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08 April 2008
Under the new regime, individuals (as opposed to legal persons only under the previous regime) may invest in a specialized investment fund, provided that each individual invests a minimum of €250,000.
Furthermore, certain uniform definitions provided by the directive specifying the instruments in which a fund may invest (eg, closed-ended funds or certain financial instruments linked to the performance of other instruments) will be implemented to foster cross-border marketing activities.
As opposed to the current regime under which assets forming part of a fund will not be pledged or otherwise encumbered, or provided as security, the draft bill proposes an exemption to this rule by specifically allowing fund assets being pledged or being provided as security for purposes of derivatives transactions. This will certainly be welcomed by the industry, as under the current framework it is necessary to argue against the letters of the law to justify why the provision of, for example, margin calls for futures transactions, were nonetheless permitted.
In line with the legal regime of other EEA jurisdictions, the draft bill foresees that: (i) investment fund management companies will henceforth be obliged to inform publicly when suspending and resuming the redemption of units; and (ii) distributions to unit holders may be satisfied not only out of profits generated by the fund, but also out of the fund’s assets if the respective fund rules so provide and if the value of the fund’s assets does not fall below €1.15 million as a result of such distributions.
It is also envisaged that an investment management company may terminate the management of a fund with immediate effect if the value of a fund’s assets reaches €1.15 million (as opposed to the current €370,000).
With respect to the EEA passporting regime of UCITS funds, the draft bill aims to codify current regulatory practice pursuant to which the attestation issued by the competent authorities of the EEA member state in which the investment fund management company has its registered office, confirming that the provisions of Directive 85/611/EEC are complied with, may be submitted in English without a German language translation. Further, the provisions on the statutory waiting period will be revised to state that the two-month waiting period (before it is possible publicly to offer units in a UCITS fund to Austrian investors) is a maximum period, which will be shortened if the respective fund is listed in the Austrian regulator’s database of UCITS funds permitted for public offer in Austria.
The consultation period on the draft bill ended on January 4 2008. In the coming weeks the draft bill will be forwarded to the two chambers of the Austrian Parliament for discussion and approval. If approved, the amendments are likely to enter into force from July 23 2008 onwards.
For further information on this topic please contact Ursula Rath at Schönherr Rechtsanwälte GmbH by telephone (+43 1 53 43 70) or by fax (+43 1 53 43 76100) or by email (email@example.com).
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