Alternative Investment Companies (ASI) operate under a specific regulatory framework in which a central role is played not only by the investment company itself, but above all by its manager. It is precisely at the intersection of these two entities that the most important questions about liability arise – regulatory, civil, and contractual alike.

In practice, liability within an ASI structure is not straightforward and depends on the management model adopted and the structure of the relationship with the manager (Alternative Investment Company Manager – ZASI).

Internal vs. External Management Model – A Key Distinction

1. Internally Managed ASI

Under the internal model:

  • management is carried out by the company’s own governing bodies (e.g. the management board),
  • there is no separate managing entity.

Consequences:

  • liability is concentrated within the company’s structure,
  • members of the management board bear both corporate and regulatory liability.

2. Externally Managed ASI (ZASI)

Under the external model:

  • a separate entity is appointed – the Alternative Investment Company Manager (ZASI),
  • it is this entity that makes the key investment and operational decisions.

Consequences:

  • ownership and management functions are separated,
  • liability is largely “transferred” to the manager.

Liability of the Alternative Investment Company Manager (ZASI)

The manager plays a central role in the ASI structure and bears broad liability across several dimensions.

1. Regulatory Liability

The ZASI is responsible for:

  • compliance with supervisory regulations,
  • implementation of required procedures (e.g. AML/KYC),
  • reporting to the supervisory authority.

Violations may result in:

  • administrative sanctions,
  • financial penalties,
  • loss of authorisation.

2. Liability Towards Investors

The manager is responsible for:

  • proper management of the investment portfolio,
  • acting in the best interests of investors,
  • adherence to the investment policy.

3. Contractual Liability

The relationship between the ASI and the ZASI is governed by contract. The ZASI is liable for:

  • performance of obligations arising from the agreement,
  • damages resulting from improper management.

The scope of liability defined in the contract is of critical importance.

Liability of the ASI Itself

Despite the manager’s prominent role, the ASI is not an empty shell devoid of responsibility.

1. Liability as a Legal Entity

The ASI is liable:

  • for its obligations towards counterparties,
  • for its actions in legal and commercial dealings.

2. Liability Towards Investors

Depending on the structure:

  • the ASI may bear liability for the implementation of the investment policy,
  • particularly where the fund’s constitutional documents do not precisely allocate roles between the parties.

3. Liability of the ASI’s Governing Bodies

Members of governing bodies (e.g. the management board):

  • bear liability for supervisory oversight,
  • may be held liable for failure to exercise adequate control over the ZASI’s activities.

Contractual Risks – Where Problems Arise

The ASI–ZASI relationship is primarily governed by contract, which in practice determines the allocation of risks. Key areas of risk include:

1. Imprecise Scope of Obligations

  • absence of a clear division of competences,
  • risk of disputes over liability.

2. Liability Caps

  • overly broad exclusions of the ZASI’s liability,
  • inadequate protection for investors.

3. Lack of Oversight Mechanisms

  • absence of reporting obligations,
  • insufficient control over the manager’s activities.

4. Conflicts of Interest

  • investments involving related parties,
  • absence of conflict-of-interest management policies.

Who “Really” Bears Responsibility?

The answer is not binary. In practice:

  • the ZASI bears primary operational and regulatory liability,
  • the ASI is liable as a legal entity vis-à-vis the market and its counterparties,
  • the ASI’s governing bodies bear responsibility for oversight and governance.

The structure and quality of documentation are of paramount importance.

How to Mitigate Risk

1. A Precisely Drafted Agreement with the ZASI

  • clear allocation of obligations,
  • defined performance standards,
  • expressly stated liability and its limits.

2. Oversight Mechanisms

  • regular reporting,
  • investment committees,
  • periodic audits.

3. Compliance Policies

  • AML/KYC procedures,
  • conflict-of-interest management,
  • investment procedures.

4. Consistency of Documentation

  • the ASI’s articles of association,
  • agreements with investors,
  • the agreement with the ZASI.

Conclusion

Liability within an ASI structure is distributed and dependent on the management model adopted. Although the manager (ZASI) plays a central role and bears broad regulatory and operational liability, the ASI itself and its governing bodies are not exempt from responsibility.

In practice, it is the quality of the legal and contractual framework that determines who bears liability and to what extent. Properly designing the ASI–ZASI relationship is therefore one of the most critical elements in safeguarding the integrity of the entire investment structure.

If you have questions about structuring an ASI or managing liability within alternative investment vehicles under Polish law, contact our team for tailored legal advice.