market practice.<\/p>\n<p>For closed-ended AIFs, this compensation is typically structured as carried interest. A common approach involves the issuance of carried interest shares, held by the fund manager or a dedicated carried interest vehicle. These entitlements are governed by a distribution waterfall, which sets out the order and conditions for profit distribution. In a typical waterfall, investors first receive a return of capital and a preferred return &#8211; commonly around 8% per annum &#8211; before the fund manager becomes entitled to any carried interest. Once this hurdle is met, a \u201ccatch-up\u201d mechanism may apply, allowing the manager to receive a larger share of subsequent profits until the agreed profit split &#8211; most commonly 80% to investors and 20% to the manager &#8211; is reached. Some structures feature tiered waterfalls, where the manager\u2019s share of carried interest increases upon exceeding higher performance thresholds, further incentivising outperformance.<\/p>\n<p>In contrast, open-ended or actively managed AIFs, particularly those investing in liquid assets, typically apply performance fees rather than carried interest. These fees are generally subject to conditions such as a hurdle rate and a high-water mark, ensuring that performance fees are only charged on net new gains and remain aligned with investors\u2019 long-term interests.<\/p>\n<p>From a regulatory perspective, it is important to note that ESMA issued guidance in 2020 addressing performance fees for licensed AIFMs managing certain type of AIFs, with a particular emphasis on funds admitting retail investors or requiring enhanced investor protection. The guidance underscores that performance fees should be reasonable, transparent, and appropriately aligned with the fund\u2019s characteristics and risk profile.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are fee discounts \/ fee rebates or other economic benefits for initial investors typical in raising assets for new fund launches?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Indeed, it is quite common to offer fee discounts or rebates to early investors as an incentive to attract capital during new fund launches.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are management fee \u201cbreak-points\u201d offered based on investment size?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Indeed, some AIFs offer reduced management fee rates for cornerstone investors or implement variable management fees that depend on the size of an investor\u2019s commitment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are first loss programs used as a source of capital (i.e., a managed account into which the manager contributes approximately 10-20% of the account balance and the remainder is furnished by the investor)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>To the best of our knowledge, first loss programs are uncommon in Belgian practice.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical terms of a seeding \/ acceleration program?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>To the best of our knowledge, we are not aware of any such programs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What industry trends have recently developed regarding management fees and incentive\/performance fees or carried interest? In particular, are there industry norms between primary funds and secondary funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Evergreen closed-ended funds, which are increasingly common in practice, tend to apply performance fees based on NAV, using mechanisms such as hurdle rates to account for NAV volatility and ongoing capital inflows. Meanwhile, fund-of-funds generally apply only management fees or reduced carried interest to avoid excessive fee layering, as investors effectively bear the fees charged by the underlying portfolio funds.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What restrictions are there on marketing Alternative Investment Funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In principle, only licensed AIFMs may market AIFs to professional investors on a cross-border basis through the AIFMD passport. As a result, an AIFM wishing to market an AIF it manages to retail investors must first verify whether such marketing is permitted under the local regulations of the jurisdiction where the marketing is intended.<\/p>\n<p>Sub-threshold AIFMs generally do not benefit from the AIFMD passport and may, in principle, only market their AIFs domestically, such as in Belgium, under national private placement regimes, and subject to local conditions.<\/p>\n<p>Certain specific marketing restrictions apply to AIFs marketed under the EuVECA or ELTIF regime, which must comply with the respective regulations that govern their use and investor eligibility.<\/p>\n<p>When marketing AIFs to retail investors, stricter disclosure requirements must be met. Retail investors are considered less financially sophisticated than professional investors and, as a result, are provided with a higher degree of regulatory protection. This includes more rigorous requirements for amongst others risk disclosures. For instance, AIFMs who intend to market to retail investors must provide a Key Information Document (KID) in accordance with the PRIIPs Regulation (EU Regulation No 1286\/2014), ensuring retail investors receive a concise, clear, and comparable summary of the investment product\u2019s features, risks, and costs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the concept of \u201cpre-marketing\u201d (or equivalent) recognised in your jurisdiction? If so, how has it been defined (by law and\/or practice)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Belgian law has implemented the regulatory framework regarding pre-marketing as set out under the CBDF Directive and the CBDF Regulation. This framework technically only applies to pre-marketing by fully licensed AIFMs and managers of EuVECA and EuSEF funds to professional investors, but is in practice also applied to sub-threshold AIFMs and retail investors.<\/p>\n<p>Pre-marketing is defined as \u201c<em>the provision of information or communication, direct or indirect, on investment strategies or investment ideas by an EU AIFM or on its behalf, to potential professional investors domiciled or with a registered office in the Union in order to test their interest in an AIF or a compartment which is not yet established, or which is established, but not yet notified for marketing in accordance with Article\u00a031 or\u00a032 AIFMD, in that Member State where the potential investors are domiciled or have their registered office, and which in each case does not amount to an offer or placement to the potential investor to invest in the units or shares of that AIF or compartment<\/em>\u201d.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can Alternative Investment Funds be marketed to retail investors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the AIFMD, licensed AIFMs benefit from a marketing passport that allows them to market AIFs to professional investors across the EU. However, this passport does not extend to retail investors. While the AIFMD does not prohibit marketing to retail investors, it leaves the\u00a0regulation of such activity to the discretion of each EU Member State.<\/p>\n<p>In Belgium, the marketing of AIFs to retail investors is permitted but subject to specific regulatory requirements. These requirements apply in full unless a private placement exemption applies. Nevertheless, even within the private placement regime, marketing to retail investors demands enhanced transparency and disclosure.<\/p>\n<p>For these purposes, a retail investor is defined in accordance with MiFID II as any investor who does not meet the criteria to be classified as a professional client.<\/p>\n<p>An AIFM established in another EU Member State wishing to market AIFs to retail investors in Belgium must comply not only with the AIFMD but also with Belgian national rules governing retail distribution. Since the AIFMD marketing passport does not cover retail marketing, the\u00a0AIFM must follow a local notification and approval process with the FSMA before commencing any marketing activities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have a particular form of Alternative Investment Fund be that can be marketed to retail investors (e.g. a Long-Term Investment Fund or Non-UCITS Retail Scheme)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Belgium does not have a default rule that allows any AIF to be freely marketed to retail investors. However, it recognises specific AIF structures that, once approved by the FSMA, can be publicly offered to retail investors. These include ELTIFs and certain public AIFs under Belgian law. Conversely, AIFs that do not fall into these specific categories must rely on a private placement exemption.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the minimum investor qualification requirements for an Alternative Investment Fund? Does this vary by asset class (e.g. hedge vs. private equity)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In principle, the regulatory framework distinguishes solely between retail and professional investors when determining eligibility for investing in AIFs. However, certain specific fund regimes impose certain investor qualification requirements. For example, when a fund adopts the private privak status, only \u201cprivate\u201d investors within the meaning of the relevant private privak regulation, may invest in the fund.<\/p>\n<p>Please also refer to the answer provided under question 29.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there additional restrictions on marketing to government entities or similar investors (e.g. sovereign wealth funds) or pension funds or insurance company investors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Not that we are aware of. In practice, these investors generally qualify as professional investors for regulatory purposes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on the use of intermediaries to assist in the fundraising process?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The use of intermediaries, such as brokers or placement agents, in the fundraising process is subject to regulatory oversight. The specific requirements and conditions applicable to intermediaries may vary depending on the circumstances and the nature of the fundraising and the level of involvement of such intermediaries, but adherence to regulatory standards is essential.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the use of \u201cside letters\u201d restricted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In principle, AIFMs are permitted to enter into side letters with investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any disclosure requirements with respect to side letters?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Licensed AIFMs are subject to the disclosure obligations set forth in Article 23(1)(j) of the\u00a0AIFMD. Pursuant to this provision, AIFMs must disclose to all investors the existence and nature of any preferential treatment granted to other investors.<\/p>\n<p>This specific disclosure obligation does not apply to sub-threshold AIFMs. However, sub-threshold AIFMs remain subject to general civil and corporate law obligations under Belgian law, including duties to avoid and manage conflicts of interest where they may arise.<\/p>\n<p>In addition, licensed AIFMs must report to the FSMA whether any investors have been granted preferential treatment (for example, through side letters), as well as the nature of such preferential treatment, in accordance with the so-called Annex IV reporting rules.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most common side letter terms? What industry trends have recently developed regarding side letter terms?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The most common arrangements included in side letters relate to most favoured nation clauses, which allow investors to benefit from more favourable terms granted to other investors; co-investment rights, which enable select investors to participate alongside the fund in specific investments; and investment committee membership or observer rights, which provide certain strategic or cornerstone investors with governance or oversight participation. In addition, it is also common for side letters to address specific terms concerning (management and entry) fees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4772<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/112916","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=112916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}