Amendments to the Law on Investment Funds in Republic of Srpska

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.
Thu, 15/10/2015

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