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Investment Funds Act


Published: 2015-07-17

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Investment Funds Act1

Passed 14.04.2004
RT I 2004, 36, 251
Entry into force 01.05.2004

PassedPublishedEntry into force
08.12.2004RT I 2004, 90, 61601.01.2005
19.10.2005RT I 2005, 59, 46315.11.2005, with respect to electronic money institutions upon entry into force of the Electronic Money Institutions Act
19.10.2005RT I 2005, 59, 46415.11.2005
22.11.2006RT I 2006, 56, 41701.01.2007
22.11.2006RT I 2006, 56, 41701.01.2008
24.10.2007RT I 2007, 58, 38019.11.2007
21.11.2007RT I 2007, 65, 40515.12.2007
28.02.2008RT I 2008, 13, 8915.03.2008
23.10.2008RT I 2008, 48, 26914.11.2008
23.10.2008RT I 2008, 48, 26901.01.2009
23.10.2008RT I 2008, 48, 26901.01.2011
28.01.2009RT I 2009, 12, 7127.02.2009
10.06.2009RT I 2009, 37, 25010.07.2009
17.12.2009RT I 2010, 2, 322.01.2010
28.01.2010RT I 2010, 7, 3026.02.2010
27.01.2010RT I 2010, 9, 4108.03.2010
22.04.2010RT I 2010, 22, 10801.01.2011, enters into force on the date which has been determined in the Decision of the Council of the European Union regarding the abrogation of the derogation established in respect of the Republic of Estonia on the basis provided for in Article 140(2) of the Treaty on the Functioning of the European Union, Council Decision 2010/416/EU of 13.07.2010 (OJ L 196, 28.07.2010, pp. 24-26).
09.12.2010RT I, 21.12.2010, 631.12.2010
08.12.2010RT I, 21.12.2010, 301.01.2011
26.01.2011RT I, 18.02.2011, 101.08.2011
23.02.2011RT I, 24.03.2011, 103.04.2011
16.06.2011RT I, 08.07.2011, 618.07.2011
12.10.2011RT I, 02.11.2011, 112.11.2011
07.03.2012RT I, 29.03.2012, 130.03.2012
06.06.2012RT I, 29.06.2012, 101.04.2013, partially 01.01.2014
13.06.2012RT I, 06.07.2012, 101.04.2013
25.04.2013RT I, 15.05.2013, 225.05.2013
20.06.2013RT I, 12.07.2013, 222.07.2013
20.11.2013RT I, 13.12.2013, 101.01.2014
11.12.2013RT I, 23.12.2013, 101.01.2014, partially 01.01.2020
05.12.2013RT I, 23.12.2013, 402.01.2014, partially 01.01.2014
16.04.2014RT I, 09.05.2014, 219.05.2014
19.06.2014RT I, 12.07.2014, 101.01.2015
19.06.2014RT I, 29.06.2014, 10901.07.2014, the titles of ministers substituted on the basis of subsection 107³ (4) of the Government of the Republic Act in the wording in force as of 1 July 2014.
18.12.2014RT I, 23.12.2014, 1501.01.2015
18.02.2015RT I, 19.03.2015, 429.03.2015
15.06.2015RT I, 07.07.2015, 217.07.2015

Chapter 1 GENERAL PROVISIONS  

§ 1.  Investment fund

  An investment fund (hereinafter fund) means a pool of assets established for collective investment (hereinafter common fund) or a public limited company founded for collective investment on the basis of this Act, which is or the assets of which are managed on the principle of risk-spreading by a management company.

§ 2.  Open-ended fund and closed-ended fund

 (1) An open-ended fund is a common fund specified in § 105 of this Act the units of which are redeemed according to the fund rules at the request of the unit-holder within one month as of submission of the respective claim by the unit-holder.

 (2) A fund which does not meet the requirements provided for in subsection (1) of this section is a closed-ended fund.

§ 3.  Public fund

  A fund the units or shares of which are publicly offered according to the fund rules or the articles of association of the fund pursuant to the provisions of § 217 of this Act is a publicly offered fund (hereinafter public fund).

§ 4.  Undertaking for collective investment in transferable securities (UCITS)

 (1) A UCITS is a fund recognised in a Contracting Party to the EEA Agreement (hereinafter Contracting State) which complies with the requirements provided for in the Council Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (OJ L 302, 17.11.2009, pp. 32–96) (hereinafter directive regarding investment funds) and the units or shares of which may be publicly offered in all Contracting States.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (2) A UCITS founded in Estonia is a public open-ended common fund which complies with the requirements provided for in the directive regarding investment funds and this Act concerning a UCITS.

§ 5.  Business name or name of fund

 (1) The word " investeerimisfond " [investment fund] or " fond " [fund] shall be used in the business name of a fund founded as a public limited company or in the name of a common fund.

 (11) The words " eurofond " [UCITS], " rahaturufond " [money market fund], " kinnisvarafond " [real estate fund], " indeksfond " [index fund] and " riskikapitalifond " [venture capital fund] may be used only respectively in the business names and names of the UCITS provided for in § 4, money market fund provided for in § 252, real estate fund provided for in § 253, index fund provided for in § 254 and venture capital fund provided for in § 2541 of this Act.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) Other persons, agencies and associations shall not use the words " investeerimisfond ", " eurofond ", " rahaturufond ", " kinnisvarafond ", " indeksfond " and " riskikapitalifond " or words or abbreviations with a misleadingly similar meaning in Estonian or in any other language in their name. The specified restriction does not apply to the business name of a management company.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (3) The business name or name of a fund shall be clearly distinguishable from the business names or names of other funds which are founded or established in Estonia, or the shares or units of which are sold in Estonia.

 (4) The requirements for a business name provided for in § 12 of the Commercial Code apply to the name of a common fund.

 (5) The business name or name of a fund shall not be misleading with regard to the investment policy or other rules of the fund as prescribed in its articles of association if the fund is founded as a public limited company or in its rules if the fund is a common fund.

§ 6.  Parent undertaking and subsidiary

  The provisions of § 7 of the Credit Institutions Act apply upon determination of the parent undertaking, subsidiary and close links.

§ 7.  Qualifying holding and controlled company

  The provisions of §§ 9, 10 and 721 of the Securities Market Act apply to determination of qualifying holdings and controlled companies.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 8.  Application of Act

 (1) A fund specified in §§ 81, 9, 91 and 10, subsection 14 (12), clause 22 1), §§ 332 and 333, subsection 34 (1), subsection 381 (1), clause 76 (1) 4), clause 76 (3) 3), § 951, clause 121 4), clause 175 (2) 5), § 2342, clause 252 (1) 3), clause 253 (2) 1), clause 255 (1) 2), §§ 264 and 265, clause 268 (2) 4) and §§ 273, 296 and 33410 and 33411 of this Act also means another pool of assets or person established for collective investment, including an investment fund founded in a foreign state.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (2) Part VI of the Securities Market Act and legislation established for specifying these provisions pursuant to Part VI of the Securities Market Act shall apply to a management company which holds an authorisation for the provision of investment services provided for in clauses 43 (1) 4) or 5) or ancillary services provided for in clause 44 1) of the Securities Market Act in addition to this Act.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

 (3) The provisions of this Act pertaining to a management company shall not apply to the following persons and pools of assets:
 1) holding companies;
 2) Eesti Pank and central banks of foreign states;
 3) state and local governments;
 4) employee share and issue schemes;
 5) institutions for occupational retirement provision for the purposes of Directive 2003/41/EC of the European Parliament and of the Council on the activities and supervision of institutions for occupational retirement provision (OJ L 235, 23.09.2003, pp. 10-21), unless otherwise provided by this Act;
 6) securitisation special purpose vehicle for the purposes of Article 1(2) of Regulation (EC) No 24/2009 of the ECB concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions (ECB/2008/30) (OJ L 15, 20.01.2009, pp. 1-13);
 7) persons who manage one or more funds which only investors are such persons themselves or the parent companies or subsidiaries of such persons or other subsidiaries of the parent company of such persons, provided that none of the above-mentioned investors is a fund.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (4) For the purposes of this Act, persons and pools of assets which are founded or established for management of family assets or other equivalent pools of assets shall not be regarded as management companies.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (5) For the purposes of this Act, a holding company is a person:
 1) whose has a participating interest in one or more persons and whose business objective is to implement its business strategy through its subsidiaries or affiliated undertakings or participating interests for increasing their value in the long term;
 2) who acts on its own account and whose shares or other equivalent securities have been admitted for trading on a regulated securities market of a Contracting State, or
 3) whose main objective in accordance with such person's annual report or other documents is not to generate revenue to the investors through transfer of the participating interest.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 81.  Application of Act to persons without authorisation of management company

 (1) In order to manage a fund, a person founded in Estonia shall register its activities with the Financial Supervision Authority, unless otherwise provided by this Act. In order to register is activities, a management company shall submit the following information to the Financial Supervision Authority:
 1) contact details;
 2) number of funds managed, their names or business names;
 3) dates of foundation or establishment of funds and according to the law of which state the funds were founded or established;
 4) information on the investment policy of the funds managed, including information about investments and financial instruments traded, trading venues, main exposures, composition and total value of the assets managed.

 (2) The information may be submitted in Estonian or English. The Financial Supervision Authority has the right, if necessary, to require translation into Estonian of the information submitted in English.

 (3) After registration of the person specified in subsection (1) of this section with the Financial Supervision Authority, the person shall submit the information specified in clauses (1) 2) to 4) of this section to the Financial Supervision Authority on regular basis once per calendar year within one month after the end of an accounting period.

 (4) The person specified in subsection (1) of this section shall apply for:
 1) an authorisation of a management company, if such person wishes to manage a fund founded or established pursuant to this Act, or
 2) an authorisation of a manager of an alternative fund, if the volume of the assets permanently managed by such person exceeds, during 30 days, the thresholds provided for in subsection 91 (1) of this Act.

 (5) More specific requirements for valuation of the assets and submission of information, including reporting, are provided in Commission Regulation (EU) No 231/2013, supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (OJ L 83, 22.03.2013, pp. 1-95) (hereinafter Commission Regulation (EU) No 231/2013).
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

Chapter 2 MANAGEMENT COMPANY  

Division 1 General Provisions  

§ 9.  Management company

 (1) A management company is a public limited company whose main and permanent activity is management of the assets of a fund founded as a public limited company or management of a common fund (hereinafter management of the fund). A management company may manage several funds.

 (2) In addition to the management of a fund, a management company may provide only the following services:
 1) management of a securities portfolio within the meaning of clause 43 (1) 4) of the Securities Market Act;
[RT I 2007, 58, 380 - entry into force 19.11.2007]
 2) investment advising within the meaning of clause 43 (1) 5) of the Securities Market Act;
[RT I 2007, 58, 380 - entry into force 19.11.2007]
 3) safekeeping and administration of units or shares of a fund for a client within the meaning of clause 44 1) of the Securities Market Act;
 4) services specified in subsection 10 (1) of this Act to funds which or the assets of which are not managed by the management company according to the provisions of subsections (2) and (3) of the same section.

 (21) A management company who does not manage a UCITS may provide investment advice and asset management services to third persons for the purposes of subsection 10 (1) of this Act in the case of the class of assets for which the management company has obtained the authority to manage a fund.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (3) A management company is a financial institution within the meaning of the Credit Institutions Act.

§ 91.  Alternative fund manager

 (1) A person is required to apply for an authorisation of a manager of an alternative fund if such person manages, in the course of its principal and permanent professional activities, funds which assets, including the total volume of all the assets obtained by means of leverage exceeds 100 million euros or the total volume of the assets exceeds 500 million euros provided that the funds' portfolio consists of unleveraged funds and the right to redeem the units or shares cannot be exercised within five years as of the date of making investments in each fund (hereinafter alternative fund manager).

 (2) The assets specified in subsection (1) of this section shall not include the assets of pension funds and UCITS.

 (3) The situation, where a person manages the assets of a fund indirectly through a company which is linked to it by common management or control or qualifying holding, is also deemed to be fund management within the meaning of subsection (1) of this section.

 (4) The provisions regarding foundation and activities of a UCITS in this Act apply to alternative fund managers, unless otherwise prescribed in this Act. The requirements for UCITS management companies established by a regulation of the minister responsible for the area on the basis of subsection 70 (5) of this Act shall not apply to alternative fund managers.

 (5) The provisions of subsection 10 (11), subsection 14 (12) and § 951 of this Act shall not apply to UCITS and pension funds managed by an alternative fund manager.

 (6) The provisions of this section do not preclude applying for an authorisation of an alternative fund manager, if the volume of the assets managed by the person does not exceed the thresholds provided for in subsection (1) of this section.

 (7) In addition to the services specified in subsection 9 (2) of this Act, an alternative fund manager may also provide the service of reception and transmission of orders in relation to securities within the meaning of clause 43 (1) 1) of the Securities Market Act.

 (8) For the purposes of this Act, leverage means any method by which the exposure of a fund is increased either through borrowing of cash or securities or leverage embedded in derivative positions or by other means.

 (9) More specific requirements for the activities of alternative fund managers, including own funds, organisational structure, internal control, remuneration of the managers and employees of the management company, management and avoidance of conflicts of interest in the management company, submission of information on the fund, acquisition by the fund of holdings in companies, valuation of the assets of the fund, reporting, offer of the shares or units of a fund founded or established in a third state and the activities of a management company established in a third state shall be established by a regulation of the minister responsible for the area.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 10.  Management of fund

 (1) Management of a fund means:
 1) investment of the assets of the fund which means determination of the investment policy of the fund and making of investment decisions upon investment of the assets of the fund;
 2) organisation of the issue and redemption or re-purchase of units or shares of the fund;
 3) issue of documentation proving the right of ownership to the unit-holders or shareholders of the fund, if necessary;
 4) communication of necessary information to the shareholders or unit-holders of the fund and provision of other services to clients;
 5) organisation of marketing of the shares or units of the fund;
 6) keeping account of the assets of the fund and organisation of accounting of a common fund;
 7) determination of the net asset value of the fund;
 8) organisation of maintenance of a register of the units or, if necessary, of the shares of the fund;
 9) calculation of the income of the fund and organisation of the distribution of the income between the shareholders or unit-holders of the fund;
 10) monitoring the compliance of the activities of the management company and the fund with this Act and other legislation, including application of a relevant control audit system;
 11) activities directly related to the activities specified in this subsection.

 (11) Management of a fund by an alternative fund manager means investment of the assets of the fund, including management of the exposure relating to investment of the assets of the fund. An alternative fund manager may also perform the following activities in connection with fund management:
 1) the activities specified in clauses (1) 2) to 11) of this section and provision of legal services relating to fund management;
 2) the activities relating to the management of the assets which constitute the object of the investments of the fund, including management of immovables, counselling of undertakings in connection with capital structure, business strategy, mergers and acquisitions of undertakings and in other issues relating to management of the fund and the assets which constitute the object of its investments.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (2) Only a management company of a fund has the right to manage the fund unless otherwise provided by this Act.

 (3) A management company of a fund may transfer the activities specified in subsections (1) and (11) of this section to third parties to the extent and pursuant to the procedure provided for in §§ 73 to 75 of this Act. Upon transfer of the aforementioned activities to any third person, the provisions specified in this Act concerning the authorisation of a management company shall not apply to such third person.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (4) [Repealed - RT I 2006, 56, 417 - entry into force 01.01.2007]

§ 11.  Seat

 (1) The seat and place of business of a management company shall be in Estonia.

 (2) The seat of the management company managing funds founded as a public limited company in Estonia and common funds founded in Estonia, except mandatory pension funds, may be in a foreign state if the management company has established a branch for this purpose or provides cross-border services in Estonia pursuant to the provisions of Division 4 of this Chapter.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (3) Estonian law shall apply to the management and activities of funds founded pursuant to this Act.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

Division 2 Authorisation of Management Company  

§ 12.  Authorisation

 (1) In order to operate as a management company, a public limited company shall hold a relevant authorisation (hereinafter authorisation).

 (2) Authorisations are issued and revoked by the Financial Supervision Authority.

 (3) Authorisations are issued for an unspecified term.

 (4) Authorisations are not transferable and the acquisition or use thereof by other persons is prohibited.

§ 13.  Scope of authorisations

 (1) A management company shall apply for an authorisation for the management of a fund or an authorisation for the management of a fund together with the right to provide one or several of the following services:
 1) the services specified in clause 9 (2) 1) of this Act;
 2) the services specified in clause 9 (2) 2) of this Act;
 3) the services specified in clause 9 (2) 3) of this Act;
 31) the service specified in subsection 91 (7) of this Act;
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]
 4) management of a mandatory pension fund specified in clause 3 (2) 1) of the Funded Pensions Act;
 5) management of a voluntary pension fund specified in clause 3 (2) 2) of the Funded Pensions Act, with the exception of management of an occupational pension fund specified in clause 6) of this section;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 6) management of a guaranteed occupational pension fund, a defined-benefit occupational pension fund and an occupational pension fund covering mortality, survival and incapacity for work risks, which are offered to employees, public servants and members of managing and controlling bodies of an employer whose place of residence or seat is in another contracting state (hereinafter employer of a Contracting State).
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) The management company of a UCITS may provide the services specified in clauses 9 (2) 2) and 3) of this Act provided that the company is granted the right specified in clause (1) 1) of this section.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (3) The alternative fund manager may provide the services specified in clauses 9 (2) 2) and 3) and subsection 91 (7) of this Act provided that the alternative fund manager is granted the right specified in clause (1) 1) of this section.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 14.  Application for authorisation

 (1) In order to apply for an authorisation, the members of the management board of a management company who are set out in the memorandum of association or, in the case of an operating company, the members of the management board entered in the registry card of the commercial register shall submit a written petition and the following documents and information (hereinafter in this Division application):
 1) the articles of association and, in the case of an operating public limited company, the resolution of the general meeting on amendment of the articles of association and the amended text of the articles of association;
 2) upon foundation of a public limited company, a notarially authenticated copy of the foundation agreement and a document certifying the resources for payment of the share capital;
 3) a business plan which complies with the requirements provided for in § 15 of this Act;
 4) the opening balance of the applicant and a review of income and expenditure, or in the case of an operating company the balance sheet and income statement as at the end of the month prior to submission of the application and the three last annual reports, if such documents exist;
 5) the internal rules or a draft thereof, which meet the requirements provided for in § 57 of this Act, and the risk management rules or a draft thereof, which meet the requirements provided for in § 248 of this Act, and for the provision of the service provided for in clauses 13 (1) 1) to 3) of this Act the internal rules or a draft thereof, which meet the requirements provided for in the Securities Market Act;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 6) information on the members of the management board and supervisory board of the applicant (hereinafter managers) which includes each member’s given name and surname, personal identification code or date of birth in the absence of a personal identification code, residence, educational background, a complete list of places of employment and positions and, in the case of members of the management board, a description of their duties, and documents certifying the trustworthiness of the managers and their compliance with the requirements of this Act which the applicant considers significant to submit;
 7) information on the auditor and internal auditor of the applicant, including their name, residence or seat, personal identification code or, in the absence of the identification code, the date of birth or registry code;
 8) the given name and surname, personal identification code or date of birth in the absence of a personal identification code, residence and, educational background of the fund manager, a complete list of places of employment and positions held during the last three years and a copy of the contract entered into by the fund manager or a consent for entry into the contract under which the manager undertakes to commence performance of the functions of a fund manager after issue of the authorisation to the applicant;
 9) a list of the shareholders of the applicant which sets out the name and the personal identification code or registry code of each shareholder, or the date of birth in the absence of a personal identification code or registry code, and information on the number of shares and votes to be acquired or owned by each shareholder;
 10) information specified in § 46 of this Act on persons who directly or indirectly hold more than 10 per cent of the votes represented by shares of the applicant;
 11) information on companies in which the participation of the applicant, of a member of its management board or supervisory board, or of the fund manager of the applicant is greater than 20 per cent; this information shall also include the amount of share capital, a list of the areas of activity and the percentage of participation of the above-mentioned persons;
 12) in the case of an operating company, documents certifying the amount of own funds together with the sworn auditor’s report;
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]
 13) accounting policies and procedures or a draft thereof;
 14) if the applicant applies for an authorisation together with the right to provide services specified in clause 9 (2) 1) or 3) of this Act, the document certifying assumption of the obligation to pay the single contributions to the Investor Protection Sectoral Fund;
 15) if the applicant applies for an authorisation for the management of an occupational pension fund specified in clause 13 (1) 6) of this Act, information on the applicant's actuary which sets out the name and personal identification code or, in the absence of the personal identification code, the date of birth or registry code of the actuary.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (11) Persons who apply for an authorisation for managing only venture capital funds need not submit the information and documents specified in clauses (1) 5), 7), 8), 11) and 13) of this section. The provisions of the first sentence of this subsection shall not apply to persons who apply for an authorisation of an alternative fund manager.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (12) A person who applies for an authorisation of an alternative fund manager shall append the following information and documents on the funds managed by such person to the application specified in subsection (1) of this section:
 1) the fund rules, articles of association or other such document;
 2) the seat of the fund in case of a foreign fund;
 3) the information concerning the investment policy of the fund, including information about the investments of the fund and instruments traded, trading venues, use of leverage, main exposures of the fund, composition and total value of the assets managed and the fact whether the assets of the fund are invested on a large-scale basis in another fund;
 4) if the assets of the fund are invested to the extent of at least 85 percent in the units or shares of another fund, the seat of such fund;
 5) the information concerning the depositary or the acts made for the appointment thereof;
 6) the fund information which shall be provided to the investors concerning the fund investment policy, the assets of the fund and valuation thereof, rights and obligations of the investor, including charges relating to the fund and third parties related to the management of the fund.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (13) If the updated information specified in subsection (12) of this section is set out in the fund rules, prospectus or other respective document submitted to the Financial Supervision Authority, no such information shall be appended to the application.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (2) If, together with application for an authorisation, an applicant applies for the right to provide one or more of the services specified in subsection 13 (1) of this Act, the applicant shall make a respective notation in the application for the authorisation.

 (3) If, during the processing of an application for an authorisation, changes are made in the information specified in subsection (1) of this section, the applicant shall promptly submit the respective updated information and documents to the Financial Supervision Authority.

 (4) Accuracy of information and documents submitted with regard to natural persons specified in clauses (1) 6) to 8) and 15) of this section shall be confirmed by the above-mentioned persons by their signatures.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (5) The format of applications shall be established by a regulation of the minister responsible for the area.

§ 15.  Business plan

 (1) The business plan of a management company shall set out a forecast and analysis of all the important economic indicators of the management company and the funds managed by it, and a description of the management structure of the management company and of the rights, obligations and liability of persons involved in management of the funds, and a description, forecast and analysis of the following factors:
 1) the net turnover and expenditure of the applicant by area of activity;
 2) the size of the assets, share capital and shareholders’ equity of the applicant;
 3) the development of the organisational structure and technical administration of the applicant, and the organisation of the issue of units;
 4) the types and number of funds managed;
 5) the market value of the assets, net asset value and rate of return of the assets of the funds;
 6) the investment policy and structure of investments of the funds (division by security and asset class, foreign issuer, sector of the economy, etc., and risks and the rate of return by type of investment);
 7) the size and structure of the management expenses of the funds;
 8) the rates for and amount of proceeds from management fees, depositary’s charges, and the issue and redemption fees of units;
 9) the amount of fixed overheads;
 10) a list of other services provided by the management company.

 (11) If a management company applies for an authorisation for the management of the occupational pension funds specified in clause 13 (1) 6) of this Act, the business plan of the management company shall include the following in addition to the information provided for in subsection (1) of this section:
 1) the amount and list of own funds of the applicant;
 2) the principles and methods of calculation of the technical reserves and financial liabilities provided in § 2791 of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) A business plan shall be submitted for at least three years.

§ 16.  Review of applications for authorisations

 (1) If an applicant has failed to submit all the information and documents specified in § 14 of this Act or if such information or documents are incomplete or have not been prepared in accordance with the requirements, the Financial Supervision Authority shall demand elimination of the deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional information and documents if it is not convinced on the basis of the information and documents specified in § 14 of this Act as to whether the applicant for an authorisation has adequate facilities for the management of a fund or whether it meets the requirements for management companies prescribed by law or legislation issued on the basis thereof or if other circumstances relating to the applicant need to be verified.

 (3) In order to verify the information submitted by an applicant, the Financial Supervision Authority may require that more specific information and documents be submitted, perform on-site inspections, order assessment or special audit, consult the state databases, obtain oral explanations from the managers of a management company, the auditor and the fund manager, their representatives and third parties concerning the content of documents and facts which are relevant in the making of a decision on the issue of an authorisation.

 (4) The information and documents specified in subsections (1) to (3) of this section shall be submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review an application if the applicant has failed to eliminate the deficiencies specified in subsection (1) of this section within the prescribed term or has not submitted the data, documents or information requested by the Financial Supervision Authority by the end of the term.

 (6) Upon processing of an application for an authorisation, the Financial Supervision Authority shall cooperate with the financial supervision authority of the respective Contracting State if:
 1) the applicant is a parent undertaking or subsidiary of a management company, investment fund, investment firm, credit institution, insurer founded in the Contracting State or another person subject to financial supervision;
 2) the subsidiary of the parent undertaking of the applicant is a management company, investment fund, investment firm, credit institution or insurer founded in the Contracting State or another person subject to financial supervision;
 3) the applicant and a management company, investment fund, investment firm, credit institution or insurer founded in the Contracting State or another person subject to financial supervision are companies controlled by one and the same person.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 17.  Decision on issue of authorisation

 (1) The Financial Supervision Authority shall make a decision to issue or refuse to issue an authorisation within two months after receipt of all the necessary documents and information, but not later than within six months after receipt of the application for the authorisation.

 (2) If, together with application for an authorisation, the right to provide one or several services specified in subsection 13 (1) of this Act is applied for, a decision on the issue of an authorisation shall also set out the services which the management company has the right to provide in accordance with the authorisation.

 (3) The Financial Supervision Authority shall promptly inform an applicant of a decision to issue or refuse to issue an authorisation.

§ 18.  Bases for refusal to issue authorisation

 (1) The Financial Supervision Authority may refuse to issue an authorisation of a management company or grant the right to provide one or several services specified in subsection 13 (1) of this Act if:
 1) the applicant does not meet the requirements for management companies provided by this Act or legislation issued on the basis thereof;
 2) the resources for full payment of the share capital of a public limited company being founded are not proved;
 3) the applicant does not have the necessary resources or experience to operate as a management company of a fund of the respective type with success and continuity;
 4) the managers, fund manager, auditor or shareholders of the applicant do not meet the requirements provided by this Act or legislation established on the basis thereof;
 41) the applicant's actuary does not meet the requirements provided by law or legislation established on the basis thereof, if the authorisation is applied for the management of the occupational pension funds specified in clause 13 (1) 6) of this Act;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 5) close links between the applicant and another person prevent sufficient supervision over the management company, or the requirements provided for by legislation or the implementation of legislation of the state where the persons with whom the applicant has close links is established prevent sufficient supervision over the management company;
 6) information presented in a business plan provided for in § 15 of this Act are inadequate or insufficient;
 7) the internal rules of a management company specified in clause 14 (1) 5) of this Act are not sufficiently accurate or unambiguous for regulation of the activities of the management company;
[RT I 2007, 58, 380 - entry into force 19.11.2007]
 8) the applicant has been punished for an economic offence, official misconduct, offence against property or offence against public trust and information concerning the punishment has not been expunged pursuant to the Punishment Register Act.
 9) the previous authorisation issued to the public limited company has been revoked, unless the authorisation has been revoked for any reason provided for in § 21 of this Act.

 (2) Among other matters, the following shall be considered upon assessment of that provided for in clause (1) 3) of this section:
 1) the level of the organisational and technical administration of the activities of the applicant;
 2) the professional qualifications and experience of persons engaged in the management of funds, and transparency of their rights, obligations and liability;
 3) the activities, financial situation, reputation and experience of the applicant, its parent undertaking and persons belonging to the same consolidation group as the applicant.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 19.  Application for additional authorisation

 (1) A management company which already holds an authorisation of a management company and additionally wishes to commence provision of one or several of the services specified in subsection 13 (1) of this Act shall apply for an additional authorisation from the Financial Supervision Authority.

 (2) Upon application for an additional authorisation, a management company shall submit to the Financial Supervision Authority a respective written petition, a business plan provided for in § 15 of this Act and the internal rules of the management company specified in § 57 of this Act.

 (3) The provisions of subsection 14 (4) and §§ 16-18 of this Act apply to the processing of documents specified in subsection (2) of this Act.

§ 20.  Amendment of decision on issue of authorisation

 (1) Upon changes in the name, registry code, the address of the seat or place of business of a management company or upon amendment of documents specified in clauses 14 (1) 1) or 3) of this Act, the Financial Supervision Authority shall make a decision on amendment of a decision on issue of an authorisation specified in subsection 17 (1) of this Act or issue of an additional authorisation provided for in § 19 of this Act.

 (2) The Financial Supervision Authority shall make a decision on amendment of a decision on issue of an authorisation or additional authorisation within one month after submission of the changed information specified in subsection (1) of this section by the management company.

 (3) The Financial Supervision Authority shall promptly inform a management company of a decision on amendment of a decision on issue of an authorisation or additional authorisation.

§ 21.  Revocation of authorisation

 (1) Revocation of an authorisation or additional authorisation (hereinafter in this Division authorisation) means the total or partial deprivation of the rights granted by the authorisation.

 (2) An authorisation shall be revoked either in full or in part in order to deprive of the right to provide the services specified in subsection 13 (1) of this Act, whereupon the rights of which the holder of the authorisation is deprived of upon the partial revocation of the authorisation are specified.

 (3) Prior to deciding on the revocation of an authorisation pursuant to § 22 of this Act, the Financial Supervision Authority may issue a precept to the management company and set a term for elimination of the deficiencies which are the basis for the revocation.

 (4) The addressee of a decision, the fund founded as a public limited company managed by it and the depositary of a common fund managed thereby shall be promptly informed of the decision on revocation of the authorisation.

 (5) A decision on revocation of an authorisation enters into force on the date indicated in the decision but not before communication of the decision to the addressee.

§ 22.  Bases for revocation of authorisation

  The Financial Supervision Authority may revoke an authorisation in full or in part if:
 1) a management company has not commenced the management of the fund within 12 months as of the issue of the authorisation thereto or the management company has not managed any funds or assets of funds within a period of 12 consecutive months;
 2) information submitted upon application for the authorisation which was of material importance in the decision to issue the authorisation is false, and in other cases where false information has been submitted to the Financial Supervision Authority by or for the management company;
 3) the management company does not meet the requirements in force with regard to the issue of authorisations;
 4) the circumstances provided for in clauses 18 (1) 4), 41) or 5) become evident;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 5) a management company has violated repeatedly or to a material extent the provisions of legislation regulating the activities thereof, a management company or its manager has been punished for an economic offence, official misconduct, offence against property or offence against public trust if information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act or the activities or omissions of a management company are not in compliance with good practice;
 6) a management company has published materially incorrect or misleading information or advertising concerning its activities or members of its managing bodies;
 7) a management company is unable to perform the obligations it has assumed or if, for any other reason, its activities significantly damage the interests of the fund, unit-holders, shareholders of a fund founded as a public limited company or the clients of the services specified in subsection 9 (2) of this Act or adversely affect the regular functioning of the securities market;
 8) a management company which provides the services specified in clauses 9 (2) 1) to 3) of this Act fails to comply with the prudential requirements established with respect to the company and provided by this Act or legislation established on the basis thereof;
 9) a management company which provides the services specified in clauses 9 (2) 1) to 3) of this Act fails to pay the contributions to the Investor Protection Sectoral Fund prescribed in the Guarantee Fund Act for the specified term or in full;
 10) a management company which manages pension funds failed to pay contributions to the Pension Protection Sectoral Fund prescribed in the Guarantee Fund Act for the specified term or in full;
 11) a management company has violated the rules of a common fund managed by the management company or a management contract with a fund founded as a public limited company (hereinafter management contract), where the interests of the unit-holders of the common fund or fund founded as a public limited company managed by the management company may be damaged due to such violation;
 12) a management company has failed to implement a precept of the Financial Supervision Authority within the term or to the extent prescribed;
 13) the amount of own funds of an asset management company does not meet the requirements provided for in this Act or legislation established on the basis thereof;
 131) the technical reserves and financial liabilities of the occupational pension fund specified in clause 13 (1) 6) of this Act or the assets covering these do not comply with the requirements of this Act;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 14) management company is involved in money laundering or violates the procedure for preventing money laundering and terrorist financing established by legislation;
 15) according to the information submitted to the Financial Supervision Authority by the financial supervision authority of the Contracting State, a management company has violated the conditions provided for in the legislation of the Contracting State or established by the financial supervision authority of the Contracting State in accordance with subsection 30 (6) of this Act.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 23.  Revocation of authorisation on basis of petition of management company

 (1) An authorisation shall be revoked in full or in part on the basis of the respective petition of a management company if:
 1) the management company no longer provides the services specified in subsection 13 (1) of this Act;
 2) the management company no longer manages any funds or assets of funds and the legitimate interests of the shareholders and unit-holders of the funds previously managed by the company are sufficiently protected;
 3) upon merger of management companies, the management company is the management company being acquired and the legitimate interests of the shareholders and unit-holders of the funds previously managed by the company are sufficiently protected.

 (2) A petition specified in subsection (1) of this section shall be reviewed by the Financial Supervision Authority and a decision to revoke or refuse to revoke the authorisation in full or in part shall be made within two months as of the receipt of the petition. The provisions of subsections 21 (4) and (5) of this Act apply to the decision.

 (3) The Financial Supervision Authority may refuse to revoke an authorisation in part or in full on the basis of a petition specified in subsection (1) of this section if:
 1) the right of the management company to manage all the funds managed thereby has not extinguished;
 2) revocation of the authorisation in part or in full may damage the legitimate interests of the unit-holders or shareholders of the funds managed by the management company;
 3) revocation of the authorisation in part or in full may damage the interests of clients.

§ 24.  Disclosure

 (1) The Financial Supervision Authority shall disclose a decision to issue an authorisation or revoke an authorisation in full or in part pursuant to the procedure provided for in § 295 of this Act and legislation issued on the basis thereof.

 (2) In addition to the provisions of subsection (1) of this Act, the Financial Supervision Authority shall disclose a decision to revoke an authorisation in full or in part which is made pursuant to § 22 of this Act in at least one national daily newspaper.

 (3) The Financial Supervision Authority shall disclose a decision specified in subsection (2) of this section not later than on the third working day after expiry of the term of contestation of the decision to revoke the authorisation. The Financial Supervision Authority shall disclose other decisions specified in subsection (1) of this section not later than on the next working day after the decision is made.

 (4) The Financial Supervision Authority shall promptly inform the registrar of the Estonian Central Register of Securities of a decision according to which the applicant may manage mandatory pension funds.

Division 3 Activities of Management Company in Foreign State  

§ 25.  Bases of activities of management company in foreign state

 (1) A management company founded in Estonia and holding an authorisation issued by the Financial Supervision Authority may provide services in a foreign state by establishing branches or providing cross-border services.

 (2) Upon provision of services in a foreign state, a management company shall comply with the requirements provided by this Act, legislation issued on the basis thereof and legislation of the foreign state.

 (3) Cross-border services are services of a management company which the company provides in a state where the management company or a branch thereof is not registered.

 (4) The provisions of §§ 30-33 shall apply to the provision of services in another Contracting State in the case of an Estonian management company managing a UCITS and the provisions of subsections 30 (1), (7) and (8); § 32 and subsections 33 (1) and (7) to (9) of this Act shall apply respectively in the case of an Estonian management company not managing any UCITS.

 (41) The provisions of § 33 of this Act shall not apply to a management company which intends to offer only units of a UCITS in another Contracting State.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (42) The provisions of §§ 332 and 333 of this Act apply to provision of services by an alternative fund manager in a Contracting State and fund offers. An alternative fund manager may provide fund management services in a third state in line with the requirements provided for in this Act provided that the Financial Supervision Authority has entered into a cooperation agreement with the financial supervision authority of the third state for exercise of financial supervision.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (5) The provisions of §§ 26-29 and subsections 33 (1) and (7) to (9) of this Act apply to the provision of services in a foreign state not specified in subsection (4) of this section (hereinafter third country).

 (6) If a management company manages a UCITS established in another Contracting State through the establishment of a branch for this purpose or providing cross-border services, the management company shall comply with the requirements provided for in §§ 51 to 561, 57 to 582, 69 to 75, 85 to 88, 1441, 1442, 237 to 245 and 248 of this Act with respect to the management, organisational structure, prudential requirements and activities of the management company.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (7) In the case provided for in subsection (6) of this section, the obligations of the management company specified in the fund rules and the prospectus of a UCITS established in another Contracting State shall comply with the requirements specified in subsection (6) of this section. The management company shall establish an organisational administration, which is required according to the legislation of another Contracting State for pursuing the activities of a UCITS established in such Contracting State and investing the assets of the UCITS and for performance of the obligations specified in the fund rules and the prospectus of the UCITS on the basis of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (8) If a management company intends to manage a UCITS established in another Contracting State, the Financial Supervision Authority shall submit explanations to the financial supervision authority of another Contracting State on the information of the authorisation of the management company and the documents submitted by the management company for the management of a UCITS in another Contracting State within ten days after receipt of a request from the financial supervision authority of another Contracting State.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 26.  Branch of management company in third country

 (1) A management company which wishes to found a branch in a third country shall apply for a respective authorisation (hereinafter in this Division authorisation for foundation of a branch) from the Financial Supervision Authority.

 (2) In order to apply for an authorisation for the foundation of a branch in a foreign state, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) the third country where the management company wishes to found the branch;
 2) the address of the seat of the branch in the third country;
 3) a business plan for the activities of the branch in the third country, which complies with the requirements provided for in § 15 of this Act;
 4) information specified in clause 14 (1) 6) of this Act concerning the managers of the branch.

 (3) The format of an authorisation for the foundation of a branch in a foreign state may be established by a regulation of the minister responsible for the area.

§ 27.  Processing of application for authorisation for foundation of branch and decision on issue of authorisation

 (1) The provisions of § 16 of this Act apply to the processing of applications for an authorisation for the foundation of a branch, verification of the submitted information and verification of the financial situation, organisational structure and technical systems of the applicant and existence of sufficient resources for the foundation of a branch.

 (2) The Financial Supervision Authority shall make a decision to grant or refuse to grant an authorisation for the foundation of a branch within two months after receipt of all the necessary information and documents, but not later than within three months after receipt of the respective petition.

 (3) The Financial Supervision Authority shall promptly inform the management company of a decision to grant or refuse to grant an authorisation for the foundation of a branch.

§ 28.  Bases for refusal to grant authorisation for foundation of branch

  The Financial Supervision Authority may refuse to grant an authorisation for the foundation of a branch if:
 1) the managers of the branch do not meet the requirements for managers of management companies provided by this Act;
 11) the information or documents submitted upon application for an authorisation for the foundation of a branch do not meet the requirements provided by this Act or legislation established on the basis thereof or are inaccurate, misleading or incomplete;
 2) the financial situation, organisational structure and other resources of the management company are insufficient for the provision of services specified in the business plan in third countries;
 3) the foundation of the branch in a third country or implementation of the business plan submitted by the management company may damage the interests of the fund or the shareholders or unit-holders of the fund, the financial situation of the management company or adversely affect the reliability of its activities in Estonia, in another Contracting State or in a third country;
 4) a financial supervision authority of a third country has no legal basis or possibilities for cooperation with the Financial Supervision Authority due to which the Financial Supervision Authority cannot exercise sufficient supervision over the branch in the third country.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 29.  Revocation of authorisation for foundation of branch

 (1) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch in a third county if:
 1) the management company has submitted false information upon application for the authorisation for the foundation of a branch which was of material importance in the decision to grant the authorisation, and also in other cases where false information has been submitted to the Financial Supervision Authority by or for the management company;
 2) the management company has materially violated the requirements of legislation of the relevant third country, which may damage the interests of the shareholders, unit-holders or clients of funds managed by the management company;
 3) the management company or its branch does not meet the requirements in force with regard to the issue of authorisations for the foundation of a branch;
 4) the management company fails to submit reports on its branch as required;
 5) the management company has violated the rules or management contract of the fund managed thereby where the interests of the shareholders or unit-holders of the fund managed by the management company may be damaged due to such violation or if the management company or its manager has been punished for an economic offence, official misconduct, offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act;
 6) a management company has failed to implement a precept of the Financial Supervision Authority within the term or to the extent prescribed;
 7) the risks arising from the activities of the branch are significantly greater than risks arising from the activities of the management company;
 8) the authorisation of the management company has been revoked;
 9) the circumstances provided for in § 28 of this Act become evident.

 (2) The Financial Supervision Authority shall promptly inform the management company and the financial supervision authority of a third country of a decision to revoke an authorisation for the foundation of a branch.

 (3) After becoming aware of revocation of an authorisation for the foundation of a branch, the management company shall terminate the provision of its services through the branch founded in the third country not later than by the due date specified by the Financial Supervision Authority.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 30.  Branch of management company in another Contracting State

 (1) A management company which intends to found its branch in another Contracting State shall inform the Financial Supervision Authority thereof and submit the following information and documents to the Financial Supervision Authority:
 1) the name of this Contracting State where the management company intends to found the branch;
 2) scheme of operations of the branch, which shall contain information about all the services provided in the Contracting State and the organisational structure of the branch;
 3) the address of the seat of the branch;
 4) the names of the managers of the branch.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (2) A management company managing a UCITS shall submit the documents specified in subsection (1) of this section together with a translation made by a sworn translator or confirmed by a notary into the official language or one of the official languages of the Contracting State of the location of the branch.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]

 (3) If an asset management company which manages a UCITS intends to found its branch in another Contracting State, the Financial Supervision Authority shall make a decision to forward or refuse to forward the information and documents specified in subsection (1) of this section to the financial supervision authority of the corresponding Contracting State within two months after receipt of all the required information and documents, but not later than within three months after receipt of the corresponding notice from the asset management company. The Financial Supervision Authority shall promptly inform the asset management company of the decision.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (4) The Financial Supervision Authority may refuse to review the information and documents specified in subsection (1) of this section if the information and documents:
 1) do not meet the requirements provided by this Act or are incomplete;
 2) have deficiencies specified in clause 1) of this subsection and the information or documents additionally demanded by the Financial Supervision Authority have not been submitted within the prescribed term.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (5) The Financial Supervision Authority shall forward the information and documents specified in subsection (1) of this section to the financial supervision authority of the respective Contracting State not later than on the second working day after the decision specified in subsection (3) of this section is made. Information concerning the investor protection scheme applicable in Estonia shall also be forwarded together with the specified information and documents, and if the management company intends to manage a UCITS established in another Contracting State, an attestation from the Financial Supervision Authority stating that the management company has been issued an authorisation according to the provisions of the directive regarding investment funds, and explanations on the scope of the authorisation of the management company and the restrictions relating to the types of UCITS managed.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (6) A management company managing a UCITS may found a branch in a Contracting State if it has obtained the requirements of the financial supervision authority of the Contracting State of the location of the branch for the foundation of a branch in this Contracting State or if the financial supervision authority of the Contracting State of the location of the branch has failed to submit its requirements within two months as of the receipt of the documents and information specified in subsection (1) of this section.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (7) A management company shall inform the Financial Supervision Authority and a management company managing a UCITS shall also inform the financial supervision authority of the respective Contracting State of changes in the information or amendment of the documents specified in clauses (1) 2) to 4) of this section at least one month before the changes enter into force.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (8) The Financial Supervision Authority shall inform the financial supervision authority of the Contracting State of each such change to the investor protection scheme applicable in Estonia, which have occurred during the period when the management company has been operating through a branch in such Contracting State, and of each change in the information submitted on the basis of subsection (5) of this section about the scope of the authorisation of the management company and the restrictions relating to the types of UCITS managed.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 31.  Bases for refusal to forward documents and information

  The Financial Supervision Authority may make a decision to refuse to forward the information and documents specified in subsection 30 (1) of this Act if:
 1) the information or documents submitted do not meet the requirements provided by this Act or are inaccurate, misleading or incomplete;
 2) the management company does not manage a UCITS;
 3) the financial situation, organisational structure or other resources of the management company are insufficient for the provision of services specified in the scheme of operations in other Contracting States;
 4) the foundation of the branch or implementation of the scheme of operations submitted by the management company may damage the interests of the fund, the unit-holders or the shareholders of a fund founded as a public limited company, the financial situation of the management company or its reliable activities in Estonia or in another Contracting State;
 5) a financial supervision authority of a Contracting State has no legal basis or possibilities for cooperation with the Financial Supervision Authority due to which the Financial Supervision Authority cannot exercise sufficient supervision over the branch in the Contracting State.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 32.  Precept for termination of activities through branch

 (1) The Financial Supervision Authority may, by its precept, prohibit the activities of a management company through a branch founded in a Contracting State if:
 1) grounds provided for in § 31 of this Act for refusal to forward the information and documents exist;
 2) the financial supervision authority of the Contracting State has informed the Financial Supervision Authority that a management company has committed a violation of the requirements provided for in the legislation of the Contracting State and established by the financial supervision authority of the Contracting State.

 (2) The Financial Supervision Authority shall promptly deliver the precept specified in subsection (1) of this section to the fund management company. The management company is required to terminate the provision of its services through the branch founded in the Contracting State not later than by the due date specified by the Financial Supervision Authority.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 33.  Provision of cross-border services by management company

 (1) A management company which intends to provide cross-border services in a foreign state shall inform the Financial Supervision Authority thereof and submit the following information and documents to the Financial Supervision Authority:
 1) the name of this Contracting State where the management company intends to provide cross-border services;
 2) scheme of operations, which shall contain information about all the services provided in the foreign state.

 (2) A management company managing a UCITS shall submit the documents specified in subsection (1) of this section together with a translation made by a sworn translator or confirmed by a notary into the official language or one of the official languages of the Contracting State.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]

 (3) If a management company which manages a UCITS intends to provide cross-border services in a Contracting State, the Financial Supervision Authority shall make a decision to forward or refuse to forward the information and documents specified in subsection (1) of this section to the financial supervision authority of the respective Contracting State within one month after receipt of the information and documents. The Financial Supervision Authority shall promptly inform the asset management company of a decision to forward the information and documents or refuse to forward the information and documents. The Financial Supervision Authority shall inform the financial supervision authority of the Contracting State of the investor protection scheme applicable in Estonia, and if the management company intends to manage a UCITS established in another Contracting State, send an attestation to the financial supervision authority of the Contracting State stating that the management company has been issued an authorisation according to the provision of the directive regarding investment funds, and explanations on the scope of the authorisation of the management company and the restrictions relating to the types of UCITS managed.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (4) The Financial Supervision Authority may refuse to review the information and documents specified in subsection (1) of this section if the information and documents:
 1) do not meet the requirements provided by this Act or are incomplete;
 2) have deficiencies specified in clause 1) of this subsection and the information or documents additionally demanded by the Financial Supervision Authority have not been submitted within the prescribed term.

 (5) The Financial Supervision Authority may make a decision to refuse to forward the information and documents specified in subsection (1) of this section if:
 1) the information or documents submitted do not meet the requirements provided by this Act or are inaccurate, misleading or incomplete;
 2) the financial situation, organisational structure or other resources of the management company are insufficient for the provision of cross-border services in a foreign state;
 3) provision of cross-border services may damage the interests of the fund, unit-holders or shareholders of a fund founded as a public limited company, the financial situation of the management company or adversely affect the reliability of its activities;
 4) a financial supervision authority of a Contracting State has no legal basis or possibilities for cooperation with the Financial Supervision Authority and therefore the Financial Supervision Authority cannot exercise sufficient supervision over the provision of cross-border services in the foreign state.

 (6) After forwarding the information and documents specified in subsection (1) of this section to the financial supervision authority of the respective Contracting State, the management company which manages a UCITS may commence the provision of cross-border services there, taking account of the requirements provided for in the legislation of the Contracting State and established by the financial supervision authority of the Contracting State.

 (7) Upon changes in the scheme of operations specified in clause (1) 2) of this section, a management company shall inform the Financial Supervision Authority and a management company managing a UCITS shall also inform the financial supervision authority of the Contracting State of the changes at least one month before the changes enter into force.

 (8) The Financial Supervision Authority may prohibit, by a precept, provision of cross-border services by the management company if:
 1) grounds provided for in subsection (5) of this section for refusal to forward information and documents exists;
 2) the financial supervision authority of the Contracting State has informed the Financial Supervision Authority that a management company has committed a violation of the requirements provided for in the legislation of the Contracting State and established by the financial supervision authority of the Contracting State.

 (9) The Financial Supervision Authority shall promptly deliver the precept specified in subsection (8) of this section to the fund management company. The management company is required to terminate provision of cross-border services in the Contracting State not later than by the due date specified by the Financial Supervision Authority.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 331.  Public offer of units of UCITS founded in Estonia in another Contracting State

 (1) For public offer of the units of a UCITS established in Estonia in another Contracting State (hereinafter in this section offer), the management company shall submit to the Financial Supervision Authority, before commencing the offer, a notice of offer (hereinafter notice of offer) in English and in writing or in a format which can be reproduced in writing, which contains the following information:
 1) a plan for marketing the units in the Contracting State where the offer of the units is requested (hereinafter country of destination);
 2) names of classes of units to be marketed if the fund has different classes of units;
 3) a notation with regard to whether the same management company markets the units of the fund in the country of destination that manages the fund in Estonia.

 (2) Together with the notice of offer, the transcripts of the following updated documents or, if necessary, the translations thereof shall be submitted to the Financial Supervision Authority, unless they have already been previously submitted to the Financial Supervision Authority:
 1) the fund rules;
 2) the latest audited annual report of the fund;
 3) the latest semi semi-annual report of the fund if this is approved after the latest audited annual report;
 4) a prospectus and a document with the title "Key Investor Information" (hereinafter key information).

 (3) The management company shall submit the documents specified in subsection (2) of this section, except key information, at its choice either in English, an official language of the country of destination or a language approved by the financial supervision authority of the country of destination. The management company shall communicate the key information in the official language of the country of destination or a language approved by the financial supervision authority of the country of destination.

 (4) The Financial Supervision Authority shall submit the required documents specified in subsections (1) and (2) of the section to the financial supervision authority of the country of destination together with their statement in English concerning the conformity of the UCITS with the requirements of this Act. The specified statement and documents shall be submitted at the latest within ten working days after receipt of the required documents and information specified in subsections (1) and (2) of this section.

 (5) The Financial Supervision Authority shall ensure electronic access to the documents set out in subsection (2) of this section and, if necessary, the translations thereof for the financial supervision authority of the country of destination.

 (6) The Financial Supervision Authority shall immediately notify the management company of submission of the information and documentation specified in subsections (1) and (2) of this section to the financial supervision authority of the country of destination. The offer of the units of a UCITS founded in Estonia may be commenced from the day of receipt of that notice.

 (7) The management company shall notify the financial supervision authority of the country of destination of amendments to the documents specified in subsection (2) of this section and indicate where the updated documents can be electronically examined.

 (8) The management company shall notify the financial supervision authority of the country of destination before making amendments to the marketing plan specified in clause 1) of subsection (1) of this section or the names of the classes of units set out in clause 2).

 (9) The specific conditions of the offer and the principles of co-operation of the financial supervision authorities required for this purpose are provided for in the Commission Regulation (EU) No. 584/2010, implementing Directive 2009/65/EC of the European Parliament and of the Council as regards the form and content of the standard notification letter and UCITS attestation, the use of electronic communication between competent authorities for the purpose of notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities (OJ L 176, 10.7.2010, pp. 16-27). The management company shall be guided upon preparation and submission of the offer notice by the format specified in Annex 1 to the regulation specified in the first sentence of this subsection.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

§ 332.  Offer of fund managed by alternative fund manager in another Contracting State

 (1) For offer of the units or shares of the fund managed by it in another Contracting State, an alternative fund manager (hereinafter in this section management company) shall submit a written offer notice to the Financial Supervision Authority before the offer is commenced, and the following information and documents shall be appended to it in English (hereinafter in this section information):
 1) an action plan which contains a list of the funds the offer of the units or shares of which in another Contracting State is requested, and information stating the country in which each fund was established;
 2) the fund rules, articles of association or other such document;
 3) the information concerning the depositary of the fund;
 4) if the assets of the fund are invested to the extent of at least 85 percent in the units or shares of another fund, the seat of such fund;
 5) the fund information which shall be provided to the investors concerning the fund investment policy, the assets of the fund and valuation thereof, rights and obligations of investors, charges relating to the fund and third parties related to the management of the fund;
 6) the name of the country of destination where the offer of the units or shares of the fund is requested;
 7) a review of the procedure of offer of the units or shares of the fund in Estonia and, if relevant, information about how the offer of the units or shares of the fund to investors who cannot be regarded as professional investors is precluded, including in the case the units or shares of the fund are offered by a third person in the framework of the provision of investment services.

 (2) The Financial Supervision Authority shall send proper information to the financial supervision authority of the country of destination together with their statement in English concerning the compliance of the management company with the requirements of this Act. The statement and the information shall be submitted within 20 working days as of the receipt of proper information from the management company. The Financial Supervision Authority may make a decision to refuse to submit the information if the management of the fund or the activities of the management company do not comply with the requirements of this Act.

 (3) The Financial Supervision Authority shall notify the management company immediately of submission of information to the financial supervision authority of the country of destination. The management company may commence the offer of the units or shares of the fund in the country of destination as of the day of receipt of the specified notice. The Financial Supervision Authority shall also notify the financial supervision authority of the home state of the fund of forwarding the information to the financial supervision authority of the country of destination, if the home state of the fund is not Estonia.

 (4) Prior to making any significant alterations to the information, the management company shall notify the Financial Supervision Authority in writing thereof at least one month before such alterations enter into force but immediately after any unforeseeable alterations are made.

 (5) The Financial Supervision Authority may prohibit the entry into force of any alteration if the activities of the management company no longer comply with this Act after the entry into force of the alteration.

 (6) When the alterations specified in subsection (5) of this section enter into force, the Financial Supervision Authority shall have the right to implement all the measures specified in this Act in order to bring the activities of the management company into compliance with law, including to prohibit the offer of the units or shares of the fund.

 (7) If the alterations are in compliance with the provisions of this Act, the Financial Supervision Authority shall notify the financial supervision authority of the country of destination thereof.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 333.  Management of funds of other Contracting States by alternative fund managers

 (1) For the management of a fund established or founded in another Contracting State, an alternative fund manager (hereinafter in this section management company) shall submit to the Financial Supervision Authority in writing the following information in English:
 1) the name of the country of destination;
 2) an action plan which contains a list of the services which offer is requested in the country of destination and a list of the funds they want to manage in the country of destination.

 (2) In the case a branch is established in the country of destination, the management company shall submit, in addition to the information specified in subsection (1) of this section, the following information in English:
 1) the organizational structure of the branch;
 2) the address of the fund where it is possible to obtain information;
 3) the name and contact details of the managers of the branch.

 (3) The Financial Supervision Authority shall submit proper information to the financial supervision authority of the country of destination together with their statement in English concerning the compliance of the management company with the requirements of this Act. The statement and the information shall be submitted within one month as of the receipt of proper information. In the case a branch is established, the statement and the information shall be submitted within two months as of the receipt of proper information. The Financial Supervision Authority may make a decision to refuse to submit the information if the activities of the management company do not comply with the requirements of this Act.

 (4) The Financial Supervision Authority shall notify the management company immediately of submission of information to the financial supervision authority of the country of destination. As of the day of receipt of the specified notice, the management company may commence the offer of the fund in the country of destination.

 (5) Prior to making any significant alterations to the information, the management company shall notify the Financial Supervision Authority in writing thereof at least one month before such alterations enter into force but immediately after any unforeseeable alterations are made.

 (6) The Financial Supervision Authority may prohibit the entry into force of any alteration if the activities of the management company no longer comply with this Act after the entry into force of the alteration.

 (7) When the alterations specified in subsection (6) of this section enter into force, the Financial Supervision Authority shall have the right to implement all the measures specified in this Act in order to bring the activities of the management company into compliance with law, including to prohibit the offer of the units or shares of the fund.

 (8) If the alterations are in compliance with the provisions of this Act, the Financial Supervision Authority shall notify the financial supervision authority of the country of destination thereof.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

Division 4 Activities of Foreign Management Companies in Estonia  

§ 34.  Bases for activities of foreign management companies

 (1) A person who, according to the legislation of the state where it is founded (hereinafter home state), has the right to manage funds or other similar undertakings or institutions established for collective investment, may manage funds founded in Estonia and provide services specified in subsection 9 (2) of this Act on the basis of the authorisation issued in the home state by establishing branches or providing cross-border services in Estonia.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (11) Mandatory pension funds shall not be managed through a branch or cross-border.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (2) The provisions of §§ 38, 42 and 297 of this Act apply to a person specified in subsection (1) of this section which is founded in another Contracting State and complies with the requirements established for management companies in the directive regarding investment funds or which the financial supervision authority of another Contracting State has declared to be in compliance with the requirements established in the directive regarding investment funds (hereinafter in this Division management company of the Contracting State).
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (21) The provisions specified in § 42 of this Act do not apply to persons specified in subsection (1) of this section who intend to offer only units of a UCITS in Estonia.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (22) The provisions of §§ 381 and 297 of this Act apply to the person specified in subsection (1) of this section who has been established in another Contracting State and who meets the requirements established for management companies in Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 01.07.2011, pp. 1-73) or who has been acknowledged by the Financial Supervision Authority of another Contracting State compliant with the requirements established in the above-mentioned Directive (hereinafter alternative fund manager).
[RT I, 12.07.2013, 2 - entry into force 22.07.2013]

 (3) The provisions of §§ 35-37, 39-41 and subsections 297 (1) and (3) of this Act apply to a person specified in subsection (1) of this section which does not comply with the requirements provided for in subsection (2) of this section (hereinafter in this Division management company of a third country).

 (4) For the purposes of this Division, cross-border services are services of a management company provided by a person who is not or whose branch is not registered in Estonia. The provisions of this Division concerning cross-border services apply also if cross-border services are provided through a third party.

 (41) A management company of a third country wishing to manage funds founded in Estonia by providing cross-border services shall enter into a contract in order to organise the purchase and sale of shares or units of such funds with a credit institution, investment firm or another management company who or whose branch is founded in Estonia.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (5) Upon provision of services in Estonia, a foreign management company shall comply with the requirements established for the activities of management companies in this Act and on the basis thereof and other requirements for activities in Estonia provided for by legislation.

 (6) If a management company of another Contracting State manages a UCITS established in Estonia by establishing branches for this purpose or providing cross-border services in Estonia, the management company shall comply with the provisions of §§ 111 to 154, 162 to 187, 217 to 226 and 237 to 245 of this Act with respect to establishment of UCITS and management of the fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (7) In the case provided for in subsection (6) of this section, the obligations of the management company provided by the fund rules and prospectus of the UCITS and the performance of the obligations of the management company shall comply with the requirements specified in subsection (6) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (8) Establishment by a management company of another Contracting State of a branch in Estonia shall comply with the requirements provided for in §§ 581, 582, 701, 1441 and 1442 of this Act and the legislation passed on the basis of subsection 70 (5) of this Act on the general organisational structure of the management company, settlement of client complaints, management and avoidance of conflicts of interests and operation in the best interests of the UCITS and its unit holders.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (9) Upon provision of services in Estonia, a management company of another Contracting State shall make the information about the procedure for resolution of unit-holders' complaints available to the Financial Supervisory Authority and other interested persons. The procedure for resolution of complaints shall allow the Financial Supervision Authority to obtain from the management company additional information and documents which are necessary for the exercise of supervision over it.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 35.  Branch of management company of third country in Estonia

 (1) In order to found a branch in Estonia, a management company of a third country is required to apply for a respective authorisation (hereinafter in this Division authorisation for foundation of a branch) from the Financial Supervision Authority.

 (2) Upon application for an authorisation for the foundation of a branch, a written petition and the following information and documents (hereinafter in this Division application) shall be submitted to the Financial Supervision Authority:
 1) the name and address of the management company;
 11) information provided for in clause 14 (1) 6) of this Act concerning the managers of the management company;
 12) the data and documents provided for in subsection 46 (1) of this Act relating to shareholders who have qualifying holdings in the management company;
 2) the scope of the authorisation issued to the management company and information concerning the agency which issued the authorisation;
 3) the business name and address of the branch;
 4) information and documents provided for in clause 14 (1) 6) of this Act concerning the managers of the branch;
 5) the information and documents specified in clauses 386 (2) 1), 3), 4) and 5) of the Commercial Code;
 6) the audited annual reports of the management company for the past two financial years;
[RT I 2010, 7, 30 - entry into force 26.02.2010]
 7) the business plan of the branch which meets the requirements provided for in § 15 of this Act and sets out all the services provided by the branch in Estonia.

 (3) In addition to the information specified in subsection (2) of this section, a management company of a third country shall submit the following to the Financial Supervision Authority:
 1) the permission of the financial supervision authority of the home state to found a branch in Estonia;
 2) the statement of the financial supervision authority of the home state that the management company holds a valid authorisation in its home state and that it pursues its activities in a correct manner and in accordance with good practices;
 3) information provided by the financial supervision authority of the home state on the financial situation of the management company, including the amount of own funds, and the description of the investor protection scheme applicable to the unit-holders and clients of the funds managed by the management company in the home state.

 (4) The format of an authorisation for the foundation of a branch may be established by a regulation of the minister responsible for the area.

 (5) The information and documents specified in this section which are in a foreign language shall be submitted together with a translation into Estonian made by a sworn translator or certified by a notary.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]

§ 36.  Processing of application for authorisation for foundation of branch and revocation of authorisation

 (1) The provisions of §§ 16-18 and 21-23 of this Act apply to the processing of applications for an authorisation for the foundation of a branch and verification of information and to the grant and revocation of authorisations, unless otherwise provided for in this section.

 (2) In addition to the grounds for refusal provided for in § 18 of this Act, the Financial Supervision Authority may refuse to grant an authorisation for the foundation of a branch if:
 1) the financial supervision authority of a third country does not ensure sufficient supervision over the applicant;
 2) the financial supervision authority of a third country has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority;
 3) the Financial Supervision Authority has the reason for believing that it is impossible to verify or ensure compliance by the applicant to the extent necessary with the requirements provided by this Act or other legislation;
 4) requirements at least equal to the requirements provided for a management company by this Act shall not apply to the activities of a management company of a third country.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (3) The Financial Supervision Authority may revoke an authorisation for the foundation of a branch if circumstances provided for in § 22 of this Act or in subsection (2) of this section become evident.

 (4) The Financial Supervision Authority may refuse to revoke an authorisation for the foundation of a branch if the clients of the branch have claims against the branch or the management company of a third country or the revocation of the authorisation damages the interests of the fund or the shareholders or unit-holders of the fund.

§ 37.  Amendment of authorisation for foundation of branch

 (1) A management company of a third country which wishes to provide services in Estonia which are not specified in the business plan submitted upon application for an authorisation for the foundation of a branch shall submit an application for amendment of the authorisation for the foundation of the branch to the Financial Supervision Authority.

 (2) In order to amend an authorisation for the foundation of a branch, a management company of a third country shall submit to the Financial Supervision Authority the information and documents specified in clauses 35 (2) 1) to 4) and 7) of this Act.

 (3) The provisions of §§ 16-18 of this Act apply to the processing of applications for the amendment of authorisations for the foundation of a branch, verification of information and deciding on amendment of the authorisations.

§ 38.  Branch of management company of Contracting State in Estonia

 (1) A management company of a Contracting State which wishes to found a branch in Estonia shall inform the Financial Supervision Authority thereof through the financial supervision authority of the Contracting State. The following information and documents shall be submitted to the Financial Supervision Authority:
 1) scheme of operations of the branch, which shall contain information about all the services provided in Estonia and the organisational structure of the branch;
 2) the business name and address of the branch;
 3) the names of the managers of the branch;
 4) a description of the investor protection scheme applicable to the unit-holders and clients of the funds managed by the management company in the Contracting State;
 5) a statement by the financial supervision authority of the Contracting State that an authorisation has been issued to the management company according to the provisions of the directive regarding investment funds, and explanations about the scope of the authorisation of the management company and restrictions on the types of UCITS managed, if the management company intends to manage a UCITS established in Estonia.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (11) The information and documents specified in this section which are in a foreign language shall be submitted together with a translation into Estonian made by a sworn translator or certified by a notary.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]

 (2) The Financial Supervision Authority shall promptly inform the financial supervision authority of the Contracting State of receipt of the information specified in subsection (1) of this section. The Financial Supervision Authority may make, within two months after receipt of the aforementioned information, a decision which determines the requirements which the management company must observe in Estonia and pursuant to which the management company must provide its services, including portfolio management, consulting and depositary services. The Financial Supervision Authority shall promptly inform the financial supervision authority of the Contracting State of its decision.

 (3) A management company of a Contracting State may found a branch and commence provision of services two months after the date on which the Financial Supervision Authority receives the documents and information specified in subsection (1) of this section.

 (4) The Financial Supervision Authority shall be informed of changes in the information and documents specified in subsection (1) of this section at least one month in advance. Within one month as of becoming aware of the changes, the Financial Supervision Authority may amend the decision specified in subsection (2) of this section or make the aforementioned decision unless it has been made earlier.

 (5) A statement of the Financial Supervision Authority concerning receipt of the information specified in subsection (1) of this section and the decision of the Financial Supervision Authority specified in subsection (2) of this section, if it exists, shall be submitted upon entry of a branch in the commercial register. If the Financial Supervision Authority makes a decision specified in subsection (4) of this section, the Authority shall send a copy of the decision to the commercial register.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 381.  Activities of alternative fund manager of another Contracting State in Estonia

 (1) An alternative fund manager of a Contracting State who wishes to manage an investment fund established in Estonia shall submit the following information and documents to the Financial Supervision Authority through the financial supervision authority of its home state:
 1) an action plan which in particular contains a list of the services which offer in Estonia is requested and a list of the funds that they want to manage in Estonia;
 2) a statement of the financial supervision authority of the home state of the alternative fund manager that the fund manager holds an authorisation according to the provisions of Directive 2011/61/EU of the European Parliament and of the Council.

 (2) For establishment of a branch in Estonia, an alternative fund manager shall submit, in addition to the information and documents specified in subsection (1) of this section, the following information in the manner specified in the same provision:
 1) the organizational structure of the branch;
 2) the address of the fund established in Estonia through which it is possible to obtain information;
 3) the name and contact details of the managers of the branch.

 (3) After the Financial Supervision Authority has received the proper information specified in subsections (1) and (2) of this section, the alternative fund manager may commence the management of the alternative fund in Estonia.

 (4) An alternative fund manager shall immediately inform the Financial Supervision Authority of any changes in the information specified in subsections (1) and (2) of this section through the financial supervision authority of the home state.

 (5) Upon entry of the branch in the commercial register, the Financial Supervision Authority shall submit a statement to the commercial register concerning the receipt of the information specified in subsections (1) and (2) of this section.

 (6) The fund manager shall submit the documents and information specified in this section at is option either in English or Estonian.
[RT I, 12.07.2013, 2 - entry into force 22.07.2013]

§ 39.  Provision of cross-border services in Estonia by management company of third country

 (1) A management company of a third country which wishes to provide cross-border services in Estonia shall apply for a respective authorisation (hereinafter in this Division authorisation for provision of cross-border services) from the Financial Supervision Authority.

 (2) In order to apply for an authorisation for the provision of cross-border services, a management company shall submit to the Financial Supervision Authority a petition together with the following information and documents:
 1) the name and address of the management company;
 2) the scope of the authorisation issued to the management company and information concerning the agency which issued the authorisation;
 3) the information and documents provided for in clauses 386 (2) 1) and 3) to 5) of the Commercial Code;
 4) the audited annual reports of the management company for the past two financial years;
[RT I 2010, 7, 30 - entry into force 26.02.2010]
 5) the business plan which meets the requirements provided for in § 15 of this Act and sets out all services provided by the management company in Estonia.

 (3) In addition to the information specified in subsection (2) of this section, a management company of a third country shall submit the following to the Financial Supervision Authority:
 1) the permission of the financial supervision authority of the home state to provide cross-border services in Estonia;
 2) the statement of the financial supervision authority of the home state to the effect that the management company holds a valid authorisation in its home state and that it pursues its activities in a correct manner and in accordance with good practices;
 3) information provided by the financial supervision authority of the home state on the financial situation of the applicant, including the amount of own funds, and the description of the investor protection scheme applicable to the unit-holders and clients of the funds managed by the management company in the home state.

 (4) The information and documents specified in this section which are in a foreign language shall be submitted together with a translation into Estonian made by a sworn translator or certified by a notary.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]

§ 40.  Processing of application for authorisation for provision of cross-border services and revocation of authorisation

 (1) The provisions of §§16 to 18 and 21 to 23 of this Act apply to the application for authorisations for the provision of cross-border services, review of petitions and the grant and revocation of authorisations, unless otherwise provided for in this section.

 (2) In addition to the grounds for refusal provided for in § 18 of this Act, the Financial Supervision Authority may refuse to grant an authorisation for the provision of cross-border services if:
 1) the financial supervision authority of a third country does not ensure sufficient supervision over the applicant;
 2) the financial supervision authority of a third country has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority;
 3) the Financial Supervision Authority has the reason for believing that it is impossible to verify or ensure compliance by the applicant to the extent necessary with the requirements provided by this Act or other legislation;
 4) requirements at least equal to the requirements provided for a management company by this Act shall not apply to the activities of a management company of a third country.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (3) The Supervision Authority may revoke an authorisation for the provision of cross-border services if circumstances provided for in § 22 of this Act or in subsection (2) of this section become evident.

 (4) The Financial Supervision Authority may refuse to revoke an authorisation for the provision of cross-border services if the clients of the management company of a third country have claims against the management company or the revocation of the authorisation damages the interests of the fund or the shareholders or unit-holders of the fund.

§ 41.  Amendment of authorisation for provision of cross-border services

 (1) A management company of a third country which wishes to provide services in Estonia which are not specified in the business plan submitted upon application for an authorisation for the provision of cross-border services shall submit an application for amendment of the authorisation for the provision of cross-border services to the Financial Supervision Authority.

 (2) In order to amend an authorisation for the provision of cross-border services, a management company of a third country shall submit the information and documents specified in clauses 39 (2) 1) 2) and 5) of this Act to the Financial Supervision Authority.

 (3) The provisions of §§ 16-18 of this Act apply to the processing of applications for the amendment of authorisations for the provision of cross-border services, verification of information and deciding on amendment of the authorisations.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

§ 42.  Provision of cross-border services in Estonia by management company of Contracting State

 (1) A management company of a Contracting State which wishes to provide cross-border services in Estonia shall inform the Financial Supervision Authority thereof through the financial supervision authority of the Contracting State. The following information and documents shall be submitted to the Financial Supervision Authority:
 1) a scheme of operations, which shall contain information about all the services provided in Estonia;
 2) a description of the investor protection scheme applicable to the unit-holders and clients of the funds managed by the management company in the Contracting State;
 3) a statement by the financial supervision authority of the Contracting State that an authorisation has been issued to the management company according to the provisions of the directive regarding investment funds, and explanations about the scope of the authorisation of the management company and restrictions on the types of UCITS managed, if the management company intends to manage a UCITS established in Estonia.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) After the Financial Supervision Authority has received the information specified in subsection (1) of this section, the management company of a Contracting State may commence the provision of cross-border services in Estonia.

 (3) The Financial Supervision Authority shall promptly inform the financial supervision authority of the Contracting State of receipt of the information specified in subsection (1) of this section. The Financial Supervision Authority may make, within two months after receipt of the aforementioned information, a decision in which it determines the requirements according to which the management company of the Contracting State must provide its services, including portfolio management, consulting and depositary services. The Financial Supervision Authority shall promptly inform the management company of the Contracting State of the decision.

 (4) The Financial Supervision Authority shall be informed of changes in the information specified in subsection (1) of this section at least one month in advance. Within one month as of becoming aware of the changes, the Financial Supervision Authority may amend the decision specified in subsection (3) of this section or make the aforementioned decision unless it has been made earlier.

 (5) The information and documents specified in this section which are in a foreign language shall be submitted together with a translation into Estonian made by a sworn translator or certified by a notary.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]

§ 421.  Management of UCITS established in Estonia by management company of Contracting State

 (1) A management company of a Contracting State that wish to manage a UCITS established in Estonia, shall submit the following information and documents to the Financial Supervision Authority:
 1) a depositary contract and annexes thereto;
 2) information about delegation of functions relating to the activities specified in clauses 10 (1) 1) to 4) and 6) to 11) of this Act.

 (2) Where a management company already manages a UCITS established in Estonia, the information and documents specified in subsections (1) of this section need not be submitted provided that the management company has earlier submitted them to the Financial Supervision Authority.

 (3) The Financial Supervision Authority may request explanations and additional information from the financial supervision authority of another Contracting State in connection with the information and documents specified in subsection (1) of this section and the scope of the authorisation of the management company and restrictions arising from the types of UCITS managed.

 (4) The Financial Supervision Authority may make a resolution, which prohibits the management of a UCITS established in Estonia by the management company of another Contracting State, if:
 1) the management company does not comply with the requirements established in subsections 34 (6) to (8) of this Act for management companies;
 2) the management company does not hold an authorisation for the management of such UCITS for which the information and documents specified in subsection (1) of this section were submitted;
 3) the information or documents submitted by the management company are incomplete or insufficient.

 (5) Prior to making the resolution specified in subsection (4) of this section, the Financial Supervisory Authority shall consult with the financial supervision authority of another Contracting State.

 (6) A management company of a Contracting State which manages a UCITS established in Estonia shall communicate to the Financial Supervision Authority any significant changes in the information and documentation specified in subsection (1) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

Division 5 Shares and Shareholders of Management Company  

§ 43.  Shares

 (1) The shares of a management company are freely transferable.

 (2) [Repealed - RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 44.  Requirements for persons acquiring or having qualifying holding

  Qualifying holdings in a management company may be acquired, held and increased and control over a management company may be gained, held and increased by anyone (hereinafter in this Division person):
 1) who has impeccable business reputation and whose activities in connection with the acquisition comply with the principles of sound and prudent management of a management company;
 2) who after the acquisition or increase of the holding elect, appoint or designate only such persons as managers of the management companies who comply with the requirements provided for in § 51 of this Act;
 3) whose financial situation is sufficiently secure to ensure regular and reliable operation of the management company, and in the case of a legal person if such financial statements exist that allow for a correct assessment to be made of its financial situation;
 4) who is able to ensure that the management company is capable of meeting the prudential requirements provided by this Act, in the case of a legal person above all the requirement that the consolidation group, which part the management company will form, has a structure which enables exercise of efficient supervision, exchange of information and co-operation between the financial supervision authorities;
 5) with regard to whom there is no justified reason to believe that the acquisition, holding or increase of a holding in or control over the management company is related to money laundering or terrorist financing or an attempt thereof or increases such risks.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 45.  Giving notification of acquisition of holding

 (1) A person who intends to acquire a qualifying holding in a management company or to increase such holding so that the proportion of the share capital of the management company or votes represented by shares exceeds 20, 30 or 50 per cent, or to conclude a transaction as a result of which the management company will become a company controlled thereby (hereinafter acquirer) shall notify the Financial Supervision Authority of its intention beforehand and submit the information and documents specified in subsection 46 (1) of this Act.

 (2) The provisions of this Division also apply if a person acquires a qualifying holding in a management company due to any other event or as a result of a transaction or the holding thereof increases so that the proportion of the share capital or votes represented by shares of the management company held by the shareholder exceeds 20, 30 or 50 per cent or due to the event or as a result of the transaction the management company becomes a company controlled by the shareholder. In such case, the person is required to give notification to the Financial Supervision Authority promptly after becoming aware of gaining control over the management company or the acquisition or increase of a qualifying holding in the management company.

 (3) The Financial Supervision Authority shall notify the acquirer in writing within two working days after receipt of the notice specified in subsection (1) or (2) of this section or the additional information and documents specified in subsection 46 (4) and the possible termination date of terms in proceedings provided for in § 461 of this Act.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 46.  Information submitted upon giving notification of acquisition of holding

 (1) The Financial Supervision Authority shall be notified of the name of the company in which a qualifying holding is acquired or increased or which becomes controllable by the acquirer, and the size of the holding acquired in this company, and the following information and documents shall be submitted:
 1) a description of the company acquired which contains an extract from the share register, information on the type of shares and number of votes acquired or owned by the acquirer and other information, if necessary;
 2) a curriculum vitae of the acquirer who is a natural person which contains at least the name, residence, education, work and service experience and personal identification code of the acquirer or date of birth in the absence of a personal identification code;
 3) a list of the owners or members of the acquirer if the acquirer is a legal person, and information on the number of shares held by or the size of the holding and number of votes of each owner or member;
 4) the name, registered office, registry code, authenticated copy of a registration certificate and a copy of the articles of association, if they exist, of the acquirer if the acquirer is a legal person, or of the legal person administering the pool of assets;
 5) the information on the members of the management board and supervisory board of the acquirer if the acquirer is a legal person, including, for each person, the name and surname, personal identification code or date of birth in the absence of a personal identification code, education, work and service experience, and documents which prove the trustworthiness, experience, competence and impeccable reputation of such persons;
 6) a statement that the persons who become the managers of the management company as a result of acquiring a holding have not been punished for an economic offence, official misconduct or offence against property or offence against public trust and information concerning the punishment has been expunged from the punishment register pursuant to the Punishment Register Act. In the case of a citizen of a foreign state, a certificate of the punishment register or an equivalent document of a competent court or administrative authority of the country of origin of the person which has been issued less than three months earlier is accepted;
 7) a description of the business activities of the acquirer and a description of the economic and non-economic interests of persons connected with the acquirer;
 8) a statement that in the case of a person specified in clause 6) of this subsection no such circumstances have existed or exist which in accordance with law preclude his or her right to be a manager of a management company;
 9) the last three annual reports of the acquirer, if they exist. If more than nine months have passed since the end of the previous financial year, an audited interim report for the first six months of the financial year shall be submitted. A sworn auditor's report shall be added to the reports if preparation of the report is prescribed by legislation;
[RT I 2010, 9, 41 - entry into force 08.03.2010]
 10) if the acquirer is a natural person, ratings required for assessing the financial situation of the acquirer and companies connected with the acquirer and reports intended for the public, if possible; and if the acquirer is a legal person, credit ratings issued to the acquirer and the consolidation group;
 11) if the acquirer is a company belonging to a consolidation group, a description of the structure of the group, data relating to the sizes of the holdings of the companies belonging to the group, and the last three annual reports of the consolidation group together with sworn auditor's reports;
[RT I 2010, 9, 41 - entry into force 08.03.2010]
 12) if the acquirer is a natural person, documents certifying the financial status of the person during the last three years;
 13) information and documents concerning the sources of monetary or non-monetary resources for which it is intended to acquire a qualifying holding or increase it or gain control;
 14) the circumstances relating to the acquisition of holding pursuant to §§ 9, 10 and 721 of the Securities Market Act;
 15) the size of the qualifying holding owned by the person after acquisition of the holding and the circumstances relating to the holding pursuant to §§ 9, 10 and 721 of the Securities Market Act;
 16) if a management company becomes a controlled company, a business plan and other circumstances related to gaining of control and exercising control;
 17) a review of the strategy applied in the management company, provided the management company does not become a controlled company as a result of the acquisition.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (11) The minister responsible for the area may established a regulation, which specifies the information and documents to be submitted to the Financial Supervision Authority and specified in subsection (1) of this section.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (12) The information and documents submitted to the Financial Supervision Authority shall be in Estonian. With the consent of the Financial Supervision Authority, the above-mentioned information and documents may be submitted in another language.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (2) If a management company, investment fund, investment firm, credit institution or insurer of a third country or another person subject to financial supervision wishes to acquire a qualifying holding, statement from the foreign supervision authority of the third country to the effect that the specified person of the third country holds an authorisation and observes the established requirements shall also be submitted to the Financial Supervision Authority in addition to the information and documents specified in subsection (1) of this section.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (3) statement regarding the accuracy of the submitted documents and information which is signed by the acquirer shall be appended to the information and documents specified in subsection (1) of this section and to any information and documents submitted later in connection with the documents and information. The accuracy of information and documents submitted concerning natural persons specified in clauses (1) 1) and 5) of this section shall be confirmed by the signature of the above-mentioned persons.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (4) The Financial Supervision Authority may request in writing additional information or documents in order to specify or verify the information or documents specified in subsection (1) of this section. In such case it is specified which additional information shall be submitted to the Financial Supervision Authority.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (5) The Financial Supervision Authority may waive the demand for the information or documents specified in subsection (1) of this section in part of in full.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 461.  Legislative proceeding and term in proceeding

 (1) The Financial Supervision Authority shall assess the compliance of the acquirer with the requirements provided for in § 44 of this Act and shall resolve on prohibition on acquisition of holding or granting authorisation for acquisition of holding within 60 working days (hereinafter term in a proceeding) as of submission of the notice provided for in subsection 45 (3) of this Act concerning receipt by the Financial Supervision Authority of the information and documents required for the assessment.

 (2) The Financial Supervision Authority has the right to demand the additional information and documents specified in subsections 46 (4) of this Act within 50 working days as of the beginning of the term in the proceeding.

 (3) The term in the proceeding shall suspend for the period between the first submission of the demand by the Financial Supervision Authority for additional information and documents specified in subsection (2) of this section and receipt from the acquirer of the demanded additional information and documents, but the suspension shall not exceed 20 working days. The term in the proceeding shall not suspend if additional information and documents are demanded.

 (4) If no financial supervision is exercised over the acquirer or a financial supervision authority of a third country exercises supervision over the acquirer, the Financial Supervision Authority may extend the term in the proceeding specified in subsection (3) of this section to up to 30 working days.

 (5) Upon assessment of acquisition and increase of the qualifying holding and upon turning a management company into a controlled company, the Financial Supervision Authority shall co-operate with the financial supervision authority of an EEA country if the acquirer is:
 1) an insurer, credit institution, management company, investment fund, investment firm or another person subject to financial supervision having obtained an authorisation in a Contracting State;
 2) a parent undertaking of an insurer, credit institution, management company, investment fund, investment firm or another person subject to financial supervision having obtained an authorisation in a Contracting State; or
 3) a person controlling an insurer, credit institution, management company, investment fund, investment firm or another person subject to financial supervision having obtained an authorisation in a Contracting State.

 (6) The Financial Supervisory Authority shall consult with other financial supervision authorities in the framework of the co-operation specified in subsection (5) of this section. The Financial Supervision Authority shall promptly forward to other financial supervision authorities all the information that is essential upon assessment of acquisition and increase of the qualifying holding and upon turning a management company into a controlled company.

 (7) If more than one person wish to acquire a qualifying holding simultaneously, the Financial Supervision Authority shall treat them equally under equal circumstances.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 47.  Requirements for acquisition of holding

 (1) The Financial Supervision Authority has the right to specify a term for the acquirer during which the acquirer has the right to acquire or increase the qualifying holding or gain control over a management company. The Financial Supervision Authority may extend the term prescribed but the term shall not exceed 12 months in total. The acquirer is required, within the specified term, to give notification to the Financial Supervision Authority promptly of making a decision on conclusion of a transaction or failure to conclude a transaction by which the holding is acquired or increased or a management company is turned into a controlled company.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (2) A qualifying holding may be acquired or increased or the management company may be turned into a controlled company if the Financial Supervision Authority does not prohibit, by a precept, acquisition or increase of a qualifying holding or turning of the management company into a controlled company based on the provisions of § 461 and subsection 48 (1) of this Act.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 48.  Bases for prohibition on acquisition of holding and decision on acquisition

  [RT I 2009, 37, 250 - entry into force 10.07.2009]

 (1) The Financial Supervision Authority may prohibit, by a precept, acquisition and increase of the qualifying holding and upon turning a management company into a controlled company if:
 1) the acquirer does not conform to the requirements provided for in § 44 of this Act;
 2) the acquirer fails to submit the information or documents provided by this Act or requested pursuant to this Act to the Financial Supervision Authority;
 3) The information or documents submitted to the Financial Supervision Authority do not comply with the requirements provided by legislation or are incorrect, misleading or incomplete or based on the information and documents submitted the Financial Supervision Authority cannot exclude reasonable doubt with respect to unsuitability of the acquisition and with respect to that the acquisition does not comply with the requirements provided by this Act;
 4) the management company would become a company controlled by a person residing or located in a third country and sufficient supervision is not exercised over the person in the country of residence or location of the person or the financial supervision authority of the third country has no legal basis or possibility to co-operate with the Financial Supervision Authority.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (2) The Financial Supervision Authority shall submit a decision to the acquirer concerning the authorisation to acquire the qualifying holding or a prohibiting precept within two working days after adoption of the respective decision but prior to the expiry of the term in the proceeding. If financial supervision over the acquirer is exercised by the financial supervision authority of another Contracting State, its assessment of the acquisition or increase of the qualifying holding or upon turning a management company into a controlled company must be also indicated in the decision.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (3) If the circumstances specified in subsection (1) of this section become evident after acquisition or increase of qualifying holding or turning a management company into a controlled company, the Financial Supervision Authority may issue a precept according to which the acquisition of qualified holding or turning of a management company into a controlled company is deemed to be contrary to this Act.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (4) The Financial Supervision Authority, by its precept, has the right to prohibit or restrict in each specific case the exercise of voting rights or other rights enabling control in a management company by the acquirer or a person who has a qualifying holding in the management company or who controls the management company if any of the circumstances provided for in subsections (1) or (3) of this section exist. The Financial Supervision Authority may issue a precept regardless of whether a precept provided for in subsection (1) or (3) of this section is issued. The Financial Supervision Authority may disclose the precept on its website, and the acquirer may also demand disclosure of the precept.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (5) If an acquirer or a person who has a qualifying holding in the management company or who controls the management company is a management company, investment fund, investment firm, credit institution or insurer registered in another Contracting State, another person subject to financial supervision or a person belonging to the same consolidation group as the aforementioned person, the Financial Supervision Authority shall inform the competent financial supervision authority of that Contracting State of issue of a precept specified in subsection (3) or (4) of this section.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (6) Compliance with the precepts of the Financial Supervision Authority provided for in subsections (1), (3) and (4) of this section is also mandatory for the management company, the person maintaining the share register thereof or another person who organises the exercise of voting rights.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 49.  Consequences of illegal acquisition of holding

 (1) As a result of a transaction by which a qualifying holding is acquired or increased, the person shall not acquire the voting rights determined by the shares and the votes represented by the shares shall not be included in the quorum of the general meeting if:
 1) the transaction is contrary to a precept issued by the Financial Supervision Authority;
 2) the Financial Supervision Authority has issued a precept specified in subsection 48 (3) or (4) of this Act;
 3) the Financial Supervision Authority has not been informed of the transaction pursuant to §§ 45 and 46 of this Act;
 4) the transaction is conducted after the expiry of the term specified in subsection 47 (1) of this Act or before the acquisition of a qualifying holding is permitted pursuant to this Act.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (2) As a result of a transaction in the case of which any of the circumstances specified in subsection (1) of this section exist, the rights which turn a management company into a company controlled by the person do not arise for the person.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (3) If voting rights representing a qualifying holding acquired or increased by such a transaction, in the case of which any of the circumstances specified in subsection (1) of this section exist, are included in the quorum of the general meeting and influence the adoption of a resolution of the general meeting, the resolution of the general meeting shall be void. A court may declare the resolution of the general meeting void on the basis of a petition of the Financial Supervision Authority, a shareholder or a member of the management board or supervisory board of the management company, if the petition is submitted within three months as of the adoption of the resolution of the general meeting.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (4) If, arising from a transaction by which a management company is turned into a company controlled by a person and in the case of which any of the circumstances specified in subsection (1) of this section exist, rights enabling control are exercised, a court may declare the exercise of the rights void on the basis of a petition of the Financial Supervision Authority, a shareholder or a member of the management board or supervisory board of the company, if the petition is submitted within three months as of the exercise of the rights.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 50.  Giving notification of changes in qualifying holding

 (1) If a person intends to transfer shares in an amount which would result in the person losing a qualifying holding in a management company or if the person reduces the holding thereof such that it falls below one of the limits specified in subsection 45 (1) of this Act or foregoes control over the management company, the person is required to inform the Financial Supervision Authority thereof in advance and indicate the number of shares which the person owns and transfers and holds after the transaction.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (2) The provisions of subsection (1) of this section also apply if a person loses control over a management company or qualifying holding in a management company as a result of any other event or transaction or if the qualifying holding of the person is reduced such that it falls below one of the limits specified in subsection 45 (1) of this Act. In such case, the person shall inform the Financial Supervision Authority promptly after becoming aware of the loss of qualifying holding or control or the reduction of holding.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (3) Upon becoming aware of transactions specified in subsections 45 (1) and (2) of this Act, a management company is required to promptly inform the Financial Supervision Authority thereof.

 (4) A management company shall, together with its annual report, submit to the Financial Supervision Authority information concerning persons who, as at the end of the financial year, have a qualifying holding in the management company and shall set out the size of holding owned by the person and related circumstances pursuant to §§ 9, 10 and 721 of the Securities Market Act.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

Division 6 Management of Management Company  

§ 51.  Requirements for managers

 (1) The managers of a management company shall have the education and knowledge necessary for the performance of their duties and an impeccable business reputation.

 (2) The following shall not be managers of management companies:
 1) persons whose activities or omissions have caused bankruptcy or revocation of the authorisation of a fund, management company, professional securities market participant, insurer, credit institution or another person subject to financial supervision on the initiative of a state agency or a supervision authority;
 2) persons who have been punished for an economic offence, official misconduct, offence against property or offence against public trust and information concerning the punishment has not been expunged from the punishment register pursuant to the Punishment Register Act;
 3) persons who are subjected to a prohibition on business;
 4) persons whose earlier activities during the last ten years have shown that the persons are not capable of organising the activities of a management company such that the interests of a fund and the shareholders or unit-holders of a fund would be sufficiently protected.

 (3) The management board of a management company shall have at least two members.

 (4) Members of the management board of a management company of a UCITS or pension fund shall have completed higher education or education equivalent thereto.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (5) The managers and employees of a management company are required to act with the prudence and diligence expected of them, in accordance with the requirements for their positions and in the interests of the management company and the funds managed by the management company, the shareholders and unit-holders and other clients of the funds.

 (6) The managers of a management company shall guarantee that the organisational structure of the management company is transparent, the areas of responsibility are clearly delineated and procedures for the establishment, measurement, management, constant monitoring and reporting of risks have been established and that such procedures are sufficient and proportional taking into account the nature, extent and level of complexity of the operation of the management company.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

§ 52.  [Repealed - RT I 2006, 56, 417 - entry into force 01.01.2007]

§ 53.  Removal of manager

 (1) The Financial Supervision Authority may issue a precept to demand the removal of a manager of a management company if:
 1) the manager does not meet the requirements provided by this Act;
 2) the manager has violated the requirements of this Act or other legislation relating to the professional activities thereof;
 3) misleading, incomplete or inaccurate information or misleading, incomplete or falsified documents have been submitted in order to appoint him or her;
 4) the activities of the manager in managing the management company have demonstrated his or her inability to organise the management of the management company such that the interests of the fund, the shareholders, unit-holders, clients and creditors of the fund are sufficiently protected.

 (2) If a management company fails to comply with a precept specified in subsection (1) of this section in full or within the specified term, the Financial Supervision Authority has the right to demand the removal of the manager of the management company through a court or revoke the authorisation of the management company.

 (3) A court may, at the request of the Financial Supervision Authority or the management board, the supervisory board or a shareholder of the management company, appoint a new member to replace a member removed from the supervisory board. The authority of a court-appointed member of the supervisory board shall continue until the election of a new member of the supervisory board by the general meeting.

§ 54.  Restrictions on activities of managers and employees

 (1) A member of the management board of a management company shall not be a member of the management board or an employee of another management company, credit institution, insurer, paying authority, e-money institution or investment firm.
[RT I 2010, 2, 3 - entry into force 22.01.2010]

 (2) A member of the management board of a management company may be a member of the management board or an employee of a company belonging to the same consolidation group as the management company.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (21) A person whose office or position in a depositary of the mandatory pension fund is related to the provision of the depositary service with regard to this pension fund or whose other activities cause conflicts of interests with the fulfilment of his or her duties in the management company shall not be a manager or employee of the management company of a mandatory pension fund.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (3) [Repealed - RT I 2004, 90, 616 - entry into force 01.01.2005]

 (4) The manager or an employee of a management company holding an authorisation for the management of mandatory pension funds shall not be a member of the management board or an employee of the registrar of the Estonian Central Register of Securities.

§ 55.  Fund manager

 (1) The management board of a management company shall appoint as a manager of each fund managed by the management company a person whose duty is to coordinate investment of the assets of the fund and other activities related to the management of the fund and to monitor that the fund is managed pursuant to the provisions of legislation and the rules of the common fund or the management contract (hereinafter fund manager).
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (2) The person may be the fund manager of several funds managed by the management company. With the consent of the management company, a fund manager may work in another company or agency or provide investment or other services to third parties only if there is no conflict of interests between the fund manager and the shareholders or unit-holders of the fund or the clients of the management company.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (3) A fund manager shall operate in the best interests of the fund and the shareholders or unit-holders of the fund.

 (4) A fund manager shall be liable to the management company for the damage caused by violation of his or her duties if, as a result of violation of the duties, damage is caused to the fund or the shareholders or unit-holders of the fund.

§ 56.  Requirements for fund managers

 (1) Fund managers shall have the education and knowledge necessary for the performance of their duties and an impeccable business reputation.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (2) A person who does not comply with the requirements of subsection 51 (2) of this Act shall not be a fund manager.

 (3) [Repealed - RT I 2006, 56, 417 - entry into force 01.01.2007]

 (4) Only a person who, within the last five years, has operated as a fund manager for at least one year or has been involved in the provision of securities portfolio management services for at least three years may be the fund manager of a mandatory pension fund.

§ 561.  Remuneration of management board members and employees of management company of pension fund and other public fund

 (1) The bases and principles of determining the remuneration and other office related benefits of management board members and employees of the management company of a pension fund or other public funds, including severance payments, pension benefits and other benefits (hereinafter principles of remuneration) shall:
 1) be clear, transparent and in compliance with prudent and efficient risk management principles and investment policies of the funds managed by the management company;
 2) take into consideration the business strategy and values of the management company in view of the economic performance of the management company and the funds managed by it and the legitimate interests of the unit-holders or shareholders and other clients of the fund;
 3) take into consideration the long-term objectives of the management company in view of its ability to cope with the changes in the external environment.

 (2) The bases for determining the fees payable to management board members or employees of the management company based on the economic performance and transactions (hereinafter performance pay) shall be objective and reasoned and predetermine the period of time for which the performance pay is paid.

 (3) The following shall be taken into account upon determination and payment of the performance pay to management board members or employees of the management company:
 1) the proportion of the basic pay and performance pay shall be in reasonable compliance with the duties of the management board member or the employee;
 2) the basic pay shall make up a sufficiently big part of the pay which makes it possible not to determine or pay the performance pay, if necessary.

 (4) If performance pay is paid to a management board member or employee of a mandatory pension fund who has decision-making powers in connection with making investments of the mandatory pension fund or his or her pay depends in part or in full on the investment decisions made by him or her with respect to this mandatory pension fund, such pay shall be based on the rate of return of the fund at least during the three last years.

 (5) The contract or contract of employment of a member of the management board of a management company shall prescribe the right of the management company to reduce the payable performance pay, suspend the payment of the performance pay or demand return of the paid performance pay in part or in full. A management company may apply the aforementioned right if:
 1) the general economic performance of the management company has deteriorated to a significant extent as compared to the previous period;
 2) a management board member or employee of the management company does not meet the performance criteria or
 3) determination of the performance pay was based on information which was inaccurate or incorrect to a material extent.

 (6) The limitation period for a claim arising from performance pay is three years as of the date when the payment of the performance pay to a management board member or employee of the management company was decided.

 (7) The principles of remuneration of risk managers or management board members or employees managing risks shall ensure their independence and objectivity in the performance of their functions related to risk management.

 (8) A management company shall disclose in its annual report for the past financial year the principles of remuneration of its management board members and employees and the information characterising the nature of their application:
 1) relevant characteristics of the principles of remuneration, including information concerning the criteria used to measure the work results and compliance with them;
 2) reasons for payment of performance pay and severance pay and enabling of other performance based financial or significant non-financial benefits.

 (9) For the purpose of this section and subsection 57 (3) of this Act, fund managers or other persons who have decision-making powers in connection with making the investments of the fund shall be regarded as employees of a management company.

 (10) For the purposes of this Act, pay shall also mean the remuneration payable to members of the management board of a management company.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 562.  Requirements for actuaries

  An actuary of a management company managing the occupational pension fund specified in clause 13 (1) 6) of this Act shall conform to the requirements established in subsection 473 (2) of the Insurance Activities Act.
[RT I, 23.12.2013, 4 - entry into force 01.01.2014]

§ 57.  Internal rules of management company

 (1) A management company shall establish internal rules which regulate the activities of managers and employees and ensure the compliance of activities of the management company and its managers and employees with legislation and the resolutions of the managing bodies of the management company, and also the investment of the assets of a fund pursuant to the fund rules or articles of association of the fund and the lawful and regular provision of investment services.

 (2) A management company shall regularly evaluate the efficacy of its internal rules and the correspondence thereof to the actual situation, and shall adjust the internal rules in order to guarantee the best possible protection of the interests of the shareholders, unit-holders and other clients of the fund.

 (3) Among other matters, the internal rules shall set out the following:
 1) the procedure for the movement of the internal information and documents of a management company, including the requirements for submission and forwarding of information;
 2) criteria for selection of employees, professional or official functions, relationships of subordination, reporting chains, the procedure for reporting and the delegation of rights, including the separation of functions upon determination of the investment policy of a fund, transactions with securities for the account of a fund, assumption of obligations by the fund manager, recording of services for accounting and reporting purposes and assessment of risks involved;
 3) the procedure for avoidance of conflicts between the interests of the management company and the personal economic interests of the managers and employees of the management company, including the procedure for avoidance of conflicts within the consolidation group if the management company belongs to a consolidation group;
 4) the procedure for maintaining databases and processing of data;
 5) the procedure for provision of investment services and ancillary services, including a plan for determining the danger of suspension of business activities related to the provision of investment services, for grounding or preventing such risk and restrictions, both time-limited and unlimited by time, in the conclusion of transactions;
 6) internal rules of procedure for imposing international sanctions established on the basis of the International Sanctions Act and application of the Money Laundering and Terrorist Financing Prevention Act, and the code of conduct for verification of compliance therewith;
[RT I 2007, 58, 380 - entry into force 19.11.2007]
 7) the bases for remuneration of the management board members or employees of the management company of a pension fund or other public fund and the principles of their formation, including bases for payment of performance pay and measures for management and avoidance of conflicts of interests related to remuneration and the procedure for checking adherence to these principles.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (4) The internal rules of the management company managing the occupational pension funds specified in clause 13 (1) 6) of this Act shall also determine the principles governing risk management and relevant procedures and the principles and methods of calculation of technical reserves and financial liabilities in addition to the provisions specified in subsection (3) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 58.  Internal control

 (1) A management company shall implement sufficient internal control measures which cover all management and operations levels of the management company.

 (11) The provisions of §§ 83 and 831 of the Securities Market Act apply to a management company who provides investment services and ancillary services.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

 (2) The supervisory board of a management company shall appoint an independent employee or employees or shall enter into an agreement with an auditor for performance of the functions of internal auditor (hereinafter internal auditor), who shall meet the requirements provided for in subsection 51 (2) of this Act and shall not be employed as a fund manager or perform other duties which create or may create a conflict of interests.

 (3) The duty of an internal auditor is to monitor whether the activities of a management company and its managers and employees comply with legislation, the precepts of the Financial Supervision Authority, the resolutions of managing bodies, the internal rules, agreements entered into with the management company and good practice. In addition to the aforementioned, an internal auditor shall check and assess at least once a year whether the principles of remuneration established in the management company of a pension fund or other public fund comply with the requirements provided by this Act.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (4) A management company shall ensure that the internal auditor has the rights and working conditions necessary to perform his or her duties, including the right to obtain explanations and information from the managers and employees of the management company and to observe the elimination of any deficiencies discovered and compliance with any precepts issued.

 (5) An internal auditor is required to forward any information concerning a management company which becomes known to him or her and which indicates a violation of law or damage to the interests of a fund, the shareholders, unit-holders or clients of a fund to the supervisory board and management board of the management company, the depositary and the Financial Supervision Authority promptly in writing.

§ 581.  Additional requirements for internal control of UCITS management company

 (1) The internal control system of the management company of a UCITS shall include at least the conformity inspection function and the internal audit function in the case provided for in this section. A management company of a UCITS shall establish legal, technical and organisational measures in order to carry out the independent conformity inspection and independent internal audit functions, if it is necessary and proportionate taking into consideration the nature, extent and level of complexity of the business activities of the management company of the UCITS.

 (2) In order to carry out the independent conformity inspection, a management company of a UCITS shall establish in its internal rules the principles of action and rules for identification, management or prevention of the legal risks of failure to perform the obligations provided for by this Act and other risks related thereto (hereinafter principles of action). Upon establishment of the principles of action, the nature, extent and level of complexity of the business activities of the management company of a UCITS shall be take into consideration.

 (3) The principles of action specified in subsection (2) of this section shall enable the Supervision Authority to efficiently perform its supervisory duties.

 (4) A management company of a UCITS shall prescribe a conformity inspection function which shall be carried out consistently and effectively by an independent conformity inspection body who shall:
 1) supervise and evaluate regularly the appropriateness and efficiency of the measures taken for elimination of deficiencies upon the implementation of the principles of action established pursuant to subsection (2) of this section and the performance of the obligations of the management company of a UCITS;
 2) advise the relevant persons responsible for the management of a UCITS in the issues related to the performance of the obligations provided for in this Act;
 3) present regular reports to the managers of the management company of a UCITS.

 (5) The management board of the management company of a UCITS shall ensure that the conformity inspection body has the rights and working conditions necessary to perform its duties and access to the information required for the performance of the conformity inspection function, including the right to obtain explanations and information from the managers of the management company of a UCITS and to observe the elimination of any deficiencies discovered and compliance with any proposals made.

 (6) A conformity inspection body is required to forward any information concerning the management company of a UCITS, which becomes known to it and which indicates a violation of law or damage to the interests of unit-holders, to the managers of the management company of a UCITS, its depositary and the Financial Supervision Authority.

 (7) A conformity inspection body shall not provide services or perform operations, over which the conformity inspection body exercises supervision and the bases of and procedure for the remuneration of the conformity inspection body shall not compromise its objectivity. The conditions provided for in this section need not be complied with if the management company of a UCITS can prove that the specified obligation is not proportional taking into account the nature, scale and level of complexity of its business and that the performance of the conformity inspection functions is effective in practice even without the performance of the relevant obligation.

 (8) In the case the internal audit function exists, the management company of a UCITS shall determine the procedure of the internal audit function by its internal rules. The main duties of an internal auditor of a management company of a UCITS are:
 1) to establish and implement an internal audit programme for the examination and assessment of the appropriateness and efficiency of the processes and systems of the management company of a UCITS, including the internal audit system;
 2) to give recommendations based on the results of the internal audit performed pursuant to clause 1) of this subsection and observe compliance with the recommendations;
 3) to present regular reports to the managers of the management company of a UCITS.

 (9) For the purposes of this Act, a relevant person is:
 1) a member of the management board, manager of the management company of a UCITS or another person that performs a similar management function;
 2) an employee of the management company of a UCITS or another natural person who is subject to control by the management company of a UCITS and is related to the provision of the fund management service;
 3) any other natural person who provides relevant services to the management company of a UCITS subject to a contract on the transfer of the duties related to the management of the fund;
 4) a natural person specified in clauses 1) and 2) of this subsection whose competence includes the management function of a UCITS established as an investment company in another Contracting State or who is related to the management of the fund, if the management company manages a UCITS established in another Contracting State.

 (10) Written reports concerning the conformity and internal audit areas specified in this section shall be submitted to the managers of a management company on a regular basis but not less frequently than once a year. It shall become evident from the report whether, upon the existence of deficiencies, appropriate measures have been taken to eliminate the deficiencies in the area covered in the report.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 582.  Risk management of UCITS management company

 (1) The management company of a UCITS shall determine the person carrying out independent risk management, if this is necessary and proportionate taking into consideration the nature, extent and level of complexity of the business activities of the management company of the UCITS.

 (2) The person carrying out risk management shall have the following duties:
 1) to implement the risk management rules and risk measurement and management procedures specified in subsection 248 (1) of this Act;
 2) to ensure compliance of the UCITS with the risk limits system, including compliance with the exposure and counterparty risk assessment requirements;
 3) to advice the management board of the management company in connection with the determination of the risk profile of the UCITS;
 4) to review the procedure for computing the value of OTC derivatives and to enhance it, if necessary;
 5) to present regular reports to the managers of the management company.

 (3) The person carrying out risk management shall present reports to the managers of the management company according to clause (2) 5) of this section on regular basis but not less frequently than once a year on the following indicators:
 1) compliance of the risk level of the UCITS with the risk profile of the UCITS;
 2) compliance of the UCITS with the risk limits system;
 3) appropriateness and efficiency of the risk measurement and management procedures and elimination of discovered deficiencies;
 4) actual and probable exceeding of the risk profile and the risk limits system of the UCITS in order to ensure immediate taking of appropriate measures.

 (4) The report specified in subsection (3) of this section shall clarify upon existence of deficiencies whether appropriate measures have been taken to eliminate the deficiencies in the area covered in the report.

 (5) If the management company of a UCITS has not determined a person carrying out independent risk management, the management company shall be able to prove that measures have been taken for avoiding any conflicts of interests that enable independent performance of the risk management and the risk measurement rules of the management company and the procedures for measurement and management of the risks of the UCITS comply with the requirements specified in this Act and they are implemented consistently and effectively.

 (6) The management board of a management company shall ensure that the person carrying out risk management has the rights and working conditions necessary to perform its duties and access to all the information required for the performance of the risk management, including the right to observe the elimination of any deficiencies discovered and compliance with any recommendations made.

 (7) Courterparty risk or credit exposure for the purposes of this Act is the risk of sustaining losses because the counterparty of the transaction conducted on account of the UCITS violates its obligation prior to performing a monetary transaction in full.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

Division 7 Merger, Division, Transformation, Dissolution and Bankruptcy of Management Company  

§ 59.  Transformation of management company

  A public limited company which manages a fund shall not be transformed into a company of a different type.

§ 60.  Division of management company

  The division of a management company is prohibited.

§ 61.  Merger of management company

 (1) Management companies shall be merged pursuant to the procedure prescribed in the Commercial Code, unless otherwise prescribed in this Division.

 (2) Management companies may be merged only with management companies founded pursuant to the law of a Contracting State. The merger of management companies whereby a new company is founded is not permitted.
[RT I 2007, 65, 405 - entry into force 15.12.2007]

 (3) An authorisation from the Financial Supervision Authority is required for the merger of management companies (hereinafter in this Division authorisation for merger).

§ 62.  Merger agreement and merger report

 (1) The merger agreement of a management company shall not be entered into with a suspensive or resolutive condition. A merger agreement may only provide for a condition according to which the merger agreement enters into force after the Financial Supervision Authority grants the authorisation for merger provided for in § 63 of this Act.

 (2) The Financial Supervision Authority shall be informed of entry into a merger agreement between management companies within ten days after the entry into the merger agreement.

 (3) Upon the merger of management companies, a merger report shall be prepared and the report shall be audited by an auditor.
[RT I, 02.11.2011, 1 - entry into force 12.11.2011]

 (4) The auditor's report shall provide an opinion on the exchange ratio of shares and the determination thereof and on whether the acquiring management company meets the prudential requirements provided by this Act.

§ 63.  Authorisation for merger

 (1) In order to be granted an authorisation for merger, the acquiring management company or the merging management companies jointly shall submit a respective petition to the Financial Supervision Authority to which the following information and documents are appended (hereinafter in this Division application):
 1) the merger agreement or a notarially authenticated copy thereof;
 2) the merger report;
 3) the merger resolutions if required;
[RT I, 02.11.2011, 1 - entry into force 12.11.2011]
 4) the auditor’s report;
 5) the business plan which meets the requirements provided for in § 15 of this Act for the three years following the merger;
 6) the information and documents specified in clauses 14 (1) 6) and 10) of this Act;
 7) the draft internal rules of the management company which meet the requirements provided for in § 57 of this Act.

 (2) If the merger brings about amendment of fund rules, the acquiring management company shall also submit the information and documents specified in § 117 of this Act.

§ 64.  Processing of application for authorisation for merger and decision on grant of authorisation for merger

 (1) The provisions of § 16 of this Act apply to the processing of applications for authorisations for merger, verification of the submitted information and verification whether the facilities of applicants for the management of funds and the acquiring management company comply with the requirements provided by an Act or legislation issued on the basis thereof.

 (2) The decision to grant or refuse to grant an authorisation for merger shall be made by the Financial Supervision Authority within two months after the receipt of a respective petition but not later than within one month after the receipt of all the necessary documents and information.

 (3) If amendment of fund rules is also applied for upon merger, the Financial Supervision Authority shall make, together with the decision to grant an authorisation for merger, a decision on registration of amendment of the fund rules pursuant to the provisions of § 118 of this Act.

 (4) The Financial Supervision Authority shall inform the acquiring management company or the merging management companies of a decision to grant or refuse to grant an authorisation for merger promptly after the decision is made.

 (5) The Financial Supervision Authority shall decide to revoke an authorisation of a management company being acquired pursuant to the provisions of § 21 of this Act at the same time with the decision to grant an authorisation for merger, and the decision shall enter into force not earlier than on the date when the merger is entered in the commercial register.

 (6) The Financial Supervision Authority shall disclose a decision to grant an authorisation for merger not later than on the working day following the day the decision is made pursuant to the procedure provided for in § 295 of this Act and legislation issued on the basis thereof.

§ 65.  Bases for refusal to grant authorisation for merger

  The Financial Supervision Authority may refuse to grant an authorisation for merger if:
 1) the managers of the acquiring management company do not comply with the requirements provided for in an Act or legislation issued on the basis thereof;
 2) the merger would violate the limitations on investment provided by this Act or other legislation;
 3) the financial situation of the acquiring management company does not comply with the requirements provided by this Act;
 4) the merger agreement does not comply with the requirements provided by this Act or other legislation;
 5) close links between the acquiring management company and another person prevent sufficient supervision over the management company:
 6) the merger may damage the interests of a fund or the shareholders or unit-holders of a fund for other reasons.

§ 66.  Merger notification

 (1) Merging management companies shall immediately publish a merger notification concerning the fact of being granted an authorisation for merger in at least one national daily newspaper and on the website specified in subsection 242 (1) of this Act (hereinafter website of management company).

 (2) A management company shall submit a petition for entry of a merger in the commercial register promptly after publication of the merger notice specified in subsection (1) of this section.
[RT I 2007, 65, 405 - entry into force 15.12.2007]

§ 67.  Dissolution of management company

 (1) The general meeting of a management company may adopt a resolution on dissolution of the management company only after the dissolution of all funds managed thereby or transfer of the management thereof.

 (2) A management company which manages mandatory pension funds may be dissolved only with the authorisation of the Financial Supervision Authority.

 (3) In order to be granted an authorisation for the dissolution of a pension management company, the pension management company shall submit a petition to the Financial Supervision Authority to which the following information and documents are appended:
 1) the resolution of the general meeting of the pension management company concerning application for the authorisation for dissolution of the management company;
 2) the assessment of the pension management company concerning the effect of the dissolution thereof on the interests of the unit-holders of the pension funds which have been or are managed by the pension management company.

 (4) The provisions of § 16 of this Act apply to the processing of an application for an authorisation for the dissolution of a pension management company, verification of the submitted information and verification whether the dissolution of the pension management company is in the interests of the unit-holders of the pension funds which have been or are managed thereby.

 (5) The decision to grant or refuse to grant an authorisation for the dissolution of a pension management company shall be made by the Financial Supervision Authority within one month after the submission of all the necessary documents and information but not later than within two months after the receipt of the respective petition.

 (6) The Financial Supervision Authority may refuse to grant an authorisation for the dissolution of a pension management company if dissolution of the pension management company is contrary to the interests of the unit-holders of the pension funds which have been or are managed by the pension management company.

 (7) The Financial Supervision Authority shall promptly inform a pension management company of a decision to grant or refuse to grant an authorisation for dissolution of the pension management company.

 (8) The Financial Supervision Authority shall disclose a decision to grant an authorisation for dissolution of the pension management company not later than on the working day following the day the decision is made pursuant to the procedure provided for in § 295 of this Act and legislation issued on the basis thereof.

§ 68.  Bankruptcy of management company

 (1) The assets of a fund do not form a part of the bankruptcy estate of the management company, and the claims of creditors of the management company shall not be satisfied out of such assets. Unless otherwise provided for in this section, the shares or units of a fund which are owned by the management company form a part of the bankruptcy estate of the management company.

 (2) Bankruptcy proceedings with regard to a pension management company may be commenced only on the basis of a petition of the Financial Supervision Authority or a liquidator.

 (3) The Financial Supervision Authority shall submit a bankruptcy petition against a pension management company if the assets of the pension management company are insufficient to satisfy all claims of creditors. The Financial Supervision Authority shall also submit a bankruptcy petition with respect to the management company managing of the occupational pension funds specified in clause 13 (1) 6) of this Act in the case the assets of the pension management company and the occupational pension fund managed by it are insufficient for covering the technical reserves and the financial liabilities.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (4) Bankruptcy cautions shall not be submitted to pension management companies.

 (5) A court shall decide on the commencement of bankruptcy proceedings with regard to a pension management company within three working days as of the submission of the bankruptcy petition.

 (6) In the event of the bankruptcy of a management company, claims against the management company from unit-holders of pension funds managed by the company shall be satisfied first, after claims secured by a pledge.

 (7) The provisions of subsection (6) of this section apply for five years after transfer of the management of a pension fund.

 (8) The units of a mandatory pension fund which are owned by a pension management company and managed by the pension management company shall not be included in the bankruptcy estate.

 (9) A pension management company may apply for the redemption of units of a mandatory pension fund which are owned by the pension management company and managed by the pension management company pursuant to the procedure provided for in § 81 of this Act or for the deletion of such units pursuant to the procedure provided for in § 84 of this Act only if the circumstances specified in subsection 32 (1) of the Funded Pensions Act have not arisen within 18 months as of transfer of the management of the mandatory pension fund.

 (10) Money received upon redemption of units specified in subsection (8) of this section shall be included in the bankruptcy estate of the pension management company.

Division 8 Requirements for Activities of Management Company  

§ 69.  Activities of management company

 (1) The activities of a management company shall comply with legislation, the articles of association of the management company and the fund rules of a fund managed by the management company and with the management contract.

 (2) A management company has the right to dispose of and possess the assets of a fund in accordance with the rules of the fund and the management contract, and has other rights provided for therein.

 (3) A management company shall conclude transactions with the assets of a common fund in its own name and for the account of all the unit-holders collectively (hereinafter for the account of a common fund, or with the assets of a fund founded as a public limited company in the name and for the account of the fund, or in the name of the management company for the account of the fund pursuant to a management contract.

§ 70.  Functions of management company

 (1) A management company is required to:
 1) comply with the requirements provided for by legislation and the management contract and, in its activities, show sufficient competence, honesty, accuracy and conscientiousness in order to ensure the protection of the best interests of a fund managed by the management company and the shareholders, unit-holders and clients of the fund and the reliable and regular operation of financial markets and other markets;
 2) ensure the establishment and application of the procedures necessary for the activities of the management company and the existence of resources necessary to manage funds and the effective use of the resources;
 3) refrain from conducting transactions in which the interests of the management company are in conflict with those of a fund managed thereby and of a client (conflict of interests) and, in the event a conflict of interests cannot be avoided, to act in the interests of the fund and the client;
 4) ensure that conflicts of interests between the management company and the client thereof or between the management company and the fund or between the clients of the management company and the funds managed by the management company are avoided or as small as possible;
 5) treat unit-holders of the fund equally under equal conditions, including to share information and documents equally to them. The obligations specified in the first sentence of this clause shall also apply to the shareholders of the fund.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (2) A management company shall be liable for the damage caused to a fund, the unit-holders or a fund founded as a public limited company by violation of the functions of the management company.

 (3) A management company has the right and duty to submit in its own name the claim of unit-holders or a fund against a depositary or third parties if failure to submit such claim will result or may result in significant damage to the fund or its unit-holders. A management company is not required to submit such claim if the fund or unit-holders have already submitted a claim.

 (4) Upon investment of the assets of a fund, a management company shall:
 1) obtain sufficient information on the assets which the company intends to acquire or has acquired for the account of the fund;
 2) monitor the financial and economic situation of the issuer whose securities the company plans to acquire or has acquired for the account of the fund;
 3) obtain sufficient information with regard to the solvency of the persons with whom they transact for the account of the fund.

 (5) The specific requirements set on the management company's organisational structure and internal rules of procedure, management and avoidance of conflicts of interests, risk management, and conclusion of a transactions with the assets of a UCITS relating to the management of the fund shall be established by a regulation of the minister responsible for the area.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

§ 701.  Additional obligations of managers of UCITS management company

 (1) Managers of the management company of a UCITS shall ensure control over the compliance of the activities of the management company, its management board and employees with the legislation and internal rules and rules of procedure of the management company.

 (2) The management board of the management company of a UCITS has the following obligations:
 1) to approve the internal procedure for making investment decisions and review it regularly in order to ensure compliance of the investment decisions with the general investment policy of the UCITS;
 2) to regularly check that the general investment policy set out in the rules and prospectus of the UCITS and the risk limits of each of the UCITS are properly implemented, including in the case the risk management has been delegated to a third person;
 3) to ensure the designation of the conformity inspection function and its efficient implementation, including in the case the carrying out of the conformity function has been delegated to a third person;
 4) to approve the risk management rules and procedures for risk measurement and management and risk limits system of the UCITS, from which suitable restrictions arise for all potential significant risks, and to review them regularly;
 5) to check on regular basis the efficiency of each policy, procedure and measure established for the performance of the obligations specified in this Act and impose the measures necessary for elimination of the deficiencies.

 (3) For the performance of the duties specified in subsections (1) and (2) of this section, the management board of the management company shall be presented reports on the implementation of the internal procedure for making investment decisions specified in clause (2) 1) of this section on regular basis.

 (4) The supervisory board of the management company shall exercise supervision over the performance of the obligations specified in clause (2) 5) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 702.  Personal transactions of relevant person of UCITS management company

 (1) The management company of a UCITS shall designate in its internal rules the procedure for personal transactions by the relevant person specified in subsection 581 (9) of this Act (hereinafter in this section relevant person) and ensure the protection of the interests of the unit-holders of the UCITS.

 (2) The management company of a UCITS shall establish a procedure by its internal rules aimed at preventing the following transactions in the case any relevant person is involved in respective activities who may give rise to a conflict of interest, or who has access to inside information for the purposes of the Securities Market Act or confidential information relating to unit-holders:
 1) conducting of a personal transaction if this is prohibited according to § 1886 of the Securities Market Act or the transaction involves illegal disclosure of confidential information or if this is in conflict or may come into conflict with the obligations of the management company provided for by this Act or the Securities Market Act;
 2) conducting of a personal transaction is supplemented by giving recommendations to a third person for conclusion of a securities transaction or inducing to it and it is not related to the performance of normal duties of or provision of investment services by the relevant person, and if such activity would be covered by the provisions of clause 1) of this subsection, clause 825 (5) 1) or 2) of the Securities Market Act or this misuses in any other manner the information related to the orders accepted for execution;
 3) disclosure of information or expression of opinion to a third person in any other manner than in the course of activities related to the performance of his or her duties or the service provision contract if the relevant person knows or it might be reasonably expected that as a result of this a third person will conclude a securities portfolio transaction to which the provisions of clause 1) of this section or clause 825 (5) 1) or 2) of the Securities Market Act apply, that it would result in misuse of the information related to the orders accepted for execution in any other manner or that the third person would give a recommendation for concluding such transaction or induce another person to it.

 (3) A management company is required to take appropriate measures to ensure that:
 1) each relevant person is aware of the procedure established on the basis of subsection (1) of this section and the restrictions contained therein on conducting personal transactions;
 2) a system is applied on the basis of which the management company is informed promptly of any personal transaction conducted by a relevant person or which enables the management company to identify such transactions;
 3) all information on personal transactions, including any authorisation or prohibition of the transactions, is stored. A separate record shall be kept of the above-mentioned information.

 (4) If a management company delegates the duties of the management company to a third person, the management company shall ensure that the third person shall store the information specified in clause (3) 3) of this section and provide that information promptly to the management company on the request of the latter.

 (5) Subsections (1) to (4) of this section shall not apply to the following personal transactions:
 1) personal transactions concluded under the provision of a securities portfolio management service where there is no prior communication in connection with the transaction between the manager of the securities portfolio and the relevant person or other person for whose account the transaction is executed;
 2) personal transactions in units or shares of a UCITS or units or shares of other investment funds in the case the Financial Supervision Authority or a financial supervision authority of another Contracting State exercises supervision over the fund and requirements for risk spreading in the investment of their assets equivalent to UCITS are applied to such fund and the relevant person and any other person for whose account the transactions are conducted are not involved in the management of that fund.

 (6) The conclusion of a personal transaction specified in this section means the conclusion of a securities transaction by or for a relevant person for the purposes of subsection 762 (3) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 703.  Management and avoidance of conflicts of interests in UCITS management company

 (1) A management company of a UCITS shall establish and implement legal, technical and organisational measures to manage or prevent internal conflicts of interests in the management company of the UCITS, conflicts of interests between the management company and the person having a control relationship with the management company, conflicts of interests between the UCITS and the unit-holders and the unit-holders and other clients of the management company and the adverse effect thereof on the interests of the unit-holders of the UCITS.

 (2) Upon detection of any conflicts of interests specified in subsection (1) of this section, a management company shall take into consideration the obligations of the management company in connection with the management of the UCITS, and the interests of the other clients of the management company and the interests of the management company and in the case the management company belongs to a consolidation group, any circumstances of which the management company is or should be aware in the case a conflict of interests may arise as a result of the structure and business activities of other members of this consolidation group.

 (3) The measures specified in subsection (1) of this section shall comply with the requirements specified in subsection 761 (1), clauses (3) 1) to 4) and subsections (5) and (6) of this Act and take into consideration whether the management company, the relevant person or a person in the control relationship with the management company receives a benefit in cash, in kind or in the form of services from a person not connected with the UCITS in relation to the service provided to the unit-holder other than the standard commission or service fee payable for that service.

 (4) If the implementation of one or more procedures or measures specified in subsection 761 (6) of this Act does not ensure the requisite degree of independence of the management company of a UCITS, the management company shall implement alternative or additional procedures and measures for achieving thereof.

 (5) If the measures specified in subsection (1) of this section do not ensure prevention of the risk of damaging the interests of a UCITS or its unit-holders, the management board of the management company shall be immediately notified thereof to ensure that decisions are made for acting in the best interests of the UCITS and its unit-holders.

 (6) In the case specified in subsection (5) of this section, the management company notifies the unit-holders on a durable medium and substantiate the decision made about damage to the interests.

 (7) A management company shall keep and regularly update a record of conflicts of interests which have arisen and may arise involving a material risk of harming the interests of unit-holders, and of more specific circumstances related to these.

 (8) The person specified in subsection 581 (9) of this Act is deemed to be the relevant person for the purposes of this section and the measures established on the basis thereof.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 71.  Duties of management company upon provision of investment services

 (1) Upon provision of the service of managing securities portfolios, a management company may invest the assets of a client in a fund managed by the company only to the extent in which the client has granted the respective right to the management company in writing.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

 (2) The provisions of §§ 811, 821, 823, 824, 826, 827 and 828, clauses 85 1) to 12), §§ 852, 853, 86, 87, 871, 873 to 876, 88, 8813, 891 and 90 of the Securities Market Act and Part VI of the Securities Market Act and the legislation established for specification of such provisions apply to management companies providing investment services and ancillary services.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 72.  Separation of assets

 (1) A management company shall manage the assets of a fund separately from its own assets and from the assets of other funds managed by the management company and from other pools of assets.

 (2) Assets which are acquired on the basis of rights belonging to the assets of a fund, in a transaction which is based on the assets of a fund or received as compensation for a thing or right belonging to the assets of a fund also form a part of the assets of the fund.

 (3) Upon provision of services specified in clauses 9 (2) 1) to 3) of this Act, the provisions of § 88 of the Securities Market Act concerning the maintenance and protection of the assets of clients apply to a management company.

§ 73.  Transfer of duties of management company

 (1) For the better performance of its duties, a management company has the right to transfer the activities specified in subsections 10 (1) and (11) of this Act to third parties (hereinafter transfer of duties):
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]
 1) unless the transfer of duties damages the legitimate interests of the fund or the shareholders or unit-holders of the fund;
 2) unless the transfer of duties hinders the activities of the management company and the sufficient performance of the duties of the management company;
 3) unless the transfer of duties prevents sufficient supervision over the management company and the depositary;
 4) unless the transfer of duties creates a situation where the management company does not actually manage the fund;
 5) if the third party to whom the duties are transferred has the necessary qualifications for the performance of the duties and the party is able to perform the duties;
 6) if the management company has the right to give additional instructions to third parties to whom the duties of the management company have been transferred and to monitor the activities of third parties which are related to the management of the fund;
 7) if other requirements provided for by this Act are complied with.

 (2) A management company may transfer duties also to a foreign management company, investment firm or credit institution which does not have a branch founded in Estonia or does not provide cross-border services in Estonia.

 (3) A management company may transfer to a third party only such activities listed in subsection 10 (1) of this Act the transfer of which is permitted pursuant to the rules or management contract of the fund managed by the management company.

 (4) A management company shall promptly inform the Financial Supervision Authority of transfer of the duties related to the management of a fund and shall submit a copy of the contract on the transfer of duties.

 (5) The transfer of duties to a third party does not release the management company and the depositary from liability related to the management of the fund.

§ 74.  Specifications for transfer of duties related to management of fund

 (1) The investment of the assets of a fund provided for in clause 10 (1) 1) of this Act and subsection (11) of the same section to the extent determined by the management company may be transferred to a third party only if the transfer complies with the investment policy determined by the management company and the decisions made by the management company on the application of such policies.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (2) The investment of the assets of a fund may only be transferred to a management company, credit institution or investment firm which holds an authorisation for the provision of services specified in clause 43 (1) 4) of the Securities Market Act. The investment of the assets of a fund may also be transferred to a management company, credit institution or investment firm founded in a foreign state which, pursuant to the authorisation thereof, has the right to provide securities portfolio management services.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

 (3) The investment of the assets of a fund shall not be transferred to the depositary of the fund or to a third party in the case of which a conflict of interests between the third party and the management company, the fund or the shareholders or unit-holders of the fund may arise.

 (4) In addition to the persons specified in subsection (2) of this section, organisation of the issue and redemption of units may also be transferred to the Estonian Central Register of Securities.

 (5) Maintenance of a register of the units of a common fund may be transferred only pursuant to the provisions of Division 3 of Chapter 4 of this Act.

§ 75.  Termination of transfer of duties of management company

 (1) A management company shall have the right to terminate a contract on the transfer of duties related to the management of a fund entered into with a third party at any time.

 (2) The Financial Supervision Authority has the right to issue a precept which requires termination of the transfer of a duty related to the management of all funds or a fund to a certain person or termination of all contracts on the transfer of duties entered into by the management company with third parties.

 (3) The Financial Supervision Authority may issue a precept specified in subsection (2) of this section if:
 1) a third party does not have the necessary qualifications for the performance of the duties of a management company;
 2) the legitimate interests of a fund or the shareholders or unit-holders of the fund are violated or there is a danger of such violation;
 3) the requirements specified in §§ 73 or 74 of this Act are violated;
 4) the financial supervision authority of a third country which exercises supervision over a person specified in subsection 74 (2) of this Act has no legal basis or possibilities for cooperation with the Financial Supervision Authority;
 5) a third party to which the duties of a management company are transferred does not comply with the requirements necessary for the performance of the duties transferred thereto.

§ 76.  Activities of pension management company

 (1) A management company which has been granted the authority provided for in clause 13 (1) 4) of this Act to manage mandatory pension funds is required to manage a mandatory pension fund (hereinafter conservative pension fund) the assets of which may, pursuant to the pension fund rules, only be invested in:
 1) securities specified in clauses 2 (1) 2) and 5) of the Securities Market Act;
 2) deposits in credit institutions;
 3) derivative instruments specified in clause 2 (1) 6) of the Securities Market Act the underlying assets of which are assets specified in clauses 1), 2) or 4) of this section;
 4) funds the assets of which may be invested only in securities or deposits specified in clauses 1) to 3) of this subsection.

 (2) In addition to a conservative pension fund, the management company may manage a mandatory pension fund pursuant to the rules of which the maximum proportion of investments in shares is 25 per cent, 50 per cent or 75 per cent of the market value of the pension fund assets.

 (3) A management company may manage mandatory pension funds pursuant to the rules of which the maximum proportion of investments in shares is equal if the limitations provided for in the rules of these pension funds individually or together differ as regards the following requirements:
 1) the states provided pursuant to subsection 269 (3) of this Act are different or the limitations established on the states differ to the extent of not less than 25 per cent of the market value of the assets of a pension fund;
 2) the limitation on investment in immovables differs to the extent of not less than 10 per cent of the market value of the assets of a pension fund;
 3) the limitation on investment in the units and shares of other funds differs to the extent of not less than 35 per cent of the market value of the assets of a pension fund.

 (4) The provisions of subsection (3) of this section do not apply if the management of these mandatory pension funds pursuant to the rules of which the maximum proportion of investments in shares is equal results from a merger of management companies or an assumption of the management of a mandatory pension fund.

 (5) For the purposes of subsections (2) to (4) of this section, all the investments specified in subsection 271 (2) of this Act are deemed to be investments in shares to the full extent of the investment.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

§ 761.  Managing and preventing conflicts of interests in management company of mandatory pension fund

 (1) A management company shall establish and implement legal, technical and organisational measures to manage or prevent conflicts of interests in the management company, conflicts of interests of a person having a control relationship with the management company, conflicts of interests between the unit-holders and between the unit-holders and other clients of the management company and the adverse effect thereof on the interests of the unit-holders upon management of a mandatory pension fund (hereinafter provision of fund management service). The above-mentioned measures shall take into account the size and structure of the management company and the nature, scale and complexity of the business of the management company. The management company shall establish such procedures and measures by its internal rules.

 (2) The measures provided for in subsection (1) of this section shall include in the case of a conflict of interests in the management company at least the managers of the management company and such employees of the management company who are involved in the management of the mandatory pension fund (hereinafter relevant person), and if the management company belongs to a consolidation group, any circumstances shall be taken into account of which the management company is or should be aware in the case a conflict of interests may arise as a result of the structure and business activities of other members of this consolidation group.

 (3) For the purposes of identifying the types of conflicts of interests that arise in the course of providing the fund management service and which existence may damage the interests of a unit-holder, management companies shall take into account, by way of minimum criteria, whether a relevant person or a person who is in a control relationship with the management company is in any of the following situations as a result of providing the fund management service or otherwise:
 1) the management company, the relevant person or that person who is in a control relationship with the management company is likely to make a financial gain, or avoid a damage to property, at the expense of the unit-holder;
 2) the management company, the relevant person or that person who is in a control relationship with the management company has an interest in the outcome of a service provided to the unit-holder or of a transaction conducted on behalf of the fund which is distinct from the interest of the unit-holder in that outcome;
 3) the management company, the relevant person or that person who is in a control relationship with the management company has a financial or other incentive to favour the interest of the unit-holders of another fund managed by it, other clients or group of clients over the interests of the unit-holder;
 4) the management company, the relevant person or that person who is in a control relationship with the management company carries on the same business as the unit-holder;
 5) the management company, the relevant person or that person who is in a control relationship with the management company receives a benefit in cash or in kind from a person not connected with the fund in relation to the service provided to the unit-holder other than the standard commission or service fee payable for that service and which is not permitted pursuant to subsections 151 (6) and (7) of this Act.

 (4) If the measures specified in subsection (1) of this section do not ensure avoiding of the risk of damaging the interests of a unit-holder, the management company shall disclose the general nature of the conflicts and, if possible, the source of the conflict in the prospectus of the mandatory pension fund.

 (5) The measures for avoiding conflicts of interests established pursuant to subsection (1) of this section shall define:
 1) circumstances relating to each service provided by the management company or on behalf of it, which constitute or may give rise to a conflict of interests or which entail a material risk of damage to the interests of unit-holders;
 2) processes and measures to be applied in order to resolve conflicts of interests.

 (6) The processes and measures specified in clause (5) 2) of this section shall ensure that the persons engaged in business activities involving a conflict of interests specified in clause (5) 1) of this section carry on those business activities in a way which manages the risk of damage to the interests of a unit-holder to the maximum extent. The specified processes and measures shall include such of the following list as are necessary and appropriate to ensure the requisite degree of independence of the management company:
 1) procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interests where the exchange of that information may harm the interests of unit-holders;
 2) separate control of persons whose principal functions involve conducting of transactions on behalf of the fund or providing services related to the fund, whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the management company;
 3) measures, which remove any link between the remuneration of relevant persons engaged in different activities and the revenues generated by them to the management company or the fund, where a conflict of interests may arise in relation to those activities, including if this would endanger the realisation of the investment policy of the fund;
 4) procedures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person provides or carries out the fund management service;
 5) procedures to prevent or control the simultaneous or sequential involvement of a relevant person in separate fund management services where such involvement may impair the proper management of risks arising from conflicts of interests.

 (7) A management company shall keep and regularly update a record of conflicts of interests which have arisen and may arise involving a material risk of harming the interests of unit-holders, and of more specific circumstances related to these.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 762.  Personal transaction by manager, employee or other connected persons of management company of mandatory pension fund

 (1) A management company shall set out by internal rules the procedure for conducting personal securities transactions of the persons associated with the management company and ensure the protection of the interests of the unit-holders of the mandatory pension fund.

 (2) A relevant person, and the spouse, a dependent child, stepchild, foster-child and a person who has shared the same household as that relevant person for at least one year on the date of the transaction concerned (hereinafter in this section person close) is deemed to be a connected person specified in subsection (1) of this section.

 (3) The conclusion of a personal securities transaction specified in subsection (1) of this section means the conclusion of a securities transaction by or for a relevant person if:
 1) the relevant person acts outside his or her normal duties or authority upon conducting the transaction;
 2) the transaction was conducted for the account of the relevant person or a person close to the relevant person;
 3) the transaction was conducted for the account of a person who has close links with the relevant person;
 4) the transaction was conducted for the account of a person whose contractual relationship with the relevant person is such that the relevant person has material interests in the outcome of the transaction, other than a fee or commission for the execution of the trade.

 (4) A management company shall establish a procedure by internal rules aimed at preventing such transactions in the case of any relevant person who is involved in transactions that may give rise to a conflict of interests in connection with the management of a mandatory pension fund or who has access to inside information for the purposes of the Securities Market Act or confidential information relating to the interests of unit-holders.

 (5) A management company is required to take appropriate measures to ensure that:
 1) each relevant person is aware of the procedure established on the basis of subsection (4) of this section and the restrictions contained therein upon conducting personal transactions;
 2) a system is applied on the basis of which the management company is informed promptly of any personal transaction conducted by a relevant person or which enables the management company to identify such transactions;
 3) all information on personal transactions, including any authorisation or prohibition of the transactions, is stored. A separate record shall be kept of the above-mentioned information.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 77.  Termination of management authority

 (1) The authority of a management company to manage a fund terminates upon:
 1) transfer of the management in the case of a common fund pursuant to the procedure provided for in §§ 155-160 of this Act;
 2) revocation of the authorisation of the management company;
 3) compulsory dissolution of the management company;
 4) declaration of bankruptcy of the management company or abatement of bankruptcy proceedings commenced against the management company due to a lack of assets to cover the expenses of the bankruptcy proceedings.

 (2) The Financial Supervision Authority may issue a precept by which the authority of a management company to manage a fund is terminated:
 1) if the net asset value of the common fund is less than 400,000 euros six months after the registration of the fund;
 2) if the management company has not eliminated the circumstances which constitute the basis for suspension of the issue of units during the term provided for in subsection 145 (8) of this Act;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 3) if the management company has not eliminated during the term provided for in subsection 145 (8) of this Act the circumstances which constitute the basis for redemption of units or the management company has repeatedly suspended redemption of units of a common fund and such suspension damages the legitimate interests of unit-holders;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 4) if the common fund does not have a depositary;
 5) if the management company fails to manage the fund in compliance with the requirements of this Act;
 6) if this is necessary due to the legitimate interests of the shareholders or unit-holders of the fund;
 7) in other cases prescribed by law, the management contract or the fund rules or articles of association of the fund.

Division 9 Participation of Management Company in Fund  

§ 78.  Holding of units by management company

 (1) A management company may own units or shares of a fund managed by the management company.

 (2) A management company shall own at least 1 per cent of the units of each mandatory pension fund managed by the pension management company.

 (3) Within three years as of the formation of a mandatory pension fund, the management company shall own at least 2 per cent of the units of the pension fund.

 (4) [Repealed - RT I 2008, 48, 269 - entry into force 14.11.2008]

 (5) In order, for the purposes of this Division, to determine the proportion of units of a mandatory pension fund owned by a management company or person who has operated as a pension management company, the number of units owned by such person shall be divided by the number of units in the fund as registered by the registrar of the Estonian Central Register of Securities.

 (6) A management company shall not own any units of pension funds which the management company does not manage.

§ 79.  Specifications for holding of units

 (1) The provisions of § 78 of this Act do not apply:
 1) to a mandatory pension fund for a period of three months after a management company assumes management of the pension fund;
 2) under the conditions determined by the Financial Supervision Authority within six months after the redemption of units in the case provided for in subsection 32 (21) of the Funded Pensions Act.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (2) The Financial Supervision Authority may extend the term provided for in clause (1) 1) of this section to up to 18 months under the conditions specified by the Authority.

§ 80.  Obligation to acquire additional units

 (1) In the cases provided by law, the number of units of a mandatory pension fund owned by a management company shall exceed the number provided for in §§ 78 and 79 of this Act.

 (2) Precepts concerning the acquisition of additional units and the conditions thereof are issued to management companies by the Financial Supervision Authority.

§ 81.  Acquisition and redemption of units

 (1) Units of a common fund shall be acquired by a management company (hereinafter in this Division acquisition of units) and units of a common fund owned by a management company shall be redeemed by the management company (hereinafter in this Division redemption of units) under the conditions and pursuant to the procedure provided by this Act, legislation established on the basis thereof and the rules of the respective fund.

 (2) A management company shall inform the Financial Supervision Authority of an intention to acquire or redeem units at least ten days before the acquisition or redemption of the units. The management company shall submit the following information to the Financial Supervision Authority:
 1) the name of the fund;
 2) the market value of the assets and the net asset value of the fund;
 3) the number of units which have been issued but not redeemed;
 4) the number of units owned by the management company and the proportion thereof in the total number of units;
 5) the number of units which are intended to be acquired or redeemed;
 6) the date of acquisition or redemption of the units (hereinafter in this Division date of transaction).

 (3) A management company shall inform the Financial Supervision Authority of a transaction by which units are acquired or redeemed not later than on the tenth day following the transaction. This notice shall set out at least the following:
 1) the number of units acquired or redeemed by the management company;
 2) the date of the transaction;
 3) the number of the units of the fund on the date of the transaction;
 4) the net asset value of a unit on the date of the transaction and on the working day preceding and the working day following the date of the transaction.

 (4) Giving notification to the Financial Supervision Authority according to subsection (2) of this section is not required in the case of an open-ended fund and if units of a mandatory pension fund are acquired or redeemed on the basis of a precept of the Financial Supervision Authority pursuant to the provisions of subsection 80 (2) of this Act or §§ 32-35 of the Funded Pensions Act.

 (5) The provisions of this Division concerning management companies also apply, with regard to the redemption of units, to persons who no longer manage the fund of which the redemption of units they request.

§ 82.  Bases for prohibition on acquisition or redemption of units

 (1) The Financial Supervision Authority may, by a precept, prohibit the acquisition of units or determine the maximum number of the acquired units if:
 1) if the information or documents submitted upon giving notification do not meet the requirements provided by this Act or legislation issued on the basis thereof or are inaccurate, misleading or incomplete;
 2) after acquisition of the units of a fund the management company owns more than 5 per cent of the units of the fund;
 3) acquisition of the units is contrary to the legitimate interests of other unit-holders.

 (2) The Financial Supervision Authority may, by a precept, prohibit the redemption of units or determine the maximum number of the redeemed units:
 1) if the information or documents submitted upon giving notification do not meet the requirements provided by this Act or legislation issued on the basis thereof or are inaccurate, misleading or incomplete;
 2) if the Financial Supervision Authority has issued a precept to the management company and it has not been complied with by the due date;
 3) if the management company has deferred payment of a quarterly contribution on the basis of subsection 67 (2) of the Guarantee Fund Act;
 4) if the redemption of units would not be in the best interests of other unit-holders for any other reason;
 5) if the number of units of the pension fund owned by the management company after the redemption of units would be less than the number provided for in §§ 78-80 of this Act;
 6) if 12 months have not passed since a bonus issue of units of the mandatory pension fund;
 7) upon redemption of units owned by a person whose authority to manage a pension fund managed thereby is transferred to another management company and less than six months has passed since the transfer;
 8) upon redemption of units owned by a person whose authority to manage the pension fund managed thereby is transferred to a depositary of the pension fund – until the authority to manage the pension fund is transferred to another management company or the pension fund is liquidated.

§ 83.  Acquisition or redemption of units at request of Financial Supervision Authority

  The Financial Supervision Authority may, by a precept, require that:
 1) units of a fund be redeemed if the management company owns more than 5 per cent of the units of the fund;
 2) units of a mandatory pension fund be acquired if the number of units owned by a management company in the mandatory pension fund managed by the management company does not comply with the provisions of §§ 78 and 79 of this Act;
 3) units of a mandatory pension fund be acquired if this is necessary in order to guarantee compensation for the loss specified in subsection 32 (1) of the Funded Pensions Act or to protect the interests of the unit-holders for any other reason;
 4) units of a pension fund which are owned by a person who managed the pension fund be redeemed if more than nine months have passed since the management authority of the pension fund was transferred.

§ 84.  Deletion of units of mandatory pension fund which are owned by management company upon liquidation of pension fund

 (1) After termination of the liquidation of a mandatory pension fund, the management company or a person who operates as a management company has the right to apply for the consent of the Financial Supervision Authority for payment of the amount which corresponds to the net asset value of the units owned by the management company or person who operates as a management company and deletion of the units from the register.

 (2) If the Financial Supervision Authority refuses to grant consent, the provisions of § 82 of this Act apply. The Financial Supervision Authority shall promptly inform also the registrar of the Estonian Central Register of Securities of grant or refusal to grant consent.

 (3) The Financial Supervision Authority shall refuse to delete any or part of the units owned by the management company if any of the circumstance provided for in subsection 32 (1) of the Funded Pensions Act arises.

 (4) In the case provided for in subsection (3) of this section, the procedure for compensation for loss provided for in §§ 32-35 of the Funded Pensions Act shall be applied.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (5) A management company shall submit a petition to the registrar of the Estonian Central Register of Securities for payment of the amount which corresponds to the number of the units of the mandatory pension fund owned by the management company and for deletion of the units from the register of units and shall append the consent of the Financial Supervision Authority for deletion of the units. On the basis of the petition, the registrar of the Estonian Central Register of Securities shall transfer money for the units to be deleted to the management company.

Division 10 Prudential Requirements for Management Companies  

§ 85.  Share capital

 (1) The share capital of a management company shall be at least 125,000 euros.

 (2) The share capital of a management company shall be at least:
 1) 730,000 euros, if the company manages a voluntary pension fund not specified in clause 13 (1) 6) of this Act;
 2) 3,000,000 euros, if the company manages a mandatory pension fund or an occupational pension fund specified in clause 13 (1) 6) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The provisions of § 57 of the Insurance Activities Act concerning the share capital of an insurer apply to increase of the share capital of a management company that has the right to manage mandatory pension funds and occupational pension funds specified in clause 13 (1) 6) of this Act.
[RT I, 23.12.2013, 4 - entry into force 02.01.2014]

 (4) The share capital of a management company may be reduced only on the condition that it shall not be lower than provided for in subsections (1) and (2) of this section after the adoption of the reduction resolution.
[RT I, 23.12.2013, 4 - entry into force 02.01.2014]

 (5) The management company holding the right to manage a mandatory pension fund and an occupational pension fund specified in clause 13 (1) 6) of this Act is required notify the Financial Supervision Authority of any planned reduction of the share capital in writing at least one month prior to the adoption of the corresponding resolution.
[RT I, 23.12.2013, 4 - entry into force 02.01.2014]

 (6) If the management company holding the right to manage a mandatory pension fund or an occupational pension fund specified in clause 13 (1) 6) of this Act wishes to reduce the share capital for any other purpose besides covering a loss, it may adopt a resolution on reduction of the share capital provided the Financial Supervision Authority has granted a written consent for it. The Financial Supervision Authority shall resolve on the grant of or refusal to grant consent within 20 days as of the receipt of the corresponding notice.
[RT I, 23.12.2013, 4 - entry into force 02.01.2014]

 (7) The Financial Supervision Authority may refuse to grant the consent specified in subsection (6) of this section if the reduction of share capital would damage the solvency of the management company or the interests of the unit-holders or other creditors of the pension fund managed by it.
[RT I, 23.12.2013, 4 - entry into force 02.01.2014]

 (8) § 358 and the term specified in the first sentence of subsection 359 (1) and subsection (2) of the Commercial Code do not apply to the management company holding the right to manage a mandatory pension fund and an occupational pension fund specified in clause 13 (1) 6) of this Act. The management company shall publish a notice concerning the amount of the reduction and the new amount of the share capital in a national newspaper within 15 days as of the adoption of the reduction resolution.
[RT I, 23.12.2013, 4 - entry into force 02.01.2014]

§ 86.  Own funds of management company

 (1) The own funds of a management company are determined on the basis of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.06.2013, pp. 1-337) and Regulation (EU) No. 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories (OJ L 201/1, 27.07.2012, pp. 1-59).

 (2) A management company is promptly required to inform the Financial Supervision Authority and submit its explanations if the own funds of the management company have decreased:
 1) by more than five percent;
 2) below the minimum amount provided for in § 87 of this Act.

 (3) If the own funds of a management company are smaller than the minimum amount provided for in subsection 87 (1) of this Act, the Financial Supervision Authority may designate a term in order to bring the own funds into compliance with the requirements of this Act and legislation issued on the basis thereof.

 (4) If a management company is part of a financial conglomerate within the meaning of § 1101 of the Credit Institutions Act, the company shall comply with the provisions of Chapter 91 of the Credit Institutions Act.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 87.  Minimum amount of own funds

  [RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (1) The amount of own funds of a management company must be equal to or exceed both of the following indicators:
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]
 1) the minimum amount of share capital provided for in subsections 85 (1) and (2) of this Act;
 2) 25 per cent of the fixed overheads of the management company.

 (2) If the market value of the assets of the funds managed by a management company and of the funds the management of which has been transferred by the management company exceeds 250,000,000 euros, the management company shall own additional own funds to the extent of 0.02 per cent of the amount by which the market value of the assets of the managed funds exceeds 250,000,000 euros (hereinafter additional own funds).
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (3) With the permission of the Financial Supervision Authority, a management company may cover 50 per cent of the requirement of additional own funds by a guarantee in the respective amount granted by a credit institution or an insurer. The credit institution or insurer which has granted a guarantee shall be a credit institution or insurer of a Contracting State or another credit institution or insurer provided that the person which grants the guarantee is, according to the opinion of the Financial Supervision Authority, required to comply with at least equivalent prudential requirements which are provided for in the legislation of the European Community.

 (4) The minimum amount of share capital provided for in subsections 85 (1) and (2) of this Act and the amount of additional own funds altogether need not exceed 10,000,000 euros.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (5) The procedure for calculating own funds and fixed overheads of management companies and for reporting on own funds shall be established by a regulation of the minister responsible for the area.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 88.  Fixed overheads of management company

 (1) Fixed overheads shall be calculated on the basis of the last annual report approved by the general meeting of the shareholders.

 (2) On the basis of prior written consent from the Financial Supervision Authority, non-recurring exceptional expenses which are included in the fixed overheads of the financial year may be deducted upon calculation of fixed overheads.

 (3) The Financial Supervision Authority has the right to demand that the amount of fixed overheads which was taken as the basis for calculating the minimum amount of own funds be adjusted after approval of the annual report if significant changes have occurred in the operating activities of the management company.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (4) The minimum amount of own funds intended to cover the fixed overheads of a management company commencing its activities or which has operated for less than one year shall be calculated on the basis of the fixed overheads projected in the business plan provided for in § 15 of this Act.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 89.  Specifications for own funds of management company of pension fund

 (1) In addition to the provisions of subsections 87 (1) and (2) of this Act, the own funds of a management company, which manages a pension fund, shall be at least 2 per cent of the market value of the assets of the pension funds managed by the management company, unless otherwise provided for in subsection (2) or (5) of this section.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (2) In addition to the provisions of subsections 87 (1) and (2) of this Act, the own funds of the management company which manages pension funds with a market value of the assets greater than 125,000,000 euros shall be at least 2,500,000 euros plus 1 per cent of that part of the market value of the assets of the pension funds managed by the management company which exceeds 125,000,000 euros.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (3) Upon transfer of the management of a pension fund, a management company to which the management of the pension fund is transferred shall comply with the requirements provided for in subsection (1) or (2) of this section not later than six months after transfer of the management authority.

 (4) The Financial Supervision Authority may extend a term specified in subsection (3) of this section by up to six months if extension of the term is justified having regard to the financial situation of the pension management company and the structure of investments of the pension funds managed by the management company and extension of the term is in the legitimate interests of the shareholders or unit-holders of the fund.

 (5) To secure obligations assumed towards the unit-holders of the occupational pension funds specified in clause 13 (1) 6) of this Act, the own funds of the management company managing the specified pension fund shall be at least at the level of the minimum solvency margin and the required solvency margin in addition to that provided for in subsections 87 (1) and (2) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (6) The minimum solvency margin of the management company managing the occupational pension fund specified in clause 13 (1) 6) of this Act is three million euros and the required solvency margin is determined pursuant to § 891 of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (7) A management company shall submit the calculation of the required solvency margin to the Financial Supervision Authority together with the annual report and in other cases provided by law.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (8) The provisions of subsections (5) to (7) of this Act do not apply to a management company, if the rate of return or distributions to unit-holders of an occupational pension fund managed by it specified in clause 13 (1) 6) of this Act are guaranteed by the employer of the Contracting State making contributions to this pension fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 891.  Required solvency margin of pension fund management company

 (1) The required solvency margin of the management company of the pension funds specified in clause 13 (1) 6) of this Act is determined according to the liabilities of the occupational pension funds managed by the management company as the sum of the components found on the basis of subsections (2) and (5) to (7) of this Act.

 (2) The required solvency margin shall be equal to the sum of the following two components:
 1) a 0.04 fraction of the technical reserves and financial liabilities shall be multiplied by the ratio of the total technical reserves and financial liabilities net of reinsurance cessions to the gross total technical reserves and financial liabilities; that ratio may in no case be less than 0.85;
 2) for liabilities on which the capital at risk is not a negative figure, a 0.003 fraction of such capital underwritten by the assurance undertaking shall be multiplied by the ratio of the total capital at risk retained as the undertaking's liability after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0.5.

 (3) By way of derogation from the provisions of clause (2) 2) of this section, the capital at risk shall be multiplied in case of liabilities that cover a death risk:
 1) for liabilities of a term of up to three years on which the capital at risk is not a negative figure, a 0.001 fraction of such capital shall be multiplied by the ratio of the total capital at risk retained as the undertaking's liability after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0.5;
 2) for liabilities of a term from three to five years on which the capital at risk is not a negative figure, a 0.0015 fraction of such capital shall be multiplied by the ratio of the total capital at risk retained as the undertaking's liability after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0.5.

 (4) For the purposes of this section, the capital at risk means the amount to be paid from which the amount covering the technical reserves and financial liabilities assumed with respect to unit-holders has been deducted.

 (5) For liabilities which correspond to the type of life assurance specified in clause 13 (1) 6) of the Insurance Activities Act, the amount of the corresponding assets shall be multiplied by the factor 0.01.

 (6) For liabilities which correspond to the types of life assurance specified in clauses 13 (1) 5) and 7) of the Insurance Activities Act, the required solvency margin is equal to the sum of the following components:
 1) in so far as the management company bears an investment risk, a 0.04 fraction of the amount of the technical reserves and financial liabilities;
 2) in so far as the management company bears no investment risk but the allocation to cover management expenses is fixed for a period exceeding five years, a 0.01 fraction of the amount of technical reserves and financial liabilities;
 3) in so far as the management company bears no investment risk and the allocation to cover management expenses is not fixed for a period exceeding five years, a 0.25 fraction of the amount of administrative expenses net of the commission paid by the management company;
 4) in so far as the liabilities cover a death risk, a 0.003 fraction of the capital at risk shall be multiplied by the ratio of the total capital at risk after reinsurance cessions and retrocessions to the total capital at risk gross of reinsurance; that ratio may in no case be less than 0,5.

 (7) For the liabilities which correspond to the types of non-life insurance specified in clauses 12 1) and 2) of the Insurance Activities Act, the required solvency margin is the higher of the amounts calculated on the basis of subsections (8) and (9) or (10) and (11) of this section.

 (8) The higher of gross written premiums, or gross earned premiums of a financial year shall be multiplied by the factor 0.18 for an amount extending up to 50 million euros, and by the factor 0.16 for an amount in excess of 50 million euros.

 (9) The results obtained pursuant to subsection (8) of this section shall be added together, and the sum so obtained shall be multiplied by the factor existing in respect of the sum of the previous financial year between the amount of claims remaining to be borne by the undertaking after deduction of amounts recoverable under reinsurance and the gross amount of claims. This factor may in no case be less than 0.5.

 (10) The gross amount of claims of the last three financial years shall be divided by three and multiplied by the factor 0.26 for an amount extending up to 35 million euros, and by the factor 0.23 for an amount in excess of it.

 (11) The results obtained pursuant to subsection (10) of this section shall be added together, and the sum so obtained shall be multiplied by the factor existing in respect of the sum of the previous financial year between the amount of claims remaining to be borne by the undertaking after deduction of amounts recoverable under reinsurance and the gross amount of claims. This factor may in no case be less than 0.5.

 (12) If the required solvency margin as calculated in subsection (7) of this section is lower than the required solvency margin of the year before, the required solvency margin shall be the higher of the required solvency margin as calculated in subsection (7) of this section, or the required solvency margin of the year before multiplied by the ratio of the amount of the technical reserves, net of reinsurance, for claims outstanding at the end of the last financial year and the amount of the technical reserves, net of reinsurance, for claims outstanding at the beginning of the last financial year. This factor may in no case be bigger than 1.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 90.  Application for permission for extension of term

 (1) In order to apply for the permission specified in subsection 89 (4) of this Act, a management company shall submit a petition, information and documents (hereinafter in this Division application) which set out the reasons that prevent the management company from complying with the requirements provided for in subsections 89 (1) or (2) of this Act.

 (2) The provisions of § 16 of this Act apply to the processing of applications specified in subsection 89 (4) of this Act, verification of the submitted information and verification whether the application is in the legitimate interests of the unit-holders and potential investors and justified.

 (3) The decision to grant or refuse to grant the permission specified in subsection 89 (4) of this Act shall be made by the Financial Supervision Authority within one month after the receipt of all the necessary information and documents but not later than within two months after the receipt of the petition.

 (4) The Financial Supervision Authority may refuse to grant the permission specified in subsection 89 (4) of this Act if extension of the term is unjustified or not in the legitimate interests of the fund or the shareholders or unit-holders of the fund.

 (5) The Financial Supervision Authority shall promptly inform the management company of a decision specified in subsection (3) of this section.

§ 91.  [Repealed - RT I 2006, 56, 417 - entry into force 01.01.2007]

Chapter 3 DEPOSITARY  

§ 92.  Depositary

 (1) A fund shall have a depositary, unless otherwise provided for in this section.

 (2) The depositary holds the assets of the fund and performs other functions assigned thereto by law.

 (3) A credit institution, investment firm or foreign credit institution or investment firm which according to the law of the state where it is founded has the right to provide services equal to the services specified in clause 6 (1) 14) of the Credit Institutions Act or clause 44 1) of the Securities Market Act may be a depositary.

 (4) Only a credit institution may be the depositary of a UCITS and pension fund.

 (5) The depositary of a UCITS shall be entered in the Estonian commercial register as a public limited company or a branch.

 (6) Only a credit institution which is an Estonian or foreign account administrator specified in the Estonian Central Register of Securities Act and which has operated as a depositary for at least one year during the three years preceding entry into the depositary contract may be the depositary of a mandatory pension fund. Foreign credit institutions may provide the depositary service to mandatory pension funds only through a branch established in Estonia.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (7) A common venture capital fund, a common real estate fund and a fund founded as a public limited company shall not have a depositary, unless these are public funds. If a common venture capital fund, a common real estate fund or a fund founded as a public limited company, which is not a public fund, has a depositary, the provisions of this Act in respect of the depositary and the depositary contract shall not apply to it.

 (8) The Financial Supervision Authority may, by a precept, request the entry of the depositary in the Estonian commercial register as a public limited company or a branch or oblige a management company or a fund founded as a public limited company to change a depositary if:
 1) the foreign financial supervision authority does not ensure sufficient supervision over the depositary;
 2) the foreign financial supervision authority has no legal basis, possibilities or readiness for sufficient and efficient cooperation with the Financial Supervision Authority;
 3) the Financial Supervision Authority cannot monitor the performance of the requirements for depositaries prescribed by this Act or other legislation or such monitoring is impeded.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

§ 93.  Depositary contract

 (1) A depositary contract is a contract entered into between a management company of a common fund and a depositary, or between a fund founded as a public limited company and a depositary, pursuant to which the assets of the fund are entrusted with the depositary for safe-keeping and the depositary undertakes to perform transactions therewith pursuant to the orders of the management company and the terms and conditions of the depositary contract.

 (2) A depositary contract shall prescribe:
 1) the term of the contract;
 2) the rights and obligations of the parties;
 3) the procedure for transactions;
 4) the amount and procedure for payment of the fee payable to the depositary;
 5) the extent of and procedure for payment of expenses incurred upon the provision of depositary services;
 6) liability of the parties for breach of the contract;
 7) the liability of the depositary if the assets or securities of the fund are entrusted to a third party;
 8) the procedure for resolution of disputes;
 9) the conditions and procedure for amendment and termination of the contract, including the conditions for the holding and transfer of assets after termination of the depositary contract;
 10) other terms and conditions provided by law or provided for in the fund rules or articles of association of the fund.

 (3) A depositary contract shall be entered into in writing.

§ 931.  Additional requirements for depositary contracts

 (1) If a UCITS established in Estonia is managed by a management company of another Contracting State, the depositary contract shall specify in addition to the provisions of subsection 93 (2) of this Act:
 1) all the information that needs to be exchanged between the UCITS, its management company and the depositary related to the issue and redemption of units, and upon change of the depositary subscription, the conditions and procedure for transfer of information and documents;
 2) confidentiality obligations applicable to the parties to the depositary contract;
 3) information concerning the performance of the tasks and responsibilities of the parties to the depositary contract in respect of obligations relating to the prevention of money laundering and the financing of terrorism;
 4) application of Estonian law to depositary contracts;
 5) information about whether the depositary contract covers several UCITS, and the list thereof.

 (2) In addition to the provisions of subsection (1) of this section, the depositary contract shall prescribe for transfer of the tasks of the depositary or the management company:
 1) an undertaking to provide details, on a regular basis, of any third parties to whom the depositary or the management company has delegated its functions;
 2) an undertaking that, upon request by one of the parties to the depositary contract, the other party shall provide information on the criteria used for selecting the third party and the steps taken to monitor the activities of the selected third party;
 3) an attestation that the liability of the depositary is not affected if the assets or securities of the UCITS are entrusted to a third party.

 (3) Establishment of the confidentiality obligation concerning the information and documents specified in clause (1) 2) of this section shall not prevent the Financial Supervision Authority or the financial supervision authority of the home state of the management company from gaining access to the documents and information.

 (4) In addition to the provisions of subsection (1) of this section, the following shall be contained in the depositary contract or shall be added to depositary contract:
 1) the procedure for entrusting the assets to the depositary and storing the assets according to the types of the assets;
 2) the procedure for amendment of the rules or prospectus of a UCITS, and the procedure for notification of the depositary of the amendments;
 3) the procedure for submission of information by the depositary to the management company, and the procedure for exercise of the rights relating to securities and the procedure for ensuring the management company timely and relevant access to the information concerning the financial statements of the UCITS;
 4) the procedure for ensuring the depositary access by the management company to the information necessary to perform its obligations;
 5) the procedure for inspection of the activities of the management company by the depositary and assessment of the quality of the information submitted, including for carrying out an on-site inspection;
 6) the procedure for inspection by the management company of the activities and performance of the obligations of the depositary.

 (5) Each procedure specified in clauses (4) 3) and 4) of this section may be agreed upon by a separate written contract.

 (6) If the parties to a depositary contract agree upon submission of the information submitted subject to subsections (1) and (4) of this section in whole or in part in electronic form, the depositary contract shall prescribe the terms and conditions for the storage of the information.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 94.  Requirements for depositary

 (1) The level of the organisational and technical administration of activities of a depositary, its financial situation, the competence and experience of the employees engaged in performance of the functions of the depositary and its technical systems and facilities shall be adequate to ensure the performance of functions prescribed for the depositary by this Act, in the depositary contract and in the contract specified in subsection 22 (1) and 525 (3) of the Funded Pensions Act.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (2) [Repealed - RT I 2010, 7, 30 - entry into force 26.02.2010]

 (3) A depositary shall act independently of the management company and in the interests of the fund and the shareholders or unit-holders of the fund.

 (4) A depositary shall also perform the functions provided by this Act or the Funded Pensions Act after termination of the depositary contract if the depositary contract is terminated due to circumstances provided for in § 77 of this Act or in other cases if the assets of the fund are not transferred to another depositary after the termination of the depositary contract. A depositary has the right to receive a fee provided for in the depositary contract for performance of the activities specified in this subsection.

§ 95.  Activities of depositary

 (1) A depositary:
 1) holds the money, securities and other liquid assets of a fund;
 2) organises holding of the other assets of a fund unless the management company and the depositary have agreed otherwise;
 3) performs settlements and transactions with the assets of a fund and keeps account thereof;
 4) ensures that units are issued, redeemed and cancelled, compensated for and exchanged pursuant to the requirements prescribed by law, legislation issued on the basis thereof and the fund rules;
 5) executes the orders of a management company in so far as, according to the depositary, they are not contrary to this Act, other legislation, the fund rules or articles of association of the fund;
 6) performs other functions in accordance with this Act, other legislation and the depositary contract.

 (2) In addition to the provisions of subsection (1) of this section, the depositary of a fund:
 1) ensures that the net asset value of an open-ended or public common fund and its units is calculated pursuant to law, other legislation and the fund rules;
 2) monitors that the distributions from an open-ended or public common fund as set out in §§ 150-152 of this Act are made and that issue of new units from the account of the income of the fund is carried out in accordance with this Act and the fund rules;
 3) ensures that all transactions upon the transfer of fund assets and acquisition of assets for a fund are performed in full and within the term prescribed by legislation or, in the absence of a term, within the term ordinarily necessary for transfers.

 (3) In order to perform the functions of a depositary provided for in subsections (1) and (2) of this section, a depositary shall monitor that the relevant procedures of the management company and the contracts entered into by the management company comply with law and the fund rules or the articles of association of the fund. A depositary shall periodically verify whether the activities of the pension management company comply with law and the fund rules or the procedures established by the management company.

 (4) The depositary of a closed-end venture capital fund and a real estate fund is not required to meet the requirements provided for in clauses (1) 3) to 6) and subsections (2) and (3) of this section.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

§ 951.  Specifications of depositaries of funds managed by alternative fund managers

 (1) Funds managed by an alternative fund manager, including non-public funds (hereinafter in this section fund) shall have a depositary. The provisions of this Chapter apply to the depositary of a fund, unless otherwise prescribed in this section.

 (2) The obligation of a depositary to keep the assets is delimited in the case of securities with such securities, which can be reflected in the securities account opened in the name of the fund or the management company or which can be physically delivered to the depositary. The requirements specified in § 881 of the Securities Market Act apply to safekeeping and administration of securities.

 (3) In the case of other assets, the obligation of a depositary to keep the assets means regular assessment of the right of ownership of such assets and the maintenance of records thereof. The assessment of the right of ownership by the depositary shall be based on the information and documents submitted by the management company and, where available, on other external evidence. Maintaining of a record of the right of ownership of the assets shall comply with the information and documents submitted by the management company and other external evidence.

 (4) In addition to the provisions of § 95 of this Act, the depositary of a fund shall:
 1) check that the payment made upon subscription for the units or shares has been received in the bank account of the fund opened in the name of the fund, the management company or the depositary either with the central bank or a credit institution of the Contracting State or a credit institution of a third country in the case it has the right, under the law of the home state of this credit institution to provide services equivalent to the services specified in clause 44 1) of the Securities Market Act and the efficiency of the supervision exercised over it is equivalent to the supervision over the credit institutions of the European Union;
 2) ensure that distributions to unit-holders or shareholders are made from the income of the fund pursuant to the provisions of the legislation and the fund rules or the articles of association.

 (5) A depositary has the right to transfer only the functions specified in subsections (2) and (3) of this section.

 (6) The depositary of the funds managed by an alternative fund manager shall be entered in the Estonian commercial register as a public limited company or a branch.

 (7) The requirements for safekeeping of assets, separation of assets, avoidance of conflicts of interests, transfer of liability and functions apply to any third persons to whom the depositary has transferred the functions of safekeeping of the assets of the fund.

 (8) The exceptions provided for in subsection 92 (7) and subsection 95 (4) of this Act shall not apply to the funds managed by an alternative fund manager and their depositaries.

 (9) The depositary of a fund of an alternative fund manager which units or shares are not redeemed within five years as of the founding or establishment of the fund and pursuant to the investment policy of which the assets of the fund are in general not invested in securities traded on regulated securities markets, may be, in addition to the provisions of subsection 92 (3) of this Act, any other legal person which carries out depositary functions as part of its professional or business activities in respect of which such person is subject to mandatory professional registration. The level of the organisational and technical administration of activities of such legal person, its financial situation, the competence and experience of the employees shall be sufficient to ensure the performance of functions specified in the legislation and in the depositary contract.

 (10) More specific requirements for the activities of the depositary of a fund managed by an alternative fund manager, transfer of its functions and liability are provided by a regulation of the minister responsible for the area.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 96.  Activities of depositary of pension fund

 (1) In addition to the provisions of § 95 of this Act, the depositary of a pension fund:
 1) organises the redemption of units of a pension fund in order to enter into an insurance contract for a funded pension;
 2) organises the exchange of units of voluntary pension funds;
 3) organises the exchange of units of mandatory pension funds together with the registrar of the Estonian Central Register of Securities;
 4) organises entry into an insurance contract for a mandatory funded pension together with the registrar of the Estonian Central Register of Securities and an insurer;
 5) performs other functions provided for by legislation or contracts.

 (2) A depositary shall inform the registrar of the Estonian Central Register of Securities of the issue price and redemption price and the size of the issue fee and redemption fee of a unit of a mandatory pension fund by the beginning of each working day.

§ 97.  Rights and obligations of depositary

 (1) A depositary has the right and duty to submit in its own name the claims of unit-holders or a fund founded as a public limited company against a management company if submission of such claim is expedient. A depositary is not required to submit such claims if the unit-holders or the fund founded as a public limited company have already submitted the claims.

 (2) A depositary has the right and duty to submit in its own name the claims of unit-holders or a fund founded as a public limited company against third parties or to present an objection or an application for the release of assets from seizure in its own name if compulsory execution is performed against the assets or assets are seized in order to cover a claim for which the assets of the fund are not subject to liability.

 (3) A depositary may demand a reasonable fee from a management company for the activities specified in subsections (1) and (2) of this section and reimbursement of expenses related to such activities.

§ 98.  Transfer of duties of depositary

 (1) A depositary has the right to enter into agreements with third parties for the safekeeping of fund assets, the performance of transactions therewith and the transfer of other duties of a depositary, pursuant to the procedure prescribed in the depositary contract. Upon transfer of duties, the depositary shall be held liable pursuant to the provisions of § 103 of this Act.

 (2) A depositary shall choose a third party which holds the assets or securities of a fund with due diligence in order to ensure the reliability of the third party. Before the transfer of duties and thereafter, a depositary is required to verify whether the level of the organisational and technical administration of a third party and its financial situation are adequate to ensure the performance of obligations prescribed in the contract.

§ 99.  Transactions with fund assets

 (1) A management company may conclude transactions with the assets of a fund only through a depositary or with the prior written consent of a depositary. A management company may enter into transactions with immovable property purchased or to be purchased for the account of the fund but in the name of the management company only with the consent of the depositary and the management company is required to ensure that the respective restriction on disposal is entered as a notation in the land register. The notation shall also set out the name of the fund in the case of which the restriction on disposal is valid in respect of the immovable purchased or to be purchased for the account of the fund.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) Money from the issue of units and the transfer of the assets of the fund, and dividends, interest and other funds are deposited in the bank account or accounts of the fund opened by the depositary (hereinafter bank account of a fund).

 (3) A depositary may make payments from the bank account of a fund only on the order of the management company or the fund in the case of a fund founded as a public limited company pursuant to law, the depositary contract, management contract, the fund rules or the articles of association of the fund.

§ 100.  Separation of assets

 (1) A depositary shall keep the assets of funds, including claims arising from money held in the bank account in a depositary or credit institution, separate from its own assets and shall keep separate accounting of the assets of funds.

 (2) A depositary may keep the assets of funds in its own name if the management company consents thereto and separate accounting of the assets of funds is ensured.

 (3) The assets of a fund do not form a part of the bankruptcy estate of the depositary, and the claims of creditors of the depositary shall not be satisfied for the account of such assets.

§ 101.  Depositary’s charges and expenses

  A depositary has the right to receive a fee for the provision of services specified in §§ 95 and 96 of this Act and compensation for the expenses incurred upon provision of the services pursuant to the fund rules, the depositary contract or the orders of the management company. The above-mentioned order is not required if the fund is managed by the depositary.

§ 102.  Notification requirement

  If the activities of a management company are, to a depositary’s knowledge and to a significant extent, contrary to legislation, the fund rules, the articles of association of the fund, or the depositary contract or management contract, the depositary is required to promptly give notification to the Financial Supervision Authority, the supervisory board of the management company and the management board of the fund founded as a public limited company.

§ 103.  Liability of depositary

 (1) A depositary shall be liable for the direct proprietary damage caused to a fund and unit-holders and shareholders as a result of violation of duties of the depositary.

 (2) Unless more stringent requirements are agreed in a depositary contract, the depositary shall be liable for violation of the requirements provided for in subsection 98 (2) of this Act and failure to exercise supervision over third parties.

§ 104.  Change of depositary

 (1) The Financial Supervision Authority may issue a precept obliging a management company or a fund founded as a public limited company to change a depositary in order to protect the legitimate interests of the shareholders or unit-holders of the fund, if the depositary fails to perform the obligation provided for in this Act, other legislation, the depositary contract or other contracts or if at least one of the bases specified in subsection 92 (8) of this Act exists.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (2) A precept of the Financial Supervision Authority may designate a term within which a management company or a fund founded as a public limited company has to enter into a new depositary contract and transfer the assets of the fund to a new depositary.

 (3) A depositary shall perform the obligations provided by law and the depositary contract until a new depositary contract is entered into and shall transfer the assets of the fund to a new depositary not later than by the due date designated by the Financial Supervision Authority. A depositary has the right to receive a fee provided for in the depositary contract for performance of the activities provided for in this subsection.

Chapter 4 COMMON FUND  

Division 1 Common Fund, Assets and Units of Fund  

§ 105.  Common fund

 (1) A common fund (hereinafter in this Chapter fund) is the money collected through the issue of units and other assets acquired through the investment of such money, which is owned jointly by the unit-holders (hereinafter community of unit-holders).

 (11) The assets of a common fund include securities, other things and rights, including immovable property which has been purchased for the account of the fund but in the name of the management company.

 (2) The bases for the activities of a fund and relationships of unit-holders with the management company are specified by this Act and the fund rules.

 (3) Each fund shall have only one management company at the same time.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 106.  Unit and unit-holder’s share in assets of common fund

 (1) A unit represents the unit-holder’s share in the assets of a fund.

 (2) A unit-holder’s share in the assets of a fund is determined by the ratio of the number of units held by the unit-holder and the total number of units held by all unit-holders. Upon a change in such ratio, the unit-holder’s share changes accordingly.

 (3) If a fund has several classes of units, a unit-holder’s share in the assets of a common fund is determined by the ratio of the number of units held by the unit-holder and the total number of all units of the same class and the total of the net asset values of all units of the same class, respectively, to the net asset value of the fund.

 (4) If a unit-holder owns units of several classes, the unit-holder's share in the assets of a common fund is determined as the total of the units corresponding to the units of several classes specified in subsection (3) of this section.

 (5) Assets received as a result of the issue of units and investment of the assets of a fund are owned by the unit-holders as the assets of the common fund according to the size of the shares of the unit-holders provided for in subsections (2) to (4) of this section.

 (6) The provisions of §§ 72-79 of the Law of Property Act do not apply to relationships between unit-holders. No unit-holder is entitled to demand termination of the community of unit-holders. Further, such right cannot be exercised by the pledgee or creditor of a unit-holder in the execution proceedings or by the trustee in bankruptcy in the bankruptcy proceedings of a unit-holder.

§ 107.  Liability of unit-holder

 (1) A unit-holder is not personally liable for the obligations of a fund assumed by the management company for the account of the fund, or for obligations the performance of which the management company has the right to demand from the fund pursuant to the fund rules. The liability of the unit-holder for performance of such obligations is limited to the unit-holder's share in the assets of the fund.

 (2) A management company shall not assume obligations in the name of unit-holders.

 (3) In order to satisfy a claim against a unit-holder, a claim for payment may be made against the units of the unit-holder but not against the assets of the fund.

 (4) An agreement which derogates from the provisions of this section is void.

§ 108.  Unit

 (1) A fund may have several classes of units and the rights arising from the units may differ as regards the nominal value of the units, the number of votes attaching to the units or the size of the fees related to the units specified in §§ 139 and 140 and subsections 150 (2) and (3) of this Act or the distributions made from a fund specified in § 152 of this Act.

 (2) Units of the same class grant the unit-holders equal rights on equal bases.

 (3) In the fund rules, a management company has the right to establish specifications for different classes of units, which may arise from the required manner of acquisition of units, the minimum number of units required upon acquisition of units, the invested amount required for acquisition of units or the permissibility of exchange of units or the procedure for exchange.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (4) In fund rules, the units of the fund which belong to different classes shall be named differently.

 (5) Units may be of nominal value or no nominal value. One and the same fund shall not have units of nominal value and no nominal value.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (51) If a fund has units of nominal value, the nominal value of the unit shall be expressed at least to the accuracy of one cent; in the case the nominal value is expressed in foreign currency, at least to the accuracy of two decimal places.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (52) If a fund has units of nominal value, the nominal value of the unit of the fund shall be not less than one euro.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (6) A unit is divisible. The rules for the rounding of parts of units created as a result of the division of units (hereinafter fractional unit) shall be provided for in the fund rules.

§ 109.  Specifications for units of pension fund

 (1) Units of pension funds shall only be acquired or owned by natural persons and pension management companies or persons who have operated as a pension management company under the conditions and pursuant to the procedure provided for in Division 9 of Chapter 2 of this Act.

 (2) Units of a pension fund shall not be transferred or encumbered.

 (3) A pension fund shall only have units of one class.

 (4) The fractional unit of a pension fund shall be indicated to the accuracy of three decimal places.
[RT I 2006, 56, 417 - entry into force 01.01.2008]

 (5) A pension fund unit shall be of nominal value which is 0.64 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (6) Units of a pension fund shall not belong to several persons at the same time. Units of a mandatory pension fund shall not be included in the joint property of spouses.

 (7) In the event of the bankruptcy of the estate of a unit-holder of a mandatory pension fund, the trustee in bankruptcy has the right to submit an application to the registrar for the redemption of the units of the mandatory pension fund.
[RT I, 13.12.2013, 1 - entry into force 01.01.2014]

 (8) In the event of the bankruptcy of a unit-holder of a voluntary pension fund or a claim for payment being made on the assets of such unit-holder pursuant to enforcement procedure, the trustee in bankruptcy or the bailiff, as appropriate, has the right to submit an application for the redemption of the units of a voluntary pension fund or, in the event of the liquidation of a voluntary pension fund, for the making of payments.
[RT I, 13.12.2013, 1 - entry into force 01.01.2014]

 (9) In the cases not specified in subsections (7) and (8) of this section, it is prohibited to make a claim for payment on units of a pension fund.
[RT I, 13.12.2013, 1 - entry into force 01.01.2014]

§ 110.  Rights attached to unit

  A unit-holder has the right to:
 1) demand that the management company redeem the units pursuant to the provisions of the fund rules;
 2) transfer the units held by the unit-holder to third parties;
 3) receive, when payments are made, pursuant to the fund rules, a share of the income of the fund in proportion to the number of units and the class of units held by the unit-holder;
 4) receive, pursuant to the fund rules, a share of the assets remaining upon liquidation of the fund in proportion to the number of units and the class of units held by the unit-holder;
 5) call the general meeting of unit-holders in the cases and pursuant to the procedure prescribed by law or the fund rules;
 6) participate and vote in the general meeting pursuant to the number of votes provided for in subsection 131 (3) of this Act;
 7) obtain information provided for in § 242 of this Act on the activities of the fund;
 8) perform other acts prescribed by law or the fund rules.

Division 2 Establishment of Fund and Fund Rules  

§ 111.  Establishment of fund

 (1) The establishment of a fund is decided and the fund rules are approved by the supervisory board of the management company.

 (2) A decision on the establishment of a fund shall set out the following:
 1) the name of the fund;
 2) the business name and seat of the management company;
 3) the business name and seat of the depositary.

 (21) In order to agree upon the establishment of an occupational pension fund and the fund rules and the financing thereof, a management company and the employer commencing contributions to such fund may enter into a contract.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The seat of a fund shall be the seat of its management company or the seat of its Estonian branch. If a fund founded pursuant to this Act is managed by a foreign management company by means of providing cross-border services, the seat of the fund shall be the seat of the credit institution, investment firm another management company or branch specified in subsection 34 (41) of this Act.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

§ 112.  Fund rules

 (1) Fund rules shall set out:
 1) the name of the fund;
 2) the business name and seat of the management company and the business name of the depositary;
 3) the type of the fund having regard to the provisions of §§ 2-4 of this Act, and a notation whether the fund is a mandatory or voluntary pension fund, including an occupational pension fund, or a fund specified in §§ 252 to 254 or 278 of this Act. In the case of a guaranteed fund, the terms and conditions of the guarantee, the business name and seat of the guarantor and the registry code of the guarantor, if the guarantor has one, shall also be indicated;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 4) the objective of the activities and the fundamental principles of the investment policy of the fund, which shall indicate investments into different classes of securities and other assets, more specific restrictions on risk-spreading and limitations on investment, and restrictions in geographical sectors or sectors of the economy;
 5) classes of units if the fund has different classes of units;
 6) the rights and obligations attached to units;
 7) the procedure for exercising the rights attached to units;
 8) if exchange of units is permitted, the conditions and procedure for the exchange of units, the procedure for the issue and redemption of units carried out upon exchange of units, the procedure for the payment of issue and redemption fees and the respective terms;
 9) the rights and obligations of the management company in management of the assets of the fund;
 10) the liability of the depositary if the assets or securities of the fund are entrusted to a third party;
 101) in the case of the funds specified in subsection 92 (7) of this Act information stating that the existence of a depositary is not required pursuant to law and information on the rights and obligations applicable to safekeeping of the assets of the fund;
[RT I 2010, 7, 30 - entry into force 26.02.2010]
 11) the procedure for the acquisition of holding in a fund by a management company and the procedure for the redemption of units owned by a management company;
 12) the procedure for the registration of units and the registrar;
 13) the list of fees and charges to be paid to the management company and the depositary and the method for the calculation of the fees and charges;
[RT I 2008, 48, 269 - entry into force 14.11.2008]
 14) a complete list and method of calculation of expenses payable for the account of the fund;
 15) limits on the fees, charges and expenses provided for in clauses 13) and 14) of this subsection;
 16) the conditions and procedure for issue and redemption of units;
 17) the method of calculation and limits on the issue and redemption fees of the fund, and the criteria on the basis of which different limits are applied to different unit-holders;
 18) the method and frequency of calculation and publication of the net asset value of the fund and of the issue price and redemption price of fund units;
 19) if, according to the fund rules, the assets of the fund may be invested in things, the procedure for ensuring the storage and preservation of these things;
 20) the principles for calculating the net value of all classes of units;
 21) the duration of a fixed-term fund if the duration is prescribed;
 22) the procedure for the disclose and submission of information concerning the fund, including advertisements and reports;
 221) if the investment policy of the fund consist in replicating a securities index or other financial index or exceeding its rate of return, information about the origin of the reference index or other reference basis used for comparing the rate of return of the fund and its comparison index or reference basis;
[RT I 2009, 12, 71 - entry into force 27.02.2009]
 23) the procedure for application of income of the fund, and for the making of distributions for the account of the income of the fund;
 24) the procedure for calling and conducting the general meeting of unit-holders if the general meeting is prescribed by law or the fund rules;
 25) the list of duties which the management company may transfer to third parties and the extent of liability of the management company upon performance of the transferred duties;
 26) the procedure for amendment of the fund rules and the place of publication of amendments;
 27) the conditions and procedure for the liquidation of the fund;
 28) other rules provided by law.

 (2) Fund rules may prescribe other rules which are not contrary to legislation.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 113.  Specifications for pension fund rules

 (1) In addition to the provisions of § 112 of this Act, the following shall be set out in pension fund rules:
 1) specifications to the procedure for the redemption of units of the pension fund upon entry into an insurance contract for a funded pension;
 2) the procedure for making of payments upon the succession of units.
 3) the conditions and procedure for the cancellation of units of the mandatory pension fund which belong to the management company or person who has operated as a pension management company;
 4) the procedure for the cancellation of units of the mandatory pension fund in the case provided for in subsection 28 (4) of Funded Pensions Act if there are no successors;
 5) the conditions and procedure for the making of periodic payments from the mandatory pension fund provided for in § 42 of the Funded Pensions Act;
[RT I 2008, 48, 269 - entry into force 14.11.2008]
 6) the business name, seat and registry code, if any, of the employer making contributions to the occupational pension fund for its employees, servants, and members of its managing and controlling bodies for the purposes of § 9 of the Income Tax Act (hereinafter members of managing and controlling bodies).
[RT I, 06.07.2012, 1 - entry into force 01.04.2013]

 (11) Servants for the purposes of this Act include officials and the persons specified in subsection 2 (3) of the Public Service Act and public servants of another Contracting State.
[RT I, 06.07.2012, 1 - entry into force 01.04.2013]

 (2) The rules of a mandatory pension fund shall indicate the actual rate of the fees payable to the management company in addition to the provisions of § 112 of this Act and subsection (1) of this section.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (3) The rules of the occupational pension funds specified in clause 13 (1) 6) of this Act shall specify in addition to the provisions of § 112 and clauses (1) 2) and 6) of this Act the agreed amount of the payments to unit-holders, including the amount of the payments in the case the contributions to the pension fund are terminated before the due date prescribed in the pension fund rules.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 114.  Registration of fund rules

 (1) Fund rules enter into force and a fund is deemed to be established after registration of the fund rules with the Financial Supervision Authority.

 (2) In order to register fund rules, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) the resolution to establish the fund;
 2) the fund rules;
 3) a prospectus specified in § 219 of this Act if units are sold by public offer and a simplified prospectus if it exists;
 4) information specified in clause 14 (1) 7) of this Act concerning the auditor of the fund, unless the prospectus contains this information;
[RT I 2006, 56, 417 - entry into force 01.01.2007]
 5) information specified in clause 14 (1) 8) of this Act concerning the fund manager, unless the prospectus contains this information;
[RT I 2006, 56, 417 - entry into force 01.01.2007]
 6) the depositary contract and the consent of the depositary with the fund rules;
 7) in the case of a pension fund, an overview of the previous activities of the depositary as a depositary;
 8) in the case of a mandatory pension fund, the opinion of the registrar of the Estonian Central Register of Securities on the rules of the pension fund;
 9) the contracts specified in subsections 22 (1) and 525 (3) of the Funded Pensions Act;
[RT I 2008, 48, 269 - entry into force 14.11.2008]
 10) in the case of an occupational pension fund, the consent of the employer commencing contributions to such fund to the fund rules.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) statement regarding the accuracy of the information and documents submitted upon application for registration, signed by all members of the management board of the management company, shall be appended to the petition and to any information submitted later in connection with the petition.

§ 115.  Processing of application for registration of fund rules and decision to register

 (1) The provisions of § 16 of this Act apply to the processing of applications for registration, verification of the submitted information and verification whether the fund rules comply with the requirements of this Act or legislation issued on the basis thereof and are in the legitimate interests of the unit-holders.

 (2) The Financial Supervision Authority shall make a decision to register or refuse to register the fund rules within two months after receipt of all the necessary information and documents, but not later than within six months after receipt of the respective petition.

 (3) The Financial Supervision Authority shall promptly inform the management company and the depositary of a decision to register the fund rules.

 (4) The Financial Supervision Authority shall promptly inform also the registrar of the Estonian Central Register of Securities of a decision on registration of the rules of a mandatory pension fund.

§ 116.  Bases for refusal to register fund rules

 (1) The Financial Supervision Authority may refuse to register fund rules if:
[RT I 2004, 90, 616 - entry into force 01.01.2005]
 1) the fund rules do not reflect all the essential rules of the operation of the fund in full, clearly and unambiguously, or contain provisions which are misleading or contradictory;
 2) the investment policy proposed in the pension fund rules does not ensure that risk will be adequately spread or that there will be the necessary reliability of the assets of the pension fund;
 3) the fund and the management thereof or the fund manager do not meet the requirements provided by this Act;
 4) according to the rules of an open-ended or public fund, the assets of the fund may, to a significant extent, be invested in assets the value of which is difficult to assess. The aforementioned does not apply in the case the investment policy of the fund contain in investment of the assets of the fund in illiquid assets or securities not traded on regulated securities markets (hereinafter regulated market);
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 5) a public offer of the units of the fund or the prospectuses specified in subsections 219 (1), (2) or (3) of this Act do not comply with the requirements provided by this Act, legislation issued on the basis thereof or other legislation;
 6) the procedure for the disclosure of information concerning the fund provided for in the fund rules is insufficient;
 7) the fund manager does not meet the requirements provided by legislation regulating the professional activities of the manager or his or her knowledge, skills, experience and other characteristics do not ensure sufficient protection of the interests of unit-holders of a fund of the respective type;
 8) the depositary does not meet the requirements for depositaries provided by legislation or is unable for any other reason to ensure sufficient protection of the interests of unit-holders of a fund of the respective type;
 9) the depositary contract contains provisions which are contradictory, ambiguous, or which prevent the depositary or management company from performing their duties in full, or which for some other reason do not enable promotion of the best interests of the unit-holders of the fund;
 10) the registrar of the units of the fund does not comply with the requirements provided for in Acts or legislation issued on the basis thereof;
 11) the fund rules are contrary to the legitimate interests of the unit-holders or refusal to register is necessary in the legitimate interests of the unit-holders for other reasons.
 12) significant amendments of the fund rules do not comply with the provisions of subsections 117 (21) to (23) of this Act;
[RT I 2006, 56, 417 - entry into force 01.01.2007]
 13) pursuant to the fund rules its portfolio composition or the conditions for redemption of units may cause a situation where ensuring sufficient liquidity of the fund and organisation of redemption of units may be hindered to a significant extent.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) In addition to the provisions set out in subsection (1) of this section, the registration of fund rules may be refused if:
 1) based on the provisions of § 76 of this Act, the investment policy prescribed in the rules of a mandatory pension fund does not differ significantly from the investment policy of the mandatory pension funds which are already managed by the management company which submitted the petition or for the registration of whose rules the management company has applied for at the same time;
 2) the contract specified in subsections 22 (1) and 525(3) of the Funded Pensions Act contains provisions which contradict each other or legislation or which fail to designate, unambiguously and with sufficient accuracy, the rights and obligations of the registrar, the depositary of the pension fund and the pension management company upon organisation of the issue and redemption of units of the mandatory pension fund.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

§ 117.  Amendment of fund rules

 (1) The amendment of the fund rules shall be resolved by:
 1) the supervisory board of the management company;
 2) the general meeting of unit-holders in the case of the funds specified in subsection 126 (2) of this Act or if the right to amend the fund rules has been granted to the general meeting by the fund rules.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (11) The management company shall promptly inform the depositary of a resolution on amendment.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (12) The management company shall have the resolution on amendment of the occupational pension fund rules approved by the employer making contributions to such fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) Amendments to fund rules shall be registered with the Financial Supervision Authority. When bringing the fund rules into conformity, the amendments to the fund rules shall not be registered with the Financial Supervision Authority if the following criteria are met:
 1) only such provisions of the fund rules are amended which the management company is required to amend due to amendments made to the legislation;
 2) the amended fund rules shall be immediately submitted to the Financial Supervision Authority.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (21) The management company is required to assess the significance of the amendments to the fund rules taking account of the legitimate interests of unit-holders. If the investment policy of the fund or the rights relating to units are significantly changed, taking into particular account the provision of clauses 112 (1) 3), 4), 6), 8), 13) to 17), 21) and 23), at least one of the following criteria shall be complied with:
 1) the management company shall redeem the unit without the redemption fee at the request of a unit-holder within a reasonable time prior to entry into force of amendments to the fund rules;
 2) the management company shall ensure the right of a unit-holder to transfer the unit of the fund within a reasonable time prior to entry into force of amendments to the rules at the price which shall not be less than the net asset value of the unit;
 3) if the fund rules prescribe the general meeting of unit-holders, at least 3/4 of the votes represented at the general meeting must be in favour of amending the fund rules.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (22) The management company shall give advance notice to unit-holders of the possibilities provided for in clauses (21) 1) and 2) of this section in accordance with the provisions of subsection 119 (2) of this Act.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (23) Clause (21) (1) of this section applies to pension funds, taking into account the differences provided for in the Funded Pensions Act with regard to exchange and redemption of units.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (24) [Repealed - RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (25) The provisions of the second sentence of subsection 21) of this section do not apply if:
 1) the management company reduces the fees, charges and expenses specified in clauses 112 (1) 13) and 14) of this Act upon amendment of the fund rules or makes other amendments of favourable nature for unit-holders; or
 2) the management company amends the fund rules only due to amendments made to the legislation.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (3) In order to register amendments to fund rules, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) the resolution to amend the fund rules;
 2) the amended text of the fund rules;
 3) the public offer prospectus of units if the units are offered publicly and if amendment of the fund rules results in amendments to the prospectus;
 4) amendments to the depositary contract and the amended text thereof if amendment of the fund rules results in amendments to the depositary contract;
 5) the consent of the depositary to amendment of the fund rules;
 51) the consent of the employer making contributions to the occupational pension fund to amendment of the fund rules;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 6) a justification of the amendments and an analysis of the effects on the development of the fund and on the interests of the shareholders of the fund.

 (4) Upon amendment of the rules of a mandatory pension fund, the opinion of the registrar of the Estonian Central Register of Securities on amendment of the rules of the pension fund and amendments to and the amended text of the contracts specified in subsection 22 (1) and 525 (3) of the Funded Pensions Act, if amendment of the pension fund rules results in amendments to the contracts, shall be submitted to the Financial Supervision Authority in addition to that set out in subsection (3) of this section.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

§ 118.  Review of application for registration of amendments to fund rules

  The provisions of §§ 115 and 116 of this Act apply to the review of applications for the registration of amendments to fund rules and the adoption of a resolution and refusal to adopt a resolution to register the amendments.

§ 119.  Disclosure and entry into force of amendments to fund rules

 (1) A management company shall inform unit-holders of amendment of the fund rules pursuant to the procedure provided for in this section after registration of the amendments to the fund rules.

 (2) Upon amendment of the rules of a public fund, the management company shall publish a notice concerning amendment of the fund rules in at least one daily national newspaper and on the website of the management company promptly after the registration of the amendments or submission of the amended fund rules to the Financial Supervision Authority. The notice shall set out the following:
 1) information on registration of the amendments with the Financial Supervision Authority or notification of the Financial Supervision Authority of such amendments;
 2) information concerning availability of the amended text of the fund rules, including a reference to the website of the management company.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (21) No notice concerning amendment of the fund rules shall be published in a daily national newspaper if the management company amends the fund rules only due to amendments made to the legislation.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (3) Upon amendment of the rules of a fund not specified in subsection (2) of this section, the management company shall disclose the amended text of the fund rules on the website of the management company promptly after the registration of the amendments and shall inform the Financial Supervision Authority of the date of disclosure of the amendments.

 (4) Amendments to the rules of a fund specified in subsection (2) of this section enter into force one month after publication of a respective notice in a daily national newspaper unless the notice prescribes a later date for entry into force.

 (5) Amendments to the rules of a fund specified in subsection (3) of this section enter into force one month after the date when the Financial Supervision Authority receives the respective notice of the management company unless the notice prescribes a later date for entry into force.

 (51) If the management company amends the fund rules only due to amendments made to the legislation, the amendments of the fund rules enter into force on the date prescribed in the notice disclosed on the website of the management company.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (6) Amendments to the rules of mandatory pension funds enter into force on 1 January, 1 May or 1 September but not earlier than 100 calendar days after the publication of a respective notice.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (7) Amendments to the rules of mandatory pension funds which the management company is required to make due to amendments made to the legislation or which reduce the rates of the fees payable to the management company and prescribed by the pension fund rules shall enter into force one month after the publication of a respective notice, unless the notice prescribes a later date for entry into force.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (8) Upon amendment of the rules of an occupational pension fund, the management company discloses the amended text of the fund rules to the unit-holders promptly after the registration of the amendments and inform the Financial Supervision Authority the date of disclosure of the amendments to unit-holders.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (9) Amendments to the rules of an occupational pension fund enter into force one month after the day when the Financial Supervision Authority receives the relevant notice from the management company unless the notice prescribes a later date for entry into force.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

Division 3 Registration of units 

§ 120.  Registration of units

 (1) Units shall be registered in the register of units (hereinafter in this Division register).

 (2) The register of units shall be maintained by a management company or, if the duties of the management company are transferred, by the registrar of the register of units (hereinafter registrar). The registrar may be:
 1) a management company founded in Estonia or in a foreign state;
 2) the depositary of the fund or another depositary founded in Estonia or in a foreign state;
 3) the registrar of the Estonian Central Register of Securities;
 4) another person founded in Estonia or in a foreign state which meets the requirements provided for in § 125 of this Act and which, according to the legislation of the home state, are not prohibited from provision of the service of maintenance of a register of securities.

 (21) All units of a fund which are of the same class must be registered with the same registrar. If a fund has several classes of units, there may be different registrars for each class of units.

 (3) Units of investment funds registered in Estonia which are traded on a regulated market and units of pension funds shall be registered with the Estonian Central Register of Securities.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (4) If units are registered with the Estonian Central Register of Securities, the provisions of the Estonian Central Register of Securities Act apply to the registration of the units.

 (5) The liability of a registrar arising from provision of the service of maintenance of the register of units shall be insured or guaranteed to the extent established by a regulation of the minister responsible for the area, unless the registrar is a credit institution or an insurer. The requirements for insuring or guaranteeing the liability of the registrar shall be established by a regulation of the minister responsible for the area.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 121.  Information subject to entry in register of units

  The following information shall be entered in the register of units:
 1) the business name, address of the seat and registry code of the management company;
 2) the name of the fund;
 3) the name, address and personal identification code or, in the absence of the latter, the date of birth of the unit-holder, or the registry code of the unit-holder if the unit-holder has a registry code;
 4) if the unit-holder is a fund, the name of the fund and the name and address of the seat of the management company or depositary of the fund and the registry code of the management company or depositary of the fund if the management company or depositary of the fund has a registry code;
 5) the number, class and nominal value of the units owned by the unit-holder;
 6) the date of acquisition and issue price of units and the date of redemption and redemption price of units if the units have been redeemed;
 7) other rights attached to units and the time of creation, changing and extinction of the rights;
 8) other information which the management company or registrar deems necessary.

§ 122.  Procedure for entry of information in register

 (1) Information shall be entered, processed or amended in the register pursuant to the requirements provided for in the Personal Data Protection Act and the procedure provided for in the fund rules.

 (2) A unit-holder has the right to request that the unit-holder be entered in the register as unit-holder or amendment of the information in the register.

 (3) A unit-holder has the right to request that the registrar issue a certificate or an extract from the register concerning the units owned by the unit-holder.

 (4) An entry in the register shall be made within one working day after receipt of a respective order.

§ 123.  Processing and storage of information entered in register

 (1) Information entered in the register shall be processed pursuant to the data processing rules established by the management company or agreed between the management company and the registrar which shall ensure sufficient protection of the information entered in the register against unauthorised processing, including unauthorised use, destruction or alteration.

 (2) The registrar is required to ensure preservation of the information entered in the register in a permanently unaltered state and enable reproduction thereof at the request of entitled persons and agencies.

 (3) Information and documents submitted to the registrar for an entry to be made shall be preserved by the registrar for at least ten years as of the respective entry. Information and documents specified in this subsection shall be preserved as documents or in a format which can be reproduced in writing.

 (4) A registrar may refuse to execute an order concerning a register entry if:
 1) the order or the information contained therein does not meet the requirements established by an Act or legislation established on the basis thereof;
 2) the order has been given by a person not authorised to give orders.

 (5) The procedure for the maintenance of a register, making register entries and processing and storage of information entered in the register may be established by a regulation of the minister responsible for the area.

§ 124.  Access to register

 (1) The unit-holders of funds, management companies and depositaries, the Financial Supervision Authority and the following persons and agencies, if they have a legitimate interest, have the right to examine information entered in the register of units:
 1) courts during proceedings of matters;
 2) bailiffs in enforcement proceedings;
 3) agencies conducting preliminary investigation in criminal matters;
 4) the Tax and Customs Board in connection with proceedings concerning tax matters and compliance with the provisions of the Tax Information Exchange Act;
[RT I, 23.12.2014, 15 - entry into force 01.01.2015]
 5) notaries in connection with the performance of notarial acts;
 6) trustees in bankruptcy in order to perform duties provided by law;
 7) the person which exercises control over declarations of economic interests on the basis of the Anti-Corruption Act in order to verify the data presented in the declaration.
[RT I, 29.06.2012, 1 - entry into force 01.04.2013]

 (2) A unit-holder has the right to examine only the information which is entered in the register concerning the unit-holder.

§ 125.  Requirements for registrars

 (1) The level of the organisational and technical administration of activities of a registrar, its financial situation, the competence and experience of the respective employees and its other resources shall be adequate to ensure the performance of functions specified by law and an agreement on maintenance of the register.

 (2) In order to manage management and operating risks, a registrar shall apply sufficient internal control measures.

 (3) A registrar shall compensate for damage caused by violation of the obligations thereof in the maintenance of the register.

Division 4 General meeting of unit-holders 

§ 126.  General meeting of unit-holders

 (1) Fund rules may prescribe the right of unit-holders to adopt resolutions relating to the activities of the fund in the general meeting of unit-holders (hereinafter in this Division general meeting).

 (2) A general meeting shall be prescribed in the rules of a closed-ended fund the units of which are redeemed not earlier than one year after submission of a respective claim by a unit-holder. The provisions concerning the general meeting in this Act shall apply to the fund specified in the first sentence of this subsection and the rules of such fund shall provide that the general meeting of unit-holders adopts all resolutions specified in subsection 127 (1) of this Act.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (3) The rules of a mandatory pension fund shall not prescribe a general meeting and unit-holders do not have the right to adopt resolutions relating to the activities of the fund.

 (4) If a general meeting is prescribed for a fund not specified in subsection (2) of this section, the provisions of this Act concerning the general meeting of the fund shall not apply to it, unless otherwise prescribed in fund rules.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (5) A general meeting shall be held at the seat of the management company unless otherwise prescribed in the fund rules.

 (6) The costs of holding a general meeting shall be covered by the management company unless otherwise provided for in the fund rules.

§ 127.  Competence of general meeting

 (1) A general meeting is competent to:
 1) amend the duration of a closed-ended fund;
 2) liquidate a closed-ended fund;
 3) amend the procedure for the redemption of units of a closed-ended fund;
 4) increase the management fees and depositary’s charges of the fund and other fees and charges payable for the account of the fund;
 5) amend the procedure for the making of distributions to unit-holders for the account of the income of the fund;
 6) decide on the merger and transformation of the fund unless otherwise provided by this Act;
 7) decide to amend the investment policy specified in clause 112 (1) 4) of this Act;
 8) amend the fund rules;
 9) decide on other issues placed within the competence of the general meeting by the fund rules.

 (2) The general meeting of unit-holders may adopt resolutions specified in subsection (1) of this section on the initiative of the general meeting or the management company.

 (3) A management company cannot adopt resolutions specified in subsection (1) of this section without a resolution of the general meeting which expresses consent, except resolutions specified in clause (1) 2) of this section.

 (4) A management company shall submit amendments to the fund rules made by a resolution of the general meeting for registration with the Financial Supervision Authority within two months as of adoption the resolution.

 (5) The provisions of §§ 117 and 118 of this Act apply to the registration of amendments to fund rules.

§ 128.  Calling general meeting

 (1) A general meeting of unit-holders shall be called by the management company.

 (2) The Financial Supervision Authority or unit-holders whose units represent at least 1/10 of the votes may also demand that a general meeting be called and issues be included in the agenda of the general meeting. If the management company does not call a general meeting within one month after receipt of a demand from the Financial Supervision Authority or unit-holders, the Financial Supervision Authority or unit-holders have the right to call the general meeting themselves.

§ 129.  Notice calling general meeting

 (1) Notice of a general meeting shall be given at least three weeks in advance unless the fund rules prescribe a longer term.

 (2) A notice calling a general meeting shall be disclosed on the website of the management company.

 (3) At the same time with disclosure of a notice on the website of the management company, the notice calling the general meeting of a public fund shall be disclosed in at least one daily national newspaper or the respective notice shall be sent to the postal addresses of unit-holders indicated in the register of units.

 (4) A management company shall inform also the Financial Supervision Authority of calling a general meeting of unit-holders and shall forward the notice calling the general meeting to the Financial Supervision Authority.

 (5) If a general meeting is not called by a management company, a notice calling the general meeting shall be disclosed on the website of the Financial Supervision Authority or pursuant to the procedure provided for in subsection (3) of this section.

 (6) A notice calling a general meeting shall set out at least the following:
 1) the name of the fund;
 2) the business name and seat of the management company;
 3) the time and place of the general meeting;
 4) the agenda of the general meeting.

§ 130.  Violation of procedure for calling general meetings

  If the requirements of law or the fund rules are violated in calling a general meeting, the general meeting does not have the right to adopt resolutions unless all unit-holders participate in or are represented at the general meeting.

§ 131.  Procedure of general meeting

 (1) A unit-holder in person or a representative of a unit-holder who has been granted an authorisation document in writing may participate in a general meeting, unless otherwise provided by law. The participation of a representative shall not deprive the unit-holder of the right to participate in the general meeting.

 (2) A list of unit-holders participating in the general meeting which shall set out the names of the unit-holders, the number of votes attaching to their units and the names of the representatives of unit-holders shall be prepared at a general meeting. The list shall be signed by the chair of the meeting and the recording secretary, and by each unit-holder or his or her representative participating in the general meeting. The authorisation documents of representatives shall be appended to the minutes of the general meeting.

 (3) In order to adopt resolutions at a general meeting, the proportion of votes belonging to a unit-holder shall be determined pursuant to the ratio of the number of votes arising from units belonging to the unit-holder and the number of votes arising from all units which have been issued and not redeemed as at ten days before the general meeting is held unless otherwise prescribed in the fund rules.

 (4) A general meeting may adopt resolutions if over one-half of the votes represented by units are present unless the fund rules prescribe a greater representation requirement. If less than one-half of the votes represented by units are present at the general meeting, a new meeting with the same agenda may be called within three weeks but not earlier than seven days after the last general meeting. The new general meeting is competent to adopt resolutions regardless of the votes represented at the meeting.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (5) An issue which is initially not on the agenda of a general meeting may be included on the agenda with the consent of at least 9/10 of the unit-holders who participate in the general meeting if their units represent at least 2/3 of the votes.

§ 132.  Resolution of general meeting

 (1) A resolution of a general meeting shall be adopted if over one-half of the votes represented at the general meeting are in favour unless the law or the fund rules prescribe a greater majority requirement.

 (2) The list of unit-holders provided for in subsection 131 (2) of this Act shall serve as the basis for the calculation of votes.

§ 133.  Invalidation of resolution of general meeting

  On the petition of a unit-holder or a management company, a court may revoke a resolution of a general meeting which is in conflict with law or the fund rules if the petition is filed within three months after becoming aware of the resolution.

§ 134.  Minutes of general meeting

 (1) Minutes shall be taken of a general meeting. The minutes shall set out:
 1) the name of the fund;
 2) the business name and seat of the management company;
 3) the time and place of the meeting;
 4) the names of the chair and recording secretary of the meeting;
 5) the agenda of the meeting;
 6) the resolutions adopted at the meeting together with the voting results;
 7) on the petition of a unit-holder who maintains a dissenting opinion with regard to a resolution of the meeting, the unit-holder’s dissenting opinion;
 8) other material circumstances at the general meeting.

 (2) Written proposals and petitions submitted to the general meeting and the list of unit-holders who participate in the meeting shall be appended to the minutes. The minutes shall be signed by the chair and the recording secretary of the meeting. A dissenting opinion shall be signed by the person who presents it.

 (3) A copy of the minutes of a general meeting shall be forwarded to the Financial Supervision Authority.

 (4) The minutes shall be made accessible to the unit-holders seven days after the end of the general meeting and unit-holders have the right to obtain a copy of the minutes or a copy of a part thereof.

 (5) At the request of the management company or the unit-holders whose units represent at least 1/10 of the votes, the minutes of the general meeting shall be notarized.

Division 5 Issue and Redemption of Units 

§ 135.  Issue of units

 (1) A unit may be issued only for the net asset value of a unit specified in § 143 of this Act, which corresponds to the number of units to be issued upon payment of money into the assets of a fund. Upon issue of a fractional unit, the money which corresponds to that part of the net asset value of the unit shall be paid into the assets of a fund.

 (2) Units of an open-ended fund and a pension fund are issued on a continuous basis and the volume of the issue of units and the number of units to be issued shall not be fixed.

 (3) If so prescribed in fund rules, the units of an index fund provided for in § 254 of this Act (hereinafter index fund) may be issued for the securities underlying the units of the index fund.

 (4) The provisions of subsection (1) of this section do not apply to the distribution of income by the issue of new units and to the issue of units of an acquiring fund upon merger of funds.

§ 136.  Issue price of unit

 (1) Units shall be issued by a management company for the issue price.

 (2) The issue price of a unit is the net asset value of the unit of the respective class to which the issue fee may be added pursuant to the procedure prescribed by the fund rules.

§ 137.  Redemption of units

 (1) Upon the redemption of units, a management company shall make a payment for the units to be redeemed from the assets of the fund in money in an amount which corresponds to the number of units to be redeemed and their redemption price.

 (2) If so prescribed in fund rules, the units of an index fund may be redeemed for the securities which belong to the index observed upon investment of the assets of the index fund.

 (3) A management company may refuse to redeem a unit of an open-ended fund if units of the fund are traded on a regulated market and it is ensured that the value of the unit on the market does not differ significantly from the redemption price of the unit.

 (4) Units shall be deleted from the register and the rights and obligations attached thereto terminate from the date of payment therefor.

 (5) Unless otherwise prescribed in fund rules, payments shall be made in the order that requests are submitted. The specifications for the order provided for in fund rules may arise from the number of units to be redeemed and the size of the payment made upon redemption. Upon the redemption of units, payment is made from the assets of the fund within the term and pursuant to the procedure prescribed by the fund rules.

§ 138.  Redemption price of units

 (1) Units may be redeemed only for the redemption price which is the net asset value of the unit of the corresponding class from which the redemption fee may be deducted pursuant to the procedure prescribed by the fund rules.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) If the technical reserves and financial liabilities of the occupational pension fund specified in clause 13 (1) 6) of this Act exceed the assets corresponding to these, the redemption price of the units of such pension fund may be lower with the authorisation of the Financial Supervision Authority and in agreement with the unit-holders than the redemption price of the units determined according to the provisions specified in subsection (1) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 139.  Issue fee and redemption fee

 (1) Fees for the issue and redemption of units shall be paid from the account of the person acquiring or redeeming units.

 (2) Fees for the issue and redemption of units are determined as a percentage or set amount of the net asset value of a unit of the fund.

 (3) Fees for the issue and redemption of units shall not be higher than these provided with regard to units of the respective class in the fund rules.

 (4) At the request of persons acquiring or redeeming units, the persons shall be informed in a format which can be reproduced in writing of the amount of the issue fee or redemption fee charged to their account.

 (5) A management company shall inform the public of the amount and procedure for calculation of the issue fee or redemption fee of units or of amendment of the bases for the establishment of different fees with regard to clients on the website of the management company at least one month in advance.

§ 140.  Specifications for issue fees and redemption fees of pension fund units

 (1) Upon calculation of the issue price and redemption price of units, the same issue fee or redemption fee rate shall be charged for units issued or redeemed on one and the same day, unless otherwise provided by this Act, the Funded Pensions Act and in the respective pension fund rules. The issue fee rate shall not exceed the limit prescribed in the pension fund rules.

 (2) The rate of the redemption fee for a unit of a pension fund shall not exceed 1 per cent of the net asset value of the unit.

 (3) It is not permitted to charge redemption fees to unit-holders of mandatory pension funds who are in the pensionable age provided by the State Pension Insurance Act or who will reach such age in five years or less.
[RT I 2008, 48, 269 - entry into force 01.01.2009]

 (4) The management company of a mandatory pension fund is prohibited to charge a unit issue fee to the acquirer of a unit.
[RT I 2008, 48, 269 - entry into force 01.01.2011]

§ 141.  Disclosure of prices and net asset value of units

 (1) A management company shall disclose the issue and redemption price and the net asset value of the units of a fund managed thereby pursuant to the provisions of the fund rules each day when the issue or redemption of units is prescribed.

 (2) The issue and redemption price and the net asset value of the units of an open-ended fund and a pension fund shall be disclosed at least once a month.

 (3) The issue and redemption price and the net asset value of the units of a closed-ended fund shall be disclosed at least once a year.

§ 142.  Net asset value of fund

 (1) The net asset value of a fund shall be established on the basis of the market value of the securities and other things or rights belonging to the assets of the fund from which claims against the fund are deducted.

 (2) The procedure for establishment of the net asset value of funds shall be established by a regulation of the minister responsible for the area.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 143.  Net asset value of unit

 (1) The net asset value of a unit shall be calculated by dividing the net asset value of the fund by the number of all units issued and not redeemed by the time of the calculation.

 (2) If a fund has several classes of units, the net asset value of units of different classes may differ pursuant to the bases provided for in the fund rules.

 (3) Until the net asset value of a fund is determined pursuant to § 142 of this Act, the net asset value of the unit is its nominal value.

§ 144.  Determination of net asset value of units

 (1) The net asset value of a unit is determined to the accuracy of at least four decimal places. The net asset value of a unit of a mandatory pension fund is determined at the accuracy of five decimal places.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (2) A management company shall establish the net asset value of units each day that it issues or redeems units, but at least once a week in the case of an open-ended fund and a pension fund and once a month in the case of a closed-ended fund.

 (3) Units are issued and redeemed on the basis of the net asset value of a unit which is established according to the fund rules either:
 1) on the basis of the last net asset value determined by the time of receipt of the respective petition or
 2) on the basis of the net asset value determined first after receipt of the respective petition.

 (4) In addition to the provisions of subsection (3) of this section, the units of a close-ended fund may be redeemed based on their net asset value which is determined as at the date of their redemption.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

§ 1441.  Recording of transactions conducted for the account of UCITS

 (1) The management company of a UCITS shall implement relevant electronic data processing systems (hereinafter data processing system) which allow timely and proper recording of all the information of the transactions concluded for the account of the UCITS and the applications for issue and redemption of the units of the UCITS. In the case specified in this subsection, the data processing system shall record the information specified in the legislation passed on the basis specified in subsection 70 (5) of this Act.

 (2) The data specified in subsection (1) of this section shall be stored for a period of five years.

 (3) The data processing system shall be secure and ensure the integrity and confidentiality of the recorded information.

 (4) A management company shall record and store the information in such a manner that these are accessible to the Financial Supervision Authority and satisfy the following conditions:
 1) the information has been recorded in a format which allows to reconstitute each key stage of the processing of each transaction;
 2) it must be possible for any corrections or other amendments to be easily ascertained and the contents of the information to be reconstituted prior to such corrections or amendments;
 3) it must not be possible for the information to be manipulated or altered.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1442.  Report on issue and redemption of UCITS units

 (1) The management company of a UCITS shall submit, immediately or at the latest on the first working day after satisfying an application for issue or redemption of UCITS units, the information confirming the execution of the application (hereinafter execution notice) to the unit-holder by means of a durable medium or shall make such information available in another similar manner.

 (2) If the management company of a UCITS gets an attestation of execution of an application for issue or redemption of units from a third person, the execution notice shall be submitted at the latest on the first working day after receiving the attestation from the third person.

 (3) The management company of a UCITS shall have no obligation to submit an execution notice if this contains the same information as the attestation that the third person shall immediately submit to the unit-holder.

 (4) Where applications of a unit-holder are executed periodically, the management company of a UCITS may submit an execution notice at least once every six months in the form of a summary notice.

 (5) If requested by a unit-holder, the management company of a UCITS shall submit information concerning the status of the issue or redemption application.

 (6) The execution notice shall provide the information specified in the legislation passed on the basis specified in subsection 70 (5) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 145.  Suspension of Issue or Redemption of Units

 (1) A management company may suspend the issue of fund units, if the issue of units would materially harm the interests of the unit-holders of the fund.

 (2) A management company may suspend the redemption of fund units, if at least one of the following conditions is complied with:
 1) if the money in the accounts of the fund is insufficient for payment of the redemption price of the units;
 2) if the securities or other assets of the fund cannot be promptly sold;
 3) if the calculation of the net asset value of the fund is hindered;
 4) if the regular management of the fund may be harmed by the payment of the money or if the interests of other unit-holders would be materially harmed thereby.

 (3) A management company shall promptly inform the Financial Supervision Authority and the depositary of suspension of the issue or redemption of units and the reasons therefor. Thereafter the Financial Supervision Authority shall inform the financial supervision authorities of all the Contracting States where the units of the fund are offered.

 (4) The Financial Supervision Authority may issue a precept obliging a management company to suspend the issue of units of a public fund if there is doubt that the requirements of legislation concerning the issue or public offer of units are violated or there is a danger of such violation or suspension of the issue of units is necessary to protect the interests of the unit-holders for any other reason.

 (5) The Financial Supervision Authority may issue a precept obliging a management company to suspend the redemption of units if there is doubt that the requirements of legislation concerning the redemption of units are violated or there is a danger of such violation or suspension of the redemption of units is necessary to protect the interests of the unit-holders for any other reason.

 (6) Upon suspension of an issue or redemption of the units, the Financial Supervision Authority issues a precept obliging a management company to eliminate the circumstances which are the basis for suspension of the issue or redemption of units.

 (7) A management company shall promptly publish a notice concerning suspension of the issue or redemption of units on the website of the management company and, in the case of an open-ended fund or a pension fund, also in at least one daily national newspaper.

 (8) The redemption of units may be suspended for up to three months. The redemption of the units of an open-ended fund and a pension fund may be suspended for up to three months; the redemption of the units of other funds may be suspended for up to one year.

 (9) If the issue of units of a mandatory pension fund is suspended, the registrar shall keep the funds received for the acquisition of such units in the bank account specified in subsection 12 (1) of the Funded Pensions Act.

 (10) During the period when the redemption of the units of a mandatory pension fund is suspended the units of such pension fund may be issued only for the acquisition of the units by the management company itself and on the bases provided for in subsection 32 (1) of the Funded Pensions Act for the issue of new units to unit-holders of the mandatory pension fund.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 146.  [Repealed - RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 147.  Suspension of redemption of units of mandatory pension funds

 (1) In order to suspend the redemption of units of a mandatory pension fund, the management company shall apply to the Financial Supervision Authority for an authorisation (hereinafter in this Division authorisation).

 (2) In order to apply for an authorisation, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) information specified in subsection 51 (4) of the Estonian Central Register of Securities Act concerning the number of units of the pension fund which have been issued and the number which have been redeemed during the month preceding submission of the petition, and information concerning the unit-holders who acquired or transferred the units;
 2) information concerning the assets of the pension fund, the net asset value of the units, and changes in the redemption fee and issue fee for units during the month preceding submission of the petition;
 3) an explanation of the reasons for suspension of the redemption of units;
 4) an assessment of the impact of suspension of the redemption of units on the interests of the unit-holders of the pension fund.

§ 148.  Processing of applications for authorisation and decision

 (1) The provisions of § 16 of this Act apply to the review of applications for an authorisation, verification of the submitted information and verification whether suspension of the redemption of units is reasoned.

 (2) The Financial Supervision Authority shall make a decision regarding the grant of or refusal to grant an authorisation within five working days after receipt of the respective petition and the management company shall be promptly informed of the decision.

§ 149.  Bases for refusal to grant authorisation

  The Financial Supervision Authority may refuse to grant authorisation if:
 1) it has not been proven that the circumstances specified in subsection 145 (2) of this Act exist;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 2) the interests of unit-holders are insufficiently protected if the redemption of units is suspended.

§ 150.  Fees, charges and expenses paid for account of fund

 (1) Only fees and charges provided by this Act, and expenses directly associated with management of the fund and provided for in the fund rules shall be payable for the account of the fund.

 (2) Fees to a management company for the management of a fund (management fees) shall be payable for the account of the fund.

 (3) Charges to a depositary for the provision of depositary services (depositary’s charges) may be payable for the account of the fund.

 (4) The fees and charges specified in subsections (2) and (3) of this section shall not be paid before the respective services are provided.

 (5) The total of fees, charges and expenses specified in subsections (1) to (3) of this section shall not exceed the limit prescribed by the fund rules.

§ 1501.  Additional requirements for fees paid and expenses covered on account of UCITS

 (1) A management company of a UCITS shall prevent incurring of expenses to the UCITS and unit-holders that are not related to the management of UCITS.

 (2) The management company of a UCITS is not acting honestly, proficiently and in the best interests of the UCITS if it pays or receives, in connection with the activities specified in clauses 10 (1) 1) to 4) and 6) to 11) of this Act, other fees or other benefits in kind in addition to those provided for in the rules of the UCITS (hereinafter fee), with the exception of the following fees:
 1) fees paid on account of the UCITS or a person acting on account of it as well as fees paid to the UCITS or a person acting on account of it;
 2) fees paid by a third person or a person acting on account of such person as well as fees paid to such persons provided that the existence, substance, amount or method of calculating the fee, if the amount is not determined, shall be disclosed to the unit-holders prior to the provision of the service in a manner that is clear, accurate and understandable and the fee is envisaged for improvement of the quality of the fund management service and it does not impair compliance with the management company’s duty to act in the best interests of the UCITS;
 3) fees relating to the management of a UCITS or required for the provision of the service relating to the management of a fund, such as depositary’s charges, settlement and exchange fees, supervision fee and state fee as well as legal fees, which do not conflict with the management company's duties to act in the best interests of the UCITS.

 (3) The information specified in clause (2) 2) of this section may be submitted by a management company to unit-holders in the form of a summary. At the request of a unit-holder, a management company is required to also disclose precise details of the fee.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 151.  Fees, charges and expenses paid for account of pension fund

 (1) Unless otherwise provided by this Act, the following fees, charges and expenses shall be paid for the account of a pension fund:
 1) management fees;
 2) depositary’s charges;
 3) transfer charges and service charges directly related to transactions performed for the account of the pension fund (hereinafter transaction costs);
 4) costs relating to borrowing provided for in clauses 276 (1) 2) and 3) and § 277 of this Act.

 (2) Fees, charges and expenses related to the management of a pension fund which are not specified in subsection (1) of this section shall be paid for the account of the management company.

 (3) The following shall be paid for the account of a management company of a mandatory pension fund:
 1) depositary’s charges;
 2) the fee charged by the registrar of the Estonian Central Register of Securities for organising the issue and redemption of the units of the mandatory pension fund, managing the pension accounts and performing other duties provided by this Act (hereinafter registrar's charge);
 3) contributions to the Pension Protection Sectoral Fund pursuant to the Guarantee Fund Act.

 (4) The registrar's charge consists of the maintenance fee and the entry fee. The size of the maintenance fee shall be determined as a proportion of the market value of the assets of a pension fund managed by the management company. An entry fee shall be charged for each act of issue and redemption of units of a pension fund performed by the registrar of the Estonian Central Register of Securities. A uniform amount of maintenance fee and entry fee shall be applied to all mandatory pension funds under the same terms and conditions, and the registrar of the Estonian Central Register of Securities shall co-ordinate the maximum chargeable fees with the minister responsible for the area according to the procedure provided for in § 23 (1) of the Estonian Central Register of Securities Act.

 (5) Only the rate of the management fee prescribed in the fund rules shall be applied as the rate of the management fee of a mandatory pension fund. The management fee shall be calculated according to the reduced rates of the management fee which depend on the market value of the assets of the mandatory pension funds. The extent of and the procedure for calculating the reduction of the rates shall be shall be established by minister responsible for the area.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (6) Only such fees, charges and expenses provided for in clauses (1) 3) and 4) of this section may be paid or covered for the account of the pension fund which do not exceed the standard commission or service fee for the respective service or which are strictly necessary for the management of the pension fund.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (7) The fees, charges and expenses which proceeding from their nature do not cause a conflict of interests between the unit-holder and the management company upon honest, professional provision of the fund management service proceeding from the best interests of the unit-holder shall not be deemed to be the fees, charges and expenses provided for in subsection 6 of this section.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

§ 152.  Distributions to unit-holders

 (1) Distributions may be made to unit-holders for the account of a fund if this is prescribed by the fund rules. In such case, the fund rules shall prescribe the conditions and procedure for making distributions, and primarily the extent and frequency of distributions.

 (2) Distributions to unit-holders are made in money pursuant to the fund rules through the depositary or by the issue of new units.

 (3) This section does not apply to pension funds.

Division 6 Exchange of Units 

§ 153.  Right to exchange units

 (1) A unit-holder has the right to exchange the units of a fund which belong to the unit-holder for the units of the same fund which are of a different class, unless the fund rules provide for a prohibition on the exchange of units.

 (2) A unit-holder has the right to exchange the units of an open-ended fund which belong to the unit-holder for the units of a fund managed by the same management company, unless the fund rules provide for a prohibition on the exchange of units.

 (3) The provisions of the Funded Pensions Act apply to the exchange of units of a pension fund.

§ 154.  Procedure for exchange of units

 (1) A unit-holder shall inform the management company of the wish of the unit-holder to exchange units with a notice which sets out at least the following:
 1) the class and fund of the units which the unit-holder wishes to exchange and the class and fund of the units for which the units are to be exchanged;
 2) the number of units to be exchanged;
 3) the date on which the unit-holder wishes to exchange units.

 (2) Upon exchange of units, the units shall be redeemed and issued on the basis of the net asset value of the units as at the date set out in the notice specified in subsection (1) of this section.

 (3) Payments shall not be made to unit-holders upon exchange of units.

 (4) Units shall be exchanged pursuant to the procedure provided for in the fund rules.

Division 7 Transfer of Management of Fund  

§ 155.  Transfer of management

 (1) With the permission of the Financial Supervision Authority, a management company may, upon agreement with another management company, transfer management of a fund to the other management company.

 (2) The supervisory board of a management company shall decide on the transfer of management of a fund and on entry into the respective contract.

 (3) The provisions of Chapter 9 of the Law of Obligations Act shall not apply to the transfer of the management of a fund.

§ 156.  Contract for transfer of management of fund

  A contract for transfer of the management of a fund shall determine the conditions and procedure for the transfer of all rights and obligations of the management company which arise from the management of the fund and for the transfer of documents and administration related thereto, including the extent of the liability of a new management company.

§ 157.  Application for authorisation for transfer of management of fund

  In order to obtain an authorisation for transfer of the management of a fund, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority not later than on the 20th day after entry into the contract on transfer of management of the fund:
 1) the resolution of the supervisory board of the management company regarding transfer of management of the fund;
 2) the contract for transfer of management of the fund;
 3) a petition for amendment of the fund rules pursuant to the provisions of § 117 of this Act;
 4) the consent of the depositary of the fund concerning amendments to the depositary contract arising from transfer of the fund;
 5) the business plan of the management company to which management of the fund is transferred, which complies with the requirements provided for in § 15 of this Act.

§ 158.  Processing of applications for authorisation for transfer of management of fund and decision

 (1) The provisions of § 16 of this Act apply to the processing of applications for an authorisation for transfer of the management of a fund, verification of the submitted information and verification whether the transfer of management of a fund and the future management company comply with the requirements provided for by this Act or legislation issued on the basis thereof.

 (2) The decision to grant or refuse to grant an authorisation for transfer of the management of a fund and registration of amendments to the fund rules shall be made by the Financial Supervision Authority within two months after the receipt of a respective petition but not later than within one month after the receipt of all the necessary documents and information.

 (3) The Financial Supervision Authority shall promptly inform the management company and the depositary of the fund of a decision specified in subsection (2) of this section.

§ 159.  Bases for refusal to grant authorisation for transfer of management of fund

  The Financial Supervision Authority may refuse to grant an authorisation for transfer of the management of a fund if:
 1) the circumstances provided for in clauses 18 (1) 3), 5) or 7) become evident;
 2) the circumstances provided for in § 116 of this Act become evident;
 3) other circumstances which damage the legitimate interests of unit-holders become evident.

§ 160.  Disclosure and entry into force of transfer of management of fund

 (1) A management company shall disclose a notice concerning transfer of the management of a fund pursuant to the procedure provided for in § 119 of this Act.

 (2) The rights and obligations arising from management of a fund transfer to a new management company at the time prescribed by the contract for transfer of the management of the fund but not before one month after publication of the notice specified in subsection (1) of this section.

§ 161.  Transfer of management authority to depositary

 (1) If the authority of a management company to manage a fund terminates on bases other than those provided for in clause 77 (1) 1) of this Act, management of the fund shall transfer to the depositary of the fund. The depositary shall promptly give notice of transfer of the management of the fund pursuant to the procedure provided for in § 119 of this Act.

 (2) Upon termination of the authority to manage a fund, a management company shall promptly transfer the administration and documents of the fund to the depositary. After transfer of the administration and documents of a fund, the depositary has, in the management of the fund, all rights and obligations of the management company unless otherwise provided by law, the fund rules or the depositary contract. The depositary shall not issue or redeem units upon management of the fund, except in the case of a pension fund.

 (3) A depositary shall transfer management of a fund to a new management company within three months after transfer of the authority to manage the fund to the depositary. With the permission of the Financial Supervision Authority, the specified term may be extended at the request of the depositary by up to six months and, in the case of a pension fund, by up to 18 months. The provisions of subsections 155 (1) and (3) and §§ 156-160 of this Act apply to transfer of the management of a fund.

 (4) A depositary shall disclose a notice concerning transfer of management of a fund to a new management company in at least one national daily newspaper or send the notice to the postal addresses of unit-holders indicated in the register of units.

Division 8 Transformation of Fund  

§ 162.  Methods of transformation of fund

 (1) A fund may be transformed into a fund of a different type specified in §§ 2-4 of this Act by amendment of the fund rules.

 (2) A UCITS shall not be transformed into a fund which is not a UCITS.

 (3) A pension fund shall not be transformed.

 (4) The provisions of §§ 117 and 118 of this Act apply the transformation of a fund.

 (5) All costs related to the transformation of a fund shall be covered by the management company.

§ 163.  Resolution on transformation

 (1) The supervisory board of a management company shall adopt a resolution to amend fund rules such that the fund is transformed (hereinafter in this Division resolution on transformation).

 (2) If law or fund rules prescribe the general meeting of unit-holders, the general meeting of unit-holders shall grant its consent for adoption of the resolution on transformation.

 (3) A general meeting is deemed to have granted consent for a resolution on transformation if at the general meeting at least 9/10 of the votes represented by units are in favour.

 (4) A management company may decide on transformation of a closed-ended fund into an open-ended fund without the consent of the general meeting.

§ 164.  Transformation of open-ended fund into closed-ended fund

 (1) Upon transformation of an open-ended fund into a closed-ended fund, amendments to the fund rules shall enter into force not earlier than one year after disclosure of the amendments to the fund rules in at least one daily national newspaper.

 (2) A resolution on transformation shall prescribe a sufficient term within which unit-holders have the right to request redemption of the units of the fund.

§ 165.  Transformation of public fund

  A public fund may be transformed into a fund which is not a public fund only if the offer of the units of the fund meets the requirements provided for in subsection 12 (2) of the Securities Market Act.

Division 9 Division and Merger of Fund 

§ 166.  Division

  The division of funds is prohibited.

§ 167.  Merger

 (1) A fund (hereinafter fund being acquired) may be merged with another fund managed by the same management company (hereinafter acquiring fund), unless otherwise provided by this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) Upon merger, the number of the units of a fund being acquired issued to a unit-holder of the fund shall be such that the net asset value of the units corresponds to the net asset value of the units of the fund being acquired which were owned by the unit-holder. Unit-holders shall pay for the issued units with assets the amount of which corresponds to their part of assets in the fund being acquired.

 (3) Upon merger, the units of a fund being acquired shall be cancelled.

 (4) Upon merger, no issue fee shall be charged upon the issue of units of an acquiring fund.

 (5) The units of an acquiring fund belonging to the assets of the fund being acquired and the units of a fund being acquired belonging to the assets of the acquiring fund shall be redeemed before merger.

 (6) A fund being acquired is deemed to be liquidated after issue of the units of the acquiring fund to the unit-holders and cancellation of the units of the fund being acquired. The provisions of Division 10 of Chapter 4 of this Act do not apply upon merger.

 (7) All costs related to the merger of a fund shall be covered by the management company.

§ 168.  Special merger rules

 (1) A fund which is not a UCITS may be merged with a UCITS only if the acquiring fund is a UCITS.

 (2) A voluntary pension fund may be merged only with another voluntary pension fund.

 (3) A mandatory pension fund may be merged only with another mandatory pension fund if the pension fund being acquired and the acquiring pension fund have a similar investment policy, having regard to the provisions of § 76 of this Act.

§ 169.  Merger resolution

 (1) A merger resolution shall be adopted by the supervisory board of a management company.

 (2) If law or fund rules prescribe the general meeting of unit-holders, the consent of the general meeting of unit-holders is required for the merger of funds.

 (3) A general meeting is deemed to have granted consent for adoption of a merger resolution if at the general meeting at least 2/3 of the votes represented by units are in favour, unless the fund rules prescribe a greater majority requirement.

§ 170.  Authorisation for merger

 (1) In order to merge funds, a management company shall apply for a respective authorisation (hereinafter in this Division authorisation for merger) from the Financial Supervision Authority.

 (2) If, before the merger of funds, the management of a fund is transferred to the management company of a fund being acquired or an acquiring fund, an application for an authorisation for transfer of the management of the fund may be submitted to the Financial Supervision Authority together with an application for an authorisation for the merger of the funds.

 (3) Upon application for an authorisation for merger, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) the merger resolution;
 2) the consent of depositaries with the merger;
 3) the reasons for the merger of funds;
 4) the number of units specified in subsection 167 (5) of this Act;
 5) the description of the procedure for the cancellation of the units of the fund being acquired and for the issue of the units of the acquiring fund and a schedule for the cancellation and issue;
 6) a business plan which complies with the requirements provided for in § 15 of this Act.

 (4) If the merger of funds brings about amendment of the fund rules, the management company shall submit also the information and documents specified in subsection 117 (3) of this Act in addition to that provided for in subsection (3) of this section.

§ 171.  Processing of application for authorisation for merger and decision on grant of authorisation for merger

 (1) The provisions of § 16 of this Act apply to the processing of applications for an authorisation for merger, verification of the submitted information and verification whether the merger is reasoned and in the legitimate interests of unit-holders.

 (2) The decision to grant or refuse to grant an authorisation for merger shall be made by the Financial Supervision Authority within two months after the receipt of a respective petition but not later than within one month after the receipt of all the necessary documents and information.

 (3) In the case provided for in subsection 170 (2) of this Act, the Financial Supervision Authority shall make a decision to grant or refuse to grant an authorisation for transfer of the management of a fund at the same time with the decision specified in subsection (2) of this section.

 (4) If amendment of the fund rules is also applied for upon merger, the Financial Supervision Authority shall make, together with the decision to grant an authorisation, a decision on amendment of the rules pursuant to the provisions of § 118 of this Act.

 (5) The Financial Supervision Authority shall promptly inform the management company, depositaries and, upon the merger of pension funds, also the registrar of the Estonian Central Register of Securities of a decision to grant or refuse to grant an authorisation for merger.

§ 172.  Bases for refusal to grant authorisation for merger

  The Financial Supervision Authority may refuse to grant an authorisation for merger if:
 1) the merger would violate the limitations on investment provided by this Act, legislation issued on the basis thereof or the fund rules;
 2) the circumstances specified in § 116 of this Act become evident;
 3) the merger of funds may damage the interests of the unit-holders for other reasons.

§ 173.  Disclosure of merger

  A management company shall disclose the merger of funds and, if necessary, also registration of transfer of the management of a fund and amendment of fund rules pursuant to the procedure provided for in § 119 of this Act.

Division 91 Mergers of UCITS  
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1731.  Specifications for merger of UCITS

 (1) This Division shall apply to the following mergers:
 1) merger of UCITS established in Estonia if the units of at least one UCITS participating in the merger are offered in another Contracting State;
 2) merger of a UCITS with a UCITS established in another Contracting State (hereinafter cross-border merger).

 (2) A UCITS may merge with a UCITS managed by another management company.

 (3) In addition to the provisions of this Division, the provisions of subsections 167 (2) to (7) of this Act apply to merger of UCITS. If a UCITS established in Estonia participates in a cross-border merger as an acquiring UCITS, the merger technique specified in subsection 167 (2) of this Act shall apply to the merger.

 (4) If a UCITS established in Estonia participates in a cross-border merger as a UCITS being acquired, the requirements provided for in this Act shall determine the date on which the merger arising from the UCITS merger agreement enters into force, disclosure of the authorisation for the merger and notification of the entry into force of the merger.

 (5) A UCITS established in Estonia may merge with a UCITS established in a form other than a common fund only in the case this is permitted in the home state of an UCITS in the form of an investment company and a UCITS established in Estonia is the fund being acquired. If a UCITS established in another Contracting State in any other form besides a common fund participates in a cross-border merger of UCITS, the shares or other such securities relating to the holding of such UCITS shall be treated as fund units for the purposes of this Division and the shareholders of such UCITS or other persons with holdings in the UCITS as unit-holders for the purposes of this Division.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1732.  Merger agreement

 (1) Merging UCITS shall enter into a merger agreement for the merger of the UCITS. Upon merger of a UCITS with another UCITS managed by the same management company, merger conditions shall be determined to which the provisions provided for in this Division regarding the merger agreement apply.

 (2) A merger agreement shall set out at least the following information:
 1) the merger technique and types of the UCITS merging;
 2) the reason for the merger;
 3) the impact of the merger on the unit-holders of both the UCITS to be acquired as well as the acquiring UCITS;
 4) the exchange ratio of the units of the UCITS to be acquired (hereinafter exchange ratio) and criteria for the valuation of the assets and liabilities of the UCITS on the date of calculating the exchange ratio;
 5) the method of calculating the exchange ratio;
 6) the planned effective date of the merger as of which the transactions of the UCITS being acquired shall be deemed to be undertaken by the acquiring UCITS;
 7) the rules applicable to the transfer of assets and the exchange of units.

 (3) The merger agreement may prescribe that cash payments are made to the unit-holders of the UCITS to be acquired which amount shall not exceed 1/10 of the net asset value of the units of the unit-holder in the UCITS to be acquired. The cash payments specified in this section shall be made together with the issue of the units of the acquiring UCITS specified in subsection 167 (2) of this Act.

 (4) For the purposes of this Act, the coefficient applicable upon determining the number of the units of the acquiring UCITS to be issued to the unit-holder on the basis of the net asset value of the units of the UCITS to be acquired held by the unit-holder of the UCITS shall be treated as the exchange ratio.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1733.  Audit of merger agreement

 (1) The depositary of each UCITS involved in the merger shall verify the conformity of the terms and conditions of the merger agreement specified in clauses 1732 (2) 1), 6) and 7) of this Act with the requirements of this Act and the rules of the UCITS and grant its approval.

 (2) The following merger conditions shall be verified pursuant to subsection (1) of this section:
 1) the criteria for valuation of the assets and liabilities on the date of calculating the exchange ratio;
 2) the method of calculating the exchange ratio and the actual exchange ratio determined on the date for calculating that exchange ratio;
 3) cash payments per unit.

 (3) An auditor shall verify the merger agreement to the extent specified in subsection (2) of this section. One common auditor or several common auditors may be appointed for several or all of the UCITS to be acquired for the verification of the merger agreement. The parties to a merger agreement may agree that the verification of the merger agreement specified in this subsection shall be conducted by the depositary of the UCITS to be acquired.

 (4) The auditor or the depositary having conducted the audit shall prepare a report on the verification of the terms and conditions specified in subsection (2) of this section and the transcript thereof shall be made available to the unit-holders of the UCITS to be acquired and the acquiring UCITS and the Financial Supervision Authority at the request thereof free of charge.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1734.  Authorisation for merger

 (1) In order to merge funds, the management company of the UCITS to be acquired shall apply for a respective authorisation (hereinafter in this Division authorisation for merger) from the Financial Supervision Authority.

 (2) In order to apply for an authorisation for merger, a management company shall submit a written application and the following information and documents (hereinafter in this Division the application) to the Financial Supervision Authority:
 1) the merger agreement;
 2) the consents of the depositaries specified in § 1733 of this Act;
 3) the information provided to the unit-holders specified in § 17310 of this Act.

 (3) If the merger of UCITS brings about amendment of the fund rules, the management company shall also submit the application specified in subsection 117 (3) of this Act in addition to that provided for in subsection (2) of this section. If the merger of the UCITS gives rise to transfer of the management of the UCITS, the management company need not submit the application specified in § 157 of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1735.  Specifications for authorisation for cross-border merger

 (1) The Financial Supervision Authority shall make the decision to grant authorisation for a cross-border merger (hereinafter authorisation for cross-border merger), if a UCITS established in Estonia participates in a cross-border merger as a UCITS to be acquired. The provisions concerning authorisations for merger specified in this Division shall apply to authorisations for cross-border mergers, unless otherwise provided for in this Division.

 (2) When applying for an authorisation for cross-border merger, the management company of the UCITS to be acquired shall submit to the Financial Supervision Authority the application specified in subsection 1734 (2) of this Act, which includes the prospectus and key information of the acquiring UCITS if the acquiring UCITS was established in another Contracting State.

 (3) The information and documents submitted to the Financial Supervision Authority shall be in the Estonian language or the English language and in one official language of the Contracting State of the acquiring UCITS. With the consent of the financial supervision authorities of the home state of the acquiring UCITS, the documents may be also submitted in a language other than the official language of that state.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1736.  Proceedings concerning authorisation for merger

 (1) When processing applications for authorisations for mergers, the Financial Supervision Authority shall verify the information submitted and assess whether the merger and the information provided to the unit-holders and specified in § 17310 of this Act is in line with the rights of the unit-holders of the UCITS to be acquired and the requirements provided for in this Act and the legislation established on the basis thereof.

 (2) If the UCITS to be acquired failed to submit upon application for an authorisation for merger all the information and documents specified in subsection 1734 (2) of this Act, such information and documents are incomplete or were not prepared in accordance with the requirements, the Financial Supervision Authority may demand elimination of the deficiencies by the applicant within ten working days from the receipt of the application.

 (3) In the case of cross-border mergers, the Financial Supervision Authority shall send a transcript of the application specified in subsection 1735 (2) of this Act to the financial supervision authority of the home state of the acquiring UCITS immediately after receiving all the required documents from the UCITS to be acquired or elimination of the deficiencies.

 (4) If compliance of the information provided to unit-holders and specified in § 17310 of this Act with the requirements cannot be assessed on the basis of the documents submitted pursuant to clause 1734 (2) 3) of this Act, the Financial Supervision Authority may require within 15 working days as of the receipt of the application that the information which is provided to the unit-holders of the UCITS to be acquired or the acquiring UCITS shall comply with the requirements provided for in this Act. When processing an authorisation for cross-border merger, the Financial Supervision Authority may submit a request for the information which is provided to the unit-holders of the UCITS to be acquired and specified in the first sentence of this subsection.

 (5) The information and documents specified in subsections (2) to (4) of this section shall be submitted within a reasonable term determined by the Financial Supervision Authority.

 (6) The Financial Supervision Authority shall notify the management company and the depositary of the UCITS to be acquired of granting the authorisation for merger or refusal thereof within 20 working days as of the receipt of the application submitted according to the requirements, including the information provided to unit-holders specified in § 17310 of this Act.

 (7) In addition to the provisions of subsection (6) of this section, the Financial Supervision Authority shall notify the acquiring UCITS, and where applicable, the financial supervision authority of the home state of the UCITS to be acquired and established in another Contracting State, of the decision on the grant or refusal of an authorisation for cross-border merger.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1737.  Processing of documents of acquiring UCITS by Financial Supervision Authority upon cross-border merger

 (1) If a UCITS established in Estonia participates in a cross-border merger as an acquiring UCITS, the Financial Supervision Authority shall assess on the basis of a transcript of the application for authorisation for merger delivered by the financial supervision authority of the home state of the UCITS to be acquired whether the information provided to unit-holders of the acquiring UCITS and specified in § 17310 of this Act is in line with the rights of the unit-holders of the acquiring UCITS and the request specified in this Act or the legislation established on the basis thereof.

 (2) The Financial Supervision Authority may demand within 15 working days as of receipt of a transcript of the application specified in subsection (1) of this section that the information provided to the unit-holders of the acquiring UCITS would comply with the requirements provided for in this Act.

 (3) An acquiring UCITS shall submit the changes made in the information specified in subsection (1) of this section within a reasonable term determined by the Financial Supervision Authority.

 (4) The Financial Supervision Authority shall notify the financial supervision authority of the home state of the UCITS to be acquired immediately of submission of the demand specified in subsection (2) of this section. The Financial Supervision Authority shall notify the financial supervision authority of the home state of the UCITS to be acquired within 20 working days as of the receipt of the information specified in subsection (3) of this section whether the information provided to the unit-holders of the acquiring UCITS is in line with the requirements provided for in this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1738.  Bases for refusal to grant authorisation for merger

 (1) The Financial Supervision Authority may refuse to grant authorisation for merger if:
 1) The merger conditions of UCITS do not comply with the requirements provided by legislation or the information and documents submitted to the Financial Supervision Authority are incorrect, misleading or incomplete;
 2) The changes made in the information provided to the unit-holders have not been submitted to the Financial Supervision Authority or such information does not comply with the provisions of this Act;
 3) no notification has been made upon merger of UCITS concerning the offer of the units of the acquiring UCITS in the Contracting States where the units of the UCITS to be acquired are offered.

 (2) In addition to the requirements provided for in subsection (1) of this section, the Financial Supervision Authority may refuse to grant an authorisation for cross-border merger if the financial supervision authority of the home state of the acquiring UCITS gives notification that the information that is provided to the unit-holders of the acquiring UCITS does not comply with the requirements.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 1739.  Disclosure of authorisation for merger

 (1) A UCITS to be acquired and an acquiring UCITS shall publish, immediately after the receipt of an authorisation for merger, a UCITS merger notice and, where applicable, a notice concerning the registration of the amendments to the rules of the UCITS in the manner provided for in the first sentence of subsection 119 (2) of this Act.

 (2) The notice specified in subsection (1) of this section shall set out the information concerning the grant of the authorisation for merger, the term for the redemption or exchange of the units of the UCITS and the planned effective date of the merger specified in the merger agreement.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 17310.  Information provided to unit-holders

 (1) The management company of a UCITS to be acquired and an acquiring UCITS shall submit an accurate and appropriate document to the unit-holders of the UCITS specifying the circumstances of the merger (hereinafter information provided to unit-holders) which allows the unit-holders to assess the impact of the merger and the need to exercise the right to redeem or exchange the units.

 (2) The information provided to unit-holders shall be submitted after the granting of the authorisation for merger, but not later than 30 calendar days prior to the last date specified in subsection 17314 (3) of this Act for redemption or exchange of units.

 (3) The information provided to unit-holders shall be submitted to the Financial Supervision Authority in the Estonian language or with the consent of the Financial Supervision Authority in the English language.

 (4) In addition to the provisions of subsection (3) of this section, the information provided to unit-holders shall be submitted in the official language of each such Contracting State where a notice has been given concerning the offer of the units of the UCITS to be acquired or the acquiring UCITS. With the consent of the financial supervision authority of the Contracting State specified in the first sentence of this subsection, the information may be submitted in another language.

 (5) The translation of the information provided to unit-holders shall be identical with the original document as to its substance.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 17311.  Requirements for information provided to unit-holders

 (1) The information provided to unit-holders shall set out:
 1) explanations of and reasons for the merger;
 2) the possible impact of the merger on unit-holders, including any material changes in respect of the investment objectives and policy of the UCITS, costs, expected outcome of the merger, periodic reporting and dilution in financial performance, and where relevant, a warning about the changes in the taxation of the income of unit-holders after the merger;
 3) rights of unit-holders related to the merger, including the right to obtain additional information and a transcript of the rights specified in subsection 1733 (4) of this Act, submit an application for redemption or exchange of units without charges, obtain information about the end of the term for exercise of that right and explanations about the manner of receipt of a transcript of the sworn auditor's report and treatment of accrued income on account of the UCITS;
 4) terms and conditions of the merger process, including information about passing the merger resolution and suspension of issue or redemption of units and the planned effective date of the merger;
 5) key information document of the acquiring UCITS;
 6) terms and conditions of making payments to unit-holders of the UCITS being acquired.

 (2) The information provided to unit-holders shall set out together with the terms and conditions specified in clause (1) 4) of this section:
 1) the details of intended suspension of transactions in units;
 2) time as of which the transactions of the UCITS to be acquired shall be deemed conducted on account of the acquiring UCITS, the date of calculating the exchange ratio and requirements for entry into force of the merger.

 (3) The information provided to unit-holders of a UCITS to be acquired shall set out the circumstances specified in clause (1) 2) of this section:
 1) changes in the rights of unit-holders of the UCITS to be acquired after the merger of the funds;
 2) comparison of material risks, if the annexed explanations or the key information of the UCITS to be acquired and the acquiring UCITS show material differences in the synthetic risk and reward indicators in different categories;
 3) comparison of all charges, fees and expenses for the merging UCITS, based on the amounts disclosed in their respective key information;
 4) if the UCITS to be acquired applies a performance-related fee, an explanation of how it will be applied up to the merger becoming effective;
 5) if the acquiring UCITS applies a financial performance related fee after the merger becomes effective, an explanation of how it is be applied in order to ensure fair treatment of those unit-holders who previously held units in the UCITS to be acquired;
 6) an explanation on whether material changes are intended to be made in the composition of the assets of the UCITS to be acquired before the merger takes effect.

 (4) The information provided to unit-holders of a UCITS to be acquired shall set out the following in addition to the information provided according to subsections (1) to (3) of this section:
 1) the period during which the issue and redemption of the units of the UCITS to be acquired is continued based on an application of a unit-holder;
 2) the term during which the unit-holders who do not exercise the right to redeem or exchange the units specified in subsection 17314 (1) of this Act become the unit-holders of the acquiring UCITS;
 3) an explanation on that all the unit-holders who have not exercised the right to redeem or exchange the units specified in subsection 17314 (1) of this Act shall become the unit-holders of the acquiring UCITS when the merges takes effect, including in the case the unit-holder voted against the merger proposal upon approval of the merger resolution or abstained from voting;
 4) a recommendation to examine the key information of the acquiring UCITS.

 (5) The information provided to the unit-holders of the acquiring UCITS shall set out under the circumstances specified in this clause (1) 2) of this section whether the merger has a material impact on the structure of the investments of the acquiring UCITS and whether it is intended to make material changes in the composition of the assets of the acquiring UCITS before or after the merger takes effect.

 (6) In the case of a cross-border merger, the information provided to the unit-holders shall explain in a clear and understandable manner the conditions and procedures relating to the UCITS participating in the merger provided by the law of another Contracting State, which differ from the conditions and procedures specified in this Act.

 (7) Synthetic risk and reward indicators specified in clause (3) 2) of this section shall be treated as synthetic indicators within the meaning of Article 8 of Commission Regulation No. 583/2010/EU, implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website (OJ L 176, 10.07.2010, pp. 1-15).
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 17312.  Format of information provided to unit-holders

 (1) The information provided to unit-holders shall be presented in a clear and understandable manner taking into consideration the interests and competence of the unit-holders of the UCITS to be acquired and the acquiring UCITS.

 (2) If a summary of the merger conditions is presented at the beginning of the information provided to unit-holders, it shall refer to the parts of the document of the information provided to unit-holders where the additional information is presented.

 (3) The information provided to unit-holders shall be presented to unit-holders on paper or in another durable medium.

 (4) The information provided to unit-holders may be presented in another durable medium, if the following conditions are met:
 1) provision of information corresponds to the manner in which the services between the unit-holder and the UCITS to be acquired or the acquiring UCITS or the management company is or is to be provided;
 2) in the case of right to choose, a unit-holder chose the durable medium other than paper for provision of information.

 (5) Provision of information to unit-holders in durable medium other than paper is in line with the method of presentation of information specified in clause (4) 1) of this section, if the unit-holder specified the unit-holder's e-mail address for the provision of services or otherwise confirmed the unit-holder's constant access to Internet.

 (6) Durable medium is any instrument used for storage and reproduction of information for the purposes of § 111 of the Law of Obligations Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 17313.  Provision of key information

 (1) A key information document of an acquiring UCITS shall be appended to the information provided to the unit-holders of the UCITS to be acquired.

 (2) A key information document of the acquiring UCITS shall be appended to the information provided to the unit-holders of an acquiring UCITS, if it has been amended due to the merger.

 (3) As of the presentation of the information provided to unit-holders until the merger takes effect, the information provided to unit-holders and the key information document of an acquiring UCITS shall be presented to each person who purchases units of the UCITS to be acquired or the acquiring UCITS or who asks to receive the fund rules, prospectus or key information document of the receiving UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 17314.  Redemption of units and suspension of issue and redemption of units upon merger

 (1) Unit-holders of a UCITS to be acquired and an acquiring UCITS have the right to request redemption of units or exchange of the units for the units of another UCITS with similar investment policy and managed by the same management company or by any other company with which the management company is linked by common management or qualifying holding.

 (2) No fee shall be charged for redemption or exchange of units pursuant to subsection (1) of this section, except for the fee specified in the prospectus of the UCITS for reimbursement of the expenses relating to redemption of units.

 (3) The right to redeem or exchange of the units specified in subsection (1) of this section shall apply to the unit-holders of the UCITS to be acquired and the acquiring UCITS as of the provision of the information provided to unit-holders specified in subsection 17310 (1) of this Act and terminate five working days prior to the date of calculating the exchange ratio agreed upon in the merger agreement.

 (4) In addition to the provisions of subsections 145 (1) and (2) of this Act, the management company may suspend the issue or redemption of the units of a UCITS, and in addition to the provisions of subsections 145 (4) and (5) of this Act, the Financial Supervision Authority may request suspension of the issue or redemption of the units of a UCITS, if it is necessary for the protection of the legitimate interests of the unit-holders of one or more UCITS participating in the merger.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 17315.  Entry into force of merger

 (1) The merger of a UCITS enters into force on the proposed effective date of the merger specified in the merger agreement, taking into consideration the time limits specified in subsection 17314 (3) of this Act.

 (2) Upon the merger entering into force, the assets and liabilities of the UCITS to be acquired shall transfer to the acquiring UCITS. The management company of the acquiring UCITS shall notify, immediately after the entry into force of the merger, the depositary of the acquiring UCITS of the transfer of the assets and liabilities of the UCITS to be acquired to the acquiring UCITS.

 (3) The provisions of subsection (1) of this section apply to cross-border mergers, if the acquiring UCITS was established in Estonia.

 (4) The management company of an acquiring UCITS established in Estonia shall immediately notify the Financial Supervision Authority and the financial supervision authority of the home state of the UCITS to be acquired of the entry into force of cross-border merger.

 (5) A merger which has taken effect shall not be challenged.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

Division 10 Liquidation of Fund  

§ 174.  Liquidation

 (1) The supervisory board of a management company or, in the case provided for in subsection 183 (1) of this Act, the depositary shall decide on the liquidation of a fund.

 (2) The liquidation of such a closed-ended fund, which units of are not redeemed earlier than one year after the unit-holders have submitted the respective claim, is decided by the general meeting of the unit-holders. The Financial Supervision Authority shall decide on the liquidation of the specified fund if the general meeting of unit-holders has failed to approve a new management company by the resolution to amend the fund rules or decide on the liquidation of the fund within two months from the termination of the authority of the management company to manage the fund on the basis provided for in clauses 77 (1) 2), 3) or 4) or subsection (2) of this Act.
[RT I, 15.05.2013, 2 - entry into force 25.05.2013]

 (3) The liquidation of a pension fund may be decided only if transfer of the management of a pension fund pursuant to the procedure provided for in §§ 155-160 of this Act has been impossible.

 (4) A fund shall be liquidated by the management company or, in the case provided for in § 183 of this Act, by the depositary or, in the case provided for in § 184 of this Act, the liquidators determined by the Financial Supervision Authority.

§ 175.  Authorisation for liquidation

 (1) In order to liquidate a fund, a management company shall apply for a respective authorisation (hereinafter in this Division authorisation for liquidation) from the Financial Supervision Authority.

 (2) In order to obtain an authorisation for liquidation, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority not later than on the 20th day after a resolution on the liquidation of a fund is adopted:
 1) a resolution specified in subsection 174 (1) or (2) of this Act;
 2) the reasons for the need to liquidate the fund and an assessment whether the liquidation of the fund is in the interests of the unit-holders;
 3) the opinion of the depositary of the fund to be liquidated;
 4) the names, addresses and personal identification codes or, in the absence of the latter, the dates of birth of the unit-holders, or the registry codes of the unit-holders if the unit-holders have registry codes;
 5) if the unit-holder is a fund, the name of the fund and the name and address of the seat of the management company of the fund or, if there is no management company, the name and address of the seat of the depositary of the fund and the registry code of the management company or depositary of the fund if the management company or depositary of the fund has a registry code;
 6) the number, class and nominal value of the units owned by the unit-holders as at not earlier than three working days before submission of the petition;
 7) information on all rights and obligations which belong to the assets of the fund;
 8) upon liquidation of a pension fund, a report of the management company on acts performed for the transfer of the management of the pension fund together with documentation certifying the acts.

§ 176.  Review of application for authorisation for liquidation and decision on grant of authorisation for liquidation

 (1) The provisions of § 16 of this Act apply to the review of applications for an authorisation for liquidation, verification of the submitted information and verification whether the liquidation of the fund complies with the requirements of this Act or legislation issued on the basis thereof and is in the legitimate interests of the unit-holders.

 (2) The decision to grant or refuse to grant an authorisation for liquidation shall be made by the Financial Supervision Authority within two month after the receipt of all the necessary documents and information but not later than within six months after the receipt of a respective petition.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (3) The Financial Supervision Authority shall promptly inform the management company and the depositary of a decision specified in subsection (2) of this section.

 (4) Upon liquidation of a pension fund, the Financial Supervision Authority shall promptly inform the also the registrar of the Estonian Central Register of Securities of a decision specified in subsection (2) of this section.

§ 177.  Terms and conditions of authorisation for liquidation of mandatory pension fund

  The Financial Supervision Authority may, by a decision to grant an authorisation for the liquidation of a mandatory pension fund, establish the following terms and conditions for the liquidation:
 1) a term which is longer than the term for the submission of petitions which is specified in subsection 37 (2) of the Funded Pensions Act;
 2) the obligation to submit reports, including reports approved by an auditor, in the course of liquidation proceedings;
 3) other conditions which the Financial Supervision Authority deems necessary in order to protect the legitimate interests of the unit-holders.

§ 178.  Bases for refusal to grant authorisation for liquidation

  The Financial Supervision Authority may refuse to grant an authorisation for liquidation if:
 1) the management company has not, in the opinion of the Financial Supervision Authority, exhausted all the opportunities to transfer the management of the pension fund;
 2) the liquidation of the fund is not in the legitimate interests of the unit-holders for other reasons.

§ 179.  Notice of liquidation

 (1) A management company shall publish a notice concerning liquidation of a fund (hereinafter notice of liquidation) promptly after becoming aware of the decision to grant an authorisation for the liquidation pursuant to the procedure provided for in § 119 of this Act.

 (2) A notice of liquidation shall contain the following information:
 1) the name of the fund to be liquidated;
 2) the business name, registry code and seat of the management company;
 3) the name of the depositary;
 4) the term during which the creditors of the fund to be liquidated are to submit their claims against the fund, and the term shall not be shorter than two months after publication of the notice of liquidation;
 5) upon liquidation of a mandatory pension fund, the term for submission of a petition specified in subsection 37 (2) of the Funded Pensions Act and the consequences of failure to submit the petition for the specified term;
 6) the places and time of acceptance of claims and petitions;
 7) other necessary information.

 (3) Upon liquidation of a pension fund, a management company shall inform the registrar of the Estonian Central Register of Securities of publication of the notice of liquidation not later than on the day preceding the publication of the liquidation notice.

 (4) Failure to submit a claim within the term specified in clause (2) 4) of this section does not mean that the validity of the claim has expired.

§ 180.  Liquidation proceeding

 (1) Liquidation proceedings commence on the date following the date of publication of the notice of liquidation and terminate by submission of a liquidation report specified in § 187 of this Act.

 (2) Liquidation shall be completed within six months after publication of the notice of liquidation. With the permission of the Financial Supervision Authority, the specified term may be extended at the request of the management company, but the term for liquidation shall not exceed 18 months as a result of the extension.

 (3) The issue and redemption of units of a fund to be liquidated shall be suspended as of the date following the date of publication of the notice of liquidation, and as of the same date, payments to unit-holders may be made only pursuant to the procedure provided for in § 182 of this Act.

§ 181.  Transactions in liquidation proceedings

 (1) Upon liquidation of a fund, the management company shall transfer the assets of the fund as soon as possible and in accordance with the interests of the unit-holders, shall collect the debts of the fund, and satisfy the claims of creditors of the fund including performance of the obligations of the fund prescribed in the fund rules with respect to the management company and the depositary.

 (2) If a known creditor has not submitted a claim or the due date for fulfilment of the claim of a creditor has not arrived and the creditor does not accept fulfilment, the money belonging to the creditor shall be deposited with a credit institution.

 (3) During liquidation of a fund, the management company may only conclude transactions for the account of the fund which are necessary for liquidation of the fund.

 (4) Until performance of the obligations provided for in subsection (1) of this section, funds derived from transfer of property upon liquidation may be placed in assets specified in subsection 252 (1) of this Act, the issuer or credit institution of which has been assigned an investment grade credit rating which is at least Baa 1 (Moody ’s) or an equivalent thereto. Transactions involving derivative instruments may be concluded only for the purposes of managing risks arising from fluctuation of the value of the assets.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 182.  Distribution of assets

 (1) After performance of all the acts specified in subsection 181 (1) of this Act, the supervisory board of a management company shall approve the final balance sheet and the plan for distribution of the assets of the fund.

 (2) A management company shall publish a notice concerning distribution of the assets subject to distribution pursuant to the procedure provided for in § 119 of this Act. The notice shall contain the following information:
 1) the name of the fund to be liquidated;
 2) the assets to be distributed per unit;
 3) the terms of and procedure for the payment of assets subject to distribution;
 4) a list of the information and documents required upon the payment of assets subject to distribution.

 (3) A management company shall distribute the assets remaining upon liquidation between unit-holders on the basis of the class, number and net asset value of units owned by each unit-holder.

 (4) Payments to unit-holders may only be made in money. Upon liquidation of a closed-ended fund or an index fund, payments may also be made in other assets with the consent of the Financial Supervision Authority.

 (5) Units shall be deleted and the rights and obligations arising therefrom shall be terminated from the date on which payments are made. The redemption fee shall not be charged upon deletion of units.

 (6) If money or assets owned by a unit-holder cannot be paid to the unit-holder by the due date, the money or assets prescribed for payment shall be deposited in a depositary.

 (7) Upon liquidation of a mandatory pension fund, the provisions of §§ 38 and 39 of the Funded Pensions Act apply to the distribution of assets.

§ 183.  Depositary as liquidator

 (1) If the transfer of a fund according to subsection 161 (3) of this Act is impossible, the depositary shall liquidate the fund pursuant to the procedure provided for in §§ 174-182 of this Act and the fund rules.

 (2) A depositary may apply for an authorisation for the liquidation of a fund provided for in § 175 of this Act from the Financial Supervision Authority also before expiry of the term specified in subsection 161 (3) of this Act.

 (3) If a management company has not been able to liquidate a fund within the term specified in subsection 180 (2) of this Act, the depositary shall complete the liquidation of the fund on the basis of the precept of the Financial Supervision Authority pursuant to the procedure provided for in §§ 181 and 182 of this Act and the fund rules.

 (4) In the case provided for in subsection (3) of this section, the depositary shall liquidate a fund within six months after the Financial Supervision Authority has issued the respective precept. With the permission of the Financial Supervision Authority, the specified term may be extended at the request of the depositary, but the term for liquidation shall not exceed 18 months as a result of the extension.

§ 184.  Liquidators of fund

 (1) If a depositary has failed to complete the liquidation of a fund within a term specified in subsection 180 (2) of this Act or within an extended term specified in subsection 183 (4) of this Act, the Financial Supervision Authority may designate liquidators which complete the liquidation of the fund within the term designated by the Financial Supervision Authority pursuant to the procedure provided for in §§ 181 and 182 of this Act. In the case specified in the second sentence of subsection 174 (2) of this Act, The Financial Supervision Authority shall decide on the liquidation of the fund, appoint its liquidators which complete the liquidation of the fund within the term designated by the Financial Supervision Authority pursuant to the procedure provided for in §§ 181 and 182 of this Act
[RT I, 15.05.2013, 2 - entry into force 25.05.2013]

 (2) All rights and obligations of a management company shall be transferred to the liquidators unless otherwise provided by law or the fund rules.

 (3) The Financial Supervision Authority shall determine a fee for liquidators specified in subsection (1) of this section for the conduct of liquidation proceedings. In such case the limits provided for in subsection 185 (1) of this Act do not apply.
[RT I, 15.05.2013, 2 - entry into force 25.05.2013]

§ 185.  Coverage of liquidation expenses

 (1) Only the actual expenses of the liquidation of the fund may be covered for the account of the fund to the extent of not more than 2 per cent of the net asset value of the fund determined as at the date of the adoption of the resolution on the liquidation of the fund by the supervisory board of the management company or, in the case provided for in subsection 183 (1) of this Act, by the depositary.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) If a depositary commences liquidation of a fund after the expiry of the term provided for in subsection 161 (3) of this Act, the net asset value of the fund on the latest date by which the liquidation should have commenced is taken as the basis for calculation of the liquidation expenses.

 (3) If the actual liquidation expenses exceed the amount specified in subsection (1) of this section, the management company or a person who operates as a management company shall be liable for the expenses exceeding that amount.

 (4) If a fund is liquidated by a depositary or liquidators specified in § 184 of this Act, the depositary or liquidators have the right to collect the liquidation expenses exceeding the amount specified in subsection (1) of this section from the management company or a person who operates as a management company.

 (5) In addition to the expenses set out in subsection 1 of this section, the management company or the depositary as the statutory liquidator of the fund may charge only the management fee provided for in subsection 150 (2) of this Act and the depositary’s charges provided for in subsection 150 (3) of this Act for conducting the liquidation proceedings for the account of the fund. It is prohibited to charge any other fees for conducting the liquidation proceedings.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

§ 186.  Extent of liability

 (1) If during liquidation it becomes evident that a fund is insolvent, the management company or a person who operates as a management company shall be liable for all claims which are submitted against the fund and not satisfied.

 (2) A depositary is liable for damage caused to the unit-holders, the management company and creditors of a fund by failure to perform or unsatisfactory performance of its duties during liquidation.

 (3) In the event of the insolvency of a fund, a depositary shall be liable to the extent of the claims against the fund which have arisen after transfer of the management of the fund or liquidation of the fund to the depositary.

 (4) In the event of the insolvency of a fund, liquidators shall be liable to the extent of the claims against the fund which have arisen after transfer of the liquidation of the fund to the liquidators.

§ 187.  Liquidation report

 (1) Within one month after termination of liquidation proceedings, a management company shall submit to the Financial Supervision Authority the final balance sheet, the plan for distribution of the assets of the fund and a report on its activities upon liquidation of the fund. The requirements for reports on the liquidation of a fund shall be established by a regulation of the minister responsible for the area.

 (2) The documents specified in subsection (1) of this section shall be submitted to the Financial Supervision Authority by the depositary or by the liquidators if the depositary is a liquidator or the liquidation is completed by the depositary or liquidators respectively.

Chapter 5 FUND FOUNDED AS PUBLIC LIMITED COMPANY  

Division 1 Activities and Shares of Fund Founded as Public Limited Company  

§ 188.  Application of provisions for public limited company

  The provisions of laws regarding public limited companies apply to the foundation, activities and dissolution of a fund founded as a public limited company (hereinafter in this Chapter the fund) unless otherwise provided by this Act.

§ 189.  Area of activity of fund

 (1) The only area of activity of a fund shall be the investment of money received from the issue of shares pursuant to the procedure provided for in Chapter 7 of this Act in order to generate income.

 (2) In order to act, a fund shall enter into a management contract with a management company whereby the fund undertakes to transfer its assets to the disposal of the management company and the management company undertakes to invest the assets of the fund pursuant to the articles of association of the fund with the objective of generating income for the fund.

§ 190.  Shares of fund

 (1) A fund shall not issue preferred shares or convertible bonds, and other securities which grant the owner thereof rights which are similar to rights arising from preferred shares or convertible bonds.

 (2) The shares of a fund shall be freely transferable. The provisions of subsection 229 (2) of the Commercial Code do not apply to the transfer of shares of a fund.

Division 2 Foundation and Articles of Association of Fund Founded as Public Limited Company  

§ 191.  Establishment

 (1) A fund may be founded only without share subscription. An operating public limited company may be transformed into a fund if all shareholders of the public limited company are in favour of the respective amendment to the articles of association.

 (2) The foundation agreement of a fund shall, in addition to that provided for in the Commercial Code, include the business name of the management company. In the case of an operating public limited company, a management company shall be designated at the general meeting where the transformation of the public limited company into a fund is decided.

 (3) By entry into the foundation agreement of a fund, the founders shall also approve the management contract and, in the case of a public fund, the depositary contract. If an operating public limited company is transformed into a fund, the general meeting specified in subsection (2) of this section shall approve the management contract and, in the case of a public fund, the depositary contract.

§ 192.  Articles of association

 (1) In addition to the information provided for in the Commercial Code, the articles of association of a fund shall contain the following information:
 1) the objectives of the activities and the fundamental principles of the investment policy of the fund, which shall set out investments into different classes of securities and other assets, more specific restrictions on risk-spreading and limitations on investment, and restrictions in geographical or industrial sectors;
 2) the procedure for disclosure of the activities and presentation of the reports of the fund.

 (2) Share capital shall be specified in the articles of association of a fund as a minimum and maximum capital whereupon the minimum capital may be less than 1/4 but not less than 1/20 of the maximum capital.

§ 193.  Approval for foundation

 (1) Before the registration of a fund in the commercial register or, in the case of an operating public limited company, registration of amendments to the articles of association of the public limited company in the commercial register, foundation of the fund or amendments to the articles of association shall be approved by the Financial Supervision Authority.

 (2) In order to obtain approval for the foundation of a fund, the members of the management board of a public limited company who are set out in the memorandum of association or, in the case of an operating company, the members of the management board entered in the registry card of the commercial register shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) the memorandum of association;
 2) the articles of association;
 3) the management contract;
 4) the depositary contract if the fund has a depositary;
 5) information on the members of the supervisory board and management board of the public limited company, including each member’s given name and surname, personal identification code or date of birth in the absence of a personal identification code, residence, educational background, a complete list of places of employment and positions held during the last five years and, in the case of the members of the management board, a description of their duties;
 6) information on the auditor of the public limited company, including the name, residence or seat, personal identification code or, in the absence of the identification code, the date of birth or registry code of the auditor;
 7) a business plan which complies with the requirements provided for in § 194 of this Act.

 (3) A statement signed by all members of the management board of the fund regarding the accuracy of the information and documents submitted upon application for approval shall be appended to a petition and the information and documents which are submitted later in connection with the petition.

§ 194.  Business plan

 (1) The business plan of a fund shall set out a description of the management structure of the fund and of the rights, obligations and liability of members of the management board of the fund and a forecast and analysis of all the important economic indicators of the fund, including:
 1) the net turnover and expenditure of the fund by area of activity;
 2) the size of the assets, share capital and shareholders’ equity of the fund;
 3) organisation of the issue of shares;
 4) the market value, net asset value and rate of return of the assets of the fund;
 5) the investment policy and structure of investments of the fund (division by security and asset class, foreign issuer, sector of the economy, etc., and risks and the rate of return by type of investment);
 6) the size and structure of the management expenses of the fund;
 7) the rates of management fees and depositary’s charges;
 8) the amount of fixed overheads.

 (2) A business plan shall be submitted for at least three years.

§ 195.  Review of application for approval for foundation

 (1) The provisions of § 16 of this Act apply to the processing of applications for approval for the foundation of a fund, verification of the submitted information and verification whether the fund complies with the requirements provided by this Act or legislation issued on the basis thereof and whether the fund rules are in the legitimate interests of the shareholders.

 (2) The Financial Supervision Authority shall make a decision to approve or refuse to approve the foundation of a fund within two months after receipt of all the necessary documents and information, but not later than within six months after receipt of the respective petition.

 (3) The Financial Supervision Authority shall promptly inform the fund and the management company of a decision on approval for the foundation of the fund.

 (4) The decision on approval for the foundation of a fund shall be appended to the petition for entry of the fund in the commercial register.

§ 196.  Refusal to grant approval for foundation

  The Financial Supervision Authority may refuse to grant approval for foundation if:
 1) the fund or the management thereof does not meet the requirements provided by this Act;
 2) a public offer of the shares of the fund does not comply with the requirements provided by this Act or other legislation;
 3) according to the articles of association of a public fund, the assets of the fund may be, to a significant extent, invested in assets the value of which is difficult to assess;
 4) the procedure for the disclosure of information provided for in the articles of association of the fund is insufficient;
 5) the fund manager of the management company does not meet the requirements provided by legislation regulating the professional activities of the manager or his or her knowledge, skills, experience and other characteristics are not adequate to ensure sufficient protection of the interests of the shareholders of a fund of the respective type;
 6) the depositary does not meet the requirements for depositaries provided by legislation or is unable for any other reason to ensure sufficient protection of the interests of the shareholders of a fund of the respective type;
 7) the depositary contract contains provisions which are contradictory, ambiguous, or which prevent the depositary or management company from performing their duties in full, or which for some other reason do not enable promotion of the best interests of the shareholders of the fund.

§ 197.  Approval for amendments to articles of association

 (1) Before entry in the commercial register, amendments to the articles of association of a fund shall be approved by the Financial Supervision Authority. When bringing the articles of association of a fund into compliance with the legislation, the amendments to the articles of association need not be approved by the Financial Supervision Authority if the following conditions are met:
 1) only such provisions of the articles of association are amended which the management company is required to amend due to amendments made to the legislation;
 2) the amended articles of association shall be immediately submitted to the Financial Supervision Authority.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (2) In order to obtain approval for amendments to the articles of association of a fund, the fund shall submit a written petition and the following information and documents to the Financial Supervision Authority:
 1) the resolution to amend the articles of association;
 2) the amendments to and the amended text of the articles of association;
 3) the consent of the management company and, if the fund has a depositary, also the consent of the depositary with the amendment of the articles of association;
 4) a justification of the amendments and an analysis of the effects on the development of the fund and on the interests of the shareholders of the fund.

§ 198.  Review of application for approval of amendments to articles of association and decision on approval

 (1) The provisions of §§ 195 and 196 of this Act apply to the review of petitions for approval of the amendments to the articles of association of a fund and the decision to register the amendments.

 (2) The decision on approval of amendments to the articles of association of a fund shall be appended to the petition for entry of the amendments to the articles of association of the fund in the commercial register.

Division 3 Management of Fund  

§ 199.  Specifications for competence of general meeting

 (1) In addition to that provided for in the Commercial Code, the general meeting of a fund is competent to decide on entry into the management contract and depositary contract and on amendment and termination thereof unless otherwise provided by this Act.

 (2) A resolution specified in subsection (1) of this section is adopted if at least 2/3 of the votes represented by shares at the general meeting are in favour. The articles of association may prescribe a greater majority requirement.

 (3) The general meeting of a fund may decide to amend the area of activity specified in the articles of association such that a public limited company is no longer a fund if over 2/3 of the votes represented by shares are represented at the general meeting. The resolution shall be adopted if all shareholders who participate in or are represented at the general meeting vote in favour.

§ 200.  Specifications for competence of supervisory board

 (1) By a resolution of the general meeting, the right to adopt resolutions specified in subsection 199 (1) of this Act may be transferred to the supervisory board for a specified term if so prescribed by the articles of association of the fund. The specified term shall not exceed three years. In such case, the articles of association shall prescribe the method of calculation and the rate of fees and charges to be paid to the management company and the depositary, and a list and method of calculation of expenses to be covered for the account of the fund.

 (2) A resolution of the general meeting specified in subsection (1) of this section is adopted if at least 2/3 of the votes represented at the general meeting are in favour. The articles of association may prescribe a greater majority requirement.

 (3) If the articles of association grant the supervisory board the right to increase the share capital of the fund, the provisions of subsection 347 (3) and the second sentence of subsection 349 (2) of the Commercial Code do not apply. Upon undersubscription of shares, the supervisory board has the right to extend the subscription term or cancel shares which are not subscribed for during the subscription term. If shares are subscribed for by the new due date designated by the supervisory board, the subscription is deemed to be valid.

 (4) A resolution of the supervisory board provided for in subsections (1) and (3) of this section is adopted if over 2/3 of the members of the supervisory board participating in the meeting vote in favour or if a resolution of the supervisory board is made pursuant to the procedure provided for in § 323 of the Commercial Code. The articles of association may prescribe a greater majority requirement.

§ 201.  Supervision by management board

 (1) The management board of a fund shall, to the extent and pursuant to the procedure prescribed by the management contract, exercise supervision over the activities of the management company which are related to the fund.

 (2) If a fund has a depositary, the management board of the fund shall exercise supervision over the activities of the depositary to the extent and pursuant to the procedure prescribed in the depositary contract.

§ 202.  Requirements for members of managing bodies

 (1) The requirements provided for in § 51 of this Act apply to the members of the management board and supervisory board of a fund.

 (2) Members of the management board or supervisory board of the management company or depositary of a fund shall constitute not more than 1/2 of the members of the supervisory board of the fund.

Division 4 Issue of Shares  

§ 203.  Payment for shares

 (1) Upon issue, shares shall be immediately paid for in full.

 (2) Upon issue, shares may only be paid for by monetary contribution. Share capital may also be increased by a bonus issue.

§ 204.  Net asset value of fund and share of fund

 (1) The net asset value of a fund shall be established on the basis of the market value of the securities, immovables and other things and rights belonging to the fund from which claims against the fund are deducted. The procedure for establishment of the net asset value of funds shall be established by a regulation of the minister responsible for the area.

 (2) The net asset value of a share of a fund is equal to the net asset value of the fund divided by the total number of shares issued at the time of calculation.

 (3) The management company shall establish and publish the net asset value of a fund and the shares pursuant to the procedure and at the time provided for in the articles of association of the fund but not less than once a year.

§ 205.  Reimbursement of management fee, depositary’s charge and expenses

 (1) Only fees and charges provided by this Act, and expenses associated with management of a fund and specified in the articles of association of the fund shall be payable for the account of the fund.

 (2) A fund shall pay the management company a management fee prescribed by the management contract for management of the assets of the fund.

 (3) A management company may pay from a fund only those expenses related to management of the fund which are directly related to management of the fund and are prescribed by the management contract.

 (4) If a fund has a depositary, the fund shall pay the depositary a depositary’s charge prescribed by the depositary contract for safekeeping the assets of the fund.

Division 5 Management of assets of fund  

§ 206.  Management of assets of fund

  The assets of a fund shall be managed and disposed of by a management company to the extent prescribed by law and the management contract.

§ 207.  Termination of management contract

  A management contract terminates:
 1) upon expiry of the term of the management contract;
 2) upon termination by agreement of the parties;
 3) in the case of a management contract with an unspecified term, upon one month’s advance notice of cancellation by the fund and upon three months’ advance notice of cancellation by the management company unless the contract prescribes a longer term;
 4) upon termination of the authority of the management company to manage the fund;
 5) upon dissolution of the fund or the management company;
 6) upon the declaration of bankruptcy of the fund or the management company or abatement of bankruptcy proceedings commenced against either;
 7) in other cases prescribed by law or the management contract.

§ 208.  Disclosure of management contract

 (1) A public fund shall publish a notice concerning amendment or termination of a management contract on the website of the management company promptly after amendment or termination of the management contract and shall publish the notice in at least one national daily newspaper or send it to shareholders to the address entered in the share register by registered mail. The notice shall set out information regarding the possibilities to examine the amended text of the management contract.

 (2) A fund not specified in subsection (1) of this section shall publish a notice concerning amendment or termination of a management contract promptly after amendment or termination of the management contract on the website of the management company.

§ 209.  Transfer of management upon termination of management contract

 (1) Upon termination of a management contract, a fund shall enter into a new management contract within three months unless a management contract terminates upon dissolution of the fund, upon the declaration of bankruptcy of the fund or upon abatement of bankruptcy proceedings commenced against the fund. Until entry into a new management contract, a fund founded as a public limited company shall be managed by the management board of the fund.

 (2) With the permission of the Financial Supervision Authority, the term specified in subsection (1) of this section may be extended for up to six months.

 (3) If a fund does not enter into a new management contract within the term specified in subsection (1) or (2) of this section or if the general meeting of the fund fails to adopt a resolution specified in subsection 199 (3) of this Act, the Financial Supervision Authority shall commence compulsory dissolution of the fund.

Division 6 Merger, Division, Transformation and Liquidation of Fund  

§ 210.  Division and transformation of fund

 (1) A fund shall not be transformed into a company of a different type.

 (2) The division of funds is prohibited.

§ 211.  Merger of funds

 (1) Funds shall be merged pursuant to the provisions of Chapter 31 of the Commercial Code unless otherwise provided for in this Division.

 (2) A fund entered in the Estonian commercial register may be merged only with a fund founded according to the law of a Contracting State.
[RT I 2007, 65, 405 - entry into force 15.12.2007]

 (3) [Repealed - RT I 2007, 65, 405 - entry into force 15.12.2007]

§ 212.  Merger of fund with another public limited company

 (1) A fund may merge only as an acquiring fund with a public limited company of a Contracting State which is not a fund in compliance with the requirements of the Commercial Code and this Act.
[RT I 2007, 65, 405 - entry into force 15.12.2007]

 (2) The management company shall request an authorisation for the merger (hereinafter in this Division authorisation for merger) of the fund and the private limited company from the Financial Supervision Authority within ten days after passing the merger resolution of the merging entities.
[RT I, 02.11.2011, 1 - entry into force 12.11.2011]

 (3) In order to apply for an authorisation for merger, a management company shall submit a written petition and the following information and documents (hereinafter in this Division application) to the Financial Supervision Authority:
 1) the merger agreement;
 2) copies of the merger resolutions and the respective minutes of the general meetings of the fund and the merging public limited company;
 3) the merger report;
 4) the auditor’s report on the merger;
 5) information concerning the submission of claims specified in subsection 398 (1) of the Commercial Code or concerning the absence thereof;
 6) [repealed - RT I, 02.11.2011, 1 - entry into force 12.11.2011]
 7) the opinion of the management company managing the acquiring fund;
 8) the consent of the depositary with the merger if the fund has a depositary;
 9) the reasons for the need to merge the fund and the public limited company;
 10) a business plan which meets the requirements provided for in § 194 of this Act.

 (4) If the merger of a fund and a public limited company brings about amendment of the articles of association, the management company shall submit also the information specified in subsection 197 (2) of this Act in addition to that provided for in subsection (3) of this section.

§ 213.  Processing of application for authorisation for merger and decision on grant of authorisation for merger

 (1) The provisions of § 16 of this Act apply to the processing of applications for an authorisation for merger, verification of the submitted information and verification whether the merger of a fund and a public limited company is reasoned and in the best interests of shareholders.

 (2) The decision to grant or refuse to grant an authorisation for merger shall be made by the Financial Supervision Authority within two months after the receipt of a respective petition but not later than within one month after the receipt of all the necessary documents and information.

 (3) If approval of the amendments to the articles of association is also applied for upon merger, the Financial Supervision Authority shall make, together with the decision to grant an authorisation, a decision on approval of the amendments to the articles of association pursuant to the provisions of § 198 of this Act.

 (4) The Financial Supervision Authority shall inform the management company of a decision to grant or refuse to grant an authorisation for merger promptly after the decision is made.

§ 214.  Refusal to grant authorisation for merger

  The Financial Supervision Authority may refuse to grant an authorisation for merger if:
 1) the objectives of the activities and the investment policy of the acquiring fund and the public limited company being acquired differ significantly;
 2) the merger agreement contains conditions the occurrence or non-occurrence of which may damage the interests of the shareholders of the fund;
 3) the merger would violate the limitations on investment provided by this Act, legislation issued on the basis thereof or the articles of association;
 4) other circumstances provided for in § 196 of this Act arise;
 5) the merger of the fund and the public limited company may damage the legitimate interests of the shareholders for other reasons.

§ 215.  Merger notification

 (1) The management company shall immediately publish a merger notification concerning the fact of being granted authorisation for merger in at least one national daily newspaper and on the websites of all merging companies.

 (2) A management company shall submit a petition for entry of a merger in the commercial register promptly after publication of the merger notice specified in subsection (1) of this section.
[RT I 2007, 65, 405 - entry into force 15.12.2007]

§ 216.  Liquidation report or bankruptcy report

  The liquidators or trustee in bankruptcy of a fund shall, promptly after termination of the proceeding, present a report in accordance with the requirements established by a regulation of the minister responsible for the area to the Financial Supervision Authority; in addition, the liquidators shall present the final balance sheet of the fund.

Chapter 6 PUBLIC OFFER, REPORTING AND INFORMATION SUBJECT TO DISCLOSURE  

Division 1 Public Offer and Prospectuses  

§ 217.  Public offer

 (1) Within the meaning of this Act, the public offer of units of a common fund or shares of a fund founded as a public limited company means communication of the information concerning the conditions of the offer and the offered units and shares in any format in order for these units or shares to be acquired.

 (2) An offer specified in subsection (1) of this section is not deemed to be public if the shares or units are offered under the conditions specified in subsection 12 (2) of the Securities Market Act.

 (3) The shares or units of a fund may be offered publicly only if the fund rules or articles of association of the fund indicate that the fund is public.

§ 218.  Application of this Division

 (1) The provisions of this Division shall apply to public offer of units or shares of the fund and units of the pension fund specified in clause (2) 1(o)) of the Directive 2003/71/EC of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ L 345, 31.12.2003, pp. 64-89) (hereinafter in this Division offer).
[RT I 2008, 13, 89 - entry into force 15.03.2008]

 (2) The provisions of the Securities Market Act concerning public offers and admission to trading on regulated markets shall apply to the public offer of securities or shares of a closed-ended fund which units or shares are not redeemed or purchased at the request of unit-holders or shareholders for the account of the fund.
[RT I 2008, 13, 89 - entry into force 15.03.2008]

§ 219.  Prospectuses

 (1) A prospectus shall be prepared concerning an offer of units of a pension fund and a public fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) In addition to a prospectus, a simplified prospectus which complies with the requirements provided by this Act and legislation issued on the basis thereof may be prepared concerning an offer of units.

 (3) In addition to a prospectus, key information shall always be prepared concerning an offer of units of a UCITS.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (4) A prospectus and a simplified prospectus (hereinafter prospectuses) shall be approved by the management board of a management company.

 (5) The prospectuses shall be signed by all members of the management board of a management company.

 (6) A management company shall submit the prospectuses to the Financial Supervision Authority together with a petition for registration of the fund rules.

§ 220.  Requirements for prospectuses

 (1) The information presented in prospectuses shall be accurate, unambiguous and not misleading and comply with the requirements provided by legislation and contain a clear and understandable explanation concerning the risk level associated with the fund. The prospectuses shall be prepared in a manner allowing users of the prospectuses to find necessary information easily.

 (2) A simplified prospectus shall be prepared and written so that content of the prospectus is easily understandable.

 (3) The date as at which the information presented in the prospectuses derives shall be stated therein.

 (4) The rules of a common fund are an integral part of a prospectus. Fund rules need not be appended to a prospectus if an investor is informed that, at the request of the investor, the fund rules shall be sent to the investor or a unit-holder is informed of all places where the rules of the common fund are disclosed in all the states where the units are traded.

 (5) A simplified prospectus appended to a prospectus shall be separable from the prospectus.

 (6) Specific requirements for prospectuses and a list of information contained therein shall be established by a regulation of the minister responsible for the area.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 2201.  Key information requirements

 (1) The provisions concerning simplified prospectuses apply to key information, unless otherwise provided by this Act. The requirements established pursuant to subsection 220 (6) of this Act and the provisions of § 221 concerning prospectuses shall not apply to key information.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (2) The key information shall state in a clear and unambiguous manner the following information needed to make an informed investment decision:
 1) the name of the fund;
 2) a short description of its investment objectives and investment policy of the fund;
 3) the historical yield of the fund or expected return of the fund in the case of guaranteed payments;
 4) charges relating to the fund;
 5) the risk and reward profile of the fund together with the instructions and warnings necessary for understanding the risks associated with investing in the fund;
 6) a reference to the place, method of receipt of the prospectus free of charge, annual reports and semi-annual reports or other information concerning the fund and the language of the respective information;
 7) an express notice concerning the bases for the liability specified in subsection 226 (41) of this Act.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (3) The key information is prepared so that the content thereof is easily understandable by persons who are not professional investors even without any reference to other documents.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (4) The information presented in the key information shall be in accordance with the respective information in the prospectus.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (5) The key information and, where appropriate, the translation thereof shall be used in an unaltered form without supplements in all Member States where the units of the fund are offered.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (6) Commission Regulation No. 583/2010/EU establishes the specific requirements for the content and format of the key information.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 221.  Information presented in prospectuses concerning investment policy of fund

 (1) Prospectuses shall contain the principles according to which the assets of funds are invested.

 (11) Prospectuses of venture capital funds shall contain information about the differences between the risk levels of the investment policies of venture capital funds.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) If transactions are concluded with derivative instruments for the account of a fund, prospectuses shall contain a prominent statement whether the specified transactions are used in order to manage risks or achieve the investment objectives of the fund. The prospectuses shall also set out the possible effect of the use of the derivative instruments on the risk level of the fund.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (3) If a fund invests principally in assets specified in clauses 255 (1) 1), 3) and 4) and § 267 of this Act or pursuant to the rules provided for in § 253 of this Act or replicates a share or debt securities index specified in § 254 of this Act upon investment, the prospectuses and, where necessary, any other promotional literature of the fund shall include a prominent statement drawing attention to the specified investment policy.

 (4) When the net asset value of a fund is likely to have a high volatility due to investment of the assets of the fund into securities of different classes and other assets and due to transactions concluded upon management of the assets, its prospectuses and, where necessary, any other promotional literature of the fund shall include a prominent statement drawing attention to this characteristic.

 (5) A fund that invests a substantial proportion of its assets in other investment funds shall disclose in its prospectuses the maximum level of the management fees that may be charged both to the fund itself and to the other investment funds in which it intends to invest.

 (6) Upon request of an investor, the management company shall also provide supplementary information relating to the quantitative limits that apply in the risk management of the fund, to the measures of risk management and to the recent evolution of the main instrument categories' risks and yields.

§ 222.  Language

 (1) Prospectuses shall be prepared and disclosed in Estonian or English and additionally in other languages, if necessary. If the prospectus is not disclosed in Estonian, the Supervision Authority may demand that the summary of the prospectus be translated into Estonian and be disclosed in order to protect the interests of the unit-holders and potential investors.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) An offer prospectus of the units of a pension fund and a simplified offer prospectus of the units of another public fund shall be prepared and disclosed at least in Estonian.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (3) If the prospectus specified in subsection 1 of this section is prepared in Estonian and another language and if such prospectuses are nonconforming or if it is possible to interpret them differently, the prospectus in Estonian or its translation into Estonian takes precedence.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (31) If the prospectus specified in subsection 1 of this section is prepared in English and another language, except the Estonian language, and if such prospectuses are nonconforming or if it is possible to interpret them differently, the prospectus in English or its translation into English takes precedence.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (4) The content of prospectuses offering the units of a UCITS in different languages shall be identical.

§ 223.  [Repealed - RT I 2006, 56, 417 - entry into force 01.01.2007]

§ 224.  Obligation to disclose prospectuses

 (1) Prospectuses shall be accessible to the public (primarily to all investors and other interested parties) for the term of the offer.

 (2) The prospectus of an occupational pension fund shall be accessible, for the term of the offer, to the employers commencing contributions or making contributions to the fund, its employees, servants, members of managing and controlling bodies and unit-holders of the fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) A management company shall disclose prospectuses in writing or in a format which can be reproduced in writing approved by the Financial Supervision Authority at the seat of the management company and on the website of the management company. If the seat of a management company is in a foreign state, the prospectuses shall be disclosed at the seat of its subsidiary founded in Estonia or at the seat of the depositary of the fund or another location approved by the Financial Supervision Authority.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (4) A simplified prospectus shall be disclosed not later than on the day on which the offer is commenced and it shall be offered to the acquirer of units before entry into a contract on acquisition of the units without charge.

 (5) At the request of an acquirer of units, the prospectus shall be given to the acquirer without charge.

§ 225.  Changes in information contained in prospectuses

 (1) If significant information contained in prospectuses is changed, a management company shall send the amended prospectuses promptly to the Financial Supervision Authority for its information and at the same time shall disclose these pursuant to the procedure provided for in § 224 of this Act.

 (2) The Financial Supervision Authority shall require, by its precept, amendment of the prospectuses and disclosure of the amendments if the prospectuses do not meet the requirements of this Act or other legislation.

§ 226.  Compensation for loss

 (1) If prospectuses contain information which is significant for the purpose of assessing the value of the fund or units and such information proves to be different from the actual circumstances, the management company shall compensate the unit-holder for loss sustained thereby due to the difference between the actual circumstances and the information presented in the prospectuses, provided that the management company was or should have been aware of such difference.

 (2) The provisions of subsection (1) of this section also apply if prospectuses are incomplete, including omission of relevant facts, provided that the incompleteness of the prospectuses results from the management company hiding of the information.

 (21) The management company shall have the right, with the consent of the unit-holder, to compensate for the damage specified in subsections (1) and (2) of this subsection, by redeeming the unit from the unit-holder without the redemption fee at the price for which the unit-holder acquired the unit from the management company. Upon redemption of the unit in such a way, the management company is released from the obligation to compensate the unit-holder for any other damage.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The obligation to compensate for the damage prescribed in subsections (1) and (2) of this section also rests with the management company if a third party is the source of the information presented in prospectuses. The management company is released from liability only in such case if the information referred to or published in the prospectus is presented with a reference to a source of information independent of the management company and the management company did not know and need not know that the information on the basis of which the reference was made was incorrect.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (4) A management company does not have the obligation to compensate for any damage on the basis of this section if the injured party was or should have been aware, at the moment of acquiring the unit, that the prospectuses were incomplete or contained inaccurate information. The same applies if a professional investor that sustains loss should have realised, at the moment of acquiring the unit and by exercising due diligence in its activities, that the information contained in the prospectuses was inaccurate or incomplete, unless the damage is caused intentionally.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (41) Civil liability may be applied based on the key information or the translation thereof only if their content is misleading, inaccurate or inconsistent with the prospectus.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (5) The limitation period for a claim prescribed in this section is five years as of the disclosure of the prospectuses which contain inaccurate information or are incomplete.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (6) Any agreements which exclude, limit or reduce compensation or the limitation period prescribed in this section shall be void.

Division 2 Public Offer of Units and Shares of Foreign Fund in Estonia  

§ 227.  Application of this Division

 (1) The provisions of this Division apply to the public offer (hereinafter in this Division offer) of the units or shares of a foreign fund (hereinafter in this Division units) in Estonia.

 (11) The provisions of the Securities Market Act concerning public offer of securities shall apply to the offer of units of a foreign closed-end fund in Estonia.
[RT I 2005, 59, 464 - entry into force 15.11.2005]

 (2) The provisions of §§ 229-233 of this Act do not apply to an offer of units of a UCITS of another Contracting State.

 (3) The provisions of §§ 229-233 of this Act shall not apply to the offer of the shares and units of an investment fund of a Contracting State managed by an alternative fund manager of another Contracting State in the case the offer is directed to professional investors only.
[RT I, 12.07.2013, 2 - entry into force 22.07.2013]

§ 228.  Offer of units of foreign fund

 (1) Within the meaning of this Act, the public offer of units of a foreign fund means the communication of information concerning the conditions of the offer and the offered units in any format in order for these units to be acquired.

 (2) An offer specified in subsection (1) of this section is not deemed to be public if the units of a fund are offered only:
 1) under the conditions specified in subsection 12 (2) of the Securities Market Act or
 2) to a specific client upon provision of services specified in clause 43 (1) 4) or clause 44 6) of the Securities Market Act by a management company, investment firm or credit institution.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

 (3) Units of a foreign fund are also deemed as being publicly offered in Estonia if the fund is advertised in Estonia or if the manner of the offer or the contents thereof, including the language of the offer, enable the conclusion to be made that the offer is aimed at persons whose residence or seat is in Estonia.

 (4) The shares and units of an investment fund of a Contracting State managed by an alternative fund manager of another Contracting State may be publicly offered in Estonia only in the case the public offer thereof is also permitted in the home state of the fund. In such case, the provisions of this Chapter concerning a public offer of the units of a fund shall apply to offer of the units of a fund.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 229.  Marketing of units

 (1) A foreign fund or a person which, according to the law of the foreign state where it is founded (hereinafter home state), has the right to manage funds or other similar undertakings or institutions established for collective investment (hereinafter in this Division foreign the management company), is required, in order to organise the purchase and sale of units of a foreign fund (hereinafter in this Division marketing), enter into a contract in Estonia with a management company, investment firm or credit institution who or whose branch is founded in Estonia.

 (2) There is no obligation to enter into a contract in order to market units of a foreign fund if a foreign management company has, according to § 35 of this Act, founded a branch in Estonia which, among other things, organises marketing of the units of the foreign fund.

§ 230.  Application for registration of offer

 (1) The offer of units of a foreign fund in Estonia shall be registered with the Financial Supervision Authority before the offer is commenced.

 (2) In order to register an offer, a written petition and the following information and documents shall be submitted to the Financial Supervision Authority:
 1) a copy of the registration document of the foreign fund issued by a financial supervision authority of the home state;
 2) a copy of the authorisation of the foreign management company issued by the financial supervision authority of the home state if the fund is managed by a management company;
 3) a statement of the financial supervision authority of the home state that the activities of the foreign fund comply with the requirements established in the home state;
 4) the articles of association and the last audited annual report of the foreign management company if the fund is managed by a management company;
 5) the public offer prospectus or another offer document regarding units;
 6) a copy of the registration certificate of the prospectus issued by the financial supervision authority of the home state or another document permitting the prospectus to be disclosed if such document is prescribed according to the legislation of the home state;
 7) the last audited annual report and the semi-annual report of the foreign fund if it is approved after the annual report;
 8) the contract entered into with a management company, investment firm or credit institution who or whose branch is founded in Estonia for marketing units of the fund except in the case provided for in subsection 229 (2) of this Act;
 9) a description of organisation of the marketing of units of the foreign fund and transactions related thereto.

 (3) Information and documents specified in subsection (2) of this section shall be submitted to the Financial Supervision Authority together with translations into Estonian.

 (4) If, after submission of the information and documents specified in subsection (2) of this section, there are changes therein, the foreign fund or management company shall promptly submit the amended information and documents to the Financial Supervision Authority.

§ 231.  Processing of petition for registration of offer of units of foreign fund

 (1) The provisions of § 16 of this Act apply to the processing of petitions for the registration of an offer, verification of the submitted information and verification whether the offer complies with the requirements of this Act or other legislation.

 (2) The decision to register or refuse to register the offer of units of a foreign fund shall be made by the Financial Supervision Authority within six months after the receipt of a respective petition but not later than within two months after the receipt of all the necessary documents and information.

 (3) The Financial Supervision Authority shall promptly inform the foreign management company or fund of a decision to register or refuse to register an offer.

§ 232.  Conditions for registration

 (1) The offer of units of a foreign fund shall be registered if all the conditions provided for in this Division are complied with, including the following:
 1) the foreign fund, and the foreign management company if the fund is managed by a management company, are recognised by the financial supervision authority of the home state;
 2) the offer prospectus of units of a foreign fund complies with the provisions of §§ 220 and 222 of this Act and legislation issued on the basis of this Act;
 3) the name of the foreign fund complies with the requirements provided for in § 5 of this Act;
 4) in order to market units of the foreign fund, a contract is entered into with a management company, investment firm or credit institution who or whose branch is founded in Estonia except in the case specified in subsection 229 (2) of this Act;
 5) upon the issue of units of the foreign fund, it is ensured that the purchaser receives in the account thereof the number of units which corresponds to the purchase price promptly after payment of the purchase price;
 6) upon the redemption or re-purchase of units of the foreign fund and making payments for the account of the foreign fund, the receipt of money by the unit-holders of the fund is ensured pursuant to the provisions of the conditions of the transaction;
 7) organisation of maintenance of a register of the units of the foreign fund is sufficient to ensure the protection of interests of unit-holders;
 8) access to information specified in § 245 of this Act concerning the activities of the foreign fund is ensured.

 (2) The Financial Supervision Authority may register an offer also if the offer prospectus fails to meet the requirements established by a regulation issued on the basis of subsection 220 (6) of this Act unless the legitimate interests of unit-holder or investors are damaged thereby.

§ 233.  Bases for refusal to register

  The Financial Supervision Authority may refuse to register the offer of units of a foreign fund if:
 1) the offer of the units of the foreign fund does not comply with the requirements provided for in this Division;
 2) the offer prospectus of the units of the foreign fund or another offer document fails to reflect all the essential rules of the operation of the fund in full, clearly and unambiguously, or contains provisions which are misleading, incomplete or contradictory;
 3) the prospectus or other documents indicate that investment of the assets of the foreign fund is not sufficiently based on the principle of risk spreading;
 4) supervision over the activities of funds in the home state is insufficient or hindered;
 5) the financial supervision authority of the home state has no legal basis or possibilities for cooperation with the Financial Supervision Authority;
 6) refusal to register is necessary in order to protect the legitimate interests of the investors for other reasons.

§ 234.  Offer of units of UCITS of another Contracting State

 (1) Units of a UCITS of a Contracting State may be offered in Estonia if the offer complies with the requirements of this Act concerning a UCITS, including requirements set for the advertising of the fund, and the following is ensured:
 1) the possibility to pay dividends or make distributions to unit-holders from the UCITS of the Contracting State and the ability of unit-holders to demand redemption and re-purchase of units and payment of an amount which corresponds to the unit;
 2) disclosure of information concerning the UCITS of the Contracting State pursuant to the procedure and to the extent provided by this Act concerning a UCITS.

 (2) Units of a UCITS of another Contracting State may be offered in Estonia from the day a statement of the financial supervision authority of the home state of the UCITS in English is submitted to the Financial Supervision Authority concerning the compliance of the UCITS with the requirements of the legislation of its home state. The following information and transcripts of documents or, as appropriate, the translations thereof shall be submitted to the Financial Supervision Authority together with the statement:
 1) the prospectus and key information;
 2) the fund rules or articles of association of the fund;
 3) the latest audited annual report of the fund and the latest semi-annual report of the fund if this is approved after the latest audited annual report;
 4) the plan for marketing of the units or shares in Estonia;
 5) names of classes of units or shares to be marketed, if the fund has different classes of units or shares;
 6) a notation with regard to whether the same management company markets the units of the fund in Estonia that manages the fund in another Contracting State.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (21) The management company submits the documents and information specified in subsection (2) of this section, except key information, at its choice either in English or Estonian. The management company shall submit the key information in the Estonian language.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (22) The management company of the home state of a UCITS shall notify the Financial Supervision Authority of amendments to the documents specified in clauses (2) 1) to 3) of this section and indicate where the updated documents can be electronically examined. Before amending the information specified in clauses (2) 4) and 5) of this section, the management company of the home state shall notify the Financial Supervision Authority in writing thereof.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (3) [Repealed - RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (4) [Repealed - RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (5) [Repealed - RT I, 08.07.2011, 6 - entry into force 18.07.2011]

Division 21 Offer of fund managed by alternative fund manager in Estonia  
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 2341.  Offer of fund of Contracting State managed by alternative fund manager of another Contracting State in Estonia

  [RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (1) An alternative fund manager requesting only non-public offer of the units or shares (hereinafter in this Division units) of a fund managed by an alternative fund manager of another Contracting State (hereinafter in this section management company) in Estonia shall notify the Financial Supervision Authority thereof through the financial supervision authority of its home state. An offer notice shall be submitted to the Financial Supervision Authority and the following information and documents shall be appended to it (hereinafter in this section information):
 1) the fund rules or articles of association of the fund;
 2) the information concerning the depositary of the fund;
 3) the fund information which shall be provided to the investors concerning the fund investment policy and the assets of the fund, the valuation thereof, the rights and obligations of the investor, charges relating to the fund and third parties related to the management of the fund;
 4) if the assets of the fund are invested to the extent of at least 85 percent in the units or shares of another fund, the seat of such fund;
 5) the plan for marketing the units of the fund in Estonia;
 6) a statement of the financial supervision authority of the home state of the management company that the management company holds an authorisation according to the provisions of Directive 2011/61/EU of the European Parliament and of the Council.

 (2) After the Financial Supervision Authority has received the proper information, the management company may commence the offer of the units of the fund of the Contracting State in Estonia.

 (3) The management company shall immediately inform the Financial Supervision Authority of any changes in the information through the financial supervision authority of its home state and indicate the place where it is possible to examine the updated information.

 (4) The Financial Supervision Authority may prohibit the offer of the units of a fund of the Contracting State by a management company in Estonia in the case the management company does not comply with the requirements provided for in this Act.

 (5) The fund manager shall submit the information specified in this section in English.

 (6) The provisions of this section apply to an offer of the units of such a fund which assets are invested, to the extent of at least 85 percent, in the units or shares of another fund in the case the master fund manager is an Estonian alternative fund manager.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 2342.  Offer of fund of Contracting State managed by Estonian alternative fund manager in Estonia

 (1) For a non-public offer of the units of a fund managed by an Estonian alternative fund manager (hereinafter in this section management company) in Estonia, a management company established in Estonia shall submit, before commencement of the offer, a written offer notice to the Financial Supervision Authority which contains the following information and documents (hereinafter in this section information):
 1) an action plan which contains a list of the funds the offer of which units or shares in Estonia is requested, and information stating the country in which each fund was established;
 2) the fund rules or articles of association of the fund;
 3) the information concerning the depositary of the fund;
 4) if the assets of the fund are invested to the extent of at least 85 percent in the units or shares of another fund, the seat of such fund;
 5) the fund information which shall be provided to the investors concerning the fund investment policy, the assets of the fund and valuation thereof, rights and obligations of the investor, including charges relating to the fund, and third parties related to the management of the fund;
 6) if relevant, information about how the offer of the units or shares of the fund to investors who cannot be regarded as professional investors is precluded, including in the case the units of the fund are offered by third persons in the framework of the provision of investment services.

 (2) The Financial Supervision Authority shall notify a management company within 20 working days as of the receipt of proper information whether the offer of the units of a fund in Estonia is permissible. The Financial Supervision Authority may prohibit the offer of the units if the management of the fund or the activities of the management company do not comply with the provisions of this Act. As of the day of receipt of a permissive notice, the management company may commence the offer of the units of the fund in Estonia.

 (3) If a management company requests to offer the units of a fund established in another Contracting State in Estonia, the Financial Supervision Authority shall also notify the financial supervision authority of the home state of the fund of eligibility of the offer of the fund.

 (4) The provisions of this section shall apply to an offer of the units of such a fund which assets are invested, to the extent of at least 85 percent, in the units or shares of another fund in the case the master fund manager is an Estonian alternative fund manager.

 (5) Prior to making any significant changes to the information, a management company shall notify the Financial Supervision Authority in writing thereof at least one month before such changes enter into force or immediately after any unforeseeable changes are made.

 (6) The Financial Supervision Authority may prohibit the entry into force of any alteration if the activities of the management company no longer comply with this Act after the entry into force of the alteration.

 (7) When the changes specified in subsection (6) of this section enter into force, the Financial Supervision Authority shall have the right to implement all the measures specified in this Act in order to bring the activities of the management company into compliance with law, including to prohibit the offer of the units of the fund.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

Division 3 Cross-border offer of occupational pension funds  
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 235.  Offer of pension fund scheme of Contracting State in Estonia

 (1) The provisions of this Division apply to an offer of a pension fund scheme (hereinafter pension fund scheme) of a Contracting State specified in Article 6(b) of the Directive 2003/41/EC of the European Parliament and of the Council on the activities and supervision of institutions for occupational retirement provision (OJ L 235, 23.09.2003, pp. 10-21) (hereinafter IORP Directive) to the employees, servants and members of managing and controlling bodies of such employer whose residence or seat is in Estonia (hereinafter Estonian employer).

 (2) The Financial Supervision Authority shall be informed of an offer of a pension fund scheme to the employees, servants and members of the managing and controlling bodies of an Estonian employer (hereinafter offer in Estonia) through the financial supervision authority of the Contracting State. The following information shall be submitted to the Financial Supervision Authority:
 1) an attestation from the financial supervision authority of the Contracting State of the person who offers the pension fund scheme that the offered pension fund scheme complies with the requirements provided for in the IORP Directive;
 2) the name of the employer with whom the making of payments into a respective pension fund scheme was agreed;
 3) a description of the principal conditions of the pension fund scheme, including the rules for the investment of assets in the pension fund scheme.

 (3) The provisions of subsections 257 (4) and 272 (1) of this Act apply to the part of the assets of the pension fund scheme which corresponds to the part of the employees, servants and members of the managing and controlling bodies of the Estonian employer.

 (4) Employees, servants and members of managing and controlling bodies of an Estonian employer shall not be offered pension fund schemes with a guaranteed rate of return, defined-benefit pension funds and covering mortality, survival and incapacity for work risks.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 236.  Giving notification of conditions and changes

 (1) Within two months after the financial supervision authority of a Contracting State has communicated the information specified in subsection 235 (2) of this Act to the Financial Supervision Authority, the Financial Supervision Authority may determine the conditions which an offer of a pension fund scheme shall meet in Estonia according to this Act, the Income Tax Act, the Employment Contracts Act and other relevant Acts and legislation issued on the basis of these Acts.

 (2) The Financial Supervision Authority shall inform a person who offers a pension fund scheme and the financial supervision authority of the respective Contracting State of the conditions specified in subsection (1) of this section.

 (3) The offer of a pension fund scheme in Estonia may be commenced after receipt of the information specified in subsection (1) of this section from the Financial Supervision Authority or after expiry of the term specified in subsection (1) of this section.

 (4) The Financial Supervision Authority is required to inform the financial supervision authority of the Contracting State of the location of the person who offers the pension fund scheme of any material changes in the conditions specified in subsection (1) of this section which arise from amendments to the respective Acts and legislation issued on the basis thereof.

§ 2361.  Offer of Estonian occupational pension fund in another Contracting State

 (1) The provisions of this section apply to offers of occupational pension funds to employees, servants and members of managing and controlling bodies of an employer of a Contracting State.
[RT I, 06.07.2012, 1 - entry into force 01.04.2013]

 (2) For offering an occupational pension fund to the employees, servants and members or managing and controlling bodies of an employer of a Contracting State, the management company shall notify the Financial Supervision Authority and submit the following information and documents:
 1) the name of the Contracting State to the employees, servants and members of managing and controlling bodies of the employer of which the management company wishes to offer the occupational pension fund;
 2) a description of the principal rules of the occupational pension fund, including the rules for investment of assets in the occupational pension fund;
 3) the name of the employer of the Contracting State with whom the making of payments into the respective occupational pension fund was agreed.
[RT I, 06.07.2012, 1 - entry into force 01.04.2013]

 (3) If the documents submitted comply with the requirements and the management company has sufficient funds, organisational capacity and experience for the offer of the occupational pension fund in another Contracting State, the Financial Supervision Authority shall communicate the information specified in subsection (2) of this section together with an attestation that the offered occupational pension fund complies with the requirements provided for in the IORP Directive, within three months as of receipt of the information from the management company to the financial supervision authority of the Contracting State to the employees, servants and members of managing and controlling bodies of which the offer of the occupational pension fund is requested.
[RT I, 06.07.2012, 1 - entry into force 01.04.2013]

 (4) The Financial Supervision Authority shall immediately notify the management company of submission of the information and documentation specified in subsections (2) and (3) of this section to the financial supervision authority of the other Contracting State.

 (5) A management company may commence the offer of the occupational pension fund to the employees, servants and members of managing and controlling bodies of the employer of another Contracting State after receiving, through the Financial Supervision Authority, the conditions set by the financial supervision authority of the specified Contracting State for offer of the occupational pension fund in such Contracting State.
[RT I, 06.07.2012, 1 - entry into force 01.04.2013]

 (6) If the financial supervision authority of another Contracting State does not submit its requirements within two months as of the receipt of the information and documents specified in subsections (2) and (3) of this section from the Financial Supervision Authority, the management company may commence the offer of the occupational pension fund in the specified Contracting State, taking into consideration the requirements established by the legislation for occupational pensions in such Contracting State.

 (7) The management company shall notify the Financial Supervision Authority of any changes made in the information specified in clauses (2) 2) and 3) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

Division 4 Accounting and Reporting  

§ 237.  Organisation of accounting

 (1) The accounting and reporting of a management company and a fund shall be organised on the basis of the Accounting Act, this Act, other legislation and the accounting policies and procedures of the management company. The provisions of § 14, subsections 15 (2) and 18 (3) and §§ 25 and 26 of the Accounting Act do not apply to the accounting and reporting of common funds.

 (11) The management company of a mandatory pension fund shall submit a report on the management of the mandatory pension fund as a note to its annual report.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (12) The format of the note to the annual report specified in subsection (11) of this section and the procedure for completion thereof shall be established by a regulation of the minister responsible for the area.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (13) The management company of a mandatory pension fund shall append explanations to its annual report of the principles for allocation of expenditure among the management of the mandatory pension fund and other activities of the management company.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (14) The minister responsible for the area may establish by a regulation the principles for allocation of expenditure of management companies among the management of mandatory pension funds and other activities of the management company.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (2) The accounting of a common fund shall be organised by the management company.

 (3) The accounting of a common fund shall be kept separate from the accounting of the management company and other common funds.

 (4) The financial year of a common fund is the financial year of its management company.

 (5) The provisions in the Accounting Act concerning annual reports apply to annual reports and semi-annual reports of funds founded as public limited companies unless otherwise provided by this Act.

 (6) If a management company manages a UCITS established in another Contracting State, the UCITS accounting shall be kept and the internal rules of procedure for establishment of the net asset value of the UCITS shall be established pursuant to the legislation of the home state of the UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 238.  Reports and their submission

 (1) A management company shall prepare reports and the reports of the common funds managed by it and submit them to the Financial Supervision Authority pursuant to the procedure provided by this Act or legislation issued on the basis thereof.

 (2) A fund founded as a public limited company shall prepare reports and submit them to the Financial Supervision Authority pursuant to the procedure provided by this Act or legislation issued on the basis thereof.

 (3) A management company shall submit the annual report, the sworn auditor's report, an extract from the proposal for and the resolution on the distribution of profits or the covering of losses for the financial year and the minutes of the general meeting concerning the approval of or refusal to approve the annual report to the Financial Supervision Authority within two weeks after the general meeting of shareholders but not later than by 1 May of the year following the financial year.

 (4) The period for the regular reports of management companies to be submitted to the Financial Supervision Authority is one quarter. A management company shall submit the regular report of the management company to the Financial Supervision Authority within 25 days after the end of the reporting period.

 (5) The period for the regular reports of funds to be submitted to the Financial Supervision Authority is one month. A management company of a common fund and a fund founded as a public limited company shall submit the regular report of the fund to the Financial Supervision Authority within then days after the end of the reporting period.

 (6) The exact requirements for the regular reports of funds to be submitted to the Financial Supervision Authority, their content, the methods of preparation and the procedure for submission thereof shall be established by a regulation of the minister responsible for the area; the minister responsible for the area may also prescribe a longer period for preparation and submission of regular reports.

 (7) The exact requirements for the regular reports of management companies to be submitted to the Financial Supervision Authority, their content, the methods of preparation and the procedure for submission thereof shall be established by a regulation of the minister responsible for the area.

 (8) In addition to the provisions in subsections (6) and (7) of this section, the Financial Supervision Authority shall have the right, for exercise of supervision, to request additional periodic and specific reports from a management company on the management company itself and on a common fund managed by it or from a fund founded as a public limited company on the fund itself, and information and reports on the services provided and the investment funds managed by the management company, which are required for the performance of the functions of the Financial Supervision Authority on the basis of Regulation (EU) No 1095/2010 of the European Parliament and of the Council establishing a European Supervisory Authority (European Securities and Markets Authority) (OJ L 331, 15.12.2010, pp. 84-119).
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

 (9) The Financial Supervision Authority may request that a foreign fund and a management company which provides service in Estonia submit the same reports and information as the management companies and funds of Estonia.

 (10) The minister responsible for the area may establish by a regulation the requirements for the regular reports of the funds managed by foreign management companies and subsidiaries of management companies founded in Estonia to be submitted to the Financial Supervision Authority, their content, the methods of preparation and the procedure for submission thereof.

 (11) Based on the reports submitted to the Financial Supervision Authority and provided for in this section, information may also be submitted as appropriate to the Ministry of Finance for the performance of duties provided for in the Government of the Republic Act, and to Eesti Pank for the performance of duties provided for by the Official Statistics Act.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 239.  Approval of reports

 (1) The annual reports and semi-annual reports and statement of investments of a common fund shall be approved by the management board of the management company. The reports shall be signed by all members of the management board of the management company.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (2) The semi-annual reports of a fund founded as a public limited company shall be approved by the supervisory board of the fund founded as a public limited company.

§ 240.  Audit

 (1) A common fund shall have an auditor who is designated by the supervisory board of the management company and complies with the requirements provided for in the Authorised Public Accountants Act.

 (2) The respective provisions of this Act, the Accounting Act, Commercial Code and other legislation concerning audits apply to the audit of common funds.

 (3) Before approval, the annual report of a common fund shall be audited by the auditor. The sworn auditor’s report shall be appended to the annual report of the common fund.
[RT I 2010, 9, 41 - entry into force 08.03.2010]

 (4) The auditor shall, among other things, monitor compliance of the activities of the fund with the requirements prescribed by this Act and the fund rules or articles of association of the fund.

 (5) Companies belonging to the same consolidation group as a management company shall be audited by at least one common auditor.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (6) In the course of auditing a management company, an auditor shall audit the compliance of the activities of the management company with the requirements provided by this Act and submit a report to the management company and the Financial Supervision Authority, assessing at least the following areas:
 1) the compliance of the own funds of the management company with the requirements;
 2) the sufficiency and efficiency of the internal audit measures;
 3) the security of the information systems of the management company;
 4) the compliance of the policy and rules of procedure for the management of risks associated with the management of the assets of a public fund with the requirements;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 5) sufficiency of the technical reserves and financial liabilities of the occupational pension fund specified in clause 13 (1) 6) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 241.  Notification obligation of auditor

 (1) The auditor is required to inform the Financial Supervision Authority promptly in writing of any circumstances revealed in the course of an audit which result or may result in:
 1) material violation of legislation regulating the activities of management companies, funds or depositaries;
 2) interruption of the activities of the management company;
 3) a situation or the risk of a situation arising in which the management company or depositary is unable to perform its obligations;
 4) a qualified report by the sworn auditor concerning the annual accounts of the management company;
[RT I 2010, 9, 41 - entry into force 08.03.2010]
 5) significant proprietary damage to the management company, to unit-holders or shareholders of funds managed by the management company or to other clients, which is caused by an act by a member of the management board or supervisory board or an employee of the management company.

 (2) Upon communication of information to the Financial Supervision Authority according to subsection (1) of this section, an auditor does not violate the obligation to maintain the confidentiality of information which is imposed on the auditor by legislation or a contract.

Division 5 Disclosure  

§ 242.  Disclosure of information

 (1) A management company shall publish and make available the information provided by this Act and legislation issued on the basis thereof at the seat of the management company, in its branches and on the website of the management company or on the website of the consolidation group into which the management company belongs or, in the case of a fund the units or shares of which are traded on a regulated market registered in Estonia, on the website of the operator of the market.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (11) For ensuring the availability of the fund rules and prospectuses of mandatory pension funds on the website of the registrar of the Estonian Central Register of Securities, the management company is required to submit to the registrar of the Estonian Central Register of Securities the fund rules and prospectuses of the mandatory pensions funds managed by it and upon their amendment the amended fund rules and prospectuses.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (2) Each person shall be able to examine the following information and documents at the seat of the management company of a public fund, in its branches and on the website of the management company or on the website of the consolidation group into which the management company belongs:
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 1) the fund rules or articles of association of the fund;
 2) the three preceding annual reports of the fund;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 3) the last semi-annual report of the fund if this is approved after the last annual report;
 31) the latest statement of investments of the mandatory pension fund, if this is approved after the annual report;
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]
 4) an offer prospectus regarding the units or shares of the public fund and a simplified prospectus if it exists;
 5) the name and contact details of the management company;
 6) the name of the fund manager;
 7) the name and contact details of the depositary;
 8) a list of the members of the supervisory board and management board of the fund if the fund is founded as a public limited company;
 9) the management contract of the fund founded as a public limited company;
 10) information on the size of holding of the management company in the fund;
 11) the three preceding annual reports of the management company.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (21) If the seat of a management company is in a foreign state, it shall be possible to examine the information and documents specified in subsections (2) or (3) of this section at the seat of its branch founded in Estonia or the depositary of the fund or at another location approved by the Financial Supervision Authority.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (22) The employer that will make contributions or makes contributions to the occupational pension fund, its employees, servants, members of managing and controlling bodies and unit-holders of the fund shall be able to examine the information and documents of the occupational pension fund specified in subsection (2) of this section at the seat or on the website of the management company or on the website of the consolidation group in which the management company belongs.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The unit-holders or shareholders of a fund not specified in subsection (2) of this section shall be able to examine the information and documents specified in subsection (2) of this section at the seat of the management company.

 (4) A management company shall give copies of the documents specified in clauses (2) 1) to 4) of this section to unit-holders or shareholders at the request thereof without charge.

 (5) Information specified in clauses (2) 1) to 7), 9) and 10) of this section shall be made available within three working days after entry into force of the respective document or change of the information.

 (6) The information and documents specified in clauses (2) 1) to 3) and 5) to 10) of this section shall be disclosed in Estonian or English and additionally in another language, if necessary. If the information and documents are not disclosed in Estonian, the Financial Supervision Authority may demand that the translation of the information and documents into Estonian be disclosed in order to protect the interests of the unit-holders and shareholders.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (61) The information and documents specified in clauses (2) 1) to 31) and 5) to 10) of this section shall be disclosed concerning pension funds and other public funds at least in the Estonian language. If the information and documents are not disclosed in Estonian, the Financial Supervision Authority may demand that their translation into Estonian be disclosed in order to protect the interests of the unit-holders, shareholders and potential investors.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (62) If the information and documents specified in clauses (2) 1) to 31) and 5) to 10) of this section are disclosed in Estonian and another language and they are nonconforming or can be interpreted differently, the information or documents in Estonian or translation of the information and documents in another language into Estonian shall take precedence.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (63) If the information and documents specified in clauses (2) 1) to 3) and 5) to 10) of this section are disclosed in English and another language, except in the Estonian language, and they are nonconforming or can be interpreted differently, the information or documents in English or translation of the information and documents in another language into English take precedence.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (7) A management company shall promptly, pursuant to the procedure prescribed in the fund rules or articles of association of the fund, disclose all circumstances which materially influence the activities, financial situation or net asset value of the shares or units of the funds managed by the management company.

§ 243.  Requirements for information subject to disclosure

 (1) All information published and presented in documents concerning a fund (hereinafter information subject to disclosure) shall be true and unambiguous and not misleading.

 (2) Information subject to disclosure concerning a fund may include information, facts and assessments disclosed concerning a fund published with the aim of informing the public of the fund rules, the activities, financial situation of the fund, formation of the net asset value of the shares or units of the fund and other required circumstances.

 (3) Information subject to disclosure concerning a fund shall not give actual or ostensible guarantees concerning the yield of the fund or distributions from the fund or contain forecasts of the financial performance of the fund, taking into account the provisions of §§ 278 and 279 of this Act.

 (4) Information subject to disclosure concerning the reference index or other reference basis of a fund shall include a notation as to whether this is the basis for comparing the rate of return of the fund, or the investment policy of the fund consists in replicating a specific securities index or other financial index. Information concerning the reference basis shall be set out at least in the prospectus of the fund.

 (5) Advertising of a fund for the purposes of this Act (hereinafter advertising) is the information subject to disclosure, which is available to the public, which purpose is to affect the economic behaviour of persons and promote the offer and which may be expressed among other things through disclosure of offers of non-fund benefits.

 (6) All information subject to disclosure which invites persons to purchase shares or units of a public fund, including advertising, shall include a notation as to where the documents specified in clause 242 (2) 4) of this Act can be examined.

 (7) Advertisements of a mandatory pension fund shall not include any offers of non-fund benefits or be related, in any other way, to offers which may influence the persons to whom such offers are directed or to whom they may reach, to make a decision in choosing a pension fund based on such non-fund benefits.

 (8) The minister responsible for the area may established by a regulation the detailed requirements for the information disclosed concerning a fund, including advertising, in order to ensure that true information and data are communicated and submitted to shareholders and unit-holders.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 2431.  Disclosure of rate of return of fund

 (1) In disclosure of the rate of return of a fund, the information subject to disclosure shall contain a notation that the rate of return achieved by the fund in past periods does not guarantee the rate of return of the fund in future periods, unless the rate of return of the fund is guaranteed under the aforementioned conditions pursuant to the provisions of §§ 278 and 279 of this Act. Information concerning the period used as the basis for determining the rate of return shall also be included in the information about the rate of return subject to disclosure.

 (2) In disclosure of the rate of return of a fund, the rate of return over a period of at least 12 months shall be disclosed provided that the last month of such period is the month preceding the moment of disclosing the rate of return. In the case of periods that are shorter than 12 months, no annual rate of return shall be disclosed.

 (3) An annual rate of return of any period shorter than 12 months may be disclosed only in the case of the money market funds provided for in § 252 of this Act and other funds which comply with equivalent requirements. In case the annual rate of return is disclosed, it shall be indicated with regard to the rate of return that the rate of return is annualized.

 (4) If the fund has sufficient history, the average rate of return of the fund for the last two, three and five calendar or financial years shall be stated in disclosure of the rate of return of the fund.

 (5) The provisions of this section do not apply to any reference information and the information disclosed on the website specified in subsection 242 (1) of this Act. Information submitted by an independent person in which the rate of return of funds is compared directly or indirectly or which refers to the respective reference basis is deemed to be reference information.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 244.  Obligation to disclose reports

 (1) Copies of the annual report of a common fund and the annual report of a fund founded as a public limited company and of the half-year report of a public fund shall be given to the unit-holders or shareholders or an acquirer of units or shares of the fund at their request without charge.

 (2) The annual report of a public fund shall be disclosed within four months after the end of the financial year and the half-year report within two months after the end of the half-year on the website specified in subsection 242 (1) of this Act.

 (21) The period of the statement of investments of a mandatory pension fund is one month. The statement of investments of a mandatory pension fund shall be disclosed by the 15th date of the month following the accounting period.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (22) The annual report of an occupational pension fund shall be made available to the persons specified in subsection 242 (22) of this Act within four months after the end of the financial year and the semi-annual report within two months after the end of the first six months of a financial year.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The management company of a public fund shall disclose its annual report within four months after the end of a financial year on the website specified in subsection 242 (1) of this Act.

 (4) The requirements for the content of annual reports and the methods of preparing the reports shall be established by a regulation of the minister responsible for the area.

 (41) Unit-holders of the occupational pension fund specified in clause 13 (1) 6) of this Act shall be also provided information free of charge once a year at their request concerning the amount of the payments agreed upon in the rules of the occupational pension fund, including the amount of the payments in the case the contributions to the pension fund are terminated before the due date prescribed in the rules of the occupational pension fund, and the amount of the contributions made by the employer of the unit-holder for the unit-holder.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (5) The minimum amount of information to be disclosed by a management company, the methods of preparing reports and term for publication thereof may be established by a regulation of the minister responsible for the area.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 245.  Information subject to disclosure regarding foreign funds

 (1) The unit-holders and shareholders of a fund shall have the opportunity to examine the information and documents specified in subsection 242 (2) of this Act, if prepared concerning the fund, at the seat of the branch of the management company, at the seat of a management company, investment fund or credit institution marketing the units of the fund and founded in Estonia or at the seat of the branch of the aforementioned foreign persons founded in Estonia.

 (11) Upon offering the units and shares of a UCITS of another Contracting State, at least the documents and information specified in clauses 242 (2) 1) to 4) of this Act shall be disclosed regarding the UCITS. The management company shall disclose the said documents and information, except for key information, at its choice either in English or Estonian. The management company shall disclose the key information in the Estonian language.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]

 (2) All advertising which directly or indirectly invites persons to purchase shares or units of a fund shall meet the requirements provided for in the Advertising Act and in §§ 243 and 2431 of this Act and include a notation as to where the prospectuses can be examined.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (3) The documents and information specified in subsection (1) of his section shall be disclosed pursuant to the procedure provided for in subsections 242 (2) to (6) of this Act.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

Chapter 7 REQUIREMENTS FOR MANAGEMENT OF FUND ASSETS  

Division 1 General Requirements  

§ 246.  General provisions for investment of assets

 (1) The assets of a fund may be invested only in the assets specified in the fund rules or the articles of association of the fund, taking account of the limitations provided by this Act, legislation issued on the basis thereof, the fund rules or the articles of association of the fund.

 (2) The fund rules or the articles of association of a fund shall provide for separate limitations by classes of assets and set out the states or persons located in the states in which the assets of the fund are invested, and shall also provide for limitations broken down by states if the assets of the fund are invested in securities traded on the regulated markets of the states.

§ 247.  General requirements for investment of assets and risk-spreading

 (1) In acquiring and transferring assets for the account of a fund, a management company shall ensure that the investments of the fund are sufficiently spread between different securities and other assets.

 (2) The limitations on the investment of assets and restrictions on risk-spreading provided for in this Chapter do not apply upon the liquidation of a fund, unless the Financial Supervision Authority prescribes otherwise in its decision to grant an authorisation for the liquidation of the fund as provided for in § 176 of this Act.

 (3) All the assets of a fund may be invested in one investment fund if, upon investment of the assets, the requirement to spread investments in different securities and other assets is complied with to the sufficient extent pursuant to this Act or legislation of other states.

 (4) The methods and instruments which are used for effective investment of the assets of a fund shall meet the following requirements:
 1) their use shall be economically inexpedient and they shall be used in a cost-effective manner;
 2) their purpose is to reduce the risks and costs associated with investment of the assets of a fund and to generate additional income or profit, taking into account the risk profile of the fund and the internal rules of procedure established pursuant to subsection 248 (1) of this Act;
 3) the risks associated with their use shall be sufficiently managed by the risk management system implemented by the management company.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 248.  Risk management

 (1) A management company shall establish risk management rules for management of risks associated with investment of the assets of the fund (hereinafter in this Chapter rules) which enable to determine the risk profile of the fund and monitor and measure at any time the exposure of the fund.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (11) Among other matters, the rules shall set out the following:
 1) transparent risk management organisational structure of the management company with clearly delineated areas of responsibility;
 2) risk management process taking into consideration the risks associated with investments in compliance with the investment policy of the fund disclosed to the shareholders or unit-holders of the fund;
 3) sufficient and proportional procedures for the establishment, measurement, managing and constant monitoring of risks, which take the risk profile of the fund into consideration, and the procedure for informing the managers of the management company;
 4) measures which ensure the knowledgeability of the managers and employees of the management company on the risk profile of the fund and the risks arising from the investment activities of the fund and taking of the risk considerations into account in the decision-making processes of the management company;
 5) measures which ensure the liquidity required for regular operation of the fund, taking into consideration the extent of the obligations incurred for conducting transactions for the account of the fund, and the policy for redemption or repurchase of units or shares.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (12) The rules must ensure that the management company is not based, upon investment of the assets of the fund or assessment of the risks, only or mechanically on the credit ratings issued by the rating agencies specified in Article 3(1)(b) of Regulation (EC) No 1060/2009 of the European Parliament and of the Council.
[RT I, 19.03.2015, 4 - entry into force 29.03.2015]

 (2) A management company shall promptly inform the Financial Supervision Authority of establishment of the rules and amendments thereto.

 (21) The management company shall assess at least once a year the effectiveness, up-to-date and appropriate nature of the rules and, if necessary, change the rules and investment policy of the fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The Financial Supervision Authority may require, by its precept, amendment of rules if the rules:
 1) do not comply with the requirements provided by this Act;
 2) do not comply with the provisions of the fund rules or articles of association of the fund;
 3) are incomplete, misleading or contain provisions which are contradictory or ambiguous;
 4) do not enable adequate determination of the net asset value of the fund;
 5) are not in the best interests of the shareholders or unit-holders of the fund for other reasons.

§ 249.  General requirements for derivative transactions

 (1) If, according to the fund rules or the articles of association of the fund, it is permitted to conclude derivative transactions, the fund rules or the articles of association of the fund shall provide for the objectives of the transactions involving derivative instruments.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (2) A management company shall establish detailed rules where it shall define the types of derivative instruments, the underlying risks, the quantitative limits and the methods which are chosen in order to estimate the risks associated with transactions in derivative instruments regarding each managed fund. The rules shall also include a process for accurate and independent assessment of the value of derivative instruments acquired over-the-counter.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (3) If securities specified in clauses 2 (1) 1) to 3), 5) and 7) of the Securities Market Act embed derivative instruments, the provisions of this Chapter regarding derivative instrument apply to the securities.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (4) Specific requirements for derivative transactions, the procedure for the calculation of limitations on investment and persons who are counterparties to transactions with derivative instruments may be established by a regulation of the minister responsible for the area.

§ 250.  Investment in immovables

 (1) Objects which are necessary for the management of immovables may also be acquired for the account of a fund investing in immovables.

 (2) For the purposes of this Act, adjacent immovables or immovables in close proximity to each other are deemed to be one immovable, unless the intended use of the immovables or the risks and circumstances which affect the value of the immovables are clearly distinguishable.

§ 251.  Valuation of immovables

 (1) Fund rules or the articles of association of a fund shall provide:
 1) the procedure for and terms of valuation of immovables;
 2) whether immovables are evaluated by a valuator of immovables or the general meeting of the fund or both;
 3) criteria for choosing a valuator of an immovable, including criteria for assessment of the competence and independence of the valuator, and, where applicable, the value and class of an immovable in the case of which more than one valuator of immovables must be designated;
 4) criteria and the procedure for evaluation of immovables at the general meeting.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) The rules for the valuation of immovables shall be disclosed on the website of the management company.

 (3) A management company is required to inform the Financial Supervision Authority of the valuators of immovables chosen thereby and the criteria on the basis of which the valuators were chosen.

 (4) A management company shall ensure that immovables are valued at least once a year as at the end of the financial year and before the audit of the annual report of the fund is conducted.

 (5) Only an independent valuator of immovables who is of good repute and has sufficient experience to evaluate the assets concerned may be a valuator of immovables.

 (6) The Financial Supervision Authority may require, by its precept, a re-valuation of immovables if valuation of the immovables:
 1) do not comply with the provisions of the fund rules or articles of association of the fund;
 2) was not objective;
 3) do not enable adequate determination of the net asset value of the fund;
 4) are not in the best interests of the shareholders or unit-holders of the fund for other reasons.

Division 2 Different Types of Funds  

§ 252.  Money market fund

 (1) A money market fund is a fund the assets of which are, according to the fund rules or articles of association of the fund and having regard to the limitations provided for in this Chapter, invested to the extent of not less than 80 per cent only in the following instruments:
[RT I 2006, 56, 417 - entry into force 01.01.2007]
 1) money market instruments provided for in clause 2 (1) 5) of the Securities Market Act (hereinafter money market instrument);
 2) deposits in credit institutions;
 3) units and shares of other funds which are deemed to be money market funds according to the legislation of Estonia or foreign states;
 4) other debt obligations the redemption or maturity date of which is in up to 13 months;
 5) short-term derivative instruments.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (2) In addition to the provisions of subsection (1) of this section, the assets of a money market fund may be temporarily held in a bank account or placed on overnight deposit.

 (3) In order to protect the interests of the shareholders or unit-holders of a fund, more precise requirements and additional limitations on investment of the assets of a money market fund, including limitations arising from the home state and credit rating may be established by a regulation of the minister responsible for the area.

§ 253.  Real estate fund

 (1) A real estate fund is a fund which units or shares are redeemed or repurchased at the request of unit-holders or shareholders not earlier than one month after submission of a respective claim by the unit-holders or shareholders, and the assets of which shall be invested as follows according to the fund rules or the articles of association:
 1) at least 60 per cent in immovables or
 2) at least 80 per cent in immovables and securities relating to immovables.

 (2) The following are securities relating to immovables specified in subsection (1) of this section:
 1) the units or shares of a fund which is deemed to be a real estate fund according to the legislation of Estonia or foreign states;
 2) the units or shares of a real estate undertaking whose main activity is investment in immovables or management of immovables;
 3) derivative instruments the underlying assets of which are securities specified in clauses 1) to 2) of this subsection.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (3) The Financial Supervision Authority has the right to determine whether a real estate undertaking complies with the requirements provided for in clause (2) 2) of this section.

 (4) The management company which manages the real estate funds provided for in subsection (1) of this section is deemed to be the management company of a real estate fund.

 (5) The management company of a real estate fund shall not provide the services specified for in clauses 9 (2) 1) and 3) of this Act.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (6) The provisions of this section do not preclude the management of the real estate fund specified in subsection (1) of this section by a management company which is not a real estate fund management company.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 254.  Index fund

 (1) An index fund is a fund which, in the investment of its assets, replicates the composition of a certain share or debt securities index which is recognised by the Financial Supervision Authority. The index to be replicated shall comply with the following requirements:
 1) its underlying assets are sufficiently diversified;
 2) the index represents the movement of the market to which it is linked, and internationally recognized methods are used to compile the index, according to which the main or major issuer on such market is generally not excluded;
[RT I 2009, 12, 71 - entry into force 27.02.2009]
 3) the index is accessible to the public and its compiler or provider is independent in its activities from the index fund and its management company.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (11) The provisions of clause (1) 3) of this section shall not prohibit the index compiler or provider and the index fund or the management company to be part of one business entity or members of a consolidation group provided that conflicts of interests are sufficiently managed.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (12) Replication of stock or bond indices specified in subsection (1) of this section shall be deemed to be replication of the composition of the underlying assets of the specified index, including the use of derivatives or other techniques or instruments pursuant to the provisions of §§ 247 and 249 of this Act.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (2) Upon registration of the rules or articles of association of an index fund, the Financial Supervision Authority may require that a management company submit a contract on the basis of which the management company of the index fund or another entitled person designated thereby is required to regularly disclose the purchase and selling prices of the units or shares of the fund and execute the purchase and sales orders according to the prices.

§ 2541.  Venture capital fund

  [RT I 2006, 56, 417 - entry into force 01.01.2007]

 (1) A venture capital fund is a fund where, pursuant to its terms and conditions or articles of association, at least 60 per cent of the assets of the fund are invested in shares or units not traded on the regulated market, debt securities, or shares or units of other venture capital funds, and whose units or shares are offered only to professional investors within the meaning of subsection 6 (2) of the Securities Market Act or to persons who meet at least two of the following conditions:
[RT I 2007, 58, 380 - entry into force 19.11.2007]
 1) the minimum amount of his or her initial investment is 10,000 euros and he or she has provided prior written statement that he or she has sufficient knowledge of investments, risks associated with it and the special risk level of a venture capital fund;
 2) he or she works or has worked for at least one year in the financial sector in a professional position which requires knowledge of securities investment;
 3) he or she has carried out transactions of a significant size on securities markets at an average frequency of, at least, five per quarter over the previous four quarters;
 4) the volume of his or her securities portfolio exceeds 100,000 euros.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) The management company which manages the venture capital funds provided for in subsection (1) of this section is deemed to be the management company of a venture capital fund.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (3) The management company of a venture capital fund shall not provide the service specified for in clause 9 (2) 1) of this Act. The management company of a venture capital fund may provide the service provided for in clause 9 (2) 3) of this Act in the case of the class of assets for which the management company has obtained the authority to manage a fund.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (4) The provisions of subsection 51 (3), § 561, clauses 57 (3) 2) to 4) and 7), subsections 58 (2) to (5) and subsection 87 (2) of this Act shall not apply to the management company of a venture capital fund.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (5) The provisions of this section do not preclude the management of the venture capital fund specified in subsection (1) of this section by such management company which is not a venture capital fund management company.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

Division 3 Specifications for Investment of Assets of Open-ended Public Fund and of Risk-spreading  

§ 255.  Investment of assets

 (1) The assets of a UCITS may be invested only in:
 1) deposits in credit institutions;
 2) securities specified in clauses 2 (1) 1) to 3), 5) and 7) of the Securities Market Act excluding shares of an investment fund (hereinafter in this Division securities);
 3) derivative instruments;
[RT I 2009, 12, 71 - entry into force 27.02.2009]
 4) shares and units of an investment fund.

 (11) The securities specified in subsection (1) of this section are also deemed to include such financial instruments which may be guaranteed by assets which do not qualify as securities or the rate of return of such assets.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (2) The assets of a UCITS shall not be invested in precious metals and securities which grant rights with regard to precious metals, or derivative instruments related to commodities.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (3) In addition to that provided for in subsection (1) of this section, the assets of other open-ended public funds may be invested in immovables.

 (4) In the case of a UCITS, all persons belonging to one and the same consolidation group are deemed to be one person upon investment in assets specified in § 256 or §§ 259-263 of this Act.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 256.  Investment in deposits and risk-spreading

 (1) The assets of a UCITS and other open-ended public funds may be invested in deposits in credit institutions maturing in no more than 12 months.

 (2) The assets of a UCITS and other open-ended public funds may be invested in deposits in credit institutions of third countries if the prudential ratios applicable to these institutions comply with the requirements which are at least as strict as those established by the legislation of the European Community. The Financial Supervision Authority has the right to determine whether a credit institution of a third country complies with the aforementioned requirements.

 (3) A UCITS and other open-ended public funds may not invest more than 20 per cent of the market value of its assets in deposits made with the same credit institution.

 (4) Other open-ended public funds may invest up to 30 per cent of the market value of the assets of the funds in deposits made with credit institutions not specified in subsections (1) and (2) of this section.

 (5) The provisions of subsection (3) of this section do not apply to money held in a bank account specified in § 99 of this Act or placed on overnight deposit.

§ 257.  Investment in securities

 (1) The assets of a UCITS and other open-ended public funds may be invested in securities which are freely transferable and meet at least one of the following requirements:
 1) the securities are traded on a regulated market of a state which is a Contracting Party to the EEA Agreement (hereinafter in this Chapter Contracting State) as defined in § 3 of the Securities Market Act or on another regulated market which is recognized by the Contracting State and operates regularly and on which the public can to acquire or transfer securities;
[RT I 2008, 13, 89 - entry into force 15.03.2008]
 2) the securities are traded on a regulated securities market of a state not specified in clause 1) of this subsection if the state is specified in the rules or articles of association of the investing fund;
 3) the securities are not traded on regulated markets of the states specified in clauses 1) or 2) of this subsection but, pursuant to their conditions of issue, the securities shall be admitted to the regulated market of a state specified in clause 1) or 2) of this subsection within 12 months after issue of the securities.

 (2) The assets of a UCITS and other open-ended public funds may be also invested in the money market instruments not specified in subsection (1) of this section, which are generally traded on the money market, are liquid and have a value which can be accurately determined at any time and meet at least one of the following requirements:
[RT I 2009, 12, 71 - entry into force 27.02.2009]
 1) the money market instruments are issued or guaranteed by a state, federated state of a Contracting State or regional or local government of a Contracting State, the European Union, the central bank of a Contracting State, the European Central Bank, the European Investment Bank or an international organisation in which the Contracting State is a member, shareholder or partner;
[RT I 2009, 12, 71 - entry into force 27.02.2009]
 2) the money market instruments are issued by a person which has issued other securities traded on the regulated market specified in clauses (1) 1) or 2) of this section;
 3) the money market instruments are issued or guaranteed by a management company, investment firm, insurer or credit institution founded in a Contracting State or if the aforementioned person was founded in a member state of the Organisation for Economic Co-operation and Development (OECD) belonging to the Group of Ten (G10) countries or the aforementioned person has been assigned at least an investment grade rating or it can be proven based on an in-depth analysis of the issuer of the money market instrument that the prudential rules applicable to the issuer are at least as stringent as those laid down by Community law. The Financial Supervision Authority has the right to determine whether the management company, investment firm, insurer or credit institution which is the issuer or guarantor of the money market instruments complies with the aforementioned requirements with regard to application of prudential ratios;
[RT I 2009, 12, 71 - entry into force 27.02.2009]
 4) the issuer of the money market instruments is included among the issuers approved by the supervision authority of another Contracting State pursuant to the conditions specified in Article 50(1)(h)(4) of the directive regarding investment funds.
[RT I, 08.07.2011, 6 - entry into force 18.07.2011]
 5) in the opinion of the Financial Supervision Authority, the issuer of the money market instruments meets the requirements established by the minister responsible for the area.

 (3) The assets of a UCITS, up to a total of 10 per cent of the market value of the assets of the UCITS, may be invested in securities not specified in subsections (1) and (2) of this section.

 (4) The assets of another open-ended public fund, up to 30 per cent of the market value of the assets of the fund, may be invested in securities not specified in subsections (1) and (2) of this section.

 (5) The provisions of this section do not apply to open-ended public venture capital funds.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (6) The conditions specified in clause (2) 5) of this section, taking into particular account the financial situation, purpose of activities and reliability of the issuer shall be established by a regulation of the minister responsible for the area.

§ 2571.  Additional conditions and requirements upon investment in securities

 (1) Upon investment of the assets of a UCITS and other open-ended public funds in securities, the securities shall meet at least one of the following requirements:
 1) they are negotiable;
 2) their acquisition is consistent with the investment objectives and the investment policy of the fund;
 3) the risks arising from them are sufficiently managed by the policy for the management of the risks of the fund and the procedure of implementing thereof;
 4) the potential damage arising from their acquisition is limited to the amount paid for them;
 5) they are sufficiently liquid to ensure that the management company is able to redeem the units of the fund at the request of unit-holders according to the provisions of § 2 and Division 5 of Chapter 4.

 (2) The value of the securities specified in this Act shall be determined accurately and reliably based on the market price or the price determined using valuation systems independent of the issuer of the securities. Up-to-date and appropriate information on the securities specified in the first sentence of this subsection shall be continuously available for the market.

 (3) The value of the securities not specified in subsection 257 (1) of this Act shall be determined based on the information received from their issuers or based on competent investment research, and up-to-date and appropriate information on them shall be continuously available for the management company.

 (4) The requirements provided for in clauses (1) 1) and 5) of this section are fulfilled if the security has been admitted for trading on a regulated market for the purposes of clauses 257 (1) 1) and 2) of this Act, unless such information is available on the specified security based on what the fulfilment of the requirements specified in clauses (1) 1) and 5) of this section shall be determined separately.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 2572.  Additional conditions and requirements upon investment in money market instruments

 (1) A money market instrument is understood to be dealt in on the money market according to subsection 257 (2) of this Act if it meets one of the following conditions:
 1) the redemption or maturity date of the money market instrument is up to 397 days;
 2) the money market instruments undergo regular yield adjustments in line with money market conditions at least every 397 days;
 3) the risk profile of the money market instrument, including credit and interest rate risks, corresponds to that of such securities which have the maturity specified in clause 1) of this subsection or which are subject to regular yield adjustments according to clause 2) of this subsection.

 (2) A money market instrument is understood to be liquid according to subsection 257 (2) of this Act if it can be transferred in a short time frame at as limited cost as possible, taking into account the term for redemption of units prescribed in the fund rules.

 (3) The value of a money market instrument can be accurately determined at any time according to subsection 257 (2) of this Act if relevant and reliable valuation systems are implemented to determine it which enable to calculate the net asset value of the fund in accordance with the value at which the security held in the portfolio of the fund could be exchanged between knowledgeable, willing parties in an arm’s length transaction or which are based either on market data or on valuation models based on amortised costs.

 (4) The requirements provided for in subsections (2) and (3) of this section are fulfilled if the money market instrument has been admitted for trading on a regulated market for the purposes of clauses 257 (1) 1) and 2) of this Act or it is traded on a money market for the purposes of subsection (1) of this section, unless such information is available on the money market instrument based on what the fulfilment of the requirements specified in subsections (2) and (3) of this section shall be determined separately.

 (5) Upon investment of the assets of a fund in the money market instruments specified in subsection 257 (2) of this Act, appropriate information on the money market instruments shall be available for the management company, including information which allows appropriate assessment of the credit risks related to the specified money market instruments, taking particularly into account the provisions of subsections (6) to (8) of this section.

 (6) For the money market instruments specified in subsection 257 (2) of this Act, unless their issuer is the European Central Bank or the central bank of a Contracting State, appropriate information shall consist at least of information on both the issue or the respective offering programme as well as the legal and financial situation of the issuer prior to issue of the money market instrument.

 (7) If the issuer of a money market instrument is a person or Contracting State or regional or local government entity of a Contracting State or international organisation specified in clauses 257 (2) 2) to 5) of this Act, which member, shareholder or partner the Contracting State is, but the money market instrument is not guaranteed by the Contracting State, the appropriate information shall contain, in addition to the information provided for in subsection (6) of this section:
 1) information on the changes related to the aforementioned information; and
 2) available and reliable statistical data on the issuer or offering programme or other information which allows appropriate assessment of the credit risks associated with the investments made in the specified instruments.

 (8) If the issuer of a money market instrument is the person or Contracting State or regional or local government entity of a Contracting State or international organisation specified in clauses 257 (2) 2), 4) and 5) of this Act, which member, shareholder or partner the Contracting State is, but the money market instrument is not guaranteed by the Contracting State, the appropriate information shall also contain information on verification of the information specified in subsection (6) of this section by third persons with appropriate qualification and independent from the issuer in addition to the information provided for in subsections (6) and (7) of this section.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 258.  Risk-spreading upon investment in securities

 (1) A UCITS may invest no more than 10 per cent of the market value of its assets in securities issued by the same person.

 (2) If the value of securities issued by one person is more than 5 per cent of the market value of the assets of a UCITS, the aggregate value of such securities shall total not more than 40 per cent of the market value of the assets of the UCITS.

 (3) The value of securities issued by persons belonging to the same consolidation group shall total not more than 20 per cent of the market value of the assets of a UCITS.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (4) The assets of another open-ended public fund, up to 20 per cent of the market value of the assets of the fund, may be invested in securities issued by the same issuer.

 (5) This section does not apply upon investment in securities specified in §§ 259 and 260 of this Act.

§ 259.  Specifications for risk-spreading upon investment in securities issued or guaranteed by state

 (1) The value of securities belonging to the assets of a UCITS and another open-ended public fund which are issued by the same person may form up to 35 per cent of the market value of the assets of the fund if they are issued or guaranteed by:
 1) a Contracting State;
 2) another state which guarantees conditions for investment with a degree of risk similar or smaller than the Contracting States and which is set out in the fund rules or articles of association of the fund;
 3) an international organisation to which at least one Contracting State belongs.

 (2) The assets of a UCITS and another open-ended public fund, more than 35 per cent of the market value of the assets of the fund, may be invested in securities of a person specified in subsection (1) of this section or securities guaranteed by the person if:
 1) sufficient protection of the interests of the shareholders and unit-holders of the fund is ensured;
 2) the assets of the fund comprise securities issued or guaranteed by such person during at least six different issues, and the value of securities acquired in a single issue totals not more than 30 per cent of the market value of the assets of the fund;
 3) the fund rules or articles of association of the fund and the prospectus set out the issuers the securities issued or guaranteed by whom are targets for investment or are subject to investment in which more than 35 per cent of the market value of the assets of the fund are invested.

§ 260.  Specifications for investment in covered bonds and risk-spreading

 (1) The assets of an open-ended public fund may be invested in non-equity securities which are continuously or repeatedly issued by a credit institution (hereinafter covered bonds) if all the following requirements are met:
[RT I 2010, 7, 30 - entry into force 26.02.2010]
 1) the credit institution regularly discloses its annual reports and state financial supervision is exercised over the institution primarily in order protect the interests of holders of securities;
 2) the money received from the issue of non-equity securities is invested in assets which, during the whole period of validity of the non-equity securities, cover claims attaching to these securities;
 3) in the case of the insolvency of the credit institution, the principal and the accrued interest on the non-equity securities is reimbursed to the creditors on a priority basis.

 (11) The assets of a UCITS may be invested for the purposes of this section only in covered bonds which are issued by a credit institution of a Contracting State.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

 (2) Up to 25 per cent of the market value of the assets of a fund may be invested in covered bonds issued by the same person.

 (3) If the value of covered bonds issued by one person is more than 5 per cent of the market value of the assets of a UCITS, the aggregate value of such bonds shall total not more than 80 per cent of the market value of the assets of the UCITS.
[RT I 2005, 59, 464 - entry into force 15.11.2005]

§ 261.  Investment in derivative instruments

 (1) The assets of a UCITS and another open-ended public fund may be invested in derivative instruments traded on regulated markets specified in clauses 257 (1) 1) and 2) of this Act and derivative instruments acquired over-the-counter, provided that:
 1) the counterparty to the derivative transactions concluded over-the-counter is a person whose compliance with prudential ratios established with regard to the person is subject to state financial supervision;
 2) the value of derivative instruments acquired over-the-counter can be reliably assessed every day and the UCITS can transfer the derivative instruments at any time for fair price, liquidate its position therein or close them by an offsetting transaction.

 (2) For the purposes of clause (1) 2) of this section, a fair price is understood to be the price at which assets can be acquired or transferred or at which an obligation can be performed between knowledgeable, willing parties in an arm’s length transaction.

 (3) Upon application of clause (1) 2) of this section, reliable valuation is understood as the valuation, which corresponds to the concept of fair price provided for in subsection (2) of this section. Reliable valuation cannot rely only on the price quotations by the counterparty and shall comply with the following requirements:
 1) the basis for the valuation is either a reliable up-to-date market value of the asset or, if such a value is not available, a pricing model using a generally recognised methodology;
 2) verification of the valuation is carried out either by an independent counterparty in an over-the-counter derivative transaction at an adequate frequency and in such a way that a competent person of the management company is able to check it as appropriate, or such an entity of the management company which is not engaged in investment of the assets of the fund.

 (4) The assets of a UCITS and other open-ended public fund may be invested in such derivative instruments the underlying assets of which are the following assets or which price depends directly or indirectly on the following factors:
 1) deposits which meet the requirements provided for in subsections 256 (1) and (2) of this Act;
 2) securities specified in § 257 and units or shares of the investment fund specified in subsection 264 (1) or (2) of this Act;
 3) securities and other financial indices, interest rates or currency in which the fund may invest pursuant to its rules.

 (5) In addition to the provisions of subsection (1) of this section, a UCITS or other open-ended public funds may invest their assets in derivative instruments which meet the following requirements:
 1) they allow the transfer of the credit risk of an underlying asset provided for in subsection (4) of this section independently from the other risks associated with that underlying asset;
 2) fulfilment of the obligations assumed based on these is related only to the delivery or transfer of assets specified in subsection 255 (1) of this Act, including money;
 3) they meet the requirements provided for in subsections (1) to (3) of this section concerning derivative instruments acquired over-the-counter;
 4) risks resulting from potential access of the counterparty to non-public information on underlying assets of credit derivatives (asymmetry of information) are sufficiently managed by the internal rules of procedure and internal audit measures provided for in the risk management process applicable to the fund.

 (6) Obligations assumed for the account of an open-ended public fund, except a UCITS, through derivative instruments not specified in subsections (1), (4) and (5) of this section shall exceed not more than 20 per cent of the market value of the assets of the fund.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 2611.  Additional conditions and requirements for financial indices linked derivatives

 (1) The underlying assets used as the basis for compiling an index shall be sufficiently diversified in the case of the financial index linked derivatives provided for in clause 261 (4) 3) of this Act, and the following requirements shall be met:
 1) the index is composed in such a way that potential price fluctuations of one component of the index or transactions with the component do not excessively affect index-linked transactions as a whole;
 2) where the index is composed based on the assets specified in clauses 261 (4) 1) and 2) of this Act, except for the securities specified in subsections 257 (3) and (4) of this Act, these assets shall be diversified according to the requirements for index funds provided for in subsection 254 (1) of this Act;
 3) where the index is composed based on the assets not specified in clause 2) of this section, these assets shall be diversified according to the requirements equal to the requirements for index funds provided for in subsection 254 (1) of this Act.

 (2) A financial index shall represent an adequate benchmark tracking the market and the following requirements shall be met:
 1) the index shall adequately measure the rate of return of the underlying assets;
 2) the index shall be revised and its composition rebalanced periodically to ensure that it continues to reflect the movements of the market, following thereupon criteria and principles which are publicly available;
 3) the underlying assets of the index shall be sufficiently liquid to allow the users of the index to determine its value, if necessary.

 (3) A financial index shall be disclosed in an appropriate manner and in that the following conditions shall be met:
 1) disclosure of the index relies on sound methods of collecting and calculating the prices, including the method of calculation of the adequate value of the index components where a market price is not available, followed by the procedure of calculating the index value;
 2) information on index calculation, rebalancing method and index changes and potential deviations in providing timely or accurate information shall be provided on a sufficiently wide and timely basis.

 (4) Where financial index linked derivative instruments do not fully comply with the requirements provided for in subsection (1) of this section, such derivative instruments are understood as other derivative instruments provided for in subsection 261 (4) of this Act.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 2612.  Embedded derivatives

 (1) In the case of a UCITS or other open-ended public fund, securities not specified in clauses 2 (1) 4) to 6) of the Securities Market Act which comply with the conditions and requirements provided for in section 2571 of this Act and contain a component which meets the following conditions shall be understood as embedded derivatives:
 1) by virtue of that component some or all of the cash flows that would be initially required by the underlying contract of the derivative instrument (hereinafter underlying contract) can be modified or postponed according to an agreed interest rate, price of the security or other financial instrument, foreign exchange rate, index of prices or exchange rates, credit rating or credit index, or other circumstances, and therefore the value of the component may vary in a way similar to the value of the underlying assets of a stand-alone derivative instrument;
 2) its economic characteristics and risks are not closely related to the economic characteristics and risks of the underlying contract;
 3) it has a significant impact on the risk profile and pricing of the security.

 (2) In the case of a UCITS and other open-ended public funds, securities in the meaning of subsection 249 (3) of this Act, which comply with one requirement provided for in subsection 2572 (1) of this Act and the requirements provided for in subsection 257 (2) and § 2572 of this Act and which contain a component which fulfils the criteria provided for in clauses (1) 1) to 3) of this section are regarded as embedded money market instruments.

 (3) A money market instrument or other security shall not be regarded as an embedded derivative if it contains a component which is contractually transferable independently of the specified security. Such a component shall be deemed to be a separate security or instrument.

 (4) The embedded derivatives or money market instruments provided for in subsections (1) and (2) of this section shall comply with the requirements provided for in this Chapter concerning derivative instruments.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 262.  Risk-spreading upon investment in derivative instruments

  [RT I 2009, 12, 71 - entry into force 27.02.2009]

 (1) Upon investment of the assets of a UCITS and another open-ended public fund in derivative instruments traded on regulated markets, the provisions of § 258 of this Act concerning securities apply to risk-spreading.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (2) The exposure to a counterparty of a UCITS in an over-the-counter derivative transaction may not exceed 10 per cent of the market value of the assets of the UCITS when the counterparty is a credit institution which meets the requirements provided for in subsection 256 (2) of this Act.

 (3) In the case of another open-ended public fund, the exposure to one person in an over-the-counter derivative transaction may not exceed 20 per cent of the market value of the assets of the fund.

 (4) The exposure to a counterparty of a UCITS in an over-the-counter derivative transaction may not exceed 5 per cent of the market value of the assets of the UCITS when the counterparty is a person not specified in subsection (2) of this section.

 (5) A UCITS shall ensure that its global exposure relating to derivative instruments does not exceed the total net asset value of the fund. Global exposure of the derivative instruments of another open-ended public fund may not exceed the net asset value of the fund by more than twice.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (6) The exposure (or the value of a derivative instrument) shall be calculated taking into account the value of the underlying assets, the counterparty risk (credit risk), market movements and the time available to liquidate the positions.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (7) The underlying assets of derivative instruments of a UCITS and another open-ended public fund shall, at the moment the derivative instruments are possibly used, not exceed in aggregate the limitations on investment provided for in this Chapter regarding the funds. The aforementioned does not apply in the case of index-based derivative instruments.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 263.  Risk-spreading upon investment in one person

 (1) The value of securities belonging to the assets of a UCITS and issued by the same person, deposits placed with the person and exposures arising from derivative transactions undertaken with the person shall total not more than 20 per cent of the market value of the assets of the UCITS.

 (2) The aggregate value of securities, derivative instruments and covered bonds belonging to the assets of a UCITS and issued by the same person, and deposits placed with the person shall total not more than 35 per cent of the market value of the assets of the UCITS.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 264.  Investment in units or shares of other investment funds

 (1) The assets of a UCITS and another open-ended public fund may be invested in:
 1) the units of a UCITS;
 2) the units and shares of a UCITS of another Contracting State specified in § 4 of this Act.

 (2) In addition to the provisions of subsection (1) of this section, the assets of a UCITS and another open-ended public fund may be invested in other funds which according to the legislation of Estonia or other states are deemed to be open-ended public funds and which meet the following requirements:
 1) financial supervision is exercised over the fund pursuant to the requirements of legislation of the European Community or requirements which are at least as strict as the requirements of legislation of the European Community and cooperation between the Financial Supervision Authority and the authority exercising supervision over the fund is not hindered;
 2) pursuant to this Act the level of protection for unit-holders is equivalent to that provided for investors in a UCITS, and in particular the requirements of § 72, subsections 276 (3) and (4) and subsections 277 (1) and (2) of this Act must be complied with;
 3) the business of the fund is reported in half-yearly and annual reports which include the statement of assets and liabilities, income and expense statement and the statement of investments of the fund;
 4) no more than 10 per cent of the assets of the fund may be invested in other investment funds.

 (3) The assets of a UCITS, up to a total of 30 per cent of the market value of the assets of the UCITS, may be invested in units or shares of funds specified in subsection (2) of this section.

 (31) In addition to the provisions of subsections (1) and (2) of this section, the assets of a UCITS and other open-ended public funds may be invested in units of closed-end common funds or shares of funds founded as a public limited company or units and shares of funds which are deemed to be closed-end funds according to the legislation of foreign states to which the requirements prescribed for investor protection and the management or managing bodies of a management company or a fund apply. Upon investment in the units or shares of the specified closed-end funds, the provisions of this Chapter concerning investment of the assets of a UCITS or other open-ended public funds in securities apply.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (4) The assets of another open-ended public fund, up to 50 per cent of the market value of the assets of the fund, may be invested in units or shares of funds not specified in subsections (1), (2) and (31) of this section. The aforementioned shall not apply to the units or shares of investment funds which are traded on the regulated market specified in clause 257 (1) 1) or 2) of this Act.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (5) The Financial Supervision Authority has the right to determine whether the supervision exercised over the fund in the assets of which investments are made complies with the requirements provided for in clause (2) 1) of this section or whether the funds regarded as closed-end funds according to the legislation of a foreign state comply with the requirements provided for in subsection 31 of this section.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 265.  Risk-spreading upon investment in units and shares of other investment funds

 (1) The value of units or shares of an investment fund shall not total more than 20 per cent of the market value of the assets of a UCITS.

 (2) The shares or units of other funds managed by the management company of the fund shall not be acquired or held for the account of a UCITS and another open-ended public fund, including shares or units of funds which the management company manages as a third party to whom the duties of the management company are transferred, unless all the following conditions are met:
 1) the investment policies of the funds differ significantly;
 2) such possibility is prescribed in the fund rules or articles of association of the fund;
 3) the management company does not charge a redemption fee or issue fee therefor.

 (3) The provisions of subsection (2) of this section apply also if the assets of a UCITS are invested in the shares or units of funds managed by a company with which the management company is linked by common management or control, or by a substantial holding, and also if the company is a third party to whom management of the fund is transferred.

§ 266.  Specifications for index fund

 (1) If the index fund is a UCITS, the limitations on the investment of assets and restrictions on risk-spreading provided for in this Chapter shall be complied with, unless otherwise provided for in this section.

 (2) The shares or debt securities issued by one person and belonging to the assets of an index fund which is a UCITS shall total not more than 20 per cent of the market value of the assets of the fund.

 (3) The assets of an index fund which is a UCITS may be invested in securities of a person specified in subsection (2) of this section or in securities guaranteed such person to a maximum of 35 per cent of the market value of the assets of the fund where that proves to be justified by the particular conditions of a regulated market where certain shares or debt securities are highly dominant.

§ 267.  Investment of assets of other open-ended public fund in immovables

 (1) The acquisition cost of an immovable together with the acquisition costs of objects specified in subsection 250 (1) of this Act shall, at the time of acquisition, total not more than 20 per cent of the market value of the assets of another open-ended public fund.

 (2) The market value of an immovable together with the value of objects specified in subsection 250 (1) of this Act shall not total more than 25 per cent of the market value of the assets of another open-ended public fund.

 (3) Another open-ended public fund shall invest not more than 25 per cent of the market value of its assets in immovables which are located in states which do not have an effective and reliable registration system for immovables which proves the right of ownership. The aforementioned provisions shall not apply to investments in immovables located in a Contracting State or a member state of the Organisation for Economic Co-operation and Development.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

§ 268.  Limitations on participation

 (1) Qualifying holding shall not, directly or indirectly, be acquired or held through any shares carrying voting rights for the account of a management company and the UCITS-s managed thereby.

 (2) A management company may, for the account of a UCITS, acquire no more than:
 1) 10 per cent of the non-voting shares of any single body;
 2) 10 per cent of the debt securities of any single body;
 3) 10 per cent of the money market instruments of any single body;
 4) 25 per cent of the units of another investment fund specified in § 264 of this Act.

 (3) A management company shall not, for the account of another open-ended public fund, acquire or hold in any person more than 50 per cent of the securities and money market instruments issued by the management company.

 (4) The provisions of this section do not apply upon acquisition or holding of securities issued or guaranteed by the state or an international organisation pursuant to the provisions of § 259 of this Act.

Division 4 Specifications for Investment of Assets of Pension Funds and Risk-Spreading  

§ 269.  Investment of assets

 (1) The limitations and restrictions established with regard to UCITS-s and the provisions of § 267 of this Act apply to investment of the assets of a pension fund and risk-spreading, unless otherwise provided for in this Division.

 (2) The assets of a pension fund may be invested only in:
 1) deposits in credit institutions;
 2) precious metals;
 3) the securities specified in § 2 of the Securities Market Act, including any securities which underlying assets are precious metals or which price is dependent on precious metals;
 4) immovables.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

 (21) The restrictions provided for in § 268 of this Act shall not apply to the investment of assets of pension funds.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

 (3) The rules of a mandatory pension fund shall provide for limitations broken down by states if more than 30 per cent of the market value of the assets of a fund is invested in the same state in securities specified in § 257 of this Act and units or shares of other funds.

 (4) In order to protect the interests of unit-holders, additional limitations on investment of the assets of mandatory pension funds may be established by a regulation of the minister responsible for the area.

§ 270.  Investment in deposits

 (1) The assets of a pension fund deposited in a single credit institution or in credit institutions belonging to the same consolidation group shall not total more than 10 per cent of the market value of the assets of the pension fund.

 (2) The provisions of subsection (1) of this section do not apply to money held in a bank account specified in § 99 of this Act or placed on overnight deposit.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

§ 2701.  Investment in precious metals

  The assets of a pension fund may be invested in precious metals and securities, which underlying assets are precious metals or which price is dependent on precious metals, in total to the extent of up to 5 per cent of the market value of the assets of the pension fund.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

§ 271.  Investment in shares and other similar instruments

 (1) The assets of a mandatory pension fund shall not be invested in shares to an extent greater than 50 per cent of the market value of the assets of the mandatory pension fund.

 (2) Investment in equity funds, shares and other instruments similar to shares may total up to 75 per cent of the market value of the assets of a mandatory pension fund.

 (3) For the purposes of subsection (2) of this section, investments in funds the assets of which may, directly or through other funds, be invested in shares or other similar instruments are deemed to be investments in equity funds.

 (4) For the purposes of subsection (2) of this section, investments in instruments similar to shares are deemed to be investments in securities, deposits or other instruments which price or the income received from which depends in part or in full on the price of the share or other similar instrument or the changes thereof.

 (5) The investment specified in subsections (3) and (4) of this section shall be taken in full into account upon investment of the assets of a mandatory pension fund in shares and other similar instruments.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (6) The restrictions provided for in this section shall not apply in the case the assets of a pension fund are invested in:
 1) shares or other share-like securities of a company which is mainly engaged in the development, management or operation of any infrastructure which is important for the public, including electricity market, road network, water supply, waste management;
 2) units of such equity funds or shares which assets are mainly invested in the securities of the companies specified in clause 1 of this subsection or other equivalent securities;
 3) shares of such companies or units of funds or shares which assets are mainly invested in immovables.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

§ 272.  Limitations on investment in securities

 (1) The value of securities issued by one person and specified in clauses 2 (1) 1) to 3), 5) and 7) of the Securities Market Act (hereinafter in this section the securities) shall not total more than 5 per cent of the market value of the assets of a mandatory pension fund, unless otherwise provided for in this Division.

 (11) The value of the securities issued by one undertaking making contributions to the occupational pension fund shall not exceed 5 per cent and the value of the securities issued by such undertaking and the undertakings belonging to the same consolidation group shall not total more than 10 per cent of the market value of the assets of the occupational pension fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) Subsections 260 (2) and (3) of this Act shall not apply to pensions funds.

 (21) Clause 257 (2) 2) of this Act shall not apply to conservative pensions funds.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (3) The value of securities issued or guaranteed by a state specified in § 259 of this Act shall not total more than 35 per cent of the market value of the assets of a pension fund.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (4) Assets of a pension fund may be invested in the securities and money market instruments not specified in subsections 257 (1) and (2) of this Act in total to the extent of up to 30 per cent of the market value of the assets of the pension fund.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

§ 273.  Investment in other funds

 (1) Upon investment of the assets of a pension fund in other investment funds, the provisions of subsection 264 (3) of this Act do not apply.

 (2) Up to 50 per cent of the market value of the assets of a pension fund may be invested in units or shares of an investment fund not specified in subsections 264 (1) and (2) of this Act which are not admitted for trading on the regulated market specified in clause 257 (1) 1) or 2) of this Act if the value of the units or shares of that fund can be determined accurately and reliably based on the market price or using another appropriate valuation systems.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (21) [Repealed - RT I 2008, 48, 269 - entry into force 14.11.2008]

 (3) The value of units or shares of a fund shall not total more than 10 per cent of the market value of the assets of a pension fund.

 (4) The value of the shares and units of other funds managed by a management company which manages a pension fund shall not total more than 10 per cent of the market value of the assets of a mandatory pension fund or more than 50 per cent of the market value of the assets of a voluntary pension fund.

 (5) The value of the shares and units of other funds managed by management companies belonging to the same consolidation group as a management company which manages a mandatory pension fund shall not total more than 50 per cent of the market value of the assets of a mandatory pension fund and all the conditions provided for in subsections 265 (2) and (3) of this Act shall be met.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (51) If holding of shares or units of a fund managed by another management company belonging to the same consolidation group as the management company of the mandatory pension fund for the account of the mandatory pension fund involves repayment of the management fee charged by the other management company on such investment or any part thereof or payment of another fee to the management company of the mandatory pension fund, the respective amount shall be transferred to the mandatory pension fund.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (52) The management company of a mandatory pension fund shall not acquire or hold for the account of all the mandatory pension funds managed by it in total more than 20 per cent of the units or shares of any fund managed by it or a fund managed by another management company belonging to the same consolidation group as the management company.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (53) Shares and units of other funds managed by the management company of a mandatory pension fund may be acquired and held for the account of the mandatory pension fund in the case, in addition to the provisions of clause 265 (2) 3) of this Act, the management company does not charge the management fee or transfers the management fee charged on such investment back to the mandatory pension fund.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (54) Shares and units of other funds managed by the management company or funds managed by a management company belonging to the same consolidation group as the management company of a mandatory pension fund, which are not open-ended or public, shall not be acquired or held for the account of the mandatory pension fund.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (6) Upon investment of the assets of a mandatory pension fund in other investment funds, the provisions specified in subsections 271 (2) and (3) of this Act concerning investments in equity funds shall be taken into account.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

§ 274.  Transactions involving derivative instruments and limitations on investments in securities denominated in foreign currencies

  [RT I 2008, 48, 269 - entry into force 14.11.2008]

 (1) The assets of a conservative pension fund may, in addition to the provisions of subsection 76 (1) and according to the fund rules, be invested in such derivative instruments the underlying assets of which are securities indices, interest rates, currencies or precious metals, or which price is dependant, directly or indirectly, on securities indices, interest rates, currencies of debt securities or precious metals.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

 (2) Obligations which exceed 10 per cent of the market value of the assets of a pension fund shall not be assumed by the pension fund for the account of the pension fund by transactions provided for in § 262 of this Act, except a transaction entered into for the purposes of managing foreign exchange risks with which assets are acquired on behalf of the fund in the currency in which the transaction is made.

 (3) A unit-holder or a person with an equivalent economic interest shall not be counterparty to a transaction with derivative instruments entered into for the account of a pension fund.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (4) The overall net open foreign exchange position shall not exceed 25 per cent of the assets of a conservative pension fund and 50 per cent of the assets of other mandatory pension funds. In the calculation of net open foreign exchange positions, foreign exchange positions arising from investments made by this fund shall not be taken into consideration in the case of investments made in shares or units of another fund.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

§ 275.  Investment in immovables and real estate funds

  [RT I 2006, 56, 417 - entry into force 01.01.2007]

 (1) Investments in immovables shall not total more than 20 per cent of the market value of the assets of a voluntary pension fund or more than 10 per cent of the market value of the assets of a mandatory pension fund.

 (2) The acquisition cost of an immovable shall, at the time of acquisition, not total more than 5 per cent of the market value of the assets of a mandatory pension fund.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

 (3) The value of immovables and units and shares of a real estate fund or a fund which is deemed to be a real estate fund according to the legislation of foreign states shall not total more than 70 per cent of the market value of the assets of a voluntary and not more than 40 per cent of the market value of the assets of a mandatory pension fund.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

 (4) The limitation provided for in subsection (3) of this section shall also apply to investments in securities or other instruments, which price or the income received from which depends directly or indirectly on the price of the immovable or the changes thereof.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (5) The investment specified in subsection (4) of this section shall be taken into full account upon investment of the assets of a pension fund in the specified instruments.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

§ 2751.  Additional requirements for investment of assets of conservative pension fund

 (1) Assets of a conservative pension fund may only be invested in such bonds:
 1) which have been issued at least an investment grade credit rating by a rating agency registered in accordance with the Regulation (EC) No. 1060/2009 of the European Parliament and of the Council on credit rating agencies (OJ L 302, 17.11.2009, pp. 1-31) (hereinafter in this section rating agency);
 2) which issuer has been issued at least an investment grade credit rating by a rating agency, if the bonds themselves have no credit rating;
 3) which issuer, which parent undertaking is a credit institution, has been issued at least an investment grade credit rating by a rating agency, if the bonds and their issuer, which is a credit institutions, have no credit rating;
 4) which are guaranteed by a Contracting State or a member state of the OECD holding at least an investment grade credit rating of a rating agency.

 (2) A management company shall determine in its risk management rules the rating agencies the credit ratings issued by which it follows and uses for the management of the investments and risks of a conservative pension fund. In the case of different credit ratings issued by the specified rating agencies, the management company shall take the lowest current credit rating into consideration.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) In addition to the provisions of subsection (1) of this section, the assets of a conservative pension fund may be invested up to a total of 10 per cent of the market value of the assets of the fund in such securities with no credit rating, which have been issued by a company of a Contracting State or a member state of the OECD or other company in which a public sector entity of such state has a majority holding or which is under the dominant influence of the public sector entity of such state, it such state has been issued at least an investment grade credit rating by a rating agency and the company meets at least one of the requirements specified in subsection 91 (2) of the Authorised Public Accountants Act.

 (4) The assets of a conservative pension fund may not be invested in debt securities, in the case of which the claim arising from them to their issuers is subject to satisfying in the event of dissolution or bankruptcy of the issuer after satisfaction of the accepted claims of all other creditors.

 (5) At least 50 per cent of the investments made in bonds complying with the requirements set out in subsections (1) and (3) of this section shall be in bonds which credit rating is respectively not lower than A2 (Moody ’s) or its equivalent or P-1 (Moody ’s) or its equivalent.

 (6) The assets of a conservative pension fund may be invested only in the shares or units of such funds, which assets are mainly invested according to the fund rules in the deposits, money market instruments and derivative instruments specified in clause 76 (1) 1) to 3) of this Act, and in the bonds specified in clause 76 (1) 1) of this Act and complying with the requirements established in subsection (1) of this section.

 (7) For the purposes of this section, the money market instruments specified in this clause 2 (1) 5) of the Securities Market Act shall not be regarded as bonds.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

Division 5 Other Restrictions on Activities, Violation of Requirements and Compensation for Damage  

§ 276.  Permissible transactions

 (1) If so prescribed by the fund rules or the articles of association of the fund and provided that the limitations on investment provided by this Act are observed, a management company has, for the account of the fund, the right to:
 1) guarantee an issue of securities;
 2) take a loan;
 3) enter into repurchase or reverse repurchase agreements and conclude other securities-borrowing transactions.

 (2) The fund rules or the articles of association of a fund shall provide for the extent and terms of taking of loans and assumption of obligations specified in causes (1) 2) and 3) of this section.

 (3) for the account of a UCITS and a pension fund, it is prohibited to:
 1) issue debt securities;
 2) grant a loan and assume obligations provided for in a contract of suretyship or guarantee contract, except acquisition of securities which are not paid for in full;
 3) borrow from the persons specified in subsections 281 (1) and (2) of this Act;
 4) conclude borrowing-transactions pursuant to clause (1) 3) of this section if performance of the obligation is not covered by the securities in the assets of the fund to the same extent.

 (4) Securities which at the time of entry into the transfer deed do not belong to the assets of a UCITS shall not be transferred for the account of the UCITS.

 (5) Objects belonging to the assets of a UCITS shall not be pledged or in other way encumbered or granted as security except in the case where the objective is to guarantee performance of a transaction concluded for the account of the fund or to secure a loan specified in subsection (1) of this section.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 277.  Restrictions on Borrowing

 (1) A management company may, for the account of a UCITS or a pension fund, take loans and assume other obligations specified in subsection 276 (1) of this Act in an amount which totals up to 10 per cent of the market value of the assets of the fund.

 (2) The term of a loan taken or obligation assumed for the account of a UCITS shall not exceed three months.

 (3) It is permitted to take loans and assume obligations specified in subsection 276 (1) of this Act for the account of another open-ended public fund in an amount which totals up to 50 per cent of the market value of the assets of the fund.

§ 278.  Guaranteed fund

 (1) A guaranteed fund is a fund in the case of which a credit institution or an insurer (hereinafter guarantor) assumes an obligation to guarantee that at least 75 per cent of the value of an initial investment made by an investor is preserved (hereinafter guaranteeing the rate of return of the value of a fund).

 (2) It is prohibited to guarantee a share which is smaller than 75 per cent of the initial investment.

 (3) The rate of return on a mandatory pension fund, an occupational pension fund not specified in clause 13 (1) 6) of this Act or another voluntary pension fund shall not be guaranteed.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (4) A person who belongs to the same consolidation group as a management company or a depositary of a fund shall not be a guarantor.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (5) A management company or another person shall not grant guarantees concerning the income, or distributions or dividends from the fund, or make forecasts of the financial performance of the fund, they shall not offer other guarantees outside the fund on the basis of the factors relating to the fund, unless the fund meets the requirements for guaranteed funds provided for in this Division.

 (6) Specific rules for guaranteeing the rate of return of the value of a fund shall be provided for in the fund rules or the articles of association of the fund.

 (7) The provisions of subsections (1) to (5) of this section shall not be applied to guaranteed occupational pension funds specified in clause 13 (1) 6) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 279.  Requirements for guaranteed fund

 (1) In the case of an open-ended or public fund, the rate of return of the assets of the fund shall be guaranteed until liquidation of the fund.

 (2) If the rate of return of the assets of a fund is not guaranteed any more, the fund shall be liquidated pursuant to the procedure provided for in Division 10 of Chapter 4 of this Act.

 (3) Guaranteed funds shall not be merged.

 (4) The Financial Supervision Authority has the right to demand that the issue of the units of the fund the rate of return on the assets of which is guaranteed be suspended if the guarantee granted by a guarantee contract or in the case of a guaranteed occupational pension fund specified in clause 13 (1) 6) of this Act the assets corresponding to the technical reserves and financial liabilities of the fund are insufficient in order to guarantee the rate of return on the fund.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (5) In order to protect the interests of the shareholders or unit-holders of a fund, specific requirements for guaranteed funds and guarantors may be established by a regulation of the minister responsible for the area, taking account of the home state and credit rating of the guarantor.

§ 2791.  Additional requirements for guaranteed pension funds, defined-benefit pension funds and pension funds covering mortality, survival and incapacity for work risks

 (1) The total amount of the technical reserves and financial liabilities of the occupational pension funds specified in clause 13 (1) 6) of this Act shall at all times cover the amount of the liabilities assumed by the management company with respect to unit-holders and which the management company can reasonably foresee.

 (2) The amount of the technical reserves and financial liabilities shall be calculated by the management company based on sufficiently prudent prospective actuarial valuations, taking account of the liabilities with respect to unit-holders, including:
 1) all guaranteed indemnities;
 2) bonuses to which unit-holders are already entitled during the past periods;
 3) potential liabilities of the management company set out in the pension fund rules arising from the choices made by unit-holders;
 4) expenses.

 (3) Upon calculation of the technical reserves and financial liabilities, the management company shall use the interest rate used upon calculation of technical reserves and financial liabilities of pension contracts established on the basis of subsection 76 (2) of the Insurance Activities Act.

 (4) The management company shall disclose on its website the principles and methods of calculation of the technical reserves and financial liabilities and give reasons to the Financial Supervision Authority for the changes made in the principles and methods of calculation of the technical reserves and financial liabilities.

 (5) The amount of the assets covering technical reserves and financial liabilities of the occupational pension funds specified in clause 13 (1) 6) of this Act shall at all times cover at least the amount of the technical reserves and financial liabilities of this occupational pension fund.

 (6) Upon investment of the assets covering technical reserves and financial liabilities, the management company shall take into account the nature and duration of the liabilities taken with respect to the unit-holders of the occupational pension funds specified in clause 13 (1) 6) of this Act and ensure safety, quality, liquidity and profitability of the investments and at the same time maintain diversity and spread of the investments.

 (7) The management company shall invest the assets covering technical reserves and financial liabilities in the same currency in which the liability was assumed. The assets covering the technical reserves and financial liabilities may be invested in other currencies to the total extent of up to 30 per cent of the amount of the technical reserves and financial liabilities.

 (8) A management company shall submit, together with an annual report, a report of the actuary covering the following areas to the Financial Supervision Authority:
 1) sufficiency of technical reserves and financial liabilities and the principles and methods of calculation thereof;
 2) assets covering technical reserves and financial liabilities;
 3) sufficiency of contributions in the case of defined-benefit occupational pension funds;
 4) sufficiency of own funds of the management company and their compliance with the requirements established in this Act.

 (9) If the technical reserves and financial liabilities of the occupational pension funds specified in clause 13 (1) 6) of this Act do not comply with the provisions of subsection (1) of this section, the Financial Supervision Authority may prohibit, by a precept, carrying out of transactions or performing of acts related to the assets of the specified occupational pension fund or restrict the volume of the transactions or acts related to the assets.

 (10) If the amount of the assets covering the technical reserves and financial liabilities of the occupational pension fund specified in clause 13 (1) 6) of this Act is smaller than the amount of the technical reserves and financial liabilities of such occupational pension fund, the management company may increase the contributions of the employer to the pension fund by agreement with the employer specified in the rules of such occupational pension fund or by agreement with the employer specified in the rules of such occupational pension fund and the unit-holders of the pension fund reduce the amount of the benefit agreed upon in the pension fund rules, including to enable redemption of units pursuant to the provisions of subsection 138 (2) of this Act.

 (11) If the measures specified in subsection (10) of this section are insufficient, the management company shall make an additional contribution to the occupational pension fund in order to comply with the requirement provided for in subsection (5) of this section.

 (12) The provisions of subsection (11) of this section shall not apply if the rate of return on the occupational pension fund or its distributions to unit-holders are guaranteed by the employer of the Contracting State making contributions to such pension fund.

 (13) In addition to the provisions of subsection 278 (3) of this Act, a mandatory pension fund, an occupational pension fund not specified in clause 13 (1) 6) of this Act or another voluntary pension fund shall not have defined benefits or cover mortality, survival and incapacity for work risks.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 280.  Avoiding conflicts of interest

 (1) Participation in the management company that manages a fund or in its subsidiary shall not be acquired or held for the account of the fund and securities issued by such persons shall not be acquired or held on behalf of the fund. The aforementioned does not apply upon investment in the units and shares of another fund managed by the management company of the fund.

 (2) Participation in companies belonging to the same consolidation group of companies as the management company of a fund and securities issued by such persons shall be acquired for the account of the fund only through a regulated market. The aforementioned does not apply upon investment in the units and shares of another fund managed by the management company of the fund.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (3) The market value of the securities issued by a company belonging to the same consolidation group as the management company shall not total more than 5 per cent of the market value of the assets of the pension fund managed by this management company.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

 (31) Securities may be subscribed for the account of a pension fund for up to 5 per cent and for the account of all the pensions funds managed by the management company in total up to 10 per cent of the volume of the issue of securities which offer, issue or sale is guaranteed or organised according to clauses 43 (1) 6) and 7) of the Securities Market Act by a company belonging to the same consolidation group as the management company.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (32) In addition to the provisions of subsections (1) to (31) of this section, the following is not permitted for account of a mandatory pension fund:
 1) to acquire or hold a holding in a company, where the relevant persons of the management company, shareholders who have qualifying holdings or companies controlled by the management company hold either directly or indirectly a qualifying holding, and to acquire or hold securities issued by the specified company;
 2) to subscribe for more than 5 per cent and for the account of all the mandatory pension funds managed by the management company in total for more than 10 per cent of the volume of the issue of securities which offer, issue or sale is guaranteed or organised according to the provisions of clauses 43 (1) 6) and 7) of the Securities Market Act is the company specified in clause 1 of this subsection.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (33) The provisions of clause (32) 1) of this section shall not apply to investment in the units and shares of another fund.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (4) An open-ended or public fund shall not be a partner of a general partner or a general partner of limited a partnership, a member a non-profit association or association, or a founder of a foundation. This limitation does not apply to membership in an apartment association if the fund owns an apartment ownership.
[RT I 2007, 58, 380 - entry into force 19.11.2007]

§ 281.  Restrictions on transfer

 (1) The assets of a fund shall not be transferred to:
 1) the management company of the fund;
 2) a member of the management board or supervisory board, or the auditor, fund manager or an employee of the management company of the fund;
 3) a member of the management board or supervisory board of the fund;
 4) other funds managed by the management company of the fund, except the transfer of securities through a regulated market at the market price as at the time of transfer.

 (2) The assets of a fund shall not be transferred to persons who have an equivalent economic interest with persons specified in clauses (1) 1) to 3) of this section.

 (21) The assets of a fund may be transferred in transferring the assets of the fund during the liquidation proceedings of the fund or for other purposes for ensuring the protection of the best interests of the fund, shareholders or unit-holders of the fund at the price on a regulated market as at the time of transfer or at other fair price to the management company of this fund or a company belonging to the same consolidation group as it.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (3) Assets shall not be acquired for the account of a fund from persons specified in subsections (1) or (2) of this section.

§ 282.  Application of limitations and restraints on disposition on investment and specifications for risk-spreading

  [RT I 2006, 56, 417 - entry into force 01.01.2007]

 (1) The restrictions on risk-spreading provided for in Divisions 1 to 4 of this Chapter do not apply:
 1) within nine months after registration of the rules of a fund or entry of a fund founded as public limited company in the commercial register;
 2) within six months after registration of the rules of a UCITS;
 3) within 24 months after registration of the rules of a real estate fund or entry of the specified fund in the commercial register.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (11) The limitations on acquisition of holdings and securities specified in subsections 280 (1) and (2) of this Act and the restraints of disposition on the persons specified in clauses 281 (1) 1) and 4) shall not be applied within 18 months after registration of the fund rules or entry in the commercial register in the following cases:
 1) the general meeting of the fund has approved beforehand the transaction of acquiring the assets and thereafter the transfer of these assets to the persons specified in subsections 280 (1) and (2) and clauses 281(1) 1) and 4) of this Act is prohibited;
 2) the total value of the transactions of acquiring the assets amounts to 20 per cent of the market value of the assets of the fund and thereafter the transfer of these assets to the persons specified in subsections 280 (1) and (2) and clauses 281 (1) 1) and 4) of this Act is prohibited;
 3) a fund founded as a public limited company and managed by the same management company or a company where the management company has a holding is transformed into a common fund.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (2) Upon investment of the assets of a UCITS and another open-ended public fund, the restrictions on risk-spreading provided for in this Chapter need not be observed if subscription rights are exercised with regard to securities specified in clause 255 (1) 2).

 (3) The restrictions on risk-spreading provided for in Divisions 1 to 4 of this Chapter may be temporarily exceeded for reasons independent of the management company. Exercising a right of pre-emption to acquire securities, a bonus issue, a change in the market value of securities and other such reasons are deemed to be reasons independent of a management company if the objective of the transactions conducted for the account of a fund is to commence observance of the aforementioned restrictions, taking into account the interests of the shareholders or unit-holders of the fund.

 (4) The requirement provided for in subsection 267 (2) of this Act applies 18 months after the foundation of the fund.

 (5) The restrictions provided for in subsection 258 (1) and limitations provided for in subsection 272 (2) of this Act do not apply until 18 months after the registration of the rules of a voluntary pension fund, with the exception of cases where the net value of the assets of the pension fund exceeds 1,200,000 euros by the end of the aforementioned term.

 (6) The limitations provided for in subsections 272 (1) and (2) of this Act do not apply until nine months after the registration of the rules of a mandatory pension fund, with the exception of cases where the net value of the assets of the pension fund exceeds 3,200,000 euros by the end of the aforementioned term.

§ 283.  Violation of requirements and compensation for damage

 (1) Violation of the requirements provided for in this Chapter upon entry into a transaction does not render such transaction void, although the management company shall compensate the fund or the shareholders or unit-holders of the fund for any damage caused by the violation.

 (2) A management company is required to promptly notify the Financial Supervision Authority in writing of violation and termination of violation of the requirements provided for in this Chapter.

 (3) A loss caused to unit-holders of a mandatory pension fund shall be compensated in accordance with the procedure provided for in §§ 32-36 of the Funded Pensions Act.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

Division 6 Feeder and Master UCITS  
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2831.  Feeder and Master UCITS

 (1) A feeder UCITS is a UCITS, which may invest at least 85 per cent of its assets in units of another UCITS (master UCITS).

 (2) A master UCITS is a UCITS, which meets the following conditions:
 1) has at least one feeder UCITS among its unit-holders;
 2) is not itself a feeder UCITS;
 3) does not hold units of a feeder UCITS.

 (3) The requirement of public offering of units specified in § 3 of this Act shall not apply to a master UCITS, if it has at least two feeder UCITS as unit-holders.

 (4) The provisions of § 234 of this Act shall not apply to a master UCITS established in another Contracting State which units are not publicly offered in Estonia but in which the assets of a feeder UCITS established in Estonia have been invested.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2832.  Additional restrictions on investments of feeder UCITS

 (1) Assets of a feeder UCITS may be invested up to a total of 15 per cent in:
 1) deposits in credit institutions;
 2) derivative instruments for hedging purposes, taking into consideration the provisions of §§ 249, 261 and 2612 and subsections 262 (5) and (6) of this Act.

 (2) Upon investment of the assets of a feeder UCITS in derivative instruments, the risk specified in clause (1) 2) of this section may be combined, upon calculation of the credit exposure specified in subsection 262 (5) of this Act, with:
 1) the master UCITS' actual exposure to derivative instruments in proportion to the feeder UCITS' investment into the master UCITS; or
 2) the master UCITS’ potential maximum global exposure to derivative instruments provided for in the master UCITS’ fund rules in proportion to the investment s made by the feeder UCITS in the master UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2833.  Coordination of investments of feeder UCITS

 (1) The management company of a feeder UCITS shall apply to the Financial Supervision Authority for an authorisation in order to make an investment in the units of a master UCITS which exceeds the limit provided for in subsection 265 (1) of this Act (hereinafter in this Division investment authorisation).

 (2) In order to apply for an investment authorisation, the management company of a feeder UCITS shall submit an application and the following information and documents (hereinafter in this Division the application) to the Financial Supervision Authority:
 1) the rules of feeder and the master UCITS;
 2) the prospectus and key information of the feeder and the master UCITS;
 3) the agreement for making an investment in the feeder and the master UCITS specified in subsection 2836 (1) of this Act or the internal rules of the management company specified in subsection 2836 (10) of this Act;
 4) the information to unit-holders specified in clauses 2835 (1) 1) to 4) of this Act;
 5) the information-sharing agreement between depositaries provided for in subsection 2838 (1) of this Act;
 6) the information-sharing agreement between auditors provided for in subsection 2839 (1) of this Act.

 (3) If a master UCITS has been established in another Contracting State, an attestation of the financial supervision authority of the home state of the master UCITS shall be appended to the application for an investment authorisation stating that the master UCITS is a UCITS, which complies with the requirements provided for in clauses 2831 (2) 2) and 3) of this Act.

 (4) The application submitted to the Financial Supervision Authority and the documents appended thereto shall be in Estonian or in English. With the consent of the Financial Supervision Authority, the application may also be submitted in a language other than Estonian or English.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2834.  Processing of applications for and decision on investment authorisation

 (1) The provisions of § 16 of this Act apply to the processing of an application for investment authorisation of feeder and the master UCITS and verification of the information submitted.

 (2) The Financial Supervision Authority shall adopt a resolution on grant of or refusal to grant an investment authorisation within 15 working days after receipt of all the necessary information and documents and inform the management company and the depositary of the feeder UCITS immediately thereof.

 (3) The Financial Supervision Authority may refuse to grant an investment authorisation to a feeder UCITS if the activities or the information and documents describing the activities of the feeder UCITS, its management company, depositary, auditor or the master UCITS do not meet the requirements provided for in this Division.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2835.  Notification of unit-holders of feeder UCITS

 (1) When an operating UCITS becomes a feeder UCITS or a feeder UCITS terminates its investments in the units of a master UCITS and makes investments in the units of another master UCITS, the UCITS or the management company of the feeder UCITS making investments in another master UCITS shall provide the following information to all the unit-holders of the UCITS:
 1) an attestation that an investment authorisation has been issued to the UCITS;
 2) the key information of the feeder and the master UCITS;
 3) the date on which investment of the assets of the UCITS in the master UCITS is commenced or on which the investment exceeds the limits provided in subsection 265 (1) of this Act, if the assets of the feeder UCITS have already been invested in the master UCITS;
 4) a statement that the unit-holders have the right to request redemption of their units within 30 calendar days as of submission of the information specified in this subsection for which no fee shall be charged, except the fee specified in the prospectus of the UCITS for reimbursement of the expenses relating to redemption of units.

 (2) The information specified in subsection (1) of this section shall be submitted at least 30 calendar days before the date provided for in clause (1) 3) of this section.

 (3) If the units of a UCITS are offered in another Contracting State, the information specified in subsection (1) of this section shall also be submitted in the official language of the Contracting State. With the consent of the financial supervision authority of another Contracting State, the information may be submitted in another language. The translation of the information shall be identical with the original document as to its substance. The management company of the feeder UCITS shall be responsible for the translation.

 (4) The information provided in subsection (1) of this section shall be provided in the manner provided for in subsections 17312 (3) to (5) of this Act.

 (5) The assets of a feeder UCITS may be invested in a master UCITS in excess of the limit provided for in subsection 265 (1) of this Act after the expiry of the term provided for in subsection (2) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2836.  Agreement for making investment in units of master UCITS

 (1) The management companies of a feeder and a master UCITS enter into an agreement for making an investment based on which the management company of the master UCITS shall submit all the documents and other information which is necessary for the performance of the duties provided for in this Act by the feeder UCITS to the management company of the feeder UCITS in connection with:
 1) access to information;
 2) grounds for termination of investments;
 3) procedure for issue, redemption of units and calculation of the net asset value and other transactions;
 4) events affecting the procedure of transactions;
 5) sworn auditor’s report;
 6) changes in the procedure concerning the operation of master UCITS;
 7) choice of applicable law.

 (2) Pursuant to the provisions of clause (1) 1) of this section, the agreement for making an investment shall set out the following:
 1) how and when the management company of the master UCITS provides the management company of the feeder UCITS with a transcript of the rules, prospectus and key information of the master UCITS or any amendments thereof;
 2) how and when the management company of the master UCITS informs the management company of the feeder UCITS of delegation of its investment management and risk management functions of the UCITS to third parties;
 3) how and when the management company of the master UCITS submits the documentation related to the management of the master UCITS to the management company of the feeder UCITS, including risk management rules and compliance reports;
 4) violation of the requirements provided by the legislation, fund rules or the agreement for making an investment of which the management company of the master UCITS shall notify the management company of the feeder UCITS and how and when this will be done;
 5) in the case the assets of the feeder UCITS are invested for the purposes or risk management in derivative instruments, how and when the management company of the master UCITS shall provide information to the management company of the feeder UCITS concerning the risk exposure related to the derivative instruments of the master UCITS which enables to calculate total open exposure per feeder UCITS according to clause 2832 (2) 1) of this Act;
 6) a statement that the management company of the master UCITS shall notify the management company of the feeder UCITS of any other procedures agreed with third persons for exchange of information and, if applicable, of how and when the management company of the master UCITS allows the management company of the feeder UCITS to examine the above-mentioned procedure for exchange of information.

 (3) Pursuant to the provisions of clause (1) 2) of this section, the agreement for making an investment shall set out the following:
 1) in which classes of units of the master UCITS the assets of the feeder UCITS may be invested;
 2) costs covered by the feeder UCITS and the terms of rebate or retrocession of charges or expenses by the master UCITS;
 3) if applicable, the terms of transfer of assets from the feeder UCITS to the master UCITS.

 (4) Pursuant to the provisions of clause (1) 3) of this section, the agreement for making an investment shall set out the following:
 1) the procedure for coordinating the frequency and timing of calculation of the net asset value of the UCITS and publication of the prices of units;
 2) the procedure for coordination of transmission of transaction orders of feeder UCITS and the role of third persons therein;
 3) necessary information or procedure concerning dealing, if the units of one or both UCITS are officially listed on a regulated market;
 4) other measures required for the performance of the duty of ensuring the frequency and time of calculating the net asset value of the UCITS and timing of the publication of the prices of units pursuant to § 2837 of this Act;
 5) the basis for conversion of transaction orders where the units of UCITS are denominated in different currencies;
 6) frequency of issue and redemption of the units of the master UCITS and the terms of payment for the units, including upon liquidation or merger of the master UCITS the terms and conditions of settlement by the feeder UCITS upon redemption of units by transfer of assets to the feeder UCITS;
 7) the procedure for responding to the enquiries of unit-holders and for settlement of complaints;
 8) a relevant statement where the rules or prospectus of the master UCITS limit or forego the exercise of certain rights and powers provided in relation to the unit-holders of the feeder UCITS.

 (5) Pursuant to the provisions of clause (1) 4) of this section, the agreement for making an investment shall set out the following:
 1) the manner and timing of a notification of the temporary suspension or resumption of the issue of the units of the UCITS;
 2) how a notification is made of errors in determining the value of the assets of the master UCITS and how these errors are resolved.

 (6) Pursuant to the provisions of clause (1) 5) of this section, the agreement for making an investment shall set out the following:
 1) procedure for cooperation with regard to production of periodic reports of the feeder and the master UCITS if the period of the financial year of the UCITS is the same;
 2) how the necessary information concerning the master UCITS is submitted to the feeder UCITS for timely preparation of the periodic reports of feeder UCITS, and the report of the sworn auditor of the feeder UCITS as at the final date of the financial year of the feeder UCITS according to subsection 2839 (3) of this Act, if the periods of the financial years of the UCITS are different.

 (7) Pursuant to the provisions of clause (1) 6) of this section, the agreement for making an investment shall set out the manner and timing of notice concerning:
 1) intended amendments and amendments entering into force to the rules, prospectus and key information of the master UCITS of the management company of the master UCITS, if this procedure differs from the procedure of notification of the unit-holders by the management company of the master UCITS;
 2) intended liquidation or merger of a master UCITS by the management company of the master UCITS, if the master UCITS was established in another Contracting State, or of the division of the master UCITS;
 3) termination of compliance with the conditions of operation as a feeder or master UCITS by the management company of the feeder or master UCITS;
 4) replacement of the management company, the depositary, auditor of a feeder or a master UCITS or other such third person which carries out the asset management or risk management functions;
 5) other changes in the procedure concerning the operation of the master UCITS by the management company of the master UCITS.

 (8) The agreement for making an investment shall indicate that the Estonian law shall apply to the agreement and any disputes arising therefrom, if both the feeder as well as the master UCITS have been established in Estonia. If the feeder and the master UCITS have been established in different Contracting States, only the law of the home state of the feeder or master UCITS shall apply to the agreement for making an investment and to any disputes arising therefrom according to the provisions of the agreement for making an investment.

 (9) The agreement for making an investment shall be available to the unit-holders of a feeder and master UCITS free of charge at the request of the latter.

 (10) If a feeder and master UCITS have the same management company, the terms and conditions of making the investments may be governed by the internal rules of the management company specified in § 57 of this Act by providing the terms and conditions and additional measures specified in subsection (1) of this section which are used for the management of the conflicts of interests between the unit-holders of the feeder and the master UCITS or other unit-holders of the feeder and the master UCITS.

 (11) The assets of the feeder UCITS shall not be invested in the master UCITS in excess of the limit provided for in subsection 265 (1) of this Act before the agreement for making an investment or the internal rules of the management company specified in subsection 10 of this section enter into force.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2837.  Coordination of offer and redemption of units

 (1) The management companies of a feeder and master UCITS shall take appropriate measures to coordinate the timing of the net asset value calculation of the feeder and the master UCITS and the publication thereof in order to prevent arbitrage opportunities relating to market timing upon acquisition and transfer of the units of the UCITS by investors.

 (2) If the management company of a master UCITS suspends the issue or redemption of the units of the master UCITS according to the provisions of § 145 of this Act or it is suspended at the request of the Financial Supervision Authority or the financial supervision authority of the home state of the master UCITS established in another Contracting State, the feeder UCITS may suspend the issue or redemption of its units for the same period as the master UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2838.  Information exchange between depositaries

 (1) If a feeder and master UCITS have different depositaries, the depositaries of the feeder and master UCITS enter into an information-sharing agreement for the performance of their duties (hereinafter information-sharing agreement between depositaries), which shall set out the following information:
 1) documents and categories of information shared by the depositaries and whether the specified documents and information are submitted regularly or based on the request of the other party;
 2) manner and deadlines of submission of information by the depositary of the master UCITS to the depositary of the feeder UCITS;
 3) involvement of depositaries in the calculation of the net asset value of the UCITS and coordination of the measures provided for in subsection 2837 (1) of this Act;
 4) involvement of the depositaries in the coordination of the settlement for the transactions of issue or redemption of units by the master UCITS to the feeder UCITS, the procedure for the settlement of such transactions and arrangement to transfer the assets;
 5) coordination of procedures at the end of a financial year;
 6) details of violations of the legislation or the fund rules by the master UCITS of which the depositary of the master UCITS shall notify the depositary of the feeder UCITS, and how and when this will be done;
 7) procedure for filling in a request for assistance submitted by one depositary to another;
 8) random or unforeseeable events of which one depositary shall notify the other depositary, and the manner and timing in which this will be done;
 9) choice of applicable law according to subsection 2836 (8) of this Act.

 (2) The assets of a feeder UCITS shall not be invested in a master UCITS before the information-sharing agreement of the depositaries enters into force.

 (3) The management company of a feeder UCITS shall be responsible towards the depositary of the feeder UCITS for submission of such information concerning the master UCITS which is required for the performance of the obligations of the depositary of the feeder UCITS.

 (4) The depositary of the master UCITS shall immediately notify the Financial Supervision Authority, the management companies of the feeder and the master UCITS and the depositary of the feeder UCITS if the operation of the master UCITS is, according to the information available to the depositary, in material contradiction with the legislation, fund rules and agreements entered into and may have an unfavourable impact on the feeder UCITS, which inter alia includes:
 1) errors or mistakes in the calculation of the net asset value of the master UCITS;
 2) errors or mistakes made by the feeder UCITS in the transactions or settlement for the acquisition or transfer of the units of the master UCITS;
 3) errors or mistakes in the payment or capitalisation of income arising from the master UCITS;
 4) errors or mistakes in withholding taxes;
 5) failure to comply with the investment objectives and policies described in the rules, prospectus and key information of the master UCITS;
 6) violation of investment restrictions provided by legislation, fund rules, prospectus and key information.

 (5) When transmitting the information arising from the information-sharing agreement of the depositaries, the depositary shall not violate the duty to maintain confidentiality of information provided by the legislation or the agreement.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 2839.  Information exchange of auditors

 (1) If a feeder and master UCITS have different auditors, the auditors of the feeder and master UCITS enter into an information-sharing agreement for the performance of their duty to audit the UCITS (hereinafter information-sharing agreement between auditors), which shall set out:
 1) documents and categories of information shared by the auditors and whether the specified documents and information are submitted regularly or based on the request of the other party;
 2) manner and deadlines of the submission of information by the auditor of the master UCITS to the auditor of the feeder UCITS;
 3) coordination of the involvement of auditors in procedures at the end of a financial year;
 4) facts disclosed in the report of the sworn auditor of the master UCITS which have to be presented in the report according to subsection (4) of this section;
 5) procedure for filling in the request for assistance submitted by one auditor to another, including a request for obtaining additional information concerning a violation stated in the report of the sworn auditor of the master UCITS;
 6) terms and conditions for the audit of the annual report and information concerning the performance of the obligations specified in subsection (3) of this section and the method and deadlines for submission to the feeder UCITS the report of the sworn auditor of the master UCITS or the drafts thereof;
 7) choice of applicable law according to subsection 2836 (8) of this Act.

 (2) The assets of a feeder UCITS shall not be invested in a master UCITS before the information-sharing agreement of the auditors enters into force.

 (3) The auditor of the feeder UCITS shall proceed upon preparation of the sworn auditor's report on the report of the sworn auditor of the master UCITS. If a feeder and master UCITS have different periods of financial year, the auditor of the master UCITS shall prepare an interim sworn auditor's report as at the final date of the financial year of the feeder UCITS.

 (4) The report of the sworn auditor of the feeder UCITS shall indicate all the extraordinary circumstances indicated in the report of the sworn auditor of the master UCITS and their impact on the feeder UCITS.

 (5) When transmitting the information arising from the information-sharing agreement of auditors, the auditor shall not violate the duty to maintain confidentiality of information provided by the legislation or the agreement.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28310.  Information subject to disclosure regarding feeder UCITS

 (1) In addition to the provisions on subsection 220 (6) and § 221 of this Act, the prospectus of a feeder UCITS shall set out:
 1) a reference to that the UCITS is a feeder UCITS and its assets are invested permanently and to the extent of at least 85 per cent in the in the units of the master UCITS;
 2) a brief description of the master UCITS, its organisational structure, investment objective and policy and risk level and indication of how the prospectus of the master UCITS can be examined;
 3) an indication of whether the risk level and the performance of the feeder and the master UCITS are the same or how they differ and a description of investments made according to subsection 2832 (1) of this Act. Disclosure of the performance of the UCITS pursuant to clause shall adhere to the provisions of § 2431 of this Act;
 4) a summary of the agreement for making an investment provided for in subsection 2836 (1) of this Act or of the internal rules of the management company provided for in subsection 2836 (10) of this Act;
 5) where and how the unit-holders obtain further information on the master UCITS and a transcript of the agreement for making the investment;
 6) a complete list of the fees and expenses incurred in connection with making an investment in the master UCITS paid on account of the feeder UCITS and the total amount of the fees of making an investment in the units of the feeder and the master UCITS;
 7) information on the impact of making an investment in the units of the master UCITS on the feeder UCITS.

 (2) The calculation of the total amount of the fees for making investments in the units of the feeder UCITS and the master UCITS shall be indicated in the annual report of the feeder UCITS.

 (3) The annual and semi-annual reports of the feeder UCITS shall indicate where the annual reports and the semi-annual reports of the master UCITS can be examined. A paper copy of the prospectus, and the annual and semi-annual reports of the master UCITS shall be delivered by the management company of the feeder UCITS to unit-holders free of charge on request of the latter.

 (4) The management company of the feeder UCITS shall submit to the Financial Supervision Authority the prospectus, key information of the master UCITS and any amendments thereto and the annual reports and semi-annual reports, if the master UCITS has been established in another Contracting State.

 (5) The advertising of the feeder UCITS shall include a notation stating that the assets of the UCITS may be invested to the extent of at least 85 per cent in the units of another UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28311.  Requirements for management company of feeder UCITS

 (1) The management company of a feeder UCITS shall monitor the activity of a master UCITS with due diligence, relying on the information and documents received from the management company of the master UCITS, the depositary and the auditor, unless there is reason to doubt their accuracy.

 (2) The fee or any other benefit paid for making an investment in the units of the master UCITS to the management company of the feeder UCITS or any other person who acts on the behalf of the feeder UCITS or its management company shall be transferred into the assets of the feeder UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28312.  Requirements for management company of master UCITS

 (1) The management company of a master UCITS shall immediately notify the Financial Supervision Authority of the details of each feeder UCITS making investments in the units of the master UCITS.

 (2) If a feeder UCITS has been established in another Contracting State, the Financial Supervision Authority shall immediately notify in the case provided for in subsection (1) of this section the financial supervision authority of the home state of the feeder UCITS of making an investment in the units of the master UCITS.

 (3) The management company of a master UCITS shall not charge an issue or redemption fee from the feeder UCITS for the issue or redemption of its units.

 (4) The management company of a master UCITS shall disclose to the management company, the depositary and the auditor of a feeder UCITS in time all the information that has to be submitted based on the provisions of §§ 2836 to 2839 of this Act or the rules of the master UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28313.  Specifications for merger of master UCITS

 (1) The merger of a master UCITS enters into force provided that the management company of the master UCITS has submitted to all the unit-holders of the master UCITS and the Financial Supervision Authority or the financial supervision authority of the home state of the feeder UCITS established in another Contracting State, at least 60 calendar days before the intended date of the merger taking effect, the information provided to unit-holders specified in subsection 17310 (1) of this Act.

 (2) Upon merger of a master UCITS, the management company of a feeder UCITS shall have the right to demand redemption of the units of the feeder UCITS according to § 17314 of this Act, except in the case the Financial Supervision Authority or the financial supervision authority of the home state of a feeder UCITS established in another Contracting State has issued an authorisation stipulated in clause 28314 (1) 1) of this Act to the feeder UCITS for feeder UCITS to continue as the feeder UCITS of the master UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28314.  Continuation of activities of feeder UCITS upon merger of master UCITS

 (1) If a master UCITS in respect of which a feeder UCITS has an investment authorisation mergers with another UCITS, the feeder UCITS shall be liquidated, unless the Financial Supervision Authority has:
 1) issued an authorisation for continuation of the feeder UCITS as the feeder UCITS of the same master UCITS, if the master UCITS is the acquiring UCITS;
 2) granted an investment authorisation for making an investment in the units of the feeder UCITS in the master UCITS formed as a result of the merger, if the master UCITS is the UCITS to be acquired and as a result of the merger the feeder UCITS becomes the unit-holder of the acquiring UCITS;
 3) granted an investment authorisation for making an investment of the feeder UCITS in another master UCITS, which is not involved in the merger, or
 4) registered the amendments to the rules of the feeder UCITS pursuant to which the UCITS is no longer a feeder UCITS.

 (2) The provisions of subsection (1) of this section also apply to the division of such master UCITS established in another Contracting State in respect of which the feeder UCITS established in Estonia has an investment authorisation.

 (3) For the master UCITS continuing as a feeder UCITS according to clause (1) 1) of this section, the management company of the feeder UCITS shall submit the following documents to the Financial Supervision Authority:
 1) an application for continuation as a feeder UCITS of the master UCITS;
 2) the application specified in subsections 117 (3) of this Act for registration of the amendments to the fund rules;
 3) the amended prospectus and key information of the feeder UCITS.

 (4) For making an investment in the units of the master UCITS formed as a result of the merger or another master UCITS according to clauses (1) 2) or 3) of this section, the management company of the feeder UCITS shall submit the following documents to the Financial Supervision Authority:
 1) an application for an investment authorisation for making an investment in the units of the master UCITS formed as a result of the merger or another master UCITS and the information and documents specified in subsection 2833 (2) of this Act;
 2) the application specified in subsections 117 (3) of this Act for registration of the amendments to the fund rules;
 3) the amended prospectus and key information of the feeder UCITS.

 (5) for amending the rules of the feeder UCITS according to clause (1) 4) of this section, the management company of the feeder UCITS shall submit an application to the Financial Supervision Authority according to subsection 117 (3) of this Act.

 (6) The management company of a feeder UCITS shall submit to the Financial Supervision Authority the application specified in subsection (3), (4) or (5) of this section or for liquidation of the feeder UCITS the application for the liquidation authorisation specified in subsection 175 (2) of this Act within one month as of the receipt of the merger information provided to the unit-holders by the master UCITS.

 (7) If the management company of the master UCITS has given the merger information to be provided to the unit-holders to the feeder UCITS more than four months before the intended date of the merger taking effect, the management company of the feeder UCITS shall submit the documents specified in specified in subsection (4) of this section at the latest three months before the intended date of the merger of the master UCITS taking effect.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28315.  Proceedings concerning merger authorisation of feeder UCITS and registration of amendments to fund rules

 (1) The provisions of § 16 of this Act apply to the proceedings of the authorisation specified in clauses 28314 (1) 1) to 4) of this Act and verification of the information submitted.

 (2) The Financial Supervision Authority shall adopt a resolution on grant of or refusal to grant an investment authorisation specified in clauses 28314 (1) 1) to 4) of this Act within 15 working days after receipt of all the necessary information and documents and immediately inform the management company and the depositary of the feeder UCITS thereof.

 (3) The Financial Supervision Authority may refuse to grant the authorisation specified in clauses 28314 (1) 2) to 4) of this Act if the investment of the funds or other means received upon redemption of the units from the master UCITS does not ensure sufficient liquidity of the assets of the feeder UCITS before making an investment in the units of the master UCITS formed upon merger or another master UCITS by the feeder UCITS or continuation of the activities of the feeder UCITS as a UCITS which is not a feeder UCITS.

 (4) The management company of the feeder UCITS shall immediately notify the master UCITS of the resolution specified in subsection (2) of this section.

 (5) The management company of the feeder UCITS shall immediately notify its unit-holders according to the provisions of § 2835 of this Act after obtaining the authorisation stipulated in clause 28314 (1) 2) or 3) of this Act and notifying the master UCITS thereof.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28316.  Redemption of units of feeder UCITS from master UCITS

 (1) If the Financial Supervision Authority has not adopted a resolution on grant of the authorisation specified in clauses 28314 (1) 2) to 4) of this Act by the penultimate working day when the management company of the feeder UCITS has the right to apply for redemption of the units of the feeder UCITS from the master UCITS according to § 17314 and subsection 28313 (2) of this Act, the management company of the feeder UCITS shall redeem all the units of the feeder UCITS from the master UCITS in the case this is necessary for the performance of the obligation to redeem the units of the feeder UCITS and this is in the interests of the unit-holders of the feeder UCITS.

 (2) Upon redemption of the units of the feeder UCITS from the master UCITS, the payments shall be made in cash or other assets. Payment shall be made in whole or in part in other assets, if the management company of the feeder UCITS has granted consent for this purpose and this arises from the agreement on making investments between the feeder and the master UCITS.

 (3) The feeder UCITS may transfer the assets received pursuant to subsection (2) of this section at any time for obtaining funds.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28317.  Specifications for liquidation of master UCITS

 (1) The liquidation proceeding of a master UCITS shall commence three months after the publication of the notice of liquidation of the master UCITS. If the feeder UCITS has been established in another Contracting State, in addition to the provisions of the first sentence of this subsection the notice of liquidation shall also be submitted to the financial supervision authority of the home state of the feeder UCITS which assets have been invested in the units of the master UCITS.

 (2) Upon distribution of the assets of the master UCITS, the payments shall be made in cash or other assets. Payments may be made from the master UCITS to the feeder UCITS in part or in full in other assets, if this confirms to the agreement on making an investment between the feeder and the master UCITS and the liquidation resolution of the master UCITS.

 (3) The feeder UCITS may transfer the assets received pursuant to subsection (2) of this section at any time for obtaining funds.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28318.  Specifications for liquidation of feeder UCITS

 (1) If a master UCITS in respect of which a feeder UCITS has an investment authorisation is liquidated, the feeder UCITS shall be liquidated, unless the Financial Supervision Authority has:
 1) granted an investment authorisation for making an investment of the feeder UCITS in another master UCITS, or
 2) registered the amendments to the rules of the feeder UCITS pursuant to which the UCITS is no longer a feeder UCITS.

 (2) For making an investment in the units of another master UCITS according to clause (2) 1) of this section, the management company of the feeder UCITS shall submit to the Financial Supervision Authority:
 1) an application for an investment authorisation for making an investment in the units of another master UCITS and the information and documents specified in subsection 2833 (2) of this Act;
 2) the application specified in subsections 117 (3) of this Act for registration of the amendments of the fund rules;
 3) the amended prospectus and key information of the feeder UCITS.

 (3) for amending the rules of the feeder UCITS according to clause (1) 2) of this section, the management company of the feeder UCITS shall submit an application to the Financial Supervision Authority according to subsection 117 (3) of this Act.

 (4) The management company of a feeder UCITS shall submit to the Financial Supervision Authority the application specified in subsection (2) or (3) of this section or for liquidation of the feeder UCITS the application for the liquidation authorisation specified in subsection 175 (2) of this Act at the latest two months after the publication of the notice of liquidation of the master UCITS.

 (5) If the notice of liquidation of the master UCITS was published more than five months before the commencement of the liquidation proceedings of the master UCITS, the management company of the feeder UCITS shall submit the documents specified in subsection (4) of this section at least three months before the date of commencement of the liquidation proceedings.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28319.  Proceedings concerning merger authorisation of feeder UCITS upon liquidation of master UCITS and registration of amendments to fund rules

 (1) The provisions of § 16 of this Act apply to the proceedings of the authorisation specified in clauses 28318 (1) 1) and the registration application specified in clause 2) of this Act and verification of the information submitted.

 (2) The Financial Supervision Authority shall adopt a resolution on grant of or refusal to grant an investment authorisation specified in clause 28318 (1) 1) of this Act and making or refusal to make the registration entry specified in clause 2) within 15 working days after receipt of all the necessary information and documents and immediately inform the management company and the depositary of the feeder UCITS thereof.

 (3) The Financial Supervision Authority may refuse to grant the authorisation specified in clause 28318 (1) 1) of this Act and making the registration entry specified in clause 2) if the investment of the funds or other means received upon redemption of the units from the master UCITS does not ensure sufficient liquidity of the feeder UCITS before making an investment in the units of another master UCITS by the feeder UCITS or continuation of the activities of the feeder UCITS as a UCITS which is not a feeder UCITS.

 (4) The management company of the feeder UCITS shall immediately notify the master UCITS of the resolution specified in subsection (2) of this section.

 (5) The management company of the feeder UCITS shall notify its unit-holders according to the provisions of § 2835 of this Act immediately after receipt of the authorisation specified in clause 28318 (1) 1) of this Act or making of the registration entry specified in clause 2).
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 28320.  Financial Supervision Authority's obligation to notify in connection with feeder UCITS and master UCITS

 (1) The Financial Supervision Authority shall notify the management company of a feeder UCITS established in Estonia immediately of any resolution relating to the master UCITS or its management company, depositary or auditor, measures implemented, failure to comply with the requirements provided for in this Chapter or information provided based on subsection 241 (1) of this Act.

 (2) If a master UCITS has invested assets in a feeder UCITS established in another Contracting State, the Financial Supervision Authority shall notify the financial supervision authority of the home state of the feeder UCITS immediately of making an investment in the units of the master UCITS and the circumstances provided for in subsection (1) of this section.

 (3) If the financial supervision authority of the home state of a master UCITS established in another Contracting State communicates the information provided for in subsection (2) of this section to the Financial Supervision Authority, the Financial Supervision Authority shall notify the management company of the feeder UCITS immediately thereof.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

Chapter 8 SUPERVISION  

§ 284.  Bases of supervision

 (1) The Financial Supervision Authority shall supervise whether the activities of a management company, funds, third parties to whom the duties of a management company have been transferred, persons who have a qualifying holding in the management company and persons engaged in the management of a fund without an authorisation of a management company comply with the requirements provided by this Act, the Funded Pensions Act, the Securities Market Act, the Guarantee Fund Act, the Money Laundering and Terrorist Financing Prevention Act, the International Sanctions Act and legislation issued on the basis thereof.

 (2) The Financial Supervision Authority shall supervise whether the activities of a depositary and third parties to whom the duties of a depositary have been transferred comply with the requirements provided for in the Credit Institutions Act, the Funded Pensions Act, the Securities Market Act, this Act and legislation issued on the basis thereof.

 (3) The purpose of supervision is to ensure that the foundation or establishment, activities and dissolution of funds and management companies comply with Acts and other legislation, with particular attention to protection of the interests and rights of the shareholders or unit-holders of funds.

 (4) The provisions of the Administrative Procedure Act apply to the administrative proceedings prescribed in this Act, taking account of the specifications provided by this Act and the Financial Supervision Authority Act.

 (5) If a management company is part of a financial conglomerate within the meaning of § 1101 of the Credit Institutions Act, supervision over the management company as a unit of a financial conglomerate shall be exercise pursuant to the provisions of Chapter 91 of the Credit Institutions Act.
[RT I, 12.07.2013, 2 - entry into force 22.07.2013]

§ 285.  Submission of petition of participant in proceeding

 (1) A participant in a proceeding shall submit to the Financial Supervision Authority a petition for an authorisation, consent or approval of the Financial Supervision Authority provided by this Act or legislation issued on the basis thereof or for the issue of an administrative act or taking of a measure in writing or in a format which can be reproduced in writing if the petition is accompanied by a digital signature.

 (2) In supervisory proceedings, a participant in a proceeding has the right to submit written questions to witnesses through the Financial Supervision Authority. The Financial Supervision Authority has the right to refuse to forward questions to witnesses with good reason.

§ 286.  Receipt of information

 (1) In order to exercise supervision, the Financial Supervision Authority has the right to demand information, documents and oral or written explanations without charge concerning facts which are relevant in the exercise of supervision from the following persons:
 1) a management company, a manager or employee of a management company;
 2) a manager or employee of a company which belongs to the same consolidation group as the management company;
 3) a depositary;
 4) a fund founded as a public limited company;
 5) a third party to whom the duties of a management company or a depositary have been transferred;
 6) a fund manager;
 7) an investor;
 8) a management company or a liquidator of a fund or a trustee in bankruptcy;
 9) the shareholder of a management company;
 10) third parties;
 11) a state or local government agency, including a general national register, national register and the chief processor and authorised processor of a state database.

 (2) If necessary, the Financial Supervision Authority may require that a person appear at the offices of the Financial Supervision Authority at the time designated by the Financial Supervision Authority in order to provide explanations.

 (3) The Financial Supervision Authority may require that a third party reply to the submitted questions in writing at the time designated by the Financial Supervision Authority.

 (4) For the purposes of supervision, the Financial Supervision Authority may require that a management company or a company belonging to the same consolidation group as the management company, and a third party to whom the duties of a management company or a depositary have been transferred, a depositary or a fund established as a public limited company submit additional information or reports.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (5) If necessary, the Financial Supervision Authority may issue an order whereby the Authority designates a term for the performance of obligations provided for in subsections (1) to (4) of this section. The order may contain a warning that upon failure to perform the obligations within the designated term, a penalty payment may be imposed pursuant to the procedure provided for in the Substitutive Enforcement and Penalty Payment Act.

 (6) In order to exercise supervision, the Financial Supervision Authority has the right to receive from credit institutions information which contains banking secrets concerning a fund, management company, depositary and investors, and a third party to whom the duties of a management company or a depositary have been transferred.

 (7) For the purposes of supervision, the Financial Supervision Authority has the right to receive from a third party information concerning a management company or a depositary without informing the specified management company or depositary of communication of the information, and the third party is required, upon communication of the information, not to inform the management company or depositary thereof.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 287.  Bases for refusal to provide information

 (1) The following have the right to refuse to provide information on the basis of subsections 286 (1) to (4) of this Act:
 1) advocates, employees of an advocate's law office and employees of the Bar Association in respect of circumstances which become known to them in connection with the provision of legal assistance;
 2) notaries, ministers of religion and doctors in respect of circumstances which become known to them in connection with their professional activities;
 3) agencies conducting state statistical surveys in respect of information which becomes known to them in connection with a survey.

 (2) The relatives of the following persons also have the right specified in subsection (1) of this section, unless they have to provide information in connection with their duties of employment or official duties:
 1) the manager, internal auditor or employee of q management company;
 2) the manager, and the head and employees of the internal audit unit of a company belonging to the same consolidation group as the management company;
 3) the manager, and the head and employees of the internal audit unit of a third party performing the duties of a management company;
 4) the manager, and the head and employees of the internal audit unit of a depositary;
 5) the manager, and the head and employees of the internal audit unit of a fund founded as a public limited company;
 6) the manager, and the head and employees of the internal audit unit of an investor.

 (3) Within the meaning of subsection (2) of this section, the spouse, cohabitee, relatives in ascending line and descending line, adoptive parents and adoptive children and sisters and brothers are deemed to be relatives.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 288.  Duties of Financial Supervision Authority

  In the exercise of supervision, the Financial Supervision Authority shall:
 1) decide on the grant, amendment and revocation of authorisations provided by this Act;
 2) verify everything relating to the acquisition, increase or reduction of holdings;
 3) perform the registrations and approvals provided by this Act;
 4) monitor, upon verification of the submitted reports and other documents and upon performance of on-site inspections, whether the activities of the management company, fund and the depositary comply with law;
 5) monitor whether the public offer of the shares of a fund and a pension fund scheme of a Contracting State complies with the requirements provided by this Act;
 6) issue mandatory precepts to a management company, a fund founded as a public limited company or a depositary when necessary;
 7) perform other duties provided by the Acts or legislation issued on the basis thereof.

§ 289.  Precepts

 (1) The Financial Supervision Authority has the right to issue a precept:
 1) if violations of the requirements of Acts specified in subsections 284 (1) and (2) of this Act and legislation established on the basis thereof, the fund rules or the articles of association of the fund founded as a public limited company are discovered as a result of supervision;
 2) for the prevention of violations specified in clause 1) of this subsection;
 3) if the risks assumed by a management company have increased significantly or if other circumstances emerge which endanger or may endanger the activities of the management company or the interests of the fund, unit-holders, shareholders or clients or the reliability of the securities market as a whole.

 (2) The recipient of a precept shall, immediately after being notified of the precept, commence compliance with the precept.

 (3) The filing of an appeal against a precept and proceedings regarding the appeal do not suspend the requirement to comply with the precept, unless otherwise provided by the Financial Supervision Authority.
[RT I 2010, 2, 3 - entry into force 22.01.2010]

§ 290.  Rights upon issue of precepts

 (1) The Financial Supervision Authority has the right, by issuing a precept, to:
 1) prohibit certain transactions or activities from being conducted or to establish restrictions on their volume;
 2) prohibit, wholly or partially, payments from the profit of a management company;
 21) demand the reduction of the performance pay of the members of the management board and employees of a management company, suspension of their payment or return of the payments made, if the grounds specified in subsection 561 (5) of this Act exist;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 3) demand that a management company, if the units or shares of a fund which is managed by the management company are offered publicly, promptly disclose information, if the obligation to disclose such information arises from legislation;
 4) demand amendment of prospectuses and disclosure of the amendments if the prospectuses do not meet the requirements of this Act or other legislation;
 5) demand restrictions on the operating expenses of a management company;
 6) demand amendment of internal rules or rules of procedure and principles of remuneration of a management company;
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 61) demand reduction of references to credit ratings of rating agencies in the risk management rules of the management company or that the assessment of the risks of the assets of the managed fund would not be based on credit ratings;
[RT I, 19.03.2015, 4 - entry into force 29.03.2015]
 7) demand the removal of the manager of a management company;
 8) demand that the auditor of a management company be changed;
 9) demand removal of a fund manager;
 10) demand that an employee of a management company be suspended from work;
 11) demand that performance of the duties of a management company transferred by the management company to a third party be terminated prematurely;
 12) demand that a management company acquire or redeem the units of a fund managed by the management company;
 13) terminate the authority of a management company to manage a fund;
 14) demand that the issue or redemption of the units of a common fund be suspended;
 141) to demand the retention of the information concerning the transactions made for account of the UCITS or details of the units issue and redemption applications for more than five years or five years after the expiry of the authorisation of the management company or making the records for the past five years accessible, if the performance of the obligations of the management company has been delegated to a third person;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 15) demand that a management company pay the contributions to the Investor Protection Sectoral Fund prescribed in the Guarantee Fund Act;
 151) to demand submission of a reorganisation plan for the management company managing the occupational pension fund specified in 13 (1) 6) of this Act;
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]
 16) make other demands for the implementation of this Act, the Funded Pensions Act, the Credit Institutions Act, the Commercial Code, the Securities Market Act, the Guarantee Fund Act, Money Laundering and Terrorist Financing Prevention Act and the International Sanctions Act.

 (2) If the addressee of a precept fails to comply with the precept of the Financial Supervision Authority, the Financial Supervision Authority may impose a penalty payment pursuant to the procedure provided for in the Substitutive Enforcement and Penalty Payment Act.

 (3) In addition to the provisions of subsection (2) of this section, if the addressee of the precept fails to comply with the precept of the Financial Supervision Authority, the Financial Supervision Authority may apply other measures prescribed by this Act, including:
 1) revocation of the authorisation of the management company;
 2) revocation of the authorisation for the foundation of a branch;
 3) demanding the removal of a manager of the management company by a court.

§ 291.  Calling meeting of managing bodies

 (1) In order to protect the interests of the shareholders or unit-holders of a fund, the Financial Supervision Authority has the right to issue a precept to a management company:
 1) to call a meeting of the supervisory board or management board of the management company;
 2) to call a general meeting of the unit-holders of a common fund if the general meeting is prescribed by law or the fund rules;
 3) to call a general meeting of the management board, supervisory board or the general meeting of shareholders of a fund founded as a public limited company;
 4) to include an issue on the agenda of a meeting of the management board or supervisory board of the management company or a general meeting of unit-holders or shareholders if this is necessary in the opinion of the Financial Supervision Authority.

 (2) On the basis of its precept, the Financial Supervision Authority has the right to send a representative of the Financial Supervision Authority to the meetings specified in subsection (1) of this section. A precept shall be communicated not later than on the working day before the date of the meeting. At the meeting, the representative of the Financial Supervision Authority has the right to present positions, make proposals and demand the recording thereof in the minutes of the meeting.

§ 292.  On-site inspection

 (1) In order to exercise supervision, the Financial Supervision Authority has the right to carry out on-site inspection at the seat or place of business of a management company, depositary, fund founded as a public limited company and a third party to whom the duties of a management company or a depositary have been transferred.

 (2) An on-site inspection shall be carried out if:
 1) it is necessary to check whether the information submitted corresponds to reality;
 2) the Financial Supervision Authority suspects that the provisions of legislation specified in subsections 284 (1) and (2) of this Act have been violated;
 21) on the basis of the respective application of the financial supervision authority of the Contracting State, it is necessary to verify information received from the management company of the Contracting State;
 3) it is necessary to execute supervisory duties.

 (3) In order to carry out an on-site inspection, the Financial Supervision Authority shall issue an order which sets out the purpose, extent, duration of the period and time of the inspection. The order shall be delivered to the person to be inspected at least three working days before the inspection is commenced, unless giving such notice damages attainment of the objectives of the inspection. An on-site inspection shall be carried out by an employee authorised by the Financial Supervision Authority, unless otherwise prescribed in this Act.

 (4) In the course of an on-site inspection, inspectors have the right to:
 1) enter all premises, in compliance with the security requirements in force with regard to the person being inspected;
 2) use a separate room necessary for their work;
 3) study documents and media necessary for exercising supervision, make excerpts and copies thereof and monitor the work processes without restrictions;
 4) obtain oral and written explanations from the managers and employees of the management company.

 (5) The management of a person being inspected is required to appoint a competent representative in whose presence the inspection is carried out and who shall provide the person carrying out the inspection with documents and other information necessary for the performance of his or her duties, including the sworn auditor's reports concerning the reports of the person being inspected and the special reports of the auditor, and provide necessary explanations with regard to such documents and information.
[RT I 2010, 9, 41 - entry into force 08.03.2010]

 (6) In the case specified in clause (2) 21) of this section, the Financial Supervision Authority may authorise the financial supervision authority of the Contracting State or an auditor or expert appointed by it to perform on-site inspections.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 293.  Report concerning on-site inspection

 (1) An inspector is required to prepare a report concerning the results of the inspection within two months after completion of the on-site inspection and the Financial Supervision Authority shall promptly communicate the report to the person being inspected.

 (2) The manager and an employee of a person being inspected have the right to provide written explanations within one month after the date of delivery of the report.

 (3) After obtaining the written explanations of the person being inspected, but not later than within four months after the on-site inspection is completed, the Financial Supervision Authority shall prepare a final report which is delivered to the person being inspected.

 (4) In the event of disagreement with the facts indicated in a report, the person being inspected has the right to append a written dissenting opinion to the report.

 (5) If, after the on-site inspection or obtaining the written explanations of the person being inspected, additional circumstances become evident or the Financial Supervision Authority obtains additional information, the term for preparation of the report of the Financial Supervision Authority or a final report specified in subsection (3) of this section may be extended by up to two months, and the new term for preparation of the report or the final report shall be communicated to the person being inspected and the reason for extension of the initial term shall be indicated.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 294.  Assessment and special audit in supervisory proceedings

 (1) The Financial Supervision Authority may involve experts in proceedings in the cases where expertise is required to ascertain facts which are relevant to the matter.

 (2) The Financial Supervision Authority has the right to demand a special audit if:
 1) the reports or information submitted to the Financial Supervision Authority or the public are misleading or incorrect;
 2) transactions have been concluded which may result or have resulted in significant damage to a management company, a fund or the shareholders or unit-holders of a fund;
 3) other issues relevant to the financial situation of a management company, depositary or a company belonging to their consolidation group or a fund founded as a public limited company need additional clarification in the supervisory proceedings.

 (3) The Financial Supervision Authority shall involve an expert or, for a special audit, an auditor on its own initiative or at the request of a participant in the proceeding. The name of an expert or auditor and the reasons for involvement of the expert or auditor shall be communicated to a participant in the proceeding before involvement of the expert or auditor, unless proceedings regarding the matter need to be conducted quickly or communication of the information may impede attainment of the objectives of the assessment or special audit.

 (4) If an expert or an auditor who performs a special audit ascertains facts relevant in the supervision proceedings and the Financial Supervision Authority did not directly assign the task of ascertaining these facts to the expert or auditor, the expert or auditor shall also provide his or her opinion or assessment with regard to the facts.

 (5) An expert or an auditor who performs a special audit has the right to exercise all rights provided for in subsection 292 (4) of this Act and make proposals to the Financial Supervision Authority and participants in proceedings for the submission of additional information and documents. The expert is required to maintain the confidentiality of any confidential information which becomes known to him or her in connection with performance of the duties of an expert.

 (6) Costs related to the conduct of an assessment or a special audit shall be covered from the budget of the Financial Supervision Authority. If an expert or auditor is involved at the request of a participant in the proceeding, costs related to the conduct of an assessment or a special audit shall be covered by the participant in the proceeding.

§ 295.  Obligation to notify Financial Supervision Authority

 (1) A management company is promptly required to notify the Financial Supervision Authority of changes in any information or circumstances which were of material importance in the decision to issue the authorisation of the management company, and shall submit the following information and documents:
 1) the business name or address of the seat of the management company or, in the case of changes in details, a new business name, address of the seat and new details;
 2) upon changes in the share capital of the management company, the amount of share capital and the date of making the entry;
 3) upon changes in the articles of association of the management company, the amendments to and the amended text of the articles of association;
 4) [repealed - RT I, 24.03.2011, 1 - entry into force 03.04.2011]
 5) upon a change of managers, information specified in clause 14 (1) 6) of this Act if the management company has not submitted such information to the Financial Supervision Authority earlier;
[RT I 2006, 56, 417 - entry into force 01.01.2007]
 6) upon a change of an auditor, information specified in clause 14 (1) 7) of this Act if the management company has not submitted such information to the Financial Supervision Authority earlier;
[RT I 2006, 56, 417 - entry into force 01.01.2007]
 7) upon a change of a fund manager, a copy of the decision specified in subsection 55 (1) of this Act and information specified in clause 14 1) 8) of this Act if the management company has not submitted the specified information to the Financial Supervision Authority earlier;
 8) upon a change of shareholders, information specified in clause 14 (1) 9) of this Act.

 (11) A management company is required to inform the Financial Supervision Authority promptly of amendments of its internal rules and establishment of new internal rules.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

 (2) A management company is promptly required to notify the Financial Supervision Authority of changes in any circumstances which were of material importance in the registration of the rules of a common fund, and shall give notification:
 1) if the type of the fund is changed, of the type of the fund;
 2) upon a change of auditors of the fund, of information specified in clause 14 (1) 7) of this Act.

 (3) A fund founded as a public limited company is promptly required to inform the Financial Supervision Authority of changes in any information or circumstances which were of material importance in the approval of the articles of association of the fund founded as a public limited company, and shall submit the following information and documents:
 1) upon changes in the share capital, the amount of share capital and the date of making the entry;
 2) upon changes in the articles of association, the amendments to and the amended text of the articles of association;
 3) upon changes in the management contract, the amendments to and the amended text of the management contract;
 4) information on termination of the management contract;
 5) if the fund founded as a public limited company has a depositary, upon changes in the depositary contract, the amendments to and the amended text of the depositary contract;
 6) upon a change of member of the management board or supervisory board of the fund founded as a public limited company, information specified in clause 193 (2) 5) of this Act;
 7) upon a change of auditors, information specified in clause 193 (2) 6) of this Act.

 (4) At the request of the Financial Supervision Authority, a management company or a fund founded as a public limited company shall promptly disclose the information specified in subsections (1) to (3) of this section.

 (5) The information specified in this section shall be disclosed pursuant to the provisions of subsection 53 (4) of the Financial Supervision Authority Act.

 (6) [Repealed - RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 296.  Supervision over management company providing services in foreign state

 (1) If a management company whose branch is founded in a foreign state or which provides cross-border services in a foreign state violates the requirements of legislation established in a third country or a Contracting State, the Financial Supervision Authority shall promptly apply measures for termination of the violation on the proposal of the financial supervision authority of the third country or Contracting State. The Financial Supervision Authority shall inform the financial supervision authority of the third country or Contracting State of the measures applied.

 (11) If a management company manages a UCITS established in another Contracting State, the Financial Supervision Authority shall exercise supervision over compliance with the requirements specified in subsections 25 (6) and (7) of this Act and the procedures and proceedings established by the management company for implementation thereof and immediately apply measures for termination of violations of the requirements imposed on the activities of the management company. The Financial Supervision Authority shall immediately inform the financial supervision authority of the Contracting State of any violation of the requirements specified in this subsection and the measures applied by the Financial Supervision Authority.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (2) The Financial Supervision Authority shall promptly inform the financial supervision authority of the foreign state where the branch of a management company is founded or where a management company provides cross-border services of revocation of an authorisation or an authorisation for the foundation of a branch in a foreign state and of precepts specified in § 32 or subsection 33 (8) of this Act.

 (3) A branch of a management company or a management company which provides cross-border services shall, at the request of the financial supervision authority of a third country or a Contracting State, submit information which is necessary for the exercise of supervision over the activities of the management company in the state. The Financial Supervision Authority shall cooperate with the financial supervision authority of the third country or the Contracting State in order to ensure performance of the obligations of the management company specified in this subsection.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 297.  Supervision over foreign management company providing services in Estonia

 (1) The Financial Supervision Authority may demand that a management company of a third country or a Contracting State which provides its services in Estonia submit additional information and documents which are necessary for the exercise of supervision over the management company.

 (2) A management company which provides services in Estonia and whose authorisation is suspended or revoked by the financial supervision authority of a third country or a Contracting State shall not provide services in Estonia.

 (3) If a management company of a third country which provides services in Estonia violates the requirements provided by this Act or other legislation, the Financial Supervision Authority may apply measures necessary for the termination of the violation or revoke the authorisation for the foundation of a branch or for the provision of cross-border services.

 (4) The Financial Supervision Authority may demand that a management company of a Contracting State which has founded a branch is Estonia or provides cross-border services in Estonia terminate violation of the requirements provided for in Acts or legislation established on the basis thereof.

 (41) If a management company of a Contracting State manages a UCITS established in Estonia, the Financial Supervision Authority shall exercise supervision over compliance with the requirements specified in subsections 34 (6) and (7) of this Act and immediately implement measures for termination of any violations of the requirements established on the management of the UCITS. If the management company of a Contracting State has established a branch in Estonia, the Financial Supervision Authority shall immediately take measures for termination of violations of the requirements established for the activities of the management company of the Contracting State to the extent specified in subsection 34 (8) of this Act. The Financial Supervision Authority shall immediately inform the financial supervision authority of the Contracting State of any violation of the requirements specified in this subsection and the measures applied by the Financial Supervision Authority.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (42) If an alternative fund manager manages an investment fund through a branch established in Estonia, the Financial Supervision Authority shall exercise supervision over compliance with the requirements provided for in subsection 70 (1) and § 71 of this Act and immediately implement measures for termination of violations of the requirements established for the management of the investment fund. The Financial Supervision Authority shall immediately inform the financial supervision authority of the home state of the investment fund of any violations of the requirements specified in this subsection and the measures applied by the Financial Supervision Authority.
[RT I, 12.07.2013, 2 - entry into force 22.07.2013]

 (5) If a management company of a Contracting State specified in subsection (4) of this section continues to violate the requirements provided for in legislation, the Financial Supervision Authority shall inform the financial supervision authority of the Contracting State thereof.

 (6) If the measures applied by a financial supervision authority of a Contracting State are insufficient and the management company of the Contracting State continues to violate the requirements provided for in legislation, the Financial Supervision Authority may in turn, by its precept, apply measures provided by this Act for the termination of the violation or prohibit the activities of the management company of the Contracting State in Estonia and shall inform the financial supervision authority of the Contracting State thereof beforehand.

 (61) If the measures implemented by the financial supervision authority of a Contracting State are insufficient and the management company of the Contracting State continues violation of the requirements specified in the legislation, the Financial Supervision Authority may inform the European Securities and Markets Authority which may take measures within the powers granted to it or, by its precept, apply measures provided for in this Act for termination of violations or prohibit the activities of the management company of the Contracting State in Estonia.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (7) The Financial Supervision Authority shall inform the management company of the Contracting State of the measures applied thereby.

 (8) In exceptional cases, the Financial Supervision Authority may, in order to protect investors or the public interest, apply measures with regard to a management company of a Contracting State which violates the requirements provided for in legislation without advance notice to the financial supervision authority of the Contracting State of the measures.

 (9) The Financial Supervision Authority shall promptly inform the European Commission, the European Securities and Markets Authority and the financial supervision authority of a Contracting State of application of the measures specified in subsections (6) or (8) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (10) The Financial Supervision Authority shall notify the European Commission and the European Securities and Markets Authority of the cases where the Financial Supervision Authority fails to review the documents submitted to it pursuant to subsection 30 (4) of this Act or prohibits the management company from managing the fund on the basis of subsection 421 (4) of this Act.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 298.  Supervision over public offer of units or shares of foreign fund in Estonia

 (1) The Financial Supervision Authority shall exercise supervision over the compliance of the public offer of the units or shares of a foreign fund in Estonia with the conditions provided by this Act and other legislation.

 (2) If, upon the public offer or marketing of the units or shares of a foreign fund, the requirements provided by this Act or other legislation are violated, the Financial Supervision Authority may prohibit the public offer of the units or shares of the foreign fund in Estonia or apply measures for termination of the violation.

 (21) If the requirements provided for in this Act or other legislation are violated upon public offering or marketing of the units or shares of a UCITS of another Contracting State, the financial supervision authority of the other Contracting State shall be informed thereof at first. The Financial Supervision Authority itself may apply measures for termination of violations in the case the measures applied by the financial supervision authority of another Contracting State are insufficient or the violations of the requirements provided by legislation are continued upon public offering or marketing of the units or shares of the UCITS.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

 (3) The Financial Supervision Authority shall immediately notify the financial supervision authority of the home state and to the European Commission in the case of a UCITS established in another Contracting State of the measures taken. If necessary, the Financial Supervision Authority may also inform the European Securities and Markets Authority of the measures taken.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 299.  Suspension of offer

 (1) The Financial Supervision Authority may, by its precept, suspend the public offer of the units or shares of a foreign fund in Estonia if:
 1) the offer does not comply with the requirements provided by this Act or other legislation;
 2) upon application for the registration of the offer, upon giving notification of the offer or during the offer, incorrect, misleading or contradictory information have been submitted or the information is not submitted in due time;
 3) the re-purchase or redemption of the units or shares in the home state is suspended;
 4) the fund, foreign management company or the distributor of the units or shares of the fund submits or publishes incorrect, misleading or contradictory information, advertising or reports concerning the fund;
 5) the terms and conditions prescribed in the prospectuses are not complied with upon the offer of the units or shares of the fund;
 6) the requirements of this Act have been violated upon the re-purchase or redemption of the units or shares;
 7) information contained in the prospectuses which are in Estonian and offer the units of a UCITS of a Contracting State is different from information contained in the prospectuses published in the Contracting State.

 (2) When suspending an offer, the Financial Supervision Authority shall issue a precept to oblige the offeror to eliminate the circumstances causing the suspension of the offer. After eliminating such circumstances, the offeror may resume the offer with the permission of the Financial Supervision Authority.

§ 300.  Supervision over offer of pension fund scheme

 (1) The Financial Supervision Authority has the right to exercise supervision over the compliance of an offer of a pension fund scheme with the requirements provided for in subsection 235 (3) or 236 (1) of this Act and demand that reports on a regular or individual basis be submitted on the pension fund scheme.

 (2) If the requirements provided for in subsection 235 (3) or 236 (1) of this Act are violated upon an offer of a pension fund scheme, the Financial Supervision Authority shall inform the financial supervision authority of the Contracting State thereof.

 (3) If the measures applied by a financial supervision authority of a Contracting State are insufficient and the offeror of a pension fund scheme continues to violate the requirements provided for in subsection 235 (3) or 236 (1) of this Act, the Financial Supervision Authority may, in turn, apply measures for the termination of the violation or prohibit the offer of the pension fund scheme in Estonia.

 (4) The Financial Supervision Authority shall inform the financial supervision authority of the Contracting State of the measures applied thereby beforehand.

 (5) In exceptional cases, the Financial Supervision Authority may, in order to protect investors or the public interest, apply measures with regard to an offeror of a pension fund scheme which violates the requirements provided for in subsection 235 (3) or 236 (1) of this Act without advance notice to the financial supervision authority of the offeror concerning the measures.

 (6) The Financial Supervision Authority shall promptly inform the European Commission, the European Securities and Markets Authority and the financial supervision authority of a Contracting State of application of the measures specified in subsections (5) of this section.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 3001.  Reorganisation plan of management company managing occupational pension fund

 (1) If the management company of the occupational pension funds specified in 13 (1) 6) of this Act fails to comply with prudential ratios, it is obliged to submit a reorganisation plan to the Financial Supervision Authority during the term determined by a precept.

 (2) The Financial Supervision Authority has the right to demand that a management company order an assessment of the reorganisation plan by one or several auditors appointed by the Financial Supervision Authority.

 (3) The Financial Supervision Authority has the right to demand increase of the own funds of the management company, including increase of the share capital, and prescription in the reorganisation plan of other measures to guarantee the financial soundness of the management company.

 (4) The management company shall describe in detail in its reorganisation plan the measures it intends to apply in order to achieve compliance with prudential ratios during the term determined by the Financial Supervision Authority.

 (5) If, according to the opinion of the Financial Supervision Authority, the reorganisation plan of the management company is not feasible or does not ensure the protection of the interests of the unit-holders of the occupational pension fund managed by it and specified in clause 13 (1) 6) of this Act or if the management company is unable to perform the acts or apply the measures specified in the reorganisation plan on time, the Financial Supervision Authority has the right to prohibit the performance of the acts and carrying out of transactions related to the assets of the management company and occupational pension fund managed by it and specified in clause 13 (1) 6) of this Act or restrict the volume thereof, revoke the authorisation of the management company and apply other measures provided for by this Act.

 (6) The Financial Supervision Authority shall immediately notify the financial supervision authorities of the Contracting States where the management company offers the occupational pension fund specified in clause 13 (1) 6) of this Act of the measures taken.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 301.  Upper limit for penalty payment

 (1) In the event of failure to comply or inappropriate compliance with a precept issued pursuant to this Act or another administrative act, the Financial Supervision Authority has the right to impose a penalty payment pursuant to the procedure provided for in the Substitutive Enforcement and Penalty Payment Act.

 (2) In the event of failure to comply or inappropriate compliance with an administrative act, the upper limit for a penalty payment is, in the case of a natural person, up to 1200 euros for the first occasion and altogether up to 3200 euros for each subsequent occasion to enforce the performance of the same obligation and, in the case of a legal person, up to 3200 euros for the first occasion and altogether up to 32,000 euros for each subsequent occasion to enforce the performance of the same obligation.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

Chapter 9 LIABILITY  

§ 302.  Violation of requirements for offer of units of common fund

 (1) The public offer of the units of a common fund without registration of the fund rules or prospectuses or without disclosure of the prospectuses
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 303.  Violation of requirements for offer of units of foreign fund

 (1) The public offer of the units of a foreign fund without registration of the offer, upon failure to give notification of the offer or without disclosure of the prospectuses
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 304.  Violation of requirement to treat investors on equal basis

 (1) Violation of the requirement to treat all potential investors on equal basis during an offer of units or shares or a fund, including disclosure of information and other documents,
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 305.  Violation of requirements for advertising

 (1) Disclosure of misleading or incomplete advertising or information about a public offer of the units of a common fund or presentation of information which has not been presented in the prospectuses in an advertisement or in other manner
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 306.  Violation of guarantee requirements

 (1) Violation of a prohibition on guaranteeing the rate of return of a mandatory pension fund or other requirements for guaranteeing the rate of return of a fund
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 307.  Failure to submit mandatory reports, documents and information

 (1) Failure of a management company or a fund founded as a public limited company to submit or disclose, or incomplete submission or disclosure of or failure to submit or disclose on a timely basis mandatory reports, documents, explanations or information to the Financial Supervision Authority, or documents or information to the unit-holders of a fund managed by the management company or to the public; or submission of false or misleading information in such reports
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (2) [Repealed - RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 308.  Violation of procedure for acquisition of qualifying holding in management company

 (1) Acquisition or transfer of a qualifying holding in a management company or turning a management company into a controlled company without giving prior notification to the Financial Supervision Authority according to this Act or in violation of the precept specified in subsection 48 (1) of this Act, and exercise of the right to vote or other rights enabling control in the insurer in violation of the precept of the Financial Supervision Authority,
is punishable by a fine of up to 300 fine units.
[RT I 2004, 90, 616 - entry into force 01.01.2005]

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 309.  Exploitative abuse of assets of fund

 (1) Covering of expenses by the manager or an employee of a management company from the account of a fund which were not determined in the rules of a common fund or in the management contract of a fund founded as a public limited company, and which were not directly related to management of the fund; violation of the limitations prescribed by law in the investment of fund assets; violation of the restrictions prescribed in the rules of a common fund or in the management contract of a fund founded as a public limited company, transfer of fund assets in violation of law or guarantee of an issue of securities for the account of a fund if such possibility is not prescribed by the articles of association of the fund or the fund rules
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 310.  Violation of procedure for issue and redemption of units

  Issue or redemption of units of a common fund by a management company upon liquidation of the fund or during a period when redemption is suspended; or acquisition, without the permission or consent of the Financial Supervision Authority, of the units or shares of other funds managed by the management company of the fund; or other violation of the procedure for the issue or redemption of units which is provided by law; or acquisition or redemption, without the permission of the Financial Supervision Authority, of units of the pension fund managed by the pension management company
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 311.  Violation of suspension of public offer of units and shares of foreign fund

 (1) Violation of suspension of a public offer of the units or shares of a foreign fund
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 312.  Violation of obligations of management company

  Failure by a management company to perform the obligations provided by this Act, including failure to perform the obligations of a management company upon provision of investment services, failure to perform the obligation to keep the assets of a fund separate from the assets of the management company, transfer of the duties of a management company to a third party without basis, incorrect calculation of the net asset value of a fund or a share or unit of a fund or disclosure of an incorrect net asset value and failure to perform any other obligation provided for by this Act, the Funded Pensions Act or legislation issued on the basis thereof
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 3121.  Failure by management company to assess suitability of units of voluntary pension funds

 (1) Failure by a manager or an employee of a management company or other person acting in their interests to perform the obligations provided for in § 541 of the Funded Pensions Act
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

§ 313.  Violation of obligations of manager of management company

  Violation by the manager of a management company of the obligations provided by this Act, including failure to ensure sufficient protection of the interests of the shareholders or unit-holders and clients of funds managed by the management company and failure to comply with the requirements provided for transactions by relevant persons
is punishable by a fine of up to 300 fine units.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 314.  Violation of obligations of fund manager

  Violation by a fund manager of the obligations provided by this Act, including failure to operate in the best interests of the shareholders or unit-holders of a fund managed by the management company and failure to comply with the requirements provided for transactions by relevant persons
is punishable by a fine of up to 300 fine units.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 3141.  Violation of requirements to disclose conflict of interests

  Violation by a fund manager of the requirements to disclose a conflict of interests, or failure to keep the register specified in subsection 703 (7) or subsection 761 (7) of this Act, enter data on such register or entry of incorrect data in such register
is punishable by a fine of up to 32,000 euros.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 3142.  Violation of requirements for management conflicts of interests

  Failure by the management company to establish or apply measures to prevent conflicts of interests which may arise in connection with the management and unit-holders of the fund
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 315.  Violation of prudential requirements

  Violation by a management company of the prudential requirements provided by this Act or on the basis thereof
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 316.  Violation of requirements for activities of foreign management company

 (1) Provision of services in Estonia by a management company of a Contracting State without giving notification to the Financial Supervision Authority or violation of the requirements for the activities of foreign management companies established in this Act
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (2) [Repealed - RT I 2004, 90, 616 - entry into force 01.01.2005]

§ 317.  Violation of obligations of depositary

  Failure by a depositary to give notification of violations during the liquidation proceedings of a common fund or of non-compliance of the activities of a management company with legislation, the fund rules or the articles or association or management contract of the fund and other violation of the obligations imposed on the depositary in this Act, the Funded Pensions Act or legislation issued on the basis thereof
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 318.  Violation of obligations of liquidator

 (1) Violation by a liquidator of the obligations provided for by this Act or the Commercial Code during the liquidation proceedings of a common fund or a fund founded as a public limited company
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 3181.  Violation of name protection requirements

 (1) Violation of the name protection requirements provided for in § 5 of this Act
is punishable by a fine of up to 300 fine units.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 3182.  Violation of registration obligation and failure to submit mandatory information

  Persons who fail to register themselves or submit information to the Financial Supervision Authority according to the provisions of § 81 of this Act,
shall be punished by a fine of up to 32,000 euros
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 3183.  Violation of investment restrictions

 (1) Violation of the restrictions provided for by this Act in the investment of assets
is punishable by a fine of up to 300 fine units.

 (2) The same act, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I, 12.07.2014, 1 - entry into force 01.01.2015]

§ 319.  Proceedings

 (1) [Repealed - RT I, 12.07.2014, 1 - entry into force 01.01.2015]

 (2) Extra-judicial proceedings concerning the misdemeanours provided by this Act shall be conducted by the Financial Supervision Authority.

Chapter 10 AMENDMENT OF LEGISLATION CURRENTLY IN FORCE  

§ 320. – § 329. [Omitted from this text.]

Chapter 11 IMPLEMENTING PROVISIONS  

§ 330.  Validity of authorisations

 (1) A management company which holds a valid authorisation at the time this Act enters into force shall, within six months after the entry into force of this Act, submit to the Financial Supervision Authority a notice indicating which services specified in subsection 13 (1) of this Act the management company provides.

 (2) After submission of a notice specified in subsection (1) of this section, a management company may only provide services set out in the notice, unless an additional authorisation provided for in § 19 of this Act has been issued to the management company.

 (3) If a management company has failed to submit a relevant notice to the Financial Supervision Authority within a term specified in subsection (1) of this section, the management company is deemed to provide only the services specified in clause 13 (1) 1) of this Act.

§ 331.  Bringing of activities of funds and management companies into compliance

 (1) Management companies which hold a valid authorisation at the time this Act enters into force shall bring their activities and documents into compliance with the provisions of this Act within six months as of the entry into force of this Act. Until bringing into compliance with this Act, the activities and documents of management companies shall comply with the Investment Funds Act in force until the entry into force of this Act.

 (2) The rules or articles of association of funds registered before the entry into force of this Act, the activities of the funds, the registration of units, the offer of the units and shares of the funds and management of the assets of the funds shall be brought into compliance with the requirements provided by this Act within six months as of the entry into force of this Act. Until bringing into compliance with this Act, the specified activities and documents shall comply with the requirements of the Investment Funds Act in force until the entry into force of this Act.

 (3) One month after entry into force of amendments to the fund rules specified in subsection (2) of this section, the registrar shall organise the issue of fractional units of a relevant value for the amounts remaining after the issue of units of a mandatory pension fund. All fractional units shall be issued on the same date.

 (4) The share capital of a management company which manages a mandatory pension fund shall comply with the provisions of clause 85 (2) 2) of this Act no later than by 1 January 2007. Until the expiry of the specified term, the share capital of a pension management company which manages a mandatory pension fund shall be at least 30,000,000 kroons.

 (5) Until bringing into compliance with the requirement specified in the first sentence of subsection 144 (1) of this Act, but not later than until 31 December 2007, the net asset value of a unit may be determined to an accuracy of two decimal places.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

 (6) Managers and employees of a management company shall comply with the requirements specified in subsection 54 (21) of this Act by 1 July 2009.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (7) [Repealed - RT I, 18.02.2011, 1 - entry into force 01.08.2011]

§ 332.  Bringing of activities of management company in foreign state into compliance with requirements

 (1) Upon entry into force of this Act, a management company providing services in a foreign state shall, pursuant to the procedure provided by this Act, give notification that it provides services in the foreign state or apply for an authorisation for the foundation of a branch in the foreign state pursuant to the procedure provided for in §§ 25-33 of this Act and bring its activities into compliance with the requirements of this Act within six months as of the entry into force of this Act.

 (2) A management company which upon entry into force of this Act provides services in a foreign state may, until performance of the obligations provided for in subsection (1) of this section, continue to provide services in the foreign state but for not longer than six months as of the entry into force of this Act.

§ 333.  Bringing of activities of foreign management company into compliance with requirements

  Upon entry into force of this Act, a foreign management company which offers services in Estonia shall apply for an authorisation for the foundation of a branch in Estonia or for the provision of cross-border services pursuant to the procedure provided by this Act, and a management company of a Contracting State shall give notification of foundation of a branch in Estonia or provision of cross-border services by the management company. The aforementioned persons shall bring their activities into compliance with the requirements of this Act within six months as of the entry into force of this Act.

§ 334.  Bringing of pension fund scheme of Contracting State into compliance with requirements

  Upon entry into force of this Act, the Financial Supervision Authority shall be informed of an offer of a pension fund scheme in Estonia pursuant to the procedure provided by this Act and shall bring the offer of the pension fund scheme of the Contracting State into compliance with the requirements of this Act within six months as of the entry into force of this Act.

§ 3341.  Bringing into compliance with name protection requirements

  The name of the person, institution or association which operated before 1 January 2007 and the activities and documents thereof shall be brought into compliance with the provisions of subsection 5 (11) and the provisions of subsection (2) of this Act as regards the use of the words " UCITS " [UCITS], " rahaturufond " [money market fund], " kinnisvarafond " [real estate fund], " indeksfond " [index fund] and " riskikapitalifond " [venture capital fund] at the latest by 1 July 2008.
[RT I 2006, 56, 417 - entry into force 01.01.2007]

§ 3342.  Bringing of activities of management company of mandatory pension fund into compliance with requirements

  [RT I 2008, 48, 269 - entry into force 14.11.2008]

 (1) The management company of a mandatory pension fund is required to bring the rules of the mandatory pension funds managed by it and established before 1 January 2009 into compliance:
 1) with the wordings of the Investment Funds Act and Funded Pensions Act passed on 23 October 2008 by 1 January 2010;
 2) with the provisions of §§ 40-525 of the wording of the Funded Pensions Act passed on 23 October 2008 and subsection 140 (3) of the Investment Funds Act passed on the same date by 1 January 2009.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (2) When bringing the fund rules of a mandatory pension fund into compliance with the provisions of the Funded Pensions Act and Investment Funds Act specified in subsection (1) of this section, the amendments of the fund rules need not be registered with the Financial Supervision Authority if the following conditions are met:
 1) only such provisions of the fund rules are amended which the management company of a mandatory pension fund is required to amend due to subsection (1) of this section;
 2) the amended fund rules shall be submitted to the Financial Supervision Authority.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (3) The units of a mandatory pension fund, the assets of which may, pursuant to its fund rules, be invested in equity funds, shares and other instruments similar to shares to the extent exceeding 50 per cent of the market value of the assets of the mandatory pension fund, may be offered as of 1 January 2010.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

 (4) Units of a mandatory pension fund specified in subsection (3) of this section and registered before 1 August 2009 may be offered as of 1 September 2009.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (5) No amendments of the fund rules of a mandatory pension fund are registered or respective applications are accepted until 1 January 2011, if the amendments increase the proportion of the investments of the assets of the mandatory pension fund provided for in the fund rules pension in equity funds, shares and other instruments similar to shares.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (6) The management company of a mandatory pension fund is required to bring its activities into compliance with the provisions of §§ 761 and 762 of this Act by 31 December 2009.
[RT I 2009, 37, 250 - entry into force 10.07.2009]

 (7) The management company of a mandatory pension fund is required to bring the investments of a conservative pension fund made before 1 August 2011 into compliance with the provisions of § 2751 of this Act at the latest by 1 January 2012.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (8) The limitations and restrictions established in subsections 273 (52) and (54) of this Act shall apply to the investments of a mandatory pension fund made after 1 August 2011.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

 (9) The management company of a mandatory pension fund is required to prepare an annual report established in subsections 237 (11) and (13) in compliance with the requirements established on the basis of subsection (12) of this Act for the accounting period beginning on 1 January 2012 and thereafter.
[RT I, 18.02.2011, 1 - entry into force 01.08.2011]

§ 3343.  Maximum rate of management fees of mandatory pension funds

 (1) Until 1 January 2019, the rate of the management fee of a mandatory pension fund shall not exceed in total 2 per cent of the market value of the assets of the pension fund calculated based on a year of 365 days.
[RT I, 13.12.2013, 1 - entry into force 01.01.2014]

 (2) Until 1 January 2019, the rate of the management fee of a mandatory pension fund specified in subsection 76 (1) of this Act shall not exceed in total 1.2 per cent of the market value of the assets of the pension fund calculated based on a year of 365 days.
[RT I, 13.12.2013, 1 - entry into force 01.01.2014]

 (3) The Ministry of Finance shall analyse by 1 May 2018 the expedience and practicability of implementation of the restrictions on fee rates specified in subsections (1) and (2) of this section and if necessary, shall present a proposal for their amendment or extension of their term of validity.
[RT I, 13.12.2013, 1 - entry into force 01.01.2014]

§ 3344.  Bringing activities and documents of management companies into compliance with wording of this Act passed on 28 January 2009

  The management company is required to bring its activities and documents, including fund rules and articles of associations, and activities of the funds and management of fund assets into compliance with the requirements of the wording of this Act passed on 28 January 2009 by 30 June 2009.
[RT I 2009, 12, 71 - entry into force 27.02.2009]

§ 3345.  Application of Act to UCITS

  The provisions of subsection 11 (2) and subsection 34 (1) of this Act apply to the UCITS founded in Estonia as of 1 July 2011. Until the specified date, the management company of UCITS founded in Estonia shall be entered in the Estonian commercial register as a public limited company.
[RT I 2010, 7, 30 - entry into force 26.02.2010]

§ 3346.  Bringing activities and documents of management companies into compliance with wording of this Act passed on 23 February 2011

 (1) Management companies are required to bring their activities and documents into compliance with the requirements provided for in § 561, clause 57 (3) 7), subsection 240 (6) and subsection 242 (2) of the wording of this Act passed on 23 February 2011 at the latest by 30 June 2011. Until bringing into compliance with the aforementioned wording, the activities and documents of the management companies shall comply with regard to the aforementioned requirements with the legislation in force until the entry into force of the specified wording.

 (2) The term specified in subsections 238 (3) and 244 (3) of this Act for submission and disclosure of the annual reports and documents of management companies shall not apply to the documents of management companies prepared for 2010. The annual report and documents prepared for 2010 shall be submitted and disclosed within two weeks after the approval of the annual report but not later than by 30 June 2011.
[RT I, 24.03.2011, 1 - entry into force 03.04.2011]

§ 3347.  Bringing activities of management companies into conformity with wording of this Act passed on 16 June 2011

  Management companies are required to bring their activities and documents into compliance with the requirements established on the basis of subsection 70 (5) of the wording of this Act passed on 16 June 2011 (hereinafter this wording) and with the requirements provided for in subsection 219 (3) and § 2201 of this Act at the latest by 1 July 2012. Until bringing into conformity with this wording, the activities and documents of management companies shall comply with regard to the aforementioned requirements with the legislation in force until the entry into force of this wording. Until compliance with the requirements arising from this wording, the definition of a UCITS provided for in § 4 of the Investment Funds Act in force until the entry into force of this wording and the provision relating thereto shall apply.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 3348.  Bringing activities of management companies into conformity with wording of this Act passed on 7 March 2012

  Management companies are required to bring their activities and documents into conformity with the requirements provided for in § 581, 581, 582, 701 to 703, 1441, 1442 and 1501 and subsection 237 (6) of the wording of this Act passed on 7 March 2012 at the latest by 1 July 2012.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 3349.  Offer of pension fund scheme of Contracting State in Estonia

  If an Estonian employer has made contributions before the entry into force of subsection 235 (4) of this Act for its employees, servants, members of managing and controlling bodies in a pension fund scheme of the Contracting State with guaranteed rate of return, defined-benefit or covering mortality, survival and incapacity for work risks, the employer may continue making of contributions for the such employees, servants, members of managing and controlling bodies in such scheme.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

§ 33410.  Bringing of activities of alternative fund manager of Contracting State into conformity with wording of this Act passed on 20 June 2013

 (1) The alternative fund manager of another Contracting State who offered units or shares of an investment fund in Estonia before 22 July 2013 shall make its activities comply with the requirements established by the wording of this Act passed on 20 June 2013 concerning alternative fund managers by 22 July 2014.

 (2) The requirements provided for in § 2341 of this Act concerning an offer of units or shares of an investment fund shall not apply to a fund manager, who offered the units or shares of a fund in Estonia before 22 July 2013 on the basis of a prospectus prepared in accordance with the Directive 2003/71/EC of the European Parliament and of the Council, for the duration of validity of that prospectus.
[RT I, 12.07.2013, 2 - entry into force 22.07.2013]

§ 33411.  Bringing activities into conformity with wording of this Act passed on 16 April 2014

 (1) Persons specified in subsection 81 (1) of this Act founded and operating before the entry into force of this Act shall register themselves with the Financial Supervision Authority and bring their activities and documents into conformity with the provisions of this Act by 22 July 2014.

 (2) Persons specified in subsection 91 (1) of this Act founded and operating before the entry into force of this Act, shall apply for an authorisation from the Financial Supervision Authority and bring their activities and documents into conformity with the provisions of this Act by 22 July 2014.

 (3) The requirements provided for in §§ 332, 333, 2342 and 2343 of this Act concerning an offer of units or shares of a fund shall not apply to a person who offered the units or shares of a fund in Estonia before the entry into force of this Act on the basis of a prospectus prepared in accordance with the Directive 2003/71/EC of the European Parliament and of the Council, for the duration of validity of that prospectus.

 (4) The management company of a fund which units or shares are not redeemed at the request of unit-holders or shareholders is not required to comply with the requirements established with regard alternative fund managers by this Act, provided no investments have been made in this fund after the entry into force of this Act.
[RT I, 09.05.2014, 2 - entry into force 19.05.2014]

§ 33412.  Making of ex post analysis of wording of this Act adopted on 15 June 2015

  The Ministry of Finance shall analyse by 1 October 2020 the expedience and practicability of implementation of the specifications for investment of assets of pension funds provided for in the working of this Act adopted on 15 June 2015 and, if necessary, submit proposals for amendment of the legislation.
[RT I, 07.07.2015, 2 - entry into force 17.07.2015]

§ 335.  [Repealed - RT I 2010, 22, 108 - entry into force 01.01.2011]

§ 3351.  Specifications for transition to the euro

 (1) A management company which amends the fund rules is required to convert the amounts expressed in the Estonian kroons in the fund rules into the euros.

 (2) In connection with the introduction of the euro in Estonia, the amendments of fund rules or articles of association of a fund need not be approved by the Financial Supervision Authority if the following conditions are met:
 1) only such provisions of the fund rules or articles of association are amended which the management company is required to amend due to introduction of the euro in Estonia;
 2) the amended fund rules or the articles of association shall be submitted to the Financial Supervision Authority.

 (3) The nominal values of the units of such funds which fund rules were registered before the date which has been determined in the Decision of the Council of the European Union regarding the abrogation of the derogation established in respect of the Republic of Estonia on the basis provided for in Article 140 (2) of the Treaty on the Functioning of the European Union shall be converted into the euros according to the provisions of § 5 of the Act on the Introduction of the Euro.
[RT I 2010, 22, 108 - entry into force 01.01.2011]

 (4) The amendments of the fund rules or the articles of association made on the bases provided for in subsection (2) of this section shall enter into force on the next working day after their disclosure on the website of the management company.
[RT I, 21.12.2010, 3 - entry into force 01.01.2011]

§ 336.  Repeal of Act

 (1) The Investment Funds Act is repealed.

 (2) Legislation established pursuant to subsection 43 (2), § 55, subsection 69 (1), § 77, clause 107 (4) 2), subsections 116 (7), (8) and (9) and subsection 134 (3) of the Act specified in subsection (1) of this section remain valid until they are repealed.

§ 337.  Entry into force of Act

 (1) This Act enters into force on 1 May 2004.

 (2) Until the establishment of the legislation specified in subsections 14 (5), 87 (5), 142 (2), 151 (5), 187 (1), 204 (1), § 216, subsections 220 (6), 238 (5), 244 (4), 269 (4) and 295 (6) of this Act, management companies shall operate pursuant to the provisions of legislation established on the basis of the Investment Funds Act in force until the entry into force of this Act and legislation specified in subsection 77 (2) of the Funded Pensions Act, unless otherwise provided by this Act.

 (3) Subsection 237 (1) of this Act enters into force on 1 January 2005. Pursuant to this Act and legislation issued on the basis thereof, reports shall be prepared for accounting periods beginning on 1 January 2005 or later.

 (4) Reports for accounting periods beginning before the date specified in subsection (3) of this section shall be prepared pursuant to legislation established on the basis of subsections 116 (7), (8) and (9) of the Investment Funds Act in force until the entry into force of this Act.

 (5) The second sentence of subsection 108 (6) of this Act applies retroactively to all units issued by mandatory pension funds unless the units have been divided before 1 May 2004.


1Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 375, 31.12.1985, pp. 3-18), last amended by Directive 2008/18/EC (OJ L 76, 19.03.2008, pp. 42-43); Directive 2003/41/EC of the European Parliament and of the Council on the activities and supervision of institutions for occupational retirement provision (OJ L 235, 23.09.2003, pp. 10-21), as last amended by Directive 2013/14/EU (OJ 145, 31.05.2013, pp. 1-3); Commission Directive 2007/16/EC implementing Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards the clarification of certain definitions (OJ L 79, 20.03.2007, pp. 11-19); Directive 2007/44/EC of the European Parliament and of the Council amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ L 247, 21.09.2007, pp. 1-16); Directive 2009/65/EC of the European Parliament and of the Council on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, pp. 32-96), as last amended by Directive 2014/91/EU (OJ L 257, 28.08.2014, pp. 186-213); Commission Directive 2010/43/EU implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk managing and content of the agreement between a depositary and a management company (OJ L 176, 10.07.2010, pp. 42-61); Corrigendum to Council Directive No. 2010/44/EU implementing Directive 2009/65/EC of the European Parliament and of the Council as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure (OJ L 176, 10.07.2010, pp. 28–41), constituting the basis for the Committee Directive 2010/42/EL (implementing Directive 2009/65/EC of the European Parliament and of the Council as regards certain provisions concerning fund mergers, master-feeder structures and notification procedure) (OJ L 176, 10.07.2010) (OJ L 179, 14.07.2010, p. 16); Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 01.07.2011, pp. 1-73), as amended by Directive 2013/14/EU (OJ L 145, 31.05.2013, pp. 1-3). [RT I, 19.03.2015, 4 - entry into force 29.03.2015]