How does mutual Fund. Control over the activities of the management company.
Mutual Fund is not a legal entity, and disposes of his property management company. The activity of the management company is strictly regulated and controlled. First, the management company may manage mutual Fund only on the basis of the license for realization of activity on management of investment funds, unit investment funds and private pension funds issued by the Federal Commission for the securities market (FCSM).
The management company may combine the management of mutual funds only with the activities of the trust management of securities, management of pension reserves of private pension funds and management of insurance reserves of insurance companies. So the management company could not abuse investors ‘ funds, invented by the separation of the management of funds from their store. Unitholders ‘ funds are kept in a different organization – a specialized Depository, which not only preserves them, but also controls the legality of transactions with these funds. This is called the principle of separation of property constituting a unit investment Fund property the management company. For the settlement of transactions related to trust management of the mutual Fund, a separate Bank account (s) and for recording rights to securities, constituting the mutual Fund, is a separate Deposit account in the special Depository.
Specialized Depository is the organization that maintains the safekeeping and accounting of rights to securities, constituting the mutual Fund. Specialized Depository is not entitled to use and dispose of property constituting the mutual investment Fund, he is obliged to exercise control over compliance the management company of that mutual Fund regulations and the rules of trust management of mutual investment Fund. Specialized Depository ensures that, where the management company sends the funds of shareholders in order to comply with the requirements to the composition and structure of assets of mutual investment Fund pursuant to the investment Declaration of the Fund. If the management company gives the special Depository any orders regarding the assets of the Fund contrary to law, the specialized Depository is not entitled to execute such orders. He must act solely in the interests of the shareholders. If the specialized Depositary in the course of monitoring the activities of the management company identifies violations, it shall notify the Federal Commission for the securities market. Specialized Depository also maintains the register of holders of Mutual Fund shareholders, i.e. who, when, how many shares bought and sold. Or, according to the Rules of the specific Fund, this activity is engaged in specialized Registrar.
But the control over the activities of the management company ends. Each year the management company is subject to verification by the auditor. The audit shall be subject to accounting, record keeping and reporting on the assets of the Fund, the composition and structure of assets of the Fund, etc. State regulation of activity of management companies of unit investment funds, specialised depositories and the state control over their activity are carried out by the Federal Commission for securities market (FCSM). The management company is obliged to submit reports to the FCSM.
Thanks to the organization of the mutual Fund the money of shareholders cannot “evaporate” or to be expended at the expense of shareholders. The value of the Fund’s assets may decrease because of lower market prices of the securities constituting the assets of the Fund, but the Fund may not “disappear”. Even in the event of bankruptcy of the management company shareholders will not be affected, and the mutual Fund will be transferred to the control of another company.
7. How to become a shareholder. Sale of shares.
The sale and redemption of units the management company produces and/or agents of the mutual Fund. Agents can only be legal entities – professional participants of the securities market having the license for implementation of broker activities. Issuance of investment units (the entry in the register of unit holders) on the basis of applications for purchase of units. Requirements on the redemption of investment units also served in the form of applications for redemption of investment units. In the application for purchase of units, the investor indicates how much he makes, and in the application for redemption amount of units is going to sell or how much to get.
Accepting applications for purchase, redemption and exchange of investment units of an open mutual Fund is carried out every working day. And the acceptance of applications for purchase, redemption and exchange of investment shares of the interval mutual Fund shall be made within the period determined by the Rules of the Fund (within two weeks 1-4 times per year). Applications for purchase, redemption and exchange of investment shares is served in a management company and (or) agents of mutual Fund. The first purchase of Fund units, the shareholder fills in the questionnaire of the registered person and the statement about the opening of personal accounts in the mutual Fund.
The Fund rules may provide for the exchange of Fund units for units of another Fund managed by the same management company. Moreover, the units of an open Fund can only be exchanged for units of an open Fund, and the interval – only to the units of interval. The transition from the Fund to the Fund may be useful to the shareholder, if he wants to change investment strategy. Exchange of units the redemption of units of one Fund and buying units in another take place simultaneously without any discounts and allowances to the cost of the unit. No taxes shall be levied.
Application for purchase of units, you can apply to transfer to the account of the Fund of funds investor, and after they arrive. The deadline for issuance of investment units (making an entry in the register of unit holders) amounts to no more than three days from the date of receipt by the Fund of funds (if the application for purchase of units was adopted earlier) or from the date of filing (if the money to the Fund received before).
As Pai uncertificated securities, the ownership of shares is evidenced by the issuance of extracts from the register of shareholders. Extract from the register of shareholders or mailed to the shareholder by mail or issued at the point of receiving applications. Within one day after making entries on the personal account, the Registrar must give or send the registered entity a notice of operations under the personal account. Redemption of investment shares (making the expenditure entry in the register of unit holders) is no later than 3 days from the date of receiving an application for redemption of units. Payment of monetary compensation in connection with the redemption of investment unit of open-end equity unit investment Fund shall be no later than 15 days from the date of repayment of the investment share. And payment of monetary compensation in connection with the repayment of the investment share of interval share investment Fund is carried out not later than 15 days from the date of expiry of the period for acceptance of applications for redemption of investment units, for which the application was filed.
In almost every mutual Fund determined the minimum amount that can be invested by a shareholder. This amount varies from a few hundred to millions of rubles. Mutual funds that focus on private investors, set a small amount – an average of 5,000 rubles. In mutual funds, established to manage assets of insurance companies and private pension funds, the minimum amount of one hundred thousand and above.