Variable Capital Investment Companies in Luxembourg and Ireland: A Reform Proposal for Investment Fund Regulation in Finland
DOI:
https://doi.org/10.33344/vol19iss1pp18-44Abstract
Variable Capital Investment Companies (VCICs) have become a preferred investment fund structure in leading European financial centers, particularly in Luxembourg and Ireland. These models offer legal personality, automatic capital adjustments, and favorable tax treatment, making them highly attractive to institutional and retail investors. In contrast, investment funds in Finnish financial markets rely solely on contractual structures, limiting their competitiveness and international appeal. This article examines the regulatory frameworks of the investment company structures in Luxembourg and Ireland, highlighting their advantages, and presents a reform proposal to introduce a VCIC framework that aligns with European best practices.
By implementing a legal framework for investment companies with variable capital, Finnish financial markets could enhance investment flexibility, market competitiveness, and cross-border fund distribution. The proposed reform would introduce a corporate investment vehicle with variable capital, governed by European investment fund regulations, ensuring broad marketability across the European Union. The article argues that such a change would attract foreign capital, strengthen investor protection, and diversify the investment fund landscape. Ultimately, establishing a VCIC framework would position Finnish investment funds as a more competitive option, enabling them to operate on equal footing with financial centers such as Luxembourg and Ireland.
