UniCredit Bank d.d.
The National Assembly of the Republic of Srpska adopted Amendments to the Law on investment funds (hereinafter: Amendments), which entered into force on 14 October 2015.
The most notable changes are:
- Close-end investment funds established and based on the Law on Privatization Investment Funds and Privatization Funds Management Companies (Official Gazette of RS No. 24/08, 63/02 and 67/05) that are organized into close-end funds based on the Law on Investment Funds (Official Gazette No. 92/06) are required to transform into open-end funds within three years from the date the amendments entered into force:
- Funds Management companies are required to complete the process of reorganization of close-end funds into open-end funds within three years from the date the amendments entered into force.
- Shareholder´s Assembly of close-end fund is eligible to adopt the reorganization activities plan without influence of fund management companies and related parties.
- If the fund management company fails to complete the reorganization procedure within the three-year period, the depository bank is required to start liquidation procedure of the fund.
- 20% of exit fees will apply in the first year and 10% of exit fees will apply in the second year upon reorganisation. Exit fees can be charged in money or in securities.
- Units of open-end fund arising from closed-end fund reorganization will be listed on the stock exchange upon conclusion of the reorganization process and must remain listed for at least for two years.
- The fund management company is in the first two years upon reorganization required to perform redemption of units at least once a year.
- Changes in regulation that apply to funds management companies related to:
- Minimum capital amount requirements for fund management companies; the minimum capital amount is increased from BAM 200,000.00 to BAM 250,000.00.
- Thresholds in ownership structure of fund management companies; reaching of the threshold of 10%, 20%, 33% or 50% in ownership structure of fund management companies now requires approval from the Securities Commission of RS.
- Structure and authorisation of the management board;
- Regulation related to close-end funds:
- Shareholders meetings of the close-end funds and eligibility of Shareholders Assembly is prescribed in more details. If the quorum of 30% for annual general meeting is not met, the repeated shareholders meeting with the same agenda can be scheduled in the period of time not before 7 and not later than 15 days. There is no quorum for the repeated shareholders meetings.
- Jurisdiction of the supervisory board of close-end funds and new investment rules for close-end funds are defined.
- Real estate close-end investment funds with public offer as type of investment funds are abolished.
- Requirement of obligatory liquidation or merger of the open-end funds in case the net assets value (NAV) decreases below the minimum amount of BAM 1 million in three consecutive calendar months is now changed to the amount of BAM 500 thousand.
- Registry of units in open-end funds besides the funds management companies can now be maintained by the CSD as well.
- Registry of units in open-end funds that are listed on the stock exchange is maintained by the CSD.
Impact on investors: New regulation for investment funds in Republic of Srpska entered into force as of 14 October 2015