From 22 July 2013, fund managers of alternative investment funds (AIF) established in Slovakia are subject to new regulations due to the implementation of the Alternative Investment Fund Managers Directive (AIFMD).
AIFMD applies to hedge funds, certain private equity funds, real estate funds, securities funds, commodities funds and a number of vehicles that are not commonly thought of as funds at all. In Slovakia this will apply to the existing special mutual funds or venture capital funds and some entities engaged in public offering of securities under the Securities Act.
These funds and their investment managers were not subject to the same rules as other investment funds and pension funds (the UCITS Directive), so the new rules bring them into line with the regulatory requirements for other collective investments undertakings.
AIF managers in Slovakia now require authorisation (a special permit) from the National Bank of Slovakia (NBS), and are subject to strict capital adequacy requirements, as well as detailed rules on issues such as:
- supervision by the NBS
- delegation of management functions
- remuneration policy
- marketing to retail investors
- conflict of interest
- risk management
- liquidity management
- valuation and auditing
- acting as a depositary
The transparency requirements include an obligation on AIF managers to give investors information about their investment strategy and objectives, investment techniques and associated risks, investment restrictions, details of any leverage or collateral, any asset re-use arrangements, valuation and pricing methodology and all investment-related fees.
AIF managers are also required to report on a regular basis to the NBS details of the main markets and instruments they trade in, the proportion of assets subject to special arrangements, liquidity arrangements, risk profile and risk management systems, and the result of stress tests on investment and liquidity risk.
For the purpose of the development of umbrella mutual funds consisting of several sub-funds, introduced by an older regulation, the new law (independent from the AIFMD) also allows to change concurrently existing mutual funds to an umbrella mutual fund.
Law: Act No. 206/2013 Coll. amending and supplementing the Act No. 203/2011 Coll. on Collective Investment