10th February 2021, Skopje – Government of the Republic of North Macedonia supported the draft amendments to the Law on Investment Funds, thus creating possibilities for greater liberalization and deepening of the capital market Opportunity to establish new types of investments funds also provides for greater competition, accelerated consolidation and more efficient management of investors’ assets. The Law also underpins greater transparency by getting the potential investors informed in a clear, unambiguous and comprehensible manner, all to the end of timely assessing the risks and the potential costs related to investments.
Amendments to the Law on Investment Funds are an integral part of the broader capital market reform, being aimed at further harmonization with the European Directives.
Two types of investments funds such as master funds and so-called feeder funds will be introduced under the proposed solutions, which will also provide for merging the already established funds into the existing open-end funds in the Republic of North Macedonia, as well as merging of two or several open-end funds into a new open-end investment fund.
This means that so-called feeder funds could be established. Feeder fund means an open-end investment fund, which has invested at least 85% of its assets in units of another investment fund, so-called master investment fund, which will manage the collected assets. Under the existing Law, maximum 10% of the funds’ assets can be invested in another fund. This will provide for greater liberalization of the capital market, thus also creating opportunity for merging the assets of several investments funds into one fund, by which investors will face less costs for managing and using the expertise of the professional managers in the master funds, the ultimate goal of which is better asset management.
Draft amendments to the Law also regulate the procedure for opening a branch of a foreign management company on the territory of the country, also creating the opportunity for the management company in our country to be able to perform activities related to investment fund management by acquiring qualified holding in a foreign company or by opening subsidiary i.e. branch abroad.
In addition, the proposed amendments also provide for deleting the obligation for the open-end investment fund to collect monetary assets amounting to at least EUR 300,000 in Denar equivalent so as to be established, the obligation to maintain their value up to this amount, as well as the obligation for the investment fund management companies to submit, to the Securities and Exchange Commission, revised semi-annual repots on the company and the investments funds managed thereby. These amendments are aimed at facilitating the operations of the investment fund management companies, as well as harmonizing with the European regulations.