Bylaws on Alternative Investment Funds Act
Bylaws on Alternative Investment Funds Act
The Alternative Investment Funds Act (“Act”) came into force on 19 October 2019 and applies as of 20 April 2020, while the provisions governing small investors and public offering will be applicable from 1 January 2021, and the provision governing cross-border activity will be applicable from the date of accession of the Republic of Serbia to the European Union. Besides harmonization of the Serbian law with EU law, one of the main aims for adopting the Act was the improvement of the Serbian financial market and development of micro, small, and medium-sized businesses (MSMEs).
The Act delegates legislative power to the Securities Commission (“Commission”) and entitles it to enact bylaws, which should ensure that the provisions of the Act operate successfully. Specifically, according to the Act, the Commission was entitled to regulate in more detail over 60 issues from the Act. USAID Cooperation for Growth Project (CFG) assisted the Commission and the Ministry of Finance in drafting the bylaws. The CFG Project aims to stimulate SME growth by expanding access to a greater variety of financial instruments, and considers adopting the Act an important step in achieving this goal.
The Commission adopted 7 bylaws implanting the Act: which will come into force on 5 May. 2020:
- Rulebook on Alternative Investment Funds
The Rulebook on Alternative Investment Funds (“Rulebook on AIFs”) provides a comprehensive regulatory framework regarding all meters with respect to alternative investment funds (“AIFs”).
According to the Act, prior to market an AIF to investors in Serbia, an alternative investment fund manager (“AIFM”) must apply for a licensee with the Commission. An AIF may be established as an AIF with or without separate legal personality and the Rulebook on AIFs regulates in detail the procedure for establishment and granting permission to market both forms of AIFs as well as documentation which should be submitted with the application. The Rulebook on AIFs also defines the content of a registry of AIFs which is held by the Commission and the obligation of an AIFM to provide the Commission with all relevant information regarding the AIF it manages.
As defined under the Act, initial offering, redemption and repurchase, determination of the price of shares of an AIF with separate legal personality should be conducted in accordance with the Capital Market Act and the Companies Act. On the other hand, initial offering, redemption and repurchase, determination of the price of an AIF without separate legal personality is in detail defined under the Rulebook on AIFs.
The Rulebook on AIFs also regulates master and feeder AIFs, status changes and liquidation of AIFs without separate legal personality advertising of AIFs and chart of accounts and financial statements for AIFs.
- Rulebook on Types of Alternative Investment Funds
According to the Act, shares of an AIF can be subject to private placement or public offering. AIFs which are subject to private placement can be organized as general AIF which is subject to private placement or as one of specific types of AIFs which are subject to private placement: (1) private equity; (2) venture capital; (3) real estate AIFs subject to private placement; (4) fund of funds; (5) hedge fund; (6) specialized AIF; (7) European Venture Capital Funds; or (8) European Social Entrepreneurship Fund. The Rulebook on Types of Alternative Investment Funds defines assets in which every type of AIFs may invest, as well as limitations for such investments. Following the provisions of Act, provisions of the Rulebook on Types Alternative Investment Funds regarding the AIFs which are subject to public offering will be applicable from 1 January 2021.
- Rulebook on Conditions for Performing the Activity of Alternative Investment Fund Managers
The Rulebook on Conditions for Performing the Activity of Alternative Investment Fund Managers (“Rulebook on AIFMs”) should regulate in more detail conditions that AIFMs must fulfill in order to obtain and maintain the authorization for performance of their services.
The Rulebook on AIFMs defines the procedure for establishment and granting permission for the performance of activities of an AIFM, as well as documentation that should be submitted with the application. According to the Act, AIFM may along with their main service – management of AIFs, perform ancillary services (portfolio management services, provision of investment advice, reception and transmission of orders in relation to financial instruments and safe-keeping and administration in relation to shares, shares of stock or investment units of collective investment undertakings). The Rulebook on AIFMs regulates the content of the application and substantiating documentation to accompany an application for extension of the scope of authorization.
The Rulebook on AIFMs also regulates in detail, conditions which persons who effectively conduct the business of the AIFM must fulfill, remuneration policy, registry of AIFMs, fees which may be charged directly from the members or shareholders of an AIF and obligation of an AIFM to keep a registry of shares and units of AIFs.
- Rulebook on Conditions for Performing Depository Operations of an Alternative Investment Fund
A depositary of an AIF, which should be appointed for each AIF, must be a credit institution having its registered seat in the Republic of Serbia, which has obtained a permit for the performance of depositary operations from the Commission. The Rulebook on Conditions for Performing Depository Operations of an Alternative Investment Fund regulates in more detail matters regarding conditions under which depositaries may perform their operations and conditions that they must fulfill in order to obtain authorization for performance of their operations, content on an agreement based on which depositary performs its services for an AIF, as well as staffing and organizational capacity for performance of depositary operations.
- Rulebook on the Chart of Accounts and Financial Statements for Alternative Investment Funds
The Rulebook on the Chart of Accounts and Financial Statements for Alternative Investment Funds regulate in more detail all matters with respect to the chart of accounts and financial statements which must be prepared for AIFs, i.e.: the content of the regular annual financial statements; charts of accounts and financial statements of AIFs.
- Rulebook on the Chart of Accounts and Financial Statements for Alternative Investment Fund Managers
The Rulebook on the Chart of Accounts and Financial Statements for Alternative Investment Fund Management Companies regulates in more detail all matters with respect to the chart of accounts and financial statements that must be prepared for AIFMs.
- Rulebook on Capital of Alternative Investment Fund Managers
The Rulebook on Form and Amount of Capital of Alternative Investment Fund Managers regulates methods for calculation of capital of AIFM, items included in the calculation of total AIF assets under management of an AIFM, the composition of flat fixed costs incurred by the AIFM in the course of the preceding financial year as well as the schedule for reporting capital calculations to the Commission.
This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.
Miloš Velimirović , Partner
Nevena Milošević, Associate
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