The assessment considers joint investment under a defined investment policy for investors' benefit and whether their returns depend on the acquired assets. Legal form is not decisive in itself. The activity must be authorised or comply with a special statutory regime; registration as a sub-threshold manager is subject to asset-volume and distribution restrictions. Fixed-interest financing of the company's own operations is generally not collective investment, but it still carries default risk and is subject to other rules.
A development project, investment club, joint property or cryptocurrency purchase: several people contribute money and someone invests it for them. The boundary between ordinary business and regulated collective investment is not where many expect. It depends on what you promise investors and who decides how their money is used, rather than the amount raised or investor numbers.
The prohibition rests on two features
Collective investment is a business activity that raises money from investors to invest under a defined investment policy for their benefit (Section 2(1) of Act No. 203/2011 Coll.). The Act prohibits activity that meets neither the authorisation requirement nor the special statutory conditions:
Raising money and assets with a monetary value for subsequent investment is prohibited if: (a) the return of the money and assets so raised, or the profit of the persons whose money and assets were raised, is to depend, even partly, on the value or returns of assets acquired with that money and those assets; and (b) the activity is not conducted under authorisation pursuant to this Act or under the conditions laid down in this Act.
— Section 2(3) of Act No. 203/2011 Coll. (unofficial English translation)
The phrase “even partly” matters. You need not promise a profit share: it is enough that the investor’s return can fluctuate with the value of assets purchased with their money.
How the NBS assesses the boundary
NBS Guidance No. 5/2023 on unauthorised collective investment activity explains the test. It examines whether the following features are all present: business activity, raising money or assets with a monetary value from investors for joint investment, an investment policy, investor benefit and returns dependent on acquired assets.
Legal form is immaterial: a company contribution, silent partnership and cooperative membership contribution are treated alike. Neither investor numbers nor investing indirectly through a subsidiary or project company is decisive. An investment policy may be a strategy published only on a website or the passive holding of purchased rental property.
When you fall outside regulation
The guidance also describes the opposite situations. Fixed-interest debt used for the company’s own operations or project generally does not constitute collective investment. The investor nevertheless bears, in particular, the risk of issuer default; a fixed coupon also does not preclude fluctuations in the market price of a traded bond. A hybrid with “additional returns based on performance”, however, triggers the test again. Financing the company’s own operations is distinct from collective investment: building and operating a logistics complex is a non-financial activity; buying and selling property to generate investor returns is not. A model in which investors actually make investment decisions themselves falls outside the definition, as do a pre-existing family circle and a self-managed holding company without an investment policy that does not market its ownership interests as an investment opportunity. Licensed crowdfunding under Regulation (EU) 2020/1503 has its own exemption. Formally meeting an exemption is insufficient: the NBS assesses substance rather than paperwork.
What happens if you cross the line
NBS sanctions also apply to unauthorised persons: an order to cease activity and a fine of up to EUR 5,000,000 or 10% of total annual turnover (Section 202(3) of Act No. 203/2011 Coll.). If activity continues after a sanction, the court dissolves the company with liquidation on the NBS’s application. A third party promoting unauthorised collective investment may also be sanctioned. Alongside supervision, investors who suffer losses may bring disputes based on the model’s illegality.
How to structure the model lawfully
Registration as a sub-threshold manager may replace authorisation only subject to the conditions in Section 31a of Act No. 203/2011 Coll.: total assets under management, including assets acquired through leverage, must not exceed EUR 100 million, or EUR 500 million for unleveraged funds with no redemption rights exercisable for five years following the initial investment. The exemption does not apply to public special funds or special funds for qualified investors, and other statutory duties remain.
Distribution of funds under Section 4(2)(b) is generally intended for professional investors. Distribution to qualified investors is possible under Section 31d only if all conditions are met: no more than 50 persons in a single fund, their interests representing no more than 30% of the fund’s net asset value and, for a sub-threshold manager, also no more than 30% of the total value of the funds under management. Distribution must be conducted by an authorised financial institution providing the relevant investment advice or portfolio management and applying a suitability test. Registration alone therefore does not authorise raising money from the general public.
Another route is full authorisation or restructuring the financing as fixed debt, such as credit, a loan or a fixed-interest bond. With debt, however, watch the second boundary: the banks’ deposit-taking monopoly. We discuss it in when loans from investors constitute deposit-taking, and for bonds in when a bond offer is a public offer.
How we can help
We examine each feature of your model and provide a written assessment of which side of the boundary it falls on through our collective investment review. If equity proves safer, we prepare the investor’s entry. For securities offerings, we also assess the public offer regime. Tell us how your financing is structured: whether authorisation is required determines everything else.
This answer provides general information on the law as at 10 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
