How to Start a Hedge Fund in Netherlands
Updated on Wednesday 20th December 2017
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Foreign investors can open various types of investment funds in the Netherlands, including hedge funds, that are alternative investment vehicles in which the businessmen pool their financial assets to perform different investment strategies. The procedure of starting a hedge fund in the Netherlands must be completed following the regulations applicable under the Dutch legislation.
Hedge funds in the Netherlands
Businessmen who are interested on how to start a hedge fund in the Netherlands must know that first they should decide on the business structure the fund will have.
In the Netherlands, hedge funds can be set up as one of the following:
• investment company;
• investment fund.
A hedge fund falls under the regulations of the Alternative Investment Fund Manager Directive (AIFMD) established by the European Union. Netherlands has modified its national legislation to incorporate the AIFMD regulations. Investors who want to know more on how to start a fund can find out further details on the AIFMD regulations in our investment publication.
The following video offers a short presentation on the Dutch hedge funds:
Structure of hedge funds in Netherlands
Investors who are starting a hedge fund in the Netherlands can set up the vehicle as one of the structures mentioned below:
• open-ended funds;
• closed-ended funds.
The main difference between these structures refers to the issuance of shares that can be managed through that respective structure. In the case of a hedge fund set up as an open-ended vehicle, the investors will not have any restrictions for the issuance of bonds or shares, a situation which is not applicable for the closed-ended structure.
Regulatory bodies for investment funds
Dutch hedge funds have to follow the regulations imposed by the Authority for the Financial Markets (AFM) and the Dutch Central Bank (DCB), each institution dealing with different aspects related to the proper functioning of the investment vehicles available here.
As hedge funds in the Netherlands are considered alternative investment funds, they will need to obtain a license issued by the AFM, which can be further on used on other European markets which are included in the European Community.
However, the Dutch legislation provides several exemptions related to the licensing requirements, which can be further on detailed by our affiliates in Netherlands.