Collective Investment Institution (CII)
What is a Collective Investment Institution?
Collective Investment Institution (CII) is an investment fund, established under "The Law “On Collective Investment Institutions”, that conducts collective investment activity, that is attracting investors’ money with the aim to generate profits from investments into other issuers’ securities, corporate rights, real estate and money market instruments.
In Ukraine, first investment funds were created relatively not so long ago – in 1994, and became an important mechanism of the mass privatization process, although these funds were not ready, or adapted for the classic collective investment.
Classic investment funds, in terms of their nature and functions, were created in Ukraine in 2003, after the adoption of the Law “On Collective Investment Institutions (Unit and Corporate Investment Funds)” by the Parliament of Ukraine in 2001.
National collective investment market has been demonstrating positive growth dynamics for over five recent years of its development. It has ensured a sufficiently high rate of investment return, which exceeded the rate of interest on bank deposits. Therefore, Ukrainian investors have obtained a new opportunity to invest and increase the A CII can be created in the form of a unit or a corporate investment fund. or a investment fund.
Unit investment fund (UIF) is not a legal entity, and is founded by an asset management company (AMC) in order to attract monetary resources for conducting collective investment activity.
UIF is assets belonging to investors by the right of collective partial ownership, and are managed by an asset management company (AMC), and are accounted separately from the AMC’s business performance results. , and are accounted separately from the AMC’s business performance results.
A unit investment fund:
is not a legal entity, and is established by an AMC by means of placing (selling) fund’s investment certificates which are issued by the AMC among the investors;
when signing contracts on sale and redemption of the fund’s assets, the AMC acts on its own behalf;
AMC performs accounting of the fund’s operations separately from its own and and other CII’s business operations;
minimum asset volume of the UIF is 1,250 minimum wages fixed as of the date of registration of the fund (UAH 1,722.5thsd as from 01.09.2015, is gradually increasing - previously was UAH 1,522.5thsd, as from 01.12.2013).
Corporate investment fund (CIF) is a legal entity established in the form of a public joint stock company (PJSC) and conduct collective investment as their exclusive activity.
A corporate investment fund:
shall form its statutory capital of cash, government securities and other issuers’ securities admitted to trading in a stock exchange, as well as of real estate objects; statutory capital may be increased by moneys only;
delegate management of its assets to an AMC on a contractual basis; the fund’s management bodies are the same as of an JSC – a General Shareholders’ Meeting and a Supervisory Board.
Depending on the procedure of carrying out their activities, CII are subdivided into three types:
Open-ended fund – the fund (its AMC) has an obligation to perform, upon an investor’s demand, a redemption of securities issued by this CII (or its AMC in case of a unit fund) at any time, i. e. every business day.
Interval fund – the fund (its AMC) has an obligation to perform, upon an investor’s demand, a redemption of securities issued by this CII (or its AMC) during the time period specified in the issue prospectus ("an interval"), but at least once a year.
Closed-end fund – the fund (its AMC) does not have an obligation to redeem the fund’s securities until the termination date of such a fund.
CII may either be fixed-term or perpetual (termless).
Fixed-term CII is created for a certain period of time specified in the issue prospectus of such CII, on the expiration of which this fund is terminated.
Perpetual (termless) CII is created for an indefinite period of time.
A closed-end CII shall only be fixed-term.
Depending on the asset constitution and structure, CII are divided into four kinds (categories):
1) Diversified CII which are investment funds meeting the requirements to their monetary resources to be invested into different capital market instruments envisaged by the Law. Monetary funds can be invested exclusively into securities, placed in bank deposit accounts, or – in the amount of not more than 5 percent of the total asset value – invested into other assets permitted by the legislation.
2) Non-diversified CII are investment funds which do not have to meet strict requirements to asset diversification. They are allowed to invest into real estate objects, into LLC's statutory funds etc. These are funds that do not comply with the requirements of the Law on CII and by-laws of the Commission (NSSMC) to diversified, specialised and qualified CII.
3) Specialised CII invests exclusively into the assets determined by Law On CII. Investment funds belonging to the following classes are regarded as specialised funds:
money market funds;
government securities funds;
bank metals funds
4) Qualified CII invests exclusively into one of the qualified assets classes and moneys, as well as does not have any requirements to asset structure.
The following asset classes belong to qualified ones:
combined securities class;
real estate class;
rent asset class;
loan asset class;
commodity exchange asset class;
other asset classes that the NSSMC may introduce and attribute to qualified ones.
Open-ended CII shall only be diversified or spesialised.
Interval CII shall only be diversified or spesialised, or qualified.
Exchange traded CII (ETFs) shall only be open-ended specialised investment funds of either of the two classes - index funds or bank metals funds.
Non-diversified, closed-end, corporate or unit fund, which carries exclusively private placement of its securities among legal entities and individuals is reffered to as a venture fund. Such a fund shall have the label “venture” in its full name.
Natural persons are allowed to invest in any type of publicly offered CII. But they only may participate in:
a venture CII - if their total investments thereinto (the total value of the fund's shares or investment certificates acquired) are not less than 1,500 minimum salaries as at 1st Jan 2014 (UAH 1,522.5thsd);
a qualified CII - if their total holdings amount to at least 100 minimum salaries as at 1st Jan 2014 (UAH 121.8thsd).
Securities of Investment Funds
The securities of an investment fund confirm the title of their owner to the part of assets of a corporate investment fund or a unit investment fund.
In a UIF, the AMC is the issuer of its securities that confirm the title to the part in the unit investment fund’s assets (theinvestment certificates).
A CIF issues common registered stocks. Stocks of the CIF, in addition to the proprietary right, confirm their owner’s right to participate in the management of the fund as a PJSC.
Stocks and certificates of investment funds have their nominal (face) value. There are no restrictions as to the number of the fund’s securities that could be held by one participant. Owners of stocks or investment certificates are exposed to the risks dependent on the changes of the asset value of the respective investment fund.
The securities of open-ended and interval investment funds are subject to placement/redemption by their issuers (funds or their AMC in the case of unit funds) according to the specificities of the particular CII (fund) type set forth in the fund's Prospectus.
Open-ended fund (its AMC) shall provide placement and redemption of the fund’s securities every business day.
In an interval investment fund, investors can buy and claim for the redemption of the fund’s securities, previously purchased by them, only during certain periods – intervals, when redemption claims are accepted by the fund (its AMC), but not less than once a year. The dates of opening and closing of such intervals are fixed and set forth in the fund’s Prospectus, and its Regulation (Rules).
Closed-end investment funds (their AMC) are obliged to redeem their securities on the expiration of the time period for which such funds were created.
open-end investment funds – are subject to circulation (trading) on the stock exchanges only. Dividends on such securities are neither accrued nor paid.
interval investment funds – are subject to free circulation during the "intervals" on the stock exchanges only; all the other time they are subject to free circulation on all secondary stock markets. Dividends on such securities are neither accrued nor paid.
closed-end investment funds – are subject to free circulation on the secondary securities markets. Dividends on such securities are accrued provided that this is envisaged by their Prospectus.
For more detail please see The Law “On Collective Investment Institutions”.
For more information on Ukrainian CII please also see:
For enquiries please contact:
Anastasiia Gavryliuk (Director of International Relations & Senior analyst) - email@example.com
|Total number of members||313||as at 21.10.21|
|Number of AMC||307||as at 21.10.21|
|Number of NPF administrators||19||as at 21.10.21|
|Number of CII||1642||as at 21.10.21|
|Number of NPF*||56||as at 21.10.21|
|IC Number*||2||as at 31.08.21|
|AuM, UAH M||491 778||as at 31.08.21|
|NPF assets under administration, UAH M||2 105||as at 31.08.21|