Most investors rarely think about how a fund handles liquidity, manages conflicts of interest or responds when large numbers of investors want to withdraw money at the same time. Yet these are precisely the areas affected by changes taking effect on 1 September 2026.
The amendment to the Czech Act on Investment Companies and Investment Funds (ZISIF), implementing AIFMD II, introduces new requirements for fund managers, tighter governance standards and harmonised liquidity management tools. For investors, the goal is not to change investment strategy, but to better understand how funds may operate during periods of market stress.
Where Investors May Notice the Biggest Change
The most significant development concerns liquidity management in open-ended investment funds.
Under the new rules, fund documentation will generally need to include at least two liquidity management tools. These may include limits on redemptions, extended redemption periods, anti-dilution mechanisms or pricing adjustments designed to protect investors remaining in the fund during periods of unusually high withdrawals. Requirements relating to the selection and implementation of liquidity management tools must be fulfilled by 16 April 2027.
For investors, this is not about restricting access to their money. Rather, it is about ensuring that a small group of investors exiting a fund during stressed market conditions does not disadvantage those who remain invested.
While most investors are unlikely to encounter these measures in normal market conditions, understanding how a fund may respond during periods of heightened withdrawals has become more important.
What the New Governance Rules Mean
The amendment also introduces stricter conflict-of-interest requirements for investment funds established or managed at the initiative of another party. In addition, reporting obligations to the Czech National Bank are expanded in areas such as delegated activities, investment exposures, leverage and liquidity management arrangements.
From an investor’s perspective, these changes are less about administration and more about transparency. They provide greater visibility into how funds operate, how risks are managed and how investment decisions are supervised.
The legislation also expands the activities that investment management companies may perform, including the management of non-performing loans and, under specified conditions, the administration of benchmarks.
Should Investors Take Action?
In most cases, there is no need for immediate action.
The new obligations apply primarily to fund managers rather than investors themselves. Fund managers are generally granted a six-month transitional period to update internal policies, fund statutes and disclosure documents to comply with the amendment.
However, investors should pay greater attention to fund documentation, particularly when investing in alternative funds or strategies with lower liquidity. This is where liquidity management arrangements and redemption procedures are most likely to be described in detail.
💡 TIP: During your next portfolio review, check your fund’s prospectus or key information document and identify which liquidity management tools may be used if redemption requests increase significantly.
What We Recommend
- Review the funds in your portfolio and understand their redemption arrangements.
- Read updated fund documentation as managers implement the new requirements.
- Pay particular attention to liquidity provisions if you invest in alternative or less liquid strategies.
FAQ
1. Do these changes affect all fund investors?
Not directly. The new obligations primarily apply to investment companies and fund managers. However, investors may notice changes in how funds manage liquidity and disclose information.
2. Will it become harder to redeem investments from a fund?
Not necessarily. The amendment does not remove redemption rights. It provides funds with additional tools to manage exceptional situations involving unusually high withdrawal requests.
3. What are liquidity management tools?
They include measures such as redemption limits, longer redemption periods or pricing mechanisms designed to reduce the impact of large-scale withdrawals on remaining investors.
4. When must funds implement the new liquidity requirements?
Liquidity management tools must be selected and implemented by 16 April 2027.
5. Do the new rules improve investor protection?
The amendment introduces harmonised liquidity management requirements, stricter conflict-of-interest controls and expanded supervisory reporting obligations.
6. Do I need to change my investment strategy because of the amendment?
The amendment itself does not require investors to change their strategy. Understanding how your funds operate and manage liquidity is likely to be more important than making portfolio changes.
