Investment funds (corporate and unit)

CIF, UIF, AMC – the abbreviations are the names of investment funds and companies, they are great opportunities for developing business, receiving income, optimizing tax burden and assets protection.

According to the Law of Ukraine “On the Institute of Special Investment” dated 05.07.2012, in Ukraine there are two types of investment funds for accumulating a wealth of investors:

• Corporate investment funds (CIF);
• Unit investment funds (UIF).

Also, the funds are classified according to the order of publicity, terms of investment and direct investment.

The professional management of the assets of the funds is done by the investors of the Asset Management Company (AMC). Nowadays, thanks to the Ukrainian Association for Investment Business, there are 300 companies in Ukraine who are responsible for collective and individual trust management. Cooperation with the Investment Fund from the AMC is done on legal ambushes, and defined, in the first place, by the type of the Institute of Mutual Investments.

Corporate investment funds: serious business decisions

A corporate investment fund operates in the form of an open joint-stock company: a legal entity that has supervisory bodies, emits assets and interacts with AMC on the basis of an asset management agreement.

The formation of a CIF occurs exclusively through the establishment (mergers, divisions, spin-offs, mergers, transformations are not allowed), in order for investors to carry out only joint investment activities. Procedure for creating a CIF:

• Lasts an average of 4 months to six months;
• Requires a meeting of founders twice: first – to decide on the establishment of the fund, issuance of shares and approval of the draft statute, and secondly (constituent meeting) – to approve the statute and the results of private placement of shares among the founders, creation of a supervisory board, to approve the draft agreement with AMC;
• Requires the formation of statutory capital in a certain amount: not less than 1250 minimum wages;
• Includes the acquisition of legal entity status, as well as obtaining the status of a mutual investment institution.

Features of cooperation of corporate investment fund with AMC:

• AMC acts according to the agreement concluded with the CIF on the provision of services, which includes the rules and limits of the company’s investment decisions, depending on the level of control that investors want to maintain over the activities of the fund;
• CIF supervises the work of the AMC through annual and extraordinary general meetings, as well as a permanent supervisory board;
• The CIF may decide to replace the AMC.

All the property of the corporate fund is owned by CIF as a legal entity, and some participating investors own its property in shares proportional to the number of their shares.