REGISTRATION AND ISSUING OF SECURITIES

Both corporate investment funds and share investment funds are required to be registered with the Sate Commission on Securities and the Stock Market.

In the case of corporate investment funds, shares ate sold by public “subscription,” and for open and interval fund, the offering period is continuous except for brief periods associated with holding general shareholders meeting.

For share investment funds, investment certificates are issued by the company managing its assets, either by public subscription (continuous for open and interval funds), or through private sale to specified investors.

Sales of shares or investment certificates, as well as repurchases of those instruments by a corporate investment fund or the asset manager of a share investment fund, are accomplished at the net value of the assets of the fund.

RELATED REGULATION

The new law contains detailed provisions regarding companies that mange assets of joint investment funds. Assets managers must be licensed by the Commission and their fees are subject to regulation by the Commission. Under certain circumstances, they can be liable for losses incurred by the fund.

The new law regulates the permitted composition of assets of joint investment funds and the valuation of those assets. There are provisions that place limitations upon investment in certain types of securities, such as foreign and non-traded securities, and these limitations vary depending upon the classification of the fund.

The new law also requires that an independent custodian provides custodian services for securities held by a fund, as well as is engaged in ongoing activities related to the sale and purchase of fund shares or investment certificates and verification of assets valuations made by the asset manager. The requirements of custodial agreements are to be approved by the Commission. The custodian has an obligation to report the Commission actions of the asset manager that are not consistent with the fund’s governing documents or the applicable law.

Finally, the new law contains extensive requirements on the issuance and circulation of shares or investment certificates of investment funds. This includes a disclosure prospectus that must be used when selling shares or investment certificates and is registered with the Commission as described in the new law. The Commission also closely regulates the repurchase of shares by a fund or investment certificates by an asset manager, and the new law details various required processes for this. The new law also provides for annual updating of the disclosure prospectus used by open or interval funds as

well as other periodic reporting requirements. All joint investment funds are to be audited annually by an independent audit firm.

The new law represents a comprehensive regulation of joint investment activities, in that it covers all major areas important to ensuring that those activities are conducted in an objective and independent fashion. The guiding principle of the new law appears to be protection of investors, which generally is viewed as the bedrock of modern investment fund regulation. As such , the new law should serve to promote confidence in the joint investment fund industry in Ukraine.

Date: 2015-01-29; view: 739