Voluntary supervision

According to a proposal to amend the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht) as approved by the Dutch Cabinet, an investment institution or its manager may opt for statutory supervision. This may be an option when participations in the investment institution are offered only to qualified investors. It will no longer apply that there is supervision only when participations are offered to the public. Voluntary supervision entails fewer requirements than mandatory supervision. This will result in the introduction in the Netherlands of a regime comparable, for example, to that of the Luxembourg Specialised Investment Fund (SIF).

Mitigated regime

Voluntary supervision entails fewer requirements than mandatory supervision, such as:

  • no substantive requirements for annual and semi-annual accounts of the investment institution
  • no requirement to publish the annual accounts of the investment institution
  • no mandatory annual valuation of non-liquid assets by an independent expert
  • no requirement of joint disposal of assets by manager and custodian
  • no requirement to engage an independent custodian in case of risk of contagion.

Other requirements, which also apply to mandatory supervision, are applicable, such as:

  • the testing of expertise and reliability of daily policymakers of (managers of) investment institutions
  • a custodian must hold the assets of an investment fund which is not a legal entity
  • minimum equity requirements for managers and custodians.

Voluntary supervision: when and why?

The mitigated regime may be advantageous because:

  • many institutional investors which are only allowed to invest in supervised investment institutions may invest in investment institutions under the mitigated regime
  • supervision costs are lower than for mandatory supervision
  • the statutory arrangement for the separate capital of the custodian for each investment fund applies
  • a Dutch public limited company (naamloze vennootschap, N.V.) may opt for the status of investment company with variable capital (beleggingsmaatschappij met veranderlijk kapitaal, “bmvk”); a bmvk is subject to fewer capital protection rules and in a bmvk more corporate powers are vested in the board instead of in the general meeting of shareholders.

The voluntary supervisory regime is to enter into force on 1 January 2010.