Legal base
Asset Management of joint investment institutions (JII)* is the principle area of activity of Asset Management Company (AMC). AMC attracts investments via JII, and, is based on the own investment strategy, it invests the attracted capital in various assets, thus forming the assets of JII. | For information: Portfolio investment... | | According to one of the possible definitions, portfolio investment means investment made by investor not intending to receive the additional advantages deriving from the receipt of management control over the Company and participation in its economic activity that is the feature of the so called direct investments. The aim of the portfolio investor is limited by increase of value of the invested capital (for example, shares) and/or by receipt of the current income that such capital may provide(for example in form of dividends on the shares). In this case the investor does not concentrate the attention on one investment in financial or real asset, but creates the diversified assets portfolio. High-quality legislation in area of the investment funds and their numerous features make the investment funds in Ukraine one of the cheapest, stable and easy-way to realize portfolio investments in Ukraine . | | For information: Types of investments... | Private Equity Investments Private equity is defined as investments in unlisted companies in which Investor assumes an active owner ship role. Investor’s involvement may range from supporting holdings in the development of their business, strategy and vision, to providing access to representatives in Investor’s network and legal and financial expertise. Depending on the development phase of a company, Investor conducts two different kinds of private equity investments: venture capital and buyouts. Operating Investments Operating Investments consist of holdings in which Investor has a controlling interest or minority position with significant influence. Financial Investments In the Financial Investments business area, investments are made in financial instruments, primarily listed ones, such as shares and share-related derivatives in the global finance market. Investments are strictly financial investments in which investor do not assume an active role in the development of the company he invest in. Exits Exiting, or divesting, holdings is an important part of Investor's business operations when owner can no longer develop the holding or contribute more to its value, or when he see that another owner can further develop the holding. The exit is made with the goal to generate attractive returns for our shareholders. Exits are made through an IPO, industrial sale or by selling to a financial investor.. | All features of asset management company activity are described in The Law of Ukraine on the Joint Investment Institutions. | For information: Basic terms (The Law on Jll, Article 3) | | Assets of joint investment institute mean the complex of property, corporate rights and calls formed by application of the joint investment capital; Joint Investment Institute (hereinafter referred to as JII) means the corporate investment fund or the venture investment fund performing the activity related to concentration (attraction) of monetary capital of the investors with the aim of receipt of profit from investment of them in securities of the other issuers, in corporate rights and real estate; Asset management company is the commercial company performing its professional activity related to the management of JII assets basing on the license granted by the Commission (GKCBFR) JII Regulations mean the document defining the details of activity of JII; JII securities are the shares of corporate investment fund and the investment certificates of venture investment fund. |
AMC Remuneration AMC remuneration is also fixed. The Laws of Ukraine (particularly The Disposition on the structure and amount of expenses covered from the assets of the joint investments institutions) establish the maximum possible amount of remuneration and the way for its calculation. Thus, AMC remuneration consists of remuneration for Asset Management and premium. Remuneration for management may not exceed 5% of the average value of assets of JII being in management during the financial year (except management of assets of venture funds). AMC remuneration in case of venture funds is established pro rata to the total nominal value of the actually listed emission of investment certificates and to the difference in expenses for purchase of assets of the funds and income from their sale. The premium is paid according to the results of activity of JII during the reported period and may not exceed 15% from the extra profit of the certain JII. (Extra profit is the profit exceeding the planned level stated in JII Regulations). The exact amount of remuneration is stated in the principal document the Regulations, the principal JII instrument. In practice, remuneration for management is related to the expenses of AMC connected with the investments, and premium is related to the personal remuneration, thus the Client receives the additional evidences of the fact that Company acts for the interest of the Client. Types of the Funds Article 4 of the Law on JII established the possible kinds and types of the funds. The venture funds are the most popular in Ukraine, as they have the minimum restrictions for the structure of the assets, enabling them to realize any investment strategy. | For information: History of venture funds | | What is “Venture”? The re are a lot of definitions of the term of venture financing, and the most common definition is as follows: venture financing means financing by private business capital of the project having non-guaranteed successful perspective. Practically it appeared that the most interesting objects for application of the venture capital were the small innovation companies oriented to the creation and putting on the market of the products with important scientific component, based on the high tech, that’s why venture financing is often related to the direct investments in the companies of technological sector. The venture investment funds or companies prefer to invest their capital in the companies that are not publically listed at the Stock Exchange, the shares of such companies are distributed actually completely among the shareholders, natural and moral persons. The following history is well-known for public. In 1957 a certain Arthur Rock, the employee of the investment bank in New York, received from his friend, the specialist in semi-conductors, the letter asking the advice to found the investor ready to finance creation and production of new silicon transistors. Only one of 35 potential investors with whom Rock had the negotiations, responded to this offer, he was Sherman Fairchild. As a result, “Fairchild Semiconductor” Company appeared, it became the predecessor of all American semiconductor companies, it made its founders rich and approved for them the perspective of high – risk investments in small innovative companies. After the success of his first deal Rock decided to dedicate himself to the venture investments. The first venture fund established by Arthur Rock in 1961, amounted only to: $5 mln, and only $3 mln of them were invested. Nevertheless, the results of operation of the Fund were astonishing: having invested only $3 mln., A. Rock returned after a short-term period to his investors about $90 mln. Later he operated the projects resulted in appearance of the well-known brands, recognized today, such as are «Intel» and «Apple Computer». In the year of 1984 the name of Arthur Rock became the symbol of success. Venture Funds in Ukraine Venture fund, according to the definition of the Ukrainian legislation is the joint investment institute of the private and non-diversified type, performing only private subscriptions for the securities of the own issue, and its assets consist for more than 50 % of the corporate rights and securities not allowed for trade at the Stock Exchange in via the trade information system. The investor bears completely the risk of venture investment, that’s why the legislation excluded for such funds the numerous regulatory restrictions that are characteristic for the activity of the investment funds of the other types. The composition and structure of the venture fund assets are regulated only by its Members. Particularly, the venture investment fund may invest all own capital in low-liquid securities of one Issuer, buy the promissory notes and the loans to the companies being in his property, etc. There are no limitations for the number of members of the venture investment fund, and the Fund may have only one Member. The only limitation for such funds is that the securities of the fund may not be offered to public and the subscribers may be only legal entity. Venture funds – the profile in Ukraine As the majority of the analysts states, the growth of the venture investment funds number in Ukraine is due to the simplified reporting system and tax privileges. The main area of use of the venture investment funds is the use of securities for tax optimization of construction and sale of the real estate. | At the present moment the Company is entrusted in management 2 venture funds: Legal documents Law of Ukraine on JII Law of Ukraine on Securities and Stock Market Land Code of Ukraine About claim of Statute about the features of realization of activity from the asset management of institutional investors About claim of Statute about the order of placing About claim of Statute about the order of registration of issue of investment certificates of rationing About claim of Statute about the order of registration of issue of investment certificates of rationing investment fund at their placing by public suggestion About claim of the Licensed terms of realization of professional activity at the fund market * -AMC does not provide legal, fiscal or accounting consultations. These matters and their description in the materials of this site have general character and are given only for information, being our interpretation of the materials of the Laws of Ukraine in effect as of the moment of the last update. The Laws may be amended from time to time. This representation may not be used as the document substituting the professional consultations of the specialists in the relevant areas.
|
