Custody services

REDSIDE Investment Company, a.s. offers its investors the creation and maintenance of asset accounts.
For this service, the investment company is entitled to a payment.

Management and administration od QIF

Generally speaking, the management process may be divided as follows:

Management of an investment fund

Basically, it includes managing assets of an investment fund, making investments (portfolio management) as well as risk management. In term of a managed fund the management is conducted exclusively by an investment company. The investment company is also authorized to perform acts related to its status as the only board member of the managed fund with legal personality, including updates of the statute of the fund.

Administration of an investment fund

The administration of an investment fund embraces taking proper care of the administration process including regular reports submitted to the CNB and investors. As for the externally managed funds, the administration is provided by an investment company.
The administration mainly covers these activities:
o Bookkeeping,
o Provision of legal services and compliance,
o Evaluation of the property and debts of a fund,
o Calculation of the current value of a security issued by this fund,
o Maintaining the list of owners of securities issued by this fund,
o Ensuring issuance and redemption of securities issued by this fund,
o Execution and update of an annual report of the fund,
o Provision of information services for investors,
o Fulfilment of duties towards the Czech National bank,
o Fulfilment of duties towards the fund depositary and so on.

Communication with a depositary and custodian of an investment fund

Every investment fund has its own depositary. In the Czech Republic the depositary of an investment fund is almost always a bank that was granted an approval by the Czech National Bank to perform activities of a depositary, despite the fact that the Act on Investment Companies and Investment Funds provides for other alternatives.
The main activities of a depositary include in particular bookkeeping and cash flow control. The depositary is given the assets of the investment fund for safekeeping and is also responsible for the settlement of transactions and appropriate calculating the net asset value.
A depositary has oversight duties, which require it to perform ad hoc monitoring activities on the grounds of the regular reports of the investment company in the best interest of both an investment company and its investors.

A depositary closely cooperates with a fund manager and with a capital market regulator, i.e. the Czech National Bank.

Cooperation with expert institutions

On regular basis, a depositary evaluates the assets of a managed investment fund independently of the investment company and in compliance with the terms and periods set out through the legislation and the statute of the fund.

Cooperation with auditors

Every year a depositary ensures financial statements and annual report for each managed fund.

The above is just a basic description and a summary of activities carried out by funds. In some special cases certain processes may differ. Would you like to find out more about the operation of funds? Please do not hesitate to contact us.

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The main classification of investment funds

ISIF has introduced a new classification of investment funds. From investor's point of view, funds type are divided into:

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Collective investment funds are designed for retail investors from the general public (that is why they are sometimes called retail funds) and offer higher protection, however are significantly more regulated and limited with respect to their investment focus.

On the contrary, qualified investors funds are designed for professional investors from institutions and experienced individuals offering a lower degree of regulation and considerably greater opportunities in terms of various investment objectives and strategies.

The funds may be also divided into open-end or closed end funds:

• An open-end fund allows investors to continuously join and leave the fund pursuant to the terms and conditions laid down by the legislation and the statute of the fund.
• A close-end fund on the contrary closes for a period defined by the statute after raising its capital.

Qualified Investors Funds (QIF)

Amendment 224/2006 Coll. introduced the distinction between special funds for the general public and for qualified investors together with the adoption of a special qualified investors fund following Luxemburg and German regulations (QIF is similar to Luxemburg Specialized Investment Fund). QIF is designed for experienced investors from institutions such as insurance companies, pension funds, banks, asset managers, investment intermediaries etc., and individuals with extensive investment experience meeting the minimum initial investment in amount of EUR 125 000.

Funds of qualified investors represent opportunities for investors to effectively achieve a broad spectrum of investment objectives ranging from financial assets, real estate to commodities and works of art. These funds may take form of a mutual fund as well as an investment fund with legal personality. Each form has different procedural, regulatory, tax and accounting features.

In comparison to retail funds, a QIF is less regulated and offers more options in terms of investment objectives and strategies. A QIF is for example suitable for making investments in:
• Real estate
• Private equity and venture capital
• Energy industry
• Securities, money market instruments, commodities etc.
• Receivables
• Trademarks
• Less traditional investments, such as works of art or wine
• Many other investment objectives
QIF may come into existence in a variety of legal forms depending on particular parameters of planned investments, investors’ intentions etc., among standard forms belong:
• Legal person (joint-stock company, limited liability company, limited partnership company, European company and cooperative)
• SICAV (joint-stock company with variable registered capital, allows creating sub-funds that are within one SICAV separated in terms of assets and thus separate portfolios can be created effectively by various investors and in various currencies etc.)

• Limited partnership company with investment certificates
• Mutual fund
• Trust (fund)

QIFs may be established as self-managed funds (applies only to certain forms) or managed funds (see Management – link) and also as open-end or close-end.
Please do not hesitate to contact us if you wish to learn more about taking advantage of particular forms of funds.

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The above is just a basic description and a summary of activities carried out by funds. In some special cases certain processes may differ.

Would you like to find out more about the operation of funds? Please do not hesitate to contact us.