Decree No. 270 / 2004 Coll.
Order on how to measure the fair value of the CIU's assets and liabilities and how to determine the current value of the CIU's share or units
Valid
Order
Effective from 01.05.2004
270
DECLARATION
of 7 April 2004
on the method of determining the fair value of the assets and liabilities of the collective investment fund and the method of determining the actual value of the shares or units of the collective investment fund
The Czech National Bank provides pursuant to § 139 (a) of Act No. 189 / 2004 Coll., on Collective Investment, hereinafter referred to as "the Act":
Subject matter
This decree regulates the way in which the fair value of the assets and liabilities of the collective investment fund (hereinafter referred to as "the fund ') is determined in cases not covered by specific accounting legislation, and the way in which the actual value of the share or share certificate of the collective investment fund is determined.
Investment securities, money market instruments and financial derivatives admitted to trading on the markets referred to in Section 26 (1) (a) of the Act
(1) In order to determine the fair value of investment securities, money market instruments and financial derivatives, including equivalent money settlement rights (hereinafter referred to as "financial instruments') admitted to trading on the market referred to in Section 26 (1) (a) of the Act, the fund shall use the market value in accordance with the special accounting law, (1) unless they are financial instruments held to maturity, securities of a collective investment fund that purchase securities issued (hereinafter referred to as" collective investment fund securities') or financial instruments actively traded on a non-trading market for which the procedure referred to in paragraph 2 may be applied.
(2) Where a generally accepted information system publishes a sufficiently representative figure for a financial instrument on a daily basis
(a) the average price of the underlying transactions;
(b) the average price between binding supply and demand; or
(c) the average price of binding demand by market makers;
the fund shall use primarily the data specified in point (a) to measure the fair value of the financial instrument; If the information referred to in point (a) is not available, the Fund shall use the information specified in point (b) and, if the data referred to in points (a) and (b) are not available, the Fund shall use the information set out in point (c) or an indication with a similar storytelling capability if it is agreed by the depositary. If there is more than one information system, the used information system shall determine the Fund in agreement with the depositary. If data from this information system is not available, it shall, with the permission of the depositary, use data from another information system.
(3) Where the procedure referred to in paragraph 2 cannot be applied and the financial instrument has not been traded on the market referred to in Article 26 (1) (a) of the Act for more than 30 days preceding the date on which the fund carries out the measurement of its fair value, the fund shall adjust the potential losses arising from the impairment of financial instruments by reducing the last known market value of the financial instrument by 1% on a daily basis for 100 calendar days.
(4) The provisions of paragraphs 1 to 3 of the Fund shall not apply where an unconditional and unrestricted public proposal for a contract for the purchase of participating securities has been made (2) (hereinafter referred to as the "public proposal") or the right to purchase participating securities (hereinafter referred to as the "right of redemption") has been exercised under a special law and the price of the share in a public proposal or in a general meeting resolution is higher than the fair value of the share determined in accordance with paragraphs 1 to 3. The Fund shall, for the duration of the public proposal for the determination of the fair value of the share, use the price indicated in that public proposal and for the time before the transfer of ownership to the share, if applicable, of the right of redemption, the price indicated in the resolution of the general meeting.
(5) The provisions of paragraphs 1 to 3 shall also not apply to the Fund where the public limited liability company with a transfer of capital to the shareholder has been abolished under a special law. 3) In this case, the fair value corresponds to the share of the settlement in money per share.
(6) For the purpose of determining the fair value of financial instruments held to maturity, the present value of future cash payments from a financial instrument to which the holder of that financial instrument is entitled shall be used. The method of measuring fair value shall be determined by the Fund with the agreement of the depositary.
Securities of a collective investment fund
(1) For the purpose of determining the fair value of the CIU security, the AIF shall use the declared value4) of the CIU's security at the fair value date.
(2) Where the redemption of the security of a collective investment fund has been suspended, the fund shall measure the fair value of the security of the collective investment fund with an estimate of professional care, taking into account the underlying condition and with the agreement of the depositary.
Investment securities and money market instruments not admitted to trading on the market referred to in Section 26 (1) (a) of the Act
(1) Where a generally accepted information system publishes, for a given investment security or money market instrument not admitted to trading on the market referred to in Article 26 (1) (a) of the Act, a sufficiently representative indication of:
(a) the average price of the underlying transactions;
(b) the average price between binding supply and demand; or
(c) the average price of binding demand by market makers
and unless otherwise specified, the Fund shall use the information specified in point (a) to measure the fair value of the financial instrument in question; If the information referred to in point (a) is not available, the Fund shall use the information provided for in point (b) and, if the data referred to in points (a) and (b) are not available, the Fund shall use the information provided for in point (c) or the data similarly representative.
(2) Where the generally recognised information system does not disclose either of the data referred to in paragraph 1 for the financial instrument in question, the Fund shall use a qualified estimate to measure the fair value of such financial instrument with the approval of the depositary.
(3) The procedure laid down in paragraphs 1 and 2 shall not be applied by the Fund if it is for financial instruments held to maturity when the provisions of Paragraph 2 (6) apply for the measurement of fair value.
Instruments related to investment securities and money market instruments
(1) The fair value of the instruments referred to in Article 27 (2) or Article 49b (3) of the Act relating to investment securities and money market instruments shall be determined by the Fund in accordance with international financial reporting standards.
(2) The procedure referred to in paragraph 1 shall also apply to the determination of the fair value of investment securities or money market instruments containing a derivative.
Fair value of securities in special cases
(1) For the purposes of determining the fair value of investment securities referred to in Section 26 (1) (b) of the Act, the Fund shall use the valuation by qualified estimation with the permission of the depositary.
(2) For the purposes of determining the fair value of a financial instrument pursuant to Articles 2 and 4, issued by an issuer whose assets were, according to the information available, declared bankrupt or rejected an application for bankruptcy for a lack of assets, or issued by an issuer for which a settlement procedure has been initiated, the fund shall use zero value.
(3) The fair value of the financial instrument referred to in paragraphs 2 and 4 issued by the issuer in liquidation shall be determined by the fund with professional care. The method of determining that fair value shall be determined by the Fund with the agreement of the depositary.
Deposits with a bank
Deposits referred to in Articles 26 (1) (e) and 49a (1) of the Act shall be included in the assets of the Fund at nominal value, including interest income on the date on which the fair value was determined after deduction of the adjustments, where they were created, unless the deposit contains financial instruments; in that case, the fund shall determine the fair value of the deposit as the sum of the fair value of the deposit obtained by the net present value method at the date of calculation and the fair value of the embedded financial instruments.
Financial derivatives
(1) The fair value of the financial derivative, according to § 26 (1) (g) of the Act, is determined by the fund in accordance with § 4 (1).
(2) The fair value of financial derivatives other than those referred to in paragraph 1 or in Section 2 of the Fund shall be determined with professional care in accordance with the standard economic and mathematical models for determining the fair value of the relevant type of financial derivative. The method of measuring fair value according to the sentence of the first fund shall be determined with the agreement of the depositary.
Real estate
(1) The real value of the real estate held by the special property fund for the purposes set out in § 53 (3) (a) of the Act is determined by the yield method set out in § 2 (1) (m) of the Act.
(2) The real value of the property owned by the special property fund for the purpose of Article 53 (3) (b) of the Act is determined by a comparison method. The fair value must not deviate substantially from the average price of real estate sold in the period since the last fair value measurement on the site and whose significant characteristics are comparable to those of real estate whose value is determined. The characteristics relevant to the valuation of the property (5) and the definition of the location shall be determined in accordance with the valuation standards and with the agreement of the depositary.
(3) Until the first measurement of the fair value of the property referred to in paragraph 1 or 2, the fair value shall be determined as the cost of the property.
Commodity and commodity derivatives
(1) The fair value of a commodity traded on a commodity exchange is the rate published by that exchange at the date of calculation of the fair value. The fair value of a commodity derivative traded on a commodity derivative exchange is the rate published by that exchange at the fair value date.
(2) The fair value of other commodities and commodity derivatives is determined by the Fund by a qualified estimate with the agreement of the depositary.
Other movable goods, property rights and other assets
(1) The fair value of the assets of the fund, with the exception of securities, shall be determined by a qualified estimate with the agreement of the depositary.
(2) The fair value of the assets and other assets held by the Fund shall be determined by the Fund as a qualified estimate of the present value of future transactions on property rights or other assets. The method of determining the present value of future transactions shall be determined by the Fund with the agreement of the depositary.
Commitments
The fair value of the liability, which is the obligation to supply the financial instrument, shall be determined by the Fund as the fair value of the financial instrument. Other commitments of the Fund shall be valued in accordance with international financial reporting standards.
Claims
(1) The basis for determining the fair value of purchased receivables is their cost. The basis for determining the fair value of other claims is their nominal value. For claims before maturity, the fair value shall be determined as the present value of its nominal value.
(2) Predictable risks and potential losses arising from the impairment of claims shall be taken into account in such a way that the basis for the fair value assessment referred to in paragraph 1 shall be reduced by 10% at maturity no more than 90 days, by 33% at maturity no more than 180 days, by 66% at maturity no more than 360 days, claims for the debtor in the settlement procedure and claims for the debtor whose assets have been declared bankrupt or rejected for lack of assets, shall be reduced by 100%.
(3) Where, at the time of professional care, it is considered that the fair value of the claim, which is the present value of the expected transactions, including those resulting from reinsurance, is, in particular, higher or lower than the value determined in accordance with paragraphs 1 and 2, the Fund shall determine the fair value of the claim in a different way, with the agreement of the depositary.
Equity interests in real estate
(1) The fair value of the equity in the real estate company (6) is determined by a qualified estimate (7) with the agreement of the depositary. It is based on the real value of real estate held by the real estate company established by the expert committee (8), which is treated mutatis mutandis in accordance with Paragraph 9, unless it is the first measurement of the real value of real estate based on its purchase price.
(2) If shares of a real estate company are admitted to trading on the market referred to in Section 26 (1) (a) of the Act, the fair value of the equity in the real estate company shall be determined as the fair value of the investment securities referred to in Section 2.
Method for determining the current value of the fund's share or units
(1) The basis for determining the current value of the fund's shares or units is the fund's own funds at the date of establishing the current value, taking into account the timeliness of the standard costs affecting the fund's own funds.
(2) For the purposes of determining the current value referred to in paragraph 1, standard costs affecting the own funds of the Fund shall mean, in particular, the fees set out in its Statute, such as the fund's management fee and remuneration to the depositary, the audit price and the expected tax liability on the date on which the fair value is calculated.
(3) The value of equity at the date on which the actual value is determined, divided by the sum of all the nominal values of the shares issued in circulation or the sum of all the nominal values of the shares issued in circulation, multiplied by the appropriate nominal value of the share or units concerned, shall be rounded to the number of decimal places indicated in the Statute, expressing the current value of the share or units of the fund.
Common provisions
(1) Where it can reasonably be assumed that the value of financial instruments, deposits, real estate, liabilities, receivables or other assets determined in accordance with paragraphs 2 to 14 does not correspond to the price at which the asset in question can be monetized with professional care, the fund shall determine the value of such an asset in a manner that gives a true and fair view of its fair value within the meaning of international financial reporting standards.
(2) The reasons for the measurement of fair value referred to in paragraph 1 shall be recorded in writing by the Fund.
(3) The agreement of the depositary shall be required to determine the fair value referred to in paragraph 1.
(4) In the event that the consent of the depositary is required for the fair value method, the agreed method may be amended only with the agreement of the depositary and provided that new facts arise that would alter the credibility of the agreed calculation.
(5) If the depositary does not agree to the determination of the fair value of the assets or liabilities or to the determination of the fair value of the assets or liabilities referred to in paragraph 1, § 2 (2), § 3 (2), § 4 (2), § 6 (1) or (3), § 8 (2), § 9 (2), § 10 (2), § 11, § 13 (3) or § 14 (1), it shall immediately notify the investment company or investment fund and the Czech National Bank in writing. In such a case, the Fund shall use zero value for the asset value or liability.
(6) For the purposes of this decree, own capital means the difference between the value of the assets and the value of the liabilities. The value of assets and liabilities shall be calculated as the sum of the fair value of the assets and liabilities related to the investment activity and the value of the other assets and liabilities determined under the special accounting legislation.
Efficacy
This decree takes effect on the date of the entry into force of Act No. 189 / 2004 Coll., on Collective Investment.
Presidium member acting as Chairman:
Ing. Shimáček v. r.
1) Paragraph 27 (5) of Act No. 563 / 1991 Coll., on Accounting, as amended.
2) Sections 183a, 183b, 183h and 186a of Act No. 513 / 1991 Coll., Commercial Code, as amended.
2a) Sections 183i to 183n of the Commercial Code, as amended by Act No. 216 / 2005 Coll. and Act No. 377 / 2005 Coll.
3) § 220p of the Commercial Code.
4) Paragraph 12 (1) of Act No. 189 / 2004 Coll., on Collective Investment.
5) Sections 53e (2) (c), (e), (g) to (i) and 53e (3) of Act No. 189 / 2004 Coll., as amended by Act No. 224 / 2006 Coll.
6) § 53c of Act No. 189 / 2004 Coll., as amended by Act No. 224 / 2006 Coll.
7) § 53f (2) (d) of Act No. 189 / 2004 Coll., as amended by Act No. 224 / 2006 Coll.
8) § 53f (2) (c) of Act No. 189 / 2004 Coll., as amended by Act No. 224 / 2006 Coll.
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Regulation Information
| Citation | Decree No. 270 / 2004 Coll., on how to measure the fair value of the assets and liabilities of the collective investment fund and on how to determine the actual value of the share or units of the collective investment fund |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 30.04.2004 |
|---|---|
| Effective from | 01.05.2004 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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