Decree No. 195 / 2011 Coll.
Order on the activities of the depositary of the collective investment fund and arrangements for the depositary contract of the standard fund
Valid
Order
Effective from 15.07.2011
Text versions:
15.07.2011
195
DECLARATION
of 27 June 2011
on the activities of the depositary of the collective investment fund and the arrangements for the depositary contract of the standard fund
Pursuant to § 139 (2) of Act No. 189 / 2004 Coll., on Collective Investment, as amended by Act No. 188 / 2011 Coll., ("the Act '), the Czech National Bank provides for the implementation of § 20 (12), § 21 (3) and § 23 (6):
GENERAL PROVISIONS
Subject matter
(1) This decree regulates the activities of the depositary of the collective investment fund (hereinafter referred to as the depositary) in the context of:
(a) custody of the collective investment fund;
(b) checking the assets of the collective investment fund in cases where the nature of the case excludes the disposal of the assets;
(c) checking the issue, redemption and cancellation of units or shares of a collective investment fund;
(d) with scrutiny of the calculation of the actual value of the shares or units of the collective investment fund;
(e) settlement of transactions in the assets of the collective investment fund within the normal time limit;
(f) checking the use of the return on the assets of the collective investment fund; and
(g) control of the management of the assets of the collective investment fund.
(2) This decree further regulates
(a) the conduct of an investment company or investment fund which is a reason for not carrying out the order by the depositary;
(b) cases in which the depositary's activities may be carried out through another person ("outsourcing"); and
(c) the method of carrying out the valuation of the assets of the collective investment fund or the calculation of the actual value of the shares or units of the collective investment fund pursuant to Article 78 (2) of the Act.
(3) This decree also incorporates the relevant European Union1 provisions and regulates the content requirements for the arrangement of the depositary agreement applicable to a standard fund managed by an investment company (hereinafter referred to as the "standard fund depositary contract") as regards:
(a) the definition of the individual activities of the depositary and the investment firm and ensuring their proper implementation by both parties to the depositary contract;
(b) the means of communication between the parties to the depositary contract, including the provision of arrangements for keeping records of communication and for the protection of sensitive and confidential information;
(c) the conditions governing the conferral of property management (Section 78 of the Act) or some of the depositary's activities (Section 21 of the Act) to another person ("the outsourcing provider");
(d) the designation of the legal order governing the depositary contract under the law; and
(e) the manner in which the liability of the depositary contract is changed or terminated.
_
(Articles 21 (3) and 23 (6) of the Law)
Relationship to the special fund of qualified investors
The special fund of qualified investors may, under the conditions set out in § 21 (4) of the Act, restrict or exclude control under § 6 and § 8 to 13.
Deposits of assets of a collective investment fund
The depositary shall ensure that the assets of the collective investment fund are held in such a way that:
(a) the book-entry securities registered in the central register of securities (2) shall be kept in the owner's account in the central securities register; other investment vehicles shall be kept in separate records (3) or in a separate register,
(b) other assets, if their nature so permits, shall be physically taken into custody or secured by the outsourcing provider.
Control of the assets of the collective investment fund
(1) The depositary shall verify the value and nature of the assets which cannot be entrusted in the custody provided for in Article 3, in particular by:
(a) continuously checks the status of the registration in the real estate register or other register;
(b) compare information from an investment company or investment fund with information from its own records.
(2) Where, on the basis of the information obtained in accordance with paragraph 1, the depositary is not able to reliably establish the current status of the assets, it shall verify the status of the assets by on-the-spot check or by any other appropriate procedure at least once a year; they shall verify the state of the property whenever, for any reason, there is doubt as to the accuracy or completeness of the information provided by the investment firm or investment fund.
(3) The depositary may carry out the check referred to in paragraph 1 through the outsourcing provider.
Control of the issue, redemption and cancellation of units or shares of a collective investment fund
(1) The depositary shall carry out checks on the issue of units of the mutual fund and shares of the investment fund, in particular by verifying each day on which the unit sheet or shares are issued,
(a) whether the number of units issued by an investment company is equal to the proportion of the total amount paid for it in the current account of the mutual fund held by the depositary and the actual value of the units issued for the relevant date; taking into account, where appropriate, the premium in accordance with the holding fund rules; or
(b) whether the number of IF shares issued per inspection date is equal to the proportion of the total amount credited for the issue of such shares to the depositary's current account of the IF and the fixed share issue rate.
(2) When checking under paragraph 1, the depositary shall take into account the premium and the premium on the issue account at least in terms of whether the total amount credited takes into account at least the smallest premium or premium and the highest premium or premium possible under the collective investment fund Statute or under the decision of the General Meeting of the Investment Fund4).
(3) The depositary may, instead of the procedure referred to in point (a) of paragraph 1, carry out a check on the issue of units of the mutual fund by checking that the number of units of the unit of account corresponding to the amount credited to the account of the Fund has been issued to individual shareholders; Article 10 (2) shall apply mutatis mutandis.
(4) When subscription of shares in an investment fund by a non-cash deposit, the depositary shall verify each day on which those shares are issued that the number of shares is equal to the share of the total value of the non-cash deposit paid and the fixed issue rate of the share, taking into account any premium and the issue premium, as defined in the IF Statute or in the decision of the General Meeting of the Investment Fund.
(5) The depositary shall carry out checks on the purchase and cancellation of units or shares in accordance with the laws and regulations of the collective investment fund in the context of the control of payments provided for in this Order.
(6) The settlement of the buy-in of units shall be carried out by the depositary on the basis of an order from the investment company in the manner set out in the open holding fund or closed holding fund law under Paragraph 13a of the Law and under an agreement between the investment company and the shareholder, provided that this agreement does not conflict with law or statute.
Control of the calculation of the current value of the share or share certificate of the collective investment fund
The depositary of a collective investment fund shall carry out a check on the calculation of the current value of the investment fund's share or mutual fund's share certificate each time before publication of that value (5) by verifying the accuracy of the data on that value submitted by the investment company or investment fund. The verification shall be carried out by the depositary on the basis of data from sources independent of the investment company or investment fund normally used by qualified investors in their activities; in the absence of such resources, the depositary shall base itself on the supporting documents of the investment company or investment fund. The expert's opinion under § 53e of the Act may also be used for the verification.
Securing settlement of transactions in collective investment fund assets within the normal time limit
The settlement of transactions in the assets of the collective investment fund shall be ensured by the depositary by the provision of the assets of the collective investment fund which it holds in custody or by the provision of such transactions in cases where the handling of such transactions is subject to its approval.
Control of the use of the proceeds of the collective investment fund's assets
(1) The depositary checks that the distribution of the proceeds of the collective investment fund's assets is in accordance with the law and the Statute of the collective investment fund.
(2) Where a collective investment fund distributes holdings in the management of the assets of a collective investment fund, the depositary shall, mutatis mutandis, check the payment of funds to shareholders or shareholders in accordance with Article 5 (5).
(3) The depositary shall carry out the check referred to in paragraph 1 on the day on which the proceeds of the collective investment fund's assets were distributed.
Control of the management of the collective investment fund's assets
(1) The depositary shall monitor the investment firm and the investment fund's asset management instructions that form part of the assets of the collective investment fund (hereinafter referred to as the "control of the order") at the dates set out in Section 10 and, to the extent and in a manner specified in paragraphs 2 to 5.
(2) Where an order is issued to acquire an asset in the assets of a collective investment fund, the depositary shall, in the context of the control of the order:
(a) checking that only the types of assets permitted under the law and the Statute are acquired into the assets of the collective investment fund; If the type of asset is not apparent, the check shall also be carried out on the basis of an analysis of the documentation relating to the relevant asset;
(b) checking compliance with the investment limits under the law and the Statute by comparing the established limits with the latest available information on the assets of the collective investment fund on the date on which the order was submitted.
(3) Where an order for the acquisition or disposal of an asset is sought, the depositary shall, in the context of the control of the order, carry out a check of professional care in determining the price and other conditions of trade, unless it is an anonymous transaction concluded on the market under Article 26 (1) (a) of the Act; This check shall be carried out in particular by a review of the analysis to be provided by the investment company or investment fund to demonstrate the acquisition or disposal of the asset under the best conditions and the advantage of the market6). The subject of the review is, in proportion to the nature of the controlled transaction, at least the price, potential return on the transaction, whether the transaction was negotiated under conditions more favourable or similar than those of another counterparty (comparison of competing bids), and the assessment of the quality of the counterparty (creditworthiness and credibility of the counterparty).
(4) If the order is related to techniques and tools for the efficient management of assets or similar techniques and instruments, the depositary shall, in the framework of the order control, check the professional care costs in determining the price and other trading conditions; This check shall be carried out in particular by reviewing the analysis of the benefits of the transaction referred to in paragraph 3 and by verifying compliance with the rules on the use of techniques and tools for the efficient management of the property (7).
(5) Where an order for payment of the assets of a collective investment fund is not referred to in paragraphs 2 to 4, the depositary shall verify, in the context of the control of the order, that the order does not contradict the law, the Statute or the management contract, including professional care, in particular that the reasons for the investment firm or the investment fund to submit the order are justified. A check of the merits of the order for payment, including professional care, shall be made to the extent that the purpose of the payment, its amount and whether it is a one-off or regular payment.
(6) Where the legal order governing the management of the property so permits, the depositary shall agree with the collective investment fund on the arrangements of the relationship in such a way that the assets of the collective investment fund cannot be treated in a valid manner without the consent of the depositary.
(1) The depositary shall check the order before making the payment or other settlement of the transaction on the basis of the order. After payment or other settlement of the transaction, the order may be checked only where:
(a) the amount on which the order is issued shall not exceed CZK 500 000 until the aggregate daily value of such payments reaches 0,1% of the value of the collective investment fund's assets; or
(b) the assets referred to in § 26 (1) (a) and (c) or § 51 (1) (a) and (b) of the Act are the subject of trade; and
1. the way in which the market is traded pursuant to Paragraph 26 (1) (a) of the Act excludes settlement of the transaction later than the day following the submission of the order; or
2. the depositary has ensured, on the basis of a check with the investment company, investment fund or outsourcing provider of the collective investment fund in agreement with those persons during the last 12 months, that the management and control system of that person ensures adequate compliance with the law, the Statute, the depository contract and the management contract.
(2) The control of the orders referred to in paragraph 1 (a) may be carried out by checking a representative sample of payments within 30 days of the end of the week in which the order was issued. A representative sample of payments shall be selected by the depositary for a period not exceeding 30 days.
(3) The order for the execution of a payment submitted through an electronic banking system with which the depositary carries out a pre-payment check is co-authorised by the depositary. This does not apply to payments entered through automated settlement systems.
The depositary shall ensure that an investment company that manages multiple collective investment funds submits to it on a daily basis a list of closed transactions on their account, broken down by collective investment fund. The depositary shall check at least once a month that the asset has been acquired after settlement in accordance with the closed business lists provided.
The depositary shall carry out compliance checks
(a) limits relating to the assets of the collective investment fund at least once a month within 15 days of the end of the preceding month, according to the latest available data;
(b) the limits applicable to the issuer of securities held by a collective investment fund, on the basis of the last available information on the capital of the issuer or the number of voting rights associated with the issuer's shares, but at least once a quarter, in the case of the issuer, at least once every half year; and
(c) other limits under the law and the Statute, mutatis mutandis, the nature of the limit; compliance with the quality requirements of the investment instrument or its issuer shall be checked not only when dealing with the investment instrument but also during the holding of the investment instrument, at least once a quarter.
Valuation of the assets of the collective investment fund and calculation of the current value of the share or share certificate of the collective investment fund
Where a bank or branch of a foreign bank that carries out the activities of a depositary for a collective investment fund carries out a valuation of the assets of a collective investment fund or a calculation of the current value of a share or a collective investment fund unit,
(a) appreciates the assets and liabilities and calculates the actual value of the collective investment security in accordance with Section 82 of the Act and Title III of Part Three of Decree No. 194 / 2011 Coll., on a more detailed regulation of certain rules in collective investment; and
(b) separate the organisational and staffing functions of the depositary and of the branch carrying out the business of valuing the assets of the collective investment fund or calculating the actual value of the share or units of the collective investment fund in such a way as to create organisational assumptions ensuring a proper, independent and independent valuation control in the performance of the depositary's business.
Reasons for not executing the order by the depositary
The reason for not carrying out the order by the depositary pursuant to Article 23 (6) of the Act is where:
(a) the investment firm or the investment fund fails to remedy, in particular by entering a new order, the implementation of which will eliminate the lack of the original order and which can reasonably be expected to be settled; or
(b) the execution of the order would exceed the limit laid down by law or by the Statute by more than 1% or the risk of damage caused by settlement of the order clearly exceeds the risk of damage associated with failure to settle it; for the mutual fund, the depositary shall also consider the likelihood of early compensation for damage by the investment firm or the outsourcing provider that the collective investment fund manages when assessing the risk of damage.
Outsourcing of depositary activities
(1) If this decree allows the depositary to carry out its activities through the outsourcing provider, the depositary
(a) verify that the outsourcing provider is entitled to carry out the activity in question;
(b) conclude a contract with the outsourcing provider according to which the outsourcing provider, depending on the nature of the case
1. Issue the assets of a collective investment fund or documentation relating to such assets to another person without prior approval of the depositary, unless they are subject to a statutory obligation and the outsourcing provider immediately informs the depositary of the issue of the assets or documentation;
2. comply with the depositary's request to suspend the execution of an order concerning the trust;
3. allow the depositary at any time to take over the assets or documentation of the collective investment fund, where its nature so permits;
4. does not use another person for that activity, except in accordance with paragraph 2;
5. carry out the activities in question in such a way as to comply with the legislation and allow for the control carried out by the depositary.
(2) In the case of safekeeping, the contract shall determine whether and under what conditions the outsourcing provider may use other persons to carry out the activities in question; the conditions laid down in paragraph 1 must be met.
ARRANGEMENTS OF THE TREATY OF THE STANDARD FUND
(Paragraph 20 (11) of the Law)
(1) The depositary contract shall define the standard fund:
(a) the duration of the contract;
(b) the conditions under which the contract may be amended or cancelled;
(c) the rules necessary to facilitate the transition to another depositary and the procedure by which the depositary sends all relevant information to another depositary in the case of a transfer.
(2) Where the parties to the depositary's contract of a standard fund agree to electronically transmit some or all of the information they exchange to each other, the depositary's contract of a standard fund shall contain provisions on the keeping of records of such communication.
(3) The standard fund deposit agreement may cover several standard funds managed by the same investment company. In that case, the contract shall list the standard funds covered by the contract.
(4) The Contracting Parties may provide details of the means and procedures referred to in Article 17 (c) and (d) in the Depositary Agreement of the Standard Fund or in a separate written contract.
(5) The Contracting Parties shall indicate in the depositary contract that the depositary contract of the Standard Fund is governed by the legal order of the Member State of the European Union whose supervisory authority has granted permission to establish or establish a Standard Fund.
The deposit agreement of the standard fund further defines:
(a) the procedures of the depositary in carrying out its business, including the safekeeping of the assets of the standard fund by type of asset held by the standard fund;
(b) the procedures in the event of a change to the Statute of the Standard Fund and the definition of changes to the Statute on which the depositary is to be informed or changes to which the investment firm must agree in advance with the depositary;
(c) the procedures and description of the means used by the depositary to send information to the investment firm in order to be able to fulfil its obligations properly; that description also includes means and procedures relating to the exercise of the rights associated with investment instruments and ensuring timely and flawless access by the investment firm to information relating to the accounts of the standard fund;
(d) the procedures and description of the means by which the depositary will have access to the information it needs for the proper performance of its duties;
(e) procedures to enable the depositary to monitor the performance of the investment firm's business related to the management of the assets of the standard fund and to evaluate the quality of all the information sent, including the conduct of occasional on-the-spot checks;
(f) the procedures by which the investment firm may control the activities of the depositary in respect of its contractual obligations.
(1) The Depositary Agreement of the Standard Fund defines the description of the communication system between the parties to the Depositary Agreement which regulates:
(a) an overview of the types of information that the investment firm and the depositary will exchange when issuing, buying and cancelling the units of the standard fund;
(b) the obligations of the Contracting Parties relating to the protection of sensitive and confidential information; such obligations must not undermine the access of the home supervisory authority of the investment company and the standard fund to all relevant documents and information;
(c) where appropriate, the tasks and duties of the Parties in the framework of measures to prevent the legalisation of proceeds from crime and terrorist financing.
(2) The standard fund deposit agreement also contains provisions on the use of outsourcing activities by the depositary or investment firms which include:
(a) a commitment by both Parties to provide regular information on outsourcing providers through which they carry out any of their activities;
(b) an undertaking by both Contracting Parties to provide, upon request, information on the criteria used to select an outsourcing provider for the performance of its activities and the measures taken to monitor the performance of that outsourcing provider;
(c) a statement that the liability of the depositary under Article 23 (12) of the Act does not affect the fact that it has entrusted the assets of the standard fund or part of it to the depositor of the outsourcing.
FINAL PROVISIONS
Repeal
Decree No. 115 / 2007 Coll., on the details of the performance of the obligations of the depositary of the collective investment fund, is hereby repealed.
Efficacy
This decree shall take effect on the day of its publication.
Governor:
Ing. Singer, Ph.D., v. r.
1) Commission Directive 2010 / 43 / EU of 1 July 2010 implementing Directive 2009 / 65 / EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, rules of conduct, risk management and content of the contract between the depositary and the management company.
2) Paragraph 92 (1) of Act No. 256 / 2004 Coll., on Capital Market Business, as amended.
3) § 93 of Act No. 256 / 2004 Coll., as amended.
4) Article 204a (2) of Act No. 513 / 1991 Coll., Commercial Code, as amended by Act No. 370 / 2000 Coll.
5) § 88 of Act No. 189 / 2004 Coll., on Collective Investment, as amended.
6) § 75 paragraph 1 (j), (l) and (m) of Act No. 189 / 2004 Coll., as amended by Act No. 188 / 2011 Coll.
7) Sections 27 and 49b of Act No. 189 / 2004 Coll., as amended. Title II of Part Three of Decree No. 194 / 2011 Coll., on a more detailed regulation of certain rules in collective investment.
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Regulation Information
| Citation | Decree No. 195 / 2011 Coll., on the activities of the depositary of the collective investment fund and the arrangements for the deposit agreement of the standard fund |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 15.07.2011 |
|---|---|
| Effective from | 15.07.2011 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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