AIFM passporting in Latvia

Under the Law on Alternative Investment Funds and their Managers of 2013 (“LAIFM”), authorised EEA AIFMs are entitled to market units or shares of EEA and NonEEA AIFs to professional and assessed retail investors directly or through a branch as soon as the EEA AIFM has received a confirmation by the EEA HMSA that the relevant passport notification has been sent to the Bank of Latvia (“BoLV”), This notification is accompanied by copies of those documents required for authorisation under Annex IV of AIFMD, and an attestation on authorisation by their HMSA. 

The BoLV possesses the authority to request additional identifying information or any missing data regarding the EEA AIFM from the HMSA. It's important to note that this request is not akin to a formal "registration" or filing requirement but is rather intended to verify the legal compliance measures implemented by the EEA AIFM. 

Latvia has opted not to exercise the discretion granted under Article 42 of the AIFMD. Consequently, the marketing of Non-EEA AIFs managed by Non-EEA AIFMs prohibited in Latvia. 

If a Non-EEA AIFM wishes to market an EEA AIF in Latvia, it must first obtain authorization, i.e., a license from the Bank of Latvia or another competent authority within the EEA. Registering or notifying the regulator alone does not suffice for Non-EEA AIFMs to market an EEA AIF to Latvian investors. 

In order to obtain authorisation, the AIFM must have a representative in Latvia who has the required skills and competencies, as well as the funds to provide the respective services. Furthermore, the Non-EEA AIFM must submit the specified documents as listed in the LAIFM. 

Directive 2019/1160 which facilitates the cross-border distribution of AIFs and introduces harmonized "pre-marketing" rules within the EU, has been incorporated into the legal framework as of November 2 2021.  

In Latvia, EEA AIFMs are permitted to commence pre-marketing activities of EEA AIFs targeted at potential professional investors without the necessity of prior notification to the  BoLV. This pre-marketing in Latvia is conducted under the same conditions as marketing activities in their home State. The BoLV, however, possesses the authority to request a statement from the HMSA of the respective EEA AIFM regarding information pertaining to pre-marketing activities which are / have occurred in Latvia. In simpler terms, EEA AIFMs only need to notify (i) their HMSA and (ii) the BoLV - if requested to do so. 

The information shared with potential professional investors within the context of the pre-marketing activity should not enable such investors to commit to acquiring units or shares of the pre-marketed AIF. This information should also not resemble a subscription form or any similar document, whether it’s in draft or final form. Additionally, the EEA AIFMs are prohibited from disclosing documents of incorporation, prospectus, or offering documents of a newly formed fund. 

As the national transposition of Directive 2019/1160 does not encompass non-EEA AIFMs, the general reverse solicitation considerations apply in relation thereto. 

EEA AIFMs are not subject to any application fees when operating under the passporting regime. However, AIFMs shall pay a single supervision fee for marketing units or shares of the fund in Latvia in the amount of EUR 1,209 per each fund (EEA or Non-EEA AIFs).  

If operating through a branch, the annual fee for branch supervision is calculated as a percentage (1%) of the gross income generated by the Latvian branch per quarter, but no less than EUR 2,134. 

Regarding authorization with the Bank of Latvia (BoLV), AIFMs are subject to certain fees: 

1. A fee of EUR 1,422 for fund registration. 
2. A fee of EUR 426 for making amendments to the documents submitted during the registration process. 

An AIFM authorised with the BoL must pay an annual supervision fee in the amount of 0.016% from the average quarterly asset value of funds operated but no less than EUR 3,557. A registered AIFM shall pay a fixed supervision fee of EUR 900 per year.