NEW FRAMEWORK FOR MUTUAL FUNDS
Only licensed investment intermediaries shall be authorized to give consultations in the sphere of capital investments, amendments to the Public Offering of Securities Act stipulate. The changes in its provisions are to be considered at an extraordinary meeting of the Financial Supervision Commission on August 30. Until now anyone could give investment consultations. The projected amendments will affect mostly the activities of mutual funds, better known in Bulgaria as investment companies. It is true the regulations for their operation are scarce and need supplementing. Dimana Rankova, Deputy Chairperson of the Financial Supervision Commission, explained that a new scheme will be applied for setting up mutual funds on a contractual basis. This means they will be no longer juristic persons, such as investment companies are. Mutual funds' basic mission is to gather comparatively small amounts of money from many investors and after that distribute the investments in financial instruments with different risk and yield. The amendments are aimed at bringing the law in full compliance with EU directives. The change will affect mostly the capital thresholds for a certain kind of a licence. They have already been set by an ordinance on the capital adequacy and liquidity of investment intermediaries, enforced two months ago. The new levels of the minimum required capital are to be included in the law now. A full licence, entitling the intermediaries to effect deals at their own expense and undertake issues of securities, will be granted only to companies with initial capital of at least BGN1.5MN. The next threshold is BGN250,000 and will entitle the intermediary to effect fiduciary management. Companies with initial capital of BGN200,000 shall not be allowed to effect deals at their own expense or effect fiduciary management.The amendments to the Public Offering of Securities Act are also aimed to eliminate the discrepancy between it and the Act on the Financial Supervision Commission. They concern mainly public companies and issuers on the stock exchange. Their regulation in the first legislative document is also in contradiction with the Commercial Code, in which corrections were made in the section regarding the transformation of companies, including public ones. We'll try to eliminate all inconsistencies and vices in the Public Offering of Securities Act, which have been evident since 2002 when it was seriously amended, Ms. Rankova said. The legislative document, approved in 1999, has undergone ten amendments since then. The last one was in August 2003.