Asset management companies

The Asset Management Company during the asset management activity of the Joint Investment Institute, in accordance with the Law on Collective Investment Institutions, has no right to:

1) to acquire, at the expense of assets of the institution of joint investment, property and securities of the types that are not provided for by the investment declaration of the joint investment institution;

2) to carry out, at its own expense, the operations with assets of the joint investment institute, which it manages;

3) to dispose of assets of the collective investment institution free of charge;

4) take a loan or a loan to be repaid at the expense of the assets of the collective investment institution in the amount of more than 10 percent of the net asset value of the collective investment institution for a term of more than three months for a purpose other than the use of these funds for the redemption of securities of the joint investment institution;

5) to provide a loan at the expense of assets of the collective investment institution (not applicable to venture fund assets management activities);

6) use the assets of the collective investment institution to ensure the fulfillment of obligations to which the joint investment institution is not a party;

7) to purchase promissory notes at the expense of assets of the institution of collective investment, unless otherwise provided by regulatory acts of the Commission (does not apply to venture fund assets management activities);

8) place securities of other issuers, except for securities of the collective investment institution the assets of which it manages;

9) enter into contracts of sale with related parties of such company, except contracts with securities traders for the placement and redemption of securities of the collective investment institution (does not apply to venture fund assets management activities);

10) enter into loan agreements (interest-free and non-interest bearing) with related parties of such company (does not apply to venture fund assets management activities);

11) to sell securities of the joint investment institution to the custodian of the joint investment institution, the depositary, the property appraiser of the joint investment institution and the auditor (audit firm) of such institution, as well as to the state authorities and local self-government bodies;

12) to alienate the assets constituting the assets of the relevant collective investment institution to the assets of the company itself (does not apply to venture fund assets management activities);

13) conclude, on behalf of the institution of joint investment, contracts which by their nature can be concluded only on behalf of the asset management company;

14) conclude, on behalf of the institution of collective investment, contracts which by their nature can be concluded only by the institution of joint investment;

15) to alienate the property belonging to the company to the assets of the institution of joint investment;

16) to alienate the assets that constitute the assets of the joint investment institution in favor of another joint investment institution that it manages, except for the transfer of funds from the account of one joint investment institution to another institution of joint investment in the conversion of securities of the collective investment institution;

17) to provide loans at the expense of assets of the joint investment institution.

In order to carry out professional activity in managing assets of institutional investors, a legal entity must obtain the appropriate license in accordance with the established procedure. The list of documents necessary for obtaining a license, the procedure for its issuance and revocation shall be established by the National Commission for Securities and Stock Market.

The combination of asset management activities of institutional investors with other types of professional activity in the stock market is prohibited except in cases stipulated by law. In particular, AMC may conduct mortgage management activities. AMC also has the right to simultaneously manage the assets of several institutional investors.

The following indicators are used to measure and evaluate the risks of asset management activities:

SIZE OF OWN FUNDS. The minimum amount of own funds of the Company or the Individual shall be not less than 50 per cent of the minimum amount of authorized capital established by the legislation for the specified type of professional activity in the stock market.

NORMAL ACCESSIBILITY OF OWN FUNDS. Calculated as a ratio of the amount of own funds to a value that is 25% of fixed overhead costs of the institution for the previous fiscal year. Normative value of the standard is not less than 1.

COVERAGE OF OPERATING RISK COVERAGE. It is calculated as the ratio of the size of the institution’s own funds to its operational risk, which is 15% of the size of the average annual net income of the institution for the 3 previous financial years in which a positive net income was received. If an institution carries out professional activity in the stock market for less than three years, the annual net income for the number of full fiscal years is taken by the institution of professional activity in the stock market. The normative value of the coefficient is not less than 1.

FINANCIAL STABILITY COEFFICIENT. Calculated as the ratio of the amount of equity capital of the institution to the value of its assets. Normative value of the coefficient – not less than 0,5.

Asset management companies and individuals managing non-state pension funds assets submit to the Commission information on the financial state, results of activities and the calculation of the net asset value of collective investment institutions and the management of assets of a non-state pension fund (open, corporate, professional).

Information about the financial condition is provided:

• monthly (title page, certificate of compliance with statutory and equity capital requirements of legislation, list of institutional investors whose assets are managed by a company / person, and compliance with prudential standards). The information shall be submitted no later than the last day of the month following the reporting period. Information for the last month of the quarter is provided as part of the quarterly information;
• quarterly (monthly information and financial statements). The information shall be submitted no later than the last day of the month following the reporting quarter. Information for the IV quarter is provided in the annual information;
• annual (monthly information and financial statements). Information is submitted by March 1 of the year following the reporting period.

Information on the results of activities and the calculation of the net asset value of joint investment institutions are given:

• daily (certificate of net asset value). The information is submitted before the 18th hour of the next working day regarding the net asset value of the CII, which is calculated
• at the end of each working day – for an open-end CII;
• on the day from which the restrictions established by the legislation apply to the structure of CII assets;
• for each day, the funds are transferred to the CII bank account (when placing the securities of such institution) or the transfer of CII securities to the account of such institution’s securities purchased (during the redemption of CII securities);
• Monthly (certificate of net asset value) – not later than the last day of the month following the reporting period. Information for the last month of the quarter is provided in the quarterly form;
• quarterly (title page, information about CIFs and mutual funds, certificate of value of net assets) – not later than the last day of the month following the reporting quarter. Information for the IV quarter is provided in the annual information;
• annually (title page, information on KIFs and mutual funds, certificate of net asset value, information on compliance with AMC remuneration requirements, financial statements, information on the audit report) – no later than April 1 of the year following the reporting year.

Information on asset management of a non-state pension fund is provided:

• monthly (information on the composition, structure and value of NPF assets) – by 13:00 the second working day of the month following the reporting period. Information for the last month of the quarter is provided in the quarterly form;
• quarterly (title page, information on NPF in management, information on the composition, structure and value of NPF assets) – not later than the last day of the month following the reporting quarter. Information for the IV quarter is provided in the annual information;
• annually (title page, information on NPF in management, information on composition, structure and value of NPF assets, certificate of remuneration for asset managers) – not later than April 1 of the year following the reporting year.

More information on information disclosure by asset management companies can be found at the link.