Decree No. 457 / 2004 Coll.
Decree on minimum requirements for the Statute and compulsory requirements for the simplified Statute of the collective investment fund
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Effective from 01.09.2004
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01.09.2004
10.08.2004
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457
DECLARATION
of 21 July 2004
on the minimum requirements of the Statute and the compulsory requirements of the simplified Statute of the collective investment fund
According to Section 139 (b) of Act No. 189 / 2004 Coll., on Collective Investment, hereinafter referred to as "the Act", the Securities Commission provides:
BASIC PROVISIONS
Subject matter of adaptation and definition of terms
(1) This decree implements the relevant provisions of the European Community1) and regulates the minimum requirements of the Statute and the compulsory requirements of the simplified Statute of the collective investment fund.
(2) For the purposes of this decree:
(a) a share in the profit or loss of the profit or loss of the profit or loss of the collective investment fund's assets,
(b) a collective investment target fund whose securities are acquired by another collective investment fund.
Minimum requirements of the Statute and mandatory requirements of the Simplified Statute
(1) The Statute is to be broken down into at least parts corresponding to the various sections of Titles I to III of Part Two of this Order.
(2) The formalities required in Section 15 may also be indicated in other parts of the Statute where they are related in substance.
(3) With regard to the data referred to in Articles 4 (2) (g) and (h), 8 (b) and (c) and 12 (f), (g), (h) and (i), reference may be made in the relevant part of the Statute to the annex to the Statute in which such an indication is given.
(4) The simplified Statute contains the elements in the order set out in Section 19.
(5) The data contained in the simplified Statute must comply with the data contained in the Statute.
MINIMUM OBLIGATIONS OF THE COLLECTIVE INVESTMENT STATUTE
GENERAL OBLIGATIONS OF STATUTE
The general provisions of the Statute shall be:
(a) basic data on the collective investment fund (Section 4);
(b) if the assets of the collective investment fund are managed by an investment company, the information on that investment company (Section 5);
(c) investment objectives and policies (Section 6);
(d) risk information (Section 7);
(e) information on historical performance (§ 8);
(f) principles of management of the assets of the collective investment fund (Section 9);
(g) information on the payment of profit shares (Section 10);
(h) data on securities issued by the collective investment fund (Section 11);
(i) information on the remuneration of the management and other expenditure borne by the collective investment fund (Section 12);
(j) data on the depositary (§ 13),
(k) details of the entrustment of the assets of a collective investment fund or part of it or the pursuit of collective investment activities (Section 14); and
(l) further information (§ 15).
Basic information on the collective investment fund
(1) The basic data on the collective investment fund are:
(a) name,
(b) the designation of the decision granting the authorisation on the basis of which the holding fund was created (2) (the designation of the institution which issued the decision, the date of the decision and the reference number); and
(c) details of the competence, powers and rules for the assembly and decision-making of unit-holders, if established.
(2) Basic data on the collective investment fund are for the IF
(a) data on the person (3) of the investment fund;
(b) the amount of the capital;
(c) the date on which the IF is registered;
(d) the designation of the decision granting the authorisation for the activity of the Investment Fund4 (the designation of the institution which issued the decision, the date of the decision and the reference number of the decision);
(e) data on the consolidation total5) to which the IF belongs;
(f) whether the investment fund has entrusted the management of its assets to the investment firm,
(g) a list of the managers of the IF, indicating their functions; and
(h) details of the main activities of the managers they carry out outside the IF where relevant in relation to the IF.
(3) The basic data on the collective investment fund are always:
(a) the period on which the collective investment fund is based (created);
(b) an indication of whether the fund is a standard or special fund6); if there is a special fund, also the categories of the fund under Section 49 (2) of the Act,
(c) details of the auditor of the collective investment fund;
(d) the place where any subscriber of a security issued by a collective investment fund may obtain, on request, the status or simplified status of the collective investment fund and the last published annual and half-yearly report of the collective investment fund, including by electronic means, including the address (URL) at which such information can be obtained; and
(e) historical data on collective investment fund statutory matters (e.g. previous fund names, merger data, operator changes, date of conversion of the special fund into a standard fund); where a historical figure is not known to the operator or has doubts as to the accuracy of such data, an explanatory appendix shall be provided.
Investment company data
The investment company data are:
(a) data on a person (3) an investment company;
(b) the amount of the capital and the payment of the capital,
(c) the date on which the investment firm is registered;
(d) the designation of the decision authorising the activity of an investment company (the designation of the institution which issued the decision, the date of the decision and the reference number of the decision),
(e) a list of the managers of the investment firm, indicating their functions;
(f) details of the main activities of the managers that are carried out outside the investment firm where they are relevant in relation to the activity of the investment firm or the collective investment fund of the investment firm;
(g) details of the subject matter of the investment firm's business and services provided;
(h) data on the consolidation total5) to which the investment company belongs; and
(i) the list of collective investment funds managed by investment firms.
Investment objectives and policy
(1) Information on the investment objectives of the collective investment fund contains an accurate description of the objectives pursued by the collective investment fund and, where appropriate, in particular:
(a) the specification of guarantees provided by third parties for the purpose of protecting and limiting investors;
(b) an indication that the collective investment fund intends to monitor an index or indicator (benchmark); the information must indicate the index or indicator and how or to what extent the collective investment fund monitors it; and
(c) an indication that the collective investment fund copies an index; This data shall indicate the index to which it is, to what extent the index is copied, to which market segment the index refers and where the investor can obtain more detailed information about the index including its current value [in particular the Internet address (URL address)].
(2) Information on the investment policy of the collective investment fund shall include:
(a) an indication of whether the fund is standard or special;
(b) the category of the fund under Section 49 (2) of the Act, if it is a special fund,
(c) a more detailed designation of the collective investment fund according to the risk of the type of assets in which it primarily invests (e.g. money market fund, equity fund, bond fund) if it is usually used;
(d) the types of assets in which the collective investment fund is to invest, broken down in accordance with Table 1 of the Annex to this Decree;
(e) according to the nature of the relevant assets in which the collective investment fund is to invest;
1. the maximum limit on investment in investment securities from a new issue pursuant to Section 26 (1) (b) of the Act;
2. a general designation of assets which, by reason of their nature, cannot be entrusted to the depositary for safekeeping or other custody and a maximum limit on such investments;
3. the maximum limit of investment in investment securities or money market instruments which contain a derivative pursuant to Article 27 (7) of the Act, including their type and the characteristics of their economic nature and the manner in which the risks associated with those investments will be taken into account;
4. a list of the most commonly used types of financial derivatives, specifying the regulated markets on which the collective investment fund intends to dispose of the derivatives in question, and, in the case of derivatives not admitted to trading on a regulated market under Section 26 (1) (a) of the Act, the terms of the selection of counterparties shall be indicated. For each type of derivative, its economic characteristics and information shall be given as to whether operations with that derivative will be carried out to hedge the assets of a collective investment fund against adverse developments in securities, currencies, interest rates or indices or to meet the investment objectives pursued by the collective investment fund and to indicate that the individual risks associated with those investments are shown in the risk profile of the fund (Section 7). The list shall be supplemented by the way in which the risks associated with those investments are taken into account and a statement that the collective investment fund may operate with the types of financial derivatives not explicitly mentioned, provided that they are consistent with its investment objectives,
5. the maximum investment limit for open positions related to financial derivatives (exposure to financial derivatives);
6. the maximum investment limit for money market instruments referred to in Section 26 (1) (h) (4) of the Act and the designation of their issuers;
7. a description of all the significant characteristics of the investment securities or money market instruments referred to in Article 26 (1) (i) of the Act, including taking into account the risks arising from investments in those assets compared to investment securities and money market instruments pursuant to Article 26 (1) (a) and (h) of the Act;
8. the designation of issuers and entities that have taken over the guarantee for investment securities or money market instruments where the collective investment fund intends to apply an exemption under Article 29 (1) of the Act or an option under Article 51 (5) of the Act. The standard fund shall also indicate that it is an exemption authorised by the Securities Commission (hereinafter referred to as the Commission) 7,
9. Types of bonds by category of their issuer (sovereign bonds, municipal bonds, bonds issued by trading companies, etc.), modified bond portfolio duration and quality rating requirements,
11. a description of the way in which it will be verified whether the conditions of the exemption under Article 28 (2) (c) of the Act have been fulfilled, where the collective investment fund intends to apply such an exemption to investment securities or money market instruments;
(f) where a collective investment fund concentrates its investments in a particular industry, state or region, other part of the market or a particular type of asset (e.g. investment in financial instruments in risk countries), more detailed information on such investment policy;
(g) in the case referred to in point (f), an indication that such investment may pose an increased risk, although the Fund invests in accordance with the principles laid down in the Statute and the legislation, and that the individual risks associated with those investments are shown in the risk profile of the Fund (Section 7);
(h) an indication of whether the collective investment fund will carry out repos or lend securities, the conditions for the selection of counterparties to such transactions (transactions) and the characteristics of the securities that may be subject to such transactions (transactions);
(i) where the return on investment, part of it or the return thereof are to be secured (so-called hedge funds), more detailed information on such collateral, indicating the way in which the hedge will be achieved. Where there are conditions on the basis of which the collective investment fund is partly or fully involved in the development of an index or indicator, those conditions shall also be indicated; and
(j) an indication of whether the management style of the collective investment fund is based on the tactical allocation of assets and the frequency at which the portfolio adapts.
(3) Furthermore, the objectives and objectives of the investment policy include the characteristics of the typical investor for which the collective investment fund is intended, in particular in terms of the investor's relationship to the risks associated with the investment in the collective investment fund, the level of its experience in the capital market and the approximate period for which the investment should be held in order to achieve the expected return.
Risk information
Information on the risks associated with the investment of a collective investment fund (so-called risk profile of the fund) is
(a) a statement that the value of the investment may fall and rise and that a return on the amount initially invested is not guaranteed;
(b) depending on the investment policy chosen, a detailed description of all the relevant risks that an investor may encounter in connection with his investment in a collective investment fund, in particular:
1. the risk of the volatile current value of the security issued by the collective investment fund as a result of the composition of the assets or the management of the assets of the collective investment fund;
2. market risks arising from the effects of changes in the overall market on the prices and values of the individual assets of the collective investment fund;
3. credit risk by the issuer or counterparty failing to comply with its obligation;
4. the settlement risks associated with the settlement of the transaction not taking place as expected on the ground that the counterparty does not pay or deliver the investment vehicles within the specified period;
5. the risk of insufficient liquidity, consisting of the fact that a particular asset of a collective investment fund will not be monetized in time at a reasonable price and that for that reason the collective investment fund will not be able to meet its obligations to buy-in units or that the redemption of securities issued by the collective investment fund may be suspended;
6. the monetary risk of the investment being affected by a change in the foreign exchange rate;
7. risks associated with the different types of financial derivatives that the collective investment fund intends to acquire;
8. the risk of loss of assets entrusted to custody or other custody which may be due in particular to insolvency, negligence or intentional conduct of a person who has the assets of a collective investment fund or securities issued by a collective investment fund in custody or other custody;
9. risks related to the investment focus of the collective investment fund on certain industries, states or regions, other parts of the market or certain types of assets;
10. the risk that investment companies will be obliged under statutory conditions to pay the assets' liabilities in the mutual fund resulting from the transformation from the investment fund (8); or
11. the risk arising from the possibility that if, within 12 months of the creation of a collective investment fund, the equity capital does not reach at least CZK 50 000 000, the Commission will withdraw the permission to form a collective investmentfund 9).
Information on historical performance
Information on the historical performance of the collective investment fund
(a) an indication that historical performance data of the collective investment fund are not future performance indicators;
(b) the historical performance of the collective investment fund in the form of a column diagram showing the annual income after tax over at least 10 consecutive years; where a collective investment fund exists for less than 10 years but for more than 1 year, annual returns for all years of existence shall be reported. The historical performance data shall be accompanied by an explanation as to whether the performance of the fund includes fees related to the issuance (subscription) and redemption of securities issued by the collective investment fund; and
(c) a comparison of the historical performance of the collective investment fund (point (b)) with the development of the benchmark monitored by the collective investment fund in the event that the collective investment fund monitors such a benchmark. The comparison shall be given in the form of a column diagram showing the compared data.
Principles for the management of the assets of a collective investment fund
The principles of management of the assets of the collective investment fund shall include:
(a) the accounting year;
(b) rules and time limits for the valuation of the assets of the collective investment fund;
(c) the method of using the profit from the profit or loss of the assets of the collective investment fund;
(d) information concerning the prohibition on the use of the assets of a collective investment fund for the provision of credit, loan, gift and collateral of a third party's liability or payment of an obligation not related to the management of a collective investment fund pursuant to Article 34 or Article 49 (7) of the Act;
(e) information on the prohibition of a collective investment fund to carry out uncovered sales pursuant to Article 35 or Article 49 (9) of the Act; and
(f) the conditions under which a collective investment fund accepts loans or loans where a collective investment fund intends to accept loans or loans pursuant to § 33 or § 49 (10) of the Act.
Information on the payment of profit shares
Where a collective investment fund pays a profit share, it shall provide information on the payment of profit shares from the results of the management of the collective investment fund's assets containing:
(a) the relevant date for the payment of profit shares from the results of the management of the collective investment fund's assets;
(b) the time limit for the payment of profit participation in the results of the management of the collective investment fund's assets;
(c) the way in which the shares in the profit from the results of the management of the collective investment fund's assets will be paid;
(d) the period within which entitlement to the payment of profit shares from the results of the management of the assets of the collective investment fund is limited.
Data on securities issued by the collective investment fund
The data on securities issued by the collective investment fund shall be:
(a) an indication of whether the securities are registered on the official market, quoted securities or securities admitted to free market trading (10);
(b) the form of securities;
(c) the form of securities;
(d) the nominal value of the securities, if any;
(e) the designation of the currency in which the value of the securities is indicated;
(f) identification of securities under the international numbering system for the identification of securities ("ISIN"), where assigned,
(g) persons responsible for the possible safekeeping of paper-based securities;
(h) details of the person who registers the securities in a book-entry form in accordance with the special legislation11), and a brief description of the method of such registration;
(i) a description of the rights attached to the securities, the manner and time limits for their application; and
(j) an indication of the method or document proving the right of ownership of the securities.
Remuneration and other expenses of collective investment fund assets
Information on the remuneration of management and other expenditure borne by the collective investment fund shall be:
(a) the method of determining and determining the amount of the remuneration of an investment company, where it manages the assets of a collective investment fund;
(b) the method of determining and determining the amount of payment to the depositary;
(c) the method of determining and determining the amount of remuneration to persons entrusted with the management of the assets of, or part of, a collective investment fund, which are entrusted with, the exercise of certain activities relating to the management of the assets of the collective investment fund (12), where such entrustment or entrustment takes place and is borne by the assets of the fund;
(d) an overview of the other expenditure borne by the collective investment fund not included in the remuneration referred to in points (a) to (c);
(e) the maximum amount of the management fees that can be charged to both the collective investment fund itself and to another collective investment fund in which it intends to invest if the collective investment fund invests a substantial part of its assets in another collective investment fund;
(f) an indicator of the total cost of the collective investment fund (TER) for the preceding financial year, equal to the ratio of the total operating costs of the collective investment fund to the average monthly value of the collective investment fund's own funds, the total operating costs being the sum of the fees and commissions, administrative costs and other operating costs in the statement of costs, revenues and gains or losses under the special legislature13), which provides for information on the economic situation, minus fees and commissions for operations with investment instruments under this special legislation;
(g) synthetic TER where a collective investment fund invests at least 10% of the value of the assets in other collective investment funds that disclose its own TER. Synthetic TER is equal to the sum of the own TER and TER of each of the target funds in proportion to the share of the investment in the target fund in the total assets of the collective investment fund, the entry and exit fees of the target funds in this case being included in the target fund's TER. Where the target fund belongs to the same consolidation unit as the collective investment fund for which the synthetic TER is counted, these input and output charges shall not be included for the purposes of calculating the TER. Where the target fund does not publish its own TER, its amount shall be estimated for the purposes of calculating the synthetic TER.
Synthetic TER is calculated using the following formula:
TERSynth = TERF + ITIS = 1ČNCI x wi + CCFin + CCFout / VK
where:
TERF = operating costs / VK
VK = average monthly equity of the collective investment fund
TERCFI = indicator of TER of the ith target fund if published
wi = share (weight) of the investment in the ith target fund in the assets of the collective investment fund
K = number of target funds
CCFin = input fees paid for target funds
CCFout = output fees paid by target funds,
(h) an estimate of the costs and amounts of the collective investment fund for the calendar year in which the fund is set up and, for each other calendar year following the previous financial year, in the structure set out in Table 2 of the Annex to this Regulation;
(i) an asset turnover indicator (PTR) over the last financial year, which is equal to the difference between the sum of the purchased and disposed assets of the collective investment fund and the sum of the subscribed (issued) and sold (purchased) shares or units of the collective investment fund to the average monthly own funds of the collective investment fund;
The PTR shall be calculated using the following formula:
PTR = [((PS + SS) - (I + R)) / M] x 100
where:
PS = acquired assets
SS = stolen assets
I = subscribed (issued) shares / units of the collective investment fund
R = subscribed shares / units of collective investment fund
M = average of the monthly equity values of the collective investment fund over the reference period.
Data on the depositary
The depositary's data shall be:
(a) details of the depositary person and his actual seat;
(b) a description of the essential characteristics of the depositary's activities, including the definition of its responsibility in particular for the safekeeping and other custody of the assets of the collective investment fund, even if the depositary has delegated the performance of that activity to a third party; and
(c) data on persons (3) to which the depositary has delegated custody or other custody of the assets of the collective investment fund, including the terms and conditions of that delegation.
Data on the entrustment of the assets of a collective investment fund or part of it or the pursuit of collective investment activities
(1) Indication of entrustment to another person of the assets of a collective investment fund or part thereof 14) are
(a) the information on which part of the property is entrusted to another person in the management and the indication of the relevant part of the property; and
(b) the particulars referred to in paragraphs 3 and 4.
(2) The information on entrustment of collective investment activities is:
(a) the designation of collective investment activities entrusted to others (15); and
(b) the information referred to in paragraphs 3 and 4, with the exception of provisions relating to remuneration.
(3) Indication of the persons entrusted with the management of the assets of, or part of, a collective investment fund or the pursuit of collective investment activities
(a) data on these persons (3); and
(b) the identification of the main or other significant activities carried out by such persons.
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Regulation Information
| Citation | Decree No. 457 / 2004 Coll., on the minimum requirements of the Statute and the mandatory requirements of the simplified Statute of the collective investment fund |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 10.08.2004 |
|---|---|
| Effective from | 01.09.2004 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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