Protection of Investors’ Rights

Protection of Investors’ rights is a topic widely covered by local legislative and administrative regulation, by mechanisms of property rights protection and restrictions imposed on the Funds’ Asset Management Company.

Legislation. Rights of investors of the Funds in Ukraine are protected by law. Unit Investment Funds are regulated by the Law of Ukraine “On Joint Investment Institutions” (mutual and corporate investment funds)”. Corporate funds incorporated as joint stock companies are also to comply with the Law of Ukraine “On Economic Entities”.

State Control. Regulation and control over the activity of the Funds is executed by the State Commission for Securities and Stock Market (SCSSM). Investment funds are obliged to report to the Commission on their performance, publish articles in mass media, inform the investors on all changes on a regular basis. If the activity of the Fund is not “transparent”, the SCSSM is entitled to take the relevant measures up to revocation of the license of Asset Management Company.

Property right. Investor is not a client, but a co-owner of the Fund. Ownership always implies control over the property. Therefore, the Funds’ investors have the right to:

  • set up the Supervisory Board of the Fund to control the activity of AMC in terms of the Fund’s asset management;

  • amend the Investment Declaration and the Rules of the Fund, select a registrar, auditor, custodian of the Fund’s assets, Asset Management Company by means of the Supervisory Board and the General Meeting of Shareholders (investors) in cases, stipulated by Rules of the Fund;

  • receive information on the activity of the Fund and its net asset value on a regular basis.

Restriction of AMC activity.

  • In order to get the registration, AMC has to comply with the set of strict requirements to capital, professional experience of employees etc.;

  • Mandatory condition for AMC activity is to join the Ukrainian Association of Investment Business that requires references from other capital market players;

  • AMC may not carry out any transaction with the Fund’s assets without the knowledge of the Fund’s assets Custodian that acts as an independent party on arm’s length basis;

  • AMC may not buy the assets not specified in the Investment Declaration of the Fund;

  • AMC may not extend credits and loans at the expense of the Fund’s assets;

  • Other restrictions.