What is Government Regulation No. 243 / 2013 Coll.?

Government Regulation No. 243 / 2013 Coll., on Investment Funds and on Techniques for their Management — Government regulations on investment funds and techniques for their management.

When it became Government Regulation No. 243 / 2013 Coll. effectiveness?

Government Regulation No. 243 / 2013 Coll. became effective 19.08.2013.

Is Government Regulation No. 243 / 2013 Coll. still valid?

Yes, Government Regulation No. 243 / 2013 Coll. is still valid and effective.

How many times was it Government Regulation No. 243 / 2013 Coll. amended?

Government Regulation No. 243 / 2013 Coll. has 8 time versions of the text.

Government Regulation No. 243 / 2013 Coll. - Government regulations on investment fun...

243

GOVERNMENT REGULATION

of 31 July 2013

on investment funds and techniques for their management

The Government mandates pursuant to § 215 (2) and § 284 (2) of Act No. 240 / 2013 Coll., on investment companies and investment funds:

ČÁST PRVNÍ

SUBJECT MATTER OF THE ADJUSTMENT

§ 1

(1) This Regulation implements European Unionlegislation (1), takes into account the general guidelines of the European Supervisory Authority and regulates qualitative requirements for the standard fund for:

(a) the rules governing the composition of the fund's assets, consisting of:

1. the items which may be acquired into the assets of the fund; and

2. investment limits to be observed in relation to items referred to in point 1, including investment limits when copying the composition of the equity index or bond index;

(b) the rules governing the acceptance of a loan or loan on behalf of the Fund, including limits on the level of use of leverage, where the leverage is exercised;

(c) rules on the use of the assets of this Fund for the provision of credit, loan or gift, for securing another person's debt or for the payment of debt not related to the management of that fund, including:

1. whether the assets of that fund may be used to provide a loan or loan that is not related to its management; and

2. whether the assets of this fund can be used to provide a gift, to secure another person's debt or to pay a debt that is not related to its management;

(d) the rules governing the conclusion of contracts for the sale of goods for the account of this Fund which the Fund does not have in its possession or which it has been committed for a period of time, including whether contracts for the sale of goods which it does not have in its possession or which it has in its possession may be concluded for the account of that Fund;

(e) techniques for managing the fund;

(f) rules on the use of the techniques referred to in (e), including rules on the negotiation of repurchase transactions using the assets of the fund and rules on investment in connection with agreed repurchase transactions;

(g) rules for reducing risk from the use of derivatives;

(h) rules for the calculation of the total exposure of this fund by the commitment method and by the method of measurement of the value at risk, with a distinction according to the model of the absolute risk value and relative risk values, or, where appropriate, other advanced risk measurement method; and

(i) limits for total exposure for the methods referred to in (h).

(2) This Regulation also provides for the special fund, with a distinction between whether it invests as a real estate fund (Section 51), the qualitative requirements for the rules, techniques and limits referred to in paragraph 1.

(3) This Regulation also provides for qualitative requirements for the use of leverage on the account of that fund and for the provision of investment vehicles from the assets of that fund as financial collateral or comparable collateral under the law of a foreign State or other collateral for a qualifying investor fund whose manager is entitled to exceed the applicable limit.

(4) Where this Regulation applies the concept of:

(a) a standard fund, which shall be understood to mean, in the case of a standard fund which creates sub-funds, a sub-fund of a standard fund;

(b) a foreign investment fund, in the case of a foreign investment fund, which creates facilities comparable to those of sub-funds; in so doing, the establishment is not comparable to the sub-fund if the assets in that establishment are to be used to meet the debt which is not the debt of that establishment;

(c) a collective investment fund, meaning, in the case of a collective investment fund which creates sub-funds, a collective investment fund sub-fund;

(d) a special fund, which shall be understood as constituting a special fund,

(e) real estate fund, which is understood to mean, in the case of a real estate fund which creates sub-funds, a real estate fund sub-fund;

(f) a qualifying investor fund, meaning, in the case of a qualifying investor fund that creates sub-funds, a qualifying investor fund sub-fund.

ČÁST DRUHÁ

STANDARD FUND

HLAVA I

COMPLIANCE OF PROPERTY

Díl 1

Things

§ 2

Basic provisions

(1) Only the matter referred to in paragraphs 3 to 16 can be acquired into the assets of the standard fund.

(2) Only assets of the standard fund which is a subordinated fund may be acquired:

(a) a security or a book-entry security issued by its management fund;

(b) a financial derivative referred to in paragraphs 12 and 13, which is a technique for the management of the fund and which is agreed solely for the purpose of collateral;

(c) a claim for payment of funds from accounts in Czech or foreign currency pursuant to Paragraph 15;

(d) the case according to Article 16, if this standard fund is a joint-stock company with variable capital and if the Czech National Bank is authorised to operate an autonomous investment fund.

(3) Gold, silver, platinum, paladium, iridium, rhodium, ruthenium or osmium ("precious metal ') or a certificate representing precious metal cannot be acquired into the assets of the standard fund.

(4) A derivative other than a derivative cannot be negotiated on behalf of the standard fund,

(a) which allows the credit risk of an underlying to be transferred independently of other risks associated with that underlying;

(b) where the supply or transfer, including physical delivery and transfer, does not result in underlying assets other than those referred to in Sections 3 to 16; and

(c) the associated risks shall be taken into account by the risk management system of the operator of the standard fund in order to take sufficient account of at least the risk of information asymmetry between the manager and another party to such a derivative resulting from the possible access by that other party to private information on the companies whose assets are used as underlying assets for that derivative.

§ 3

Investment security

(1) The assets of the standard fund may be acquired

(a) investment security;

1. which is admitted to trading on a European regulated market or on an operator's multilateral trading system established in a Member State; or

2. which is admitted to trading on a market similar to a regulated market located in a Member State which is not a Member State, or which is traded on a market similar to a regulated market located in a Member State which is not a Member State, provided that those markets are listed in a list of foreign markets similar to a regulated market located in a Member State which is not a Member State maintained by the Czech National Bank,

(b) new issue investment paper;

1. where the issuer's obligation to enter into trading on one of the markets referred to in point (a) results from its emission conditions; and

2. where the request for admission to trading on one of the markets referred to in point (a) is made in such a way that the investment security is admitted to trading within 1 year of the date on which its issue was terminated,

(c) an investment security which is a security or a book-entry security issued by a collective investment fund that does not purchase securities issued by it or a book-entry securities, or a comparable foreign investment fund, provided that the manager of such a fund complies with any of the corporate governance and management codes and is subject to the supervision of the Czech National Bank, the supervisory authority of another Member State or the supervisory authority of another State which, in the exercise of supervision, contributes to the protection of investors if the investment paper fulfils the condition set out in (a) or (b);

(d) an investment security the value of which relates to items which may include items other than those referred to in paragraphs 3 to 16 if the investment security fulfils the condition under (a) or (b); and

(e) an investment security not referred to in points (a) to (d), subject to the conditions laid down in Article 17 (5).

(2) An investment security may be acquired into the assets of a standard fund if:

(a) its liquidity does not weaken the ability to purchase units or investment shares issued by the Fund at the request of the owner of the investment share or shareholder of the fund's assets; for investment securities admitted to trading on the markets referred to in point (a) of paragraph 1, this condition shall be deemed to be met if information which might lead to a different conclusion is not available to the person receiving the investment instrument for the account of the standard fund in its assets,

(b) as a result of its holding, there is no risk to the standard fund of loss in excess of the amount paid for it;

(c) its value can be reliably determined, which in the case of:

1. the investment security referred to in points (a) to (d) of paragraph 1 shall mean that there is a reliable and regular valuation of the final market rate or other valuation independent of the issuer of that investment security;

2. the investment security referred to in paragraph 1 (e) means that the valuation is carried out periodically and is based on investment research or other information provided by the issuer of that investment security;

(d) adequate information is available to him, which in the case of:

1. the investment security referred to in points (a) to (d) of paragraph 1 means that regular, accurate and complete information on that investment security is available to market participants;

2. The investment security referred to in paragraph 1 (e) shall mean that the person who receives the investment security into the fund's assets on behalf of the standard fund is provided with regular and accurate information on the investment security;

(e) its acquisition is consistent with the investment strategy of the standard fund; and

(f) the risks associated with it are sufficiently taken into account by the risk management system for the standard fund.

(3) An investment security may be acquired into the assets of the standard fund, whether fully repaid or not.

(4) In this Regulation the term "investment security 'does not include an investment security which is a security or a book-entry security issued by an investment fund or a foreign investment fund; This shall not apply if it is the investment security referred to in paragraph 1 (c).

§ 4

Investment security containing a derivative

(1) An investment security containing a derivative that can be acquired into the assets of a standard fund is an investment security referred to in Section 3 containing a component,

(a) for the presence of which some or all of the cash flows associated with that investment paper may be changed depending on the interest rate, the price of another investment instrument, the exchange rate, the price index, the interest rate index, the rating, the credit assessment, the credit index or any other variable variable, thereby allowing it to change its value in a similar manner to a derivative;

(b) whose economic character and the risks associated with it are not closely related to the economic character of the investment security and the risks associated with it; and

(c) which has a significant impact on the risk profile of the standard fund and on the value of the investment security.

(2) Where an investment security contains an component that is separately transferable, it shall be deemed not to contain a derivative; such a component is considered as a separate investment instrument.

(3) Where an investment security contains a derivative, paragraphs 22 and 34 to 44 shall apply mutatis mutandis to that derivative.

(4) For the purposes of this Regulation, an investment security shall not contain a derivative unless it uses leverage in relation to the underlying asset.

§ 5

Money market instrument admitted to trading

(1) A money market instrument admitted to trading on the markets referred to in Article 3 (1) (a) may be acquired into the assets of the standard fund,

(a) if it can be sold at limited cost within a reasonable period of time for the purchase of a unit sheet or investment shares issued by that fund;

(b) if it is an instrument for which accurate and reliable valuation methods are available,

1. allow the calculation of its net value, which is not significantly different from the price at which the instrument could be sold between the informed parties under normal market conditions; and

2. are based on market data or valuation methods, including methods based on residual value; and

(c) if it is an instrument,

1. whose original maturity is not more than 397 days,

2. whose residual maturity is not more than 397 days,

3. which undergoes regular indexation of revenues in accordance with money market conditions at least every 397 days; or

4. whose risk, in particular the level of credit risk and interest rate risk, corresponds to the risk profile of the instrument that meets the condition set out in points 1, 2 or 3.

(2) The conditions referred to in points (a) to (c) of paragraph 1 shall be deemed to be met for a money market instrument admitted to trading on the markets referred to in point (a) of Article 3 (1) if information which might lead to a different conclusion is not available to the person who acquires the instrument on behalf of the standard fund in its assets.

§ 6

Money market instrument not admitted to trading

(1) A money market instrument not admitted to trading on the markets referred to in Article 3 (1) (a) may be acquired into the assets of the standard fund if:

(a) it has been issued by a national central bank, a Member State central bank, the European Central Bank, the European Union, the European Investment Bank, a State or a member of the Federation, or by an international financial organisation of which one or more Member States is a member, or the latter have taken over the guarantee;

(b) it has been issued by the issuer by which securities or book-entry securities are admitted to trading on a European regulated market or on the market referred to in Article 3 (1) (a) (2);

(c) has been issued by or taken over by a person,

1. which is subject to supervision by the Czech National Bank or the supervisory authority of another Member State,

2. which is established in a Member State of the Organisation for Economic Cooperation and Development, belonging to signatories to the International Agreement General Arrangements to Borrow (G10 Member State),

3. which is assessed by at least the investment grade of a credit rating issued by a credit rating agency registered under the directly applicable European Union regulation governing credit rating agencies (15); or

4. whose in-depth analysis shows that the supervisory rules to which it is subject are comparable to those of European Union law; or

(d) it has been issued by an issuer which is an eligible counterparty, provided that the person investing in it enjoys similar protection to the person investing in the money market instrument referred to in (b), (c) or (d) and their issuer is:

1. a company whose equity is equal to at least EUR 10 000 000 and which publishes financial statements which are drawn up in accordance with European Union law;

2. a person who provides financing for a whole for which consolidated financial statements are drawn up, of which at least one member is an issuer of shares or similar securities or book-entry securities representing a share in a trading company or other legal person admitted to trading on a European regulated market or on the market referred to in Article 3 (1) (a) (2); or

3. a person who, through the issuance of securities or book-entry securities, provides financing for companies, contractual relationships or other structures set up for the purpose of securitisation (16) whose financing through credit lines is provided by the person referred to in (c).

(2) The money market instrument referred to in paragraph 1 may be acquired into the assets of the standard fund only if the legislation applicable to its issue or the issuer ensures the protection of investors or savings by:

(a) the conditions set out in Article 5 (1) (a) to (c) are fulfilled;

(b) the person who receives the instrument into the fund's assets on behalf of the standard fund has sufficient information on that money market instrument, including information enabling the proper assessment of the credit risks associated with the investment in such an instrument; and

(c) this money market instrument is not limited to transferability.

(3) For the purposes of this Regulation, an eligible counterparty shall:

(a) the bank;

(b) savings and credit cooperatives;

(c) a securities dealer who is not a bank and who:

1. Observes the capital adequacy under Articles 9 and 9a of the Capital Market Act; and

2. has permission to provide an investment service for trading in investment vehicles for its own account;

(d) the insurance undertaking;

(e) the reinsurance undertaking;

(f) an investment company;

(g) a pension company;

(h) a self-governing investment fund;

(i) a foreign person with a registered office in another Member State with a comparable permit to operate as one of the persons referred to in points (a) to (h); or

(j) a foreign person established in a State which is not a Member State, with a permit equivalent to that referred to in points (a) to (h).

§ 7

Use of legal assumptions when acquiring money market instruments

(1) For money market instruments referred to in Article 6 (1) (a), with the exception of those referred to in Article 6 (1) (b) and issued by the European Central Bank or the central bank of a Member State, the condition set out in Article 6 (2) (b) is fulfilled if at least the information relating to the issue or terms of issue or the legal and financial situation of the issuer is available to the person receiving the instrument on behalf of the standard fund before the date of issue of the money market instrument.

(2) For money market instruments referred to in Article 6 (1) (b) and (d), and those issued by a Member State or an international financial organisation, but for which a guarantee has not been taken over, the Member State or Federation State which is a Member State, the condition referred to in Article 6 (2) (b) is satisfied if the person acquiring the instrument on behalf of the standard fund is at least available to the fund's assets

(a) information relating to the issue or conditions of the issue and the legal and financial situation of the issuer before the issue date of the money market instrument;

(b) updates of the information referred to in point (a) made regularly and at a major event, and in particular when changes affecting the issuer's financial situation and its ability to meet its obligations; and

(c) available and reliable statistics on emissions and emission conditions.

(3) In the case of money market instruments referred to in Article 6 (1) (c), the condition referred to in Article 6 (2) (b) is met if at least the person acquiring that instrument on behalf of the standard fund in its own funds is available to:

(a) information relating to the issue or terms of the issue or the legal and financial situation of the issuer before the issue date of the money market instrument;

(b) updates of the information referred to in point (a) made regularly and at a major event, and in particular changes affecting the issuer's financial situation and its ability to meet its obligations; and

(c) available and reliable statistics on the issue and on the conditions of the issue or other data allowing a proper assessment of the credit risks associated with the investment in such an instrument.

§ 8

Money market instrument containing a derivative

(1) A money market instrument containing a derivative that can be acquired into the assets of a standard fund is a money market instrument referred to in Section 5, 6 or 9 containing a component,

(a) for the presence of which some or all of the cash flows associated with this instrument may be changed depending on the interest rate, the price of another investment instrument, the currency rate, the price index, the interest rate index, the rating, the credit assessment, the credit index or any other variable variable, as a result of which it may change its value mutatis mutandis as a derivative;

(b) whose economic nature and the risks associated with it are not closely related to the economic character of the money market instrument and the risks associated with it; and

(c) which has a significant impact on the risk profile of the standard fund and on the value of the money market instrument.

(2) Where a money market instrument contains an component that is separately transferable, it shall be deemed not to contain a derivative; such a component is considered as a separate investment instrument.

(3) Where a money market instrument contains a derivative, Sections 22 and 34 to 44 apply mutatis mutandis to that derivative.

§ 9

Other money market instrument

A money market instrument which is not admitted to trading on the markets referred to in Article 3 (1) (a) and which does not meet any of the conditions set out in Article 6 may also be acquired into the assets of the standard fund if it fulfils the conditions set out in Articles 6 (1) (a) to (c) and 17 (5).

§ 10

Securities or book-entry securities issued by a collective investment fund or comparable foreign investment fund

(1) A security or book-entry security issued by a standard fund or a comparable foreign investment fund may be acquired into the assets of a standard fund which, according to its Statute or a comparable document, invests a maximum of 10% of the value of its assets in securities or book-entry securities issued by collective investment funds or comparable foreign investment funds.

(2) A security or a book-entry security issued by a special fund or a comparable foreign investment fund may be acquired into the assets of a standard fund if:

(a) under the fund's statute or comparable document which issued that security or book-entry paper, that fund shall invest no more than 10% of the value of its assets in securities and book-entry securities issued by collective investment funds or comparable foreign investment funds;

(b) according to the fund's statute or comparable document which issued that security or book-entry paper, the sole activity or sole purpose of that fund is to collect funds from the public by issuing securities or book-entry securities and by investing the funds collected together on the basis of a defined investment strategy on the basis of the principle of risk distribution to owners of such securities or book-entry securities, and to further manage such assets;

(c) under the fund's statute or comparable document which issued the security or the book-entry security, the assets of the fund may not be acquired other than those which, under this Regulation, may be acquired into the assets of the standard fund;

(d) such securities or book-entry securities are purchased within a period of less than 1 year or ensure that the rate or price of such securities or book-entry securities on the European regulated market or on the market referred to in Article 3 (1) (a) (2) does not deviate significantly from their current value;

(e) the manager of the fund which issued those securities or the book-keeping securities is authorised by the supervisory authority of the State in which he is established to be subject to supervision by that supervisory authority and that supervisory authority and the Czech National Bank have agreed to exchange the information necessary to exercise supervision under the law governing investment companies and investment funds;

(f) the fund manager who has issued such securities or book-entry securities complies with prudential rules comparable to those of European Union law;

(g) invest, according to its status or comparable document, in such a way as to ensure the spread of risk; and

(h) a half-yearly report and an annual report shall be drawn up and published for the fund which issued the security or the book-entry security, which shall allow the assessment of the situation of the fund in respect of the assets, revenues and the management of the fund's assets during the financial year to which they relate.

(3) A security or a book-entry security issued by a collective investment fund or a comparable foreign investment fund may be acquired into the assets of a standard fund, irrespective of whether it has been fully repaid.

§ 11

Investment shares for another sub-fund of the same standard fund

An investment share issued to another sub-fund of the same standard fund may not be acquired into the assets of one sub-fund of the standard fund.

§ 12

Financial derivative admitted to trading

A financial derivative admitted to trading on the markets referred to in Article 3 (1) (a) may be negotiated on behalf of the standard fund if the value to which the value of that derivative relates is only:

(a) the case referred to in paragraphs 3 to 15 which, according to the investment strategy of that fund as set out in the Statute of that fund, may be acquired into the assets of that fund;

(b) the interest rate, exchange rate or currency; or

(c) a financial index sufficiently diversified, sufficiently representative and publicly available.

§ 13

Financial derivative not admitted to trading

A financial derivative not admitted to trading on the markets referred to in Article 3 (1) (a) may be negotiated on behalf of the standard fund if:

(a) the value of that derivative relates only to the values referred to in § 12 (a) to (c);

(b) the derivative is valued reliably and verifiably each working day;

(c) the manager of that fund may at any time transfer or terminate the derivative on his own initiative, or otherwise terminate it for an amount that can be achieved between the parties under conditions that are not significantly imbalance for either party, or may close a new derivative to compensate the underlying assets of that derivative in accordance with the procedure laid down in Paragraph 37; and

(d) the derivative is negotiated with an admissible counterparty subject to supervision by the Czech National Bank, the supervisory authority of another Member State or the supervisory authority of another State.

§ 14

Use of legal assumptions in the negotiation of financial derivatives

(1) The financial index is sufficiently diversified for the purposes of Paragraph 12 (c) if:

(a) the change concerning one of the values to which this index relates does not substantially affect the value of that index;

(b) this index consists of such a number of values that at least the conditions set out in § 24 are met in a comparable manner; and

(c) this index is not made up of one commodity.

(2) The financial index is sufficiently representative for the purposes of Paragraph 12 (c) if:

(a) adequately reflect any change concerning one of the values to which the index relates;

(b) its composition is regularly adjusted in such a way that it still reflects the situation on the markets in which it is used, on the basis of publicly available criteria,

(c) the values to which it relates are so liquid that the composition of that index can be copied;

(d) it has not been created or calculated at the request or following orders of one or more persons;

(e) its creator does not accept payment for including the value to which the index relates in the composition of the index; and

(f) the already published values to which this index relates may not be amended retroactively.

(3) The financial index is publicly available for the purposes of Section 12 (c) if:

(a) proper procedures, including procedures for determining the prices of underlying assets of that index for which a market price is not available, are used for the collection, calculation and publication of the index; and

(b) the calculation of the value of this index, the way in which it is composed and the updating of its composition, its changes, operational difficulties in the timely and accurate publication of information relating to it or other relevant relevant information shall be made public as widely as possible and in due time.

(4) A derivative is valued reliably and verifiably for the purposes of Paragraph 13 (b) if:

(a) its valuation corresponds to market conditions;

Citation	Government Regulation No. 243 / 2013 Coll., on Investment Funds and on Techniques for their Management
Regulation Type	Regulation
Author	-
Collection	Code of Laws

Date of Promulgation	19.08.2013
Effective from	19.08.2013
Effective until	-
Status	Valid

Government Regulation No. 243 / 2013 Coll.

Government regulations on investment funds and techniques for their management

Contents

ČÁST PRVNÍ

§ 1

ČÁST DRUHÁ

HLAVA I

Díl 1

§ 2

§ 3

§ 4

§ 5

§ 6

§ 7

§ 8

§ 9

§ 10

§ 11

§ 12

§ 13

§ 14

Contents

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