Note: This should not be considered to be an official translation of this decree.
Decree of the President of the Russian Federation
"On Further Development of Investment Fund Activity"
February 23, 1998
No. 193
In accordance with the Comprehensive Program for the Protection of Rights of Investors and Shareholders approved by Decree No. 408 of the President of the Russian Federation (March 21, 1996), I hereby decree:
1. To establish that investment funds shall carry out their activity in the form of open joint-stock companies in accordance with the Federal Law "On Joint-Stock Companies" and decrees of the President of the Russian Federation.
2. In addition to requirements set forth in the legislation of the Russian Federation with respect to the contents of charter of a joint-stock company, the charter of an investment fund shall include:
· a provision establishing that the object of the investment fund shall be to invest in securities specified in the fund’s investment statement or to invest in securities and real estate, and/or titles to real estate;
· an investment statement outlining the main directions, objectives and restrictions of the investment fund’s activity, as well as maximum and/or minimum size limits of the as-sets which can be invested in securities and real estate;
· the procedure for raising credit funds;
· a prohibition of the creation of any special funds;
· a prohibition of repurchase of the fund’s own stock, except for cases directly provided for in the Federal Law "On Joint-Stock Companies;"
· a prohibition of issue of issue-grade securities other than common registered shares;
· a prohibition of activities other than investment;
· the procedures, location and time-limits for payment of dividends.
3. To establish that the name of an investment fund shall include the words "investment fund." Legal entities which do not conform with the requirements of the present Decree shall not have the right to incorporate the words "investment fund" into their names, unless stated otherwise in federal laws and Decrees of the President of the Russian Federation.
4. The investment fund shall have the right to carry out its activity only on the basis of the license issued by the Federal Commission for the Securities Market.
The license to carry out investment fund activity shall be issued on the following conditions:
· conclusion by the investment fund of appropriate agreements with a specialised depository and an audit company, as well as an agreement with a legal entity regarding management of the fund. If the investment statement of the investment fund provides for investment in real estate, as well as in other assets specified by the Federal Com-mission for the Securities Market, the investment fund shall be obligated to conclude an agreement with an independent appraiser holding a license issued by the Commission mentioned above;
· the value of the investment fund assets as of the date of submitting of the license application documents shall be no less than 10,000 minimum wages as established by federal law;
· conformity of the composition and the structure of the assets of the investment fund with the requirements set by the Federal Commission for the Securities Market;
· availability of an audit report prepared by an auditing firm entitled by the Federal Commission for the Securities Market, confirming the validity of the accounting (financial) statements of the investment fund;
· conformity of the license application documents with federal laws, Decrees of the President of the Russian Federation and the Regulation on Licensing.
If a license for investment fund activity is requested by an open joint-stock company whose assets include securities without recognised quotations, real estate, and/or titles to real estate, the license for investment fund activity shall be issued on condition of evaluation of the above assets by an independent appraiser holding a license issued by the Federal Commission for the Securities Market.
5. Only a legal entity which has a license of unit investment fund specialised depository issued by the Federal Commission for the Securities Market shall become a specialised depository of the investment fund.
The agreement of the investment fund with the specialised depository shall conform with the binding conditions approved by the Federal Commission for the Securities Market.
Approval of the agreement with the specialised depository, as well as introduction of changes and supplements, shall be made according to the decision of the Board of Directors of the investment fund taken by a qualified majority vote of two-thirds of the total number of the members of the Board of Directors.
6. The specialised depository shall ensure that the assets of the investment fund are managed in accordance with legal acts of the Federal Commission for the Securities Market.
All certificated securities owned by the investment fund (except for those securities which, in accordance with legislation, should be kept with other entities) and documents confirming titles to real estate of the investment fund shall be kept at its specialised depository. Titles to uncertificated securities of the investment fund shall be recorded (entered) by its specialised depository, except for cases provided for in the legal acts of the Federal Commission for the Securities Market.
7. Only a legal entity holding a license issued by the Federal Commission for the Securities Market for trust management of assets of unit investment funds shall become the management company of the investment fund.
The agreement of the investment fund with the management company shall comply with binding conditions approved by the Federal Commission for the Securities Market.
The approval of the agreement with the management company, as well as the introduction of changes and supplements to the agreement, shall be made by decision of the Board of Directors of the investment fund taken by a qualified majority vote of two-thirds of the total number of the members of the Board of Directors.
8. The affiliate of the specialised depository of an investment fund cannot become a management company for this investment fund.
The affiliate of an investment fund, as well as the affiliate of its management company, cannot become a specialised depository of this investment fund.
The number of executives and employees of the management company and of the specialised depository of the investment fund, their affiliates, as well as affiliates of the management company and those of the specialised depository of the investment fund, shall not exceed one-third of the members of the Board of Directors of this fund.
For purposes of this Decree:
· The affiliate of a legal entity shall be construed as a person performing the functions of a sole executive body, a member of a collective executive body, a member of the Board of Directors, other executive from this legal entity, as well as a participant which owns 25% or more of the authorised capital of this legal entity, or a commercial organisation where this legal entity owns 25% or more of the authorised capital.
· The affiliate of a natural person shall be construed as his parents, children and spouse, as well as a commercial organisation where this natural person, his parents, children and spouse own 25% or more of the authorised capital.
The affiliates of the management company of an investment fund shall also include all in-vestment funds which signed a management agreement with the management company, and non-governmental pension funds which signed an agreement with the management company for the management of their assets.
9. To establish that the requirements set for reports submitted by the investment fund, the management company and the specialised depository of investment fund, the procedures for providing and releasing this information, as well as requirements for other information submitted by them, shall be set forth in this Decree and in legal acts of the Federal Com-mission for the Securities Market.
The investment fund is prohibited to promise a paid income to investors in any form, including advertisement.
10. To establish that effective the day this Decree takes effect, the regulation of the activity of investment funds, including specialised privatisation investment funds which accumulate citizens’ privatisation vouchers and management companies of these funds, shall be carried out by the Federal Commission for the Securities Market.
By January 1, 1999, investment funds, including specialised privatisation investment funds which accumulate citizens’ privatisation vouchers, shall bring their activity into compliance with the present Decree, or exclude the words "investment fund" from their names and introduce corresponding changes into their charters.
The specific conditions of the activity of unit investment funds created on the basis of as-sets of joint-stock companies which on January 1, 1997, held a license to act in the capacity of investment funds, and of specialised privatisation investment funds which accumulate citizens’ privatisation vouchers, including specific conditions pertaining to their creation, shall be set forth by the Federal Commission for the Securities Market. During the creation of such unit investment funds the Federal Commission shall have the right to permit payment not only with cash but also with assets for the investment units, as well as to set redemption dates for the investment units of these investment funds which differ from the dates set for interval unit investment funds in Decree No. 765, of the President of the Russian Federation "On Additional Measures Aimed at Increasing the Effectiveness of the Investment Policy of the Russian Federation" (July 26, 1995).
11. Within a two-month period, the Federal Commission for the Securities Market shall develop and approve the following documents:
· Regulation on Licensing of Investment Funds;
· Procedures for the Calculation of the Assets Value of Investment Funds;
· Binding Terms of the Management Agreement of an Investment Fund;
· Regulation on Procedures for the Maintenance of Investment Fund Registries.
Requirements for investment funds and for their activities shall be established by the Federal Commission for the Securities Market.
12. Within a two-month period, the Federal Commission for the Securities Market, upon agreement with the Ministry of Finance of the Russian Federation, shall draft and approve a Regulation on Investment Fund Accounting and Outlining of Costs and Financial Results Structure.
The Ministry of State Property of the Russian Federation shall stop issuing licenses of specialised privatisation investment funds accumulating citizens’ privatisation vouchers and management companies of these funds.
The Ministry of Finance of the Russian Federation shall stop issuing licenses of investment funds and management companies of these funds.
13. To introduce the following changes and supplements to Decree No. 765, 1995, of the President of the Russian Federation "On Additional Measures Aimed at Increasing the Effectiveness of the Investment Policy of the Russian Federation" (July 26)(Compendium of Legislation of the Russian Federation, No. 31, 1995, Article 3097):
a) Clause 4:
Paragraph 4 shall be excluded;
Paragraph 5 shall be counted as Paragraph 4;
b) to supplement Clause 11 with Paragraph 2 as follows:
"The titles to securities which constitute assets of the unit investment fund including voting rights associated with shares, shall be exercised by the management company."
paragraphs 2 to 5 shall be numbered paragraphs 3 to 6 respectively;
c) Clause 21 shall read as follows:
"21. The principle and the procedures for the circulation of investment units of open unit investment funds, as well as the procedures for the circulation of units of interval unit investment funds, shall be established by the Federal Commission for the Securities Market."
14. To consider null and void clauses 2 and 4 to 7 of Decree No. 1186 of the President of the Russian Federation "On Measures on Organisation of Securities Market in the Course of Privatisation of State and Municipal Enterprises" (October 7, 1992), as well as annexes No. 1 to 6 to that Decree (Compendium of Presidential and Governmental Acts of the Russian Federation, No. 15, 1992, Article 1155).
15. The present Decree shall come into force, effective the day of its official publication.
Moscow, Kremlin
B. Yeltsin
February 23, 1998 |
