Why is Poland changing the rules of the game in the funds market?
Poland’s capital market is on the cusp of one of the most significant reforms in recent years, which will fundamentally reshape the regulatory framework for ETFs and introduce an entirely new investment vehicle: the Qualified Investment Fund (QIF/KFI).
This is a response to market demands and presents an opportunity for Poland to close the gap with countries such as Luxembourg and Ireland, with the overarching objective of boosting competitiveness and stemming the outflow of investment capital abroad. The new regulations aim to deliver greater flexibility for investors and fund managers alike, while also aligning with current market trends and European standards. We examine what is changing in practice and what it means for all market participants.
The Qualified Investment Fund – a new vehicle for private equity
Unlike the existing closed-end investment funds (CIF/FIZ), the Qualified Investment Fund is intended to be a new category of investment vehicle that is:
- Simpler in structure
- More flexible
- More tax-efficient
- Internationally competitive
and is designed with private equity and venture capital market standards in mind. It is also tailored to the long-term nature of such investments.
The KFI will have legal personality and the status of an alternative investment fund (AIF/AFI), and can be managed by:
- An investment fund company (IFC/TFI)
- A manager of alternative investment companies (AICs/ASI) holding a licence from the Polish Financial Supervision Authority (KNF)
- A European alternative investment fund manager (AIFM/ZAFI)
The key structural elements of the KFI are as follows:
- Committed capital model, under which investors undertake to make contributions up to a specified maximum amount; these contributions are then made at the fund manager’s request in line with investment needs (capital call mechanism)
- Waterfall mechanism, whereby funds are distributed once the investment has been completed, with investors having priority of return; the manager’s remuneration is payable only after investors have recovered their invested capital plus a minimum rate of return. In practice, this means that the manager only receives remuneration once investors have recovered their investment with a profit
- Mandatory capital commitment by the manager – a requirement designed to ensure alignment of interests between the manager and investors
- Closed-ended structure – early termination of an investment will only be possible in the cases specified in the fund’s articles of association, thereby ensuring structural stability and enabling the pursuit of long-term investment strategies
- Investors’ meeting – a supervisory body open to all registered investors, responsible for overseeing key aspects of the fund’s operations
- KFI units – the KFI will issue units constituting transferable proprietary rights, recorded in the register of investors; such units do not qualify as securities and do not take documentary form
UCITS-compliant ETFs: the end of regulatory exclusion
Poland’s capital market, despite its growing importance in the economy, does not yet offer the fully developed and competitive investment instruments that have proved successful in other EU countries. This is particularly apparent in the area of ETFs (Exchange Traded Funds), which, due to regulatory barriers, have only a limited presence in Poland.
At present, ETFs may only operate in the form of portfolio funds, meaning that under European law they are treated as alternative investment funds rather than UCITS (Undertakings for Collective Investment in Transferable Securities). In practice, this results in a number of constraints.
Accordingly, as the explanatory memorandum to the draft legislation makes clear, the aim is to enable ETFs to operate as UCITS-compliant vehicles, that is to say, as open-ended investment funds whose units constitute securities admitted to trading on a stock exchange.
This represents a landmark development. For the first time, Polish ETFs will be able to compete on a level playing field with funds domiciled in Dublin or Luxembourg. By virtue of the EU passport, they will be eligible for cross-border distribution, significantly enhancing their appeal to institutional investors whilst also enabling their inclusion in global databases.
Furthermore, the proposed amendments envisage the introduction of new unit classes within existing open-ended and specialised funds, which will be eligible for listing and trading on the secondary market.
This solution, modelled on established practices in Luxembourg and Ireland, allows for a flexible combination of traditional distribution channels with exchange trading, thereby opening up new opportunities for fund managers and distributors alike.
The draft amendment to the Investment Funds Act is currently at the consultation stage, with its adoption anticipated in Q4 2026. It is well worth monitoring its progress and preparing for the forthcoming changes.
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