To increase capital, investment funds are often being created, the funds of which are invested in securities, precious metals or real estate. But not everyone knows how to properly dispose of them to make a profit. To do this, there are asset management companies (AMC), which receive a monetary reward for their activities.
AMCs belong to these types of companies. They may exist in the form of a limited liability company or a joint stock company. AMCs are in charge of managing the assets of institutional investors. The basis of activity is a license issued by the National Commission in charge of securities and stock market. Such companies serve mutual investment institutions and private pension funds. Note that the former include corporate and mutual funds.
An agreement between the company and the mutual investment institution must be concluded. It states the term, rights and obligations of the parties, the responsibility of the company, which it must bear if it performs its duties improperly, and the amount of remuneration. If the term of the agreement expires, it can be extended only by shareholders by the decision of the general meeting.
Companies are allowed to conduct business for several investors at the same time. At the same time, they must act in such a way that investors receive the maximum possible income and the risks are minimal.
The investment fund’s assets are being invested in bonds and stocks, real estate, deposits and gold. Investment income should be distributed among investors according to the number of securities they will own. The company must have its authorized capital, and its size is determined by law and cannot be less than UAH 7 million. The state may have a share in it, but not more than 10%.
If the amount of capital decreases, the company must notify the commission within 3 days of this situation, and within 6 months to ensure that it is reduced to the required amount. The reserve fund must be at least ¼ of the statutory. Deductions are made to it annually, and their amount must be at least 5% of net profit.
The law states that a company should not engage in other stock market activities professionally. However, there may be exceptions that are specified in the law.
If the investment declaration does not provide for the purchase of certain securities, the company has no right to purchase them at the expense of assets owned by the collective investment institution. It is prohibited to provide loans and credits at the expense of the assets it manages.
The company must report to the custodian of the funds on what transactions were carried out within 3 working days after the funds were debited from the account.
The company receives a fee, which is calculated as a percentage of the value of the net assets of the institute. The Law on Mutual Investment Institutions stipulates that if such a company is declared bankrupt, the assets it managed cannot be included in the liquidation estate. That is, the legislator took care that the interests of investors were not violated. If the company has exceeded its authority, entered into agreements not on behalf of the corporate fund, it should be liable for obligations only in the amount of its property.