Investment Funds Act

Part 1 GENERAL PART 

Chapter 1 General Provisions  

§ 1.  Scope of regulation

 (1) This Act regulates establishment, foundation and management of investment funds and offer of their units, shares and other similar rights representing a holding.

 (2) The provisions of the Administrative Procedure Act apply to administrative proceedings provided for in this Act, taking account of the specifications provided for in this Act and the Financial Supervision Authority Act.

§ 2.  Investment funds

 (1) An investment fund (hereinafter fund) is a legal entity or pool of assets which involves the capital of a number of investors with the view of investing it in accordance with a defined investment policy for the benefit of the investors in question and in their common interests.

 (2) A fund can be established pursuant to this Act as a common fund (hereinafter common fund) or founded as a public limited company (hereinafter public limited fund), a limited partnership (hereinafter limited partnership fund) or a defined-benefit occupational pension fund.

 (3) A fund must have a fund manager, unless otherwise provided for in this Act. A fund may only have one fund manager at a time.

§ 3.  Fund managers

 (1) A fund manager is a company which main and permanent activity is the management of one or more funds. A fund manager may manage a fund established or founded pursuant to this Act or another fund, including a fund established or founded pursuant to foreign law.

 (2) In order to operate as a fund manager, the person must hold an activity licence or register its activities with the Financial Supervision Authority in accordance with the provisions of Part 5 of this Act.

 (3) The fund manager of a UCITS (hereinafter UCITS manager) is a fund manager which holds an activity licence pursuant to the requirements provided for in Directive 2009/65/EC of the European Parliament and of the Council on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, pp. 32-96).

 (4) The fund manager of a pension fund (hereinafter pension fund manager) is a fund manager which holds an activity licence in accordance with this Act for management of a mandatory or voluntary pension fund.

 (5) The fund manager of an alternative fund (hereinafter alternative fund manager) is a fund manager which holds an activity licence pursuant to the requirements provided for in Directive 2011/61/EU of the European Parliament and of the Council on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 01.07.2011, pp. 1-73), and Commission Delegated Regulation (EU) No 231/2013, supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (OJ L 83, 22.03.2013, pp. 1-95).

 (6) A manager of small alternative funds (hereinafter small fund manager) is a fund manager which manages, either directly or indirectly through a company linked thereto by common management or control or qualifying direct or indirect holding, alternative funds which:
 1) volume of assets, including all the assets of the funds acquired by use of leverage, in total does not exceed 100 million EUR; or
 2) volume of assets in total does not exceed 500 million EUR provided that the portfolio of the alternative funds consists of unleveraged alternative funds and the right to redeem the units or shares cannot be exercised within five years after the date of making investments in each alternative fund.

 (7) The provisions of this Act concerning a fund manager shall not apply to the following persons and pools of assets:
 1) holding companies;
 2) Eesti Pank and central banks of foreign states;
 3) the state, and local authorities;
 4) employee participation or issue schemes;
 5) securitisation special purpose vehicle for the purposes of Article 1(2) of Regulation (EC) No 24/2009 of the European Central Bank of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions (ECB/2008/30) (OJ L 15, 20.01.2009, pp. 1-13);
 6) persons who manage one or more funds which only investors are such persons themselves or the parent companies or subsidiaries of such persons or other subsidiaries of the parent company of such persons, provided that none of the specified investors is a fund.

 (8) In this Act, persons and pools of assets which are founded or established for management of family assets or other equivalent pools of assets shall not be regarded as fund managers.
 9) For the purposes of this Act, a holding company is a person which has a holding in one or more other persons and which business objective is to implement its business strategy through its subsidiaries or affiliated undertakings or holdings for increasing their value in the long term, and:
 1) which acts on its own account and which shares or other equivalent securities have been admitted to trading on a regulated securities market of a State which is a contracting party to the EEA Agreement (hereinafter EEA Member State); or
 2) which main objective in accordance with such person’s annual report or other documents is not to generate revenue to investors through transfer of holdings.

§ 4.  Common fund

 (1) A common fund is a pool of assets which is established from the money collected pursuant to this Act through the issue of units or other assets and assets acquired through investment of money and which is jointly owned by unit-holders. A common fund may be managed by a fund manager which has received an activity licence pursuant to this Act or which has been issued an activity licence of a UCITS or alternative fund manager in another EEA Member State. A fund manager conducts transactions with the assets of a common fund in its own name and for the common account of all the unit-holders.

 (2) The assets of a common fund may be divided into separate investment vehicles to which different investment policies apply and which are regarded as sub-funds (hereinafter sub-fund) for the purposes of this Act. In the case provided for in this Act, the provisions concerning funds also apply to sub-funds.

§ 5.  Mandatory and voluntary pension funds

 (1) A mandatory pension fund or a voluntary pension fund is a common fund which main objective is to provide unit-holders of the pension fund with a funded pension under the terms and conditions and pursuant to the procedure provided for in the Funded Pensions Act and this Act (hereinafter pension fund).

 (2) A voluntary pension fund may inter alia be an occupational pension fund.

 (3) The provisions concerning public funds apply to pensions funds, unless otherwise provided for in this Act.

 (4) The rate of return of a mandatory pension fund and occupational pension fund shall not be guaranteed and such pension funds shall not have defined benefits or cover mortality, survival and incapacity for work risks.

 (5) A voluntary pension fund which is not an occupational pension fund shall not have defined benefits or cover mortality, survival and incapacity for work risks.

 (6) A voluntary pension fund which is not an occupational pension fund may be a guaranteed fund. The guarantor of a guaranteed voluntary pension fund may only be an insurer or credit institution which is not the depositary of the fund.

 (7) The assets of a pension fund may not be divided into sub-funds.

§ 6.  Public limited funds

 (1) A public limited fund is a fund founded pursuant to this Act as a public limited company and the provisions of the Commercial Code apply to the foundation, operation and dissolution thereof, unless otherwise provided for in this Act.

 (2) In order to operate, a public limited fund shall enter into a management contract with a fund manager which has been issued an activity licence pursuant to this Act or which has been issued an activity licence of a UCITS or alternative fund manager in another EEA Member State.

 (3) The assets of a public limited fund may not be divided into sub-funds.

§ 7.  Defined-benefit Occupational Pension Funds

 (1) A defined-benefit occupational pension fund is a fund which manages its own assets and which has been founded in the form of a public limited company and which main objective is to provide an occupational pension agreed upon between an employer which residence or seat is in another EEA Member State (hereinafter employer of EEA Member State) and the employees, public servants or members of managing and controlling bodies thereof.

 (2) A defined-benefit occupational pension fund may be an occupational pension fund which guarantees investment performance, covers mortality, survival and incapacity for work risks or provides benefits in agreed amounts on other bases.

 (3) The assets of a defined-benefit occupational pension fund may not be divided into sub-funds.

 (4) A defined-benefit occupational pension fund is not a public limited fund or a pension fund for the purposes of this Act or the Funded Pensions Act.

§ 8.  Limited partnership funds

 (1) A limited partnership fund is a fund founded as a limited partnership pursuant to this Act and the provisions of the Commercial Code apply to the foundation, operation and dissolution thereof, unless otherwise provided for in this Act.

 (2) A limited partnership fund may manage its own assets or enter into a management contract with a fund manager. Only a fund manager which has received an activity licence pursuant to this Act or which has been issued an activity licence of a UCITS or alternative fund manager in another EEA Member State or which has registered its operation with the Financial Supervision Authority may act as a limited partnership fund manager or a general partner of a limited partnership fund which manages its own assets. A limited partnership fund which manages its own assets shall not be regarded as a self-managed fund for the purposes of Directive 2011/61/EU of the European Parliament and of the Council.

 (3) The assets of a limited partnership fund may not be divided into sub-funds.

§ 9.  Other types and classes of funds

 (1) A UCITS is a fund established or founded in an EEA Member State which complies with the requirements provided for in Directive 2009/65/EC of the European Parliament and of the Council and the units or shares of which may be publicly offered in all EEA Member States and they shall be redeemed at the request of unit-holders or shareholders.

 (2) An alternative fund is any fund which is not a UCITS, pension fund or defined-benefit occupational pension fund.

 (3) A European venture capital fund manager is a manager of an alternative fund which is recognised in a Contracting Party, which meets the requirements provided for in Regulation (EL) No 345/2013 of the European Parliament and of the Council on European venture capital funds (OJ L 115, 25.04.2013, pp. 1-17), and the units or shares of funds managed by which may be publicly offered in all Contracting Parties.

 (4) A European social entrepreneurship fund manager is a manager of an alternative fund which is recognised in a Contracting Party, which meets the requirements provided for in Regulation (EL) No 346/2013 of the European Parliament and of the Council on European social entrepreneurship funds (OJ L 115, 25.04.2013, pp. 18-38), and the units or shares of funds managed by which may be publicly offered in all Contracting Parties.

 (5) A closed-ended fund is an alternative fund which units or shares are not redeemed at the request of unit-holders, shareholders or partners before dissolution of the fund.

 (6) A feeder fund is a fund which assets are invested to the extent of at least 85 per cent in the units or shares of a master fund specified in subsection (7) of this section or placed in the master fund in any other manner.

 (7) A master fund is a fund which fulfils the following conditions:
 1) it has at least one feeder fund among its unit-holders or shareholders;
 2) it is not a feeder fund;
 3) it does not hold any units or shares of a feeder fund.

 (8) A European long-term investment fund is an alternative fund which is recognised in a Contracting Party, meets the requirements provided for in Regulation (EL) No 2015/760 on European long-term investment funds (OJ L 123, 29.04.2015, pp. 98-121) and the units or shares of which may be offered in all Contracting Parties.

 (9) A foreign fund is a fund which has been established or founded pursuant to foreign law. For the purposes of this Act, the right representing any holding in a foreign fund shall be deemed to be a unit or share of the foreign fund.

 (10) Funds may be a guaranteed fund. The guarantor of a guaranteed fund may only be an insurer or credit institution which is not the depositary of the fund.

§ 10.  Offers of fund units and shares

 (1) An offers of units or shares of a fund (hereinafter fund offer) is deemed to be an offer of securities for the purposes of § 11 of the Securities Market Act.

 (2) A fund which units or shares are publicly offered for the purposes of § 12 of the Securities Market Act is a public fund (hereinafter public fund).

 (3) Units of a limited partnership fund may not be publicly offered.

 (4) In addition to the provisions of subsection 12 (2) of the Securities Market Act, an offer shall not be deemed to be public if the offer is submitted by a fund manager, investment firm or credit institution upon management of a securities portfolio or guaranteeing of an offer or issue of securities for the purposes of clause 43 (1) 4) or clause 44 6) of the Securities Market Act to a respective person only.

 (5) The provisions of Parts 2 and 4 of the Securities Market Act concerning public offer of securities and admission thereof to trading on a regulated market of an EEA Member State (hereinafter regulated market) apply to public offer of securities of a closed-ended public fund which is not a pension fund.

§ 11.  Basic documents, prospectuses and key information of funds

 (1) For the purposes of this Act, a basic document is the articles of association of a public limited fund, partnership agreement of a limited partnership fund or fund rules of a common fund which are required for foundation or establishment of the fund.

 (2) Fund rules of a common fund (hereinafter fund rules) are a document approved pursuant to the procedure provided by law and disclosed to investors which prescribes the bases for the activities of the common fund and the relations of unit-holders with the fund manager.

 (3) For the purposes of this Act, a prospectus is a document prepared for public offer of a fund which states the information relating to the fund at least to the extent provided by legislation and other information which is required or useful in the opinion of the fund manager in making an investment decision.

 (4) For the purposes of this Act, key information is a brief document prepared for public offer of a fund which only states the basic information relating to the fund to the extent provided by legislation.

§ 12.  Other terms used in Act

 (1) In this Act, terms are used in the following meaning:
 1) initial capital is the capital and reserves specified in Article 26(1)(a)-(e) of Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176/1, 27.06.2013), having regard to the provisions of Article 26(2);
 2) depositary is a credit institution or investment firm or another legal entity which has been granted the right on the basis of this Act to carry out depositary functions and which holds the assets of the fund and performs other functions assigned thereto by legislation and the depositary contract;
 3) parent company and subsidiary are the persons provided for in subsections 27 (1) and (2) of the Accounting Act;
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 4) leverage is a method by which the risk position of a fund is increased either through borrowing of cash or securities, derivative positions or by other means;
 5) net asset value of a fund is the value of the securities and other things and rights among to the assets of the fund from which claims against the fund are deducted;
 6) investor is a unit-holder, shareholder or partner of a fund or a person who has an obligation to acquire a unit or share of the fund, and professional investor is the person specified in subsection 6 (2) of the Securities Market Act;
 7) manager is a member of the management board or supervisory board of a fund manager or a public limited fund, managing partner of a limited partnership fund and member of the management board or supervisory board of a general partner, if the general partner is a legal entity;
 8) third country is a non-EEA Member State;
 9) close links are a situation where at least two persons are linked for the purposes of subsections 8² (2) and (3) of the Securities Market Act;
 10) prime broker is a credit institution, investment firm or other financial institution subject to financial supervision which provides, chiefly to professional investors, the service of granting a credit or loan to conduct securities transactions and may also provide the services of holding assets, transfer and settlement services, investment services or ancillary investment services for the purposes of the Securities Market Act (hereinafter ancillary services), such as receipt and transmission of orders related to securities and execution of orders in the name of or for the account of clients, and borrowing of securities, or provides the technical resources required to manage the fund;
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 11) home country is the country under which law the fund or fund manager was established or founded;
 12) durable medium is any instrument which allows reproduction of information for the purposes of § 11¹ of the Law of Obligations Act;
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 13) country of destination is the country in which the person wishes to offer or manage a fund or provide investment services or ancillary services;
 14) management contract is a contract which is entered into between a fund and fund manager and pursuant to which the fund manager undertakes to provide asset investment services to the fund in accordance with the articles of association of the fund with the objective of generating income for the fund and the fund undertakes to transfer the assets required for this purpose to the disposal of the fund manager;
 15) security is the security specified in § 2 of the Securities Market Act, unless otherwise provided for in this Act.

 (2) For the purposes of this Act, a relevant person is:
 1) manager, employee of a fund manager or another person who performs an equivalent function;
 2) employee of a fund manager or another natural person not specified in clause 1) of this subsection who is under the control of the fund manager and is related to the provision of the fund management service;
 3) another natural person who provides management services or fund management services to a fund manager subject to a contract for outsourcing of the functions related to the management of the fund, including management services or fund management services to an investment company managed by the fund manager and founded in another EEA Member State.

 (3) The provisions of §§ 9, 10 and 72¹ of the Securities Market Act apply to determination of qualifying holdings and controlled companies.

Chapter 2 Common Funds, Units and Shares of Unit-holders in Assets of Funds 

§ 13.  General provisions on common funds

 (1) By making a declaration of intent for acquisition of units of a common fund, the unit-holder consents to the fund rules and the prospectus.

 (2) The rights attached to a unit shall belong to the unit-holder after the registration of the unit-holder in the register of unit-holders.

 (3) Assets collected through issue of units of a common fund and acquired through investment of the assets of the common fund are jointly owned by the unit-holders (hereinafter community of unit-holders).

 (4) The provisions of §§ 72-79 of the Law of Property Act do not apply to relationships between unit-holders. No unit-holder is entitled to demand termination of a community of unit-holders. In addition to this, such right cannot be exercised by a pledgee or creditor of a unit-holder in execution proceedings or by a trustee in bankruptcy in bankruptcy proceedings of a unit-holder.

 (5) A common fund may not be transformed into a public limited fund or limited partnership fund.

 (6) If the assets of a common fund may be divided into sub-funds, which have been separated from the rest of the assets of the fund, in accordance with the provisions of the fund rules, the provisions of this Chapter concerning funds also apply to sub-funds of the fund.

§ 14.  Unit-holder’s share in assets of common fund

 (1) A unit represents a unit-holder’s share in the assets of a common fund.

 (2) Units of the same class grant equal rights to unit-holders on equal bases.

 (3) A unit-holder has inter alia the right to:
 1) demand that the fund manager redeem units in the cases and pursuant to the procedure provided for in the fund rules;
 2) exchange the units held by the unit-holder for the units of a different class of the same common fund or for the units or shares of another fund managed by the same fund manager pursuant to the procedure provided for in the fund rules or the prospectus, unless the fund rules or the prospectus provide a prohibition on exchange of units;
 3) transfer or encumber the units held by the unit-holder to third parties, taking account of the restrictions provided for in the fund rules of the non-public fund;
 4) receive, when payments are made from the assets of a common fund pursuant to the fund rules, a share of the income of the common fund or the assets of the fund based on the number of units, class of units and other circumstances provided by legislation or the fund rules;
 5) receive, pursuant to the fund rules, a share of the assets remaining after dissolution of the common fund based on the number of units, class of units and other circumstances provided by legislation or the fund rules;
 6) call the general meeting of unit-holders in the cases and pursuant to the procedure prescribed by law or the fund rules;
 7) participate in and vote at the general meeting in accordance with the provisions of the common fund rules;
 8) obtain information concerning the activities of the common fund pursuant to the provisions of the fund rules and this Act.

 (4) A unit-holder’s share in the assets of a common fund is determined by the ratio of the number of units held by the unit-holder and the total number of units held by all unit-holders. Upon a change in such ratio, the unit-holder’s share changes accordingly. Upon transfer of a unit or delivery of the ownership of a unit in any other manner, the share of the unit-holder in the assets of the common fund and the rights and obligations relating thereto shall transfer to the acquirer thereof.

 (5) If a common fund has several classes of units, a unit-holder’s share in the assets of the common fund is determined by the ratio of the number of units held by the unit-holder and the total number of all units of the same class and the total of the net asset values of all units of the same class, respectively, to the net asset value of the common fund. If a unit-holder owns units of several classes, the unit-holder’s share in the assets of the fund is determined as the total of the units corresponding to the units of several classes.

 (6) No payment shall be made to unit-holders upon exchange of units of a common fund. Upon exchange of units, the units shall be redeemed and issued on the basis of the net asset value of the units.

§ 15.  Liability of unit-holders

 (1) A unit-holder shall not be personally liable for the obligations of a fund assumed by the fund manager for the account of the fund and for the obligations which performance the fund manager has the right to demand for the account of the fund in accordance with the fund rules. The liability of a unit-holder for performance of such obligations is limited to the unit-holder’s share in the assets of the fund.

 (2) A fund manager shall not assume obligations in the name of a unit-holder.

 (3) In order to satisfy a claim against a unit-holder, a claim for payment may be made against the units of the unit-holder but not against the assets of the fund.

 (4) An agreement which derogates from the provisions of this section is void.

§ 16.  Units and principles of distinguishing between classes thereof

 (1) Units may have a nominal value or no nominal value. One and the same fund may not have units with nominal value and with no nominal value.

 (2) A unit is divisible. The rules for rounding of parts of units created as a result of division of units (hereinafter fractional unit) shall be provided for in the fund rules.

 (3) A holder of a fractional unit shall participate in the payments made from a common fund and upon distribution of assets in the case of dissolution the common fund. The rights attached to fractional units shall be specified in the fund rules.

 (4) In accordance with the provisions of the fund rules, a common fund may have units of several classes and the rights association therewith may differ. Units of a common fund may differ inter alia as regards the following conditions:
 1) minimum number of units or minimum investment amount;
 2) currency of the class of units;
 3) conditions of issue and redemption;
 4) amount of fees related to the unit;
 5) permissibility of exchange of units or procedure for their exchange;
 6) conditions prescribed to investors based on the knowledge, legal form or other identifiers of the investor;
 7) voting right associated with the unit;
 8) right of a unit-holder to receive disbursements from the common fund or participate in the distribution of the assets remaining upon dissolution of the common fund;
 9) amount of the nominal value, if applicable;
 10) registrars.

 (5) In fund rules and other documents of a fund, the fund units of different classes must be named differently.

 (6) In the cases provided for in the fund rules, the issue or redemption fees of the units of the same class may differ depending on the number, volume of the units issued or redeemed or circumstances relating to the organisation of issue and redemption of units.

Chapter 3 Public Limited Funds, Shares and Share Capital of Public Limited Funds  

§ 17.  General provisions on public limited funds

 (1) A public limited fund may only engage in the management of the own assets of the public limited fund.

 (2) A public limited fund may not be transformed into a company of a different type or a public limited company which is not a fund.

§ 18.  Specifications for shares of public limited funds

 (1) The provisions of § 223 of the Commercial Code do not apply to public limited funds. The provisions of clause 2 (1) 3) of the Securities Register Maintenance Act do not apply to registration of shares of public limited funds.
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 (2) The share register of a public limited fund shall be maintained by the management board of the public limited fund, unless the public limited fund has entered into a contract for outsourcing the function of maintaining the share register to a third party in respect of which an entry has been made in the commercial register.

 (3) A public limited fund may not issue preferred shares.

 (4) A public limited fund shall not issue convertible bonds and other securities which grant the owner thereof rights which are similar to the rights associated with convertible bonds.

 (5) A shareholder of a public limited fund has the right to:
 1) request redemption of shares by the public limited fund in the cases and pursuant to the procedure provided for in the articles of association of the public limited fund;
 2) exchange the shares held by the shareholder for the shares of a different type of the same public limited fund or shares or units of another fund managed by the same fund manager, unless the articles of association or prospectus of the public limited fund provide for a prohibition on the exchange of shares;
 3) obtain information concerning the activities of the public limited fund in accordance with the provisions of this Act and the articles of association of the public limited fund.

 (6) The provisions of subsection 229 (2) of the Commercial Code do not apply to transfer of shares of public public limited funds.

 (7) A share of a public limited fund is divisible. The rules for rounding of the fractions of shares (hereinafter fractional share) created as a result of the division of shares shall be provided for in the articles of association of the public limited fund.

 (8) A holder of a fractional share participates in making of payments from a public limited fund and in distribution of assets in the case of dissolution of the fund. The rights associated with a fractional share shall be specified in the articles of association of the public limited fund.

 (9) In accordance with the provisions of the articles of association of a public limited fund, the public limited fund may have several classes of shares which give rise to different rights. The shares of the public limited fund may differ from one another for example in terms of the following conditions:
 1) minimum number of shares or minimum investment amount;
 2) currency of the class of shares;
 3) issue and redemption principles;
 4) amount of fees related to the share;
 5) permissibility of exchange of shares or procedure for exchange thereof;
 6) conditions prescribed to investors based on the knowledge, legal form or other identifiers of the investor;
 7) right to vote attached to the share;
 8) shareholder’s right to receive payments from the public limited fund or participate in the distribution of assets remaining upon dissolution of the public limited fund;
 9) amount of the nominal value, if applicable;
 10) person maintaining the share register.

 (10) The shares of different classes of a public limited fund must be named differently in the articles of association of the public limited fund and other documents of the public limited fund.

 (11) In the case provided for in the articles of association of a public limited fund, the issue and redemption fees of the shares of the same class may differ depending on the number of shares to be issued or redeemed.

 (12) Redemption of the shares of a public limited fund shall be treated as redemption of shares for the purposes of this Act.

 (13) No payments shall be made to shareholders upon exchange of shares of a public limited fund. Upon exchange of shares, shares shall be redeemed and issued pursuant to the net asset value of the shares.

§ 19.  Specifications for share capital of public limited funds

 (1) To the extent of the minimum and maximum capital provided for in the articles of association of a public limited fund, the public limited fund may issue and redeem shares at any time. The provisions of clause 244 (1) 2) of the Commercial Code do not apply to the amount of the minimum and maximum capital of a public limited fund.

 (2) Upon issue, shares shall be paid for in full in accordance with the settlement cycle determined in the articles of association or prospectus of the public limited fund.

 (3) The amount of the share capital of a public limited fund corresponds to the amount of the net asset value of the public limited fund.

 (4) The amount of the share capital and the number of shares are not entered in the commercial register. The amount of the share capital paid upon foundation of a public limited fund shall be entered in the commercial register and a notation shall be made stating that the public limited fund is a fund founded pursuant to this Act and the amount of the share capital thereof corresponds to the amount of the net asset value of the fund.

 (5) The obligation to form a legal reserve provided for in § 336 of the Commercial Code does not apply to public limited funds.

 (6) The provisions concerning increase or reduction of the share capital or takeover of shares provided for in §§ 338-363¹⁰ of the Commercial Code do not apply to public limited funds.

 (7) The share capital of a public limited fund shall be deemed to be increased or reduced after changing the net asset value of the fund.

 (8) If the net asset value of a public limited fund is less than the minimum amount of the share capital provided for in this Act or if the claims of creditors cannot be satisfied for the account of the public limited fund, the management board of the public limited fund must promptly notify the Financial Supervision Authority in writing thereof.

Chapter 4 Limited Partnership Funds, Units and Partners of Limited Partnership Funds 

§ 20.  General provisions on limited partnership funds

 (1) A limited partnership fund may only engage in the management of its own assets. The specified requirement does not limit any other activities of the general partner of a limited partnership fund.

 (2) If a limited partnership fund does not manage its own assets, it shall enter into a management contract with a fund manager. The fund manager may represent the limited partnership fund in all transactions within the competence granted to the fund manager by the management contract, unless otherwise provided for in the partnership agreement or the management contract. Entry into and termination of the management contract shall be decided by the managing general partners of the limited partnership fund by at least a two-thirds majority of the votes, unless otherwise prescribed in the partnership agreement.

 (3) A limited partnership fund shall not be transformed into a company of a different type or into a limited partnership which is not a fund.

§ 21.  Units and partners of limited partnership funds

 (1) For the purposes of this Act, a unit of a limited partnership fund is a set of the rights and obligations of a partner which are associated with the legal relations between the limited partnership fund and its partners. Upon application of the investment restrictions and conditions provided by legislation, acquisition of a unit of a limited partnership fund shall be deemed to be equal to acquisition of a unit or share of a fund.

 (2) A unit of a limited partnership fund may be freely transferred, unless otherwise provided for in the partnership agreement. The partnership agreement may provide for restrictions on transfer and encumbrance of the units of the limited partnership fund and other conditions and procedures. Transfer and encumbrance of a unit is deemed to be effected with respect to the limited partnership fund after notification of the limited partnership fund of the transfer or encumbrance.

 (3) Partners of a limited partnership fund must make their contributions under the conditions and pursuant to the procedure provided for in the partnership agreement.

 (4) A certificate may be issued for a unit of a limited partnership fund. If the partnership agreement provides for an opportunity to issue securities of different classes and with different rights and obligations for the units of a limited partnership fund, the securities of different classes must be named differently in the partnership agreement.

 (5) A new partner may be admitted into a limited partnership fund under the conditions and pursuant to the procedure provided for in the partnership agreement.

§ 22.  Rights and obligations associated with units of limited partnership funds

 (1) Unless otherwise provided for in a partnership agreement, partners of a limited partnership fund decide on the amount and payment of the profit share subject to distribution after the end of the financial year on the basis of the approved annual report or on the basis of the consolidated report of the consolidation group, if the limited partnership fund belongs to a consolidation group.

 (2) Disbursement of profit is prohibited if, as a result thereof, the limited partnership fund would not be able to fulfil its obligations once they fall due.

 (3) A partner has the right to withdraw from a limited partnership fund and request redemption of the unit only under the conditions and pursuant to the procedure provided for in the partnership agreement. This does not exclude or restrict the right of a partner to transfer the partner’s unit in accordance with the partnership agreement.

 (4) The provisions of §§ 108 and 109 of the Commercial Code do not apply to limited partnership funds. Pursuant to the procedure established in the partnership agreement, a general partner or limited partner may be excluded from a limited partnership fund or a partner’s unit may be expropriated to another limited partner, general partner or third party, provided the acquirer of the unit assumes all the rights and obligations associated with the specified unit. The unit of a general partner may be expropriated only to a person who complies with the requirements provided for in subsection 8 (2) of this Act.

 (5) A contribution of a partner of a limited partnership fund may be increased only with the consent of the partner. The contribution may be reduced with the consent of the partner or in any other cases provided for in the partnership agreement.

 (6) In the case a partner leaves or is excluded from a limited partnership fund, the partner shall be paid a compensation in the cases, under the conditions and pursuant to the procedure prescribed in the partnership agreement.

 (7) The provisions of §§ 95, 96 and 129 of the Commercial Code apply to partners of limited partnership funds, unless otherwise prescribed in the partnership agreement.

Chapter 5 Assets of Funds and Business names or Names of Funds  

§ 23.  Assets of funds and liability of fund managers upon management of assets

 (1) The assets of a fund include securities and other things, rights and obligations, including immovable property acquired for the account of the fund but in the name of the fund manager or the fund.

 (2) Assets which are acquired on the basis of the rights attached to the assets of a fund or in a transaction which is based on the assets of a fund or received as compensation for a thing or right attached to the assets of a fund also form a part of the assets of the fund.

 (3) A fund manager shall manage the assets of a fund separately from the assets of the fund manager, the assets of other funds managed by the fund manager and other pools of assets.

 (4) Disposal of the assets of a fund shall not be restricted and no compulsory enforcement shall be imposed on the assets of the fund for fulfilment of any other obligations besides the obligations assumed for the account of the respective fund or in order to ensure fulfilment thereof. When immovable property is acquired for the account of a fund, a notation must be made in the land register or, as appropriate, a similar register of a foreign state on restriction of disposal of the assets which includes the name of the fund for the account of which the assets were acquired.

 (5) The obligation to keep assets of a fund separate shall also apply in the case of dissolution of the fund and insolvency of the fund manager or the fund.

 (6) The assets of a fund do not form a part of the bankruptcy estate of the fund manager and only the claims of the unit-holders, shareholders or partners of the fund and of the creditors related to the assets of the fund against the fund shall be satisfied out of such assets. Investors of the fund are not required to submit the application specified in subsection 123 (3) of the Bankruptcy Act for exclusion of the assets of the fund from the bankruptcy estate of the fund manager.

 (7) A fund manager shall be liable for the damage caused to a fund if the fund manager has violated the obligations arising for the fund manager from the legislation, the articles of association of the fund manager, the basic documents of the fund, the management contract or documents established on the basis thereof.

 (8) The provisions of this section concerning the assets of a fund also apply to sub-funds of a common fund, including the rights and obligations arising from the establishment, investment of the assets, merger of sub-funds and dissolution of sub-funds thereof and satisfaction of claims related to the assets of sub-funds in insolvency proceedings.

§ 24.  Business names or names of funds

 (1) Other persons, agencies or associations, which are not investment funds, shall not use in their names, designations or business names the words or abbreviations “investment fund”, “common fund”, “pension fund”, “public limited fund”, “limited partnership fund”, “UCITS”, “European venture capital fund”, “EuVECA”, “European social entrepreneurship fund”, “EuSEF”, “European long-term investment fund”, “ELTIF” or other words or abbreviations with the same meaning in the Estonian or any other language.

 (2) Only the name or business name of a UCITS, European venture capital fund, European social entrepreneurship fund and European long-term investment fund established or founded in Estonia pursuant to this Act or the law of another EEA Member State may respectively include the words “UCITS”, “European venture capital fund”, “European social entrepreneurship fund” and “European long-term investment fund”. Only the name or business name of a European venture capital fund, European social entrepreneurship fund and European long-term investment fund may include the respective abbreviations “EuVECA”, “EuSEF” and “ELTIF”.

 (3) The provisions of subsections (1) and (2) of this section do not apply to business names of fund managers.

 (4) The words “pension fund” must be used in the name of a pension fund.

 (5) The business name of a public limited fund must include the attribute “public limited fund with variable capital” or instead of this the abbreviation “MASF”.

 (6) The business name of a limited partnership fund must include the attribute “limited partnership fund”.

 (7) The name or business name of a fund must be clearly distinguishable from the names and business names of other funds established or founded in Estonia or funds offered in Estonia.

 (8) The requirements for business names provided for in § 12 of the Commercial Code apply to common funds and the business names thereof.

 (9) The name or business name of a fund must not be misleading with regard to the investment polity of the fund or other conditions prescribed in the fund rules or articles of association of a public limited fund or a defined-benefit occupational pension fund or the partnership agreement of a limited partnership fund.

Part 2 PUBLIC FUND  

Chapter 6 General Provisions  

§ 25.  Application of Part

 (1) This Part of the Act applies to any UCITS, pension funds and other public funds which have been established or founded in Estonia, unless otherwise provided for in this Part. Only the provisions of §§ 216-239 of this Act apply to defined-benefit occupational pension funds.

 (2) The provisions of §§ 80-82, 408, 413, 419, 420, 422, 423, 430, 432 and 436 of this Act apply to public offers in Estonia of funds established or founded in foreign states and to information disclosed. The public offer prospectus and key information of a fund established or founded in a foreign state and which is not a UCITS must comply with the requirements provided for in §§ 73-75 of this Act, and the information disclosed concerning the fund to the requirements provided for in § 90 of this Act.

 (3) The provisions of this Part concerning a fund, including establishment and foundation of the fund, apply to transformation of a non-public fund established or founded pursuant to this Act into a public fund.

Chapter 7 Establishment and Foundation of Funds  

Division 1 General Conditions of Establishment and Foundation of Funds  

§ 26.  Establishment of common funds

 (1) The establishment of a common fund is decided and the fund rules are approved by the management board of the fund manager.

 (2) A decision on the establishment of a common fund must set out the following:
 1) the name of the fund;
 2) the business name, registry code and seat of the fund manager;
 3) the business name, registry code and seat of the depositary.

 (3) Fund rules enter into force and a common fund is deemed to be established after approval of the fund rules by the Financial Supervision Authority, unless the fund rules prescribe a later date for entry into force.

§ 27.  Foundation of public limited funds

 (1) Upon entry into a memorandum of association of a public limited fund, the founders of the fund also approve the management contract and depositary contract.

 (2) Before registration of a public limited fund in the commercial register, the articles of association of the public limited fund shall be approved by the Financial Supervision Authority.
[RT I, 31.12.2016, 3 - entry into force 01.01.2017]

§ 28.  Transformation of public limited companies into public limited funds

  A public limited company may be transformed into a public limited fund if all the shareholders of the public limited company are in favour of the respective amendment to the articles of association. The future fund manager of the public limited fund must be designated at the general meeting where the transformation into a public limited fund is decided. Upon transformation of a public limited company into a public limited fund, the general meeting of the public limited company shall approve the management contract and depositary contract.

§ 29.  Requirements for fund rules and articles of association

 (1) Fund rules shall set out at least the following information:
 1) the name of the fund and a reference to that the fund was established as a common fund;
 2) the date of establishment of the fund and the host country of the fund;
 3) in the case of a fixed-term fund the closing date of the fund;
 4) a notation if the fund is a UCITS, feeder fund or master fund;
 5) a notation that the fund is a public fund;
 6) the business name, registry code and seat of the fund manager;
 7) a notation if the assets of a common are divided into sub-funds;
 8) the general characteristics of the strategy and policy of investment of the assets of the fund (hereinafter investment policy), including in which assets and in which regions the assets of the fund are invested;
 9) a list and procedure of calculation of all the fees, charges and expenses paid for the account of the fund;
 10) the total limit of all the fees, charges and expenses paid for the account of the pension fund and UCITS;
 11) the classes of units if the fund has different classes of units;
 12) the rights and obligations attached to units, including voting rights attached to units, rules for rounding fractional units and procedure for distribution of the income of the fund;
 13) the frequency of issue and redemption of units;
 14) the guarantee conditions and the business name and seat of the guarantor and the registry code of the guarantor, if any, if the rate of return of the fund is guaranteed;
 15) a notation on the right of the unit-holders of a common fund, if any, to participate in the general meeting and the conditions relating to acquisition of this right, competence of the general meeting of unit-holders, procedure for calling the general meeting and adoption of decisions, including the venue of the general meeting and the conditions for covering the costs of holding a general meeting;
 16) the procedure for amendment of the fund rules;
 17) the bases and procedure for dissolution and liquidation of the fund.

 (2) The articles of association of a public limited fund must set out the following information:
 1) a notation that the fund was founded pursuant to this Act as a public limited fund and the amount of the share capital thereof corresponds to the amount of the net asset value of the fund;
 2) the amount of the share capital paid upon foundation of the fund or to be paid in total during one year and the amount of the minimum and maximum capital, and a notation that, to the extent of the minimum and maximum capital, the public limited fund may issue and redeem shares at any time;
 3) the date of foundation of the fund;
 4) in the case of a fixed-term fund the closing date of the fund;
 5) a notation if the fund is a UCITS, feeder fund or master fund;
 6) a notation that the fund is a public fund;
 7) the business name, registry code and host country of the fund manager;
 8) the general characteristics of the investment policy of the fund, including in which assets and in which regions the assets of the fund are invested;
 9) a list and procedure of calculation of all the fees, charges and expenses paid for the account of the fund or shareholders;
 10) the total limit of all the fees, charges and expenses paid for the account of the UCITS;
 11) the procedure for distribution of the income of the fund;
 12) the frequency of issue and redemption of shares;
 13) the guarantee conditions and the business name and seat of the guarantor and the registry code of the guarantor (who may be an insurer or a credit institution which is not the depositary of the fund), if any, if the rate of return of the fund is guaranteed;
 14) the specifications for the competences of the managing bodies of the fund compared to the provisions of the Commercial Code and this Act;
 15) the obligations of the fund manager provided for in the management contract;
 16) the procedure for amendment of the articles of association;
 17) the bases and procedure for dissolution and liquidation of the fund.

 (3) The information specified clause 244 (1) 3¹) of the Commercial Code shall not be set out in the articles of association of a public limited fund.

 (4) The fund rules or articles of association of a fund may prescribe other conditions which are not contrary to legislation.

§ 30.  Seats of common funds

 (1) The seat of a common fund shall be the seat of its fund manager or the seat of its Estonia branch. If a common fund established pursuant to this Act is managed by a foreign fund manager by means of providing cross-border services, the seat of the common fund shall be the seat of this credit institution, investment firm, fund manager or branch with which the fund manager has entered into a contact for organisation of purchase and sale of units of funds in Estonia and which is set out as the seat of the fund in the fund rules.

 (2) If a common fund established on the basis of this Chapter and which is a UCITS or alternative fund is managed by a fund manager of an EEA Member State by means of providing cross-border services, the seat of the fund is the seat of the Estonian branch of the depositary or fund manager of the fund.

Division 2 Approval of Fund Rules and Articles of Association  

§ 31.  Data submitted for approval of fund rules and articles of association

 (1) In order to obtain an approval to the fund rules or articles of association of a public limited fund, the fund manager of the public limited fund or the public limited fund (hereinafter in this Division applicant) shall submit a written application to the Financial Supervision Authority and the following data and documents (application, data and documents hereinafter jointly in this Division application):
 1) the decision on establishment of the common fund or, in the case a public limited fund is founded, the memorandum of association or foundation resolution;
 2) the fund rules or articles of association of the fund;
 3) the prospectus of the fund and in the case of an alternative fund the information attached to the prospectus and specified in subsections 90 (1) and (2) of this Act;
 4) the key information of the fund or sub-funds, if any;
 5) the procedure for establishment of the net asset value of the fund;
 6) the data of the audit firm of the fund which include its business name, seat and registry code, unless these data are included in the prospectus;
 7) the depositary contract.

 (2) In order to obtain an approval for the articles of association of a public limited fund, the following must be submitted in addition to a specified in subsection (1) of this section:
 1) a document certifying payment of the share capital;
 2) the data of the members of the management board and supervisory board of the applicant, including each member’s given names and surname, personal identification code or date of birth in the absence of personal identification code, place of residence, educational background, complete list of places of employment and positions held and, in the case of members of the management board, a description of their duties;
 3) the management contract;
 4) in the case of an operating public limited company, the decisions of the general meeting specified in § 28 of this Act.

§ 32.  Processing of applications for and decisions on approval of fund rules and articles of association

 (1) If an application is not in compliance with the requirements provided for in § 31 of this Act, the Financial Supervision Authority shall demand elimination of the deficiencies therein by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents if it is not convinced on the basis of the data and documents specified in § 31 of this Act as to whether the fund rules or articles of association comply with the requirements established for funds by legislation or if other circumstances relating to the fund need to be verified.

 (3) In order to verify the data and documents submitted by an applicant, the Financial Supervision Authority may require that more specific data and documents be submitted, perform on-site inspections, order expert assessments and special audits and consult state databases, request oral explanations from the managers of the fund manager or public limited fund, auditor firms, their representatives and third parties concerning the contents of the data or documents submitted and the facts which are relevant in making a decision on approval of the fund rules or articles of association.

 (4) The data and documents specified in subsections (1)-(3) of this section shall be submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review an application if the applicant fails to eliminate the deficiencies specified in subsections (1) and (2) of this section within the prescribed term, or fails to submit the data or documents requested by the Financial Supervision Authority by the due date. Upon refusal to review an application, the Supervision Authority shall return the submitted documents without making a decision on refusal to approve the fund rules or the articles of association.

 (6) The Financial Supervision Authority shall make a decision to approve or refuse to approve the fund rules or articles of association of a fund within two months after receipt of all the necessary data and documents but not later than within six months after receipt of the application.

 (7) The Financial Supervision Authority shall promptly communicate a decision to approve the fund rules or articles of association of a fund to the applicant and the depositary of the fund.

 (8) If, during the proceeding of an application for approval of the fund rules or the articles of association, amendments are made in the data or documents, the applicant shall promptly submit the respective updated data and documents to the Financial Supervision Authority. If the amendment is an important one, the Financial Supervision Authority may deem the moment of receipt of this important amendment to be the beginning of the term for processing of the application. In this case, the Financial Supervision Authority must notify the applicant of a new term.

§ 33.  Bases for refusal to approve fund rules and articles of association

  The Financial Supervision Authority may refuse to approve the fund rules or articles of association of a fund if:
 1) the fund rules, articles of association, prospectus or key information do not comply with the requirements provided by legislation;
 2) the fund rules, articles of association or application do not reflect all the material conditions of the operation of the fund in full, clearly and unambiguously or contain provisions which are misleading, contradictory or hinder the public offer of the fund;
 3) the fund manager is unable to perform the obligations assumed for the management of the fund or the fund manager does not have adequate knowledge, experience or rights for the management of the fund or the management of a public limited fund does not comply with the requirements provided by law;
 4) the public offer of the fund does not comply with the requirements provided by legislation;
 5) the procedure for disclosure of information concerning the fund is insufficient;
 6) the depositary does not comply with the requirements provided by legislation or the depositary is unable to ensure sufficient protection of the interests of the unit-holders or shareholders of the fund for any other reasons;
 7) the management or depositary contract contains provisions which are in conflict, ambiguous or which prevent the depositary or fund manager, if any, from performing their functions in full, or which do not allow pursuing of the best interests of the unit-holders or shareholders of the fund for any other reason;
 8) the person maintaining the register of the units or shares or the share register of the fund does not comply with the requirements provided by legislation and the fund rules or the articles of association;
 9) the composition of the assets, conditions for redemption of units or shares or the risk management rules provided for in the fund rules, articles of association or prospectus are inconsistent with the investment policy or do not ensure sufficient liquidity of the fund due to which the organisation of redemption of units or shares may be impractical to a significant extent;
 10) the conditions of guaranteeing a rate of return provided for in the fund rules or articles of association do not ensure protection of the interests of the unit-holders or shareholders of the fund or the guarantee has been issued by the depositary of the fund or a person who does not comply with the requirements provided by law;
 11) the full payment of the share capital of a public limited company being founded is not proved.

§ 34.  Entry of public limited funds in commercial register

 (1) The following must be additionally included in an application for entry of a public limited fund in the commercial register and entered in the commercial register concerning the public limited fund:
 1) a notation that the public limited fund is a fund founded pursuant to this Act and the amount of the share capital thereof corresponds to the amount of the net asset value of the fund;
 2) the amount of share capital paid up upon foundation of the fund;
 3) a notation concerning the business name, registry code and address of the fund manager;
 4) the business name, registry code and address of the person maintaining the share register of the public limited fund.

 (2) The following must be appended to the application for entry of a public limited fund in the commercial register:
 1) a bank statement concerning the payment of the share capital;
 2) the decision of the Financial Supervision Authority on approval of the articles of association of the public limited fund.
[RT I, 31.12.2016, 3 - entry into force 01.01.2017]

§ 35.  Notification of entry into force of fund rules and making of entry in commercial register

 (1) A fund manager shall publish, promptly after the entry into force of the fund rules or entry of the foundation of a public limited fund in the commercial register, a notice concerning entry into force of the fund rules or foundation of the public limited fund (hereinafter in this section notice) and the fund rules or articles of association on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund.

 (2) A notice must set out at least the following:
 1) information concerning availability of the fund rules or articles of association and other information disclosed concerning the fund;
 2) information concerning entry into force of the fund rules or articles of association;
 3) the date of publishing of the notice.

Division 3 Amendment of Fund Rules and Articles of Association and Approval of Amendments  

§ 36.  General provisions on amendment of fund rules and articles of association

 (1) Amendment of fund rules shall be decided by the management board of the fund manager, unless making of the decision to amend has been placed within the competence of the general meeting of the unit-holders by the fund rules.

 (2) Amendment of the articles of association of a public limited fund shall be decided by the general meeting, unless otherwise provided in the articles of association of the public limited fund.

 (3) The fund rules or articles of association of a public fund shall not be amended in such a manner that the fund becomes a non-public fund.

 (4) The fund rules or articles of association of a UCITS shall not be amended in such a manner that the fund no longer is a UCITS.

 (5) The fund rules or articles of association of a fund may be amended in such a manner that the fund becomes a closed-end fund provided that the amendments of the fund rules or articles of association do not enter into force before one year has passed from disclosure of the amendments to the fund rules or articles of association on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund.

 (6) The fund manager of a common fund, or a public limited fund shall promptly notify the depositary of the fund of a decision to amend the fund rules or articles of association.

 (7) The expenses related to amendment of the fund rules or articles of association of a fund shall be covered by the fund manager, unless otherwise provided for in the fund rules or articles of association.

§ 37.  Approval of amendments of fund rules and articles of association

 (1) Amendments to the fund rules or articles of association of a fund shall be approved by the Financial Supervision Authority, unless otherwise provided for in this Division.

 (2) In order to obtain an approval for the amendment of the fund rules or articles of association, the fund manager of a common fund or a public limited fund shall submit a written application to the Financial Supervision Authority and the following data and documents (application, data and documents jointly hereinafter in this Division application):
 1) the decision to amend the fund rules or the articles of association;
 2) the amended text of the fund rules or the articles of association;
 3) the prospectus or key information of the fund if amendment of the fund rules or articles of association results in amendment of the prospectus or the key information;
 4) the amended text of the depositary contract or management contract if amendment of the fund rules or articles of association results in amendment of the depositary contract or management contract;
 5) a justification for amendment of the fund rules or articles of association and an assessment of the materiality of the amendments specified in subsection 38 (1) of this Act.

 (3) Amendments to the fund rules or articles of association of a fund shall not be approved by the Financial Supervision Authority, if:
 1) only such provisions are amended which the fund is required to amend due to any amendments made to legislation or which make such corrections or amendments to the fund rules or articles of association which have no impact on the rights and obligations of unit-holders or shareholders or which are of favourable nature for unit-holders or shareholders, such as reduction of the limit paid for the account of unit-holders or shareholders; and
 2) the amended fund rules or articles of association shall be promptly submitted to the Financial Supervision Authority.

§ 38.  Material amendments to fund rules and articles of association

 (1) The fund manager of a common fund, or a public limited fund shall prepare an assessment of the materiality of the amendments to the fund rules or articles of association based on the impact of the amendments on the reasonable interests of unit-holders or shareholders.

 (2) Materiality of the amendments to the fund rules or articles of association of a fund is presumed if the investment policy or rights attached to units or shares are amended in the fund rules or articles of association, including when the following conditions are amended:
 1) the closing date of a fixed-term fund;
 2) the general characteristics of the investment policy of the fund;
 3) a list of the fees, charges and expenses paid for the account of the fund and the procedure for calculation and total limit thereof;
 4) the frequency of redemption of units or shares;
 5) the procedure for making of payments for the account of the fund;
 6) the conditions of the offer of the fund;
 7) the rights and obligations attached to the units or shares of the fund.

 (3) Amendments to the fund rules or articles of association of a fund in the conditions specified in subsection (2) of this section shall not be deemed material if these reduce the classes of the fees, charges or expenses paid for the account of the fund, unit-holders or shareholders, make other changes which are of favourable nature for unit-holders or shareholders, or amend investment restrictions to an extent which does not materially change the general investment policy of the fund or the main investment objectives thereof.

 (4) In the case of material amendments to the fund rules or articles of association of a fund, at least one of the following conditions has to be met:
 1) at the request of unit-holders or shareholders, a unit or share is redeemed without any redemption fee within at least one month before the amendments to the fund rules or articles of association enter into force;
 2) the fund manager shall ensure the opportunity to the unit-holders or shareholders to transfer a unit or share of the fund within at least one month before the amendments to the fund rules or articles of association enter into force at the price which shall not be less than the net asset value of the unit or share;
 3) at the general meeting of unit-holders of the fund, at least 90% of the votes represented at the general meeting are in favour of material amendments to the fund rules or articles of association of the fund.
[RT I, 30.12.2017, 3 - entry into force 03.01.2018; clause 38 (4) 3) shall apply to decisions made at the general meetings of funds after 10 January 2018.]

 (4¹) The fund rules or articles of association of a fund may prescribe a greater majority requirement in the case provided for in clause (4) 3) of this section.
[RT I, 30.12.2017, 3 - entry into force 03.01.2018]

 (5) The fund manager of a common fund, or a public limited fund shall communicate the conditions provided for in subsection (4) of this section in the notice specified in subsection 40 (1) of this Act.

 (6) The provisions of this section do not apply if the fund rules or articles of association of a fund are amended under the circumstances specified in clause 37 (3) 1) of this Act.

§ 39.  Processing of applications for and decision on approval of amendments of fund rules and articles of association

 (1) The provisions of §§ 32 and 33 of this Act apply to review of applications for approval of amendments to the fund rules or articles of association, making of the decision on approval of amendments and refusal to make the decision, unless otherwise provide for in this section. Upon approval of amendments to the fund rules or articles of association, compliance of applications with the provisions of §§ 37 and 38 of this Act is assessed.

 (2) In addition to the provisions of § 33 of this Act, the Financial Supervision Authority may refuse to approve amendments to the fund rules or articles of association of a fund or a public limited fund if material amendments to the fund rules or articles of association have been made in violation of the requirements provided for in this Act.

§ 40.  Disclosure of amendments to fund rules and articles of association

 (1) A fund manager shall publish, promptly after approval of amendments to the fund rules or articles of association of a fund by the Financial Supervision Authority, a notice concerning amendment of the fund rules of the fund or articles of association of the public limited fund (hereinafter in this Division notice) and the amended fund rules or articles of association on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund.

 (2) A notice must set out at least the following:
 1) data concerning approval of the amendments by the Financial Supervision Authority;
 2) information concerning amendments of the fund rules or articles of association;
 3) data concerning availability of the amended text of the fund rules or articles of association and the prospectus of the fund, unless amendment of the fund rules or articles of association results in amendment of the prospectus;
 4) assessment of materiality of amendments to the fund rules or articles of association and possible measures applicable in the case of material amendments to the fund rules or articles of association;
 5) date of entry into force of amendments to the fund rules;
 6) the date of publishing of the notice.

 (3) The fund manager of a common fund or a public limited fund shall promptly notify the Financial Supervision Authority of publication of the notice and the contents thereof.

 (4) If amendments to the fund rules or articles of association of a fund or a public limited fund need not be approved by the Financial Supervision Authority pursuant to this Act, the fund manager of a common fund or a public limited fund shall publish, after submission of the amendments to the fund rules or articles of association to the Financial Supervision Authority, on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund:
 1) the amended fund rules or articles of association of the fund;
 2) a reference to the amendments made to the fund rules or articles of association of the fund and the time of entry into force thereof.

§ 41.  Entry into force of amendments to fund rules

  Amendments to fund rules enter into force one month after publication of the notice specified in subsection 40 (1) of this Act, unless the notice prescribes a later date or unless otherwise provided for in this Act.

§ 42.  Submission of applications for amendment of articles of association of public limited funds to commercial register and offer of public limited funds based on amended articles of association

 (1) The decision of the Financial Supervision Authority on approval of the amendments to the articles of association of a public limited fund shall be appended to the application for entry of the amendments to the articles of association of the fund in the commercial register, unless the amendments to the articles of association need not be approved by the Financial Supervision Authority pursuant to this Act.

 (2) If the supervisory board of a public limited fund has the competence to decide on amendment of the articles of association of the public limited fund pursuant to this Act, the decision of the supervisory board or the minutes of the meeting of the supervisory board of the public limited fund shall be appended to the application for entry of the amendments to the articles of association in the commercial register.

 (3) An application for entry of the amendments to the articles of association of a public limited fund in the commercial register may be submitted one month after publication of the notice specified in subsection 40 (1) of this Act or, in the case a fund is transformed into a closed-end fund, upon expiry of the term specified in subsection 36 (5) of this Act. The provisions of the first sentence do not apply in the case the amendments to the articles of association of a public limited fund shall not be submitted to the Financial Supervision Authority in accordance with subsection 37 (3) of this Act.

 (4) The shares of a public limited fund may be offered on the basis of the amended articles of association when the amendment to the articles of association of the public limited fund has been entered in the commercial register, unless the notice prescribes a later date.

 (5) A public limited fund shall promptly notify the Financial Supervision Authority of making of an entry in the commercial register.

Division 4 Specifications for Establishment of Pension Funds and Approval of Fund Rules  

§ 43.  Pension fund rules

 (1) The fund rules of a pension fund must include the following in addition to the provisions of clauses 29 (1) 1), 2), 5), 6), 8)-12) of this Act:
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]
 1) a notation on whether the fund is a mandatory or voluntary pension fund, including an occupational pension fund;
 2) in the case of units with a nominal value, the nominal value of the unit;
 3) the procedure for making payments from the pension fund;
 4) the procedure for succession of units of the pension fund and making payments;
 5) the business name, seat and registry code, if any, of the employer making contributions to the occupational pension fund for its employees, servants, and members of its managing and controlling bodies for the purposes of § 9 of the Income Tax Act (hereinafter members of managing and controlling bodies).

 (2) For the purposes of this Act, servants also mean officials or persons specified in subsection 2 (3) of the Public Service Act.

 (3) In order to agree upon establishment of an occupational pension fund and the fund rules and the financing thereof, the fund manager and the employer who commences making of contributions to such fund may enter into a contract.

§ 44.  Approval of pension fund rules

 (1) The fund manager of a mandatory pension fund and an occupational pension fund shall submit for approval of the pension fund rules the following data and documents in addition to the application specified in subsection 31 (1) of this Act:
 1) the description of hitherto operation of the depositary of the mandatory pension fund which provides an overview of how long and with which funds and with the funds of which size the depositary has operated;
 2) the contracts specified in subsections 22 (1) and 52⁵ (3) of the Funded Pensions Act;
 3) the consent of an employer commencing contributions to an occupational pension fund to the fund rules.

 (2) The Financial Supervision Authority shall promptly also communicate a decision on approval of the fund rules of a mandatory pension fund to the registrar of the Securities Register Maintenance Act.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (3) In addition to the provisions of § 33 of this Act, the Financial Supervision Authority may refuse to approve the fund rules of a mandatory pension for the following reasons:
 1) the investment policy prescribed in the fund rules of a mandatory pension fund does not materially differ from the investment policy of the mandatory pension funds which are already managed by the fund manager which submitted the application or the approval of which rules the fund manager has already applied at the same time;
 2) the contract specified in subsections 22 (1) or 52⁵ (3) of the Funded Pensions Act contains provisions which contradict each other or legislation or which fail to designate, unambiguously and with sufficient accuracy, the rights and obligations of the registrar of the pension register, depositary and fund manager of the pension fund upon organisation of issue and redemption of units of the mandatory pension fund.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

§ 45.  Amendment of pension fund rules

 (1) The fund rules of a mandatory pension fund, occupational pension fund or other voluntary pension fund shall not be amended in such a manner that the fund is no longer respectively a mandatory pension fund, occupational pension fund or other voluntary pension fund.

 (2) Where the rate of return of a voluntary pension fund is guaranteed, the fund rules shall not be amended in such a manner that the fund is no longer a guaranteed voluntary pension fund.

 (3) The regulations concerning material amendments to the fund rules provided for in § 38 of this Act apply to pension funds, taking account of the specifications provided for in the Funded Pensions Act for exchange and redemption of units; the provisions of subsections 38 (4) and (5) of this Act do not apply to significant amendment of the rules of mandatory pension funds.

 (4) Upon amendment of the fund rules of a mandatory pension fund, the amendments to the contracts provided for in subsection 22 (1) and subsection 52⁵ (3) of the Funded Pensions Act and the amended text thereof must be submitted to the Financial Supervision Authority in addition to the provisions of subsection 37 (2) of this Act, if amendment of the pension fund rules results in amendment of the contracts.

 (5) A fund manager shall have the amendment of the fund rules of an occupational pension rules approved by the employer making contributions to such fund.

 (6) Upon amendment of the fund rules of an occupational pension fund, the consent of the employer who makes contributions to the occupational pension fund to amendment of the fund rules must be submitted to the Financial Supervision Authority in addition to the provisions of subsection 37 (2) of this Act.

§ 46.  Entry into force of amendments to pension fund rules

 (1) Amendments to the fund rules of a mandatory pension fund which have to be approved by the Financial Supervision Authority enter into force on the working day of exchange of units provided for in subsection 24 (3) of the Funded Pensions Act but not earlier than 100 calendar days after publication of the relevant notice.

 (2) Upon amendment of the fund rules of an occupational pension fund, the fund manager shall disclose the amended text of the fund rules to the unit-holders promptly after the approval of the amendments and inform the Financial Supervision Authority of the date of disclosure of the amendments to unit-holders.

 (3) Amendments to the fund rules of an occupational pension fund which have to be approved by the Financial Supervision Authority enter into force one month after the day when the Financial Supervision Authority receives the relevant notice from the fund manager, unless the notice prescribes a later date for entry into force.

Chapter 8 Management of Funds  

Division 1 Management of Common Funds  

§ 47.  General meetings of unit-holders

 (1) If the fund rules prescribe a general meeting of unit-holders, the fund rules shall set out the competence of the general meeting, the procedure for calling and conducting thereof and the procedure for making decisions at the general meeting.

 (2) Unless otherwise provided for in the fund rules, the general meeting is competent to:
 1) amend the fund rules;
 2) decide on dissolution of the fund.

Division 2 Management of Public Limited Funds  

§ 48.  Competence of general meetings and procedures for calling thereof

 (1) By a decision of a general meeting, the supervisory board may be granted the right to make decisions which are in the competence of the general meeting, if so prescribed by the articles of association of the fund. In this case, the general meeting shall have the right to decide on amendment of the articles of association in such a manner that the right to make decisions which are in the competence of the general meeting shall be reclaimed into the competence of the general meeting.

 (2) The management board of a public limited fund shall call a special general meeting, if so also requested by the Financial Supervision Authority, manager or depositary of the public limited fund.

 (3) If the management board of a public limited fund fails to call a special general meeting within one month after receipt of a request of the Financial Supervision Authority, fund manager or depositary or the management board fails to call the general meeting with the requested agenda, the Financial Supervision Authority, fund manager or depositary have the right to call the general meeting themselves and determine the agenda of the general meeting.

 (4) If a general meeting is called by the persons specified in subsection (3) of this section, the provisions of §§ 293 and 293¹ of the Commercial Code with respect to filing of requests by auditors to call special general meetings or to calling of general meetings apply to the agenda of the general meeting and drafts of decisions.

§ 49.  Specifications for competence of supervisory boards

 (1) Unless otherwise specified in the articles of association of a public limited fund, the supervisory board of the public limited fund is competent to:
 1) approve amendments to the management contract of the public limited fund;
 2) approve the terms and conditions of the depositary contract of the public limited fund;
 3) approve the person maintaining the share register if the function of maintaining the share register is outsourced to a third party.

 (2) The right to make the decisions specified in subsection (1) of this section may be granted by the articles of association of a public limited fund to the management board of the public limited fund.

§ 50.  Competence of management boards

 (1) The management board of a public limited fund exercises supervision, to the extent and pursuant to the procedure prescribed in the management contract, over the activities of the fund manager related to the fund, and to the extent and pursuant to the procedure prescribed in the depositary contract over the activities of the depositary, and over performance by third parties of other functions which are related to the management of the fund and have been outsourced.

 (2) The management board of a public limited fund is competent to issue and redeem shares of the public limited fund.

 (3) The management board of a public limited fund may outsource the functions related to the administration of the fund or offer of the shares thereof on the basis of a written contract to a third party, if this is in conformity with the requirements specified in subsections 364 (1) and (5) of this Act. The provisions of § 364 of this Act concerning fund managers apply to the management boards of public limited funds upon outsourcing of functions. Maintaining of a share register may be outsourced taking account of the requirements provided for in §§ 60 and 61 of this Act.

§ 51.  Requirements for managers

 (1) The requirements provided for in § 310 of this Act to management and managers of fund managers shall apply to managers of public limited funds.

 (2) Managers of a public limited fund or members of the management board or supervisory board of the depositary thereof shall constitute not more than one-half of the members of the supervisory board of the fund.

§ 52.  Competence of fund managers and liability upon management of public limited funds

 (1) Investment of assets in accordance with the provisions of § 305 of this Act is in the competence of the fund manager of a public limited fund. The assets of a fund are disposed of by a fund manager to the extent prescribed by law and the management contract.

 (2) A fund manager shall be liable for the damage caused to a public limited fund or the shareholders thereof by violation of the functions of the fund manager.

Chapter 9 Units and Shares  

Division 1 Issue and Redemption of Units and Shares  

§ 53.  Application of Chapter

  The provisions of this Chapter concerning funds also apply to sub-funds of common funds.

§ 54.  Nominal value and net asset value of assets and units or shares of funds. Registration and storage of applications for issue and redemption of units or shares of UCITS and reporting on execution of applications

 (1) The nominal value of a unit shall be expressed at least to the accuracy of one cent; in the case the nominal value is expressed in foreign currency, at least to the accuracy of two decimal places.

 (2) An equal share of the assets of a fund conform to all the units without nominal value. The share of the assets of a fund corresponding to one unit with no nominal value (book value of the unit) shall be established by dividing the value of the assets of the fund by the number of units.

 (3) The net asset value of a unit and share is established by dividing the net asset value of the fund by the number of all the units or shares issued and not redeemed by the moment of establishment of the net asset value.

 (4) If a fund has several classes of units or shares, the net asset value of the units or shares of different classes may differ pursuant to the bases provided for in the fund rules or articles of association.

 (5) The net asset value of a unit and share is established and disclosed on each day of issue or redemption of units or shares but at least once every two weeks. Together with the net asset value of a share, a public limited fund shall also disclose the net asset value of the fund.

 (6) The net asset value of a unit and share of a closed-end fund is established and disclosed on each day of issue or redemption of units or shares but at least once per year.

 (7) Units and shares are issued and redeemed on the basis of the net asset value of the unit or share which is established in accordance with the basic documents of the fund either:
 1) on the basis of the latest net asset value established by the time of receipt of the respective application; or
 2) on the basis of the net asset value established first after receipt of the respective application.

 (8) Units or shares of a closed-end fund may be issued at an issue price which differs from the net asset value on the basis provided for in subsection 55 (9) of this Act.

 (9) The net asset value of a unit or share is disclosed pursuant to the provisions of the prospectus of the fund on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund.

 (10) The establishment of the net asset value of a unit or share and issue and redemption of the unit or share shall be based on the fair value of the assets of the fund. A fund manager is required to apply relevant and required measures in order to prevent issue or redemption of fund units or shares not on the basis of their fairly evaluated net asset value or the basis provided for in subsection 55 (9) of this Act or which allow conduct of transactions in another manner with the units or shares of the fund on the basis of unfair value which would have a direct impact on the proprietary interests of other unit-holders or shareholders.

 (11) The procedure for establishment of the net asset value of a fund shall be established by a regulation of the minister responsible for the area.

 (12) The fund manager of a UCITS shall register each application submitted to the fund manager for issue and redemption of a unit or share of a UCITS in a relevant electronic data processing system (hereinafter data processing system) promptly after receipt of the application.

 (13) The data of all the applications for issue and redemption of units or shares of a UCITS must be stored in a data processing system and kept there (hereinafter jointly stored).

 (14) The fund manager of a UCITS shall submit a report to the unit-holders or shareholders which confirms execution of the applications for issue or redemption of units or shares of the UCITS on durable medium or make it available in another similar manner.

 (15) More specific requirements for the data processing system specified in subsection (12 ) of this section, registration and storage of the data of the applications for issue or redemption of units or shares of a UCITS and reporting on execution of the applications shall be established by a regulation of the minister responsible for the area.

§ 55.  Issue of units and shares and issue price

 (1) Units and shares shall be issue at their issue price.

 (2) The issue price of a unit and share is the net asset value of the unit or share of the respective class to which the issue fee may be added pursuant to the procedure provided for in the basic documents of the fund.

 (3) The issue price of a unit and share shall be disclosed at the same time with disclosure of the net asset value of a unit or share of the fund in accordance with the requirements provided for in subsection 54 (9) of this Act.

 (4) Payment for a unit or share of a fund shall be only made by monetary contribution. Units or shares are issued and entered in the register of shares or units only for the net asset value of a unit or share which corresponds to the number of units or shares to be issued upon payment of money into the assets of a fund. Upon issue of a fractional unit or share, the money which corresponds to that part of the net asset value of the unit or share must be paid into the assets of a fund.

 (5) The provisions of subsection (4) of this section do not apply to distribution of income of a fund by issue of new units or shares, and to issue of units or shares of an acquiring fund upon merger of funds.

 (6) Issue of units and shares shall not be limited in time and the volume of the issue thereof and the number of units and shares to be issued shall not be fixed, unless otherwise provided for in the fund rules of articles of association.

 (7) Issue of a unit and share may be refused if this arises from the provisions of the fund rules, articles of association or prospectus.

 (8) If a certain index is replicated upon investment of the assets of a fund in accordance with subsection 116 (1) of this Act, units or shares may be issued under the conditions prescribed in the fund rules or articles of association for the securities on the basis of which the replicated index is calculated.

 (9) Units or shares of a closed-end fund may be issued at an issue price which differs from the net asset value under the following conditions:
 1) the conditions for determination of the issue price shall be decided at the general meeting of unit-holders or shareholders and at least two-thirds of the votes represented at the general meeting are in favour thereof, unless the fund rules or articles of association prescribe a greater majority requirement; or
 2) the units or shares of the fund are traded on a regulated market or, pursuant to the fund rules or articles of association, the units or shares of the fund must be admitted to trading on a regulated market within 12 months after adoption of the decision of the general meeting specified in clause 1) of this subsection.

 (10) A fund manager may determine the final issue price of a closed-end fund within the range of the issue price determined under the conditions set out in the decision of the general meeting specified in clause (9) 1) of this section.

§ 56.  Redemption of units and shares and redemption price

 (1) Units and shares may be redeemed at their redemption price.

 (2) The redemption price of a unit or share is the net asset value of the unit or share of the respective class from which the redemption fee may be deducted pursuant to the procedure provided for in the basic documents of the fund. The redemption price of a unit or share shall be disclosed at the same time with the disclosure of the net asset value of a unit or share of the fund in accordance with the provided requirements.

 (3) Upon redemption of units or shares, a payment shall be made in money from the assets of the fund for the units or shares redeemed in accordance with the number of units or shares to be redeemed and the net asset value thereof. The rights and obligations attached to the redeemed unit or share terminate and the redeemed unit or share shall be deleted from the register of units or shares.

 (4) Payments shall be made in the order the requests are submitted, unless the fund rules or articles of association provide for the bases for making differences in the order of payments.

 (5) If a certain index is replicated upon investment of the assets of a fund in accordance with subsection 116 (1) of this Act, units or shares may be redeemed under the conditions prescribed in the fund rules or articles of association against the securities on the basis of which the replicated index is calculated.

 (6) A fund manager or a public limited fund is not required to redeem the units or shares of a fund which units or shares are redeemed at the request of a unit-holder or shareholder if the units of the fund are trading on a regulated market and it is ensured that the value of the unit on the market does not differ materially from the redemption price of the unit.

 (7) It is not permitted to redeem, at the request of a unit-holder or shareholder, the units or shares of a fund from the assets of which at least 60 per cent are invested in immovables pursuant to the fund rules or articles of association, or at least 80 per cent in immovables and securities relating to immovables, securities that are not traded on a regulated market or other non-liquid assets, earlier than six months after submission of the respective request of the unit-holder or shareholder.

§ 57.  Suspension of issue and redemption of units and shares

 (1) A fund manager or a public limited fund must suspend the issue or redemption of the units or shares of a fund if the issue or payment of money would have a material adverse effect upon the interests of unit-holders or shareholders or the regular management of the fund.

 (2) A fund manager or a public limited fund may suspend redemption of the units or shares of a fund if at least one of the following circumstances has been proven:
 1) the money in the bank accounts of the fund is insufficient for payment of the redemption price of the units or shares;
 2) the securities or other assets of the fund cannot be promptly sold;
 3) the establishment of the net asset value of the fund is hindered.

 (3) A fund manager or a public limited fund must promptly notify the Financial Supervision Authority and the financial supervision authority in each foreign state where the units or shares of the fund are offered of suspension of issue or redemption of units or shares and the reasons therefor. The provisions of this subsection do not apply if the issue or redemption of units or shares is suspended in connection with suspension of trading on securities markets.

 (4) The Financial Supervision Authority may, by its precept, require a fund manager or a public limited fund to suspend the issue or redemption of units or shares if there is a suspicion that:
 1) the requirements provided for issue, redemption or public offer of units or shares are violated or there is a danger of such violation;
 2) the guarantee granted by a guarantee contract is insufficient in order to guarantee the rate of return of the fund, if the rate of return of the fund is guaranteed; or
 3) the suspension of the issue or redemption of units or shares is necessary for other reasons for the protection of the legitimate interests of the unit-holders or shareholders.

 (5) Upon suspension of the issue or redemption of units or shares, the Financial Supervision Authority may require, by its precept, a fund manager or a public limited fund to eliminate the circumstances which are the basis for suspension of the issue or redemption of units or shares.

 (6) A fund manager or a public limited fund must promptly publish a notice of suspension of the issue or redemption of units or shares on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund provided for in the prospectus of the fund.

 (7) The issue or redemption of units or shares may be suspended for up to three months. The term of suspension of the issue or redemption of units or shares may be extended with the consent of the Financial Supervision Authority.

Division 2 Fees and Charges Paid and Expenses covered for Account of Unit-holders and Shareholders of Funds  

§ 58.  Fees and charges paid and expenses covered for account of fund

 (1) Only the following fees and charges may be paid and expenses covered for the account of a fund:
 1) the fee paid to the fund manager for the management of the fund or the fees, charges and expenses directly related to the management of a public limited fund (hereinafter management fee);
 2) the fee paid to the depositary for the services provided (hereinafter depositary’s charge);
 3) the transfer fees and service charges directly related to transactions performed for the account of the fund and other fees and charges and expenses related to the management of the fund and specified in the basic documents of the fund;
 4) the liquidation expenses of the fund to the extend provided for in this Act.

 (2) The management fee and depositary’s charge shall not be paid as an advance payment.

 (3) The fees and charges and expenses specified in subsections (1) of this section in total shall not exceed the rates prescribed in the basic documents and the prospectus of the fund.

§ 59.  Fees and charges paid for account of unit-holders and shareholders

 (1) Fees for the issue and redemption of units or shares shall be paid from the account of the person acquiring or redeeming units or shares. Unit-holders or shareholders shall not be required to pay other fees and charges related to issue or redemption of units or shares, unless the unit-holders or shareholders may be required to pay, pursuant to the fund rules or articles of association, an additional fee due to the material impact of the transaction of issue or redemption of units or shares on the regular management of the fund. The above shall not exclude payment of the commission of a third party or other equivalent fees for the account of unit-holders or shareholders, if prescribed by the fund rules or articles of association and prospectus.

 (2) Fees paid for the account of unit-holders or shareholders are determined as a set amount or percentage of the net asset value of a unit or share of the fund, unless otherwise provided for in the fund rules of articles of association.

 (3) Issue and redemption fees of units or shares shall not exceed the rates prescribed by the fund rules, articles of association, prospectus or other information published. The rates of the issue and redemption fees of units or shares and other fees and charges, if any, may differ on the basis of the class or units or shares or other characteristic associated with unit-holders or shareholders.

 (4) At the request of persons acquiring or redeeming units or shares, the persons shall be informed in a format which can be reproduced in writing of the amount of the issue or redemption fee paid for their account.

 (5) In the cases provided for in the fund rules or articles of association, the issue or redemption fees of the units or shares of the same class may differ depending on the holding of the unit-holder or shareholder in the fund.

Division 3 Registration of Units and Shares and Maintenance of Registers of Units and Shares 

§ 60.  Registration of units and shares

 (1) Units shall be registered in computerized form in the register of units (hereinafter in this Division register). The provisions of this Act concerning registers and maintenance thereof shall apply to the share register of a public limited fund and the maintenance thereof.

 (2) The register shall be maintained by a fund manager or another person to whom the functions of maintenance of the register have been outsourced (hereinafter registrar).

 (3) All units or shares of a fund which are of the same class must be registered with the same registrar. If a fund has several classes of units or shares, there may be different registrars for each class of units or shares.

 (4) If the units or shares of a fund are registered with the Estonian register of securities, the provisions of §§ 61-63 of this Act do not apply to registration of units or shares.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

§ 61.  Requirements for registrars

 (1) In the case the functions of maintenance of a register specified in subsection 60 (2) of this Act are outsourced, a registrar may be a person founded in Estonia or a foreign state whose level of organisational and technical administration of activities, internal control measures implemented for mitigation of management and operational risks, financial situation, competence and experience of relevant employees and other capabilities are adequate to ensure the performance of the functions specified by law and an contract for maintenance of the register.

 (2) If the function of maintenance of a register has been outsourced, the liability of the registrar has to be insured or guaranteed, unless the registrar is a credit institution or insurer.

 (3) The registrar to whom the function of maintenance of a register has been outsourced must compensate for damage caused by violation of the obligations thereof in the maintenance of the register.

 (4) The requirements for insuring or guaranteeing the liability of the registrar shall be established by a regulation of the minister responsible for the area.

§ 62.  Data entered in register and processing thereof

 (1) The following data are is entered in the register:
 1) the business name, seat and registry code of the fund manager or public limited fund;
 2) the name of the fund;
 3) the name, address and personal identification code or in the absence thereof the date of birth of the unit-holder or shareholder, or the registry code of the unit-holder or shareholder if the unit-holder or shareholder has a registry code;
 4) if the unit-holder or shareholder is a fund, the name or business name of the fund and the seat and registry code thereof, if any, and the business name, seat and registry code of the fund manager, if any;
 5) the number and currency of the units or shares held by unit-holders or shareholders, the class thereof, if any, and the nominal value thereof, if any;
 6) the date of acquisition and issue price of units or shares and the issue price and date of redemption and redemption price of units or shares if the units or shares have been redeemed;
 7) other rights attached to units or shares and the time of creation, changing and extinction of the rights, including time of acquisition or pledging of units or shares;
 8) other data which the registrar deems necessary.

 (2) Where the units or shares belonging to unit-holders or shareholders are held for them by a third party who has the right provided by law to hold the units or shares in its own name and for the account of another person, the data of the third party may be entered in the register as the data specified in clause (1) 3) or 4) of this section. If a third party holds units or shares in the name and for the account of another person, the data specified in clause (1) 7) of this section shall not be entered in the register. The third party specified in the first sentence of this section has the right to give information to fund managers concerning the investors whose units or shares are held by the specified third party.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (3) Processing of data in the register by the registrar shall be based on the requirements provided for in the Personal Data Protection Act and the data handling procedure established by the fund manager or public limited fund or agreed upon between the fund manager or public limited fund and the registrar. The data handling procedure shall ensure preservation of personal data in a permanently unaltered state and adequate protection thereof against unauthorized processing and destruction.

 (4) The registrar may process the data in the register on its own initiative if the registrar discovers an error in the data and if the processing of the data does not violate anybody’s interests. The registrar shall preserve data concerning all discovered data processing errors and corrections made by the registrar.

 (5) The data and documents submitted to a registrar in a format which can be reproduced in writing for an entry to be made shall be preserved by the registrar for ten years after making the respective entry.
[RT I, 13.03.2019, 2 - entry into force 15.03.2019]

 (6) The registrar shall make a register entry within one working day after the settlement of the transaction conducted with a unit or share of a fund. If the function of the registrar has been outsourced to a third party who does not arrange the settlement of the transactions of the units or shares of a fund, the register entry must be made within one working day after receipt of a relevant order from the fund manager.

 (7) In respect of a fund, a unit or share shall be deemed to be transferred after entry of the acquirer thereof in the register.

 (8) A registrar may refuse to execute an order concerning a register entry if:
 1) the order or the data contained therein do not comply with the requirements established by legislation;
 2) the order has been given by a person not specified in subsection (6) of this section or another person authorised to give orders.

 (9) The procedure for maintenance of a register, making register entries and processing and storage of data entered in the register may be established by a regulation of the minister responsible for the area.

§ 63.  Persons entitled to access register data

 (1) unit-holders or shareholders of a fund or persons authorised by them, fund managers, depositaries, the Financial Supervision Authority and the following persons and agencies with legitimate interest have the right to access and obtain extracts from the data entered in the register:
 1) courts during proceedings of matters;
 2) pre-trial investigation authorities and prosecutor’s office in criminal proceedings already initiated, relevant bodies upon adjudication of international applications for legal assistance or for performance of obligations provided by the European Union law for compliance with international conventions or other international agreements, or cooperation agreements of the police or other similar competent authorities;
 3) security authorities for the performance of the functions provided for in the Security Authorities Act and carrying out the security checks specified in the State Secrets and Classified Information of Foreign States Act;
 4) the Estonian Tax and Customs Board in accordance with the provisions of the Taxation Act, including in commenced misdemeanour proceedings on the basis of a reasoned ruling, or for exercising of state supervision for the performance of the functions provided for in the Gambling Act;
 5) bailiffs for the performance of the functions provided for in the Code of Enforcement Procedure;
 6) interim trustees and trustees in bankruptcy for the performance of the functions provided for in the Bankruptcy Act;
 7) the State Audit Office for the performance of the functions provided for in the State Audit Office Act;
 8) persons appointed by the Guarantee Fund pursuant to the Guarantee Fund Act;
 9) persons entitled to succeed or persons authorised by the latter and notaries in connection with notarial acts, persons making the inventory of an estate at the appointment of a notary or court, administrators of an estate appointed by a court, and consular representations of foreign states in the course of succession proceedings upon submission of relevant written documents in connection with estates and data relating thereto;
 10) persons who control the declarations of economic interests on the basis of the Anti-corruption Act in order to verify the data stated in the declaration;
 11) the Financial Intelligence Unit and the Estonian Internal Security Service for the performance of the functions provided for in the Money Laundering and Terrorist Financing Prevention Act and International Sanctions Act;
 12) credit institutions;
 13) financial institutions holding the activity licence issued by the Financial Supervision Authority;
 14) other persons who prove that the objective of obtaining the data is prevention of money laundering or terrorism.

 (2) Unit-holders or shareholders or persons authorised by them have the right to access only the data which is entered in the register concerning the respective unit-holder or shareholder.

 (3) A registrar is required to ensure preservation of the data entered in the register and enable reproduction thereof at the request of entitled persons and agencies within ten years after the entry of the data in the register.
[RT I, 13.03.2019, 2 - entry into force 15.03.2019]

Division 4 Specifications applicable to Units of Pension Funds  

Subdivision 1 Specifications applicable to Units of Pension Funds and Fees Paid for Account of Pension Funds  

§ 64.  Specifications for units of pension fund

 (1) Units of a pension fund shall not be limited in time and the volume of the issue of units and the number of units to be issued shall not be fixed.

 (2) Units of pension funds may only be acquired or owned by natural persons and pension fund managers or persons who have operated as a pension fund manager under the conditions and pursuant to the procedure provided for in §§ 68-72 of this Act.

 (2¹) An insurer may also acquire and hold units of mandatory pension funds as underlying assets of insurance contracts for unit-linked mandatory funded pensions provided for in Division 8 of Chapter 2 of the Funded Pensions Act.
[RT I, 03.07.2017, 2 - entry into force 01.01.2018]

 (3) Units of a pension fund shall not be transferred or encumbered.

 (4) A mandatory pension fund shall only have units of one class.

 (5) Fractional units of a pension fund must be indicated to the accuracy of at least three decimal places.

 (6) The net asset value of the units of a pension fund shall be established on each day of issue and redemption of units but at least every seven days. The net asset value of the units of a voluntary pension fund shall be established at the accuracy of at least four decimal places and in the case of the units of a mandatory pension fund at the accuracy at least of five decimal places.

 (7) Units of a mandatory pension fund shall not be included in the joint property of spouses.

 (8) Units of a pension fund are registered in accordance with the provisions of the Securities Register Maintenance Act.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (9) Persons appointed by the Guarantee Fund on the basis of subsection 92 (1) of the Guarantee Fund Act also have the right to access the data entered in the pension register and obtain extracts of the data.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (10) Exchange of units of pension funds and making of payments therefrom shall be based on the provisions of §§ 23-27, 30, 31, 40-52⁵ and 55-60 of the Funded Pensions Act.

 (11) In the case of bankruptcy of the estate of a unit-holder of a mandatory pension fund, the trustee in bankruptcy has the right to request redemption of the units of the mandatory pension fund.

 (12) In the case of bankruptcy of a unit-holder of a voluntary pension fund or a claim for payment being made on the assets of such unit-holder pursuant to enforcement procedure, the trustee in bankruptcy or the bailiff, as appropriate, has the right to request redemption of the units of the voluntary pension fund or, in the case of liquidation of a voluntary pension fund, making of payments.

 (13) In the cases not specified in subsections (11) and (12) of this section, it is prohibited to make a claim for payment on units of a pension fund.

§ 65.  Issue and redemption fees of units of mandatory pension funds and specifications for fees paid and charges and expenses covered for account of pension funds

 (1) Acquirers of units of a mandatory pension fund shall not be charged any issue fee. The redemption fee of a unit of a mandatory pension fund is paid to the pension fund which units are redeemed.

 (2) The rate of the redemption fee of a conservative pension fund shall not exceed 0.05 per cent and that of other mandatory pension funds 0.1 per cent of the net asset value of the unit.

 (3) It is not permitted to charge redemption fees to unit-holders of mandatory pension funds who are in the pensionable age provided by the State Pension Insurance Act or who will reach such age in five years or less.

 (3¹) The rate of the base management fee of a mandatory pension fund shall not exceed in total 1.2 per cent of the value of the assets of the pension fund calculated based on a year of 365 days.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (3²) Upon calculation of the management fee of a mandatory pension fund, reduced rates of base management fees shall be used taking into consideration the provisions of § 65¹ of this Act.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (3³) The fund manager of a mandatory pension fund may charge only the success fee provided for in § 65² of this Act as a part of the management fee in addition to the base management fee. It is prohibited to charge a success fee for management of conservative pension funds.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (4) The depositary’s charge, contributions to the Pension Protection Sectoral Fund paid pursuant to the Guarantee Fund Act, supervisory fees paid pursuant to the Financial Supervision Authority Act and the registrar’s fee paid to the registrar of the pension register and other fees related to management of a mandatory pension fund and not specified in clauses 58 (1) 1), 3) and 4) of this Act shall be paid and the expenses covered for the account of the fund manager.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (5) Only such fees, charges and expenses specified in clause 58 (1) 3) of this Act may be paid or covered for the account of a mandatory pension fund which do not exceed the standard commission or service fee for the respective service or which are strictly necessary for the management of the mandatory pension fund.

 (6) The provisions of subsection (5) of this section do not apply to the fees, charges and expenses which, based on their nature, do not cause a conflict of interests between the unit-holder and the fund manager upon honest, professional provision of the fund management service based on the best interests of the unit-holder.

 (7) [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (8) [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 65¹.  Reduction of rate of base management fee of mandatory pension fund

 (1) The rate of the base management fee of a mandatory pension fund shall be reduced depending on the total amount of the value of the total assets of all the mandatory pension funds which are managed by the fund manager and which base management fee exceeds, pursuant to the prospectus of the pension fund, 0.4 per cent of the asset value of this fund.

 (2) If the total amount of the value of the assets of the mandatory pension funds of a pension fund manager provided for in subsection (1) of this section exceeds 100 million euros, the pension fund manager is required to use a coefficient which reduces the rate of the base management fee and thus reduce the rate of the base management fee of these pension funds for the asset value of each additional 100 million euros by at least 15 per cent compared to the rate of the base management fee applicable to the previous asset value of 100 million euros.

 (3) The pension fund manager is not required to reduce the rate of the base management fee applicable to each subsequent 100 million euros of asset value of a mandatory pension fund calculated pursuant to subsection (2) of this section by more than to 0.4 per cent.

 (4) The coefficient which reduces the rate of the base management fee shall be found once a calendar year based on the asset value of the mandatory pension funds as at the second working day after 1 January and it shall be determined accurate to at least two decimal places.

 (5) The rates of all base management fees specified in the prospectuses of mandatory pension funds shall be reduced on 1 February of each calendar year, taking into consideration the coefficient reducing the base management fee found pursuant to this section.

 (6) Pension fund managers are not required to implement the provisions of this section to their mandatory pension funds in the case of which the rate of the base management fee specified in the prospects is 0.4 per cent or less of the asset value of the pension fund.

 (7) The procedure for calculation of the reduction of the rate of the base management fee of mandatory pension funds may be specified by a regulation of the minister responsible for the area.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 65².  Success fee of mandatory pension fund

 (1) The fund manager of a mandatory pension fund has the right to charge a success fee if the cumulative increase in the net asset value of a unit of the mandatory pension fund managed by the fund manager exceeds the cumulative increase in receipt of the pension insurance part of social tax as of 31 December of the year of registration of the pension fund.

 (2) The registrar of the pension register shall publish the receipt of the pension insurance part of social tax once a month on its website.

 (3) In order to calculate the success fee, the pension fund manager shall prepare the index of changes of the net value of units of the mandatory pension fund (hereinafter in this section net value index) and the index of receipt of the pension insurance part of social tax (hereinafter in this section reference index), equalising the starting values of these indices as at 31 December of the year of registration of the pension fund.

 (4) The success fee shall be calculated once a year. The accounting period is a year where 31 December is the start and end date. The success fee shall be taken into account when determining the net value of a unit of a mandatory pension fund of the first working day after 1 January.

 (5) If the value of the net value index of the start date of the success fee accounting period is lower than the highest value of the net value index of this pension fund on 31 December of the last ten years, from which the success fee was paid, the value of the start date net value index shall be used upon calculation of the success fee.

 (6) The rate of the success fee may not exceed 20 per cent of the positive difference of the relative change of the value of the net value index and the positive difference of the relative change of the value of the reference index, taking into consideration the provision of subsection (5) of this section, or two per cent of the asset value of this pension fund.

 (7) If the success fee calculated based on the positive difference between the relative change of the value of the net value index and the relative change of the value of the reference index is higher than the two per cent limit established by subsection (6) of this section or the success fee limit prescribed in the prospectus of the pension fund, it is allowed, upon calculation of the success fee for the subsequent periods, to deduct from the respective value of the net value index the part on which no success fee was paid due to application of the limit.

 (8) If the value of the net value index on the start date of the success fee accounting period is lower than the value of the reference index, the amount of the success fee shall be calculated based on the positive difference of the relative change of the value of the net value index on the end date and the value of the reference index on the start date and the relative change of the value of the reference index.

 (9) The procedure for calculation of the success fee of mandatory pension funds may be specified by a regulation of the minister responsible for the area.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 66.  Specifications for suspension of issue and redemption of units of mandatory pension funds

 (1) If the issue of units of a mandatory pension fund is suspended, the registrar of the pension register shall keep the funds received for the acquisition of such units in the bank account specified in subsection 12 (1) of the Funded Pensions Act.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (2) In order to suspend redemption of units of a mandatory pension fund, the fund manager must apply to the Financial Supervision Authority for an authorisation (hereinafter in this Division authorisation).

 (3) In order to apply for an authorisation, a fund manager shall submit to the Financial Supervision Authority a written application and the following data and documents (in general, application, data and documents hereinafter in this Subdivision application):
 1) data specified in subsection 5¹ (4) of the Securities Register Maintenance Act concerning the number of units of the pension fund which have been issued and the number which have been redeemed during the month preceding submission of the application, and data concerning the unit-holders who acquired or transferred the units;
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]
 2) data concerning the assets of the pension fund, the net asset value of units and changes in the redemption fee of units during the month preceding submission of the application;
 3) explanation of the reasons for suspension of the redemption of units;
 4) assessment of the impact of suspension of the redemption of units on the interests of the unit-holders of the pension fund.

 (4) No authorisation is required if redemption of the units of a mandatory pension fund is suspended in connection with suspension of trading on securities markets or for a short term due to another urgency where, in the opinion of the fund manager, redemption of the units would harm the general interests of unit-holders.

 (5) During the period of suspension of redemption of the units of a mandatory pension fund, units of this pension fund may be issued only to the fund manager and on the basis provided for in subsection 32 (2¹) of the Funded Pensions Act to unit-holders of the mandatory pension fund.

§ 67.  Processing of and decision on application for authorisation and refusal to issue authorisation

 (1) If an application is not in compliance with the requirements provided for in subsection 66 (3) of this Act, the Financial Supervision Authority shall request elimination of deficiencies by the applicant.

 (2) The Financial Supervision Authority may request submission of additional data and documents if it is not convinced on the basis of the application as to whether the suspension of the units of a mandatory pension fund is in compliance with the requirements established by legislation or if other facts relating to the fund need to be verified.

 (3) In order to verify the data submitted by a fund manager, the Financial Supervision Authority may request submission of more specific data and documents, perform on-site inspections, order expert assessments and special audits, consult state databases, request oral explanations from the managers of the fund manager, the auditor firms, their representatives and third parties concerning the contents of the documents submitted and the facts which are relevant in making a decision on suspension of redemption of the units of the fund.

 (4) The data and documents specified in subsections (1)-(3) of this section shall be submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review an application if the fund manager fails to eliminate the deficiencies specified in subsections (1) and (2) of this section within the prescribed term or fails to submit the data, documents or information requested by the Financial Supervision Authority by the due date.

 (6) The Financial Supervision Authority shall make a decision on issue of or refusal to issue an authorisation within five working days after receipt of the application and communicate the decision promptly to the fund manager.

 (7) The Financial Supervision Authority may refuse to issue an authorisation if:
 1) arise of the circumstances specified in subsection 57 (2) of this Act has not been proven;
 2) the interests of unit-holders are insufficiently protected if the redemption of units is suspended.

Subdivision 2 Specifications for Acquisition and Redemption of Own Units of Pension Fund Managers  

§ 68.  Own units of pension fund manager

 (1) A pension fund manager may hold units of the pension funds managed by it.

 (2) A pension fund manager must hold at least 0.5 per cent of the units of the mandatory pension funds managed by it. To the extent in which the market value of the mandatory pension funds managed by the pension fund manager exceeds the amount of one billion euros, the pension fund manager must hold at least 0.02 per cent of the units.

 (3) A pension fund manager must hold units on a pro rata basis in each mandatory pension fund managed by it, taking account of the percentage of the market value of the assets of each pension fund in the market value of the assets of all the mandatory pension funds managed by it.

 (4) During three years following the establishment of a mandatory pension fund, the pension fund manager must hold at least two per cent of the units of this pension fund.

 (5) The provisions of subsections (2)-(4) of this section do not apply to:
 1) mandatory pension funds within three months after the fund manager assumes the management of the pension fund;
 2) under the conditions determined by the Financial Supervision Authority within six months after redemption of units in the case provided for in subsection 32 (2¹) of the Funded Pensions Act.

 (6) The Financial Supervision Authority may extend the term provided for in clause (5) 1) of this section by up to 15 months under the conditions specified by the Financial Supervision Authority.

 (7) In the cases provided by law, the number of the units of a mandatory pension fund held by a pension fund manager must exceed the number of the units determined in accordance with subsections (2) and (3) or subsection (4) of this section.

 (8) Precepts concerning acquisition of additional units and the conditions thereof are issued to pension fund managers by the Financial Supervision Authority.

 (9) For the purposes of this Subdivision and in order to determine the percentage of the units of a mandatory pension fund owned by a pension fund manager or person who has operated as a pension fund manager, the number of the units held by such person shall be divided by the number of the units in the fund as registered by the registrar of the pension register which may be adjusted on the basis of the units associated with received but unsettled purchase and sell orders.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (10) A fund manager may not hold units of any pension funds which the fund manager does not manage. A fund manager may acquire units of the mandatory pension fund which management the fund manager has transferred if not more than three months have passed from the transfer of its management.

§ 69.  Acquisition and redemption of own units of pension fund managers

 (1) A pension fund manager shall acquire own units of a pension fund and redeem units of a pension fund held by it under the conditions and pursuant to the procedure provided for in this Act and legislation established on the basis thereof.

 (2) A pension fund manager shall inform the Financial Supervision Authority of its intention to acquire or redeem units at least ten days before the acquisition or redemption of the units and submit the following data to the Financial Supervision Authority:
 1) the name of the pension fund;
 2) the market value of the assets and the net asset value of the pension fund;
 3) the number of units which have been issued but not redeemed;
 4) the number of units held by the pension fund manager and the percentage thereof in the total number of units;
 5) the number of units which are intended to be acquired or redeemed;
 6) the planned day for the acquisition or redemption of units.

 (3) Giving notification to the Financial Supervision Authority in accordance with subsection (2) of this section is not required in the case of a mandatory pension fund if units thereof are redeemed at the request of a unit-holder and in the case the units of a mandatory pension fund are acquired or redeemed on the basis of a precept of the Financial Supervision Authority pursuant to the provisions of subsection 68 (8) of this Act or §§ 32-35 of the Funded Pensions Act.

 (4) The provisions of this Division concerning fund managers also apply, with regard to redemption of units, to persons who no longer manage the fund in the case of which they request the redemption of units.

§ 70.  Bases for prohibition on acquisition or redemption of own units of pension fund managers

 (1) The Financial Supervision Authority may, by a precept, prohibit the acquisition of own units by fund managers or determine the maximum number of the acquired units if:
 1) the data or documents submitted upon notification do not comply with the requirements provided by legislation or are inaccurate or misleading;
 2) after acquisition of the units, the pension fund manager would hold more than five per cent of the units of the pension fund;
 3) acquisition of the units of a pension fund is contrary to the legitimate interests of other unit-holders.

 (2) The Financial Supervision Authority may, by a precept, prohibit redemption of units by a pension fund manager or determine the maximum number of the redeemed units:
 1) if the data or documents submitted upon notification do not comply with the requirements provided for in this Act or are inaccurate or misleading;
 2) if the Financial Supervision Authority has issued a precept to the pension fund manager and it has not been complied with by the due date;
 3) if the number of the units of a mandatory pension fund held by the pension fund manager after redemption of units would be less than the respective number of units provided for in subsection 68 (2), (3), (4) or (7) of this Act;
 4) if 12 months have not passed since the approval of the fund rules of the mandatory pension fund;
 5) if the pension fund manager has deferred payment of a quarterly contribution on the basis of subsection 67 (2) of the Guarantee Fund Act;
 6) upon redemption of units held by a person whose authority to manage a mandatory pension fund managed by it is transferred to another fund manager and less than six months have passed since the transfer;
 7) upon redemption of units held by a person whose authority to manage the mandatory pension fund managed by it is transferred to a depositary of the pension fund until the authority to manage the pension fund is transferred to another fund manager or the pension fund is liquidated;
 8) if redemption of units of the pension fund would not be in the best interests of other unit-holders for any other reasons.

§ 71.  Acquisition or redemption of own units of pension fund managers at request of Financial Supervision Authority

 (1) The Financial Supervision Authority may request, by a precept, redemption of the own units of a pension fund if the pension fund manager holds more than five per cent of the units of the fund.

 (2) In addition to the provisions of subsection (1) of this Act, the Financial Supervision Authority may request, by a precept, that:
 1) units of a mandatory pension fund be acquired if the number of units held by the pension fund manager in the mandatory pension fund managed by it does not comply with the provisions of subsections 68 (2) and (3) or subsection (4) of this Act;
 2) units of the mandatory pension fund be acquired if this is necessary in order to guarantee compensation for the loss specified in subsection 32 (1) of the Funded Pensions Act or to protect the interests of the unit-holders for any other reasons;
 3) units of a mandatory pension fund which are owned by a person who managed the mandatory pension fund be redeemed if more than nine months have passed since the management authority of the pension fund was transferred.

§ 72.  Deletion of units held by mandatory pension fund managers upon liquidation of pension funds

 (1) After termination of liquidation of a mandatory pension fund, the pension fund manager or a person who operated as a pension fund manager has the right to apply for the consent of the Financial Supervision Authority for payment of the amount which corresponds to the net asset value of the units held by the fund manager or person who operated as a fund manager and deletion of the units from the pension register.
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 (2) If the Financial Supervision Authority refuses to give consent, the bases provided for in § 70 of this Act apply. The Financial Supervision Authority shall promptly also communicate the grant of or refusal to grant consent to the registrar of the pension register.
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 (3) The Financial Supervision Authority shall refuse to delete any or part of the units held by a fund manager if any of the circumstances specified in subsection 32 (1) of the Funded Pensions Act arise.

 (4) In the case provided for in subsection (3) of this section, the procedure for compensation for loss provided for in §§ 32-35 of the Funded Pensions Act shall be applied.

 (5) A pension fund manager shall submit an application to the registrar of the pension register for payment of the amount which corresponds to the number and the net asset value of the units of the mandatory pension fund held by the fund manager and for deletion of the units from the pension register of units, and append the consent of the Financial Supervision Authority for deletion of the units. The registrar of the pension register shall transfer the money for the units deleted on the basis of the application to the fund manager.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

Chapter 10 Information to be Disclosed and Reporting  

Division 1 Prospectus and Key Information  

Subdivision 1 Requirements for Prospectuses and Key Information  

§ 73.  General requirements for prospectuses and key information

 (1) For public offer of a fund, a prospectus is prepared which must provide the information to be disclosed pursuant to this Chapter and which must be prepared in a manner allowing users of the prospectus to find necessary information easily.

 (2) The date as at which the data provided in the prospectuses derives must be stated therein.

 (3) In addition to a prospectus, key information must be always prepared concerning public offer of a fund which must comply with the requirements provided for in this Chapter.

 (4) The key information is prepared so that the contents thereof is easily understandable even without any reference to other documents by persons who are not professional investors.

 (5) The data provided in the key information must be in accordance with the respective data in the prospectus.

 (6) If the assets of a common fund are divided into sub-funds, the prospectus must provide data concerning each sub-fund of the fund, if these data differ from the general information about the fund. If the assets of a fund are divided into sub-funds or the fund has different classes of units or shares, key information must be prepared for each sub-fund of the fund and each class of units or shares. The data which is relevant in the case of different classes of units or shares of the same fund may be provided in a single document provided that this document complies with the requirements provided for key information.

 (7) Key information and, as appropriate, the translation thereof shall be used without modifications and supplements in all EEA Member States where the units or shares of the fund are offered taking into consideration amendments to the key information which are permitted in accordance with Article 27 of Commission Regulation (EU) No 583/2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website (OJ L 176, 10.07.2010, pp. 1-15).

 (8) The prospectus and key information of a fund are approved by the management board of the fund manager.

 (9) The fund rules or articles of association of a fund must be always appended to the prospectus of the fund, unless otherwise provided for in this Act. The fund rules or articles of association shall not be appended to a prospectus if the prospectus contains a requirement that the fund rules or articles of association shall be sent to an investor at the request of the investor or if the investor is informed of the places where the fund rules or articles of association are disclosed in all the states where the units or shares are traded.

 (10) The provisions of this Division concerning public offer, prospectus and key information of a fund do not apply to closed-end funds. The provisions of the Securities Market Act concerning public offer of securities and admission thereof to trading on regulated markets shall apply to public offers of such funds.

§ 74.  Data disclosed in prospectuses

 (1) A prospectus must include the following update information concerning the fund and sub-funds, if any:
 1) the general data of the fund;
 2) the investment policy of the fund;
 3) the conditions of issue and redemption of units or shares, the conditions of and procedure for exchange of units or shares if the exchange thereof is permitted;
 4) the rate of return achieved by the fund in the past periods and the methods of calculation of the rate of return;
 5) the description of the risks and typical investors of the fund;
 6) the business name, registry code and seat of the depositary and fund manager and third parties to whom the functions related to the management of the fund or holding of the assets thereof have been outsourced;
 7) the total limit of the fees, charges and expenses paid for the account of the fund or unit-holders or shareholders, with the exception of liquidation expenses, and the rates of the management fee, including success fee, if charged, and depositary’s charge;
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 8) the procedure for establishment and disclosure of the net asset value of the assets of the fund and unit or share and of the issue and redemption prices of units or shares and the frequency thereof;
 9) the conditions of suspension of issue or redemption of units or shares;
 10) the conditions of and procedure for making payments to unit-holders or shareholders for the account of the income of the fund;
 11) the disclosure of information concerning the fund;
 12) the conditions to which the registrar of the units or shares of the fund must comply with, and the procedure for registration of the units or shares of the fund and information concerning the registrar of the units or shares of the fund;
 13) a full description of the principles of remuneration of the fund manager, including description of the bases for calculation of the fee and compensations, persons responsible for determination of the fee and compositions, composition of a remuneration committee, if any, or summary of the principles of remuneration and a notation that a full description of the principles of remuneration is presented on the website of the fund manager together with a reference to the address of the website and that, if requested by an investor, the full description of the principles of remuneration shall be made available on paper free of charge.

 (2) A prospectus must provide the following information concerning the investment policy of a fund or sub-funds of a common fund, if any:
 1) the assets in which the assets of the fund are invested and to what extent, including when a certain index is replicated upon investment of the assets of the fund, whether this is the basis for comparing the rate of return of the fund or the investment policy of the fund comprises replicating of a specific index, and the methods of trading, if they have are material for the development of the investment policy;
 2) to what extent the assets of the fund are invested in one person or the securities issued by such person or other financial assets;
 3) the states or persons located in the states in which the assets of the fund are invested;
 4) to what extent the assets of the fund are invested in securities that are not traded on a regulated market or other non-liquid assets;
 5) the objectives of transactions with derivative instruments;
 6) the extent and terms for assumption of obligations for the account of the fund, such as conduct of transactions for guarantee of an issue of securities, borrowing, repurchase and reverse repurchase agreements or borrowing of other securities.

 (3) In addition to as specified in clause (1) 6) of this section, a prospectus must state, about the depositary of the fund, the general description of the depositary functions and conflicts of interests which may arise, including conflicts of interests which may arise upon outsourcing of the task of holding assets.

 (4) The information specified in subsections (1)-(3) of this section shall not be specified in the prospectus of a fund, if this is set out in the fund rules or articles of association.

 (5) Upon offer in Estonia of a fund which was founded or established in a foreign state, the requirements set of in the prospectus for information to be disclosed about funds and fund managers must be complied with.

 (6) Requirements for a prospectus and the list of data contained therein and additional information concerning foreign funds shall be established by a regulation of the minister responsible for the area.

§ 75.  Key information requirements

 (1) The key information must include in a clear and unambiguous manner the following information needed to make an informed investment decision:
 1) the name or business name of the fund and information concerning the supervision authority of the home country of the fund;
 2) a short description of the investment policy of the fund;
 3) the rate of return achieved by the fund in the past period, or if the rate of return of the fund is guaranteed, the rate of return in future periods;
 4) the fees, charges and expenses paid for the account of the fund or unit-holders or shareholders and the rates thereof;
 5) the risk and reward profile of the fund together with the instructions and warnings necessary for understanding the risks associated with investing in the fund;
 6) a reference to the place, method of receipt of the prospectus free of charge, annual reports and semi-annual reports and other information concerning the fund and the language of the information;
 7) a notation that a description of the principles of remuneration are available on the website of the fund manager, including a description of the bases for calculation of the fee and compensations, persons responsible for determination of the fee and compositions, composition of a remuneration committee, if any, reference to the address of the website and information that, if requested by an investor, the full description of the principles of remuneration shall be made available on paper free of charge.

 (2) The requirements for the contents and format of the key information of a fund are provided for in Commission Regulation (EU) No 583/2010.

§ 76.  Compensation for damage to unit-holders or shareholders

 (1) If a prospectus or key information of a fund (prospectus and key information jointly hereinafter in this Division prospectuses) contain information which is relevant for the purpose of evaluating the value of the fund or the units or shares thereof and such information proves to be different from the actual circumstances, the fund manager or public limited fund shall compensate the unit-holders or shareholders for the damage caused due to the difference between the actual circumstances and the information provided in the prospectuses, provided that the fund manager or public limited fund was or should have been aware of such difference.

 (2) The provisions of subsection (1) of this section also apply if prospectuses are incomplete, including omission of relevant facts, if the incompleteness of the prospectuses results from the fund manager or public limited fund hiding of the information.

 (3) The fund manager or public limited fund shall have the right, with the consent of the unit-holder or shareholder, to compensate for the damage specified in subsections (1) and (2) of this section by redeeming the unit or share from the unit-holder or shareholder without any redemption fee at the price for which the unit-holder or shareholder acquired the unit from the fund manager or public limited fund. Upon redemption by the fund manager or public limited fund of a unit or share for the account of the fund manager or public limited fund, the fund manager or public limited fund is released from the obligation to compensate the unit-holder or shareholder for any other damage.

 (4) The obligation to compensate for the damage specified in subsections (1) and (2) of this section also rests with the fund manager or public limited fund if a third party is the source of the information provided in the prospectuses. The fund manager or public limited fund is released from liability only in the case the information referred to or published in the prospectuses is provided with a reference to a source of information independent of the fund manager or public limited fund and the fund manager or public limited fund did not know and need not have known that the information on the basis of which the reference was made was incorrect.

 (5) A fund manager or public limited fund does not have the obligation to compensate for any damage on the basis of this section if the injured party was or should have been aware, at the moment of acquiring the unit or share, that the prospectuses were incomplete or contained inaccurate information. The same applies if a professional investor that sustained losses should have realised, at the moment of acquiring the unit or share and by exercising due diligence in its activities, that the information contained in the prospectuses was inaccurate or incomplete, unless the damage is caused intentionally.

 (6) A fund manager or public limited fund must compensate for damage caused to a unit-holder or shareholder only on the bases of the key information or the translation thereof in the case the information contained therein is misleading or contradicting or inconsistent with the prospectus of the fund.

 (7) The limitation period for a claim prescribed in this section is five years after disclosure of the prospectuses which contain inaccurate information or are incomplete.

 (8) Any agreements which exclude, limit or reduce the compensation or limitation period prescribed in this section shall be void.

Subdivision 2 Amendments to Prospectuses  

§ 77.  Amendments to Prospectuses and Disclosure and Entry into Force of Amendments

 (1) Amended prospectuses are disclosed promptly after submission thereof to the Financial Supervision Authority for the information thereof.

 (2) Amendments of prospectuses enter into force and offer of a fund may be started on the basis of the prospectuses after disclosure of the prospectuses, unless otherwise provided for in the prospectuses or subsection 78 (4) of this Act.

 (3) The Financial Supervision Authority may, by a precept, require that:
 1) amendments to prospectuses and disclosure of the amendments in the prospectuses do not fulfil the conditions provided for in the fund rules, articles of association or legislation;
 2) the requirements provided for in subsection 78 (4) of this Act are complied with due to the material impact of the amendments to the prospectuses to the funds or the interests of unit-holders or shareholders.

§ 78.  Assessment of impact of amendments to prospectuses and requirements for making material amendments

 (1) Unless otherwise provided for in this Act, the impact of amendments to reasonable interests of investors must be assessed upon making amendments to prospectuses. A justification of amendments and an assessment of the impact of the amendments to the fund and the interests of the investors shall be submitted to the Financial Supervision Authority together with amended prospectuses.

 (2) Materiality of the amendments to prospectuses is presumed if the prospectuses:
 1) amend the investment policy of the fund;
 2) increase the management fee and depositary’s charge to a significant extent.

 (3) Amendments to prospectuses are not considered material if investment restrictions are changed to the extent which does not change the general investment policy or the main investment objectives of the fund to a significant extent. Amendments to prospectuses are not deemed material and materiality of amendments to prospectuses shall not be assessed if:
 1) amendments to the prospectuses reduce the fees or charges and expenses paid for the account of the fund or unit-holders or shareholders or make other changes which are favourable for the unit-holders or shareholders;
 2) corrections are made in the prospectuses in the rights and obligations of the unit-holders or shareholders which have no impact on their obligations; or
 3) amendments are made to the prospectus only on the basis of the amendments made to legislation which implementation is mandatory.

 (4) In the case of material amendments to prospectuses, at least one of the following conditions must be fulfilled:
 1) at the request of unit-holders or shareholders, a unit or share is redeemed without any redemption fee within at least one month before the amendments to the prospectuses enter into force;
 2) the fund manager shall ensure an opportunity to unit-holders or shareholders to transfer a unit or share of the fund within at least one month before the amendments to the prospectuses enter into force at the price which shall not be less than the net asset value of the unit or share.

 (5) In order to notify of the opportunity provided for in subsection (4) of this section, a fund manager shall publish, promptly after deciding on amendment of the prospectuses, a notice on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund.

 (6) In the case provided for in this section, amendments to prospectuses enter into force and offers of the fund may be commenced on the basis thereof after submission of the prospectuses to the Financial Supervision Authority and disclosure thereof and after expiry of the term specified in subsection (4) of this section, unless a later date for entry into force is provided for in the prospectuses. If material amendments to prospectuses arise from amendments to the fund rules or articles of association, the amendments to the prospectuses enter into force and the offer of the fund may be commenced at the same time with the entry into force of the amendments to the fund rules or articles of association.

§ 79.  Amendments to prospectuses for establishment of new sub-funds

 (1) If a sub-fund of a common fund is established by an amendment to prospectuses, the provisions of this Act concerning material amendments to prospectuses do not apply and the prospectuses must be submitted to the Financial Supervision Authority for approval. In order to obtain an approval to prospectuses, the fund manager of a common fund (hereinafter in this Division applicant) shall submit to the Financial Supervision Authority a written application and the following data and documents (application, data and documents jointly hereinafter in this Division application):
 1) the prospectuses of the fund;
 2) the key information of the new sub-fund and each class of unit, if any;
 3) the amended depositary contract or depositary contract of the sub-fund.

 (2) If an application is not in compliance with the requirements provided for in subsection (1) of this section, the Financial Supervision Authority shall request elimination of the deficiencies by the applicant.

 (3) The Financial Supervision Authority may demand submission of additional data and documents if it is not convinced on the basis of the data and documents submitted whether the prospectus of the fund is in compliance with the requirements established for funds by legislation, or if other circumstances relating to the fund need to be verified.

 (4) Deficiencies of an application must be eliminated or additional data and documents submitted during a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review an application if the applicant fails to eliminate deficiencies within the prescribed term or fails to submit the data or documents requested by the Financial Supervision Authority by the due date. Upon refusal to review an application, the Financial Supervision Authority shall return the submitted documents without making a decision.

 (6) The Financial Supervision Authority may refuse to approve amendments to prospectuses if:
 1) the sub-fund, including the investment policy thereof, does not comply with the provisions of the prospectuses, fund rules or legislation;
 2) The prospectuses of a fund do not reflect in full, clearly and unambiguously all the material conditions of the operation of the sub-fund or contain provisions which are misleading or contradictory or hinder the public offer of the sub-fund, and if the information set out in the prospectuses about the sub-fund is insufficient.

 (7) The Financial Supervision Authority shall make a decision to approve or refuse to approve the amendments to prospectuses within two months after receipt of all the necessary data and documents but not later than within six months after receipt of the application.

 (8) The Financial Supervision Authority shall promptly communicate the decision to approve the amendments to prospectuses to the applicant and the depositary of the fund.

 (9) Amendments to prospectuses enter into force after approval of the prospectuses, unless a later date for entry into force is provided for in the prospectuses.

Division 2 Disclosure of Information  

§ 80.  Requirements for information to be disclosed

 (1) All information published and provided in documents concerning a fund, including advertising (hereinafter information to be disclosed) must be true and unambiguous and not misleading.

 (2) The information to be disclosed may include data and assessments disclosed concerning a fund with the aim of notification of the public of the activities or financial situation of the fund, formation of the net asset value of the units or shares of the fund and other required circumstances.

 (3) The information to be disclosed shall not give ostensible guarantees concerning the rate of return of or distributions from the fund or contain forecasts or prognoses of the financial performance of the fund, taking into account the provisions of this Act concerning guaranteed rates of return. The information which refers to replicating of an index, benchmark portfolio or financial assets upon calculation of the yield of or distributions from the fund are not deemed to be a prognosis of the financial performance of the fund.

 (4) Any information to be disclosed which directly or indirectly invites persons to purchase units or shares must include a notation as to where the prospectus and key information prepared for the offer of the fund can be examined.

 (5) A fund manager or public limited fund shall promptly disclose on the website of the fund manager, the consolidation group to which the fund manager belongs or the public limited fund all the circumstances which materially influence the activities or financial situation of the fund.

 (6) The provisions of this Division concerning a fund also apply to disclosure of information concerning sub-funds of a common fund.

 (7) Any incorrect, misleading, untimely or incomplete information shall be deemed to be failure to disclose or submit information.

 (8) Specific requirements for information to be disclosed concerning a fund may be established by a regulation of the minister responsible for the area.

§ 81.  Disclosure of fund documents and language requirements

 (1) A fund manager or public limited fund shall make the documents required pursuant to this Act and legislation issued on the basis thereof public at least at the seat of the fund manager or public limited fund, the seats of the branches thereof and on the website of the fund manager, the consolidation group to which the fund manager belongs or the public limited fund.

 (2) Each person must be able to examine the following documents free of charge at the places specified in subsection (1) of this section:
 1) the fund rules or articles of association of the fund;
 2) the latest annual accounts or annual report of the fund;
 3) the latest semi-annual report of the fund if it is approved after the latest annual accounts or annual report;
 4) the prospectus and key information.

 (3) The documents specified in subsection (2) of this section shall be disclosed in a format which can be reproduced in writing. At the request of an investor, a fund manager or public limited fund shall give a copy of the documents to the investor free of charge.

 (4) A fund manager or public limited fund shall disclose the annual accounts or annual report of the fund within four months after the end of a financial year. A fund manager or public limited fund shall disclose the semi-annual report of the fund within two months after the end of a half-year.

 (5) The key information shall be disclosed at least in the Estonian language. The remaining documents specified in subsection (2) of this section shall be disclosed at least in the Estonian or English language, unless otherwise provided for in this Act.

 (6) If the documents specified in this section are not disclosed in the Estonian language, the Financial Supervision Authority may request from the fund manager, in order to protect the interests of investors, translation of the documents of the fund into the Estonian language and making of the translation public.

 (7) If the translations of any documents disclosed are not in compliance with the documents translated or can be interpreted differently, the documents in the Estonian language or translations of documents in other languages into the Estonian language shall apply.

 (8) If the assets of a common fund are divided into sub-funds, the fund’s annual and semi-annual reports specified in clauses (2) 2) and 3) of this section must disclose information concerning each sub-fund and key information specified in clause (2) 4) of this subsection concerning each sub-fund and class of units.

§ 82.  Disclosure of rates of return of funds

 (1) Upon disclosure of the rate of return of a fund, the information to be disclosed must contain a notation that the rate of return achieved by the fund in past periods does not guarantee the rate of return of the fund in future periods, unless the rate of return of the fund is guaranteed pursuant to the fund rules or articles of association. Data concerning the period used as the basis for determining the rate of return must be included in the information to be disclosed concerning the rate of return.

 (2) If a fund has sufficient history, the rate of return shall be disclosed at least per calendar year or at least the last 12 months. No annual rate of return shall be disclosed on the basis of periods that are shorter than 12 months.

 (3) The annual rate of return of any period shorter than 12 months may be disclosed only in the case of funds which mainly invest in money market instruments. In this case it must be indicated that the rate of return is annualized.

 (4) If a fund has sufficient history, the average rate of return of the fund for the last two, three and five calendar or financial years must be stated upon disclosure of the rate of return of the fund. In addition to the provisions of this subsection, the average rate of return of the fund after establishment or foundation of the fund may be presented.

 (5) The provisions of this section do not apply to any comparative information and information disclosed on the website of the fund manager, the consolidation group to which the fund manager belongs or the public limited fund, provided that the data concerning the rate of the return for the latest calendar year or the last 12 months shall be appended to it. Information submitted by an independent person in which the rate of return of funds is directly or indirectly compared or which refers to the respective reference basis is deemed to be reference information.

 (6) The provisions of this section concerning a fund also apply to disclosure of the rate of return of sub-funds of a common fund.

 (7) Specifications for disclosure of key information concerning the rate of return of a UCITS are provided for in Commission Regulation (EC) No 583/2010.

Division 3 Accounting and Reporting  

§ 83.  Organisation of accounting

 (1) The accounting and reporting of a fund shall be organised on the basis of the Accounting Act, this Act, other legislation issued on the basis thereof and the accounting policies and procedures of the fund manager or fund. In the case of a conflict between this Act and other legislation, this Act applies.

 (2) The provisions of the Accounting Act concerning financial statements apply to annual reports of common funds, unless otherwise provided for in this Act. The provisions of the Accounting Act concerning annual reports apply to annual reports of public limited funds, unless otherwise provided for in this Act.

 (3) If the assets of a common fund are divided into sub-funds, the provisions of this Act concerning annual accounts also apply to preparation of the annual accounts of sub-funds, unless otherwise provided for in this Act. Reports are prepared and information is submitted separately for the fund and each sub-fund.

 (4) The annual accounts or annual reports of a fund are prepared, submitted and disclosed at least in the Estonian language. A fund manager founded in a foreign state may prepare, submit and disclose the annual accounts or annual reports of funds in the English language. The Financial Supervision Authority has the right to require translation into the Estonian language of the annual accounts or annual reports in the English language of a fund manager founded in a foreign state.

 (4¹) The annual or semi-annual accounts or annual report of a fund shall include the following statements:
 1) financial statements;
 2) statement of investments;
 3) statement of transaction fees and commissions.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (5) The annual accounts or annual reports of a fund, except of a pension fund, shall include the following data in addition to the balance sheet, income and expense statement and management report:
 1) the total amount of remuneration paid by the fund manager during the financial year, making a distinction between the total amount of the basic pay and performance pay, the number of beneficiaries and fees and charges paid from the assets of the fund;
 2) the amounts of remuneration paid by the fund manager during the financial year according to the categories of the managers and employees to whom the principles of remuneration must be applied.

 (6) The fund manager of a UCITS shall submit in the annual accounts or annual reports of the UCITS the following additional information:
 1) description of the bases for calculation of remuneration and compensations of managers and employees;
 2) results of the control procedure of implementation of the principles of remuneration by the supervisory board of the fund manager, or the remuneration committee and internal control, if any, and information concerning any deviations encountered in the implementation thereof;
 3) material changes made in the principles of remuneration.

 (7) The requirements for the contents of reports and methods of preparation of the reports shall be established by a regulation of the minister responsible for the area.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

§ 84.  Requirements for organisation of accounting of common funds

 (1) The accounting of a common fund shall be organised by the management board of its fund manager.

 (2) The accounting of a common fund must be kept separate from the accounting of the fund manager and other funds of the fund manager.

 (3) The provisions of § 14, subsection 15 (2) and subsection 18 (3) and §§ 25 and 26 of the Accounting Act do not apply to accounting and reporting of common funds.

 (4) The financial year of a common fund is a calendar year.

§ 85.  Additional requirements for organisation of accounting of public limited funds

 (1) The provisions of the Accounting Act apply to the accounting and reporting of public limited funds, including annual reports and semi-annual reports, unless otherwise provided for in this Act or legislation established on the basis thereof.

 (2) The financial year of a public limited fund is a calendar year.

§ 86.  Audit obligations

 (1) An audit firm must be appointed to a fund.

 (2) The audit firm of a common fund shall be appointed by the management board of its fund manager. The audit firm of a public limited fund shall be appointed by the general meeting of the public limited fund, unless this right was granted to the supervisory board of the public limited fund by the articles of association of the public limited fund.

 (3) The annual accounts of common funds and public limited funds must be audited. The provisions concerning audits in the Auditors Activities Act and other legislation apply to audits, taking account of specifications provided for in this Act.

§ 87.  Notification obligations of sworn auditors

 (1) A sworn auditor is required to inform the Financial Supervision Authority promptly in writing of any circumstances revealed in the course of providing the service which result or may result in:
 1) material violation of legislation governing the activities of fund managers, funds or depositaries;
 2) situation or a risk of a situation arising in which the obligations of the fund cannot be performed for the account of the fund;
 3) qualified report prepared by the sworn auditor concerning the annual accounts or annual report of the fund;
 4) significant proprietary damage caused by the activities of a member of the management board or supervisory board or employee of the fund manager or public limited fund to the unit-holders or shareholders of the fund.

 (2) Upon submission of data to the Financial Supervision Authority in accordance with subsection (1) of this section, a sworn auditor does not violate the obligation to maintain confidentiality of data which is imposed on the sworn auditor by legislation or a contract.

§ 88.  Reports submitted to Financial Supervision Authority

 (1) A fund manager shall prepare and submit to the Financial Supervision Authority reports on the supervision over the funds managed by it (hereinafter in this Division reports) pursuant to the procedure provided for in this Act and legislation issued on the basis thereof. A public limited fund shall prepare reports and submit them to the Financial Supervision Authority pursuant to the procedure provided for in this Act or legislation issued on the basis thereof, unless the fund manager submits the reports pursuant to its management contract in the name of the public limited fund.

 (2) A fund manager or public limited fund shall prepare and submit reports on the assets, obligations, fees and charges and payments of the fund and the units or shares of the fund.

 (3) The period of the reports submitted to the Financial Supervision Authority is a calendar month, unless otherwise provided by legislation.

 (4) A fund manager or public limited fund shall submit reports to the Financial Supervision Authority within ten days after the end of the accounting period.

 (5) The reports submitted to the Financial Supervision Authority must be in the Estonian language. A fund manager founded in a foreign state may submit reports of funds to the Financial Supervision Authority in the English language. The Financial Supervision Authority has the right to request translation into the Estonian language of reports of funds in the English language from a fund manager founded in a foreign state.

 (6) In addition to the provisions of this Division, the Financial Supervision Authority has the right to request, for the purpose of exercising supervision, additional periodic and specific reports from a public limited fund or fund manager concerning the funds managed by it, and any data and reports on the services provided by the fund manager and the structure of the funds managed by it, the trends and innovations thereof, which are required for the performance of the functions of the Financial Supervision Authority on the basis of Regulation (EU) No 1095/2010 of the European Parliament and of the Council establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, pp. 84-119).

 (7) Based on the reports specified in this section submitted to the Financial Supervision Authority, the Financial Supervision Authority may submit data to the Ministry of Finance for performance of the functions pursuant to the Government of the Republic Act and to Eesti Pank for performance of the functions pursuant to the Official Statistics Act.

 (8) A list of the reports submitted to the Financial Supervision Authority and the contents, methods of preparation and the procedure for submission thereof shall be established by a regulation of the minister responsible for the area.

Division 4 Specifications for Disclosure of Information and Reporting on Alternative Funds  

§ 89.  Application of Division

 (1) The provisions of this Division apply to alternative funds managed by alternative fund managers and publicly offered in Estonia or other EEA Member States.

 (2) The provisions of this Division applicable to alternative funds also apply to sub-funds.

§ 90.  Additional requirements for information to be disclosed concerning alternative funds

 (1) A fund manager must make at least the following information concerning a fund available to investors in addition to the information provided for in the fund rules, articles of association and prospectus:
 1) jurisdiction for settlement of disputes;
 2) business name, registry code and seat of the audit firm;
 3) procedure for mitigation and prevention of conflicts of interests which includes the procedure for mitigation and prevention of conflicts of interests upon outsourcing of the functions relating to the management of the fund;
 4) information concerning compliance of the fund manager with the own funds requirement;
 5) description of the liquidity risk management of the fund, including conditions for redemption of units or shares;
 6) information concerning compliance with the requirement for equal treatment of investors, and treatment of investors with different rights associated with units or shares of different classes, and connections thereof with the fund and fund manager;
 7) business name, registry code and seat of the prime broker, if any, and information concerning significant agreements entered into with the prime broker, including agreements for transfer of liability, description of measures for mitigation and prevention of conflicts of interests and terms and conditions for transfer and reuse of the assets of the fund in the depositary contract.

 (2) At least the following information must be made available to investors concerning the investment policy of a fund:
 1) if the fund is a feeder fund or if the assets of the fund are invested to a large extent in another fund, the information concerning the seat of the master fund or the specified other fund;
 2) investment techniques and risks associated with assets and investment restrictions.

 (3) In addition to the information specified in subsection (1) of this section, a fund manager shall promptly notify investors of all the agreements pursuant to which the liability of the depositary is limited in accordance with subsection 298 (4) of this Act and of any changes in connection with the depositary’s liability.

 (4) A fund manager must make the following information available to investors on regular basis:
 1) the percentage of illiquid assets in the assets of the fund to which the special arrangements arising from their illiquid nature are applied pursuant to Commission Delegated Regulation (EU) No 231/2013;
 2) the arrangements for managing the liquidity of the fund and amendments thereto;
 3) the risk profile of the fund and description of the risk management system employed to manage the respective risks.

 (5) The following information must be published on a regular basis concerning a fund employing leverage:
 1) the principles of employing leverage and borrowing, including the methods of employing leverage, risks related to use of leverage, procedure for reuse of assets and collaterals, and restrictions on the use of leverage;
 2) changes in the maximum level of leverage which the fund is entitled to employ;
 3) the right to reuse collaterals or other guarantees issued under leveraging arrangements;
 4) the total amounts of leverage of the fund.

 (6) A fund manager must promptly notify investors of any changes in the information specified in subsections (1)-(5) of this section in the cases provided for in the Commission Delegated Regulation (EU) No 231/2013, including changes in the procedure for redemption of units or shares for management of the liquidity of the fund.

§ 91.  Additional requirements for disclosure of reports

 (1) Material changes made in the information disclosed to investors in accordance with § 90 of this Act must be appended to the annual accounts or annual reports of alternative funds (hereinafter in this section report).

 (2) If reports are disclosed in accordance with the requirements of the Securities Market Act applicable to issuers, the information specified in subsection 83 (5) of this Act and subsection (1) of this section must be appended to the reports, unless this information is disclosed in the issuer’s report.

 (3) Requirements for disclosure of information concerning funds are provided for in Commission Delegated Regulation (EU) No 231/2013.

§ 92.  Additional information submitted to Financial Supervision Authority concerning alternative funds

 (1) An alternative fund manager shall prepare and submit to the Financial Supervision Authority information on regular basis concerning traded financial instruments in the assets of the alternative fund and trading venues where the alternative fund manager trades in the name of the fund, and concerning the main risks and risk concentration of the fund.

 (2) The following information must be submitted to the Financial Supervision Authority concerning an alternative fund:
 1) the percentage of illiquid assets in the assets of the fund to which the special arrangements arising from their illiquid nature are applied pursuant to Commission Delegated Regulation (EU) No 231/2013;
 2) the arrangements for managing the liquidity of the fund and amendments thereto;
 3) the risk profile of the fund and description of the risk management system required to manage the market risk, liquidity risk, counterparty risk or credit risk, operational risk and other risks of the fund;
 4) types of assets of the fund;
 5) the results of stress tests.

 (3) If leverage is employed on a substantial basis upon management of the assets of a fund, the fund manager shall submit to the Financial Supervision Authority the following information concerning the fund:
 1) the overall level of leverage employed by the fund;
 2) the break-down of the leverage of the fund between the leverage arising from borrowing of cash or securities and the leverage arising from derivatives;
 3) the extent to which the assets of the fund have been reused under leveraging arrangements.

 (4) The information specified in subsection (3) of this section shall identify the five largest sources of borrowed cash or securities and the amounts of leverage received from each of those sources for each of the funds.

 (5) An alternative fund manager shall submit information electronically to the Financial Supervision Authority with the frequency and time limits specified in Article 110(3) and in accordance with the templates provided for in Annex IV of the Commission Delegated Regulation (EU) No 231/2013.

Division 5 Specifications for Disclosure of Information and Reporting on Pension Funds  

§ 93.  Additional requirements to information to be disclosed concerning pension funds

 (1) Each person must be able to examine, at the seat of the pension fund manager and on the website of the fund manager or the consolidation group to which the fund manager belongs, the documents specified in clauses 81 (2) 1), 2) and 4) of this Act and in the case of a mandatory pension fund, the latest statement on the investments thereof.

 (1¹) The prospectus of an occupational pension fund has to specify, in addition to the information specified in subsection 74 (2) of this Act, whether and how the principles of responsible investment are complied with in the investment policy of the pension fund and whether environmental, social and governance factors are taken into account in making investment decisions.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (2) The period of the statements of investments of a mandatory pension fund is one month, the statement shall be prepared in accordance of the regulation of the minister responsible for the area established on the basis of subsection 83 (7) of this Act and shall be disclosed by the 15th date of the month following the accounting period.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (2¹) No semi-annual reports shall be prepared for pension funds.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (3) The data and documents prepared concerning a pension fund shall be disclosed at least in the Estonian language.

 (4) A mandatory pension fund manager shall submit to the registrar of the pension register for disclosure on the website of the latter the fund rules, prospectus and key information of the mandatory pension fund and in the case of any amendments thereto the amended fund rules, prospectus and key information.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (5) Information disclosed concerning a mandatory pension fund shall not include offers of non-fund benefits or be related, in any other way, to the offers which may influence persons to make a decision in choosing a mandatory pension fund based on such non-fund benefits.

 (6) Employers who wish to commence making of contributions or make contributions to an occupational pension fund, employees, servants, members of managing and controlling bodies thereof and unit-holders of the fund must be able to examine the documents disclosed concerning the occupational pension fund in accordance with subsection (1) of this section at the seat of the fund manager or on the website of the fund manager or the consolidation group to which the fund manager belongs.

 (7) The annual report of an occupational pension fund shall be made available to the persons specified in subsection (6) of this section within four months after the end of the financial year.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (8) In addition to the provisions of subsection (1) of this section, a fund manager must submit once a year to each unit-holder of any occupational pension funds managed by the fund manager a pension statement prepared pursuant to § 94¹ of this Act in a format which can be reproduced in writing. At the request of a unit-holder, the fund manager shall issue a free copy of the pension statement of the occupational pension fund to the unit-holder.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (9) At the request of a unit-holder or at the latest six months before commencement of payments, the occupational pension fund manager shall notify unit-holders of the methods of payment of supplementary funded pension.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 94.  Additional requirements for key information of pension funds

 (1) The key information of a pension fund shall include under practical information in addition to that provided for in Commission Regulation (EU) No 583/2010 information about when unit-holders can get payments from the pension fund, and references to clauses in the prospectus of the fund where it is possible to find information about the terms and conditions of exchange, redemption of units and making of payments.

 (2) The key information of a mandatory pension fund shall include under fees and charges, in addition to that provided for in Commission Regulation (EU) No 583/2010, the asset turnover ratio which equals to the quotient of the arithmetic means of the value of the assets of the mandatory pension fund sold or the value of the assets of the mandatory pension fund purchased in a calendar year, whichever is smaller, and the value of the assets on the days of calculation of the net asset value of the units of the mandatory pension fund for the calendar year.

 (3) The ongoing fees and charges shown under the key information of a mandatory pension fund must also include the fees, charges and expenses of the calendar year which are paid in accordance with clause 58 (1) 3) of this Act for the account of the mandatory pension fund.

§ 94¹.  Pension statement of occupational pension fund

 (1) Pension statements of occupational pension funds must set out the following information:
 1) the name and personal identification code or, in the absence thereof, the date of birth, of the unit-holder;
 2) the age of the unit-holder when payments shall commence to the unit-holder pursuant to the rules of the occupational pension fund;
 3) the name and contact details of the fund manager and the name of the occupational pension about which the pension statement is submitted;
 4) the forecast of the payments to be made to the unit-holder after the unit-holder reaches the age provided for in clause 2) of this subsection;
 5) the total value of the units of the occupational pension fund held by the unit-holder;
 6) the amount of the contributions to the pension fund made by the employer for the unit-holder to the pension fund during at least the last 12 months;
 7) the amount of any fees and costs covered for the account of the unit-holder and the occupational pension fund at least during the last 12 months.

 (2) When using assumptions required for forecasting distributions to unit-holders from an occupational pension fund, the fund manager shall be based on its best estimates and the indicators published by the Ministry of Finance in its latest economic forecast.

 (3) The assumptions used for forecasting distributions may be specified by a regulation of the minister responsible for the area.

 (4) If the forecast of distributions to be made to a unit-holder is based on scenarios, it must contain at least a scenario based on the best estimate of the fund manager and a negative scenario.

 (5) The forecast specified in clause (1) 4) of this section shall be submitted in a pension statement of the occupational pension fund together with a warning that distributions to the unit-holder in the estimated amount can not be guaranteed and that actual distributions may differ from it.

 (6) In addition to the provisions of subsection (1) of this section, a pension statement of an occupational pension fund must include a reference to where the unit-holder can examine:
 1) the documents specified in clauses 81 (2) 1), 2) and 4) of this Act about the occupational pension funds which are managed by the fund manager and making of contributions to which the unit-holder can choose;
 2) the information about potential distributions to the unit-holder should the employer terminate making of contributions for the unit-holder to the occupational pension fund.

 (7) Any information which has significantly changed compared to the information submitted about the previous period must be clearly indicated in the pension statement.

 (8) The pension statement of an occupational pension fund shall be prepared in such a manner that it would be easy for the unit-holder to understand the contents thereof and the data stated therein are relevant and presented as at the date indicated in the pension statement.

 (9) The name “pension statement” and, where appropriate, the translation thereof shall be used in an unaltered form and without supplements in all the Member States where the units of the occupational pension fund are offered.

 (10) At the request of a unit-holder, the occupational pension fund manager shall inform the unit-holder of the assumptions which were used for estimating the distributions stated in the pension statement.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 95.  Compensation for damage

 (1) Upon compensation for damage caused to a unit-holder of a mandatory pension fund, the units redeemed pursuant to subsection 76 (3) of this section shall be exchanged for the units of another mandatory pension fund chosen by the unit-holder under the conditions provided for in the Funded Pensions Act concerning exchange of units.

 (2) Upon redemption of units of a voluntary pension fund, the procedure for making of payments or exchange of units provided for in the Funded Pensions Act shall be implemented.

§ 96.  Specifications for amendments to information contained in prospectuses and key information of pension funds

 (1) The regulation on amendment of the prospectus and key information of a fund provided for in §§ 77 and 78 of this Act (hereinafter jointly in this section prospectuses) is applied to mandatory pension funds and occupational pension funds, taking account of the specifications provided for in this section.

 (2) The provisions of subsections 78 (4)-(6) of this Act do not apply to material amendments to the prospectuses of a mandatory pension fund.

 (3) Material amendments to the prospectuses of a mandatory pension fund enter into force on the date of exchange of units provided for in subsection 24 (3) of the Funded Pensions Act but not earlier than 100 calendar days after publication of a respective notice.

 (4) The fund manager shall have the amendment of the prospectuses of an occupational pension fund approved by the employer making contributions to such fund.

 (5) Amended prospectuses of an occupational pension fund shall be disclosed by the fund manager to unit-holders promptly after submission thereof to the Financial Supervision Authority for the information thereof. The fund manager shall inform the Financial Supervision Authority of the date of disclosure of the amendments to unit-holders.

 (6) Upon material amendments to the investment policy or rights associated with the units arising from amendments to the pension fund rules in the prospectuses of a mandatory pension fund and occupational pension fund, the provisions of §§ 40, 41 and 46 of this Act apply to notification of amendments to prospectuses, disclosure and entry into force thereof.

Chapter 11 Investment of Assets of Funds and Transactions conducted Therewith  

Division 1 General Requirements for Investment of Assets of Public Funds  

§ 97.  Application of Chapter

 (1) The provisions of this Chapter apply to public funds founded or established in Estonia.

 (2) If the assets of a common fund are divided into sub-funds, each sub-fund shall be treated as a separate fund for the purposes of this Chapter.

 (3) The provisions of this Chapter do not apply to termination of funds, unless otherwise provided for in the decision to issue an authorisation for liquidation of a fund.

§ 98.  General requirements for investment of assets of funds

 (1) Upon investment of the assets of a fund, it has to be ensured that the investments of the fund are sufficiently diversified between different securities and other assets in such a manner that redemption of the units or shares of the unit-holders or shareholders of the funds would be guaranteed in accordance with the provisions of the fund rules or articles of association.

 (2) The assets of a fund may be invested only in the assets specified in the basic document or prospectus of the fund, taking account of the requirements and restrictions provided for in the basic document and prospectus of the fund.

 (3) If the rate of return of a fund is not guaranteed in accordance with the fund rules or articles of association, the fund, fund manager or another person shall not:
 1) give any guarantee or other form of collateral concerning the income of the fund or distributions made from the fund;
 2) make forecasts or prognoses of the financial performance of the fund;
 3) offer other guarantees outside the fund on the basis of the factors associated to the fund.

§ 99.  General requirements for management of risks associated with investment of assets of funds

 (1) Internal rules of procedure must be established for management of the risks associated with the investment of the assets of a fund which enable to monitor and measure, at any time, the risk positions and the percentage thereof in the assets of the fund (hereinafter risk management rules). The risk management rules shall be sufficient and proportionate to the nature, extent and complexity of the investments of the fund.

 (2) The risk management rules shall inter alia set out the following:
 1) transparent organisational structure of the fund manager for the management of risks with clearly delineated areas of responsibility, and requirements for submission of reports, the contents and frequency thereof;
 2) risk management process taking into consideration the risks associated with investments in compliance with the investment policy of the fund;
 3) sufficient and proportional rules of procedure for measurement and management of risks (hereinafter procedure for measurement and management of risks), rules of procedure for calculation of risk positions of derivative instruments which take account of the risk profile of the fund, and the procedure for notification of the managers of the fund manager;
 4) measures which ensure knowledgeability of the managers and employees of the fund manager about the risk profile of the fund and the risks arising from the investment activities of the fund and taking of the risk considerations into account in the decision-making processes;
 5) measures which must ensure the liquidity required for regular operation of the fund, taking into consideration the extent of the obligations assumed for conducting transactions for the account of the fund, and the policy for redemption of units or shares.

 (3) The procedure for measurement and management of risks specified in clause (2) 3) of this section must allow to establish, measure, manage and constantly monitor the market risk, liquidity risk, operational risk and counterparty risk and other risks of each fund.

 (4) The procedure for measurement and management of risks must ensure compliance with the requirements for calculation of risk positions of derivative instruments and measurement of counterparty risk arising from derivative instruments.

 (5) The procedure for measurement and management of risks shall inter alia determine:
 1) the rules of procedure for measurement and management of the risks arising from the investments of each fund and the data and documents used for the measurement and management of the risks, calculation of the percentage of the risks of the fund in the general risk profile and storage of the measurement and management data;
 2) performance of periodic back tests in order to assess suitability of the procedure for measurement and management of risks and of the mark to model forecasts and valuations;
 3) performance of periodic stress tests and analysis of scenarios in order to measure and manage the risks which arise from potential changes in the market conditions;
 4) risk limits system of the fund for management and control of the risks of the fund and storage of the data thereof;
 5) measures to ensure that the risk level of the fund complies at any moment with the risk limits system specified in clause 4) of this subsection;
 6) rules to operate in the best interests of unit-holders or shareholders in the case of actual and potential deviations from the risk limits system specified in clause 4) of this section and storage of the data thereof.

 (6) At least once a year the efficiency, up-to-date and appropriate nature of the risk management rules, compliance of the activities with the risk management rules and relevance and effectiveness of the measures adopted for elimination of deficiencies in the implementation of the risk management rules must be assessed and, as appropriate, the risk management rules and investment policy of the fund changed.

 (7) The liquidity profile of the investments of a UCITS must comply with the units redemption policy established in the fund rules and prospectus of the UCITS and adequate liquidity risk management measures must be applied to the UCITS in order to ensure fulfilment of the obligation to redeem the units of the UCITS. In order to verify the liquidity requirements of a fund, stress tests have to be performed, as appropriate, in order to assess the liquidity risk of the fund in emergency situations.

 (8) The Financial Supervision Authority must be promptly notified of establishment of and amendments to risk management rules.

 (9) The Financial Supervision Authority may require, by its precept, amendment of risk management rules if the rules:
 1) do not comply with the requirements provided for in this Act;
 2) do not comply with the provisions of the fund rules or articles of association the fund;
 3) are incomplete or misleading or contain provisions which are contradictory or ambiguous;
 4) do not enable adequate determination of the net asset value of the fund;
 5) are not in the best interests of the unit-holders or shareholders of the fund for other reasons.

§ 100.  Requirements for investment in immovables and valuation of immovables

 (1) Objects which are necessary for the management of immovables may also be acquired for the account of a fund which invests in immovables.

 (2) For the purposes of this Act, adjacent immovables or immovables in close proximity to each other are deemed to be one immovable, unless the intended use of the immovables or the risks and circumstances which affect the value of the immovables are clearly distinguishable.

 (3) The assets of a fund may be invested only in immovables which are located in the states which have an effective and reliable registration system for immovables which proves the right of ownership.

 (4) Only an independent valuator of immovables (hereinafter in this section valuator) who is of good repute and has sufficient experience to evaluate the assets concerned may be a valuator of immovables.

 (5) Immovables of a fund are valued at least once as at the end of a financial year before the audit of the annual accounts of the fund is conducted.

 (6) The Financial Supervision Authority may require, by its precept, re-valuation of immovables if valuations of immovables:
 1) do not comply with the provisions of the fund rules or articles of association;
 2) were not objective;
 3) do not enable adequate determination of the net asset value of the fund;
 4) were not in the best interests of the unit-holders or shareholders of the fund for other reasons.

§ 101.  General requirements for mitigation and avoidance of conflicts of interests and related-party transactions

 (1) A fund may not have a holding in the fund manager managing it. The provisions of the first sentence do not apply upon investment in the units and shares of another fund managed by the fund manager of the fund.

 (2) A fund may have a holding in companies belonging to the same consolidation group of companies as the fund manager of the fund or in the securities issued by the specified person only through a regulated market. The provisions of the first sentence do not apply to acquisition of money market instruments and investment in the units and shares of another fund.

 (3) The assets of a fund shall not be transferred to:
 1) the fund manager or companies belonging to the same consolidation group as the fund manager;
 2) the fund manager or a manager, sworn auditor or employee of the fund;
 3) other funds managed by the fund manager, with the exception of disposal of securities on a regulated market at a price established by the moment of disposal or any other fair price determined by an independent valuer, if conduct of such transaction helps another fund managed by the fund manager to achieve its investment objectives;
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]
 4) persons who have an equivalent economic interest with the persons specified in clauses 1)-3) of this section.

 (4) The assets of a fund may be transferred upon transferring the assets of the fund during the liquidation proceedings of the fund or for other purposes for ensuring the protection of the best interests of the fund, unit-holders or shareholders of the fund on a regulated market at the price as at the time of transfer or at other fair price to the fund manager of this fund or a company which belongs to the same consolidation group or another fund managed by it.

 (5) [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (6) No assets shall be acquired for the account of a fund from the persons specified in subsection (3) of this section, with the exception of the cases provided for in subsection (4) of this section.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (7) In this section, a fund manager also denotes the person to whom the fund management functions have been outsourced.

§ 102.  Violation of requirements and compensation for damage

 (1) Violation of the requirements provided for in this Chapter upon conduct of transactions does not render such transaction void but the fund manager must compensate the fund or unit-holders or shareholders of the fund for any damage caused by the violation.

 (2) A fund manager or public limited fund is required to promptly notify the Financial Supervision Authority of violations and termination of violations of the requirements provided for in this Chapter. If violations of the requirements provided for in this Chapter take place for reasons that are not attributable to the fund or fund manager, the fund manager shall notify the Financial Supervision Authority if the violation cannot be eliminated within a reasonable period of time or if damage was caused to unit-holders as a result of the violation.

 (3) The limitation period for a claim provided for in subsection (1) of this section is five years, unless the damage arose from the violation provided for in the second sentence of subsection (2) of this section.

Division 2 Investment of assets of UCITS  

Subdivision 1 General Requirements for Investment of Assets of UCITS  

§ 103.  Investment of assets of UCITS

 (1) The assets of a UCITS may be invested only in:
 1) transferable securities, such as shares or other similar rights, bonds or other similar debt obligations and subscription rights or other transferable rights which grant the right to acquire the above specified securities (hereinafter in this Chapter securities);
 2) units or shares of other funds;
 3) derivative instruments;
 4) deposits in credit institutions;
 5) money market instruments which are generally traded on money markets and which are liquid and which value can be accurately determined at any time.

 (2) In this Chapter, the following are also deemed to be securities:
 1) financial instruments which may be guaranteed by assets, which do not qualify as securities, or the rate of return of such assets; and
 2) units and shares of a closed-end fund.

 (3) The provisions in this Division concerning investment in units or shares of other funds do not apply to units and shares of closed-end funds.

 (4) The assets of a UCITS shall not be invested in precious metals and securities which underlying assets are precious metals or which price is dependent on precious metals.

 (5) A UCITS founded as a public limited fund may own and acquire immovables which are directly required for its day-to-day business activities.

§ 104.  Specifications for investment of assets of UCITS and risk spreading

 (1) Upon investment of the assets of a UCITS, the requirements provided for in this Chapter for investment of assets and risk spreading when exercising securities or money market instruments subscription rights need not be complied with in the case the specified securities or money market instruments belong to the assets of the fund.

 (2) The restrictions provided for in §§ 115-117 of this Act for risk spreading do not apply during six months after approval of the rules of a UCITS or entry thereof in the commercial register, provided sufficient compliance with the principle of risk spreading is ensured.

 (3) The restrictions on risk-spreading provided for in this Chapter may be temporarily exceeded for reasons not dependent on the fund manager or due to exercise of the subscription rights specified in subsection (1) of this section. In this case, the composition of the assets of the fund has to be brought into accordance with the provisions in this Chapter as soon as possible without damaging the interests of the unit-holders or shareholders.

 (4) Exercising of a right of pre-emption to acquire securities, a bonus issue, change in the market value of securities and other such reasons are deemed to be reasons independent of a fund manager if the objective of the transactions conducted for the account of the fund is to commence compliance with the above specified restrictions.

§ 105.  Requirements for management of risks upon investment of assets of UCITS and conduct of transactions with derivative instruments

 (1) A fund manager must implement measures for management of risks which allow to monitor and measure at any time the risks of investment positions and their general impact on the risk profile of the portfolio of the fund and adequately and independently assess the value of the derivative instruments acquired over-the-counter.

 (2) The methods and instruments which are used for effective management of the asset portfolio of a fund shall fulfil the following conditions:
 1) their use shall be economically inexpedient and they shall be used in a cost-effective manner;
 2) while being in compliance with the risk profile of the fund and the established risk management rules, their purpose is to reduce the risks and costs associated with investment of the assets of the fund and to generate additional income or profit;
 3) the risks associated with their use shall be sufficiently managed by the risk management system implemented;
 4) the use thereof shall under no circumstances cause divergences from the investment objectives laid down in the rules or articles of association and prospectus of the fund.

 (3) The total open risk position of derivative instruments may not exceed the net asset value of a UCITS. The risk position is calculated taking into account the value of the underlying asset of the derivative instrument, counterparty credit risk, market movements and time available to liquidate the positions.

 (4) The underlying assets of the derivative instruments of a UCITS must not exceed, at the moment the derivative instruments are potentially used, the restrictions for risk spreading upon investment of the assets of the fund prescribed in § 115 of this Act. The above does not apply in the case of index-based derivative instruments.

 (5) If the securities or money market instruments embed derivative instruments (hereinafter embedded derivatives and money market instruments), the provisions of this Division regarding derivative instruments apply to them.

 (6) More specific requirements for risk management of a UCITS and conduct of transactions with the assets of a UCITS and preparation of reports thereon shall be established by a regulation of the minister responsible for the area.

Subdivision 2 Specific Requirements for Investment of Assets of UCITS  

§ 106.  Investment of assets of UCITS in deposits

  The assets of a UCITS may be invested in demand deposits and deposits in credit institutions maturing in no more than 12 months, if the following conditions are fulfilled:
 1) the credit institution is registered in an EEA Member State; or
 2) the prudential requirements applicable to credit institutions registered in third countries comply in the opinion of the Financial Supervision Authority with the requirements which are at least as strict as those provided for in the legislation of the European Union.

§ 107.  Investment of assets of UCITS in securities and money market instruments

 (1) The assets of a UCITS may be invested in securities and money market instruments which fulfil at least one of the following conditions:
 1) the securities or money market instruments are traded on a regulated market of an EEA Member State for the purposes of § 3 of the Securities Market Act or other regulated market which is recognized by this country and operates regularly and through which the public can acquire or transfer securities;
 2) the securities or money market instruments are traded on a stock exchange or other regulated market of a third country which is recognized by this country and operates regularly and through which the public can acquire or transfer securities and which has been approved by the Financial Supervision Authority or which is specified in the fund rules, articles of association or prospectus;
 3) the securities are not traded on regulated markets but, pursuant to their conditions of issue, the securities shall be admitted to the regulated market of a state specified in clause 1) or 2) of this subsection within 12 months after the issue of the securities, and the choice of the regulated market has been approved by the Financial Supervision Authority or is specified in the fund rules, articles of association or prospectus.

 (2) In addition to the provisions of subsection (1) of this section, the assets of a UCITS may be invested in money market instruments which are not traded on regulated markets (hereinafter money market instrument not traded on regulated markets), if sufficient investor protection requirements apply to the issue or issuer thereof which comply with at least one of the following conditions:
 1) the money market instruments are issued or guaranteed by an EEA Member State or regional or local authority of an EEA Member State, the European Union, the central bank of an EEA Member State, the European Central Bank, the European Investment Bank, a third country or a state of that country or an international organisation in which the EEA Member State is a member, shareholder or partner;
 2) the money market instruments are issued by a person which has issued other securities traded on regulated markets;
 3) the money market instrument has been issued or is guaranteed by an e-money institution established in an EEA Member State, fund manager, investment firm, insurer, credit institution, payment institution or other person established in an EEA Member State which compliance with prudential requirements established with regard to the person is subject to financial supervision in accordance with the European Union law;
 4) the money market instrument has been issued or is guaranteed by a person not specified in clause 3) of this section which is subject to prudential requirements and in the case of which the financial supervision is in compliance with as strict requirements as is provided for in the European Union law;
 5) the issuer of the money market instrument is among the issuers approved by the supervision authority of another EEA Member State pursuant to the conditions specified in Article 50(1)(h)(4) of Directive 2009/65/EC of the European Parliament and of the Council;
 6) the issuer of the money market instrument, particularly the financial situation, purpose of activities and reliability of the issuer, comply in the opinion of the Financial Supervision Authority with the conditions provided for in the regulation of the minister responsible for the area established on the basis of subsection (5) of this section.

 (3) The requirement provided for in clause (2) 4) of this section are met if:
 1) the issuer of the money market instrument was founded in an OECD member county belonging to the G10 (Group of Ten);
 2) the issuer of the money market instrument has been assigned at least an investment grade rating;
 3) it can be proven based on an in-depth analysis of the issuer of the money market instrument that the prudential requirements applicable to the issuer and the financial supervision over compliance therewith are at least as strict as those provided for in the European Union law. The Financial Supervision Authority has the right to determine whether the person specified in this clause is in compliance with the above specified requirements.

 (4) The assets of a UCITS may also be invested in securities or money market instruments not specified in subsections (1) and (2) of this section to the extent of up to ten per cent of the value of the assets of the fund.

 (5) Specific requirements for issuers of money market instruments are established by a regulation of the minister responsible for the area.

§ 108.  Qualifying criteria for investment in securities

 (1) Upon investment of the assets of a UCITS in securities, the securities must fulfil at least one of the following conditions:
 1) the potential damage arising from the acquisition thereof is limited to the amount paid for them;
 2) they are sufficiently liquid in order to ensure redemption of the units or shares at the request of unit-holders or shareholders in accordance with the provisions of this Act, the fund rules, articles of association or prospectus;
 3) the value thereof can be ascertained in a reliable manner;
 4) appropriate information is available on them;
 5) they can be acquired and transferred;
 6) their acquisition is consistent with the investment objectives and the investment policy of the fund;
 7) the risks arising therefrom are sufficiently managed by the policy for the management of the risks of the fund and the procedure of implementing thereof.

 (2) The value of the securities traded or to be admitted to trading on a regulated market shall be determined accurately and reliably based on the market price or the price determined using valuation systems which are independent of the issuer of the securities. The value of the securities not specified in the first sentence must be determined periodically on the basis of the information made public by their issuers or competent investment researches.

 (3) Correct and appropriate information concerning securities traded or to be admitted to trading on regulated markets must be constantly available for the market. Information concerning securities not specified in the first sentence must be constantly available at least for fund managers.

 (4) The conditions provided for in clauses (1) 2) and 5) of this section are fulfilled if the security has been admitted to trading on a regulated market, unless such information is available on the specified security based on what the fulfilment of the conditions specified in clauses (1) 2) and 5) of this section has to be determined separately.

§ 109.  Qualifying criteria for investment in units or shares of closed-end funds

  Upon investment of the assets of a UCITS in units or shares of closed-end funds, these units or shares must comply with the following conditions:
 1) the conditions provided for in §§ 107 and 108 of this Act are complied with;
 2) the requirements for investor protection and management or managing bodies of the fund manager or fund shall be implemented to these funds.

§ 110.  Qualifying criteria for investment in money market instruments

 (1) A money market instrument is deemed to be traded on a money market if it fulfils one of the following conditions:
 1) the redemption or maturity date of the money market instrument is up to 397 days;
 2) the money market instruments undergo regular yield adjustments in compliance with the money market conditions at least every 397 days;
 3) the risk profile of the money market instrument, including credit and interest rate risks, corresponds to that of such securities which have the maturity specified in clause 1) of this subsection or which are subject to regular yield adjustments in accordance with clause 2) of this subsection.

 (2) A money market instrument is understood to be liquid if it can be transferred in a short time frame at as limited cost as possible, taking into account the term for redemption of units or shares established in the fund rules, articles of association or prospectus.

 (3) The value of a money market instrument can be accurately determined at any time if relevant and reliable valuation systems are implemented to determine it which enable to establish the net asset value of the fund in accordance with the value at which the security in the composition of the fund could be exchanged between knowledgeable, willing parties in an arm’s length transaction or which are based either on market data or on valuation models based on amortised costs.

 (4) The conditions provided for in subsections (2) and (3) of this section are fulfilled if the money market instrument has been admitted to trading on a regulated market or it is traded on a money market for the purposes of subsection (1) of this section, unless such information is available concerning the money market instrument based on what the fulfilment of the conditions specified in subsections (2) and (3) of this section has to be determined separately.

 (5) Upon investment of the assets of a fund in money market instruments that are not traded on a regulated market, appropriate information concerning the money market instruments must be available, including information which enables appropriate assessment of the credit risks related to the specified money market instruments, particularly on the basis of subsections (6)-(8) of this section.

 (6) In the case of money market instruments that are not traded on regulated markets, unless their issuer is the European Central Bank or the central bank of an EEA Member State, appropriate information must consist at least of information concerning both the issue or respective offer programme as well as the legal and financial situation of the issuer prior to the issue of the money market instrument.

 (7) If the issuer of a money market instrument that is not traded on a regulated market is a person specified in clauses 107 (2) 2)-6) of this Act or regional or local authority of an EEA Member State or international organisation which member, shareholder, unit-holder or partner the EEA Member State is but the money market instrument is not guaranteed by the EEA Member State, the appropriate information shall contain, in addition to the information provided for in subsection (6) of this section:
 1) information concerning changes related to the above specified information; and
 2) available and reliable statistical data on the issuer or offer programme or other information which enables appropriate assessment of the credit risks associated with the investments made in the specified instruments.

 (8) If the issuer of a money market instrument is a person specified in clause 107 (2) 2), 5) or 6) of this Act or a state of an EEA Member State or regional or local authority of an EEA Member State or international organisation which member, shareholder or and partner the EEA Member State is but the money market instrument is not guaranteed by the EEA Member State, the appropriate information must also contain information on verification of the information specified in subsection (6) of this section by third parties with appropriate qualification and independent from the issuer in addition to the information provided for in subsections (6) and (7) of this section.

§ 111.  Requirements for investment of assets of UCITS in derivative instruments

 (1) The assets of a UCITS may be invested in derivative instruments traded on regulated markets or derivative instruments acquired over-the-counter, if the underlying assets thereof are the following assets or the price thereof directly or indirectly depends on the following factors:
 1) the deposits, securities, money market instruments and units or shares of a fund which are in compliance with the requirements provided for in this Division and in which investment is permitted pursuant to the fund rules, articles of association or prospectus of the fund, including financial assets which have similar characteristics with the above specified assets;
 2) the interest rates, currency or exchange rates in which investment is permitted pursuant to the fund rules, articles of association or prospectus of the fund;
 3) securities or other financial indices in which investment is permitted pursuant to the fund rules, articles of association or prospectus of the fund.

 (2) Upon investment in derivative instruments acquired over-the-counter, the following conditions must be additionally fulfilled:
 1) the counterparty to a transaction conducted with derivative instruments must be an e-money institution, fund manager, investment firm, insurer, credit institution, payment institution or other person whose compliance with prudential requirements established with regard to the person is subject to state financial supervision;
 2) the value of derivative instruments can be reliably assessed every day and on the initiative of the fund, the derivative instruments can be transferred at any time at a fair price, its position therein can be liquidated or closed by an offsetting transaction.

 (3) A fair price is deemed to be the price at which assets can be acquired or transferred or at which an obligation can be performed between knowledgeable, willing parties in an arm’s length transaction.

 (4) Reliable valuation is deemed to be valuation which corresponds to the concept of fair price provided for in subsection (3) of this section. Reliable valuation cannot rely only on the price quotation of the counterparty and must comply with the following conditions:
 1) the basis for the valuation is either a reliable up-to-date market value of the asset or, if such a value is not available, a pricing model using a generally recognised methodology;
 2) verification of the valuation is carried out by an independent counterparty to an over-the-counter transaction with derivative instruments at an adequate frequency and in such a manner that a competent person of the fund manager or such an entity of the fund manager which is not engaged in investment of the assets of the fund is able to check it as appropriate.

 (5) Derivative instruments acquired over-the-counter are also deemed to include credit derivatives if they comply with the provisions of subsections (2)-(4) of this section and the following conditions are fulfilled:
 1) they enable transfer of the credit risk of an underlying asset provided for in subsection (1) of this section independently from the other risks associated with the specified underlying asset;
 2) they do not require delivery or transfer of money, securities or other financial assets;
 3) the risks resulting from potential access of the counterparty to non-public information on underlying assets of credit derivatives (asymmetry of information) are sufficiently managed by the risk management rules and internal control measures prescribed for risk management and applicable to the fund.

§ 112.  Additional conditions for financial indices linked derivatives

 (1) In the case of derivative instruments linked to financial indices, the assets used as the basis for compiling an index must be sufficiently diversified and the following conditions must be fulfilled:
 1) the index is composed in such a manner that potential price fluctuations of one component of the index or transactions with the component do not have excessive impact on index-linked transactions as a whole;
 2) where the index is composed based on financial assets in which the assets of a UCITS may be invested in accordance with this Division, except for non-negotiable securities and money market instruments specified in subsections 107 (2) and (4) of this Act, these assets must be diversified at least pursuant to as strict requirements as in the case a share or debt securities index is replicated upon investment of the assets of the UCITS;
 3) where the index is composed based on non-negotiable securities and money market instruments specified in subsections 107 (2) and (4) of this Act, the financial assets must be diversified at least in accordance with equivalent requirements as in the case a share or debt securities index is replicated upon investment of the assets of the UCITS.

 (2) A financial index shall represent an adequate benchmark replicating the market and the following conditions must be fulfilled:
 1) the index must adequately measure the rate of return of the underlying assets;
 2) the index shall be revised and its composition rebalanced periodically to ensure that it continues to reflect the movements of the market, following thereupon the criteria and principles which are accessible to the public;
 3) the underlying assets of the index must be sufficiently liquid to allow index providers to change the composition thereof as appropriate.

 (3) A financial index must be disclosed in an appropriate manner and the following conditions must be fulfilled:
 1) disclosure of the index is based on sound methods of price collection and calculation, and where market prices are not available, the method is used which ensures adequate value of the index components;
 2) information on index calculation, rebalancing method and index changes and potential deviations in providing timely or accurate information must be provided on a sufficiently wide and timely basis.

 (4) If the composition of the underlying asset of a derivative instrument linked to a financial index does not fully comply with the conditions specified in subsections (1)-(3) of this section, the derivative instrument shall be treated as a combination of the underlying assets specified in clauses 111 (1) 1) and 2) of this Act, provided the conditions provided for in subsections 111 (1) and (2) of this Act are fulfilled.

§ 113.  Embedded derivatives and money market instruments

 (1) Embedded derivatives are the securities which satisfy the conditions provided for in § 108 of this Act and contain a component which fulfils the following conditions:
 1) due to that component, some or all of the cash flows that would be initially required by the underlying contract of the derivative instrument (hereinafter underlying contract) can be modified or postponed according to an agreed interest rate, price of the security or other financial instrument, foreign exchange rate, index of prices or exchange rates, credit rating or credit index, or other circumstances, and therefore the value of the component may vary in a manner similar to the value of the underlying assets of a stand-alone derivative instrument;
 2) its economic characteristics and risks are not closely related to the economic characteristics and risks of the underlying contract;
 3) it has a significant impact on the risk profile and pricing of the security.

 (2) Money market instruments which embed derivatives are money market instruments which comply with one of the conditions provided for in subsection 110 (1) of this Act and all the conditions provided for in subsections 110 (2) and (3) and which contain a component which fulfils the conditions provided for in clauses in subsection (1) of this section.

 (3) A security or money market instrument shall not be regarded as an embedded derivative if it contains a component which is contractually transferable independently of the specified security. Such a component shall be deemed to be a separate security or other financial asset.

 (4) The derivative component of an embedded derivative or money market instrument specified in subsections (1) and (2) of this section must be taken into account upon calculation of the open risk position provided for in subsection 105 (3) of this Act.

§ 114.  Investment of assets of UCITS in units or shares of other funds

 (1) The units of a UCITS may be invested in units or shares of another UCITS or units or shares of such a fund which complies with the following conditions:
 1) the units or shares of the fund are offered to the public and the assets thereof are invested in securities or other liquid financial assets based on the principle of risk spreading;
 2) the units or shares of the fund are redeemed at the request of unit-holders or shareholders within a reasonable time period;
 3) financial supervision is exercised over the fund pursuant to the requirements of the legislation of the European Union or requirements which are at least as strict as the requirements of the legislation of the European Union, and cooperation between the Financial Supervision Authority and the authority exercising supervision over the fund is not hindered;
 4) investors are guaranteed protection of interests equal to the investors of the UCITS in accordance with the provisions of this Act, including the requirements for separation of assets, taking and granting of loans and short selling of securities and money market instruments must be fulfilled;
 5) annual and semi-annual reports are prepared concerning the fund which provide an overview of at least the assets of the fund, including liabilities, income, expenses and investments of the fund.

 (2) The assets of a UCITS may be invested in the units or shares of such other UCITS or other funds which in turn may invest, in accordance with the fund rules, articles of association or prospectus, in other funds in total up to ten per cent of its assets.

Subdivision 3 Risk Spreading upon Investment of Assets of UCITS  

§ 115.  Risk spreading upon investment in deposits, securities, money market instruments and derivative instruments

 (1) Up to ten per cent of the value of the assets of a UCITS may be invested in the securities and money market instruments issued by one person, unless otherwise provided for in this Subdivision.

 (2) Up to 20 per cent of the value of the assets of a UCITS may be placed in the deposits of one credit institution. The provisions of the first sentence do not apply to bank accounts of a fund opened with a depositary where the financial resources received from the issue of units and transfer of the assets of the fund as well as dividends, interest amounts and other financial resources are deposited, and to money placed on overnight deposit.

 (3) The risk position from an over-the-counter transaction with derivative instruments may constitute up to ten per cent of the value of the assets of the fund if its counterparty is a credit institution in the deposits of which the assets of a UCITS may be placed pursuant to this Chapter. A risk position in a person not specified in the first sentence of this subsection may constitute up to five per cent of the value of the assets of the fund.

 (4) If the value of the securities, money market instruments and derivative instruments issued by one person constitutes more than five per cent of the value of the assets of a UCITS, the value of these investments in total may not constitute more than 40 per cent of the value of the assets of the UCITS.

 (5) The provisions of subsection (4) of this section do not apply to:
 1) over-the-counter transactions with derivative instruments if financial supervision is exercised over the prudential requirements applicable to the credit or financial institution which is a party to the transaction;
 2) to investment of the assets of a UCITS in the securities or money market instruments specified in subsections (7)-(9) of this section.

 (6) The value of the securities and money market instruments issued by one person and the value of the deposits placed in such person and the risk positions of transactions with derivative instruments in this person may not constitute in total more than 20 per cent of the value of the assets of a UCITS.

 (7) The value of the securities and money market instruments issued by one person may constitute up to 35 per cent of the value of the assets of a UCITS if they are issued or guaranteed by:
 1) an EEA Member State or local authority of an EEA Member State;
 2) a third country; or
 3) an international organisation to which at least one EEA Member State belongs.

 (8) The assets of a UCITS may be invested in the securities and money market instruments of a person specified in subsection (7) of this section or the securities and money market instruments guaranteed by such person to the extent exceeding 35 per cent of the value of the assets of the fund, if:
 1) in the opinion of the Financial Supervision Authority, sufficient protection of the interests of the unit-holders or shareholders of the UCITS is ensured;
 2) the assets of the UCITS include securities or money market instruments issued in the course of at least six different issues of such person or guaranteed by such person and the value of the securities or money market instruments acquired in the course of one issue does not constitute more than 30 per cent of the value of the assets of the fund;
 3) the fund rules, articles of association or prospectus of the UCITS clearly set out the issuers, the securities or money market instruments issued or guaranteed by which are or have been the targets for investments in which more than 35 per cent of the value of the assets of the fund are invested.

 (9) The assets of a UCITS may be invested in non-equity securities which are continuously or repeatedly issued by one credit institution (hereinafter covered bonds) to the extent of up to 25 per cent of the value of the assets of the fund if all the following conditions are fulfilled:
 1) the credit institution was founded in an EEA Member State;
 2) the credit institution regularly discloses its annual reports and state financial supervision is exercised over the institution primarily in order protect the interests of persons holding securities;
 3) the money received from the issue of covered bonds is invested in assets which, during the whole period of validity of the covered bonds, cover claims attaching to these securities;
 4) in the case of the insolvency of the credit institution, the principal and the accrued interest on the covered bonds is reimbursed to the creditors on a priority basis.

 (10) If more than five per cent of the value of the assets of a UCITS is invested in the covered bonds issued by one credit institution, the total value of all these investments may amount up to 80 per cent of the value of the assets of the UCITS.

 (11) The total value of securities and money market instruments, including covered bonds, derivative instruments belonging to the assets of a UCITS and issued by the same person, and deposits placed with the person may not constitute more than 35 per cent of the value of the assets of the UCITS. The provisions of the previous sentence do not apply in the case specified in subsection (8) of this section.

 (12) In this section, one person is deemed to include all persons who belong to the same consolidation group in accordance with the European Union legislation or international financial reporting standards. Differently from the provisions of subsection (1) of this section, up to 20 per cent of the value of the assets of a UCITS may be invested in the securities and money market instruments issued by persons belonging to the same consolidation group.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 116.  Specifications upon replication of financial indices

 (1) If the assets of a UCITS are invested in accordance with the fund rules, articles of association or prospectus thereof with the aim of replicating a certain share index or other debt securities index (hereinafter in this section index), the securities or money market instruments issued by one person may constitute up to 20 per cent of the value of the assets of the fund if this index has been approved by the Financial Supervision Authority through approval of the basic document of the fund on the following bases:
 1) the underlying assets of the index are sufficiently diversified;
 2) the index adequately represents the movement of the market to which it is linked, and internationally recognized methods are used to compile the index according to which the main or major issuer on such market is generally not excluded;
 3) the index is accessible to the public and its compiler or provider is independent in its activities from the UCITS and its fund manager.

 (2) The assets of a UCITS may be invested in securities or money market instruments of a person specified in subsection (1) of this section or in securities or money market instruments guaranteed by such person to the extent of up to 35 per cent of the value of the assets of the fund if this primarily originates from the particular conditions of a regulated market where certain shares or debt securities are highly dominant.

 (3) The provisions of clause (1) 3) of this section do not prohibit the compiler or provider of an index and a UCITS replicating the index or the fund manager to be part of one business entity or member of a consolidation group provided that conflicts of interests are sufficiently managed.

 (4) Replication of an index is deemed to be replication of the composition of the assets constituting the underlying assets of the specified index, including use of transactions with derivative instruments or other methods or means in accordance with the provisions of § 105 of this Act.

 (5) Upon approval of the fund rules, articles of association or prospectus of a UCITS replicating an index or the amendments thereof, the Financial Supervision Authority may require submission of a contract on the basis of which the fund manager or another entitled person is required to regularly disclose the purchase and selling prices of the units or shares of the UCITS and execute purchase and sales orders according to this.

§ 117.  Risk spreading upon investment in shares or units of other funds

 (1) The value of the shares or units of a fund may not total more than 20 per cent of the value of the assets of a UCITS.

 (2) Investments in shares or units of other such funds which are not UCITS may amount up to 30 per cent of the value of the assets of the UCITS.

 (3) The shares or units of other funds managed by the fund manager of a UCITS shall not be acquired or held for the account of the UCITS, including shares or units of the funds which the fund manager manages as a third party to whom the functions of the fund manager have been outsourced, if the fund manager does not charge thereupon any redemption or issue fees.

 (4) The provisions of subsection (3) of this section also apply if the assets of a UCITS are invested in the shares or units of funds managed by a company with which the fund manager or public limited fund is linked by common management or control, or by a qualifying holding, and in the case the company is a third party to whom management of the fund is transferred.

Subdivision 4 Other Requirements for Investment of Assets and Conclusion of Transactions of UCITS  

§ 118.  Restrictions on holding

 (1) No qualifying holding shall be acquired or held through any shares carrying voting rights or other equivalent rights for the account of any UCITS or all the contractual UCITS managed by a fund manager in total.

 (2) For the account of a UCITS, the maximum holding acquired or held in one person is:
 1) ten per cent of non-voting shares or other equivalent rights;
 2) ten per cent of the debt securities issued by it;
 3) ten per cent of the money market instruments issued by it;
 4) 25 per cent of the units or shares of another fund.

 (3) The restrictions specified in clauses (2) 2)-4) of this section need not be complied with at the moment of acquisition of bonds, money market instruments or other units or shares of the fund if it is impossible to find the gross or net value of the above specified instruments at the moment of the issue thereof.

 (4) The provisions of subsections (1) and (2) of this section do not apply to:
 1) acquisition and holding of securities or money market instruments issued or guaranteed by an EEA Member State or local authorities thereof;
 2) acquisition and holding of securities or money market instruments issued or guaranteed by a third country;
 3) acquisition and holding of securities or money market instruments issued or guaranteed by an international organisation which member at least one of the EEA Member States;
 4) investments in shares of a company registered in a third country if the above specified person invests its assets in turn primarily in the securities of issuers registered in this country and if this is the only method of investment in the securities of issuers of this country in accordance with the legislation of this country;
 5) acquisition or holding of subsidiaries by a UCITS that is a public limited fund if the only area of activity of these subsidiaries is provision of management, advisory or fund offer services at the request of the shareholders of the fund in connection with redemption of shares in the country where the subsidiary was founded.

 (5) The exception provided for in clause (4) 4) of this section only applies in the case the company registered in the respective third country complies with the provisions of subsections (1)-(3) of this section and §§ 115 and 117 of this Act upon investment of its assets, taking account of the conditions provided for in § 104 of this Act.

§ 119.  Requirements for loan and other transactions

 (1) A short-term loan may be taken for the account of a UCITS to the extent of up to ten per cent of the value of the assets of the fund.

 (2) For the account of a UCITS that is a public limited fund, loans may be taken for acquisition of immovables to the extent of up to ten per cent of the value of the assets of the fund, if the specified immovables are only intended for the day-to-day business activities of the fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (3) The obligations specified in subsections (1) and (2) of this section assumed for the account of a UCITS in total may not exceed 15 per cent of the value of the assets of the fund.

 (4) No loans may be granted and no obligations of third parties related to providing a security or guarantee may be assumed for the account of a UCITS. The provisions in the first sentence of this subsection do not exclude acquisition of the securities, money market instruments or other financial assets which are not paid for in full.

 (5) No transfer or loan transactions related to securities or other financial assets may be conducted for the account of a UCITS if performance of the respective obligation is not covered to the same extent by the securities or other financial assets belonging to the assets of the fund or if the securities or other financial assets did not belong to the assets of the fund at the time of entry into the transfer deed.

Division 3 Specifications for Investment of Assets of Other Public Funds and Risk Spreading  

§ 120.  Specifications for investment of assets of other public funds and risk spreading

 (1) The provisions of this Chapter concerning a UCITS apply to investment of the assets of another public fund which is not a UCITS or pension fund (hereinafter other public fund), risk spreading and other transactions conducted with the assets of the fund, unless otherwise provided for in this section.

 (2) The assets of another public fund may be invested in addition to the provisions of § 103 of this Act in:
 1) immovables;
 2) precious metals and securities which underlying assets are precious metals or which price is dependent on precious metals.

 (3) The acquisition cost of an immovable together with the acquisition cost of objects required for the management of the immovable must not exceed 20 per cent of the value of the assets of the fund at the time of acquisition.

 (4) The total value of an immovable together with the objects required for the management of the immovable shall not exceed 30 per cent of the value of the assets of the fund.

 (5) The assets of another public fund may be invested in the securities or money market instruments not specified in subsections 107 (1) and (2) of this Act to the total extent of up to 30 per cent of the value of the assets of the fund.

 (6) Upon investment of the assets of other public funds in other funds, the provisions of subsections 117 (1) and (2) of this Act do not apply, if investment of the assets of the fund is in turn in compliance with the requirement to diversify the investments to a sufficient extent between different securities and other assets. Up to 50 per cent of the value of the assets of another public fund may be invested in the units or shares of a fund not specified in § 114 of this Act, if the value of the units or shares of such funds can be determined accurately and reliably based on the market price or other appropriate valuation system.

 (7) The assets of other public funds may be placed in precious metals and securities which underlying assets are precious metals or which price is dependent on precious metals in total to the extent of up to five per cent of the value of the assets of the fund.

 (8) The total open risk position of derivative instruments of another public fund must not exceed the net asset value of the fund by more than twice.

 (9) The restrictions prescribed in §§ 115-117 and 120 of this Act on risk spreading do not apply to other public funds which conditions of redemption of units or shares and investment policy comply with the provisions of subsection 286 (4) of this Act within 24 months after approval of the fund rules or entry in the commercial register.

Division 4 Specifications for Investment of Assets of Pension Funds and Risk Spreading and Additional Operational Requirements  

§ 121.  General requirements for management and investment of assets of pension funds

 (1) The provisions of this Chapter concerning a UCITS apply to investment of the assets of a pension fund, risk spreading and other transactions conducted with the assets of the pension fund, unless otherwise provided for in this Division.

 (2) The assets of a pension fund may be invested in addition to the provisions of § 103 of this Act in:
 1) deposits in credit institutions;
 2) precious metals;
 3) the securities specified in § 2 of the Securities Market Act, including any securities which underlying assets are precious metals or which price is dependent on precious metals;
 4) immovables.

 (2¹) In addition to as specified in subsection (2), loans may be issued for account of the pension fund in total up to the extent of ten per cent of the asset value of the pension fund to persons in the case of whom the fund is allows to invest in the bonds issued by such persons. The limitations on investment in securities provided for in this Division shall apply to issue of loans by pension funds.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (3) The restrictions provided for in § 118 of this Act do not apply to investment of the assets of pension funds. The requirement for the term of loans provided for in subsection 119 (1) of this Act shall not apply to borrowing on account of pension funds.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (4) Upon implementation of the requirements prescribed in this Act for investments of the assets, risk management and other transactions conducted with the assets of pensions funds, any holding of the pension and other investment funds managed by a fund manager in other persons or the voting rights arising therefrom shall not be deemed to belong to the pension fund manager, and such person shall not be deemed to belong to the same consolidation group with the pension fund manager.

 (5) A pension fund shall not be a partner of a general partnership or a general partner of a limited partnership, a member a non-profit association or commercial association, or a founder of a foundation. This limitation does not apply to membership in an apartment association if apartment ownership belongs to the fund. The provisions of this subsection also apply to the partnership or membership of equivalent persons or pools of assets founded pursuant to foreign law or to being the founders thereof.

 (6) The minister responsible for the area may specify, by a regulation, the requirements for investment of the assets of a pension fund, risk spreading and other transactions conducted with the assets of the pension fund.

§ 122.  Investment in deposits

  [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 123.  Investment in precious metals

  The assets of a pension fund may be placed in precious metals and securities which underlying assets are precious metals or which price is dependent on precious metals, to the total extent of up to five per cent of the value of the assets of the pension fund.

§ 124.  Investment in securities and money market instruments and lending

  [RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (1) The assets of a pension fund may be invested in the securities and money market instruments not specified in subsections 107 (1) and (2) of this Act and on account of the assets the loan specified in subsection 121 (2¹) may be granted in total to the extent of up to 50 per cent of the value of the assets of the pension fund. The requirement provided for in clause 108 (1) 5) of this Act shall not apply to the investments provided for in this section.

 (2) The assets of an occupational pension fund may be invested in the securities or money market instruments issued by one person to the extent of up to five per cent of the value of the assets of the occupational pension fund and the value of the securities issued by persons belonging to the same consolidation group shall not total more than ten per cent of the value of the assets of the occupational pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 125.  Investment in other funds

 (1) If a certain index is replicated upon investment of the assets of a UCITS in accordance with § 116 of this Act or the provisions of Article 53 of Directive 2009/65/EC of the European Parliament and of the Council, the value of the units or shares of one such fund may total up to 30 per cent of the value of the assets of the pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2) Upon investment of the assets of a pension fund in other funds, the provisions of § 109 and subsection 117 (2) of this Act do not apply.

 (3) Up to 50 per cent of the asset value of a pension fund may be invested in units or shares of a fund not specified in subsections 114 (1) of this Act which are not admitted for trading on any regulated market specified in clause 107 (1) 1) or 2) of this Act if the value of the units or shares of these funds can be determined accurately and reliably based on the market price or using any other appropriate valuation systems. The units or share of the above specified funds shall not be regarded as securities for the purposes of this Chapter. The fund which units or shares have been admitted for trading on a regulated market specified in clause 107 (1) 1) or 2) of this Act shall be deemed to comply with the requirements provided for in § 114.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (4) If the assets of a mandatory pension fund are invested in the units or shares of a fund which is not a UCITS, and in the case of which primarily transactions with derivative instruments are used for achievement of their investment objectives, particularly swaps, the provisions of this Chapter concerning derivative instruments apply. The restriction provided for in subsection 127 (1) of this Act concerning derivative instruments does not apply to investments specified in the first sentence of this subsection.

§ 126.  Additional requirements for investment in shares and equity funds

  [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 127.  Transactions with derivative instruments and limitations on investments in securities denominated in foreign currencies

 (1) The entire open risk position of derivative instruments may not exceed 50 per cent of the value of the assets of a pension fund, with the exception of transactions conduced for mitigation of foreign exchange, interest, market or other risks associated with the assets of the pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2) The entire open net foreign exchange position shall not total more than 25 per cent of the assets of a conservative pension fund. Upon calculation of open net foreign exchange positions, foreign exchange positions arising from investments made by this fund shall not be taken into account in the case of investments made in the shares or units of other funds.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 128.  Investment in immovables

 (1) [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2) The acquisition cost of an immovable shall, at the time of acquisition, may not exceed ten per cent of the value of the assets of the pension fund. The provisions of the first sentence also apply in the case the assets of the pension fund are invested in immovables through another fund or company.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (3) The value of immovables, units and shares of other funds or other companies investing in immovables and other securities shall not total more than 70 per cent of the value of the assets of a voluntary fund and more than 40 per cent of the value of the assets of a mandatory pension fund.

 (4) The limitation provided for in subsection (3) of this section also applies to investments in securities or other instruments which price or the income received from which depends directly or indirectly on the price of the immovable or the changes thereof.

 (5) The investment specified in subsection (4) of this section shall be taken into full account upon investment of the assets of a pension fund in the specified instruments.

§ 129.  Requirements for investment of assets of conservative pension funds

 (1) A conservative pension fund is a pension fund the assets of which are invested, pursuant to the fund rules or prospectus, at least to the extent of 90 percent in total in:
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]
 1) deposits in credit institutions;
 2) bonds and other equivalent debt obligations (hereinafter in this section bonds);
 3) money market instruments if they have been admitted to trading on a regulated market;
 4) units or shares of such funds which assets are mainly invested in deposits or bonds of credit institutions in accordance with the provisions of subsection (2) of this section, derivative instruments in accordance with clause 5) of this subsection, or money market instruments;
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]
 5) derivative instruments which underlying assets are the assets specified in clauses (1)-(4) of this section, or bond or other financial indices, interest rates, currency or exchange rates, or which price depends directly or indirectly on the above.

 (2) Only the following securities shall be regarded as the securities specified in clause (1) 2) of this section:
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]
 1) which have been assigned at least an investment grade credit rating by a rating agency registered in accordance with the Regulation (EC) No. 1060/2009 of the European Parliament and of the Council on credit rating agencies (OJ L 302, 17.11.2009, pp. 1-31) (hereinafter in this section rating agency);
 2) which issuer has been assigned at least an investment grade credit rating by a rating agency, if the bonds have no credit rating;
 3) which issuer, which parent undertaking is a credit institution has been assigned at least an investment grade credit rating by a rating agency, if the bonds and their issuer have no credit rating;
 4) which are guaranteed by an EEA Member State or an OECD member state holding at least an investment grade credit rating of a rating agency.

 (3) In the case of funds specified in clause (1) 4) of this section, the fund rules and articles of association or other respective documents have to be taken into account, and it has to be assessed with sufficient regularity how much of the assets of the specified fund is actually invested in the respective deposits, bonds, derivative instruments or money market instruments of the credit institutions which comply with the requirements.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (4) A fund manager shall determine in its risk management rules the rating agencies which credit ratings it follows and uses for the management of the investments and risks of conservative pension funds. and the principles how different credit ratings of rating agencies are taken into account.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (5) [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (6) The minister responsible for the area may specify, by a regulation, the requirements for investment of assets of conservative pension funds, including the credit ratings of the bonds or deposits of credit institutions in which the assets of the fund may be invested.

§ 130.  Mitigation and avoidance of conflicts of interests upon investment in other funds

 (1) The total value of the shares and units of other pension funds managed by the pension fund manager may not exceed ten per cent of the value of the assets of a mandatory pension fund and 50 per cent of the value of the assets of a voluntary pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2) The total value of the shares and units of other funds managed by fund managers which belong to the same consolidation group as the fund manager of a mandatory pension fund shall not exceed 50 per cent of the value of the assets of the mandatory pension fund and all the conditions provided for in subsections 117 (3) and (4) of this Act must be met.

 (3) If acquisition of shares or units of a fund managed by another fund manager, which belongs to the same consolidation group as the mandatory pension fund manager, for the account of the mandatory pension fund involves repayment of the management fee charged by the other fund manager on such investment or any part thereof or payment of other fees to the manager of the mandatory pension fund, the respective amount must be transferred to the mandatory pension fund.

 (4) The fund manager of a mandatory pension fund may not acquire or hold in total, for the account of all the mandatory pensions funds managed by it, the units or shares of any fund managed by it or another fund belonging to the same consolidation group and managed by the fund manager to the extent of more than 20 per cent of the assets of the fund.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (5) The shares or units of other funds managed by the fund manager of a mandatory pension fund may be acquired and held for the account of the mandatory pension fund in the case, in addition to the provisions of subsection 117 (3) of this Act, the fund manager does not charge any management fee or transfers the management fee charged on such investment back to the mandatory pension fund.

 (6) The shares or units of other funds managed by the fund manager of a mandatory pension fund and of funds belonging to the same consolidation group as the fund manager, which are not public or which are closed-end funds, may be acquired for the account of the mandatory pension fund in total to the extent of up to ten per cent of the assets of the mandatory pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (7) The provisions of this Chapter also apply in the case a fund manager is granted the right to manage or invest the assets of a fund of another fund manager under outsourcing of the fund management functions.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 131.  Additional requirements for mitigation and avoidance of conflicts of interests

 (1) The total value of the securities and money market instruments issued by a company belonging to the same consolidation group as the fund manager may not exceed five per cent of the value of the assets of the pension fund managed by the fund manager.

 (2) For the account of the a mandatory pension fund, no holding may be acquired or held in a company where the relevant persons of the fund manager managing the mandatory pension fund, shareholders holding qualifying holdings or companies controlled by the fund manager hold either directly or indirectly a qualifying holding, and no holding may be acquired or held in a company which holds a qualifying holding in the fund manager managing the mandatory pension fund, and no securities or money market instruments issued by the specified companies may be acquired or held. The provisions of the first sentence of this subsection do not apply to investments in the units and shares of another fund. Investments in the instruments specified in the first sentence of this subsection which comply with the requirement provided for in subsection (4) of this section on account of mandatory pension funds are permitted to the extent provided for in subsections 118 (1) and (2) of this Act.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (3) Up to 25 per cent of the volume of the issue of securities or money market instruments may be subscribed for the account of a pension fund in the case of such securities or money market instruments which offer, issue or selling is guaranteed or arranged pursuant to the provisions of clauses 43 (1) 6) and 7) of the Securities Market Act by a company belonging to the same consolidation group as the fund manager or another company specified in subsection (2) of this section.

 (4) The restriction provided for in subsection (3) of this section does not apply if:
 1) the securities or money market instruments or the issuer thereof has been assigned an investment grade credit rating;
 2) the issuer of the securities or money market instruments is the state or a company in which the state has a majority holding;
 3) the issue of the securities or money market instruments is an investment fund which is managed by a company holding an activity licence of a fund manager;
 4) the securities or money market instruments are publicly offered in an EEA Member State or an OECD member country for the purposes of the Securities Market Act or legislation of the respective foreign country, or they have been admitted to trading on a trading venue operated in the above specified country for the purposes of § 3 of the Securities Market Act;
[RT I, 30.12.2017, 3 - entry into force 03.01.2018]
 5) the issuers of securities are companies which are mainly engaged in the development, management or operation of any infrastructure which is important for the public, including electricity market, road network, water supply or waste management.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (5) The counterparty of a derivative transaction conduced for the account of a pension fund may not be:
 1) a unit-holder;
 2) a person which has a conforming economic interest with the fund.

§ 132.  Application of specifications for restrictions on investment and disposition and for risk spreading to pension funds

 (1) The restrictions provided for in subsection 115 (1) of this Act do not apply during 18 months after approval of the fund rules of a voluntary pension fund, with the exception of the cases where the net assets value of the pension fund exceeds 1,200,000 euros before the end of the above specified term.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2) [Repealed - RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 133.  Compensation for damage

  A loss caused to unit-holders of a mandatory pension fund shall be compensated for in accordance with the procedure provided for in §§ 32-36 of the Funded Pensions Act.

Chapter 12 Transfer of Management of Funds  

Division 1 Transfer of Management of Funds and Transfer of Management Authority to Depositary  

§ 134.  Conditions of transfer of management of funds

 (1) Upon transfer of the management of a fund, one fund manager shall transfer the rights and obligations arising from the management of the fund to another fund manager.

 (2) The fund manager transferring the management of a fund and the one taking over the management of the fund shall enter into a contract for transfer of the management of the fund. Amendments to the terms and conditions of the management contract of a public limited fund shall be approved by the supervisory board of the public limited fund, unless otherwise provided for in this Act or the articles of association of the public limited fund.

 (3) A contract for transfer of the management of a fund shall determine the conditions and procedure for transfer of all the rights and obligations of the fund manager, which arise from the management of the fund, and for transfer of documents and administration related thereto, including the extent of the liability of the new fund manager for the obligations which arose prior to the transfer of the management of the fund.

 (4) The provisions of §§ 164-185 of the Law of Property Act do not apply to transfer of management of a fund.

 (5) An authorisation of the Financial Supervision Authority is required to transfer the management of a fund.

 (6) After receipt of the authorisation of the Financial Supervision Authority, the fund manager shall promptly disclose a notice concerning transfer of the management of a fund on the website of the fund manager, the consolidation group to which the fund manager belongs or the public limited fund.

 (7) All the rights and obligations arising from the management of the fund transferred shall transfer to the new fund manager. The fund manager which transferred the management of the fund and the new fund manager shall be jointly and severally liable to the creditors for obligations which have arisen before the transfer of the management of the fund and which have fallen due by the time of the transfer or fall due within five years after the transfer.

 (8) The rights and obligations arising from the management of a fund shall transfer to a new fund manager and amendments to the fund rules, articles of association or prospectus of the fund enter into force at the time prescribed by the contract for transfer of the management of the fund but not before one month has passed from publication of the notice specified in subsection (6) of this section, unless a longer term for entry into force of the amendments to the fund rules, articles of association or prospectus of the fund are prescribed in accordance with the provisions of §§ 38, 41 or 42 of this Act.

§ 135.  Proceedings of authorisation for transfer of management of funds

 (1) In order to obtain an authorisation for transfer of the management of a fund, the fund manager which takes over the management of the fund (hereinafter in this Division applicant) shall submit, at the latest on 20th day after the entry into force of the contract for transfer of the management of the fund, a written application to the Financial Supervision Authority and the following data and documents (application, data and documents jointly hereinafter in this Division application):
 1) the decision of the applicant for taking over the management of the fund;
 2) the contract for transfer of management of the fund;
 3) the application, data and documents on approval of amendments to the fund rules, articles of association or prospectus of the fund specified in § 37 of this Act;
 4) the opinion of the depositary of the fund concerning amendments to the depositary contract arising from transfer of the fund;
 5) the assessment of the impact of taking over of the management of the fund on the fund manager and the estimated annual balance sheets and financial indicators, including revenue and expenditure by areas of activity, plan regarding compliance of the fund manager with prudential requirements, plans of the fund manager regarding the financial indicators of the managed funds which inter alia specify the revenue, expenditure, profit and cash flows and the presumptions which constitute the basis thereof.

 (2) The provisions of § 314 of this Act apply to processing of applications, verification of submitted data and documents, transfer of management of a fund and verification of whether the future fund manager complies with the requirements provided for in this Act or legislation issued on the basis thereof. Upon processing of applications, the compliance thereof with the requirements provided for in subsection (1) of this Act shall be assessed. For verification of the respective requirements, the Financial Supervision Authority may require submission of additional data and documents.

 (3) A decision to issue or refuse to issue an authorisation for transfer of the management of a fund and approval of the fund rules, articles of association or prospectus of the fund shall be made by the Financial Supervision Authority within two months from the receipt of the application but not later than within one month after receipt of all the necessary data and documents.

 (4) The Financial Supervision Authority shall promptly communicate the decision specified in subsection (3) of this section to the fund manager, public limited fund and the depositary of the fund.

 (5) The Financial Supervision Authority may refuse to issue an authorisation for transfer of management of a fund if:
 1) the applicant does not have the necessary resources or experience to operate with success and continuity as a fund manager of the fund in question;
 2) close links between the applicant and another person prevent sufficient supervision over the fund manager, or the requirements provided for by legislation of the state where the persons with whom the applicant has close links is founded prevent sufficient supervision over the fund manager;
 3) the internal rules of the fund manager are not sufficiently accurate or unambiguous for regulation of the activities of the fund manager;
 4) the circumstances specified in § 33 of this Act become evident;
 5) other circumstances which damage the legitimate interests of unit-holders or shareholders become evident.

§ 136.  Transfer to depositaries of authority to manage funds

 (1) If the authority of a fund manager to manage a fund terminates on the bases specified in subsection 305 (7) of this Act and the management of the fund is not transferred to another fund manager, the management of the fund shall transfer to the depositary thereof.

 (2) The depositary and the fund manager shall promptly publish on their websites a notice concerning transfer of management of a fund. If the fund manager did not suspend the issue or redemption of the units or shares of the fund before transfer of the management of the fund, the depositary shall suspend the issue and redemption of the units or shares of the fund and publish a relevant notice concerning it together with the notice of transfer of the management of the fund.

 (3) Upon termination of the authority to manage a fund and transfer of the management authority to a depositary, the fund manager is required to promptly transfer the administration and documents of the fund to the depositary.

 (4) After transfer of the administration and documents of the fund, the depositary has all the rights and obligations of the fund manager in the management of the fund, unless otherwise provided by law, the fund rules, articles of association, prospectus or depositary contract of the fund. The depositary may not issue or redeem any units or shares during the management of the fund and the depositary is not required to invest the assets of the fund.

 (5) A depositary must transfer the management of a fund to a new fund manager within three months after transfer of the fund management authority to it or decide on merger of the fund as the fund being acquired in accordance with subsection 184 (1) of this Act. With the permission of the Financial Supervision Authority, the depositary may extend the term for transfer of the management of a fund to up to six months.

 (6) The provisions of §§ 134 and 135 of this Act apply to transfer of the management of a fund. Transfer of management of a fund and entry into a respective contract shall be approved by the management board of the depositary and the management board of the fund manager taking over the management of the fund.

 (7) A depositary shall disclose a notice concerning transfer of the management of a fund to a new fund manager on its website.

 (8) If a depositary fails in transfer of the management of a fund to another fund manager, it has to terminate the fund in accordance with the provisions of § 184 of this Act.

Division 2 Specifications for Transfer of Management of Pension Funds  

§ 137.  Specifications for transfer of authority and obligations related to management of mandatory pension funds

  [RT I, 28.12.2018, 1 - entry into force 13.01.2019]
The rights and obligations arising from management of a mandatory pension fund shall transfer to a new fund manager and amendments to the fund rules and prospectus of the fund enter into force on the working day of exchange of units provided for in subsection 24 (3) of the Funded Pensions Act but not earlier than 100 calendar days after publication of the notice specified in subsection 134 (6) of this Act.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 137¹.  Specifications for transfer to depositary of authority to manage pension funds

 (1) Where the management of a pension fund has been transferred from a fund manager to a depositary, the depositary shall have the right to issue and redeem units of the pension fund differently from the provisions of the second sentence of subsection 136 (4) of this Act.

 (2) With the permission of the Financial Supervision Authority, a depositary has the right to extend the term of transfer of management of a pension fund to a fund manager to up to 18 months after transfer of the pension fund management authority to it.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 137².  Specifications for transfer of management of occupational pension funds

 (1) The provisions of subsections 134 (6) and (8) and subsections 135 (2)-(5) of this Act do not apply to transfer of the management of occupational pension funds.

 (2) Transfer of the management of an occupational pension fund under the terms and conditions provided for in a contract must not damage the interests of the unit-holders, and the contract may not prescribe covering of any costs relating to transfer of the management for the account of the unit-holders of the occupational pension funds managed by the fund manager which transfers or takes over the management of the fund.

 (3) A fund manager which transfer the management of an occupational pension fund shall notify the unit-holders of this pension fund of the terms and conditions of transfer of the fond.

 (4) In order to transfer the management of an occupational pension fund, the consent of the employers making contributions to this pension fund and the majority of the unit-holds of the pension fund is required, including the majority of these unit-holders to whom distributions from the pension fund are already made.

 (5) In order to obtain an authorisation for transfer of the management of an occupational pension fund, the fund manager which takes over the management of the fund has to submit to the Financial Supervision Authority, in addition to the provisions of 135 (1) of this Act, the following information and documents:
 1) the business name and address of the seat of the fund manager that transfers the management and the fund manager that takes over the management, and another contracting state, if the fund manager that transfers the management is a fund manager of the other contracting state;
 2) the business name and address of the seat of the employer which makes contributions to the occupational pension fund being transferred;
 3) the consent to transfer the management of the fund by the employer making contributions to the occupational pension fund transferred and the majority of the unit-holds, including the majority of these unit-holders to whom distributions from the occupational pension fund are already made;
 4) the name of the contracting state which social and labour law is applicable to the transferred occupational pension fund.

 (6) The receiving fund manager has to notify the Financial Supervision Authority immediately of any changes made during the proceedings in the data and documents specified in subsection (5) of this section.

 (7) If the receiving fund manager is a fund manager of another contracting state, the authorisation of the financial supervision authority of this contracting state shall be required for transfer of the management of the fund differently from the provisions of subsection 134 (5) of this Act. In the case provided for in this subsection, subsection 135 (1) of this Act shall no apply to the application for the authorisation.

 (8) If the fund manager which transfers the management is a fund manager of an occupational pension fund of another contracting state, the Financial Supervision Authority shall notify the financial supervision authority of this contracting state of receipt of an application for authorisation to transfer an occupational pension fund and immediately communicate the information and documents specified in subsection 135 (1) and subsection (5) of this act to it.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 137³.  Specifications for proceeding of application to transfer management of occupational pension fund and issue of authorisation

 (1) The Financial Supervision Authority shall make a decision on issue of or refuse to issue an authorisation to transfer the management of an occupational pension fund within three months after receipt of all the proper information and documents and deliver it immediately to the fund manager which receives the management of the fund.

 (2) The Financial Supervision Authority may refuse to review an application if the application contains essential deficiencies.

 (3) The Financial Supervision Authority may refuse to issue an authorisation for transfer of management of an occupational pension fund if:
 1) the information or documents submitted upon application for authorisation do not meet the requirements provided for in this Act or legislation established on the basis thereof or are inaccurate, misleading or incomplete;
 2) the interests of the unit-holders of the transferred occupational pension fund are not sufficiently protected or the transfer may damage the interests of the unit-holders of any other occupational pension funds of the fund manager;
 3) the transfer of the management of an occupational pension fund may damage the financial condition of the fund manager receiving the management;
 4) the organisational structure, work organization of the fund manager receiving the management, or the reputation, qualifications or experience of the managers or employees thereof are insufficient for the management of such occupational pension fund;
 5) after the receipt of the management of an occupational pension fund, the own funds of the fund manager receiving the management or the assets corresponding to them no longer comply with the requirements provided for in this Act.

 (4) If the fund manager, which transfers the management, is a fund manager of another contracting state, the Financial Supervision Authority shall issue an authorisation for the transfer of the management of the fund only if the financial supervision authority of this contracting state agrees to the transfer of the management of the fund. Within two weeks after making a decision of issue of or refusal to issue an authorisation for transfer of the management of an occupational pension fund, the Financial Supervision Authority shall notify thereof the financial supervision authority of the contracting state of the fund manager transferring the management.

 (5) Where the transfer of the management of an occupational pension fund results in the offer of this fund in another contracting states, the Financial Supervision Authority shall notify the fund manager receiving the management of the terms and conditions of the offer of occupational pension fund in the other contracting state within one week after receipt of these terms and conditions from the financial supervision authority of the contracting state of the fund manager transferring the management.

 (6) When the Financial Supervision Authority receives information from the financial supervision authority of another contracting state about changes in the terms and conditions of the offer of an occupational pension fund, it shall immediately notify the fund manager receiving the management thereof.

 (7) If the fund manager receiving the management has not received the terms and conditions of the offer of an occupational pension fund in another contracting state within five weeks after notification of the financial supervision authority of this other contracting state of making a decision by the Financial Supervision Authority on issue of an authorisation to transfer the assets of an occupational pension fund, the fund manager may commence the offer of the occupational pension fund in this contracting state, taking into consideration the requirements provided for in the legislation of the contracting state governing occupational pensions.

 (8) If the fund manager transferring the management is an Estonian fund manager and the fund manager receiving the management is a fund manager of another contracting state, the Financial Supervision Authority shall grant its consent to transfer the management of an occupational pension fund within eight weeks after receipt of a respective application from the financial supervision authority of the other contracting state.

 (9) The Financial Supervision Authority may refuse to grant its consent to transfer the management of an occupational pension fund if the interests of the unit-holders of this occupational pension fund are not sufficiently protected or the transfer of the management of the occupational pension fund may damage the interests of the unit-holders of the other occupational pension funds managed by the fund manager.

 (10) Where the transfer of the management of an occupational pension fund results in the offer in Estonia of an occupational pension fund by the fund manager of another contracting state receiving the management of the fund, the Financial Supervision Authority shall notify the financial supervision authority of this contracting state of the terms and conditions to which the offer of an occupational pension fund must comply in Estonia within four weeks after receipt of information about issue of an authorisation to transfer the management of a fund.

 (11) The Financial Supervision Authority shall also notify the financial supervision authority of any other contracting state, which occupational pension fund is offered in Estonia, of all significant changes in the terms and conditions specified in subsection (10) of this section.

 (12) § 438 or subsections 440 (4)-(8) of this Act do not apply to cross-border offers associated with the transfer of the management of any occupational pension funds.

 (13) If there are any disagreements between the Financial Supervision Authority and the financial supervision authority of another contracting state upon proceeding an application for authorisation to transfer the management of an occupational pension fund, the Financial Supervision Authority shall have the right to contact the European Insurance and Occupational Pensions Authority in order to settle the disagreements according to article 31(2)(c) of Regulation (EC) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, pp. 48-83).
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

Chapter 13 Division, Transformation and Merger of Fund Managers 

Division 1 General Provisions  

§ 138.  Application of provisions

  The provisions of this Chapter concerning funds apply to division, transformation and merger of sub-funds of common funds.

§ 139.  Prohibition of division

  Division of funds is not permitted.

Division 2 Merger of Funds  

Subdivision 1 General Provisions on Merger of Funds  

§ 140.  General provisions on merger of funds

 (1) A fund (hereinafter fund being acquired) may be merged with another established or founded fund (hereinafter acquiring fund).

 (2) Funds may also merge in such a manner that they establish or found a new fund.

 (3) A common fund may merge with a common fund. Common funds may also merge in such a manner that a new common fund is established. A public limited fund may merge with a public limited fund. Public limited companies may also merge in such a manner that a new public limited fund is founded.

 (4) Provisions of subsection (3) of this section do not apply to cross-border mergers of common funds.

 (5) A fund which is not a UCITS may merge with a UCITS only as a fund being acquired.

 (6) A public fund may merge with a non-public fund only as an acquiring fund. The provisions of this Chapter concerning merger of funds apply to merger of a public fund with a non-public fund.

 (7) A sub-fund of a common fund may merge with a sub-fund of the same fund or another fund or a sub-fund thereof, taking account of the provisions of this Act concerning mergers of common funds.

 (8) In the case specified in this Chapter, a fund may merge with a fund of another EEA Member State.

§ 141.  Mergers of common funds

 (1) Upon merger of a common fund, the assets of the fund being acquired are transferred to the acquiring fund and the fund being acquired is deemed dissolved.

 (2) Upon merger of a common fund by means of establishment of a new fund, the assets of the funds being acquired are transferred to the new fund established and the funds being acquired are deemed dissolved.

 (3) A fund being acquired is deemed to be dissolved after issue of the units of the acquiring fund to the unit-holders of the fund being acquired and cancellation of the units of the fund being acquired. The provisions of this Act concerning dissolution of funds do not apply to mergers.

§ 142.  Mergers of public limited funds

 (1) The provisions of the Commercial Code do not apply to merger of a public limited fund, unless otherwise provided for in this Chapter.

 (2) A public limited fund may merge pursuant to the provisions of subsections 391 (1)-(5) of the Commercial Code only with another public limited fund.

 (3) A public limited fund which is a UCITS and which has been entered in the Estonian commercial register may acquire upon cross-border merger a company which is a fund founded pursuant to the law of an EEA Member State, unless otherwise provided for in this Chapter. The provisions of this Act and of subsections 391 (1)-(5) of the Commercial Code concerning the methods of merger of a public limited fund apply to such merger of a public limited fund.

§ 143.  Exchange of units or shares upon mergers

 (1) Upon merger of a fund, the number of the units or shares of the acquiring fund issued to a unit-holder or shareholder of the fund being acquired shall be such that the net asset value thereof corresponds to the net asset value of the units or shares of the fund being acquired which were held by the unit-holder or shareholder.

 (2) Upon establishment or foundation of a new fund, the unit-holders of the fund being acquired shall become the unit-holders thereof. unit-holders or shareholders pay for the units or shares issued by the assets which correspond to their share in the fund being acquired.

 (3) The units or shares of an acquiring fund belonging to the assets of the fund being acquired and the units or shares of a fund being acquired belonging to the assets of the acquiring fund shall be redeemed before the merger.

 (4) The units or shares of a fund being acquired shall be cancelled upon merger.

 (5) The value of the units or shares used as the basis of the exchange ratio of the units or shares of a closed-end fund may be different from the net asset value of the units or shares under the following conditions:
 1) the conditions for determination of the exchange ratio and the value of the units or shares used upon determination of the exchange ratio shall be decided at the general meeting of unit-holders or shareholders of the fund being acquired and the acquiring fund and at least two-thirds of the votes represented at the general meeting are in favour thereof, unless the fund rules or articles of association prescribe a greater majority requirement;
 2) the units or shares of the fund being acquired are traded on a regulated market or, pursuant to the fund rules or articles of association, the units or shares of the fund being acquired must be admitted to trading on a regulated market within 12 months after adoption of the decision of the general meeting specified in clause 1) of this subsection.

 (6) The fund manager of an acquiring fund may determine, with the consent of the fund manager of the fund being acquired, the final issue price of a closed-end fund under the conditions indicated in the decision of the general meeting and within the range of the issue price determined in the decision of the general meeting specified in clause (5) 1) of this section.

§ 144.  Redemption of units or shares and suspension of issue of units or shares upon merger

 (1) Unit-holders or shareholders of a fund being acquired and an acquiring fund have the right to demand redemption of their units or shares without any redemption fee. As appropriate, the unit-holders or shareholders of a fund being acquired and an acquiring fund also have the right to exchange units or shares without any additional fee for the units or shares of a fund with similar investment policy which is managed by the same fund manager, public limited fund or any other company with whom the fund manager or public limited fund is linked by common management or a qualifying holding. Unit-holders or shareholders of a fund being acquired or an acquiring fund shall have no right to demand redemption of the units or shares of the fund if the fund is a closed-end fund or if the merger agreement of the public limited fund excludes redemption of the shares and this has been approved in the merger resolution.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (2) The right to demand redemption of the units or shares or the right to exchange units or shares specified in subsection (1) of this section applies to the unit-holders or shareholders of a fund being acquired and an acquiring fund at least for 30 calendar days after submission of the information specified in § 156 of this Act and expires five working days prior to the date of calculating the exchange ratio agreed upon in the merger agreement.

 (3) In addition to the conditions of suspension of issue and redemption of units or shares provided for in this Act, a fund manager or public limited fund may suspend the issue or redemption of the units or shares of the fund, if it is necessary for the protection of the legitimate interests of the unit-holders or shareholders of one or several of the funds participating in the merger. For the reasons specified in the previous sentence, the Financial Supervision Authority may also request suspension of the issue or redemption of units or shares.

§ 145.  Specifications for cross-border merger of UCITS

 (1) A UCITS may merge with a UCITS of another EEA Member State or a new UCITS founded or established in another EEA Member State (hereinafter cross-border merger of UCITS).

 (2) If a UCITS participates in a cross-border merger as a fund being acquired, the funds may merge in the manner provided for in this Act.

 (3) If a UCITS participates in a cross-border merger as an acquiring UCITS, the conditions provided for in this Act apply to determination of the date on which the merger arising from the merger agreement of the UCITS takes effect, disclosure of the authorisation for merger and notification of the merger taking effect.

Subdivision 2 Application for Authorisation for Merger of Funds  

§ 146.  Authorisations for merger

 (1) For merger of a fund, a fund manager or public limited fund must apply for an authorisation from the Financial Supervision Authority (hereinafter in this Division authorisation for merger).

 (2) In order to apply for an authorisation for merger, a written application and the following data and documents (application, data and document jointly hereinafter in this Division the application) must be submitted to the Financial Supervision Authority:
 1) the merger agreement;
 2) the consent of the depositary of each merging fund specified in subsection 153 (1) of this Act;
 3) the information specified in subsection § 156 of this Act which is given to the unit-holders or shareholders of each merging fund (hereinafter in this Division merger information);
 4) an assessment of the impact of the merger on the financial position of the fund manager of the acquiring fund, including forecasts of compliance of the fund manager with prudential requirements, unless the UCITS is subject to cross-border merger.

 (3) Applications must be submitted in the Estonian or English language. The merger information must be in the Estonian language or, with the consent of the Financial Supervision Authority, in the English language. If the data and documents specified in clauses (2) 1) and 2) of this section are not submitted in the Estonian language, the Financial Supervision Authority may demand translation of the documents into Estonian.

 (4) If a UCITS participates in a merger, the merger information must be submitted in the official language of each EEA Member State where the notification has been given concerning the offer of the acquiring UCITS or UCITS being acquired. With the consent of the financial supervision authority of the EEA Member State specified in the first sentence, the information may be submitted in any other language.

 (5) If funds merge in such a manner that a new fund is founded or established upon the merger or the fund rules, articles of association or prospectus of the fund are amended, an application for approval of establishment or foundation of a new fund in accordance with the provisions of § 31 of this Act or an application for approval of the amendments to the fund rules or articles of association by the Financial Supervision Authority in accordance with the provisions of § 37 of this Act must be appended to the application for an authorisation for merger, or the amendments to the prospectus must be submitted to the Financial Supervision Authority in accordance with the provisions of § 77 and, as appropriate, § 79 of this Act. If any other application is appended to the application for authorisation for merger or any other application in submitted in connection with the merger, it must be ensured that the amendments to the fund rules, articles of association or prospectus of the fund enter into force in line with the date of the merger taking effect, and the right arising from amendment of the fund rules, articles of association or prospectus of the fund to redeem the units or shares, as appropriate, is applicable in line with the right provided for in § 144 of this Act.

§ 147.  Proceedings concerning authorisations for merger

 (1) Upon merger, the Financial Supervision Authority shall examine the application submitted and assess whether the merger is in compliance with the principles of protection of the rights of the unit-holders or shareholders of the fund being acquired and the requirements provided for in this Act and whether the merger information is sufficient.

 (2) If the application is not in compliance with the provisions of subsection 146 (2) of this Act, the Financial Supervision Authority may require elimination of deficiencies by the applicant within ten working days after receipt of the application.

 (3) If the merger information does not comply with the requirements of §§ 156-160 of this Act, the Financial Supervision Authority may require amendment of the merger information within 15 working days after receipt of the authorisation for merger in compliance with subsection 146 (2) of this Act.

 (4) The deficiencies specified in subsections (2) and (3) of this section shall be eliminated and the data and documents shall be submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority shall notify the fund manager of a fund being acquired or a public limited fund being acquired and the depositary of issue of or refusal to issue an authorisation for merger within two months after receipt of a proper application.

§ 148.  Bases for refusal to issue authorisations for merger

  The Financial Supervision Authority may refuse to issue an authorisation for merger if:
 1) the merger conditions of funds do not comply with the requirements provided by legislation or the data and documents submitted to the Financial Supervision Authority are incorrect, misleading or incomplete;
 2) the merger information does not comply with the requirements provided for in this Act;
 3) no notification has been made upon merger of UCITS concerning the offer of the units of the acquiring UCITS in the EEA Member State where the units or shares of the UCITS being acquired are offered.

§ 149.  Specifications for cross-border merger of UCITS

 (1) The Financial Supervision Authority shall make a decision to issue an authorisation for cross-border merger of a UCITS if the UCITS participates in a cross-border merger as a UCITS being acquired. The provisions concerning authorisations for merger specified in this Division apply to authorisations for cross-border merger of a UCITS, unless otherwise provided for in this Division.

 (2) In order to apply for an authorisation for cross-border merger of a UCITS, the manager of the fund being acquired or a public limited fund being acquired shall submit an application to the Financial Supervision Authority. The prospectus and key information of the acquiring UCITS must be appended to the application if the acquiring UCITS is a fund of another EEA Member State.

 (3) In addition to the provisions of this Division, an application and the additional documents specified in subsection (2) of this section must also be submitted to the Financial Supervision Authority in the official language of the EEA Member State of the acquiring UCITS. With the consent of the financial supervision authority of the home country of the acquiring UCITS, documents may also be submitted in another language.

 (4) The Financial Supervision Authority shall send transcripts of the application and additional documents specified in subsection (2) of this section to the financial supervision authority of the home country of an acquiring UCITS promptly after receipt from the UCITS being acquired of all the required data and documents or elimination of deficiencies in accordance with the provisions of subsection 147 (2) of this Act.

 (5) The Financial Supervision Authority shall notify the manager of the fund being acquired or public limited fund being acquired and the depositary of the issue of or refusal to issue an authorisation for cross-border merger of a UCITS within 20 working days after receipt of a proper application provided that the financial supervision authority of the home country of the acquiring UCITS has notified the Financial Supervision Authority within 20 working days after receipt of valid merger information of that the merger information of the acquiring fund is in compliance with the conditions. Furthermore, the Financial Supervision Authority shall notify the financial supervision authority of the home country of an acquiring, and if appropriate, of a UCITS being acquired or another EEA Member State of issue of or refusal to issue an authorisation for cross-border merger.

 (6) In addition to the provisions of § 148 of this Act, the Financial Supervision Authority may refuse to issue an authorisation for cross-border merger of a UCITS if the financial supervision authority of the home country of the acquiring UCITS gives notification that the merger information does not comply with the requirements established in the home country of the UCITS.

§ 150.  Processing of documents by Financial Supervision Authority upon cross-border merger of UCITS

 (1) If a UCITS participates in a cross-border merger as an acquiring UCITS, the Financial Supervision Authority shall assess on the basis of a transcript of the application for authorisation for merger delivered by the financial supervision authority of the home country of the UCITS being acquired whether the merger information complies with the principles of protection of the rights of the unit-holders or shareholders of the acquiring UCITS and the requirements provided for in this Act.

 (2) The Financial Supervision Authority may demand, within 15 working days after receipt of a transcript of the application specified in subsection (1) of this section, elimination of the deficiencies in the merger information by the applicant.

 (3) An acquiring UCITS shall submit the changes made in the merger information within a reasonable term determined by the Financial Supervision Authority.

 (4) The Financial Supervision Authority shall promptly notify the financial supervision authority of the home country of the UCITS being acquired of submission of the demand specified in subsection (2) of this section. The Financial Supervision Authority shall notify the financial supervision authority of the home country of a UCITS being acquired of whether the amended merger information complies with the conditions provided for in this Act within 20 working days after receipt of valid information specified in subsection (2) of this section.

Subdivision 3 Decision on Conditions of Mergers  

§ 151.  Merger agreements

 (1) Merger of a common fund shall be decided by the management board of the fund manager.

 (2) For merger of a fund, the fund manager of a common fund or a public limited fund shall enter into an agreement (hereinafter merger agreement). Upon merger of a common fund with another common fund managed by the same fund manager, the merger conditions shall be determined to which the provisions provided for in this Division regarding merger agreements apply.

 (3) A merger agreement shall set out at least the following data:
 1) the method of merger and types of merging funds;
 2) the reason for the merger;
 3) the impact of the merger on unit-holders or shareholders of both the fund being acquired as well as the acquiring fund;
 4) the exchange ratio of the units of the fund being acquired and criteria for the valuation of the assets and liabilities of the fund on the date of calculating the exchange ratio;
 5) the method of calculation of the exchange ratio;
 6) the planned effective date of the merger as of which the transactions of the fund being acquired shall be deemed to be conducted by the acquiring fund;
 7) the procedure for transfer of assets and change of units or shares.

 (4) A merger agreement may prescribe that monetary payments of the acquiring fund are made to unit-holders or shareholders of the fund being acquired and the amount thereof may not exceed one-tenth of the total amount of the net asset value of the units or shares exchanged for them. The monetary payments specified in this subsection must be made together with the issue of the units or shares of the acquiring fund to the unit-holders or shareholders of the fund being acquired.

 (5) A merger agreement may contain other conditions.

§ 152.  Specifications for merger agreements of public limited funds

 (1) A merger agreement of a public limited fund must be notarised.

 (2) In the case of merger together with foundation of a new public limited fund, the merger agreement must indicate the business name and seat of the new public limited fund and the members of the management board and supervisory board thereof. A merger agreement of a public limited fund shall indicate the amount of the share capital of the public limited fund at the time of making the merger resolution and a notification that the public limited fund is a fund founded as a public limited company pursuant to this Act and the amount of the share capital thereof corresponds to the amount of the net asset value of the fund.

§ 153.  Verification of merger conditions

 (1) The depositary of each fund participating in the merger shall verify the compliance of the data specified in clauses 151 (3) 1), 6) and 7) of this Act with the fund rules, articles of association or prospectus of the fund and the requirements of this Act. In the case of compliance with the requirements specified in the previous sentence, the depositary shall prepare a written report on the verification carried out which inter alia states consent for merger of the fund.

 (2) The depositary or sworn auditor of a fund being acquired shall additionally verity the following conditions of a merger agreement:
 1) the criteria for valuation of the assets applicable on the date of calculating the exchange ratio;
 2) the method of calculation of the exchange ratio and the actual exchange ratio determined on the date for calculation of that exchange ratio;
 3) the monetary payments per unit or share.

 (3) In order to verify the conditions of a merger agreement, one or several common sworn auditors may be appointed to several or all of the funds being acquired.

 (4) A depositary or sworn auditor shall prepare a written report on the verification specified in subsection (2) of this section which shall be made accessible by the fund manager to the unit-holders or shareholders of the fund being acquired and the acquiring fund and the Financial Supervision Authority at their request free of charge. If the conditions specified in subsection (2) of this section are verified by a sworn auditor, the provisions of subsections 396 (2²)-(4) of the Commercial Code apply to the report prepared as a result of the verification.

§ 154.  Decision on merger of public limited fund

 (1) In addition to the provisions of this Act, the provisions of §§ 397 and 398, subsections 419 (2)-(5) and §§ 420 and 421 of the Commercial Code apply to holding of a general meeting, unless otherwise provided for in this Act.

 (2) At least two weeks before the general meeting which decides on the merger, the management board shall submit to shareholders for examination at the seat of the public limited fund a signed merger agreement, the annual reports of the merging funds for the past three years, if available, and the depositary’s report specified in subsection 153 (1) of this Act. Upon merger of a public limited fund, no merger report or interim balance sheet is prepared. Instead of the interim balance sheet, the latest disclosed semi-annual report shall be submitted to shareholders for examination.

 (3) The articles of association of a public limited fund may not prescribe that adoption of the merger resolution requires more than three-quarters of the votes represented at the general meeting.

 (4) If the articles of association of a public limited fund place the decision making on merger of a public limited fund within the competence of the supervisory board of the public limited fund, the provisions of §§ 321-323 of the Commercial Code concerning meetings and decisions of the supervisory board apply to decisions on approval of the merger, unless otherwise provided for in this Act.

 (5) Merger of a public limited fund shall be decided by the general meeting of the public limited fund, unless otherwise provided for in the articles of association of the public limited fund.

Subdivision 4 Notification of unit-holders or Shareholders and Redemption of Units or Shares of Merging Funds 

§ 155.  Disclosure of authorisations for merger

 (1) Funds being acquired and acquiring funds disclose promptly after receipt of an authorisation for merger a notice on the fund merger on the website of the fund manager of the common fund, the consolidation group to which the fund manager belongs or the public limited fund.

 (2) The notice specified in subsection (1) of this section must set out at least the following:
 1) the date of issue of the authorisation for merger;
 2) the term for redemption or exchange of the units or shares of the fund;
 3) the planned effective date of the merger provided for in the merger agreement.

§ 156.  Merger information provided to unit-holders or shareholders

 (1) The fund manager of a common fund being acquired and of an acquiring common fund or a public limited fund shall submit appropriate and accurate merger information concerning the circumstances of the merger to the unit-holders or shareholders of the fund which allows the unit-holders or shareholders to assess the impact of the merger and the need to exercise the right to redeem or exchange their units or shares.

 (2) The merger information shall be submitted after receipt of an authorisation for merger but not later than 30 calendar days before the date of redemption or exchange of units or shares.

§ 157.  Requirements for merger information

 (1) The merger information must set out:
 1) the explanations of and reasons for the merger;
 2) the possible impact of the merger on unit-holders or shareholders, including material changes in respect of the investment policy, costs, expected outcome of the merger, periodic reporting and potential deterioration of financial performance, and if appropriate, warning about the changes in the taxation of the income of unit-holders or shareholders after the merger;
 3) an explanation to unit-holders or shareholders concerning the rights related to the merger;
 4) the terms and conditions of the merger process, including information concerning passing of the merger resolution and suspension of issue or redemption of units or shares and planned effective date of the merger;
 5) the terms and conditions of making payments to unit-holders or shareholders of the fund being acquired.

 (2) The merger information of a fund being acquired must include the following as regards the circumstances specified in clause (1) 2) of this section:
 1) rights of the unit-holders or shareholders of the fund being acquired before and after the merger;
 2) comparison of material risks if the attached explanations or the key information of the fund being acquired and the acquiring fund show material differences in the synthetic risk and reward indicators in different categories;
 3) comparison of all fees, charges and expenses for the merging funds based on the amounts disclosed in their key information;
 4) if the fund being acquired applies a performance-related fee, an explanation of how it is applied up to the merger taking effect;
 5) if the acquiring fund applies a financial performance based fee after the merger takes effect, an explanation of how it is applied to ensure fair treatment of those unit-holders or shareholders who previously held units or shares in the fund being acquired;
 6) explanation on whether material changes are intended to be made in the composition of the assets of the fund being acquired before the merger takes effect.

 (3) The merger information of the acquiring UCITS must set out under the circumstances specified in clause (1) 2) of this section whether the merger has a material impact on the structure of the investments of the acquiring fund and whether it is intended to make material changes in the composition of the assets of the acquiring fund before or after the merger takes effect.

 (4) The synthetic risk and reward indicators specified in clause (2) 2) of this section are understood in the meaning of Article 8 of Commission Regulation (EU) No 583/2010.

 (5) The merger information must set out for the unit-holders or shareholders specified in clause (1) 3) of this section, among the rights related to merger, the right to:
 1) receive additional information;
 2) receive the report specified in subsection 153 (4) of this Act and information concerning the method of receipt of the report;
 3) require redemption or exchange of units or shares without any additional fee and information concerning the end of the term for exercise of this right;
 4) obtain information concerning handling of accrued income for the account of the fund.

 (6) The merger information must set out together with the terms and conditions specified in clause (1) 4) of this section:
 1) the details of intended suspension of transactions in units or shares;
 2) the time as of which the transactions of the fund being acquired shall be deemed conducted on account of the acquiring fund, the date of calculating the exchange ratio, and conditions for the merger taking effect.

 (7) The merger information of a fund being acquired must set out the following in addition to the information provided for in subsection (1) of this section:
 1) the period during which issue and redemption of the units or shares of the fund being acquired is continued;
 2) the date on which the unit-holders or shareholders who do not exercise the right to redeem or exchange the units or shares specified in subsection 144 (1) of this Act become the unit-holders or shareholders of the acquiring fund;
 3) an explanation on that all the unit-holders or shareholders who did not exercise the right to redeem or exchange the units specified in subsection 144 (1) of this Act shall become the unit-holders or shareholders of the acquiring fund upon the merges taking effect, including in the case the unit-holder or shareholder voted against the merger proposal upon approval of the merger resolution or abstained from voting;
 4) a recommendation to examine the key information of the acquiring fund.

§ 158.  Additional requirements for merger information upon cross-border merger of UCITS

  In the case of a cross-border merger, the merger information must explain in a clear and understandable manner the conditions provided by the law of another EEA Member State which differ from the conditions and procedures provided for in this Act.

§ 159.  Formal requirements for merger information

 (1) The merger information shall be provided in a clear and understandable manner taking account of the interests and competence of the unit-holders or shareholders of the acquiring fund and fund being acquired.

 (2) If a summary of the merger conditions is provided at the beginning of the merger information, it must refer to the parts of the document of the merger information where additional information is provided.

 (3) The merger information is provided to unit-holders or shareholders on paper or other durable medium.

 (4) The merger information may be provided on another durable medium if the following conditions are met:
 1) provision of information corresponds to the manner in which the services between the unit-holder or shareholder and the fund being acquired or the acquiring fund or the fund manager is or is to be provided;
 2) a unit-holder or shareholder has chosen another durable medium for provision of information, if there is more than one option available.

 (5) Provision of information to unit-holders on another durable medium is in compliance with the method of provision of information specified in clause (4) 1) of this section if the unit-holder or shareholder specified the unit-holder’s or shareholder’s e-mail address for communication of information or otherwise confirmed the unit-holder’s or shareholder’s continuous access to Internet.

 (6) The merger information must be in the Estonian language. If the merging fund is a UCITS which units are offered in another EEA Member State, the merger information must also be provided in the official language of the EEA Member State. With the consent of the financial supervision authority of the other EEA Member State, the merger information may be submitted in another language. The merger information in different languages must be identical in substance. The fund manager of a common fund or a public limited fund is responsible for the translation.

§ 160.  Provision of key information upon merger

 (1) The key information of an acquiring fund must be appended to the merger information of a fund being acquired.

 (2) The key information of an acquiring fund must be appended to the merger information of an acquiring fund if it has been amended due to the merger.

 (3) The merger information and key information of an acquiring fund shall be provided to each person who acquires the units or shares of a fund being acquired or acquiring fund or who wishes to obtain the rules, prospectus or key information of a merging fund.

Subdivision 5 Taking Effect of Merger and Merger Expenses  

§ 161.  General provisions on merger taking effect

 (1) A merger takes effect on the date provided for in the merger agreement, unless otherwise provided for in this Act.

 (2) Upon merger taking effect, the assets of the fund being acquired transfer to the acquiring fund.

 (3) The fund manager of an acquiring fund or a public limited fund must notify, promptly after the merger taking effect, the depositary of the acquiring fund of transfer of the assets of the fund being acquired to the acquiring fund.

 (4) A merger which has taken effect shall not be challenged.

§ 162.  Date of merger of common fund taking effect

  Merger of a common fund takes effect on the planned effective date of the merger provided for in the merger agreement but not earlier than on the date of calculation of the exchange ratio agreed upon in the merger agreement.

§ 163.  Entry of merger of public limited fund in commercial register and taking effect of merger

 (1) The provisions of §§ 400-403 and 405 of the Commercial Code apply to entry of merger of a public limited fund in the commercial register, unless otherwise provided in this Subdivision.

 (2) A merging public limited fund may submit the application specified in subsection 400 (1) of the Commercial Code for entry of the merger of the public limited fund in the commercial register after the date of calculation of the exchange ratio of the shares specified in subsection 144 (2) of this Act.

 (3) Upon merger together with foundation of a new public limited fund, the requirements provided for in § 34 of this Act also apply to an application of a public limited fund submitted to the commercial register and entry in the commercial register in addition to the provisions of this section.

 (4) The final balance sheet of a public limited fund shall be prepared in accordance with the requirements for the balance sheet that constitutes part of an annual report of the public limited fund and the provisions of this Act concerning approval of annual reports and conduct of audits of public limited funds.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 164.  Specifications for cross-border merger of UCITS taking effect

 (1) If an acquiring UCITS is founded or established in Estonia, the provisions of §§ 161-163 of this Act apply to taking effect of cross-border merger of the UCITS. The fund manager of an acquiring UCITS or a public limited fund shall promptly notify the Financial Supervision Authority and the financial supervision authority of the home country of the UCITS being acquired of taking effect of cross-border merger of the UCITS.

 (2) Subsections 433⁹ (2)-(8) of the Commercial Code apply to cross-border merger of a public limited fund.

 (3) Upon cross-border merger of a UCITS founded as a public limited fund with a UCITS which is a common fund, the merger of the public limited fund shall be entered in the commercial register on the basis of an application of the merging public limited fund. If the UCITS founded as a public limited fund is the fund being acquired, the merger shall take effect in accordance with the provisions of § 162 of this Act. If a UCITS founded as a public limited fund is the acquiring fund, the merger shall take effect in accordance with the provisions of subsection 163 (6) of this Act.

§ 165.  Merger expenses

 (1) Expenses related to merger of a fund shall be covered by the manager of the merging fund. Differently from the provisions of clause 58 (1) 3) of this Act, no legal, consultation or management fees related to the merger shall be paid for the account of the fund.

 (2) No fee shall be charged for issue of the units or shares or cancellation of the units or shares of an acquiring fund.

 (3) No fee shall be charged for redemption or exchange of units or shares upon merger, with the exception of compensation to cover the costs arising upon redemption or exchange of units or shares upon merger.

Subdivision 6 Specifications for Merger of Pension Funds  

§ 166.  Merger of pension funds

 (1) A mandatory occupational pension fund may merge only with another mandatory pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2) An occupational pension fund may merge only with another occupational pension fund.

 (3) A voluntary pension fund, which is not an occupational pension fund, may merge only with a voluntary pension fund which is not an occupational pension fund.

 (4) If the rate of return of a voluntary pension fund is guaranteed, a merger of such fund with another is not allowed.

 (5) In addition to the provisions of subsection 147 (5) of this Act, the Financial Supervision Authority shall also promptly communicate to the registrar of the pension register the decision to issue of or refusal to issue an authorisation for merger to a pension fund.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (6) The merger information of a mandatory pension fund shall be submitted to investors after receipt of an authorisation for merger but not later than 100 calendar days before the date of the merger of the mandatory pension fund taking effect.

 (7) A merger of a mandatory pension fund shall take effect on the working day following the working day of exchange of units provided for in subsection 24 (3) of the Funded Pensions Act but not earlier than 100 calendar days after publication of the notice specified in specified in subsection 155 (1) of this Act.

 (8) Unit-holders of a mandatory pension fund being acquired and acquiring mandatory pension fund have the right, until the merger of the funds takes effect, to demand exchange of their units without any redemption fee for the units of the other mandatory pension fund, taking account of the provisions concerning exchange of units in the Funded Pensions Act.

 (9) The provisions of § 144 of this Act do not apply to a merger of a mandatory pension fund.

 (10) Unit-holders of a voluntary pension fund being acquired and acquiring voluntary pension fund have the right to demand redemption of their units or exchange thereof for units of another voluntary pension fund in accordance with the provisions of subsection 144 (1) of this Act, taking account of the provisions concerning redemption and exchange of units of voluntary pension funds in the Funded Pensions Act.

Chapter 14 Dissolution and Solvency of Funds  

Division 1 General Provisions  

§ 167.  Dissolution of common funds

 (1) A common fund is dissolved:
 1) by a decision of the fund manager;
 2) a decision of the general meeting if the fund rules prescribe the general meeting;
 3) by a decision of the depositary in the case provided for in subsection 184 (1) of this Act;
 4) by declaration of insolvency of the common fund; or
 5) by abatement of insolvency proceedings of the common fund before declaration of bankruptcy.

 (2) Dissolution of a common fund is decided by the management board of the fund manager unless, pursuant to the fund rules, the supervisory board of the fund manager is competent to decide on dissolution of the fund.

 (3) A common fund is dissolved by liquidation proceedings unless otherwise provided for in this Act. In order to liquidate a fund, the fund manager shall apply for an authorisation from the Financial Supervision Authority (hereinafter in this Chapter authorisation for liquidation).

 (4) A common fund is liquidated by a fund manager, unless otherwise provided for in this Act.

 (5) If a fund manager fails to complete the liquidation of a fund within the term provided for in this Act, the Financial Supervision Authority may appoint a depositary as a liquidator to complete the liquidation.

 (6) If the dissolution of a fund was decided by a depositary, the depositary shall liquidate the fund in accordance with the provisions of § 184 of this Act. If the depositary fails to complete the liquidation of the fund within the term provided for in § 175 of this Act, the general meeting or in the absence thereof the Financial Supervision Authority may appoint, pursuant to § 185 of this Act, a liquidator of the fund to complete the liquidation.

 (7) The provisions concerning common funds in this Chapter also apply to sub-funds of common funds.

§ 168.  Specifications for dissolution of public limited funds

 (1) In order to liquidate a public limited fund, the public limited fund shall apply for an authorisation for liquidation from the Financial Supervision Authority. In the case provided for in subsection 184 (1) of this Act, the depositary shall decide on liquidation of the public limited fund and the depositary shall be entered in the commercial register as the liquidator of the public limited fund.

 (2) The decision of the Financial Supervision Authority on issue of an authorisation for liquidation shall be appended to the application for entry of the decision on dissolution of a public limited fund in the commercial register.

Division 2 Liquidation of Funds  

Subdivision 1 Applications for Authorisations for Liquidation of Funds  

§ 169.  Authorisations for liquidation

  In order to apply for an authorisation for liquidation, the fund manager of a common fund or a public limited fund shall submit, within 20 days after adopting a decision on liquidation of the fund, a written application to the Financial Supervision Authority and the following data and documents (application, data and documents jointly hereinafter in this Subdivision application):
 1) a decision on dissolution of the fund, including the limit of the fund liquidation costs and, if any, the amount of additional liquidation costs and their reasons;
 2) the reasons for the need to liquidate the fund and an assessment whether the liquidation of the fund is in the interests of the unit-holders or shareholders;
 3) the opinion of the depositary of the fund to be liquidated;
 4) the names, addresses and personal identification codes of unit-holders or shareholders, in the absence thereof their dates of birth or, if any, registry codes;
 5) if a common fund is a unit-holder or shareholder of the fund, the business name, registry code and seat of the fund manager thereof or of the depositary in the absence of the latter;
 6) the number, type and value of the units or shares held by the unit-holders or shareholders as at three working days before submission of the application;
 7) the data on all the rights and obligations which are included in the assets of the fund;
 8) a decision on liquidation of the sub-funds of the common fund, if any.

§ 170.  Review of applications for authorisations for liquidation and decisions on issue of authorisations for liquidation

 (1) If an application is not in compliance with the requirements provided for in § 169 of this Act, the Financial Supervision Authority shall demand elimination of the deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents if it is not convinced on the basis of the data and documents specified in § 169 of this Act as to whether the liquidation complies with the requirements established by legislation or if other circumstances relating to the fund need to be verified.

 (3) In order to verify the data submitted by an applicant, the Financial Supervision Authority may request submission of more specific data and documents, perform on-site inspections, order assessments and special audits, consult state databases, and request oral explanations from managers of fund managers or public limited funds, auditor firms, their representatives and third parties concerning the contents of the documents submitted and the facts which are relevant in making a decision on an authorisation for liquidation of the fund.

 (4) The deficiencies specified in subsections (1)-(3) of this section shall be eliminated and the data and documents shall be submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review an application if the applicant fails to eliminate deficiencies within the prescribed term or fails to submit the data or documents requested by the Financial Supervision Authority by the due date.

 (6) The Financial Supervision Authority shall make a decision to issue or refuse to issue an authorisation for liquidation within two months after submission of all the necessary data and documents but not later than within six months after submission of the application.

 (7) The Financial Supervision Authority shall promptly communicate the decision specified in subsection (6) of this section to the fund manager, public limited fund and depositary.

§ 171.  Bases for refusal to issue authorisations for liquidation

  The Financial Supervision Authority may refuse to issue an authorisation for liquidation if:
 1) the data and documents submitted upon application for an authorisation for liquidation do not reflect fully, clearly and unambiguously all the circumstances of the liquidation of the fund;
 2) the liquidation of the fund is not in compliance with the requirements of this Act.

§ 172.  Notices of liquidation

 (1) The fund manager of a common fund or a public limited fund shall publish, promptly after becoming aware of the decision to issue an authorisation for liquidation, a notice concerning the liquidation of the fund (hereinafter notice of liquidation) on the website of the fund manager, the consolidation group to which the fund manager belongs, or the public limited fund.

 (2) A notice of liquidation must contain the following data:
 1) the name of the fund to be liquidated;
 2) the business name, registry code and seat of the fund manager;
 3) the business name, registry code and seat of the depositary;
 4) the term during which the creditors of the fund being liquidated must submit their claims against the fund;
 5) the places and time of acceptance of claims and applications;
 6) other necessary data.

 (3) The term provided for in clause (2) 4) of this section shall not be shorter in the case of a sub-fund of a common fund than two months after publication of the notice of liquidation of the fund.

 (4) Failure to notify on time of a claim specified in clause (2) 4) of this section does not affect the validity of the claim or restrict the right of the creditor to file an action with a court against the fund being liquidated.

 (5) The fund manager of a common fund or a public limited fund shall notify the Financial Supervision Authority of publication of a notice of liquidation not later than on the day preceding the publication of the notice of liquidation.

§ 173.  Suspension of issue and redemption of units and shares of funds

  The issue and redemption of the units or shares of a fund to be liquidated shall be suspended as of the day following the publication of the notice of liquidation, and as of the same date, payments to unit-holders or shareholders may be made only pursuant to the procedure provided for distribution of the assets in this Chapter or in the case of a public limited fund in the Commercial Code.

§ 174.  Coverage of liquidation costs

 (1) Only actual costs of liquidation of a fund may be covered for the account of the fund.

 (2) The limit of the costs of liquidation of a fund shall be set out in the decision on liquidation of the fund. The costs of liquidation of the fund may be covered for the account of the fund to the maximum extent of two per cent of the net asset value of the fund as at the day of adoption of the decision on liquidation of the fund, unless the liquidation decision sets out the amount of and reasons for additional liquidation costs.

 (3) If a fund is liquidated by a depositary in the case provided for in subsection 184 (1) of this Act, the depositary shall state in the liquidation decision the limit of the costs of liquidation of the fund specified in subsection (2) of this section as at the day of adoption of the liquidation decision. If a depositary commences liquidation of a fund after the expiry of the term specified in subsection 184 (1) of this Act or the extended term specified in 184 (2) of this Act, the net asset value of the fund on the latest day by which the liquidation should have commenced is taken as the basis for calculation of the liquidation costs.

 (4) If the actual costs of liquidation of a sub-fund of a fund or common fund exceed the limit of costs set out in the application, the fund manager or the person who acts as a fund manager shall be liable for the costs exceeding that limit.

 (5) If a fund is liquidated by a depositary or liquidator specified in § 185 of this Act, the depositary or liquidator has the right to collect the costs which exceed the limit specified in the liquidation decision from the fund manager or a person who acts as a fund manager.

 (6) In addition to the expenses specified in subsection (2) of this section, the fund manager or depositary as the statutory liquidator of a fund may charge the management fee and depositary’s charges paid for the account of the fund and specified in clauses 58 (1) 1) and 2) of this Act. It is prohibited to charge any other fees for conducting the liquidation proceedings.

Subdivision 2 Liquidation Proceedings of Common Funds  

§ 175.  Term of liquidation proceedings

 (1) Liquidation of a common fund commences on the day which follows the publication of a notice of liquidation and terminates by submission of a liquidation report pursuant to this Act. A fund is liquidated after submission of the liquidation report.

 (2) Liquidation shall be completed within six months after publication of a notice of liquidation. Liquidation of a closed-end fund shall be completed within 12 months after submission of a notice of liquidation.

 (3) With the permission of the Financial Supervision Authority, the term specified in subsection (2) of this section may be extended at the request of the fund manager of a common fund but the term of liquidation may not exceed 18 months as a result of the extension, and 24 months in the case of a closed-end fund.

§ 176.  Transactions in liquidation proceedings

 (1) Upon liquidation of a common fund, the liquidator of the fund shall transfer the assets of the fund as soon as possible and in accordance with the interests of the unit-holders, collect the debts and satisfy the claims of creditors of the fund, including perform the obligations prescribed in the fund rules and prospectus with respect to the fund manager and the depositary.

 (2) If a known creditor has not submitted a claim or the due date for the fulfilment of the claim of a creditor has not arrived and the creditor does not accept the fulfilment, the money belonging to the creditor shall be deposited with a credit institution in the name of the fund manager.

 (3) During liquidation of a fund, the fund manager may only conduct for the account of the common fund the transactions which are necessary for liquidation of the fund.

 (4) Until performance of the obligations specified in subsection (1) of this section, the funds received from transfer of assets upon liquidation may be placed in money market instruments or deposits of credit institutions in which UCITS are allowed to invest. Transactions with derivative instruments may be conducted only for the purposes of mitigation of risks arising from fluctuation of the value of the assets.

 (5) In liquidation proceedings, the notation “ likvideerimisel ” [in liquidation] shall be appended to the name of the fund upon conduct of transactions in the name of the common fund.

§ 177.  Notification of distribution of assets

 (1) After performance of all the acts specified in subsection 176 (1) of this Act, the liquidator of a fund shall prepare the final balance sheet and plan for distribution of the assets of the fund.

 (2) The liquidator of a common fund shall promptly publish a notice concerning distribution of the assets subject to distribution on the website of the fund manager or the consolidation group to which the fund manager belongs after preparation of the final balance sheet and asset distribution plan.

 (3) The notice specified in subsection (2) of this section shall contain at least the following data:
 1) the name of the fund to be liquidated;
 2) the assets to be distributed per each unit;
 3) the terms of and procedure for payment of the assets subject to distribution;
 4) a list of the data and documents required upon payment of the assets subject to distribution.

§ 178.  Distribution of assets

 (1) The liquidator of a fund shall distribute the assets remaining upon liquidation between unit-holders on the basis of the class, number and net asset value of the units held by each unit-holder.

 (2) Units shall be deleted and the rights and obligations associated therewith shall be terminated from the day on which payments are made. No redemption fee shall be charged upon deletion of units.

 (3) If money or assets owned by a unit-holder cannot be paid to the unit-holder by the due date, the money or assets prescribed for payment shall be deposited in a depositary.

 (4) Payments to unit-holders may only be made in money, unless if the fund is a closed-ended fund.

 (5) The Financial Supervision Authority may allow distribution of assets before preparation of the final balance sheet and asset distribution plan specified in subsection 177 (1) of this Act if the fund manager of a common fund submits an interim balance sheet of the fund to the Financial Supervision Authority and the distribution of assets does not damage the interests of the creditors or unit-holders. Assets may be distributed on the basis of an interim balance sheet if the term for filing the claims of creditors has expired and the claims of creditors submitted on time have been satisfied.

§ 179.  Liquidation reports

 (1) Within one month after termination of the distribution of assets, the liquidator of the fund shall submit to the Financial Supervision Authority the final balance sheet, asset distribution plan and report on its activities upon liquidation of the fund.

 (2) If the liquidation of a fund has been outsourced in accordance with § 184 or 185 of this Act, the liquidation report shall be submitted by the depositary or liquidator who conducted the liquidation.

 (3) The requirements for liquidation reports shall be established by a regulation of the minister responsible for the area.

Subdivision 3 Specifications for dissolution of public limited funds  

§ 180.  Notices of liquidation of public limited funds

  A public limited fund shall publish the notice specified in subsection 375 (1) of the Commercial Code at the same time with the notice of liquidation specified in § 172 of this Act.

§ 181.  Submission of applications concerning dissolution of public limited funds to commercial register

 (1) A public limited fund shall submit, promptly after publication of the notice specified in subsection 180 of this Act, an application for entry of the dissolution decision and liquidator of the fund to the commercial register.

 (2) The following documents shall be appended to the application for entry of the decision of dissolution and liquidator of a public limited fund in the commercial register:
 1) the decision of the Financial Supervision Authority on issue of an authorisation for liquidation of the public limited fund;
 2) the data concerning publication of the notice of liquidation.

§ 182.  Specifications for opening balance sheets and final balance sheets of liquidation of public limited funds

 (1) The liquidator of a public limited fund shall prepare the opening balance sheet of liquidation and annual report specified in subsection 374 (2) of the Commercial Code within two months after becoming aware of the decision on issue of the authorisation for liquidation.

 (2) The supervisory board of the public limited fund shall approve the opening balance sheet of the liquidation and the annual report of the public limited if this right has been transferred from the general meeting to the supervisory board of the public limited fund by the articles of association of the public limited fund.

 (3) A public limited fund shall publish the opening liquidation balance sheet and annual report at the seat of the public limited fund, the seats of its branches and on the website of the public limited fund promptly after approval of the opening balance sheet or annual report.

 (4) Requirements for opening liquidation balance sheets and annual reports of a public limited fund may be established by a regulation of the minister responsible for the area.

 (5) The liquidator of a public limited fund shall submit, within one month after termination of the distribution of assets and before submission of an application to the commercial register for deletion of the public limited fund from the register, the final balance sheet, asset distribution plan of the fund and report on its activities upon liquidation of the fund to the Financial Supervision Authority.

 (6) If the liquidation of a public limited fund has been outsourced in accordance with § 184 or 185 of this Act, the liquidation report shall be submitted by the depositary or liquidator which conducted the liquidation.

 (7) The requirements for final balance sheets of public limited funds may be established by a regulation of the minister responsible for the area.

§ 183.  Continuation of activities of dissolved public limited funds

  The activities of a dissolved public limited fund cannot be continued.

Subdivision 4 Depositaries as Liquidators or Liquidators appointed by Financial Supervision Authority and Liability of Liquidators  

§ 184.  Liquidator of depositary fund

 (1) A depositary shall decide on liquidation of a fund if it fails, within three months after termination of the management authority of a fund, on the basis specified in subsection 305 (7) of this Act:
 1) to transfer the management of the fund to another fund manager; or
 2) to decide on the merger of the fund with a fund being acquired.

 (2) With the permission of the Financial Supervision Authority, the term specified in subsection (1) of this section may be extended at the request of the depositary but the term for making of the decision on dissolution of a fund may not exceed six months as a result of the extension.

 (3) A depositary must liquidate a fund if the liquidator of the fund has failed to liquidate the fund during the term specified in § 175 of this Act and the Financial Supervision Authority has issued a precept to complete the liquidation of the fund.

 (4) A depositary may apply to the Financial Supervision Authority for an authorisation for liquidation of a fund on the basis specified in subsection (1) of this section within three months after transfer of the management authority to the depositary.

 (5) A depositary shall liquidate a fund pursuant to the procedure provided for in this Act and the fund rules or articles of association.

 (6) In the case provided for in subsection (3) of this section, the depositary shall liquidate a fund within six months after the Financial Supervision Authority has issued a respective precept. With the permission of the Financial Supervision Authority, the specified term may be extended at the request of the depositary but, as a result of the extension, the term for liquidation shall not exceed 18 months, and in the case of a closed-end funds 24 months.

 (7) If a depositary decides to merge a fund with a fund being acquired, the provisions of this Act concerning fund managers apply to the depositary upon deciding on the merger of the fund, application for an authorisation for merger and conduct of the merger.

§ 185.  Appointment of liquidators of funds by general meeting or Financial Supervision Authority

 (1) If a depositary fails to complete the liquidation of a fund within the term specified in subsection 175 (2) or 184 (6), the general meeting or in the absence thereof the Financial Supervision Authority may appoint a liquidator. The liquidator shall complete the liquidation of the fund during the term determined by the Financial Supervision Authority pursuant to the procedure provided for in this Act.

 (2) All the rights and obligations related to the liquidation of a fund shall transfer to the liquidator appointed pursuant to subsection (1) of this section.

 (3) Upon appointment of a liquidator pursuant to subsection (1) of this section, payment of remuneration to the liquidator for conduct of the liquidation proceedings must be decided. In this case, the limit provided for in subsection 174 (2) of this Act does not apply.

§ 186.  Extent of liability if liquidators of funds

  A depositary and a liquidator of a fund specified in subsection 185 (1) of this Act are liable to the unit-holders, shareholders, fund manager and creditors of the fund to the extent of the claims against the fund which have arisen after transfer of the liquidation of the fund to the depositary or liquidator.

Subdivision 5 Specifications for Dissolution of Pension Funds  

§ 187.  Deciding on dissolution and liquidation proceedings of pension funds

 (1) Dissolution of a pension fund may be decided only if transfer of the management thereof to another fund manager pursuant to the procedure provided for in this Act has been impossible.

 (2) Upon liquidation of a mandatory pension fund, the provisions of §§ 37-39 of the Funded Pensions Act apply to distribution of the assets and no payments shall not be made to unit-holders.

§ 188.  Authorisations for liquidation of pension funds

 (1) Upon liquidation of a pension fund, a report of the fund manager on acts performed for the transfer of the management of the pension fund together with the documents certifying the acts must be appended to the application specified in § 169 of this Act.

 (2) The Financial Supervision Authority may refuse to issue an authorisation for liquidation of a pension fund, in addition to the case provided for in § 171 of this Act, if the fund manager has failed to use all the options to transfer the management of the pension fund in the opinion of the Financial Supervision Authority.

 (3) The Financial Supervision Authority shall promptly also communicate the decision specified in subsection 170 (6) of this Act to the registrar of the pension register.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (4) The fund manager shall notify the registrar of the pension register of publication of the notice of liquidation of a pension fund not later than on the day preceding the publication of the notice of liquidation.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (5) The Financial Supervision Authority may, by a decision to issue an authorisation for liquidation of a mandatory pension fund, establish the following conditions for the liquidation:
 1) a term which is longer than the term for the submission of applications which is specified in subsection 37 (2) of the Funded Pensions Act;
 2) an obligation to submit reports, including reports approved by a sworn auditor, in the course of liquidation proceedings;
 3) other conditions which the Financial Supervision Authority deems necessary to protect the legitimate interests of the unit-holders.

 (6) A notice of liquidation of a mandatory pension fund must contain the term for submission of the application specified in subsection 37 (2) of the Funded Pensions Act and the consequences of failure to submit the petition for the specified term in addition to the provisions of subsection 172 (2) of this Act.

Division 3 Insolvency of funds  

Subdivision 1 General Provisions  

§ 189.  Application of Division

 (1) An application for declaring a common fund insolvent is submitted, insolvency is declared and insolvency is eliminated in accordance with the provisions of the Bankruptcy Act, unless otherwise provided for in this Division.

 (2) The provisions of this Division concerning funds apply to sub-funds of common funds, unless otherwise provided for in this Division.

 (3) The provisions of this Division concerning a liquidator of a fund also apply to a depositary of a fund if liquidation of the fund was decided by the depositary and the Financial Supervision Authority has assigned the fund to the liquidator.

§ 190.  Submission of applications for declaration of insolvency of common funds and insolvency proceedings

 (1) An application for declaring a common fund insolvent may be submitted by a manager or liquidator of the fund in addition to its creditors. The provisions of the Bankruptcy Act concerning bankruptcy petitions of debtors apply to applications of fund managers or liquidators and insolvency proceedings of common funds. The provisions of the Bankruptcy Act concerning bankruptcy petitions apply to applications submitted by creditors of common funds for declaration of insolvency.

 (2) If a common fund is insolvent, the fund manager must, as soon as possible but not later than 20 days after onset of insolvency, submit an application for declaring the fund insolvent.

 (3) If it becomes evident during the liquidation of a fund that the fund is insolvent, the liquidator of the fund must promptly file an application for declaring the fund insolvent.

 (4) The fund manager or liquidator of a fund shall promptly submit a copy of the application for declaring the fund insolvent to the Financial Supervision Authority.

 (5) Upon submission of an application for declaration of insolvency, the fund manager or liquidator of a common fund shall represent it. The provisions of §§ 85-90 of the Bankruptcy Act extend to fund managers or liquidators.

 (6) After onset of insolvency, the fund manager shall not make payments for the account of the fund, except payments which making in the state of insolvency is in line with due diligence. The fund manager is required to compensate to the fund for any payments made for the account of the fund after the insolvency of the company became evident which, under the circumstances in question, were not made in line with due diligence.

 (7) Upon submission of an application for declaration of insolvency, issue and redemption of the units of the fund shall be promptly suspended and notification thereof shall be given in accordance with the provisions of subsections 57 (3) and (6) of this Act.

 (8) In order to submit an application for declaration of insolvency of a common fund or sub-funds thereof, an insolvency caution shall be submitted to the common fund or sub-funds thereof through the fund manager. An application for declaration of insolvency must indicate with respect to which fund the application is submitted. Submission of an application with respect to a sub-fund of a common fund shall not result in insolvency proceeding of the common fund.

 (9) An application for declaration of insolvency shall be submitted according to the seat of the common fund.

§ 191.  Bankruptcy of public limited funds

 (1) A public limited fund or liquidator shall promptly submit a copy of a bankruptcy petition to the Financial Supervision Authority.

 (2) Upon submission of a bankruptcy petition, issue and redemption of the shares of the fund shall be promptly suspended and notification thereof shall be given in accordance with the provisions of subsections 57 (3) and (6) of this Act.

Subdivision 2 Insolvency Proceedings and Satisfaction of Claims of Funds  

§ 192.  Proceedings of Insolvency Petitions and Declaration of Insolvency

 (1) In this Subdivision, bankruptcy petitions, bankruptcy proceedings of a fund and bodies in bankruptcy proceedings also denote applications for declaring a common fund insolvent, insolvency proceeding and bodies in insolvency proceedings thereof.

 (2) If an application was submitted by a creditor of a fund, a court shall hold a preliminary hearing and the Financial Supervision Authority, fund manager and liquidator shall be summoned to the hearing in the case the application was submitted by the liquidator. A copy of the application shall be forwarded to the Financial Supervision Authority together with the notice specified in subsection 16 (2) of the Bankruptcy Act.

 (3) In addition to the persons specified in subsection 25 (2) of the Bankruptcy Act, a court shall also summon the Financial Supervision Authority to the hearing where the bankruptcy petition is reviewed. A representative of the Financial Supervision Authority shall provide an opinion at the court hearing concerning the fund which submitted the bankruptcy petition.

 (4) A court shall appoint interim trustees and trustees in bankruptcy of funds on the proposal of the Financial Supervision Authority. The provisions of § 61 of the Bankruptcy Act do not apply to trustees in bankruptcy of funds.

 (5) Interim trustees in bankruptcy or trustees in bankruptcy of funds promptly submit to the Financial Supervision Authority the data requested by it and enable examination of the documentation concerning the bankruptcy proceedings of the fund.

 (6) In addition to as specified in § 68 of the Bankruptcy Act, a court may release a trustee in bankruptcy on the proposal of the Financial Supervision Authority. If a trustee in bankruptcy is released, a new trustee in bankruptcy shall be appointed pursuant to the procedure prescribed in subsection (4) of this section.

 (7) On the proposal of the Financial Supervision Authority, a court shall not terminate proceedings by abatement on the basis specified in subsection 29 (1) or (2) of the Bankruptcy Act. In this case, the fund manager shall pay a deposit to cover the costs of bankruptcy proceedings to the bank account prescribed for that purpose in the amount determined by the court.

§ 193.  Obligations and rights of trustees in bankruptcy

 (1) In addition to the provisions of the Bankruptcy Act, a trustee in bankruptcy shall:
 1) publish a bankruptcy notice or notice of declaration of insolvency of a public limited fund at least in one national daily newspaper and on the website of the fund manager, the consolidation group to which the fund manager belongs or of the public limited fund;
 2) promptly submit to the Financial Supervision Authority the data requested by it and enable examination of the documentation concerning the bankruptcy proceedings of the fund;
 3) as appropriate or if prescribed by the legislation of another EEA Member State, inform the commercial register, registrar of the land register or similar registrar in the EEA Member State, where the fund has assets, of the court ruling on declaration of bankruptcy of the fund.

 (2) The provisions of subsection 34 (2) of the Bankruptcy Act do not apply to notification of known creditors and unit-holders or shareholders of a fund.

§ 194.  Bankruptcy committee, sale of bankruptcy estate, satisfaction of claims of unit-holders of common funds and bankruptcy reports

 (1) The bankruptcy committee of a fund shall comprise five members, three of whom are appointed by the Financial Supervision Authority.

 (2) The provisions of subsection 74 (7) of the Bankruptcy Act do not apply to bankruptcy proceedings of a fund.

 (3) A trustee in bankruptcy has the right to sell all the assets of the fund as a whole with the consent of the bankruptcy committee.

 (4) Claims arising from the units of a common fund shall be satisfied pursuant to the provisions of § 156 of the Bankruptcy Act concerning assets to be returned to debtors.

 (5) After termination of the bankruptcy proceedings of a fund, the trustee in bankruptcy shall submit a report to the Financial Supervision Authority which is in compliance with the requirements provided for final reports as specified in § 162 of the Bankruptcy Act.

Subdivision 3 Insolvency proceedings of pension funds  

§ 195.  Insolvency proceedings of pension funds

 (1) No application can be submitted for declaring a pension fund insolvent and no insolvency proceedings can be conducted.

 (2) If it becomes evident during liquidation of a pension fund that the liabilities of the pension fund exceed its assets, the fund manager or a person who operates as the fund manager shall be liable for all the claims which are submitted against the fund and not satisfied.

 (3) A depositary shall be liable for any claims against a pension fund which have arisen after transfer of the management or liquidation of the pension fund to the depositary.

 (4) A liquidator shall be liable for the claims against a pension fund which have arisen after transfer of liquidation of the pension fund to the liquidator.

Chapter 15 Master UCITS and Feeder UCITS  

Division 1 General Provisions  

§ 196.  Application of Chapter and Specifications for Offers of Master UCITS

 (1) This Chapter provides for the conditions for investment of the assets of a UCITS which is a feeder fund (hereinafter feeder UCITS) in a UCITS which is a master fund (hereinafter master UCITS).

 (2) The provisions of this Act concerning offers of a UCITS of another EEA Member State do not apply to a master UCITS which is established or founded in another EEA Member State and which units or shares are not publicly offered in Estonia but in which the assets of a feeder UCITS established or founded in Estonia have been invested.

 (3) If at least two feeder UCITS invest in a master UCITS, the units or shares of the master UCITS need not be offered publicly for the purposes of this Act.

 (4) The provisions concerning common funds in this Division also apply to sub-funds of common funds.

§ 197.  Additional restrictions on investments of feeder UCITS

 (1) The assets of a feeder UCITS may be invested to the extent of up to 15 per cent of the assets of the fund in:
 1) deposits in credit institutions;
 2) derivative instruments for the purposes of risk mitigation, taking account of the provisions of §§ 105, 111 and 113 of this Act.

 (2) Upon investment of the assets of a feeder UCITS in derivative instruments, the risk specified in clause (1) 2) of this section may be combined, upon calculation of the open risk position specified in subsection 105 (3) of this Act, with:
 1) the actual risk position of the derivative instruments of the master UCITS in proportion to the investment of the feeder UCITS in the master UCITS; or
 2) the potential maximum risk position of the derivative instruments of the master UCITS provided for in the fund rules, articles of association or prospectus of the master UCITS in proportion to the investments made by the feeder UCITS in the master UCITS.

Division 2 Approval of Investments of Master UCITS  

§ 198.  Approval of investments of master UCITS by feeder UCITS

 (1) In order to invest in a master UCITS, the fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS must apply to the Financial Supervision Authority for an authorisation (hereinafter in this Division investment authorisation).

 (2) The fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS shall submit, for obtaining an investment authorisation, an application and the following data and documents (application, data and documents jointly hereinafter in this Division application) to the Financial Supervision Authority:
 1) the rules or articles of association of the feeder and master UCITS;
 2) the prospectuses and key information of the feeder and master UCITS;
 3) the information specified in specified in subsection 200 (1) of this Act for unit-holders or shareholders;
 4) the agreement for making investments specified in § 201 of this Act or the internal rules of the fund manager or public limited fund specified in subsection 201 (10) of this Act;
 5) the information exchange agreement between the depositaries specified in § 203 of this Act;
 6) the information exchange agreement between auditors specified in § 204 of this Act.

 (3) If a master UCITS has been established or founded in another EEA Member State, a confirmation of the financial supervision authority of the home country of the master UCITS that the master UCITS is a UCITS which is managed by a fund manager, which is in compliance with the conditions specified in subsection 3 (3) of this Act, must be appended to the application for an investment authorisation.

 (4) The data and documents specified in subsection (2) of this section, with the exception of the information to unit-holders or shareholders, shall be submitted to the Financial Supervision Authority in Estonian or English. The Financial Supervision Authority has the right, as appropriate, to require translation into Estonian of the data and documents submitted in English. The information to unit-holders or shareholders specified in clause (2) 3) of this section shall be submitted in the Estonian language.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

§ 199.  Processing of applications for investment authorisations and decisions

 (1) If an application is not in compliance with the requirements provided for in subsection 198 (2) of this Act, the Financial Supervision Authority shall request elimination of deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents if it is not convinced on the basis of the data and documents specified in subsection 198 (2) of this Act as to whether the conditions of investment in the units or shares of a fund fulfil the requirements established by this Act or legislation issued on the basis thereof or if other circumstances relating to the fund need to be verified.

 (3) In order to verify the data submitted by an applicant, the Financial Supervision Authority may request submission of more specific data and documents, perform on-site inspections, order assessments and special audits, consult state databases, request oral explanations from managers of fund managers or public limited funds, auditor firms, their representatives and third parties concerning the contents of the documents submitted and the facts which are relevant in making a decision on approval of the fund rules, articles of association or prospectus of the fund.

 (4) The data and documents specified in subsections (1)-(3) of this section shall be submitted within a reasonable term determined by the Financial Supervision Authority.