of December 30, 2010 No. ZR-245
About investment funds
Accepted by National Assembly of the Republic of Armenia on December 22, 2010
The purpose of this Law is protection of the rights of investors, development of collective investment system and establishment of single rules of creation and activities of investment funds and managing directors of investment funds, increase in financial intermediation and attraction of general population on the security market.
1. This Law governs the relations connected with collective investments and establishes (regulates):
1) types of the investment funds operating in the territory of the Republic of Armenia and their legal status, and also legal status of managing directors of the investment fund operating in the territory of the Republic of Armenia, the branches of managing directors of foreign investment fund created in the territory of the Republic of Armenia and depositaries of investment fund;
2) the relations connected with forming, activities, management and the termination of investment funds and managing directors of the investment fund operating in the territory of the Republic of Armenia, the branches of managing directors of foreign investment fund created in the territory of the Republic of Armenia;
3) requirements to investment policy of the investment funds operating in the territory of the Republic of Armenia;
4) security sale of foreign investment fund in the territory of the Republic of Armenia;
5) the relations arising in connection with implementation by the Central bank of the Republic of Armenia (further – the Central bank) control over the implementation and observance of the requirements of this Law adopted on its basis of other legal acts and application of measures of responsibility for violation of these requirements by it.
2. The provisions established by this Law for investment funds belong to public investment funds, all types of funds of securitization if in contents of the specific precept of law it is directly not specified that they treat non-public investment funds.
3. Features of securitization of securities and the pension funds are established by the relevant laws.
4. Additional requirements to activities of managing investment fund as the member of financial group are established by the Law of the Republic of Armenia "About the Central bank of the Republic of Armenia".
1. The relations connected with forming and activities of investment funds (including non-public investment funds) and managing directors of investment funds are regulated by this Law (taking into account the provisions established by part 2 of article 1 of this Law), the Civil code of the Republic of Armenia, and also the laws of the Republic of Armenia "About the security market", "About joint-stock companies", "About limited liability companies" and other laws and regulatory legal acts if this Law does not provide other regulation.
1) investment fund – the legal entity or the set of assets created on the basis of the agreements of management of fund provided by the Civil code of the Republic of Armenia or other similar agreements which are created and (or) act (are used), aiming and (or) one of main objectives at ensuring return to investors by collective investment into securities and (or) other assets within single investment policy of the funds raised from investors in the form of increase in the capital, dividends and (or) other financial income according to the deposits made by them in the capital (set of assets) of the legal entity and depending on results of management of these investments irrespective of, this legal entity (set of assets) in the constituent documents or documents concerning the offer as "investment fund" is characterized or not and also irrespective of, the established purpose and (or) activities is performed actually by this legal entity (person managing set of assets) or not (further – fund). By regulatory legal act of the Central bank criteria for evaluation of the activities provided by this Item as the purpose or one of main objectives of creation or activities of person (set of assets) can be established. At the same time "fund" do not join in concept:
. the fund guaranteeing compensation of deposits, created according to the procedure, the Guarantee fund created on the basis of the Law of the Republic of Armenia "About the compulsory liability insurance following from use of vehicles" and also the Guarantee fund provided by the Law of the Republic of Armenia "About funded pensions" established by the Law of the Republic of Armenia "About guaranteeing compensation of bank deposits of physical persons".
group, holding or other similar person which main activities is production of goods or rendering services (but not real estate investments) and investment into securities which it is caused mainly by the purpose of predetermination of decisions of governing bodies of issuers or significant effect on them. The criteria disaggregating the provisions established by this subitem can be established by regulatory legal act of the Central bank;
2) public fund – the fund which is not considered as non-public fund;
3) non-public fund – fund which issued securities according to the charter (rules) cannot be placed by means of public offer, including the offer sent to exclusively uncertain number of skilled investors;
4) type of fund – the specific type of fund for investment policy or the mechanism of release and the redemption of shares (shares) of fund provided by this Law;
5) standard fund – the type of fund which is not considered as specialized fund which investment policy (in the presence of subfunds - all its subfunds) conforms to the requirements established by Chapter 6 of this Law, except for not diversified standard funds;
6) specialized fund – real estate fund, fund with additional risk (hedge fund), sekyyuritizatsionny fund, fund of funds, fund of private equity (the fund prayvit ekvit), including venture fund, and also other type of fund which assets completely or in certain minimum size, but at least in the amount of 30 percent are subject to investment into specific asset types, part 1 of article 40 of this Law which is not specified in Items 1-9;
7) not diversified fund – standard (specialized) fund which investment policy (in the presence of subfunds – at least one of its subfunds) does not conform to the requirements established by Chapter 6 of this Law (to diversified requirements to investment of assets, the established law or regulatory legal acts of the Central bank for this type of specialized fund / except for funds of directly skilled investors/);
8) contractual fund - set of the assets created based on the agreements of management of contractual investment fund provided by the Civil code of the Republic of Armenia;
9) corporate fund – fund with the status of the legal entity which assets accumulate only by means of share placing or other equity securities (further – shares);
10) joint-stock company with the variable capital – joint-stock company which has no the fixed capital and which capital is at any time equivalent net assets values of fund;
11) joint-stock company with the steady capital – the joint-stock company which is not joint-stock company with the variable capital;
12) open-end fund – type of fund which shall in any working day upon the demand of each of his participants redeem the securities belonging to this participant issued by fund in the procedure established by this Law;
13) interval fund – type of fund which does not redeem the securities issued by it on regular basis, but which shall in the presence of the requirement of each of his participants redeem in the procedure established by this Law the securities issued by fund belonging to this participant in the interval terms established by its rules (charter);
14) the closed fund – type of fund which has no obligation upon the demand of his participant to redeem the securities belonging to it issued by fund, the cases except for provided by this Law;
15) subfund – the set of the assets isolated as a part of the same fund having single rules of activities and different from other set of assets of fund the investment policy, income distribution policy, payments for placement and (or) the redemption by fund of the shares, cost of the assets, remuneration of the managing director or their combination;
16) share of fund – the nominal investment security issued by contractual fund certifying the right of its owner to equity in assets of this fund (further – share);
17) asset of fund – the money of fund raised by means of placement of shares (shares), resolved by this Law assets in which the raised money and income gained thanks to management, and also other means provided by the law are invested;
18) negotiable asset – money or other asset, the address in which money perhaps for short period without essential losses for their owner;
19) net assets value of fund – difference between total market value of the assets of fund and cost taken by fund (for the asset account of contractual fund - to the managing director) obligations in the cases and procedure established by this Law and rules (charter) of fund;
20) estimated cost of share (share) – the cost equal to the relation of net assets value of fund (subfund) and total quantity of the placed and not redeemed shares (shares) of this fund (subfund);
21) the member of fund – according to this Law the owner of the securities issued by fund;
22) the managing director of fund – person who obtained the license in the procedure established by this Law who exercises control of the fund created according to this Law (further – the managing director);
23) depositary of fund – person rendering service in storage of assets of fund who according to the procedure, established by this Law and other laws, and based on the agreement signed with fund (his managing director) accepts to storage stores and considers assets of fund, services the transactions connected with asset management of fund and transfers assets on their basis, and also within the competence controls activities of the managing director of this fund for the benefit of members of fund (further – depositary);
24) the agent of fund – person performing sale and (or) the redemption (repayment) of shares or shares based on the agreement signed with the managing director (further – the agent);
25) fund of skilled investors – standard or specialized fund which issued shares (shares) according to the law or its rules (charter) can be offered only:
and. to skilled investors and (or)
. to investors, the purchase price of the share (share) acquired by each of which (in case of each separate offer - total cost of acquired shares / shares/) exceeds the size established by regulatory legal acts of the Central bank;
26) index fund – type of standard fund which purpose of investment policy is duplication of structure of index of certain shares or bills of exchange;
27) the pension fund - fund which assets are created at the expense of compulsory accumulative contributions (the obligatory pension fund) or voluntary accumulative payments (the Voluntary pension fund) and their investments made from the government budget of the Republic of Armenia without fail according to the Law of the Republic of Armenia "About funded pensions" and of which payments to participants from assets of fund are made (the money corresponding to share of the participant in assets of fund returns) in the form of pension on reaching the participant of retirement age, and also in other cases provided by the Law of the Republic of Armenia "About funded pensions".
2. Other concepts used in this Law are applied in the sense determined by the Civil code of the Republic of Armenia and the Law of the Republic of Armenia "About the security market" if other sense of their use does not follow from provisions of this Law.
1. The fund (including non-public fund) can be created and perform the activities provided by this Law only from the moment of registration of fund (its rules) by the Central bank according to the procedure, provided by this Law.
2. The fund (including non-public fund) can be created in the status of contractual or corporate fund.
3. The fund for investment policy can be standard or specialized.
4. The fund for the mechanism of release and the redemption of shares (shares) can be open, closed or interval.
5. The obligatory pension fund can act only as open-end contractual fund. The pension fund cannot be the closed or interval fund.
6. The fund cannot perform the activities which are not provided for fund by this Law.
1. The funds created in the procedure established by this Law, having no right to use in the name such misleading words which can be the cause for doubts in the relation of financial position, legal status of fund or the activities performed by it.
2. The name of contractual fund shall contain the name of his managing director. The funds managed by the same managing director cannot have mixing of the name, identical or similar to degree.
3. Use by persons who do not have the corresponding registration in the Central bank, phrases "pension fund" or "fund of securitization", their case forms, the Armenian transliteration of these words in foreign language, their transfers or their combinations, and also the names directly or indirectly characterizing activities of funds within business tradition in the name, advertizing, the public offer or other assistance to advertizing is forbidden if from sense of use of phrases "investment fund", "pension fund" or "fund of securitization", their derivatives or the specified names do not follow that this is not about activities of investment fund, pension fund and fund of the securitization established by this Law and (or) the Laws of the Republic of Armenia "About funded pensions" "About securitization of the assets and securities provided with assets" and if the right of such use was not taken away by the law or the international treaty.
1. The location of fund is the location of his managing director.
1. The fund can have the agent (agents).
2. Person rendering according to the Law of the Republic of Armenia "About the security market" investment services with whom the managing director signed the agreement of rendering services provided by part 3 of this Article can be the agent.
3. The agent performs sale and (or) the redemption (repayment) of shares or shares on behalf of fund (in case of contractual fund - on behalf of the managing director) and at the expense of fund by means of acceptance and transfer of the corresponding requests to the managing director and (or) acceptance, transfer and implementation of payments of money, specifying in case of contractual fund that he acts as the agent of this fund.
1. The non-public corporate fund cannot have form of business of open joint stock company.
2. The non-public fund cannot perform public placement of shares (shares).
3. The non-public fund can have no more than 49 participants. If the number of participants exceeds 49, the non-public fund shall be re-registered in the general procedure established by this Law as public fund or to respectively reduce number of the participants within 90 calendar days. Otherwise it is subject to liquidation judicially.
4. The non-public fund shall submit upon the demand of the Central bank in the Central bank reports, the stipulated in Article 92 presents of the Law.
5. On registration of non-public fund (rules of contractual fund) introduced in its charter (rules) of changes and (or) amendments, procedure and conditions of reorganization, changes of type and liquidation (termination) of non-public fund extend the relevant provisions provided by Articles 21 and 22, parts 3, of the 4 and 5 Article 23, parts 4, of the 5 and 6 Article 24, and also Section 8 of this Law for funds of skilled investors, except for restrictions by reorganization and change of type, and also the regulations concerning the bases of liquidation (termination). At the same time the provisions which are subject to application according to this part in the part concerning depositary extend to non-public funds only in the presence of the relevant isolated depositary, and in the part concerning the managing director extend to person having the right to exercise executive control of non-public fund (irrespective of circumstance of recognition in sense of this Law by the managing director), only in case of their applicability. Besides, in case of registration of non-public fund the information about person exercising its executive control established by regulatory legal act of the Central bank shall be provided to the Central bank. These data shall be provided to the Central bank also in case of each change made to them within ten calendar days after change.
1. In rules (charter) of not diversified fund it is specified that it is not diversified fund.
2. Not diversified fund is considered fund of skilled investors.
1. Control of contractual fund is exercised of the managing director based on rules of fund (agreements of management of fund).
2. The property right of the member of contractual fund to assets of fund is limited to the rights to alienation and transfer according to the procedure of legal succession of the share belonging to it certifying this right on receipt of dividends from income gained thanks to asset management of fund and also on receipt of the share in assets of fund in case of the termination of fund - according to the procedure and on the conditions established by this Law. The property right of the member of the closed contractual fund to assets of fund is shown also in the right of submission of the offers on asset management of fund carried by this Law and (or) rules of fund to competence of general meeting of members of fund (further – meeting of fund), and in the right of participation in meeting of fund in case of pronouncement of the decisions with number of votes corresponding to quantity and settlement cost of the shares belonging to it, except as specified, provided by part 6 of article 50 of this Law.
3. The assets of contractual fund acquired by these assets securities and other property and the rights to them separately are considered and registered addressed to the managing director of this fund without acquisition by the managing director of the property right to them.
4. The managing director of contractual fund concludes the bargains connected with management of fund on its own behalf with indication of that he acts as the managing director of this fund and that obligations assumed by it according to these transactions are fulfilled only for the asset account of this fund.
5. Much and conditions of execution of obligations assumed by the managing director on the transactions connected with management of contractual fund (including limits of its responsibility for them), extend the relevant provisions of the Civil code of the Republic of Armenia established for the managing director of contractual fund being the agreement party of management of contractual fund.
6. The corporate fund can act only in form of business of joint-stock company with the steady or variable capital, and in case of funds with additional risk and private funds with equity, including venture funds, - also in form of business of the partnership based on trust.
7. The managing director of corporate fund concludes the bargains connected with management of fund on behalf of this fund and at his expense. The managing director of the fund created in form of business of the partnership based on trust bears joint subsidiary liability for obligations of this fund the property.
1. The open-end fund can act only as contractual fund or joint-stock company with the variable capital.
2. The closed and interval funds can act only as contractual fund or joint-stock company with the steady or variable capital, and in case of funds with additional risk and private funds with equity, including venture funds, funds of securitization, - also as the partnership based on trust. The interval corporate fund under which charter the interval of the redemption of its shares is provided with frequency no more once a year cannot have form of business of joint-stock company with the variable capital.
1. The contractual fund can be subdivided into subfunds.
2. In rules of fund features (shall be specified in case of their availability) investment policy, income distribution policy of the available subfunds and each of them, payments in case of placement and (or) the redemption of shares of fund, currency of assets of subfunds and remunerations of the managing director.
3. Each member of subfund can impose requirement only to assets of the subfund. Each subfund in the relations regulated by parts 4 and 5 of article 10 of this Law is considered as separate contractual fund.
4. The managing director can change investment policy of subfund or attach one subfund to other subfund of the same fund according to the rules established by this Law for change of type and accession of contractual funds by entering of corresponding changes into rules of fund.
5. In case of not achievement of the minimum extent of net assets value of fund, reduction of net assets value of subfund provided by this Law in comparison with the minimum size provided by this Law during more than 60 calendar days or reduction of the minimum extent of net assets value of subfund provided by this Law on 1/2 within 6 months after registration of rules of fund (from coming into force of the corresponding changes made to rules of fund caused by creation of fund) the subfund is subject to the termination, and its assets shall be returned to members of subfund according to the procedure, established by this Law for the termination of contractual fund.
6. The provisions concerning according to this Law of calculation and publication of net assets value and settlement cost of shares of fund, and also payments in case of their placement and the redemption (repayment) extend also to calculation and publication of net assets value and settlement cost of shares of subfund and to payments in case of their placement and the redemption (repayment).
1. Participation in fund makes sure share of fund or the share of fund.
2. The share of the member of contractual fund is determined by ratio of quantity of the shares belonging to it and total quantity of all shares of this fund which are in circulation.
3. If the contractual fund has shares of different classes, then the share of the member of fund is determined by multiplication of ratio of quantity of the shares belonging to it and quantity of all shares of this class which are in circulation on ratio of net assets value of all shares of this class and net assets value of fund.
4. The depositary of this fund, person keeping the register of members of this fund (if this function is performed by person, other than the managing director), person performing substantive audit of this fund and their affiliates cannot be members of fund.
5. Shares (shares) issued by not diversified fund, and also specialized fund, except for real estate fund, fund of securitization and fund of funds if the law regulating activities of fund of the corresponding type does not provide other, can be offered only:
1) to skilled investors;
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