sou · GQB356d1 · 2003-01-01 00:00:00 — A new requirement is that the fund management companies must also prepare simplified prospectus presenting important data about the company and the fund in a clearer, more straightforward . These simplified prospectuses must be similar in content throughout Europe and are designed to make it easier for unit holders to compare funds from different companies and member states. This simplified prospectus must be offered to all persons wishing to buy fund units. Other information is to be sent free of charge to any unit holder requesting it. proposes introducing new rules for mutual funds in accordance with the provisions of the UCITS directives. In addition, more specific rules are introduced concerning what applies if a management company, as part of its management undertakings, assumes obligations on behalf of a fund. The basic fund structure is retained. Thus the various unit holders jointly own the assets that make up a mutual fund. The fund management company deals with all matters concerning the fund and decides, inter alia, in which assets to place the funds money. Assets are to be kept in a depository, usually a bank. The fund management company and the depository come under the supervision of the Financial Supervisory Authority. Permitted types of assets Under the new provisions of the UCITS directives and of the law on investment funds, mutual funds may invest in a wider range of assets than before. Money may be placed in transferable securities, money market instruments, deposits with credit institutions, fund units and financial derivative instruments (e.g. options, futures contracts, etc, the value of which depend on an underlying financial asset such as shares, bonds, etc.). Previously, too, fund management companies were allowed to use various kinds of derivatives, but only in order to make their management undertakings more efficient. Under the new provisions, money may be invested in derivatives in the same way as for investments in shares, bonds and the like. The new provisions also allow for the operation of funds of funds, i.e. funds that invest in other funds. For funds to possess assets such as securities, money market instruments or derivative instruments, these must be quoted or traded in an exchange market or in some other regulated market. The principal reason for this is that the assets are thereby easily assigned a value so that a rate may be determined for the fund units. Also, the assets can more easily be sold should unit holders wish to redeem their fund units. To some extent, however, the fund will be allowed to invest in unquoted securities and money market instruments. In addition, a fund will be able to invest in OTC derivatives, i.e. derivative instruments traded not via a regulated market but directly between the parties concerned. In such cases, special demands are placed on the other party. The requirement whereby all assets must be quoted and traded on regulated markets is to apply to all financial assets that a fund is allowed to invest in. A fund must spread its risks. To this end, a number of provisions are included to prevent excessive investment in individual assets. The rules on risk spreading are largely unchanged in the case of shares and bonds. Generally speaking, a fund may not invest more than 5 per cent of its capital in one and the same share or bond. As before, however, there are a number of exceptions to this rule. A new feature, however, is that index funds will now be allowed to invest up to 20 per cent of their capital in one and the same security if the purpose is to replicate the composition of a certain stock or dept securities index. In some exceptional cases, this limit may be increased to 35 per cent of the funds capital, but then only for a single share or bond. Risk-spreading rules are also included for other types of assets that a fund invests in. Other provisions for consumer protection Besides the requirements governing assets and the provisions on risk spreading, there are a number of further rules aimed at enhancing consumer protection. As before, a fund management company is required to inform unit holders about its investment strategy, but a new condition requires it to specify whether the fund can be expected to vary significantly in value as a result of the way the capital is invested. The law on investment funds also includes a number of constraints on management companies, such as one that prevents them from exacting certain kinds of charges in funds of funds that invest in other funds managed by the same company. In addition, a fund management company may not borrow money in any way it pleases. Rules limiting a funds influence may a fund management company acquire, on behalf of a mutual fund, a sufficiently large holding to enable it to exercise a significant influence over the management of an issuing body. This rule harmonises with the UCITS directive but is a new feature in the Swedish regulatory framework. Under the present rules, a fund may only hold shares corresponding to a maximum of 5 per cent of a companys voting power. Under the new proposals, this percentage limit is replaced by a more descriptive rule. Corresponding rules – expressed, however, in percentage rates – exist for dept securities, fund units and other types of assets. These rules are intended to limit the amount of influence that funds can exercise in a given company and to prevent a fund from acquiring an excessively large share of the dept securities distributed by an issuer. These rules supplement the general risk spreading rules, which focus exclusively on investment in relation to a funds capital. If a large mutual fund, for example, were to acquire shares corresponding to 5 per cent of its capital (in accordance with the general rules on risk spreading) in a small or medium-sized joint stock company, it might thereby become the largest shareholder or secure significant influence in the company. This would constitute a separate risk over and above the purely market-related risks involved. A new condition is that under the fund provisions, management companies must specify how they intend to proceed with respect to ownership issues arising out of a funds holdings. This rule supplements the industrys own self-regulating practices. Responsibility for fund obligations The basic principle is that a mutual fund may not incur obligations. At the same time, however, there are a number of rules in Swedish fund legislation that allow management companies to incur obligations on behalf of a fund. For example, a management company may, on behalf of a mutual fund, raise small, short-term loans. Another example is that surety is often required for investments in derivative instruments. According to earlier preparatory statements, fund management companies should also be given the opportunity to use fund property as security. Now, the law on investment funds includes an explicit rule to the effect that funds may not incur obligations of a greater magnitude than specified by the law. In such cases, the management company may also put up fund property as security for obligations entered into on the funds behalf. The rules concerning special funds are made clearer in relation to the current rules for what are termed national funds. The law on investment funds specifies what rules apply in the case of mutual funds and which rules special funds can be exempted from. Mutual funds and special funds, however, are subject to the same regulations in such areas as the depositing of fund assets and supervision. Special funds must invest their money in accordance with the principle of risk spreading. In contrast to the provisions for mutual funds, no percentage limits are specified for individual holdings. Instead, special funds are required to specify in their fund provisions the investment strategy they intend to adopt and describe this in a relevant . The fund provisions must also show how the risk-spreading requirement is to be met. Special funds may also be given greater powers to invest in different kinds of assets, for instance to invest in unquoted companies to a greater extent than is permitted in the case of mutual funds. Similarly, special funds may seek exemption from other rules such as the ones on borrowing and short selling, etc. All special funds must specify in their provisions the level of risk they are seeking to maintain in their fund management. In addition, unit holders in the fund are to be informed of the actual level of risk (realised volatility) attained so that they can compare risk levels between different funds. Special rules for hedge funds Ordinarily, a traditional investment fund is dependent on rising market prices in order to achieve favourable returns. Hedge funds are the generic term for funds that are managed more freely and where the aim is normally to achieve favourable returns irrespective of market trends. The manager can use a wide range of methods and strategies, and as a rule takes advantage of the managing organisations specific competence in a given field. Accordingly, hedge funds are a particularly heterogeneous fund category, and are much more dependent on managerial skills in their search for favourable returns than traditional funds tend to be. For investors, or fund subscribers, therefore, hedge funds should be seen as an asset class in a portfolio of securities or funds. Nowadays, hedge funds can be established under the rules governing national funds. specific considerations have not been included, however, in previous preparatory work. In other countries, investment in hedge funds is usually reserved for institutional investors alone. has therefore considered the possibility of introducing additional provisions for hedge funds with a view to protecting consumers in an adequate . When hedge funds direct their selling of fund units at consumers, they may only do so via a fund of funds. The manager of a fund of funds can put together a portfolio of several different hedge funds, thereby spreading the investors risks. Under the Committees proposals, the fund of funds is not required to invest exclusively in hedge fund units but may compose a portfolio mixing hedge funds and traditional funds. In such cases, managers are required to ensure that the hedge fund comprises a reasonable share of the total investment. No comparable restrictions have been imposed for the sale of hedge fund units to institutional investors or what are known as qualified investors. has considered whether special funds should be allowed to invest in other types of assets than those permitted in the case of mutual funds. In and the UK, for instance, funds are allowed to invest in real estate. In principle, the Committee sees no need for constraints on this kind of investment by special funds. Real estate investment is a savings form that is similar in many respects to investment in securities. Under the present rules, however, real estate owned via funds would be in a more favourable tax position than is the case for real estate owned It is not part of the Committees brief to discuss possible solutions to this problem in closer detail. Furthermore, extensive revision of fund legislation concerning both the basic structure of funds and their investment provisions, etc, would be required if funds were to be allowed to invest in real estate. Accordingly, the Committee is not presenting any proposals relating to what are known as real estate funds. It is proposing, however, to allow special funds – with the approval of the Financial Supervisory Authority – to invest their assets not only in financial derivative instruments but also in derivative instruments that have other, underlying assets. A precondition, however, is that the derivative is traded in a properly functioning financial market and does not represent a vehicle for physically delivering or receiving the underlying asset. Restrictions on fund entry and withdrawal Investment funds as a savings form are reserved for collective investment and must therefore be spread to a wide circle of subscribers. proposes, however, that special funds be allowed to limit their range of subscribers on condition that the target group is not too narrow and that it can easily be defined. This would allow special funds to focus exclusively on the employees of a given company, for instance, or on the members of an employee organisation. A special fund is also allowed to refuse an investor permission to acquire fund units should such a sale for instance contravene the law or some other provision. The basic principle is that investment funds are open-ended, which means unit holders are entitled to have their holdings redeemed whenever they wish. There may be reason, however, to curtail this right under certain conditions. Restrictions may be approved, therefore, if fund subscribers have been advised beforehand as to when the managing company redeems units. A special fund must, however, be open for the redemption of units at least once a year. has considered the alternative of totally closed funds, in which unit holders lock their investments for an extended period. The need for such an alternative may arise, for instance, in cases where the fund supplies risk capital to smaller, unquoted companies that have only just begun operating (risk capital funds, entrepreneurial funds). For other reasons, however, investment funds are not suitable for extensive investment in smaller, unquoted companies. Investment companies that trade on the stock exchange represent an alternative to totally closed funds. The business idea of this kind of company is to generate dividends for its shareholders and its investments are subject to a risk-spreading requirement. Consequently, these resemble investments in investment funds. Special funds for qualified investors Fund investment, as a savings form is primarily intended for a broad community of consumers. Often, however, institutional investors place money in funds as well. The reason is that they represent a good alternative to their own capital management. The infrastructure afforded by legislation in this area brings order and clarity to the relationship between investors and managers and between investors individually. Also, the industrial law aspects of fund legislation, including authorisation and supervision, often work to the advantage of institutional investors as well. proposes, therefore, to allow fund legislation to extend to special funds intended for investors who do not require the usual kind of consumer protection. These funds can be granted unlimited exemption from the legal requirements concerning investment and information and can also be totally closed. A condition of exemption is that these funds only direct their activities at investors who place at least in the fund at one and the same time. Funds subject to company law In legal terms, fund investment is based on the funds capital assets. In as in the other Nordic countries, and elsewhere, funds do not have independent legal status. It is the fund unit holder who owns unincorporated units in the fund capital and it is the fund management company that deals with all matters concerning the fund. The unit holders and the fund management company agree on how the fund is to be managed and how the entitlement deriving from the fund capital is to be distributed. The contractual framework is described in the relevant legislation and in the fund provisions. The Swedish version is usually referred to as model under the law of contract. Besides this model, many countries also have a model based on company law. This is the case, for instance, in the US, , and the UK. In these countries, fund capital is owned by a joint stock company (investment company) rather than by the unit holders. Instead, fund unit holders own stock in the company. The company either manages its fund capital itself or assigns the task to an outside fund management company. The latter alternative is the most common one. is discussing the question of whether should introduce rules governing company law-based funds. One of the advantages is that unit holders (i.e. shareholders) would be given a more specific role similar to that which applies in ordinary joint stock companies. Shareholders can vote at annual company meetings and thus would have a potentially greater legal influence on the funds activities. The managers of the joint stock company also have a clearer mandate, and certain formal conflicts of interest are thus avoided. The introduction of an option to establish company law-based funds, however, does present considerable difficulties. Swedish legislation for joint stock companies and incorporated associations would have to adapt to the need to keep the funds open-ended. This is because under the present Companies Act, joint stock companies are not allowed to issue new shares should someone wish to invest in a fund and nor can companies withdraw shares on redemption. There are also a number of other provisions in relation to company law that would require special consideration. Accordingly, the Committee finds that there are certain benefits to be derived from structuring a fund in accordance with company law, and recommends further considerations in this area. Further deliberations are required, however, on a number of issues that do not constitute a part of the Committees brief or which cannot be considered within the allotted time. According to the transitional provisions in the UCITS directives, Member states shall apply the laws, regulations and administrative provisions necessary no later than 13 February 2004. The UCITS directives allow management companies and mutual funds, authorised in accordance with the previous provisions of the UCITS directive, to continue their activities until 13 February 2007. Thus Swedish management companies and investment funds that want to continue their activities shall obtain authorisation in accordance with the provisions in the new law of investment funds no later than 13 February 2007. Härigenom föreskrivs1 följande. Lagen omfattar endast investeringsfonder vars andelar kan lösas in på begäran av andelsägare. Lagen omfattar inte aktiebolag och ekonomiska föreningar som förvärvar och förvaltar fondpapper och andra finansiella instru- ment. Lagen (1904:48 s. 1) om samäganderätt skall inte tillämpas på delägarskap i en investeringsfond. I denna lag förstås med 1. värdepappersfond: en fond bestående av finansiella tillgångar, vilken bildats genom kapitaltillskott från allmänheten och ägs av dem som skjutit till kapital samt följer de bestämmelser som anges i 5 kap., 1 Jfr rådets direktiv /611/EEG av om samordning av lagar och andra författningar som avser företag för kollektiva investeringar i överlåtbara värdepapper (fondföretag) (EGT L 375, 31.12.1985, s. 3, Celex 31985L0611), senast ändrat genom och rådets direktiv /108/EG (EGT L 41, , s. 35, Celex 32001L0108). 2.specialfond: en fond bestående av finansiella tillgångar, vilken bildats genom kapitaltillskott från allmänheten eller från en särskilt angiven, obegränsad krets investerare och ägs av dem som skjutit till kapital samt följer de bestämmelser som anges i 6 kap., 3.investeringsfond: värdepappersfond eller specialfond, 4.fondbolag: ett svenskt aktiebolag som fått tillstånd enligt denna lag, 5.fondverksamhet: förvaltning av en investeringsfond, försälj- ning och inlösen av andelar i fonden samt därmed samman- hängande administrativa åtgärder, som utövas av ett fondbolag, 6.förvaringsinstitut: en bank eller ett annat kreditinstitut som förvarar en investeringsfonds tillgångar och som sköter in- och utbetalningar avseende fonden, 7.överlåtbara värdepapper: aktier och andra motsvarande värde- papper, obligationer eller andra skuldförbindelser samt försälj- ningsbara värdepapper av annat slag som ger rätt att förvärva sådana överlåtbara värdepapper genom teckning eller utbyte, med undan- tag för derivatinstrument, 8.penningmarknadsinstrument: instrument som normalt om- sätts på penningmarknaden och som är likvida och har ett värde som exakt kan fastställas, 9.EES: Europeiska ekonomiska samarbetsområdet, 10.kvalificerat innehav: ett direkt eller indirekt ägande i ett företag, om innehavet representerar eller mer av kapi- talet eller av samtliga röster eller annars möjliggör ett väsentligt inflytande över ledningen av företaget, 11.koncern: grupp för sammanställd redovisning enligt rådets sjunde direktiv /349/EEG av grundat på art- ikel i fördraget om sammanställd redovisning2, senast ändrat genom rådets direktiv /65/EG3 eller grupp som enligt erkända internationella redovisningsregler skall lämna motsvarande redo- visning. och ett annat företag skall anses ha nära förbind- elser, om 1.det ena företaget direkt eller indirekt genom dotterbolag äger eller mer av kapitalet eller disponerar eller mer av samtliga röster i det andra företaget, 2EGT L 193, , s. 1 (Celex 31983L0349). 3EGT L 283, 27.10.2001, s. 28 (Celex 32001L0065). 2.det ena företaget direkt eller indirekt utgör moderföretag till det andra eller det finns en annan likartad förbindelse mellan företagen, eller 3.båda företagen är dotterföretag till eller har en likartad för- bindelse med en och samma juridiska person eller står i ett mot- svarande förhållande till en och samma fysiska person. Nära förbindelser föreligger även mellan en fysisk person och ett fondbolag, om den fysiska personen 1.äger av kapitalet eller disponerar av samtliga röster i fondbolaget, eller 2.på annat sätt har sådant inflytande över fondbolaget att per- sonens ställning motsvarar den som ett moderföretag har i för- hållande till ett dotterföretag eller det finns annan likartad för- bindelse mellan honom och fondbolaget. Allmänna bestämmelser om tillståndsplikt Fondbolag får drivas endast efter tillstånd av Finansinspek- tionen. Tillstånd får ges för förvaltning av värdepappersfonder och för förvaltning av specialfonder. får efter tillstånd från också från ett annat fondbolag eller utländskt förvaltningsbolag eller ett utländskt fondföretag ta emot uppdrag att utföra visst arbete eller vissa funktioner. Utländska förvaltningsbolag och fondföretag Tillstånd enligt 3 § behövs inte för förvaltningsbolag, som har sitt säte i ett annat land inom EES och som i det landet (hem- landet) har tillstånd att driva förvaltningsbolag enligt bestämmel- serna i rådets direktiv /611/EEG av om samordning av lagar och andra författningar som avser företag för kollektiva investeringar i överlåtbara värdepapper (fondföretag)4. Ett sådant bolag får 4 EGT L 375, 31.12.1985, s. 3 (Celex 31985L0611), senast ändrat genom och rådets direktiv /108/EG (EGT L 41, , s. 35, Celex 32001L0108). 1.driva verksamhet från filial i med början efter det att från en behörig myndighet i förvaltningsbolagets hemland mottagit en underrättelse med sådant innehåll som anges i 8 § andra stycket eller , om medger att verksamheten får påbörjas, 2.driva verksamhet genom att från sitt hemland erbjuda och tillhandahålla tjänster i med början så snart Finansinspek- tionen från en behörig myndighet i förvaltningsbolagets hemland mottagit en underrättelse med sådant innehåll som anges i 12 § första stycket. Om det i denna verksamhet ingår marknadsföring och försäljning av fondföretagets andelar får sådan verksamhet påbörjas här i landet och utan iakttagande av tidsfristen i6 § andra stycket. Ett utländskt förvaltningsbolag får driva verksamhet i endast i den mån verksamheten omfattas av förvaltningsbolagets verksamhetstillstånd i hemlandet. Omfattar tillståndet förvaltning av någon annans finansiella instrument får bolaget också driva sådan verksamhet här i landet. Ett utländskt fondföretag får efter tillstånd av Finansinspek- tionen marknadsföra och sälja fondföretagets andelar här i landet, från filial eller utan att inrätta filial. Tillstånd får lämnas bara om