Investment certificates

Investing in investment certificates

What are investment certificates?

At present, investors are able to invest money in a wide range of financial instruments.  We also include investment certificates.  However, many people confuse them with participation units, which can lead to misunderstandings.

What are the differences and what are the characteristics of investment certificates? 

Investment certificates are issued by closed end investment funds. They are equity securities and provide evidence of participation in the assets of the fund, as are shares in a joint-stock company. The holder of certificates is a participant in the fund, which gives it certain rights.

The fund may issue investment certificates as public or non-public.

The issuance of private investment certificates does not entail any obligation to prepare and approve a prospectus, however, it is possible to prepare such a document for the investors concerned.

Non-public certificates may be registered or bearer documents. Investment certificates are in the form of a document and bearer certificates may be in the form of a document or dematerialised.

Investment certificates are indivisible, but their nominal value may be reduced with the same net asset value of the fund (WAN).  Similarly to the allocation of shares, the distribution of certificates facilitates the use of the fund's income by participants who would like to realise a portion of the profit attributable to the entity through sale or redemption. This operation therefore increases the liquidity of these instruments.

In the case of registered certificates, the statutes may differentiate in terms of rights, e. g.  the amount and method of levying charges chargeable to the fund's assets, and  a share in the net assets of the fund in the event of its liquidation or a share in income the fund.

Bearer investment certificates listed on the Exchange are subject to daily market valuation during exchange sessions. Valuation and may also be made periodically by the issuer. The frequency of valuation is specified in the statutes (at least once every 3 months) and results from estimation of the value of financial instruments in which the fund has invested.

Property rights to investment certificates may also be transferred outside the Exchange. They may be donated, inherited or sold by means of a civil-law contract.

Investor Council set up by holders of investment certificates

Holders of investment certificates have the right to establish a general meeting or a Board of Investors acting as a regulatory body. A member of the Supervisory Board may become a fund member who holds at least 5% of the total number of fund certificates and has blocked them on the investment account.

It is the Council's competence to control the implementation of the fund's investment objective and investment policy and compliance with investment limits.  The Statutes of the Fund may broaden the powers of the Council. Each public investment certificate gives the right to one vote at a Council meeting.

A closed end investment fund may be set up for a limited period of time

The fund's survival ends with the end of the so-called "fund.  winding-up proceedings involving the redemption of investment certificates and the payment of amounts to participants corresponding to the number and final valuation of certificates held by individual participants.  The phrase' winding-up proceedings', which reads quite seriously enough, is in the case of closed end investment funds, a completely natural ending of their activities.