Text size:

• Small
• Medium
• Large

Investment Funds Act¹

Passed 14.12.2016
RT I, 31.12.2016, 3
Entry into force 10.01.2017, §§ 27, 34, 243 and 244 entry into force 01.01.2017

Amended by the following legal instruments (show)

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 prescribed by this Act, taking account of the special rules provided in this Act and the Financial Supervision Authority Act.

§ 2. Investment fund

 (1) An investment fund (hereinafter fund) is a legal person or pool of assets which involves the capital of several 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 on the basis of 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 by this Act. A fund may only have one fund manager at a time.

§ 3. Fund Manager

 (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 on the basis of this Act or another fund, including a fund established or founded on the basis of 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) A UCITS manager (hereinafter UCITS manager) is a fund manager which holds an activity licence in accordance with the requirements provided 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 in accordance with the requirements provided 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 euros; or
 2) volume of assets in total does not exceed 500 million euros 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 do not apply to the following persons and pools of assets:
 1) holding companies;
 2) Eesti Pank and a foreign central bank;
 3) the state and a local authority;
 4) employee participation or issue schemes;
 5) securitization 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 securitization 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, a person or pool of assets which is founded or established for management of family assets or other equivalent pools of assets is not regarded as a fund manager.

 (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 associated 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 on the basis of 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 on the basis of 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 in this Act, the provisions concerning a fund also apply to a sub-fund.

§ 5. Mandatory and voluntary pension fund

 (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 on the conditions and in accordance with the rules provided in the Funded Pensions Act and this Act (hereinafter pension fund).

 (2) A voluntary pension fund may be, among other things, an occupational pension fund or a pension fund registered in accordance with the rules provided in Articles 5–7 of Regulation (EU) 2019/1238 of the European Parliament and of the Council on a pan-European Personal Pension Product (PEPP) (OJ L 198, 25.07.2019, pp 1–63) as a pan-European Personal Pension Product or PEPP (hereinafter pension fund registered as a PEPP) specified in Articles 2(2) of the same Regulation.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (3) The provisions concerning a public fund apply to a pensions fund, unless otherwise provided by this Act.

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

 (5) A voluntary pension fund which is not an occupational pension fund may not have defined benefits or cover mortality, longevity 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 fund

 (1) A public limited fund is a fund founded on the basis of this Act as a public limited company and the provisions of the Commercial Code apply to its foundation, operation and dissolution, unless otherwise provided by this Act.

 (2) In order to operate, a public limited fund enters into a management contract with a fund manager which has been issued an activity licence on the basis of 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 fund

 (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 its employees, public servants or members of management and control bodies.

 (2) A defined-benefit occupational pension fund may be an occupational pension fund which guarantees investment performance, covers mortality, longevity 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 fund

 (1) A limited partnership fund is a fund founded as a limited partnership on the basis of this Act and the provisions of the Commercial Code apply to its foundation, operation and dissolution, unless otherwise provided by 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 on the basis of 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 is not 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 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 are redeemed at the request of a unit-holder or shareholder.

 (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 an EEA Member State, which meets the requirements provided 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 EEA Member States.

 (4) A European social entrepreneurship fund manager is a manager of an alternative fund which is recognised in an EEA Member State, which meets the requirements provided 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 EEA Member States.

 (5) A closed-ended fund is an alternative fund which units or shares are not redeemed at the request of a unit-holder, shareholder or partner 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 an EEA Member State, complies with the requirements provided 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 EEA Member States.

 (8¹) A money market fund is an alternative fund or UCITS recognised in an EEA Member State, which complies with the requirements provided in Regulation (EU) 2017/1131 of the European Parliament and of the Council on money market funds (OJ L 169, 30.06.2017, pp 8–45).
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]

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

 (10) A fund 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. Offer of fund units and shares

 (1) An offer of units or shares of a fund (hereinafter fund offer) is deemed to be the information provided to persons in any form, any manner and by any means about the opportunities to acquire or subscribe for fund units or shares which is precise enough with regard to the conditions of the offer as well as the units or shares offered in order to allow the person to decide on the acquisition of or subscription for these units or shares.
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]

 (2) A public fund is a fund which units or shares are publicly offered.
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]

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

 (4) An offer is not deemed public where it meets at least one of the following requirements:
 1) the offer complies with the provisions of Articles 1(4)(a)–(d) of the Regulation (EU) 2017/1129 of the European Parliament and of the Council (EL) on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ 168, 30.06.2017, pp 12–82);
 2) the offer is submitted upon management of a securities portfolio or guaranteeing of an offer or issue of securities for the purposes of clause 4 of subsection 1 of § 43 or clause 6 of § 44 of the Securities Market Act to a fund manager, investment firm or credit institution;
 3) the offer of securities with a total value of less than 2,500,000 euros per all the EEA Member States in total calculated in a one-year period of the offer of the securities.
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]

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

§ 11. Basic document, prospectus and key information of fund

 (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 in accordance with the rules 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 a public offer of a fund which states the information relating to the fund at least to the extent provided by legal instruments, 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 fora public offer of a fund which only states the basic information relating to the fund to the extent provided by legal instruments.

§ 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 of the European Parliament and of the Council on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ L 176, 27.06.2013, pp 1–337), taking into consideration the provisions of Article 26(2);
[RT I, 11.10.2024, 1 - entry into force 21.10.2024]
 2) depositary is a credit institution or investment firm or another legal person which has been granted the right on the basis of this Act to carry out depositary's tasks and which holds the assets of the fund and performs other tasks assigned thereto by legal instruments and the depositary contract;
 3) parent company and subsidiary are the persons provided in subsections 1 and 2 of § 27 of the Accounting Act;
[RT I, 30.12.2017, 3 - entry into force 03.01.2018]
 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 included in the assets of the fund from which claims against the fund have been 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 2 of § 6 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, where the general partner is a legal person;
 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 2 and 3 of § 8²  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 service), 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;
[RT I, 30.12.2017, 3 - entry into force 03.01.2018]
 11) home country is the country under which law the fund or fund manager was established or founded;
 12) durable medium is an instrument which allows reproduction of information for the purposes of § 11¹ of the Law of Obligations Act;
[RT I, 30.12.2017, 3 - entry into force 03.01.2018]
 13) country of destination is the country in which the person intends 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 in accordance with 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 by 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 management 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 a management service or fund management service to a fund manager subject to a contract for outsourcing of the tasks related to fund management, including management service or fund management service to an investment company managed by the fund manager 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 Fund, Unit and Share of Unit-holder in Assets of Fund 

§ 13. General provisions on common funds

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

 (2) The rights attached to a unit 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 enforcement proceedings or by a trustee in bankruptcy in bankruptcy proceeding of a unit-holder.

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

 (6) Where the assets of a common fund may be divided into sub-funds, which are 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 a fund also apply to a sub-fund 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 among other things the right to:
 1) demand that the fund manager redeem units in the events and on the conditions and in accordance with the rules provided 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 on the conditions and in accordance with the rules provided 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 in the fund rules of the non-public fund;
 4) receive, when payments are made from the assets of a common fund in accordance with 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 legal instruments or the fund rules;
 5) receive, in accordance with 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 legal instruments or the fund rules;
 6) call the general meeting of unit-holders in the events and in accordance with the rules 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 in accordance with 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 transfer to the acquirer thereof.

 (5) Where 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. Where 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 is made to a unit-holder upon exchange of units of a common fund. Upon exchange of units, the units are redeemed and issued on the basis of the net asset value of the units.

§ 15. Liability of unit-holder

 (1) A unit-holder is not 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 may 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) are provided in the fund rules.

 (3) A holder of a fractional unit participates 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 are specified in the fund rules.

 (4) In accordance with the provisions of the fund rules, a common fund may have several classes of units, which give rise to different rights. Units of a common fund may differ among other things 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 rules for their exchange;
 6) requirements prescribed to an investor 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 any;
 10) registrar.

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

 (6) In the events provided 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 organization of issue and redemption of units.

Chapter 3 Public Limited Fund, Share and Share Capital of Public Limited Fund 

§ 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. Special rules for share of public limited fund

 (1) The provisions of § 223 of the Commercial Code do not apply to a public limited fund. The provisions of clause 3 of subsection 1 of § 2 of the Securities Register Maintenance Act do not apply to registration of shares of a public limited fund.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (2) The share register of a public limited fund is maintained by the management board of the public limited fund, unless the public limited fund has entered into a contract for outsourcing the task of maintaining the share register to a third party in respect of which an entry has been made in the commercial register.

 (3) A fund of funds may not issue preferred shares.

 (4) A public limited fund is not allowed to issue convertible bonds and other securities which grant the owner thereof rights which are similar to the rights arising from 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 events and on the conditions and in accordance with the rules provided 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 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 2 of § 229 of the Commercial Code do not apply to transfer of shares of a public public limited fund.

 (7) A share of a public limited fund is divisible. The rules for rounding of the fractions of a share (hereinafter fractional share) created as a result of the division of a share are provided 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 arising from a fractional share are 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 rules for exchange thereof;
 6) requirements prescribed to an investor 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 any;
 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 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 are treated as redemption of shares for the purposes of this Act.

 (13) No payments are made to a shareholder upon exchange of shares of a public limited fund. Upon exchange of shares, shares are redeemed and issued in accordance with the net asset value of the shares.

§ 19. Special rules for share capital of public limited fund

 (1) To the extent of the minimum and maximum capital provided 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 2 of subsection 1 of § 244 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 are 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 is entered in the commercial register and a notation is made stating that the public limited fund is a fund founded in accordance with 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 in § 336 of the Commercial Code does not apply to a public limited fund.

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

 (7) The share capital of a public limited fund is deemed increased or reduced upon changing the net asset value of the fund.

 (8) Where the net asset value of a public limited fund is less than the minimum amount of the share capital provided in this Act or where 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 Fund, Unit and Partner of Limited Partnership Fund 

§ 20. General provisions on limited partnership fund

 (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) Where a limited partnership fund does not manage its own assets, it enters 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 by the partnership agreement or the management contract. Entry into and termination of the management contract is decided by the general partners entitled to manage the limited partnership fund by at least a two-thirds majority of the votes, unless otherwise prescribed by the partnership agreement.

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

§ 21. Unit and partner of limited partnership fund

 (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 investment restrictions and conditions provided by legal instruments, acquisition of a unit of a limited partnership fund is 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 by the partnership agreement. The partnership agreement may provide restrictions on transfer and encumbrance of the units of the limited partnership fund and other conditions and rules. 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 on the conditions and in accordance with the rules provided in the partnership agreement.

 (4) A certificate may be issued for a unit of a limited partnership fund. Where the partnership agreement prescribes 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 on the conditions and in accordance with the rules provided in the partnership agreement.

§ 22. Rights and obligations arising from unit of limited partnership fund

 (1) Unless otherwise prescribed by 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, where the limited partnership fund is part of a consolidation group.

 (2) Disbursement of profit is prohibited where, 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 on the conditions and in accordance with the rules provided 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 a limited partnership fund. In accordance with the rules 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 arising from the specified unit. The unit of a general partner may be expropriated only to a person who complies with the requirements provided in subsection 2 of § 8 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 other cases provided in the partnership agreement.

 (6) In the case a partner leaves or is excluded from a limited partnership fund, the partner is paid a compensation in the events, on the conditions and in accordance with the rules prescribed by the partnership agreement.

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

Chapter 5 Assets of Fund and Business Name or Name of Fund 

§ 23. Assets of fund and liability of fund manager 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 a right 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 manages 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 must not be restricted and no compulsory enforcement may 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, where possible, a similar register of a foreign country 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 also applies 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 are satisfied out of such assets. An investor of the fund is not required to submit the petition specified in subsection 3 of § 123 of the Bankruptcy Act for exclusion of the assets of the fund from the bankruptcy estate of the fund manager.

 (7) A fund manager is liable for a loss caused to a fund where the fund manager has violated the obligations arising for the fund manager from the legal instruments, 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 a sub-fund of a common fund, including the rights and obligations arising from the establishment, investment of the assets, merger of a sub-fund and dissolution of a sub-fund thereof and satisfaction of claims related to the assets of a sub-fund in insolvency proceedings.

§ 24. Business name or name of fund

 (1) Any other person, agency or association, which is not an investment fund, may not use in their name, designation or business name 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’, ‘money market fund’ or other words or abbreviations with the same meaning in the Estonian or any other language.
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]

 (2) Only the name or business name of a UCITS, European Venture Capital Fund, European Social Entrepreneurship Fund, European Long-Term Investment Fund and Money Market Fund established or founded in Estonia on the basis of this Act or the law of another EEA Member State may respectively include the words ‘UCITS’, ‘European Venture Capital Fund’, ‘European Social Entrepreneurship Fund’, ‘European Long-Term Investment Fund’ and ‘Money Market 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’.
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]

 (3) The provisions of subsections 1 and 2 of this section do not apply to a business name of a fund manager.

 (4) The words ‘pension fund’ must be used in the name of a pension fund, except in the case of a pan-European Personal Pension Product specified in Article 2(2) of Regulation (EU) 2019/1238 of the European Parliament and of the Council.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (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 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 policy of the fund or other conditions prescribed by 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 by this Part. Only the provisions of §§ 216–239 of this Act apply to a defined-benefit occupational pension fund.

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

 (2¹) This Act applies to a UCITS and alternative fund which have been registered in accordance with the rules provided in Articles 5–7 of Regulation (EU) 2019/1238 of the European Parliament and of the Council as a pan-European Personal Pension Product or PEPP specified in Article 2(2) of the same Regulation (hereinafter UCITS registered as a PEPP or alternative fund registered as a PEPP, respectively) in accordance with the provisions of subsections 1 and 2 of this section, unless otherwise provided by the specified Regulation.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (2²) This Act applies to a pension fund registered as a PEPP in accordance with the provisions of subsections 1 and 2 of this section, unless otherwise provided by Regulation (EU) 2019/1238 of the European Parliament and of the Council. In addition, the provisions of subsections 2 and 3 of § 46, subsection 2 of § 124, subsections 1–4, clauses 1 and 3 of subsection 5, subsections 6–8 of § 137² , subsections 1–4 and 13 of § 137³ of this Act concerning an occupational pension fund apply to a pension fund registered as a PEPP.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

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

Chapter 7 Establishment and Foundation of Fund 

Subchapter 1 General Conditions of Establishment and Foundation of Fund 

§ 26. Establishment of common fund

 (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 deadline for entry into force.

§ 27. Foundation of public limited fund

 (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 are approved by the Financial Supervision Authority.
[RT I, 31.12.2016, 3 - entry into force 01.01.2017]

§ 28. Transformation of public limited company into public limited fund

  A public limited company may be transformed into a public limited fund where 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 approves the management contract and depositary contract.

§ 29. Requirements for fund rules and articles of association

 (1) Fund rules 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 where 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 where 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 rules for 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 where the fund has different classes of units;
 12) the rights and obligations attached to units, including the voting right attached to units, rules for rounding fractional units and rules 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, where 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 obtaining this right, competence of the general meeting of unit-holders, rules 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 rules for amendment of the fund rules;
 17) the bases and rules 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 in accordance with 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 where 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 of and rules for 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 rules 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, where the rate of return of the fund is guaranteed;
 14) the special rules for the competences of the management bodies of the fund compared to the provisions of the Commercial Code and this Act;
 15) the obligations of the fund manager provided in the management contract;
 16) the rules for amendment of the articles of association;
 17) the bases and rules for dissolution and liquidation of the fund.

 (3) The information specified clause 3¹  of subsection 1 of § 244 of the Commercial Code is not 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 legal instruments.

§ 30. Seats of common fund

 (1) The seat of a common fund is the seat of its fund manager or the seat of its Estonia branch. Where a common fund established on the basis of this Act is managed by a foreign fund manager by means of providing cross-border services, the seat of the common fund is the seat of this credit institution, investment firm, fund manager or branch with which the fund manager has entered into a contact for organization 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) Where 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.

Subchapter 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 Subchapter applicant) submits a written petition to the Financial Supervision Authority and the following data and documents (petition, data and documents hereinafter jointly in this Subchapter petition):
 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 1 and 2 of § 90 of this Act;
 4) the key information of the fund or sub-funds, if any;
 5) the rules 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 that 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 tasks;
 3) the management contract;
 4) in the case of an operating public limited company, the decision of the general meeting specified in § 28 of this Act.

§ 32. Processing of petition for and decision on approval of fund rules and articles of association

 (1) Where a petition is not in compliance with the requirements provided in § 31 of this Act, the Financial Supervision Authority requests elimination of deficiencies therein by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents where 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 the fund by legal instruments or where 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 an on-site inspection, order examinations and a special audit and consult state databases, request oral explanations from managers of the fund manager or public limited fund, the audit firm, their representatives and third parties concerning the contents of the data or documents submitted and the circumstances 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 are submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review a petition where 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 time limit. Upon refusal to review a petition, the Financial Supervision Authority returns the submitted documents without making a decision on refusal to approve the fund rules or the articles of association.

 (6) The Financial Supervision Authority makes 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 petition.

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

 (8) Where, during the proceeding of a petition for approval of the fund rules or the articles of association, amendments are made to the data or documents, the applicant promptly submits the respective updated data and documents to the Financial Supervision Authority. Where 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 petition. In this case, the Financial Supervision Authority must notify the applicant of a new term.

§ 33. Grounds 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 where:
 1) the fund rules, articles of association, prospectus or key information do not comply with the requirements provided by legal instruments;
 2) the fund rules, articles of association or petition 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 legal instruments;
 5) the rules for disclosure of information concerning the fund are insufficient;
 6) the depositary does not comply with the requirements provided by legal instruments 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 tasks 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 legal instruments 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 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 organization of redemption of units or shares may be impracticable to a significant extent;
 10) the conditions of guaranteeing a rate of return provided 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 fund in commercial register

 (1) The following must be additionally included in a petition 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 in accordance with this Act and the amount of its share capital 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 a petition 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 publishes, 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.

Subchapter 3 Amendment of Fund Rules and Articles of Association and Approval of Amendment 

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

 (1) Amendment of fund rules is 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 is 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 may 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 may not be amended in such a manner that the fund no longer is a UCITS.

 (4¹) The rules and articles of association of a UCITS registered as a PEPP or an alternative fund registered as a PEPP may not be amended in such a manner that the fund is no longer a UCITS registered as a PEPP or an alternative fund registered as a PEPP, respectively.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (5) The fund rules or articles of association of a fund may be amended in such a manner that the fund becomes a closed-ended fund provided that the amendments to 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 promptly notifies 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 are covered by the fund manager, unless otherwise provided by the fund rules or articles of association.

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

 (1) An amendment to the fund rules or articles of association of a fund are approved by the Financial Supervision Authority, unless otherwise provided by this Subchapter.

 (2) In order to obtain an approval for amendment of the fund rules or articles of association, the fund manager of a common fund or a public limited fund submits a written petition to the Financial Supervision Authority and the following data and documents (petition, data and documents jointly hereinafter in this Subchapter petition):
 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 where 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 where 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 1 of § 38 of this Act.

 (3) Amendments to the fund rules or articles of association of a fund need not be approved by the Financial Supervision Authority, where:
 1) only those provisions are amended which the fund is required to amend as a result of amendments made to legal instruments or which make corrections or amendments or editorial amendments or amendments to the fund rules or articles of association which are favourable to unit-holders or shareholders, such as lowering the limit of fees or expenses payable for the account of unit-holders or shareholders; and
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]
 2) the amended fund rules or articles of association are promptly submitted to the Financial Supervision Authority.

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

 (1) The fund manager of a common fund, or a public limited fund prepares 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 where 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 rules for calculation and their total limit;
 4) the frequency of redemption of units or shares;
 5) the rules 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 are not deemed material where these reduce the classes of the fees, charges or expenses paid for the account of the fund, unit-holders or shareholders, make other amendments which are favourable 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 its main investment objectives.

 (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 ensured the 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 fund rules or articles of association enter into force at the price which is 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 the material amendment to the fund rules or articles of association of the fund.
[RT I, 30.12.2017, 3 - entry into force 03.01.2018; clause 3 of subsection 4 of § 38 applies to a decision made at the general meeting of a fund 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 in clause 3 of subsection 4 of this section.
[RT I, 30.12.2017, 3 - entry into force 03.01.2018]

 (4²) Where the rules of a closed-ended common fund do not prescribe a general meeting of unit-holders, the rules specified in subsection 4 of this section need not be met. In this case, a significant amendment to the fund rules is permitted where the units of the fund have been admitted to trading on a trading venue for the purposes of § 3 of the Securities Market Act.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

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

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

§ 39. Processing of petition for and decision on approval of amendment of fund rules and articles of association

 (1) The provisions of §§ 32 and 33 of this Act apply to review of a petition for approval of an amendment to fund rules or articles of association, making of a decision on approval an of amendment and refusal to make the decision, unless otherwise provide in this section. Upon approval of an amendment to the fund rules or articles of association, compliance of the petition 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 an amendment to the fund rules or articles of association of a fund or a public limited fund where the requirements provided in this Act have not been complied with upon material amendment to the fund rules or articles of association.

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

 (1) A fund manager publishes, promptly after approval of an amendment 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 Subchapter 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 to 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 to 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 a material amendment to the fund rules or articles of association;
 5) date of entry into force of an amendment 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 promptly notifies the Financial Supervision Authority of publication of the notice and its contents.

 (4) Where 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 in accordance with this Act, the fund manager of a common fund or a public limited fund publishes, 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 their entry into force.

§ 41. Entry into force of amendment to fund rules

  Amendments to fund rules enter into force one month after publication of the notice specified in subsection 1 of § 40 of this Act, unless the notice prescribes a longer term or unless otherwise provided by this Act.

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

 (1) The decision of the Financial Supervision Authority on approval of an amendment to the articles of association of a public limited fund is appended to the petition for entry of an amendment to the articles of association of the fund in the commercial register, unless the amendment to the articles of association need not be approved by the Financial Supervision Authority in accordance with this Act.

 (2) Where the supervisory board of a public limited fund has the competence to decide on amendment of the articles of association of a public limited fund in accordance with this Act, the decision of the supervisory board or the minutes of the meeting of the supervisory board of the public limited fund is appended to the petition for entry of the amendment to the articles of association in the commercial register.

 (3) A petition for entry of an amendment 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 1 of § 40 of this Act or, in the case a fund is transformed into a closed-ended fund, upon expiry of the term specified in subsection 5 of § 36 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 are not submitted to the Financial Supervision Authority in accordance with subsection 3 of § 37 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 deadline.

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

Subchapter 4 Special Rules for Establishment of Pension Fund and Approval of Fund Rules 

§ 43. Pension fund rules

 (1) Pension fund rules must include the following in addition to the provisions of clauses 1, 2, 5, 6, 8–12 of subsection 1 of § 29 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 a unit with a nominal value, the nominal value of the unit;
 3) the rules for making payments from the pension fund;
 4) the rules 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 management and control bodies for the purposes of § 9 of the Income Tax Act (hereinafter members of management and control bodies).

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

 (3) In order to agree upon establishment of an occupational pension fund and its fund rules and financing, 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 submits for approval of the pension fund rules the following data and documents in addition to the petition specified in subsection 1 of § 31 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 subsection 1 of § 22 and subsection 2 of § 52⁵  of the Funded Pensions Act;
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]
 3) the consent of an employer commencing contributions to an occupational pension fund to the fund rules.

 (2) The Financial Supervision Authority promptly also communicates 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 by the fund rules of a mandatory pension fund does not materially differ from the investment policy of mandatory pension funds which are already managed by the fund manager which submitted the petition or the approval of which rules the fund manager has applied at the same time;
 2) the contract specified in subsection 1 of § 22 or subsection 2 of § 52⁵  of the Funded Pensions Act contains provisions which contradict each other or legal instruments 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 organization of issue and redemption of units of the mandatory pension fund.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

§ 45. Amendment of pension fund rules

 (1) The fund rules of a mandatory pension fund, occupational pension fund, pension fund registered as a PEPP or another voluntary pension fund may not be amended in such a manner that the fund no longer is a mandatory pension fund, occupational pension fund, pension fund registered as a PEPP or another voluntary pension fund, respectively.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

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

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

 (4) Upon amendment of the fund rules of a mandatory pension fund, the amendments to the contracts provided in subsection 1 of § 22 and subsection 2 of § 52⁵  of the Funded Pensions Act and the amended text thereof must be submitted to the Financial Supervision Authority in addition to as provided in subsection 2 of § 37 of this Act, where amendment of the pension fund rules results in amendment of these contracts.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (5) A fund manager has the amendment to the fund rules of an occupational pension fund 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 as provided in subsection 2 of § 37 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 must be approved by the Financial Supervision Authority enter into force on the working day of exchange of units provided in the first sentence of subsection 5 of § 24 of the Funded Pensions Act but not earlier than 100 calendar days after publication of the relevant notice.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (2) Upon amendment of the fund rules of an occupational pension fund, the fund manager discloses the amended text of the fund rules to unit-holders promptly after the approval of the amendments and notifies 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 must 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 due date for entry into force.

Chapter 8 Management of Fund 

Subchapter 1 Management of Common Fund 

§ 47. General meeting of unit-holders

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

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

Subchapter 2 Management of Public Limited Fund 

§ 48. Competence of and rules for calling general meeting

 (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, where so prescribed by the articles of association of the fund. In this case, the general meeting has 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 is reclaimed into the competence of the general meeting.

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

 (3) Where 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) Where 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 a request by an auditor to call a special general meeting or to calling of a general meeting apply to the agenda of the general meeting and drafts of decisions.

§ 49. Special rules for competence of supervisory board

 (1) Unless otherwise specified in the articles of association of a public limited fund, the supervisory board of a public limited fund is competent to:
 1) approve an amendment to the management contract of the public limited fund;
 2) approve the conditions of the depositary contract of the public limited fund;
 3) approve the person maintaining the share register where the task 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 board

 (1) The management board of a public limited fund exercises supervision, to the extent and in accordance with the rules prescribed in the management contract, over the activities of the fund manager related to the fund, and to the extent and in accordance with the rules prescribed by the depositary contract over the activities of the depositary, and over performance by third parties of other tasks 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 tasks related to the administration of the fund or offer of its shares on the basis of a written contract to a third party, where this is in accordance with the requirements specified in subsections 1 and 5 of § 364 of this Act. The provisions of § 364 of this Act concerning a fund manager apply to the management board of a public limited fund upon outsourcing of tasks. Maintaining of a share register may be outsourced taking account of the requirements provided in §§ 60 and 61 of this Act.

§ 51. Requirements for managers

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

 (2) A manager of a public limited fund or members of the management board or supervisory board of its depositary constitute not more than one-half of the members of the supervisory board of the fund.

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

 (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 the fund manager to the extent prescribed by law and the management contract.

 (2) A fund manager is liable for a loss caused to a public limited fund or its shareholders by violation of the obligations of the fund manager.

Chapter 9 Unit and Share 

Subchapter 1 Issue and Redemption of Units and Shares 

§ 53. Application of Chapter

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

§ 54. Nominal value and net asset value of assets and unit or share of fund. Registration and storage of petition for issue and redemption of units or shares of UCITS and reporting on execution of petition

 (1) The nominal value of a unit is 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 correspond 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) is 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 determining the net asset value.

 (4) Where a fund has several classes of units or shares, the net asset value of the units or shares of different classes may differ in accordance with the bases provided in the fund rules or articles of association.

 (5) The net asset value of a unit and share is determined 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 also discloses the net asset value of the fund.

 (6) The net asset value of a unit and share of a closed-ended fund is determined 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 determined in accordance with the basic documents of the fund either:
 1) on the basis of the latest net asset value determined by the time of receipt of the respective petition; or
 2) on the basis of the net asset value determined first after receipt of the respective petition.

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

 (9) The net asset value of a unit or share is disclosed in accordance with 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) Determining of the net asset value of a unit or share and issue and redemption of the unit or share is 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 in subsection 9 of § 55 of this Act or which allow conduct of a transaction 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 rules for establishment of the net asset value of a fund are established by a regulation of the minister in charge of the policy sector.

 (12) The fund manager of a UCITS registers each petition 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 petition.

 (13) The data of all the petitions 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 submits a report to unit-holders or shareholders which confirms execution of the petition for issue or redemption of units or shares of the UCITS on durable medium or makes it available in another equal 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 petitions for issue or redemption of units or shares of a UCITS and reporting on execution of the petitions are established by a regulation of the minister in charge of the policy sector.

§ 55. Issue of units and shares and issue price

 (1) Units and shares are issued 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 on the conditions and in accordance with the rules prescribed by the basic documents of the fund.

 (3) The issue price of a unit and share is 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 in subsection 9 of § 54 of this Act.

 (4) Payment for a unit or share of a fund is 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 received in 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 is not limited in time and the volume of their issue and the number of units and shares to be issued is not fixed, unless otherwise provided by the fund rules or articles of association.

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

 (8) Where a certain index is replicated upon investment of the assets of a fund in accordance with subsection 1 of § 116 of this Act, units or shares may be issued on the conditions prescribed by 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-ended fund may be issued at an issue price which differs from the net asset value on the following conditions:
 1) the conditions for determination of the issue price are 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, in accordance with 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 from 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-ended fund within the range of the issue price determined on the conditions set out in the decision of the general meeting specified in clause 1 of subsection 9 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 on the conditions and in accordance with the rules provided by the basic documents of the fund. The redemption price of a unit or share is 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 is 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 their net asset value. The rights and obligations attached to the redeemed unit or share terminate and the redeemed unit or share is deleted from the register of units or shares.

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

 (5) Where a certain index is replicated upon investment of the assets of a fund in accordance with subsection 1 of § 116 of this Act, units or shares may be redeemed on the conditions prescribed by 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 where the units of the fund are traded 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 items of immovable property in accordance with the fund rules or articles of association, or at least 80 per cent in items of immovable property and securities relating to items of immovable property, 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 where 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 where 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 determining 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 country 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 where 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 compliance notice, require a fund manager or a public limited fund to suspend the issue or redemption of units or shares where there is a suspicion that:
 1) the requirements provided in legal instruments concerning the 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, where 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 compliance notice, 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 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.

Subchapter 2 Fees and Charges Paid and Expenses covered for Account of Fund, Unit-holder and Shareholder 

§ 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 extent provided in this Act.

 (2) The management fee and depositary's charge are not paid as an advance payment.

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

§ 59. Fees and charges paid for account of unit-holder and shareholder

 (1) Fees for the issue and redemption of a unit or share are paid from the account of the person acquiring or redeeming the unit or share. A unit-holder or shareholder may not be required to pay other fees and charges related to issue or redemption of a unit or share, unless the unit-holder or shareholder may be required to pay, in accordance with the fund rules or articles of association, an additional fee due to the material impact of the transaction of issue or redemption of the unit or share on the regular management of the fund. The above does not exclude payment of the commission of a third party or other equivalent fees for the account of the unit-holder or shareholder, where prescribed by the fund rules or articles of association and prospectus.

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

 (3) Issue and redemption fees of units or shares must 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 the unit-holder or shareholder.

 (4) At the request of a person acquiring or redeeming units or shares, the persons is informed in a form reproducible in writing of the amount of the issue or redemption fee paid for their account.

 (5) In the events provided 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.

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

§ 60. Registration of units and shares

 (1) Units are registered in electronic form in the register of units (hereinafter in this Subchapter register). The provisions of this Act concerning registers and their maintenance apply to the share register of a public limited fund and its maintenance.

 (2) The register is maintained by a fund manager or another person to whom the tasks 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. Where a fund has several classes of units or shares, each class of units or shares may have different registrars.

 (4) Where 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 registrar

 (1) In the case the tasks of maintenance of a register specified in subsection 2 of § 60 of this Act are outsourced, a registrar may be a person founded in Estonia or a foreign country which level of organizational 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 tasks specified by law and a contract for maintenance of the register.

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

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

 (4) The requirements for insuring or guaranteeing the liability of the registrar are established by a regulation of the minister in charge of the policy sector.

§ 62. Data entered in register and their processing

 (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 of the latter, the date of birth of the unit-holder, or the registry code of the unit-holder where the unit-holder has a registry code;
 4) where 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 a unit-holder or shareholder, their class, if any, and their nominal value, 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 where the units or shares have been redeemed;
 7) other rights attached to a unit or share and the time of creation, changing and extinction of the rights, including time of acquisition or pledging of a unit or share;
 8) other data which the registrar deems necessary.

 (2) Where the units or shares belonging to a unit-holder or shareholder are held for them by a third party who has the right provided by law to hold the units or shares in their 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 3 or 4 of subsection 1 of this section. Where a third party holds units or shares in the name and for the account of another person, the data specified in clause 7 of subsection 1 of this section are not entered in the register. The third party specified in the first sentence of this section has the right to give information to a fund manager 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 is based on the requirements provided in the Personal Data Protection Act and the data handling rules 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 rules 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 where the registrar discovers an error in the data and where the processing of the data does not violate anybody's interests. The registrar preserves data concerning all discovered data processing errors and corrections made by the registrar.

 (5) The registrar is required to preserve data and documents submitted to a registrar in a form reproducible in writing for an entry to be made for ten years after making the respective entry.
[RT I, 13.03.2019, 2 - entry into force 15.03.2019]

 (6) The registrar makes a register entry within one working day after the settlement of the transaction conducted with a unit or share of a fund. Where the task 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 is deemed to be transferred after entry of its acquirer in the register.

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

 (9) The rules 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 in charge of the policy sector.

§ 63. Persons entitled to access register data

 (1) A unit-holder or shareholder of a fund or a person authorised by them, fund manager, depositary, 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) a court during proceedings of cases;
 2) a pre-trial investigation authority and prosecutor's office in criminal proceedings already initiated, relevant bodies upon adjudication of international letters rogatory or for performance of obligations provided by the European Union law for compliance with an international convention or other international treaty, or co-operation agreement of the police or other similar competent authority;
 3) a security authority for the performance of the tasks provided in the Security Authorities Act and carrying out a security check 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 order, or for regulatory enforcement for the performance of the tasks provided in the Gambling Act;
 5) an enforcement agent for the performance of the tasks provided in the Code of Enforcement Procedure;
 6) an interim trustee and trustee in bankruptcy for the performance of the tasks provided in the Bankruptcy Act;
 7) the State Audit Office for the performance of the tasks provided in the State Audit Office Act;
 8) a person appointed by the Guarantee Fund on the basis of the Guarantee Fund Act;
 9) a person entitled to succeed or person authorised by the latter and a notary in connection with a notarial act, person making the inventory of an estate at the appointment of a notary or court, administrator of an estate appointed by a court, and consular representations of foreign countries in the course of succession proceedings upon submission of relevant written documents in connection with estates and data relating thereto;
 10) a person who controls the declaration 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 tasks provided in the Money Laundering and Terrorist Financing Prevention Act and International Sanctions Act;
[RT I, 21.11.2020, 1 - entry into force 01.01.2021]
 12) a credit institution;
 13) a financial institution holding an activity licence issued by the Financial Supervision Authority;
 14) another person who proves that the objective of obtaining the data is prevention of money laundering or terrorism.

 (2) A unit-holder or shareholder or person authorised by them has 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]

Subchapter 4 Special Rules Applicable to Unit of Pension Fund 

Division 1 Special Rules applicable to Unit of Pension Fund and Fees Paid for Account of Pension Fund 

§ 64. Special rules for unit of pension fund

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

 (2) Units of pension funds may only be acquired or owned by natural persons and a pension fund manager or person who has operated as a pension fund manager on the conditions and in accordance with the rules provided in §§ 68–72 of this Act.

 (2¹) An insurer may also acquire and hold units of a mandatory pension fund as underlying assets of an insurance contract for a unit-linked mandatory funded pension provided in Subchapter 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 may not be transferred or encumbered.

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

 (5) A fractional unit of a pension fund must be indicated to the accuracy of at least three decimal places.

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

 (7) [Repealed – RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (8) Units of a pension fund, except for a pension fund registered as a PEPP, are registered in accordance with the provisions of the Securities Register Maintenance Act.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (9) A person appointed by the Guarantee Fund on the basis of subsection 1 of § 92 of the Guarantee Fund Act also has 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 is based on the provisions of §§ 23–27, 31, 40–52⁵ and 55–60 of the Funded Pensions Act.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (11) Where a unit-holder of a mandatory pension fund dies, the trustee in bankruptcy in the case of bankruptcy of their estate, or in the case of making a claim for payment against their estate in enforcement proceedings, the enforcement agent has the right to request redemption of the units of the mandatory pension fund held in their pension account or, in the case of the liquidation of such fund, making of payments.
[RT I, 03.06.2022, 5 - entry into force 01.01.2023]

 (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 in accordance with enforcement proceedings, the trustee in bankruptcy or the enforcement agent, 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 events not specified in subsections 11 and 12 of this section, it is prohibited to make a claim for payment on the units of a pension fund.

§ 65. Issue and redemption fees of units of mandatory pension fund and special rules for fees and charges paid and expenses covered for account of pension fund

 (1) An acquirer of a unit of a mandatory pension fund is not 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 may 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 a unit-holder of a mandatory pension fund who has been established to have no work ability or who is in the pensionable age provided by the State Pension Insurance Act or who will reach such age in five years or less.
[RT I, 28.12.2020, 1 - entry into force 02.01.2021]

 (3¹) The rate of the base management fee of a mandatory pension fund may 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 are 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 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 a conservative pension fund.
[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 on the basis of the Guarantee Fund Act, supervision fee payable on the basis of the Financial Supervision Authority Act and the registry fee payable to the registrar of the pension register and other fees related to the management of a mandatory pension fund and not specified in clauses 1, 3 and 4 of subsection 1 of § 58 of this Act are 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 3 of subsection 1 of § 58 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 interest between a 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 is 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, in accordance with the prospectus of the pension fund, 0.4 per cent of the asset value of this fund.

 (2) Where the total amount of the value of the assets of the mandatory pension funds of a pension fund manager provided 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) A 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 in accordance with 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 is 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 is determined with an accuracy of at least two decimal places.

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

 (6) A pension fund manager is not required to implement the provisions of this section to its mandatory pension fund in the case of which the rate of the base management fee indicated in the prospects is 0.4 per cent or less of the asset value of the pension fund.

 (7) The rules for calculation of the reduction of the rate of the base management fee of a mandatory pension fund may be specified by a regulation of the minister in charge of the policy sector.
[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 where 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 the social tax as of 31 December of the year of registration of the pension fund.

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

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

 (4) The success fee is calculated once a year. The accounting period is a year with a start date and end date of 31 December. The success fee is 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) Where 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 is 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 provisions of subsection 5 of this section, or two per cent of the asset value of this pension fund.

 (7) Where 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) Where 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 is 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 rules for calculation of the success fee of a mandatory pension fund may be specified by a regulation of the minister in charge of the policy sector.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 66. Special rules for suspension of issue and redemption of units of mandatory pension fund

 (1) Where the issue of units of a mandatory pension fund is suspended, the registrar of the pension register keeps the funds received for the acquisition of such units in the bank account specified in subsection 1 of § 12 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 authorization (hereinafter in this Subchapter authorization).

 (3) In order to apply for an authorization, a fund manager submits to the Financial Supervision Authority a written petition and the following data and documents (in general, petition, data and documents hereinafter in this Subchapter  petition):
 1) data specified in subsection 4 of § 5¹ of the Securities Register Maintenance Act concerning the number of units of the pension fund which have been issued and redeemed during the month preceding submission of the petition, 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 a unit and change in the redemption fee of a unit during the month preceding submission of the petition;
 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 authorization is required where 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 units of a mandatory pension fund, units of this pension fund may be issued only to the fund manager and on the basis provided in subsection 2¹  of § 32 of the Funded Pensions Act to unit-holders of the mandatory pension fund.

§ 67. Processing of and decision on petition for authorization and refusal to issue authorization

 (1) Where a petition is not in compliance with the requirements provided in subsection 3 of § 66 of this Act, the Financial Supervision Authority requests elimination of deficiencies by the applicant.

 (2) The Financial Supervision Authority may request submission of additional data and documents where it is not convinced on the basis of the petition as to whether the suspension of the units of a mandatory pension fund is in compliance with the requirements established by legal instruments or where other circumstances 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 an on-site inspection, order examinations and a special audit, consult state databases, request oral explanations from managers of the fund manager, the audit firm, their representatives and third parties concerning the contents of the documents submitted and the circumstances 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 are submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review a petition where 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 makes a decision on issue of or refusal to issue an authorization within five working days after receipt of the petition and communicates the decision promptly to the fund manager.

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

Division 2 Special Rules for Acquisition and Redemption of Own Units of Pension Fund Manager 

§ 68. Own units of pension fund manager

 (1) A pension fund manager may hold units of the pension fund 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) a mandatory pension fund within three months after the fund manager assumes the management of the pension fund;
 2) on the conditions determined by the Financial Supervision Authority within six months after redemption of units in the case provided in subsection 2¹  of § 32 of the Funded Pensions Act.

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

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

 (8) A compliance notice concerning acquisition of additional units and the conditions thereof are issued to a pension fund manager by the Financial Supervision Authority.

 (9) For the purposes of this Division 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 is 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 a mandatory pension fund which management the fund manager has transferred when no more than three months have passed from the transfer of its management.

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

 (1) A pension fund manager acquires own units of a pension fund and redeems units of a pension fund held by it on the conditions and in accordance with the rules provided in this Act and legal instruments established on the basis of this Act.

 (2) A pension fund manager notifies 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 submits 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) Informing the Financial Supervision Authority in accordance with subsection 2 of this section is not required in the case of a mandatory pension fund where the 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 compliance notice of the Financial Supervision Authority in accordance with the provisions of subsection 8 of § 68 of this Act or §§ 32–35 of the Funded Pensions Act.

 (4) The provisions of this Subchapter concerning a fund manager also apply, with regard to redemption of units, to a person who no longer manages 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 manager

 (1) The Financial Supervision Authority may, by a compliance notice, prohibit the acquisition of own units by a fund manager or determine the maximum number of the acquired units where:
 1) the data or documents submitted upon notification do not comply with the requirements provided by legal instruments 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 compliance notice, prohibit redemption of units by a pension fund manager or determine the maximum number of the redeemed units where:
 1) the data or documents submitted upon notification do not comply with the requirements provided in this Act or are inaccurate or misleading;
 2) the Financial Supervision Authority has issued a compliance notice to the pension fund manager and it has not been complied with by the due date;
 3) 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 in subsection 2, 3, 4 or 7 of § 68 of this Act;
 4) 12 months have not passed after the approval of the fund rules of the mandatory pension fund;
 5) the pension fund manager has deferred payment of a quarterly contribution on the basis of subsection 2 of § 67 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 after 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) 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 manager at request of Financial Supervision Authority

 (1) The Financial Supervision Authority may request, by a compliance notice, redemption of the own units of a pension fund where 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 section, the Financial Supervision Authority may request, by a compliance notice, that:
 1) units of a mandatory pension fund be acquired where 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 2 and 3 or subsection 4 of § 68 of this Act;
 2) units of the mandatory pension fund be acquired where this is necessary in order to guarantee compensation for the loss specified in subsection 1 of § 32 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 where more than nine months have passed after the management authority of the pension fund was transferred.

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

 (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.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (2) Where the Financial Supervision Authority refuses to give consent, the grounds provided in § 70 of this Act apply. The Financial Supervision Authority promptly also communicates the grant of or refusal to grant consent to the registrar of the pension register.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

 (3) The Financial Supervision Authority refuses to delete any or part of the units held by a fund manager where any of the circumstances specified in subsection 1 of § 32 of the Funded Pensions Act arise.

 (4) In the case provided in subsection 3 of this section, the rules for compensation for loss provided in §§ 32–35 of the Funded Pensions Act are applied.

 (5) A pension fund manager submits a petition 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 appends the consent of the Financial Supervision Authority for deletion of the units. The registrar of the pension register transfers the money for the units deleted on the basis of the petition to the fund manager.
[RT I, 26.06.2017, 1 - entry into force 06.07.2017]

Chapter 10 Information to be Disclosed and Reporting 

Subchapter 1 Prospectus and Key Information 

Division 1 Requirements for Prospectus and Key Information 

§ 73. General requirements for prospectus and key information

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

 (2) The prospectus must indicate as at which date its data are presented.

 (3) In addition to a prospectus, key information must be always prepared concerning a public offer of a fund which must comply with the requirements provided 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) Where the assets of a common fund are divided into sub-funds, the prospectus must provide data concerning each sub-fund of the fund, where these data differ from the general information about the fund. Where 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 are relevant in the case of different classes of units or shares of the same fund may be combined in a single document provided that this document complies with the requirements provided for key information.

 (7) Key information and, where necessary, translation thereof is 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).

 (7¹) Where a key information document prepared and made public in accordance with this Act for a UCITS complies with the requirements of Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) (OJ L 352, 09.12.2014, pp 1–23), it is not necessary to prepare a key information document in accordance with that Regulation with the consent of the Financial Supervisory Authority. Where a key information document is prepared for a UCITS in accordance with Regulation (EU) No 1286/2014 of the European Parliament and of the Council, the Financial Supervisory Authority may no longer require the preparation and disclosure of a key information document in accordance with this Act.
[RT I, 03.06.2022, 5 - entry into force 01.01.2023]

 (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 by this Act. The fund rules or articles of association are not appended to a prospectus where the prospectus contains a requirement that the fund rules or articles of association are sent to an investor at the request of the investor or where 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 Subchapter concerning a public offer, prospectus and key information of a fund do not apply to a closed-ended fund. The provisions of the Securities Market Act concerning a public offer of securities and admission thereof to trading on a regulated market apply to a public offer of this fund. In addition, the prospectus and key information of a public closed-ended fund must include a notation that the fund is a closed-ended fund due to which the shares or units of the fund are not redeemed at the request of shareholders or unit-holders before dissolution of the fund.
[RT I, 02.06.2021, 1 - entry into force 12.06.2021]

§ 74. Data disclosed in prospectus

 (1) A prospectus must include the following updated information concerning the fund and sub-fund, 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 rules for exchange of units or shares where 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 a typical investor of the fund;
 6) the business name, registry code and seat of the depositary and fund manager and third parties to whom the tasks 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, except for liquidation expenses, and the rates of the management fee, including success fee, where charged, and depositary's charge;
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]
 8) the rules 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 rules 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 rules 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, where requested by an investor, the full description of the principles of remuneration is made available on paper free of charge.

 (2) A prospectus must provide the following information concerning the investment policy of a fund or sub-fund 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, where they are material for the development of the investment policy;
 2) to what extent the assets of the fund are invested in one person or securities issued by such person or other financial assets;
 3) in which states or persons located in the states 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 derivative transactions;
 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 6 of subsection 1 of this section, a prospectus must state, about the depositary of the fund, the general description of the depositary's tasks and conflicts of interest which may arise, including conflicts of interest which may arise upon outsourcing of the task of holding assets.

 (4) The information specified in subsections 1–3 of this section is not specified in the prospectus of a fund, where 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 country, 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 are established by a regulation of the minister in charge of the policy sector.

§ 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 periods, or where the rate of return of the fund is guaranteed, the rate of return in future periods;
 4) the fees and charges paid and expenses covered 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 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 compensations, composition of a remuneration committee, if any, reference to the address of the website and information that, where requested by an investor, the full description of the principles of remuneration is made available on paper free of charge.

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

§ 76. Compensation for loss to unit-holder or shareholder

 (1) Where a prospectus or key information of a fund (prospectus and key information jointly hereinafter in this Subchapter 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 compensated the unit-holders or shareholders for a loss 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 where prospectuses are incomplete, including omission of relevant facts, where the incompleteness of the prospectuses results from the fund manager or public limited fund hiding of the information.

 (3) A fund manager or public limited fund has the right, with the consent of the unit-holder or shareholder, to compensate for a loss 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 loss.

 (4) The obligation to compensate for a loss specified in subsections 1 and 2 of this section also rests with the fund manager or public limited fund where 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 is not required to compensate for a loss on the basis of this section where 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 where 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 loss was caused intentionally.

 (6) A fund manager or public limited fund must compensate for a loss 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 are void.

Division 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 to 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 by the prospectuses or subsection 4 of § 78 of this Act.

 (3) The Financial Supervision Authority may, by a compliance notice, require:
 1) amendments to prospectuses and disclosure of the amendments where the prospectuses do not fulfil the conditions provided in the fund rules, articles of association or legal instruments;
 2) compliance with the requirements provided in subsection 4 of § 78 of this Act 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 by 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 is submitted to the Financial Supervision Authority together with amended prospectuses.

 (2) Materiality of amendments to prospectuses is presumed where 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 where 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 is not assessed where:
 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 amendments 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 legal instruments 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 ensures an opportunity to a unit-holder or shareholder 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 is not less than the net asset value of the unit or share.

 (5) In order to notify of the opportunity provided in subsection 4 of this section, a fund manager publishes, 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 in this section, amendments to prospectuses enter into force and an offer 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 time limit for entry into force is provided in the prospectuses. Where 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-fund

 (1) Where 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 Subchapter applicant) submits to the Financial Supervision Authority a written petition and the following data and documents (petition, data and documents jointly hereinafter in this Subchapter petition):
 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) Where a petition is not in compliance with the requirements provided in subsection 1 of this section, the Financial Supervision Authority requests elimination of the deficiencies by the applicant.

 (3) The Financial Supervision Authority may demand submission of additional data and documents where 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 the fund by legal instruments, or where other circumstances relating to the fund need to be verified.

 (4) Deficiencies of a petition 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 a petition where 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 a petition, the Financial Supervision Authority returns the submitted documents without making a decision.

 (6) The Financial Supervision Authority may refuse to approve amendments to prospectuses where:
 1) the sub-fund, including the investment policy thereof, does not comply with the provisions of the prospectuses, fund rules or legal instruments;
 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 where the information set out in the prospectuses about the sub-fund is insufficient.

 (7) The Financial Supervision Authority makes 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 petition.

 (8) The Financial Supervision Authority promptly communicates 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 deadline for entry into force is provided in the prospectuses.

Subchapter 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 does 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 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 promptly discloses 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 Subchapter concerning a fund also apply to disclosure of information concerning a sub-fund of a common fund.

 (6¹) The requirements for publication of information on UCITS are provided in Regulation (EU) 2019/1156 of the European Parliament and of the Council on facilitating cross-border distribution of collective investment undertakings and amending Regulations (EU) No 345/2013, (EU) No 346/2013 and (EU) No 1286/2014 (OJ L 188, 12.07.2019, pp 55–66).
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

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

 (8) More specific requirements for information to be disclosed concerning a fund may be established by a regulation of the minister in charge of the policy sector.

§ 81. Disclosure of fund documents and language requirements

 (1) A fund manager or public limited fund makes the documents required in accordance with this Act and legal instruments issued on the basis of this Act 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 reports of the fund where 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 are disclosed in a form reproducible in writing. At the request of an investor, a fund manager or public limited fund gives a copy of the documents to the investor free of charge.

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

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

 (6) Where 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) Where 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 apply.

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

§ 82. Disclosure of rate of return of fund

 (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 in accordance with 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) Where a fund has sufficient history, the rate of return is disclosed at least per calendar year or at least the last 12 months. No annual rate of return is 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 a fund which mainly invest in money market instruments. In this case it must be indicated that the rate of return is annualized.

 (4) Where 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 is 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 a sub-fund of a common fund.

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

Subchapter 3 Accounting and Reporting 

§ 83. Organization of accounting

 (1) The accounting and reporting of a fund is organized on the basis of the Accounting Act, this Act, other legal instruments issued on the basis of this Act and the accounting policies and procedures of the fund manager or fund. In the case of a conflict between this Act and other legal instruments, this Act applies.

 (2) The provisions of the Accounting Act concerning financial statements apply to annual accounts of a common fund, unless otherwise provided by this Act. The provisions of the Accounting Act concerning annual reports apply to annual reports of a public limited fund, unless otherwise provided by this Act.

 (3) Where the assets of a common fund are divided into sub-funds, the provisions of this Act concerning annual reports also apply to preparation of the annual reports of a sub-fund, unless otherwise provided by 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 country may prepare, submit and disclose the annual accounts or annual reports of a fund 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 country.

 (4¹) The annual or semi-annual reports or annual report of a fund includes 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, includes 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 managers and employees to whom the principles of remuneration must be applied.

 (6) The fund manager of a UCITS submits 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) the results of the review of the implementation of the principles of remuneration by the supervisory board or remuneration committee of the fund manager, if any, and of internal control, and information on deviations in implementation;
 3) material amendments made to the principles of remuneration.

 (7) The requirements for the contents of accounts and reports and methods of preparation of the accounts and reports are established by a regulation of the minister in charge of the policy sector.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

§ 84. Requirements for organization of accounting of common fund

 (1) The accounting of a common fund is organized 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 2 of § 15 and subsection 3 of § 18 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 organization of accounting of public limited fund

 (1) The provisions of the Accounting Act apply to the accounting and reporting of a public limited fund, including annual reports and semi-annual reports, unless otherwise provided by this Act or legal instruments established on the basis of this Act.

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

§ 86. Audit obligation

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

 (2) The audit firm of a common fund is appointed by the management board of its fund manager. The audit firm of a public limited fund is 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 a common fund and public limited fund must be audited. The provisions concerning an audit in the Auditors Activities Act and other legal instruments apply to an audit, taking account of special rules provided in this Act.

§ 87. Notification obligation of sworn auditor

 (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 legal instruments governing the activities of the fund manager, fund or depositary;
 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 pecuniary harm 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 forwarding 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 a legal instrument or a contract.

§ 88. Reports submitted to Financial Supervision Authority

 (1) A fund manager prepares and submits to the Financial Supervision Authority reports on the supervision over the funds managed by it (hereinafter in this Subchapter reports) in accordance with the rules provided in this Act and legal instruments issued on the basis of this Act. A public limited fund prepares reports and submit them to the Financial Supervision Authority in accordance with the rules provided in this Act or legal instruments issued on the basis thereof, unless the fund manager submits the reports in accordance with its management contract in the name of the public limited fund.

 (2) A fund manager or public limited fund prepares and submits 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 prescribed by legal instruments.

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

 (5) The reports submitted to the Financial Supervision Authority must be in the Estonian language. A fund manager founded in a foreign country may submit reports of a fund 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 a fund in the English language from a fund manager founded in a foreign country.

 (6) In addition to the provisions of this Subchapter, 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 tasks 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 and submitted to the Financial Supervision Authority, the Financial Supervision Authority may submit data to the Ministry of Finance for performance of the tasks in accordance with the Government of the Republic Act and to Eesti Pank for performance of the tasks in accordance with the Official Statistics Act.

 (8) A list of the reports submitted to the Financial Supervision Authority and the contents, methods of preparation and the rules for submission thereof are established by a regulation of the minister in charge of the policy sector.

Subchapter 4 Special Rules for Offer of Alternative Fund, Disclosure of Information and Reporting 
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

§ 89. Application of Subchapter

 (1) The provisions of this Subchapter apply to an alternative fund managed by the alternative fund manager and publicly offered in Estonia or another EEA Member State.

 (2) The provisions of this Subchapter applicable to an alternative fund also apply to a sub-fund.

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

 (1) A fund manager must make at least the following information concerning a fund available to an investor in addition to the information provided in the fund rules, articles of association and prospectus:
 1) applicable legal instruments, jurisdiction and dispute resolution rules, and reference to judgments recognition and enforcement rules;
[RT I, 04.12.2019, 1 - entry into force 14.12.2019]
 2) business name, registry code and seat of the audit firm;
 3) rules for mitigation and prevention of conflicts of interest which includes the rules for mitigation and prevention of conflicts of interest upon outsourcing of the tasks 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 arising from 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 interest 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) where the fund is a feeder fund or where 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 promptly notifies investors of all the agreements pursuant to which the liability of the depositary is limited in accordance with subsection 4 of § 298 of this Act and of all amendments 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 in accordance with Commission Delegated Regulation (EU) No 231/2013;
 2) the rules 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, rules for reuse of assets and collateral securities, 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 collateral securities or other guarantees issued under leveraging arrangements;
 4) the total amount 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 events provided in the Commission Delegated Regulation (EU) No 231/2013, including changes in the rules 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 an alternative fund (hereinafter in this section report).

 (2) Where a report is disclosed in accordance with the requirements of the Securities Market Act applicable to an issuer, the information specified in subsection 5 of § 83 of this Act and subsection 1 of this section must be appended to the report, unless this information is disclosed in the issuer's report.

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

§ 91¹. Additional requirements for fund manager where alternative fund is offered to person who is not professional investor

 (1) An alternative fund may be offered to a person who is not a professional investor, provided the fund manager:
 1) executes orders for subscription, acquisition and redemption of investor's units or shares in accordance with the conditions provided in the fund rules or articles of association;
 2) provides the investor with information on how to make the orders specified in clause 1 of this subsection and how the income received for the units or shares is paid out;
 3) provides the investor with information about their rights arising from investment in an alternative fund in an EEA Member State where the alternative fund is marketed;
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]
 4) makes the information specified in §§ 90 and 91 of this Act available to the investor for examination and copying;
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]
 5) notifies the Financial Supervision Authority of a contact person who mediates the necessary information to the Financial Supervision Authority;
 6) provides the investor with information on a durable medium on how the fund manager performs the tasks specified in this subsection.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

 (2) A fund manager performs the tasks specified in subsection 1 of this section in the Estonian or English language and by electronic means.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

 (3) The tasks specified in subsection 1 of this section may be performed by a fund manager, third party or both. Where a fund manager transfers the performance of the tasks specified in subsection 1 to a third party, a written contract is entered into for this purpose. The contract specifies the division of tasks and provides the right of a third party to receive from the fund manager the information and relevant documents necessary for the performance of the tasks.
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]

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

 (1) An alternative fund manager prepares and submits 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 in accordance with Commission Delegated Regulation (EU) No 231/2013;
 2) the rules 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) the types of assets of the fund;
 5) the results of stress tests.

 (3) Where leverage is employed on a substantial basis upon management of the assets of a fund, the fund manager submits 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 identifies 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 submits 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 in Annex IV of the Commission Delegated Regulation (EU) No 231/2013.

Subchapter 5 Special Rules for Disclosure of Information and Reporting on Pension Fund 

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

 (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 1, 2 and 4 of subsection 2 of § 81 of this Act and in the case of a mandatory pension fund, the latest statement of investments thereof.

 (1¹) The prospectus of an occupational pension fund must specify, in addition to the information specified in subsection 2 of § 74 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, climate, 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 is prepared in accordance with the regulation of the minister in charge of the policy sector established on the basis of subsection 7 of § 83 of this Act and is disclosed by the 15th date of the month following the reporting period.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

 (2¹) No semi-annual reports are prepared for a pension fund.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

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

 (4) A mandatory pension fund manager submits 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 does 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) An employer who intends to commence making of contributions or makes contributions to an occupational pension fund, employees, servants, members of management and control 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 is made available to the persons specified in subsection 6 of this section within four months after the end of a 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 in accordance with § 94¹ of this Act in a form reproducible in writing. At the request of a unit-holder, the fund manager issues 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 notifies unit-holders of the methods of payments of supplementary funded pension.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 94. Additional requirements for key information of pension fund

 (1) The key information of a pension fund includes under practical information in addition to that provided 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 conditions of exchange, redemption of units and making of payments.

 (2) The key information of a mandatory pension fund includes under fees and charges, in addition to that provided 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 3 of subsection 1 of § 58 of this Act for the account of the mandatory pension fund.

§ 94¹. Pension statement of occupational pension fund

 (1) A pension statement of an occupational pension fund 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 to the unit-holder are commenced in accordance with the rules of the occupational pension fund;
 3) the name and contact details of the fund manager and the name of the occupational pension fund 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 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 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 during at least the last 12 months.

 (2) When using assumptions required for forecasting distributions to unit-holders from an occupational pension fund, the fund manager is 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 in charge of the policy sector.

 (4) Where 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 4 of subsection 1 of this section is submitted in a pension statement of the occupational pension fund together with a warning that distributions to a unit-holder in the estimated amount cannot 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 1, 2 and 4 of subsection 2 of § 81 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 a unit-holder should the employer terminate making of contributions for the unit-holder to the occupational pension fund.

 (7) Data which have 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 is 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 are used in an unaltered form and without supplements in all the EEA 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 informs 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 loss

 (1) Upon compensating for a loss caused to a unit-holder of a mandatory pension fund, the units redeemed in accordance with subsection 3 of § 76 of this section are exchanged for the units of another mandatory pension fund chosen by the unit-holder on the conditions provided in the Funded Pensions Act concerning exchange of units.

 (2) Upon redemption of units of a voluntary pension fund, the rules for making of distributions or exchange of units provided in the Funded Pensions Act are implemented.

§ 96. Special rules for amendments to information contained in prospectus and key information of pension fund

 (1) The regulation on amendment of the prospectus and key information of a fund provided 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 special rules provided in this section.

 (2) The provisions of subsections 4–6 of § 78 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 in the first sentence of subsection 5 of § 24 of the Funded Pensions Act but not earlier than 100 calendar days after publication of a respective notice.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (4) The fund manager has 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 are disclosed by the fund manager to unit-holders promptly after submission thereof to the Financial Supervision Authority for information. The fund manager notifies 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 

Subchapter 1 General Requirements for Investment of Assets of Public Fund 

§ 97. Application of Chapter

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

 (2) Where the assets of a common fund are divided into sub-funds, each sub-fund is treated as a separate fund in this Chapter.

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

§ 98. General requirements for investment of assets of fund

 (1) Upon investment of the assets of a fund, it must 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 fund 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 in the basic document and prospectus of the fund.

 (3) Where 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 may not:
 1) give any guarantee or other form of collateral security 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 fund

 (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 must be sufficient and proportionate to the nature, extent and complexity of the investments of the assets of the fund.

 (2) The risk management rules set out among other things the following:
 1) transparent organizational 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 rules 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 rules for notification of the managers of the fund manager;
 4) measures which must 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 rules for measurement and management of risks specified in clause 3 of subsection 2 of this section must allow to establish, measure, manage and continuously monitor the market risk, liquidity risk, operational risk and counterparty risk and other risks of each fund.

 (4) The rules 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 rules for measurement and management of risks determine among other things the following:
 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) periodic back-testing in order to assess suitability of the rules 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, where necessary, 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 must be performed, where necessary, 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 compliance notice, amendment of risk management rules where the rules:
 1) do not comply with the requirements provided 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 establishment 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 items of immovable property and valuation of items of immovable property

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

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

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

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

 (5) Items of immovable property of a fund are valued at least once as at the end of a financial year before the audit of the annual report of the fund is conducted.

 (6) The Financial Supervision Authority may require, by its compliance notice, revaluation of items of immovable property where valuations of items of immovable property:
 1) do not comply with the provisions of the fund rules or articles of association;
 2) were not objective;
 3) do not enable adequate establishment 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 interest 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 a company 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 may not be transferred to:
 1) the fund manager or a company 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) another fund managed by the fund manager, except for 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, where 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 subsection.

 (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 may be acquired for the account of a fund from persons specified in subsection 3 of this section, except for the cases provided 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 tasks have been outsourced.

§ 102. Violation of requirements and compensation for loss

 (1) Violation of the requirements provided 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 a loss caused by the violation.

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

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

Subchapter 2 Investment of Assets of UCITS 

Division 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 established 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-ended fund.

 (3) The provisions in this Subchapter concerning investment in units or shares of other funds do not apply to units and shares of a closed-ended fund.

 (4) Assets of a UCITS may not be invested in precious metals and certificates representing them.
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]

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

§ 104. Special rules for investment of assets of UCITS and risk spreading

 (1) Upon investment of the assets of a UCITS, the requirements provided 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 prescribed by §§ 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) Restrictions on risk-spreading provided 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 must 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 where 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 derivative transactions

 (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 must fulfil the following conditions:
 1) their use must be economically inexpedient and they have to 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 must be sufficiently mitigated by the risk management system implemented;
 4) the use thereof must under no circumstances cause divergences from the investment objectives provided in the fund 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, price 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 prescribed 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) Where the securities or money market instruments embed derivative features (hereinafter embedded derivatives and money market instruments), the provisions of this Subchapter regarding derivative instruments must be applied 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 are established by a regulation of the minister in charge of the policy sector.

Division 2 More 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, where 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 a third country comply in the opinion of the Financial Supervision Authority with the requirements which are at least as strict as those provided in the legal instruments 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 it is possible to 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, in accordance with their conditions of issue, the securities are 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 a regulated market (hereinafter money market instrument not traded on a regulatedmarket), where 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 instrument is 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 organization in which the EEA Member State is a member, shareholder or partner;
 2) the money market instrument is issued by a person which has issued other securities traded on a regulated market;
 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 founded 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 subsection which is subject to prudential requirements and in the case of which the financial supervision is in compliance with as strict requirements as provided 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 in accordance with 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 in the regulation of the minister in charge of the policy sector established on the basis of subsection 5 of this section.

 (3) The requirement provided in clause 4 of subsection 2 of this section are met where:
 1) the issuer of the money market instrument was founded in an OECD member country belonging to the G10 (Group of Ten);
 2) the issuer of the money market instrument has been assigned at least an investment grade;
 3) it can be proven on the basis of 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 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) More specific requirements for an issuer of a money market instrument are established by a regulation of the minister in charge of the policy sector.

§ 108. Qualifying criteria for investment in securities

 (1) When investing the assets of a UCITS in securities, the securities must fulfil the following conditions:
 1) the potential loss 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 a unit-holder or shareholder 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 freely 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 mitigated by the policy for the management of the risks of the fund and the rules of implementing thereof.

 (2) The value of the securities traded or to be admitted to trading on a regulated market must be established accurately and reliably on the basis of the market price or the price established 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 established periodically on the basis of the information made public by their issuers or a competent investment research.

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

 (4) The conditions provided in clauses 2 and 5 of subsection 1 of this section are fulfilled where 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 2 and 5 of subsection 1 of this section must be determined separately.

§ 109. Specifying conditions for investing in units or shares of closed-ended fund

  Upon investment of the assets of a UCITS in units or shares of closed-ended funds, these units or shares must comply with the following conditions:
 1) the conditions provided in §§ 107 and 108 of this Act are complied with;
 2) the requirements for investor protection and management or management bodies of the fund manager or fund are 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 where it fulfils one of the following conditions:
 1) the redemption or maturity of the money market instrument is up to 397 days;
 2) the interest rates of the money market instrument are regularly adjusted in accordance with money market conditions at least every 397 days;
 3) the risk profile of the money market instrument, including the 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 interest adjustments in accordance with clause 2 of this subsection.

 (2) A money market instrument is understood to be liquid where 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 established at any time where relevant and reliable valuation systems are implemented to establish 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 valuation models based on amortised costs.

 (4) The conditions provided in subsections 2 and 3 of this section are fulfilled where 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 must be determined separately.

 (5) When investing 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 a regulated market, 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) Where the issuer of a money market instrument that is not traded on a regulated market is a person specified in clauses 2–6 of subsection 2 of § 107 of this Act or regional or local authority of an EEA Member State or international organization 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 must contain, in addition to the information provided 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) Where the issuer of a money market instrument is a person specified in clause 2, 5 or 6 of subsection 2 of § 107 of this Act or a state of an EEA Member State or regional or local authority of an EEA Member State or international organization which member, shareholder or 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 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 a regulated market or derivative instruments acquired over-the-counter, where 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 in this Subchapter and in which investment is permitted in accordance with 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 in accordance with the fund rules, articles of association or prospectus of the fund;
 3) securities or other financial indices in which investment is permitted in accordance with 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 derivative transaction 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 a derivative instrument 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 in a transaction between knowledgeable, interested and unrelated parties.

 (4) Reliable valuation is deemed to be valuation which corresponds to the concept of fair price provided 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, where 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 derivative transactions 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 where necessary.

 (5) Derivative instruments acquired over-the-counter are also deemed to include credit derivatives where they comply with the provisions of subsections 2–4 of this section and the following conditions are met:
 1) they enable transfer of the credit risk of an underlying asset provided 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 mitigated by the risk management rules and internal control measures prescribed for risk management and applicable to the fund.

§ 112. Additional conditions for derivatives linked to financial indices

 (1) In the case of a derivative instrument linked to financial indices, the assets used as the basis for compiling the 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 Subchapter, except for non-negotiable securities and money market instruments specified in subsections 2 and 4 of § 107 of this Act, these assets must be diversified at least in accordance with 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 2 and 4 of § 107 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 must represent an adequate benchmark replicating the market and the following conditions must be fulfilled:
 1) the index must adequately measure the return on the underlying assets;
 2) the index is 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 where necessary.

 (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 forwarding timely or accurate information must be provided on a sufficiently wide and timely basis.

 (4) Where the composition of the underlying assets 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 is treated as a combination of the underlying assets specified in clauses 1 and 2 of subsection 1 of § 111 of this Act, in the case the conditions provided in subsections 1 and 2 of § 111 of this Act are fulfilled.

§ 113. Embedded derivatives and money market instruments

 (1) Embedded derivatives are the securities which meet the conditions provided 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 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 asset that is separate from the 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) A money market instrument which embed a derivative is a money market instrument which complies with one of the conditions provided in subsection 1 of § 110 of this Act and all the conditions provided in subsections 2 and 3 of § 110 and which contains a component which fulfils the conditions provided in subsection 1 of this section.

 (3) A security or money market instrument is not regarded as an embedded derivative where it contains a component which is contractually transferable independently of the specified security. Such a component is 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 in subsection 3 of § 105 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 meets 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 a unit-holder or shareholder within a reasonable time period;
 3) financial supervision is exercised over the fund in accordance with the requirements of the legal instruments of the European Union or requirements which are at least as strict as the requirements of the legal instruments of the European Union, and co-operation 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 fund 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.

Division 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 by this Division.

 (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 derivative transaction may constitute up to ten per cent of the value of the assets of the fund where its counterparty is a credit institution in the deposits of which the assets of a UCITS may be placed in accordance with 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) Where 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 section 4 of this section do not apply to:
 1) over-the-counter derivative transactions where financial supervision is exercised over the prudential requirements applicable to the credit or financial institution which is a party to the transaction;
 2) 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 derivative transactions 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 where 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 organization 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, where:
 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, where all the following conditions are met:
 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;
 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) Where 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 fund. The provisions of the first 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 legal instruments 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. Special rules upon replication of financial index

 (1) Where 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 where 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 3 of subsection 1 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 interest 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 derivative transactions 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 amendments thereto, 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 continuously 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 may 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 tasks of the fund manager have been outsourced, except in the case the fund manager does not charge thereupon any redemption or issue fees.

 (4) The provisions of subsection 3 of this section also apply where 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 has been transferred.

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

§ 118. Restrictions on holding

 (1) No qualifying holding may be acquired or held through any shares carrying voting right 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 2–4 of subsection 2 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 where 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 organization which member at least one of the EEA Member States is;
 4) investments in shares of a company registered in a third country where the above specified person invests its assets in turn primarily in the securities of issuers registered in this country and where this is the only method of investment in the securities of issuers of this country in accordance with the legal instruments of this country;
 5) acquisition or holding of subsidiaries by a UCITS that is a public limited fund where 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 in clause 4 of subsection 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 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, a loan may be taken for acquisition of immovable property to the extent of up to ten per cent of the value of the assets of the fund, where the specified immovable property is 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 have not been 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 where 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 where the securities or other financial assets did not belong to the assets of the fund at the time of entry into the transfer deed.

Subchapter 3 Special Rules for Investment of Assets of Other Public Fund and Risk Spreading 

§ 120. Special rules for investment of assets of other public fund 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 by this Subchapter.
[RT I, 02.06.2021, 1 - entry into force 12.06.2021]

 (2) The assets of any other public fund may be invested in addition to the provisions of § 103 of this Act in:
 1) items of immovable property;
 2) precious metals and certificates representing them.
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]

 (3) The acquisition cost of an item of immovable property 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 item of immovable property together with the objects required for the management of the item of immovable property does 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 1 and 2 of § 107 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 any other public fund in other funds, the provisions of subsections 1 and 2 of § 117 of this Act do not apply, where 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 any other public fund may be invested in the units or shares of a fund not specified in § 114 of this Act, where 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 any other public fund may be placed in precious metals and securities which underlying asset is a precious metal or which price is dependent on a precious metal 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 any other public fund must not exceed the net asset value of the fund by more than twice.

 (9) The restrictions prescribed by §§ 115–117 of this Act and in this section 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 4 of § 286 of this Act within 24 months after approval of the fund rules or entry in the commercial register.
[RT I, 02.06.2021, 1 - entry into force 12.06.2021]

§ 120¹. Requirements for investment of assets and risk spreading of other public closed-ended fund

 (1) Where the other public fund is a closed-ended fund (hereinafter other public closed-ended fund), the provisions of this Chapter concerning a UCITS and of § 120 of this Act do not apply to investment of its assets, risk spreading and other transactions conducted with the assets of this fund, unless otherwise provided by this section.

 (2) The assets of another public closed-ended fund may be invested in the assets specified in subsection 2 of § 120 of this Act, taking into consideration the restrictions provided in subsections 3, 4, 7 and 8 and the restrictions provided in subsection 9 of § 120.

 (3) The other public closed-ended fund may invest all its assets in other funds, where the investments of the assets of these funds are made in turn in compliance with the requirement to diversity the investments to a sufficient extent between different securities and other assets.
[RT I, 02.06.2021, 1 - entry into force 12.06.2021]

Subchapter 4 Special Rules for Investment of Assets of Pension Fund and Risk Spreading and Additional Operational Requirements 

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

 (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 by this Subchapter.

 (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 and certificates representing them or raw materials;
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]
 3) securities specified in § 2 of the Securities Market Act, including securities which underlying assets are a precious metal or raw material;
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]
 4) items of immovable property.

 (2¹) In addition to as specified in subsection 2, a loan may be issued for the account of a 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 allowed to invest in the bonds issued by such persons. The limitations on investment in securities provided in this Subchapter apply to issue of a loan by a pension fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

 (2²) Up to 15 per cent of the value of the assets of a pension fund may be invested in the securities and money market instruments issued by one person, unless otherwise provided by this Subchapter.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (3) The restrictions provided in § 118 of this Act do not apply to investment of the assets of a pension fund.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (3¹) The term requirement provided in § 106 of this Act does not apply to investment of pension fund assets.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

 (4) Upon implementation of the requirements prescribed by 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 are not deemed to belong to the pension fund manager, and such person is not deemed to belong to the same consolidation group with the pension fund manager.

 (5) A pension fund may 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 where 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 in accordance with foreign law or to being the founders thereof.

 (6) The minister in charge of the policy sector 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. Investing in precious metals and raw materials
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

  Assets of a pension fund may be placed in precious metals, securities which underlying assets are raw materials, and certificates representing raw materials to the total extent of up to 25 per cent of the value of the assets of the pension fund.
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]

§ 124. Investment in securities and money market instruments and lending and borrowing
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (1) The assets of a pension fund may be invested in the securities and money market instruments not specified in subsections 1 and 2 of § 107 of this Act and on account of the assets the loan specified in subsection 2¹ of § 121 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 in clause 5 of subsection 1 of § 108 of this Act does not apply to the investments provided 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 may 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]

 (3) A loan may be taken for the account of a pension fund to the extent of up to 25 per cent of the value of the assets of the fund. A borrowing decision is made by the pension fund manager with exercise of required prudence and diligence, proceeding from the legitimate interests of unit-holders and assessing the need to take a loan on account of the pension fund and the capability to service this loan.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (4) The provisions of the first sentence of subsection 4 of § 119 of this Act do not apply where the assumption of obligations is carried out in order to ensure the performance of a transaction conducted on account of a pension fund or a company controlled by the pension fund or for the purpose of securing a loan.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

§ 125. Investment in other funds

 (1) Where 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 amount to 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 2 of § 117 of this Act do not apply.

 (3) Up to 50 per cent of the total value of the assets of a pension fund may be invested in units or shares of a fund not specified in § 114 of this Act which are not admitted to trading on a regulated market specified in clause 1 or 2 of subsection 1 of § 107 of this Act where the value of the units or shares of these funds can be determined accurately and reliably on the basis of the market price or another appropriate valuation system. The units or shares of the above specified funds are not regarded as securities for the purposes of this Chapter. The fund which units or shares have been admitted to trading on a regulated market specified in clause 1 or 2 of subsection 1 of § 107 of this Act are deemed to comply with the requirements provided in § 114.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (4) Where the assets of a mandatory pension fund are invested in units or shares of a fund which is not a UCITS, and in the case of which primarily derivative transactions are used for achievement of their investment objectives, particularly swaps, the provisions in this Chapter concerning derivative instruments apply. The restriction provided in subsection 1 of § 127 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. Derivative transactions 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, except for 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 may not total more than 25 per cent of the assets of a conservative pension fund. Upon calculation of an open net foreign exchange position, foreign exchange positions arising from investments made by this fund need not be taken into account in the case of investments made in the shares or units of another fund.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

§ 128. Investment in items of immovable property

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

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

 (3) The value of items of immovable property, units and shares of another fund or another company investing in items of immovable property and other securities may not total more than 70 per cent of the value of the assets of a voluntary pension fund and more than 40 per cent of the value of the assets of a mandatory pension fund.

 (4) The restriction provided 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 on the price of the immovable property or its changes.
[RT I, 03.12.2024, 3 - entry into force 13.12.2024]

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

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

 (1) A conservative pension fund is a pension fund the assets of which are invested, in accordance with the fund rules or prospectus, at least to the extent of 80 percent in total in:
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]
 1) deposits in credit institutions;
 2) bonds and other equivalent debt obligations (hereinafter in this section bonds);
 3) money market instruments provided 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 subsection, 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 are regarded as the securities specified in clause 2 of subsection 1 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 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 by a rating agency, where these bonds have no credit rating;
 3) which issuer, which parent undertaking is a credit institution has been assigned at least an investment grade by a rating agency, where these 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 of a rating agency.

 (3) In the case of a fund specified in clause 4 of subsection 1 of this section, the fund rules and articles of association or other respective documents must 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]

 (3¹) Investments of a conservative pension fund in shares, equity funds and other instruments similar to shares are fully taken into account, and they may not exceed in total 10 per cent of the value of the assets of the pension fund. The investments provided in this subsection together with investments in other instruments not specified in subsection 1 of this section may not exceed in total 20 per cent of the value of the assets of the pension fund.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (3²) For the purposes of this section, investments in instruments similar to shares are deemed to be investments in securities, deposits or other instruments which price or the income received from which depends in part or in full on the price of the share or other such instrument or its changes. The instruments specified in the first sentence of this subsection do not include the investment deposits specified in subsection 2 of § 89¹ of the Credit Institutions Act and debt securities in the case of which the principal amount is guaranteed.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (3³) For the purposes of this section, investments in funds in the case of which a material part of their assets is placed, directly or through other funds, in shares or other similar instruments are deemed to be investments in equity funds, and this constitutes one part of the normal investment policy of that fund.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (3⁴) The restrictions provided in the first sentence of subsection 3¹ of this section do not apply where the assets of the pension fund are invested in the shares of such companies or units or shares of such funds which assets are mainly invested in items of immovable property.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (4) A fund manager determines 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 in charge of the policy sector may specify, by a regulation, the requirements for investment of assets of a conservative pension fund, 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 interest upon investment in other funds

 (1) The total value of the shares and units of other 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 may not exceed 50 per cent of the value of the assets of the mandatory pension fund and all the conditions provided in subsections 3 and 4 of § 117 of this Act must be fulfilled.

 (3) Where 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 3 of § 117 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-ended 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 has been granted the right to manage or invest the assets of a fund of another fund manager by way of outsourcing the fund management tasks.
[RT I, 28.12.2018, 1 - entry into force 01.01.2019]

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

 (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 with a qualifying holding 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 with 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 units and shares of another fund. Investments in the instruments specified in the first sentence of this subsection which comply with the requirement provided in subsection 4 of this section on account of mandatory pension funds are permitted to the extent provided in subsections 1 and 2 of § 118 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 in accordance with the provisions of clauses 6 and 7 of subsection 1 of § 43 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 in subsection 3 of this section does not apply where:
 1) the security or money market instrument or the issuer thereof has been assigned an investment grade;
 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 legal instrument 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 special rules for restrictions on investment and disposition and for risk spreading to pension funds

 (1) The restrictions provided in subsection 1 of § 115 of this Act do not apply during 18 months after approval of the fund rules of a voluntary pension fund, except for 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 loss

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

Chapter 12 Transfer of Management of Fund 

Subchapter 1 Transfer of Management of Fund and Transfer of Management Authority to Depositary 

§ 134. Conditions of transfer of management of fund

 (1) Upon transfer of the management of a fund, one fund manager transfers 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 enter into a contract for transfer of the management of the fund. Amendments to the conditions of the management contract of a public limited fund are approved by the supervisory board of the public limited fund, unless otherwise provided by this Act or the articles of association of the public limited fund.

 (3) A contract for transfer of the management of a fund determines the conditions and rules 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 authorization of the Financial Supervision Authority is required to transfer the management of a fund.

 (6) After receipt of the authorization of the Financial Supervision Authority, the fund manager promptly discloses 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 transfer to the new fund manager. The fund manager which transferred the management of the fund and the new fund manager are 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 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. Procedure for authorization of transfer of management of fund

 (1) In order to obtain an authorization for transfer of the management of a fund, the fund manager which takes over the management of the fund (hereinafter in this Subchapter applicant) submits, at the latest on 20th day after the entry into force of the contract for transfer of the management of the fund, a written petition to the Financial Supervision Authority and the following data and documents (petition, data and documents jointly hereinafter in this Subchapter petition):
 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 petition, 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 specify among other things 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 the petition, 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 in this Act or legal instruments issued on the basis thereof. Upon processing of the petition, the compliance thereof with the requirements provided in subsection 1 of this Act is 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 authorization for transfer of the management of a fund and approval of the fund rules, articles of association or prospectus of the fund is made by the Financial Supervision Authority within two months from the receipt of the petition but not later than within one month after receipt of all the necessary data and documents.

 (4) The Financial Supervision Authority promptly communicates 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 authorization for transfer of management of a fund where:
 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 by legal instruments 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 harm the legitimate interests of unit-holders or shareholders become evident.

§ 136. Transfer to depositary of authority to manage fund

 (1) Where the authority of a fund manager to manage a fund terminates on the bases specified in subsection 7 of § 305 of this Act and the management of the fund is not transferred to another fund manager, the management of the fund transfers to its depositary.

 (2) The depositary and the fund manager promptly publish on its websites a notice concerning transfer of the management of the fund. Where 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 suspends the issue and redemption of the units or shares of the fund and publishes 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 this Act, the fund rules, articles of association, prospectus or depositary contract of the fund. The depositary may not issue or redeem 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 1 of § 184 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 the management of a fund and entry into a respective contract are 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 discloses a notice concerning transfer of the management of a fund to a new fund manager on its website.

 (8) Where 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.

Subchapter 2 Special Rules for Transfer of Management of Pension Fund 

§ 137. Special rules for transfer of authority and obligations related to management of mandatory pension fund
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

  The rights and obligations arising from the management of a mandatory pension fund 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 in the first sentence of subsection 5 of § 24 of the Funded Pensions Act but not earlier than 100 calendar days after publication of the notice specified in subsection 6 of § 134 of this Act.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

§ 137¹. Special rules for transfer to depositary of authority to manage pension fund

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

 (2) With the authorization of the Financial Supervision Authority, a depositary has the right to extend the term of transfer of the 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. Special rules for transfer of management of occupational pension fund

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

 (2) Transfer of the management of an occupational pension fund on the conditions provided in a contract may not harm the interests of 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 transfers the management of an occupational pension fund notifies the unit-holders of this pension fund of the 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 the unit-holders to whom distributions from the pension fund are already made.

 (5) In order to obtain an authorization for transfer of the management of an occupational pension fund, the fund manager which takes over the management of the fund must submit to the Financial Supervision Authority, in addition to the provisions of subsection 1 of § 135 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 EEA Member State, where the fund manager that transfers the management is a fund manager of the other EEA Member 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 the unit-holders to whom distributions from the occupational pension fund are already made;
 4) the name of the EEA Member State which social and labour law is applicable to the transferred occupational pension fund.

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

 (7) Where the receiving fund manager is a fund manager of another EEA Member State, the authorization of the financial supervision authority of this EEA Member State is required for transfer of the management of the fund differently from the provisions of subsection 5 of § 134 of this Act. In the case provided in this subsection, subsection 1 of § 135 of this Act does not apply to a petition for the authorization.

 (8) Where the fund manager which transfers the management is a fund manager of an occupational pension fund of another EEA Member State, the Financial Supervision Authority notifies the financial supervision authority of this EEA Member State of receipt of a petition for authorization to transfer an occupational pension fund and promptly forward the data and documents specified in subsection 1 and subsection 5 of § 135 of this Act to it.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 137³. Special rules for proceeding of petition to transfer management of occupational pension fund and issue of authorization

 (1) The Financial Supervision Authority makes a decision on issue of or refuse to issue an authorization to transfer the management of an occupational pension fund within three months after receipt of all the proper data and documents and delivers it promptly to the fund manager which receives the management of the fund.

 (2) The Financial Supervision Authority may refuse to review a petition where the petition contains essential deficiencies.

 (3) The Financial Supervision Authority may refuse to issue an authorization for transfer of management of an occupational pension fund where:
 1) the data or documents submitted upon applying for authorization do not meet the requirements provided in this Act or legal instruments established on the basis of this Act 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 harm 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 harm the financial situation of the fund manager receiving the management;
 4) the organizational 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 in this Act.

 (4) Where the fund manager, which transfers the management, is a fund manager of another EEA Member State, the Financial Supervision Authority issues an authorization for the transfer of the management of the fund only where the financial supervision authority of this EEA Member State agrees to the transfer of the management of the fund. Within two weeks after making a decision on issue of or refusal to issue an authorization for transfer of the management of an occupational pension fund, the Financial Supervision Authority notifies thereof the financial supervision authority of the EEA Member 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 EEA Member State, the Financial Supervision Authority notifies the fund manager receiving the management of the conditions of the offer of an occupational pension fund in the other EEA Member State within one week after receipt of these conditions from the financial supervision authority of the EEA Member State of the fund manager transferring the management.

 (6) Where the Financial Supervision Authority receives information from the financial supervision authority of another EEA Member State about changes in the conditions of the offer of an occupational pension fund, it promptly notifies the fund manager receiving the management thereof.

 (7) Where the fund manager receiving the management has not received the 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 authorization 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 in the legal instruments of the contracting state governing occupational pensions.

 (8) Where the fund manager transferring the management is an Estonian fund manager and the fund manager receiving the management is a fund manager of another EEA Member State, the Financial Supervision Authority grants its consent to transfer the management of an occupational pension fund within eight weeks after receipt of a respective petition from the financial supervision authority of the other EEA Member State.

 (9) The Financial Supervision Authority may refuse to grant its consent to transfer the management of an occupational pension fund where 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 harm 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 notifies the financial supervision authority of this contracting state of the 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 authorization to transfer the management of the fund.

 (11) The Financial Supervision Authority also notifies the financial supervision authority of any other EEA Member State, which occupational pension fund is offered in Estonia, of all significant changes in the conditions specified in subsection 10 of this section.

 (12) Section 438 or subsections 4–8 of § 440 of this Act do not apply to a cross-border offer associated with the transfer of the management of an occupational pension fund.

 (13) Where there is a disagreement between the Financial Supervision Authority and the financial supervision authority of another contracting state upon proceeding a petition for authorization to transfer the management of an occupational pension fund, the Financial Supervision Authority has the right to contact the European Insurance and Occupational Pensions Authority in order to settle the disagreement 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 

Subchapter 1 General Provisions 

§ 138. Application of provisions

 (1) The provisions of this Chapter concerning funds apply to division, transformation and merger of a sub-fund of a common fund.

 (2) The provisions of §§ 433¹–433¹⁰, 477¹–477¹⁰ ja 491¹–491¹⁰ of the Commercial Code do not apply to a cross-border merger, transformation and division.
[RT I, 23.12.2022, 2 - entry into force 01.02.2023]

§ 139. Prohibition of division

  Division of a fund is not permitted.

Subchapter 2 Merger of Fund 

Division 1 General Provisions on Merger of Fund 

§ 140. General requirements for 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 a cross-border merger of a common fund.

 (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.

 (6¹) A UCITS registered as a PEPP may only merge with another UCITS registered as a PEPP, and an alternative fund registered as a PEPP may only merge with another alternative fund registered as a PEPP.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (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 a merger of a common fund.

 (8) In the case specified in this Chapter, a fund may merge with a fund of another EEA Member State.

§ 141. Merger of common fund

 (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 a fund do not apply to a merger.

§ 142. Merger of public limited fund

 (1) The provisions of the Commercial Code do not apply to merger of a public limited fund, unless otherwise provided by this Chapter.

 (2) A public limited fund may merge in accordance with the provisions of subsections 1–5 of § 391 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 on the basis of the law of an EEA Member State, unless otherwise provided by this Chapter. The provisions of this Act and of subsections 1–5 of § 391 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 merger

 (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 is 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 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 are redeemed before the merger.

 (4) The units or shares of a fund being acquired are 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-ended fund may be different from the net asset value of the units or shares on 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 are 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, in accordance with 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-ended fund on 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 1 of subsection 5 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 acquiring fund have the right to demand redemption of their units or shares without any redemption fee. Where possible, 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 have no right to demand redemption of the units or shares of the fund where the fund is a closed-ended fund or where 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 change 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 in this Act, a fund manager or public limited fund may suspend the issue or redemption of the units or shares of the fund, where 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. Special rules 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 ofUCITS).

 (2) Where a UCITS participates in a cross-border merger as a fund being acquired, the funds may merge in the manner provided in this Act.

 (3) Where a UCITS participates in a cross-border merger as an acquiring UCITS, the conditions provided 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 authorization for merger and notification of the merger taking effect.

Division 2 Application for Authorization for Merger of Fund 

§ 146. Authorization for merger

 (1) For merger of a fund, a fund manager or public limited fund must apply for an authorization from the Financial Supervision Authority (hereinafter in this Subchapter authorization for merger).

 (2) In order to apply for an authorization for merger, a written petition and the following data and documents (petition, data and documents jointly hereinafter in this Subchapter  petition 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 1 of § 153 of this Act;
 3) the information specified in § 156 of this Act which is given to the unit-holders or shareholders of each merging fund (hereinafter in this Subchapter merger information);
 4) an assessment of the impact of the merger on the financial situation 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) The petition 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. Where the data and documents specified in clauses 1 and 2 of subsection 2 of this section are not submitted in the Estonian language, the Financial Supervision Authority may request translation of the documents into Estonian.

 (4) Where 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) Where 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, a petition for approval of establishment or foundation of a new fund in accordance with the provisions of § 31 of this Act or a petition 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 petition for an authorization 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. Where any other petition is appended to the petition for authorization for merger or any other petition 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 time limit 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, where necessary, is applicable in line with the right provided in § 144 of this Act.

§ 147. Proceedings concerning authorization for merger

 (1) Upon merger, the Financial Supervision Authority examines the petition 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 in this Act and whether the merger information is sufficient.

 (2) Where the petition is not in compliance with the provisions of subsection 2 of § 146 of this Act, the Financial Supervision Authority may require elimination of deficiencies by the applicant within ten working days after receipt of the petition.

 (3) Where 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 authorization for merger in compliance with subsection 2 of § 146 of this Act.

 (4) The deficiencies specified in subsections 2 and 3 of this section are eliminated and the data and documents submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority notifies 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 authorization for merger within two months after receipt of a proper petition.

§ 148. Bases for refusal to issue authorization for merger

  The Financial Supervision Authority may refuse to issue an authorization for merger where:
 1) the merger conditions of funds do not comply with the requirements provided by legal instruments 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 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. Special rules for cross-border merger of UCITS

 (1) The Financial Supervision Authority makes a decision to issue an authorization for cross-border merger of a UCITS where the UCITS participates in a cross-border merger as a UCITS being acquired. The provisions concerning an authorization for merger specified in this Subchapter apply to an authorization for cross-border merger of a UCITS, unless otherwise provided by this Subchapter.

 (2) In order to apply for an authorization for cross-border merger of a UCITS, the manager of the fund being acquired or a public limited fund being acquired submits a petition to the Financial Supervision Authority. The prospectus and key information of the acquiring UCITS must be appended to the petition where the acquiring UCITS is a fund of another EEA Member State.

 (3) In addition to the provisions of this Subchapter, a petition and 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 any other language.

 (4) The Financial Supervision Authority forwards copies of the petition 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 2 of § 147 of this Act.

 (5) The Financial Supervision Authority notifies the manager of the fund being acquired or public limited fund being acquired and depositary of the issue of or refusal to issue an authorization for cross-border merger of a UCITS within 20 working days after receipt of a proper petition provided 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 notifies the financial supervision authority of the home country of an acquiring UCITS, and where applicable, of a UCITS being acquired of another EEA Member State of issue of or refusal to issue an authorization for cross-border merger.

 (6) In addition to the provisions of § 148 of this Act, the Financial Supervision Authority may refuse to issue an authorization for cross-border merger of a UCITS where 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) Where a UCITS participates in a cross-border merger as an acquiring UCITS, the Financial Supervision Authority assesses on the basis of a copy of the petition for authorization 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 unit-holders or shareholders of the acquiring UCITS and the requirements provided in this Act.

 (2) The Financial Supervision Authority may demand, within 15 working days after receipt of a copy of the petition specified in subsection 1 of this section, elimination of the deficiencies in the merger information by the applicant.

 (3) An acquiring UCITS submits the amendments made to the merger information within a reasonable term determined by the Financial Supervision Authority.

 (4) The Financial Supervision Authority promptly notifies 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 notifies the financial supervision authority of the home country of a UCITS being acquired of whether the amended merger information complies with the conditions provided in this Act within 20 working days after receipt of proper information specified in subsection 2 of this section.

Division 3 Decision on Conditions of Merger 

§ 151. Merger agreement

 (1) Merger of a common fund is 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 enters 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 are determined to which the provisions provided in this Subchapter regarding merger agreements apply.

 (3) A merger agreement must 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 or shares 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 are deemed to be conducted by the acquiring fund;
 7) the rules for transfer of assets and exchange 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 set out other conditions.

§ 152. Special rules for merger agreement of public limited fund

 (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 indicates the amount of the share capital of the public limited fund at the time of making the merger resolution and a notation that the public limited fund is a fund founded as a public limited company in accordance with 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 verifies the compliance of the data specified in clauses 1, 6 and 7 of subsection 3 of § 151 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 prepares a written report on the verification carried out which states consent for merger of the fund among other things.

 (2) The depositary or sworn auditor of a fund being acquired additionally verifies 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 prepares a written report on the verification specified in subsection 2 of this section which is 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. Where the conditions specified in subsection 2 of this section are verified by a sworn auditor, the provisions of subsections 2²–4 of § 396 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 2–5 of § 419 and §§ 420 and 421 of the Commercial Code apply to holding of a general meeting, unless otherwise provided by this Act.

 (2) At least two weeks before the general meeting which decides on the merger, the management board submits 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, where available, and the depositary's report specified in subsection 1 of § 153 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 is submitted to shareholders for examination.

 (3) The articles of association of a public limited fund may not prescribe that adoption of a merger resolution requires more than three-quarters of the votes represented at the general meeting.

 (4) Where 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 by this Act.

 (5) Merger of a public limited fund is decided by the general meeting of the public limited fund, unless otherwise provided by the articles of association of the public limited fund.

Division 4 Notification of Unit-holders or Shareholders and Redemption of Units or Shares of Merging Fund 

§ 155. Disclosure of authorization for merger

 (1) A fund being acquired and an acquiring fund disclose promptly after receipt of an authorization 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 authorization 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 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 submits 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 is submitted after receipt of an authorization 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 where applicable, 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 conditions of the merger process, including information concerning adoption of the merger resolution and suspension of issue or redemption of units or shares and planned effective date of the merger;
 5) the 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 2 of subsection 1 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 where 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) where the fund being acquired implements a performance-related fee, an explanation of how it is implemented up to the merger taking effect;
 5) where the acquiring fund implements a financial performance based fee after the merger takes effect, an explanation of how it is implemented 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 2 of subsection 1 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 of subsection 2 of this section are considered for the purposes 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 3 of subsection 1 of this section, among the rights related to merger, the right to:
 1) receive additional information;
 2) receive the report specified in subsection 4 of § 153 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 conditions specified in clause 4 of subsection 1 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 are 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 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 time limit during which the unit-holders or shareholders who do not exercise the right to redeem or exchange the units or shares specified in subsection 1 of § 144 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 1 of § 144 of this Act 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 in this Act.

§ 159. Formal requirements for merger information

 (1) The merger information is 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) Where 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 where 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, where 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 1 of subsection 4 of this section where 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. Where 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 where it has been amended due to the merger.

 (3) The merger information and key information of an acquiring fund are provided to each person who acquires the units or shares of a fund being acquired or acquiring fund or who intends to obtain the rules, prospectus or key information of a merging fund.

Division 5 Taking Effect of Merger and Merger Expenses 

§ 161. General provisions on merger taking effect

 (1) A merger takes effect on the date provided in the merger agreement, unless otherwise provided by 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 cannot be challenged.

§ 162. Time limit of merger of common fund taking effect

  Merger of a common fund takes effect on the planned effective date of the merger provided 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 by this Division.

 (2) A merging public limited fund may submit a petition specified in subsection 1 of § 400 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 shares exchange ratio specified in subsection 2 of § 144 of this Act.

 (3) Upon merger together with foundation of a new public limited fund, the requirements provided in § 34 of this Act also apply to a petition 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 is prepared in accordance with the requirements for a balance sheet that constitutes a part of an annual report of the public limited fund and the provisions of this Act concerning approval of annual reports and conduct of an audit of public limited funds.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 164. Special rules for cross-border merger of UCITS taking effect

 (1) Where 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 promptly notifies 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 2–8 of § 433⁹ 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 is entered in the commercial register on the basis of a petition of the merging public limited fund. Where the UCITS founded as a public limited fund is the fund being acquired, the merger takes effect in accordance with the provisions of § 162 of this Act. Where a UCITS founded as a public limited fund is the acquiring fund, the merger takes effect in accordance with the provisions of subsection 6 of § 163 of this Act.

§ 165. Merger expenses

 (1) Expenses related to merger of a fund are covered by the manager of the merging fund. Differently from the provisions of clause 3 of subsection 1 of § 58 of this Act, no legal, consultation or management fees related to the merger may be paid for the account of the fund.

 (2) No fee are charged for issue of units or shares or cancellation of units or shares of an acquiring fund.

 (3) No fee are charged for redemption or exchange of units or shares upon merger, except for compensation to cover the costs arising upon redemption or exchange of units or shares upon merger.

Division 6 Special Rules for Merger of Pension Fund 

§ 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.

 (2¹) A pension fund registered as a PEPP may only merge with another pension fund registered as a PEPP.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (3) A voluntary pension fund which is not an occupational pension fund or a pension fund registered as a PEPP may merge only with a voluntary pension fund which is not an occupational pension fund or a pension fund registered as a PEPP.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (4) Where 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 5 of § 147 of this Act, the Financial Supervision Authority promptly also communicates to the registrar of the pension register a decision to issue or refuse to issue an authorization for merger to a pension fund other than a pension fund registered as a PEPP.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

 (6) The merger information of a mandatory pension fund is submitted to investors after receipt of an authorization 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 takes effect on the working day following the working day of exchange of units provided in the first sentence of subsection 5 of § 24 of the Funded Pensions Act but not earlier than 100 calendar days after publication of the notice specified in subsection 1 of § 155 of this Act.
[RT I, 27.10.2020, 1 - entry into force 06.11.2020]

 (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 request 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 an acquiring voluntary pension fund, except for a pension fund registered as a PEPP, have the right to request redemption of their units or exchange thereof for units of another voluntary pension fund in accordance with the provisions of subsection 1 of § 144 of this Act, taking account of the provisions concerning redemption and exchange of units of a voluntary pension fund in the Funded Pensions Act.
[RT I, 17.03.2023, 5 - entry into force 27.03.2023]

Chapter 14 Dissolution and Insolvency of Fund 

Subchapter 1 General Provisions 

§ 167. Dissolution of common fund

 (1) A common fund is dissolved by:
 1) a decision of the fund manager;
 2) a decision of the general meeting where the fund rules prescribe the general meeting;
 3) a decision of the depositary in the case provided in subsection 1 of § 184 of this Act;
 4) a declaration of insolvency of the common fund; or
 5) 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, in accordance with 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 by this Act. In order to liquidate a fund, the fund manager applies for an authorization from the Financial Supervision Authority (hereinafter in this Chapter authorization for liquidation).

 (4) A common fund is liquidated by a fund manager, unless otherwise provided by this Act.

 (5) Where a fund manager fails to complete the liquidation of a fund within the term provided in this Act, the Financial Supervision Authority may appoint a depositary to act as a liquidator to complete the liquidation.

 (6) Where the dissolution of a fund was decided by a depositary, the depositary liquidates the fund in accordance with the provisions of § 184 of this Act. Where the depositary fails to complete the liquidation of the fund within the term provided in § 175 of this Act, the general meeting or in the absence thereof the Financial Supervision Authority may appoint, in accordance with § 185 of this Act, a liquidator of the fund to complete the liquidation.

 (7) The provisions concerning a common fund in this Chapter also apply to a sub-fund of the common fund.

§ 168. Special rules for dissolution of public limited fund

 (1) In order to liquidate a public limited fund, the public limited fund applies for an authorization for liquidation from the Financial Supervision Authority. In the case provided in subsection 1 of § 184 of this Act, the depositary decides on liquidation of the public limited fund and the depositary is 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 authorization for liquidation must be appended to the petition for entry of the decision on dissolution of a public limited fund in the commercial register.

Subchapter 2 Liquidation of Fund 

Division 1 Application for Authorization for Liquidation of Fund 

§ 169. Authorization for liquidation

  In order to apply for an authorization for liquidation, the fund manager of a common fund or a public limited fund submits, within 20 days after adopting a decision on liquidation of the fund, a written petition to the Financial Supervision Authority and the following data and documents (petition, data and documents jointly hereinafter in this Subchapter  petition):
 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) where 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, class and value of the units or shares held by the a unit-holder or shareholder as at three working days before submission of the petition;
 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 petition for authorization for liquidation and decisions on issue of authorization for liquidation

 (1) Where a petition is not in compliance with the requirements provided in § 169 of this Act, the Financial Supervision Authority requests elimination of the deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents where 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 legal instruments or where 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 an on-site inspection, order examinations and a special audit, consult state databases, and request oral explanations from managers of the fund manager or public limited fund, audit firm, their representatives and third parties concerning the contents of the documents submitted and the circumstances which are relevant in making a decision on an authorization for liquidation of the fund.

 (4) The deficiencies specified in subsections 1–3 of this section are eliminated and the data and documents submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review a petition where 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 makes a decision to issue or refusal to issue an authorization 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 petition.

 (7) The Financial Supervision Authority promptly communicates the decision specified in subsection 6 of this section to the fund manager, public limited fund and depositary.

§ 171. Bases for refusal to issue authorization for liquidation

  The Financial Supervision Authority may refuse to issue an authorization for liquidation where:
 1) the data and documents submitted upon application for an authorization 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. Notice of liquidation

 (1) The fund manager of a common fund or public limited fund publishes, promptly after becoming aware of the decision to issue an authorization 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 petitions;
 6) other necessary data.

 (3) The term provided in clause 4 of subsection 2 of this section may 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 4 of subsection 2 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 notifies 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 fund units and shares

  The issue and redemption of the units or shares of a fund to be liquidated is 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 in accordance with the rules 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 must 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) Where a fund is liquidated by a depositary in the case provided in subsection 1 of § 184 of this Act, the depositary states 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. Where a depositary commences liquidation of a fund after the expiry of the term specified in subsection 1 of § 184 of this Act or the extended term specified in 2 of § 184 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) Where the actual costs of liquidation of a sub-fund of a fund or common fund exceed the limit of costs set out in the petition, the fund manager or the person who acts as a fund manager is liable for the costs exceeding that limit.

 (5) Where 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 the fund manager.

 (6) In addition to the costs specified in subsection 2 of this section, the fund manager or depositary as the statutory liquidator of a fund may charge, for conduct of liquidation proceedings, the management fee and depositary's charges paid for the account of the fund and specified in clauses 1 and 2 of subsection 1 of § 58 of this Act. It is prohibited to charge any other fees for conducting the liquidation proceedings.

Division 2 Liquidation Proceedings of Common Fund 

§ 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 in accordance with this Act. A fund is liquidated after submission of the liquidation report.

 (2) Liquidation must be completed within six months after publication of a notice of liquidation. Liquidation of a closed-ended fund must 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-ended fund.

§ 176. Transactions in liquidation proceedings

 (1) Upon liquidation of a common fund, the liquidator of the fund transfers the assets of the fund as soon as possible and in accordance with the interests of the unit-holders, collects the debts and satisfies the claims of creditors of the fund, including performs the obligations prescribed by the fund rules and prospectus with respect to the fund manager and the depositary.

 (2) Where a known creditor has failed to submit 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 is deposited with a credit institution in the name of the fund manager.

 (3) During the liquidation of a fund, the fund manager may only conduct for the account of the common fund transactions which are necessary for liquidation of the fund.

 (4) Until the 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. Derivative transactions 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] must 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 1 of § 176 of this Act, the liquidator of a fund prepares the final balance sheet and plan for distribution of the assets of the fund.

 (2) The liquidator of a common fund promptly publishes 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 must 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 rules 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 distributes 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 are deleted and the rights and obligations associated therewith are terminated from the day on which payments are made. No redemption fee may be charged upon deletion of units.

 (3) Where 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 must be deposited in a depositary.

 (4) Payments to unit-holders may only be made in money, unless 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 1 of § 177 of this Act where 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 harm the interests of the creditors or unit-holders. Assets may be distributed on the basis of an interim balance sheet where the term for filing the claims of creditors has expired and the claims of creditors submitted on time have been satisfied.

§ 179. Liquidation report

 (1) Within one month after termination of the distribution of assets, the liquidator of the fund submits to the Financial Supervision Authority the final balance sheet, asset distribution plan and report on its activities upon liquidation of the fund.

 (2) Where the liquidation of a fund was outsourced in accordance with § 184 or 185 of this Act, the liquidation report is submitted by the depositary or liquidator who conducted the liquidation.

 (3) The requirements for the liquidation report are established by a regulation of the minister in charge of the policy sector.

Division 3 Special Rules for Dissolution of Public Limited Fund 

§ 180. Notice of liquidation of public limited fund

  A public limited fund publishes the notice specified in subsection 1 of § 375 of the Commercial Code at the same time with the notice of liquidation specified in § 172 of this Act.

§ 181. Submission of petition concerning dissolution of public limited fund to commercial register

 (1) A public limited fund submits, promptly after publication of the notice specified in § 180 of this Act, a petition for entry of the dissolution decision and liquidator of the fund to the commercial register.

 (2) The following documents are appended to the petition 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 authorization for liquidation of the public limited fund;
 2) the data concerning publication of the notice of liquidation.

§ 182. Special rules for opening balance sheet and final balance sheet of liquidation of public limited fund

 (1) A liquidator of a public limited fund draws up the liquidation report specified in subsection 2 of § 374 of the Commercial Code within two months after becoming aware of the decision on issue of the authorization for liquidation.
[RT I, 05.05.2022, 1 - entry into force 01.02.2023]

 (2) The supervisory board of the public limited fund approves the liquidation report of the public limited funs where 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.
[RT I, 05.05.2022, 1 - entry into force 01.02.2023]

 (3) The public limited fund discloses the liquidation report at the seat of the public limited fund, at the location of its branches and on the website of the public limited fund promptly after approval of the liquidation report.
[RT I, 05.05.2022, 1 - entry into force 01.02.2023]

 (4) The requirements for the liquidation report of a public limited fund may be established by a regulation of the minister in charge of the policy sector.
[RT I, 05.05.2022, 1 - entry into force 01.02.2023]

 (5) The liquidator of a public limited fund submits to the Financial Supervision Authority, within one month after termination of the distribution of assets and before submission of a petition to the commercial register for deletion of the public limited fund from the register, the final liquidation report of the fund and the report on their activities upon liquidation of the fund.
[RT I, 05.05.2022, 1 - entry into force 01.02.2023]

 (6) Where the liquidation of a public limited fund was outsourced in accordance with § 184 or 185 of this Act, the liquidation report is submitted by the depositary or liquidator which conducted the liquidation.

 (7) The requirements for the final liquidation report of a public limited fund may be established by a regulation of the minister in charge of the policy sector.
[RT I, 05.05.2022, 1 - entry into force 01.02.2023]

§ 183. Continuation of activities of dissolved public limited fund

  The activities of a dissolved public limited fund cannot be continued.

Division 4 Depositary as Liquidator or Liquidator appointed by Financial Supervision Authority and Liability of Liquidator 

§ 184. Depositary as fund liquidator

 (1) A depositary decides on liquidation of a fund where it fails, within three months after termination of the management authority of a fund, on the basis specified in subsection 7 of § 305 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 as the 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 where the liquidator of the fund failed to liquidate the fund during the term specified in § 175 of this Act and the Financial Supervision Authority issued a compliance notice to complete the liquidation of the fund.

 (4) A depositary may apply to the Financial Supervision Authority for an authorization 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 liquidates a fund in accordance with the rules provided in this Act and the fund rules or articles of association.

 (6) In the case provided in subsection 3 of this section, the depositary liquidates a fund within six months after the Financial Supervision Authority issued a respective compliance notice. 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 may not exceed 18 months, and in the case of a closed-ended fund 24 months.

 (7) Where a depositary decides to merge a fund with a fund being acquired, the provisions of this Act concerning a fund manager apply to the depositary upon deciding on the merger of the fund, petition for an authorization for merger and conduct of the merger.

§ 185. Appointment of liquidator of fund by general meeting or Financial Supervision Authority

 (1) Where a depositary fails to complete the liquidation of a fund within the term specified in subsection 2 of § 175 or subsection 6 of § 184, the general meeting or in the absence thereof the Financial Supervision Authority may appoint a liquidator. The liquidator completes the liquidation of the fund during the term determined by the Financial Supervision Authority in accordance with the rules provided in this Act.

 (2) All the rights and obligations related to the liquidation of a fund transfer to the liquidator appointed in accordance with subsection 1 of this section.

 (3) Upon appointment of a liquidator on the basis of 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 in subsection 2 of § 174 of this Act does not apply.

§ 186. Extent of liability of liquidator of fund

  A depositary and a liquidator of a fund specified in subsection 1 of § 185 of this Act are liable to 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.

Division 5 Special Rules for Dissolution of Pension Fund 

§ 187. Deciding on dissolution and liquidation proceedings of pension fund

 (1) Dissolution of a pension fund may be decided only where transfer of the management thereof to another fund manager on the conditions and in accordance with the rules provided in this Act was 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 are made to unit-holders.

§ 188. Authorization for liquidation of pension fund

 (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 petition specified in § 169 of this Act.

 (2) The Financial Supervision Authority may refuse to issue an authorization for liquidation of a pension fund, in addition to the case provided in § 171 of this Act, where the fund manager fails 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 promptly also communicates the decision specified in subsection 6 of § 170 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 notifies 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 authorization 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 the petition specified in subsection 2 of § 37 of the Funded Pensions Act;
 2) an obligation to submit reports, including a report approved by a sworn auditor, in the course of the 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 petition specified in subsection 2 of § 37 of the Funded Pensions Act and the consequences of failure to submit the petition by the specified term in addition to the provisions of subsection 2 of § 172 of this Act.

Subchapter 3 Insolvency of Fund 

Division 1 General Provisions 

§ 189. Application of Subchapter

 (1) A petition 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 by this Subchapter.

 (2) The provisions of this Subchapter concerning a fund apply to a sub-fund of a common fund, unless otherwise provided by this Subchapter.

 (3) The provisions of this Subchapter concerning a liquidator of a fund also apply to a depositary of a fund where liquidation of the fund was decided by the depositary and the Financial Supervision Authority assigned the fund to the liquidator.

§ 190. Submission of petition for declaration of insolvency of common fund and insolvency proceedings

 (1) A petition 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 a bankruptcy petition of a debtor apply to a petition of a fund manager or liquidator and insolvency proceedings of a common fund. The provisions of the Bankruptcy Act concerning a bankruptcy petition apply to a petition submitted by a creditor of a common fund for declaration of insolvency.

 (2) Where a common fund is insolvent, the fund manager must, as soon as possible but not later than 20 days after onset of insolvency, submit a petition for declaring the fund insolvent.

 (3) Where it becomes evident during the liquidation of a fund that the fund is insolvent, the liquidator of the fund must promptly file a petition for declaring the fund insolvent.

 (4) The fund manager or liquidator of a fund promptly submits a copy of the petition for declaring the fund insolvent to the Financial Supervision Authority.

 (5) Upon submission of a petition for declaration of insolvency, the fund manager or liquidator of a common fund represents it. The provisions of §§ 85–90 of the Bankruptcy Act extend to a fund manager or liquidator.

 (6) After onset of insolvency, the fund manager may 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 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 a petition for declaration of insolvency, issue and redemption of the units of the fund must be promptly suspended and notification thereof has to be given in accordance with the provisions of subsections 3 and 6 of § 57 of this Act.

 (8) In order to submit a petition for declaration of insolvency of a common fund or its sub-fund, an insolvency caution is submitted to the common fund or its sub-fund through the fund manager. A petition for declaration of insolvency must indicate with respect to which fund the petition is submitted. Submission of a petition with respect to a sub-fund of a common fund does not result in insolvency proceedings of the common fund.

 (9) A petition for declaration of insolvency is submitted according to the seat of the common fund.

§ 191. Bankruptcy of public limited fund

 (1) A public limited fund or liquidator promptly submits 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 must be promptly suspended and notification thereof must be given in accordance with the provisions of subsections 3 and 6 of § 57 of this Act.

Division 2 Insolvency Proceedings and Satisfaction of Claims of Fund 

§ 192. Proceedings of Insolvency Petitions and Declaration of Insolvency

 (1) For the purpose of this Division, a bankruptcy petition, bankruptcy proceedings of a fund and bodies in bankruptcy proceedings also denote a petition for declaring a common fund insolvent, insolvency proceeding and bodies in insolvency proceedings thereof.

 (2) Where a petition was submitted by a creditor of a fund, a court holds a preliminary hearing and the Financial Supervision Authority, fund manager and liquidator are summoned to the hearing in the case the petition was submitted by the liquidator. A copy of the petition is sent to the Financial Supervision Authority together with the summons specified in subsection 1 of § 15 of the Bankruptcy Act.
[RT I, 21.11.2020, 1 - entry into force 05.01.2021]

 (3) In addition to the persons specified in subsection 2 of § 25 of the Bankruptcy Act, a court also summons the Financial Supervision Authority to the hearing where the bankruptcy petition is reviewed. The representative of the Financial Supervision Authority gives an opinion at the court hearing on the bankruptcy petition filed against the fund.

 (4) A court appoints an interim trustee and trustee in bankruptcy of a fund on the proposal of the Financial Supervision Authority. The provisions of § 61 of the Bankruptcy Act do not apply to a trustee in bankruptcy of the fund.

 (5) An interim trustee in bankruptcy or trustee in bankruptcy of a fund 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. Where a trustee in bankruptcy is released, a new trustee in bankruptcy is appointed in accordance with the rules prescribed by subsection 4 of this section.

 (7) On the proposal of the Financial Supervision Authority, a court does not terminate proceedings by abatement on the basis specified in subsection 1 or 2 of § 29 of the Bankruptcy Act. In this case, the fund manager must 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 trustee in bankruptcy

 (1) In addition to the provisions of the Bankruptcy Act, a trustee in bankruptcy:
 1) publishes 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 submits to the Financial Supervision Authority the data requested by it and enables examination of the documentation concerning the bankruptcy proceedings of the fund;
 3) where necessary or where prescribed by the legal instruments of another EEA Member State, informs the commercial register, registrar of the land register or similar registrar in the EEA Member State where the fund has assets, of the court order on declaration of bankruptcy of the fund.

 (2) The provisions of subsection 2 of § 34 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 report

 (1) The bankruptcy committee of a fund comprises five members, three of whom are appointed by the Financial Supervision Authority.

 (2) The provisions of subsection 7 of § 74 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 are satisfied in accordance with the provisions of § 156 of the Bankruptcy Act concerning assets to be returned to a debtor.

 (5) After termination of bankruptcy proceedings of a fund, the trustee in bankruptcy submits to the Financial Supervision Authority a report which is in compliance with the requirements provided for a final report specified in § 162 of the Bankruptcy Act.

Division 3 Insolvency Proceedings of Pension Fund 

§ 195. Insolvency proceedings of pension fund

 (1) No petition can be submitted for declaring a pension fund insolvent and no insolvency proceedings can be conducted.

 (2) Where 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 is liable for all the claims which are submitted against the fund and not satisfied.

 (3) A depositary is liable for the 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 is 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 

Subchapter 1 General Provisions 

§ 196. Application of Chapter and special rules for offer of master UCITS

 (1) This Chapter provides 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 an offer 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) Where 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 a fund in this Subchapter also apply to a sub-fund of a common fund.

§ 197. Additional investments restrictions of feeder UCITS

 (1) The assets of a feeder UCITS may be invested in total 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 2 of subsection 1 of this section may be combined, upon calculation of the open risk position specified in subsection 3 of § 105 of this Act, with:
 1) the actual risk position of the derivative instruments of the master UCITS in proportion to the investments of the feeder UCITS in the master UCITS; or
 2) the potential maximum risk position of the derivative instruments of the master UCITS provided 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.

Subchapter 2 Approval of Investment of Master UCITS 

§ 198. Approval of investment 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 authorization (hereinafter in this Subchapter investment authorization).

 (2) The fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS submits, for obtaining an investment authorization, to the Financial Supervision Authority a petition and the following data and documents (petition, data and documents jointly hereinafter in this Subchapter petition):
 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 subsection 1 of § 200 of this Act for unit-holders or shareholders;
 4) the agreement for making an investment specified in § 201 of this Act or the internal rules of the fund manager or public limited fund specified in subsection 10 of § 201 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) Where a master UCITS has been established or founded in another EEA Member State, an acknowledgement 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 of § 3 of this Act, must be appended to the petition for an investment authorization.

 (4) The data and documents specified in subsection 2 of this section, except for the information to unit-holders or shareholders, are submitted to the Financial Supervision Authority in Estonian or English. The Financial Supervision Authority has the right, where necessary, to require translation into Estonian of the data and documents submitted in English. The information to unit-holders or shareholders specified in clause 3 of subsection 2 of this section are submitted in Estonian.
[RT I, 03.07.2017, 2 - entry into force 13.07.2017]

§ 199. Processing of petition for investment authorization and decision

 (1) Where a petition is not in compliance with the requirements provided in subsection 2 of § 198 of this Act, the Financial Supervision Authority requests elimination of deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents where it is not convinced on the basis of the data and documents specified in subsection 2 of § 198 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 legal instruments issued on the basis thereof or where 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 an on-site inspection, order examinations and a special audit, consult state databases, request oral explanations from managers of the fund manager or public limited fund, the audit firm, their representatives and third parties concerning the contents of the documents submitted and the circumstances 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 are submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review a petition where the applicant has failed to eliminate the deficiencies specified in subsection 1 of this section within the prescribed term or has not submitted the data, documents or information requested by the Financial Supervision Authority by the due date.

 (6) The Financial Supervision Authority adopts a decision on issue or refusal to issue an investment authorization within 15 working days after receipt of all the necessary data and documents and notify the fund manager of the feeder UCITS, public limited fund and depositary promptly thereof.

 (7) The Financial Supervision Authority may refuse to issue an investment authorization to a feeder UCITS where the activities or the data and documents describing the activities of the feeder UCITS, its fund manager, depositary, audit firm or master UCITS do not meet the conditions provided by legal instruments for a master UCITS or feeder UCITS.

§ 200. Notification of unit-holders or shareholders of feeder UCITS

 (1) Where an operating UCITS is transformed into a feeder UCITS or investments by a feeder UCITS in the units or shares of a master UCITS are terminated and investments are made in the units or shares of another master UCITS, the manager of the operating UCITS or of the feeder UCITS investing in another master UCITS or the feeder UCITS provides the following information to all the unit-holders or shareholders of the UCITS:
 1) an acknowledgement that an investment authorization has been issued to the UCITS;
 2) the key information of the feeder and the master UCITS;
 3) the date on which investment of the assets of the UCITS in the master UCITS is commenced or on which the investment exceeds the limit provided in subsection 1 of § 117 of this Act where the assets of the feeder UCITS have already been invested in the master UCITS;
 4) a statement that the unit-holders or shareholders have the right to request redemption of their units or shares within 30 calendar days after submission of the information specified in this subsection, for which no fee is charged, except compensation to cover the costs arising from redemption or exchange of units or shares.

 (2) The information specified in subsection 1 of this section is submitted at least 30 calendar days before the date specified in clause 3 of subsection 1 of this section.

 (3) Where the units or shares of a UCITS are offered in another EEA Member State, the information specified in subsection 1 of this section is also submitted in the official language of the EEA Member States. With the consent of the financial supervision authority of the other EEA Member State, the information may be submitted in another language. The translation of the information must be identical with the original document as to its substance. The feeder UCITS manager or the public limited fund which is a feeder UCITS is responsible for the translation.

 (4) The information specified in subsection 1 of this section is provided to a unit-holder or shareholder on paper or other durable medium. The information may be provided on another durable medium where the following conditions are met:
 1) provision of the information corresponds to the manner in which the services between the unit-holder or shareholder and the fund or the fund manager is or is to be provided; and
 2) if there is more than one option, a unit-holder or shareholder chose another durable medium for provision of information.

 (5) Provision of the information specified in subsection 1 of this section on another durable medium requires in addition to the conditions specified in subsection 4 of this section that the unit-holder or shareholder has stated their e-mail address for the provision of the service or confirmed their continuous access to Internet in another manner.

 (6) The assets of a feeder UCITS may be invested in a master UCITS in excess of the limit provided in subsection 1 of § 117 of this Act upon expiry of 30 calendar days after submission of the information specified in subsection 1 of this section.

§ 201. Agreements for making investment in units or shares of master UCITS

 (1) In order to make an investment, a feeder and master UCITS enter into an agreement for making an investment (hereinafter agreement for making investment) on the basis of which the master UCITS submits to a feeder UCITS all the documents and other information which are required for compliance with the requirements provided in this Act for feeder UCITS in connection with:
 1) access to information;
 2) grounds for termination of investment;
 3) rules for issue and redemption of units or shares and establishment of the net asset value and for other transactions;
 4) events which have an impact on the rules of transactions;
 5) sworn auditor's report;
 6) amendments to the rules concerning the operation of master UCITS;
 7) choice of applicable law.

 (2) Concerning the provisions of clause 1 of subsection 1 of this section, the following is stated in an agreement for making an investment:
 1) how and when the master UCITS submits to the feeder UCITS the fund rules or articles of association, prospectus and key information of the master UCITS or the amendments thereto;
 2) how and when the master UCITS notifies the feeder UCITS of outsourcing the investment management and risk control tasks to third parties;
 3) how and when the master UCITS submits to the feeder UCITS the documents related to the management of the master UCITS, including risk management rules and compliance reports;
 4) a violation by the master UCITS of the conditions provided by legal instruments, fund rules, articles of association of the fund or the agreement for making an investment of which the master UCITS notifies the feeder UCITS and how and when this is done;
 5) in the case the assets of the feeder UCITS are invested for the purposes of risk mitigation in derivative instruments, how and when the master UCITS provides information to the feeder UCITS concerning the risk position related to the derivative instruments of the master UCITS which allows to calculate the total open risk position per feeder UCITS in accordance with clause 1 of subsection 2 of § 197 of this Act;
 6) an acknowledgement that the master UCITS notifies the feeder UCITS of any other arrangement agreed upon with third parties for exchange of information and, where applicable, how and when the master UCITS allows the feeder UCITS to examine the above specified rules for exchange of information.

 (3) Concerning the provisions of clause 2 of subsection 1 of this section, the following data are stated in an agreement for making an investment:
 1) in which classes of units or shares of the master UCITS the assets of the feeder UCITS may be invested;
 2) the costs covered by the feeder UCITS and the conditions of reduction or refund of charges or expenses by the master UCITS;
 3) where applicable, the conditions of transfer of assets from the feeder UCITS to the master UCITS.

 (4) Concerning the provisions of clause 3 of subsection 1 of this section, the following data are stated in an agreement for making an investment:
 1) process of coordination of the frequency and time of establishment of the net asset value of the UCITS and publication of the prices of units or shares;
 2) coordination of transmission of transaction orders of feeder UCITS and the role of third parties therein;
 3) required information or rules concerning trading, where the units or shares of one or both UCITS are traded on a regulated market;
 4) other measures used for performance of the obligation of ensuring the frequency and time of establishment of the net asset value of the UCITS and timing of publication of the prices of units or shares specified in § 202 of this Act;
 5) bases for conversion of transaction orders where the units or shares of UCITS are denominated in different currencies;
 6) frequency of issue and redemption of the units or shares of the master UCITS and conditions of payment for the units or shares, including conditions of settlement, in the case of dissolution or merger of the master UCITS, upon redemption of the units or shares of the feeder UCITS for transfer of the assets to the feeder UCITS;
 7) rules for responding to enquiries of unit-holders or shareholders and for settlement of complaints;
 8) statement that the fund rules or articles of association or prospectus of the master UCITS limit or forego certain rights and powers provided to the unit-holders or shareholders of the feeder UCITS.

 (5) Concerning the provisions of clause 4 of subsection 1 of this section, following is stated in an agreement for making an investment:
 1) how and when notification is given of suspension or resumption of the issue or redemption of the units or shares of the UCITS;
 2) how a notification is made of errors in determining the value of the assets of the master UCITS and how these errors are resolved.

 (6) Concerning the provisions of clause 5 of subsection 1 of this section, an agreement for making an investment must set out how:
 1) co-operation with regard to preparation of periodic reports of the feeder and the master UCITS takes place where the periods of the financial year of the UCITS are the same;
 2) necessary information concerning the master UCITS to the feeder UCITS for timely preparation of the periodic reports of the feeder UCITS, and the report of the sworn auditor of the feeder UCITS as at the final date of the financial year of the feeder UCITS in accordance with subsection 3 of § 204 of this Act is submitted, where the periods of the financial years of the UCITS are different.

 (7) Concerning the provisions of clause 6 of subsection 1 of this section, an agreement for making an investment sets out how and when notification is given:
 1) by the master UCITS of the intended amendments to the fund rules or articles of association, prospectus and key information and these amendments taking effect where these rules differ from the rules of notification of the unit-holders or shareholders of the master UCITS;
 2) of the intended merger, division or dissolution of the master UCITS where the master UCITS has been established or founded in another EEA Member State;
 3) of expiry of the authority of the master UCITS or feeder UCITS or the manager thereof to manage the assets of the fund;
 4) of replacement of the manager of the master UCITS or feeder UCITS, depositary, audit firm thereof or other such third party who performs the asset management or risk control function;
 5) of other amendments to the conditions relating to management of the master UCITS.

 (8) An agreement for making an investment states that the Estonian law applies to the agreement and disputes arising therefrom where both the feeder as well as the master UCITS have been established or founded in Estonia. Where a feeder and master UCITS have been established or founded in different EEA Member States, the law of the home country of the feeder or master UCITS applies to the agreement for making an investment and to disputes arising therefrom in accordance with the provisions of the agreement for making the investment.

 (9) An agreement for making an investment must be available to unit-holders or shareholders of a feeder and master UCITS free of charge at the request of the latter.

 (10) Where a feeder and master UCITS have the same fund manager, the investment conditions may be governed by the internal rules of the fund manager or public limited fund by providing the conditions specified in subsection 1 of this section and additionally measures which are used for mitigation of conflicts of interest between the feeder and the master UCITS or unit-holders or shareholders of the feeder and the master UCITS.

 (11) The assets of a feeder UCITS may not be invested in a master UCITS in excess of the limit provided in subsection 1 of § 117 of this Act before the agreement for making an investment or the internal rules of the fund manager specified in subsection 10 of this section or a public limited fund take effect.

§ 202. Coordination of conditions of issue and redemption of units or shares

 (1) A feeder and master UCITS adopt appropriate measures to coordinate the time of establishment of the net asset value and the publication thereof to prevent arbitrage opportunities relating to market timing upon acquisition and transfer of units or shares of the UCITS by investors.

 (2) Where the fund manager of a master UCITS or a public limited fund which is a master UCITS suspends redemption or issue of the units or shares of the master UCITS in accordance with the provisions of § 57 of this Act or it is suspended at the request of the Financial Supervision Authority or the financial supervision authority of the home country of the master UCITS established or founded in another EEA Member State, the feeder UCITS may suspend redemption or issue of its units or shares for the same period as the master UCITS.

§ 203. Exchange of information between depositaries

 (1) Where a feeder and master UCITS have different depositaries, the depositaries of the feeder and master UCITS enter into an information exchange agreement for the performance of their obligations (hereinafter information exchange agreement between depositaries) which must set out the following information:
 1) documents and categories of information shared by the depositaries and whether the specified information and documents are submitted regularly or based on the request of the other party;
 2) manner and deadlines of forwarding of information by the depositary of the master UCITS to the depositary of the feeder UCITS;
 3) involvement of the depositaries in the establishment of the net asset value of the UCITS and coordination of the measures specified for in subsection 1 of § 202 of this Act;
 4) involvement of the depositaries in the coordination of the settlement for transactions of issue or redemption of the units or shares of the feeder UCITS by the master UCITS, settlement of such transactions and the rules for transfer of the assets;
 5) coordination of activities of the end of a financial year;
 6) details of the violations of legal instruments, fund rules, articles of association or prospectus by the master UCITS of which the depositary of the master UCITS notifies the depositary of the feeder UCITS, and how and when this is done;
 7) rules for filling in a request for assistance submitted by one depositary to another;
 8) random or unforeseeable events of which one depositary must notify the other depositary, and the manner and time of notification;
 9) choice of applicable law in accordance with subsection 8 of § 201 of this Act.

 (2) The assets of a feeder UCITS may not be invested in a master UCITS before the information exchange agreement between the depositaries enters into force.

 (3) The fund manager of a feeder UCITS is responsible for forwarding to the depositary of the feeder UCITS of such information concerning the master UCITS which is required for the performance of the obligations of the depositary of the feeder UCITS.

 (4) The depositary of a master UCITS promptly notifies the Financial Supervision Authority, the feeder UCITS and the depositary thereof where the operation of the master UCITS is, according to the data known to the depositary, manifestly contrary to the legal instruments, fund rules, articles of association or prospectus of the fund and agreements entered into and may have an unfavourable impact on the feeder UCITS, which among other things includes:
 1) errors or mistakes in the establishment of the net asset value of the master UCITS;
 2) errors or mistakes of the feeder UCITS in the transactions of or settlements for acquisition or transfer of the units or shares of the master UCITS;
 3) errors or mistakes in the payment or capitalisation of income arising from the master UCITS;
 4) errors or mistakes in withholding a tax;
 5) failure to comply with the investment policy described in the fund rules or articles of association, prospectus and key information of the master UCITS;
 6) violation of the investment restrictions provided by legal instruments, fund rules or articles of association, prospectus and key information of the master UCITS.

 (5) When forwarding information based on the information exchange agreement between depositaries, the depositary does not violate the obligation to maintain confidentiality of the data provided in the legal instruments or agreement.

§ 204. Exchange of information between audit firms

 (1) Where a feeder and master UCITS have different audit firms, the audit firms of the feeder and master UCITS enter into an information exchange agreement for the performance of their duty to audit the UCITS which must set out the following data:
 1) documents and categories of information shared by the audit firms and whether the specified information and documents are submitted regularly or based on the request of the other party;
 2) manner and deadlines of forwarding information by the audit firm of the master UCITS to the audit firm of the feeder UCITS;
 3) coordination of the activities of audit firms in the activities of the end of a financial year;
 4) circumstances disclosed in the report of the sworn auditor of the master UCITS which must be stated in the report in accordance with subsection 4 of this section;
 5) rules for filling in the request for assistance submitted by one audit firm to another, including a request for obtaining additional information concerning the violations stated in the report of the sworn auditor of the master UCITS;
 6) conditions of fulfilment of the obligation to conduct audit of the annual report and information concerning the fulfilment of the obligations specified in subsection 3 of this section and the method and deadlines for submission to the feeder UCITS of the report of the sworn auditor of the master UCITS or the drafts thereof;
 7) choice of applicable law in accordance with subsection 8 of § 201 of this Act.

 (2) The assets of a feeder UCITS may not be invested in a master UCITS before the information exchange agreement of the audit firms enters into force.

 (3) The audit firm of a feeder UCITS proceeds upon preparation of the sworn auditor's report from the report of the sworn auditor of the master UCITS. Where the feeder and the master UCITS have different periods of a financial year, the sworn auditor's report of the master UCITS must be prepared as at the final date of the financial year of the feeder UCITS.

 (4) The report of the sworn auditor of a feeder UCITS must set out all the extraordinary circumstances indicated in the report of the sworn auditor of the master UCITS and their impact on the feeder UCITS.

 (5) Upon forwarding of data in accordance with the information exchange agreement between audit firms, the audit firm does not violate the duty to maintain confidentiality of the data provided in the legal instrument or agreement.

Subchapter 3 Additional Requirements for Management of Master UCITS and Feeder UCITS 

§ 205. Information to be disclosed concerning feeder UCITS

 (1) In addition to the provisions of § 74 of this Act, the following data must be stated in the prospectus of a feeder UCITS:
 1) statement that the UCITS is a feeder UCITS and the assets thereof are invested permanently and at least to the extent of 85 per cent in the units or shares of a master UCITS;
 2) brief description of the master UCITS, its organizational structure, investment objective and policy and risk level and information about how the prospectus of the master UCITS can be examined;
 3) information of whether the risk level and the rate of return of the feeder and master UCITS are the same or how they differ and a description of the investments made in accordance with subsection 1 of § 197 of this Act;
 4) summary of the agreement for making investments specified in subsection 1 of § 201 of this Act or of the internal rules of the fund manager or public limited fund specified in subsection 10 of § 201 of this Act;
 5) information concerning where and how the unit-holders or shareholders can obtain additional information concerning the master UCITS and the agreement for making an investment;
 6) complete list of the fees, charges and expenses incurred in connection with investments in the master UCITS paid on account of the feeder UCITS and the total amount of the fees of investments in the units or shares of the feeder and master UCITS;
 7) information concerning the taxation impact of investments in the units or shares of the master UCITS on the feeder UCITS.

 (2) The annual report of the feeder UCITS provides the calculation of the total amount of the fees for investment in the units or shares of the feeder UCITS and master UCITS.

 (3) The annual and semi-annual reports of a feeder UCITS provide information concerning where the annual and the semi-annual reports of the master UCITS can be examined. The fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS gives the prospectus and annual and semi-annual reports of the master UCITS on paper to the unit-holders or shareholders free of charge at the request of the latter.

 (4) The fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS must submit to the Financial Supervision Authority the prospectus, key information of the master UCITS and any amendments thereto and the annual and semi-annual reports, where the master UCITS has been established or founded in another EEA Member State.

 (5) Any advertising of a feeder UCITS must include a notation that the assets of the UCITS may be invested to the extent of at least 85 per cent in the units or shares of another UCITS.

 (6) Disclosure of the rate of return of a UCITS in accordance with clause 3 of subsection 1 of this section must comply with the provisions of § 82 of this Act.

§ 206. Requirements for activities of feeder UCITS

 (1) The fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS monitors the activities of a master UCITS with due diligence, relying on the information and documents received from the fund manager, depositary and audit firm of the master UCITS, unless there is reason to doubt the accuracy thereof.

 (2) The fee or other benefit paid, for the purpose of making investments in the units or shares of a master UCITS, to the fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS or another person who operates as a feeder UCITS or in the name of its fund manager must be included in the assets of the feeder UCITS.

§ 207. Requirements for activities of master UCITS

 (1) The fund manager of a master UCITS or a public limited fund which is a master UCITS promptly notifies the Financial Supervision Authority of the data of each feeder UCITS which invests in the master UCITS.

 (2) Where a feeder UCITS has been established or founded in another EEA Member State, the Financial Supervision Authority promptly notifies, in the case provided in subsection 1 of this section, the financial supervision authority of the home country of the feeder UCITS of making an investment in the units of a master UCITS.

 (3) A master UCITS does not charge any issue or redemption fee to a feeder UCITS for issue or redemption of units or shares.

 (4) The fund manager of a master UCITS or a public limited fund which is a master UCITS makes available to the feeder UCITS or the fund manager, depositary and audit firm thereof in due time all the information which must be submitted on the basis of the provisions of §§ 201–204 of this Act or the fund rules, articles of association or prospectus of the master UCITS.

Subchapter 4 Special Rules for Merger and Dissolution of Master UCITS and Feeder UCITS 

§ 208. Special Rules for merger of master UCITS

 (1) The merger of a master UCITS takes effect provided that the master UCITS has submitted to all the unit-holders or shareholders of the master UCITS and the Financial Supervision Authority or the financial supervision authority of the home country of the feeder UCITS established or founded in another EEA Member State, at least 60 calendar days before the planned date of the merger taking effect, the merger information specified in subsection 1 of § 156 of this Act.

 (2) Upon merger of a master UCITS, the feeder UCITS has the right to demand redemption of its units or shares in accordance with § 144 of this Act, unless the Financial Supervision Authority or the financial supervision authority of the home country of the feeder UCITS established or founded in another EEA Member State has issued the authorization specified in clause 1 of subsection 1 of § 209 of this Act to it to continue as the feeder UCITS of the master UCITS.

§ 209. Continuation of activities of feeder UCITS upon merger of master UCITS

 (1) Where a master UCITS in respect of which a feeder UCITS has an investment authorization merges with another UCITS, the feeder UCITS must be liquidated, unless the Financial Supervision Authority has:
 1) issued an authorization for continuation of the feeder UCITS as the feeder UCITS of the same master UCITS, where the master UCITS is the acquiring UCITS;
 2) issued an authorization to invest the units or shares of the feeder UCITS in the master UCITS founded as a result of the merger, where the master UCITS is the UCITS being acquired and as a result of the merger the feeder UCITS becomes a unit-holder or shareholder of the acquiring UCITS;
 3) issued an authorization to the feeder UCITS to invest in another master UCITS which is not involved in the merger; or
 4) approved amendments to the fund rules, articles of association or prospectus of the feeder UCITS according to which the UCITS is no longer a feeder UCITS.

 (2) The provisions of subsection 1 of this section also apply to division of a master UCITS established or founded in another EEA Member State in respect of which the feeder UCITS established or founded in Estonia has an investment authorization.

 (3) A feeder UCITS submits the following documents to the Financial Supervision Authority to continue as a feeder UCITS of a master UCITS in accordance with clause 1 of subsection 1 of this section:
 1) a petition for continuing as the feeder UCITS of the master UCITS;
 2) a petition specified in subsection 2 of § 37 of this Act for approval of the amendments to the fund rules or articles of association.

 (4) For making an investment in the units of the master UCITS established as a result of the merger or another master UCITS in accordance with clauses 2 or 3 of subsection 1 of this section, the feeder UCITS submits the following documents to the Financial Supervision Authority:
 1) a petition for an investment authorization for making an investment in the units of the master UCITS established or founded as a result of the merger or another master UCITS and the data and documents specified in subsection 2 of § 198 of this Act;
 2) a petition specified in subsection 2 of § 37 of this Act for approval of the amendments to the fund rules or articles of association.

 (5) In order to amend the fund rules or articles of association of a feeder UCITS in accordance with clause 4 of subsection 1 of this section, the feeder UCITS submits a petition to the Financial Supervision Authority in accordance with the provisions of § 37 of this Act.

 (6) A feeder UCITS must submit to the Financial Supervision Authority the petition specified in subsection 3, 4 or 5 of this section or the petition for liquidation authorization specified in § 169 of this Act within one month after receipt of information on merger from the feeder UCITS.

 (7) Where a master UCITS has given information on a merger of feeder UCITS more than four months before the planned date of the merger taking effect, the feeder UCITS must submit the documents specified in subsection 4 of this section at the latest three months before the planned date of the merger of the master UCITS taking effect.

§ 210. Proceedings of authorization for merger of feeder UCITS and approval of amendment to fund rules or articles of association

 (1) Where the petition or documents specified in subsections 3, 4 or 5 of § 209 of this Act do not confirm with the requirements, the Financial Supervision Authority demands elimination of the deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents where it is not convinced on the basis of the data and documents specified in subsection 3, 4 or 5 of § 209 of this Act whether a fund or investment in the units or shares of a fund fulfils the requirements established by legal instruments, or where other circumstances relating to the petition 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 an on-site inspection, order examinations and a special audit, consult state databases, and request oral explanations from managers of the fund manager or public limited fund, audit firm, their representatives and third parties concerning the contents of the documents submitted and the circumstances 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 are submitted within a reasonable term determined by the Financial Supervision Authority.

 (5) The Financial Supervision Authority may refuse to review a petition where the applicant has failed to eliminate the deficiencies specified in subsection 1 of this section within the prescribed term or has not submitted the data, documents or information requested by the Financial Supervision Authority by the due date.

 (6) The Financial Supervision Authority makes a decision on issue of refusal to issue the authorization or approval specified in subsection 1 of § 209 of this Act within 15 working days after receipt of all the necessary data and documents and promptly informs the manager of the feeder UCITS and the public limited fund, which is a UCITS, and the depositary thereof.

 (7) The Financial Supervision Authority may refuse to issue the authorization or approval specified in clauses 2–4 of subsection 1 of § 209 of this Act where investment of the financial or other resources received upon redemption of the units or shares from the master UCITS do not ensure sufficient liquidity of the assets of the feeder UCITS before making an investment in the units of the master UCITS established or founded upon merger or another master UCITS or continuation of the activities of the feeder UCITS as a UCITS which is not a feeder UCITS.

 (8) The fund manager of a feeder UCITS or a public limited fund which is a feeder UCITS promptly notifies the master UCITS of the decision specified in subsection 6 of this section.

 (9) A feeder UCITS must promptly notify its unit-holders or shareholders in accordance with the provisions of § 200 of this Act after obtaining the authorization specified in clause 2 or 3 of subsection 1 of § 209 of this Act and notification of the master UCITS thereof.

§ 211. Redemption of units or shares of feeder UCITS from master UCITS

 (1) Where the Financial Supervision Authority has not decided on issue of an authorization or approval specified in clauses 2–4 of subsection 1 of § 209 of this Act by the penultimate working day when a feeder UCITS has the right to apply for redemption of the units or shares of the feeder UCITS from a master UCITS in accordance with § 144 or subsection 2 of § 208 of this Act, the feeder UCITS must redeem all its units or shares from the master UCITS in the case this is necessary for the fulfilment of the obligation to redeem the units or shares of the feeder UCITS and in line with the interests of the unit-holders or shareholders of the feeder UCITS.

 (2) Upon redemption of the units or shares of a feeder UCITS from a master UCITS, payments are made in money or other assets. Payments may be made in full or in part in other assets where the feeder UCITS has granted consent for this purpose and this arises from the agreement on making an investment between the feeder and the master UCITS.

 (3) A feeder UCITS may transfer the assets received on the basis of subsection 2 of this section at any time for obtaining financial resources.

§ 212. Special rules for liquidation of master UCITS

 (1) Liquidation proceedings of a master UCITS may be commenced three months after publication of the notice of liquidation of the master UCITS. Where a feeder UCITS has been established or founded in another EEA Member State, a notice of liquidation must also be submitted, in addition to the provisions of the first sentence of this subsection, to the financial supervision authority of the home country of the feeder UCITS which assets have been invested in the units or shares of the master UCITS.

 (2) Upon distribution of the assets of a master UCITS, payments are made in money or other assets. Payments may be made from the master UCITS to a feeder UCITS in part or in full in other assets where this confirms to the agreement on making an investment between the feeder and master UCITS and the decision of dissolution of the master UCITS.

 (3) A feeder UCITS may transfer the assets received on the basis of subsection 2 of this section at any time for obtaining financial resources.

§ 213. Special rules for dissolution of feeder UCITS

 (1) In the case dissolution of a master UCITS in respect of which a feeder UCITS has an investment authorization, the feeder UCITS must be dissolved, unless the Financial Supervision Authority has:
 1) issued an investment authorization for investment of the assets of the feeder UCITS in another master UCITS; or
 2) approved amendments to the fund rules, articles of association or prospectus of the feeder UCITS according to which the UCITS is no longer a feeder UCITS.

 (2) A feeder UCITS submits the following documents to the Financial Supervision Authority in order to invest in the units or shares of another master UCITS in accordance with clause 1 of subsection 1 of this section:
 1) a petition for an investment authorization for making an investment in the units of another master UCITS and the data and documents specified in subsection 2 of § 198 of this Act;
 2) a petition specified in subsection 2 of § 37 of this Act for approval of the amendments to the fund rules or articles of association.

 (3) In order to amend the fund rules or articles of association of a feeder UCITS in accordance with clause 2 of subsection 1 of this section, the feeder UCITS submits a petition to the Financial Supervision Authority in accordance with § 37 of this Act.

 (4) A feeder UCITS submits to the Financial Supervision Authority a petition for the authorization specified in clause 1 of subsection 1 of this section or for the approval specified in clause 2 or for the authorization for liquidation specified in § 169 of this Act at the latest two months after publication of the notice of liquidation of the master UCITS.

 (5) Where the notice of liquidation of a master UCITS was published more than five months before commencement of the liquidation proceedings of the master UCITS, the feeder UCITS must submit a petition specified in clause 1 of subsection 1 of this section or approval specified in clause 2 or authorization for liquidation specified in § 169 of this Act at least three months before the date of commencement of the liquidation proceedings.

§ 214. Proceedings of authorization for merger of feeder UCITS upon dissolution of master UCITS and approval of amendment to fund rules

 (1) Where a petition for the authorization specified in clause 1 of subsection 1 of § 213 of this Act or for the approval specified in clause 2 does not comply with the requirements, the Financial Supervision Authority demands elimination of the deficiencies by the applicant.

 (2) The Financial Supervision Authority may demand submission of additional data and documents where it is not convinced on the basis of a petition for the authorization specified in clause 1 of subsection 1 of § 213 of this Act or for the approval specified in clause 2 whether the fund or making of an investment fulfils the requirements established by legal instruments or where other circumstances relating to the petition 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 an on-site inspection, order examinations and a special audit, consult state databases, and request oral explanations from managers of the fund manager or public limited fund, audit firm, their representatives and third parties concerning the contents of the documents submitted and the circumstances which are relevant in making a decision on approval of the rules, articles of association and prospectus of the fund.

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

 (5) The Financial Supervision Authority may refuse to review a petition where the applicant has failed to eliminate the deficiencies specified in subsection 1 of this section within the prescribed term or has not submitted the data or documents requested by the Financial Supervision Authority by the due date.

 (6) The Financial Supervision Authority makes a decision on issue of or refusal to issue an authorization or approval on the basis of the petition for authorization specified in clause 1 of subsection 1 of § 213 of this Act or for approval specified in clause 2 within 15 working days after receipt of all the necessary data and documents and promptly notifies the feeder UCITS, the fund manager and depositary thereof.

 (7) The Financial Supervision Authority may refuse to issue an authorization or approval on the basis of the petition for authorization specified in clause 1 of subsection 1 of § 213 of this Act or for approval specified in clause 2, where investment of the financial or other resources received upon redemption of the units or shares from a master UCITS does not ensure sufficient liquidity of the feeder UCITS before investment in the units or shares of another master UCITS or continuation of the activities of the feeder UCITS as a UCITS which is not a feeder UCITS.

 (8) A feeder UCITS promptly notifies a master UCITS of the decision specified in subsection 6 of this section.

 (9) A feeder UCITS must promptly notify its unit-holders or shareholders in accordance with the provisions of § 200 of this Act promptly after obtaining the authorization specified in clause 1 of subsection 1 of § 213 of this Act or the approval specified in clause 2.

§ 215. Obligations of Financial Supervision Authority to notify in connection with feeder UCITS and master UCITS

 (1) The Financial Supervision Authority promptly notifies a feeder UCITS established or founded in Estonia of any decision related to a master UCITS, its fund manager, depositary or audit firm, measures implemented, failure to comply with the conditions provided in this Chapter or information provided based on subsection 1 of § 87 of this Act.

 (2) Where a feeder UCITS established or founded in another EEA Member State has invested in a master UCITS, the Financial Supervision Authority promptly notifies the financial supervision authority of the home country of the feeder UCITS of investment in the units or shares of the master UCITS and the circumstances provided in subsection 1 of this section.

 (3) Where the financial supervision authority of the home country of a master UCITS established or founded in another EEA Member State forwards the information provided in subsection 2 of this section to the Financial Supervision Authority, the Financial Supervision Authority promptly notifies the feeder UCITS thereof.

Chapter 16 Defined-benefit Occupational Pension Fund 

Subchapter 1 Foundation 

§ 216. Foundation and articles of association of defined-benefit occupational pension fund

 (1) Upon foundation of a defined-benefit occupational pension fund as a public limited company which is offered to employees, public servants and members of management and control bodies of an employer of an EEA Member State, founders approve a depositary contract.

 (2) Before registration of a defined-benefit occupational pension fund in the commercial register, the public limited company must apply for an activity licence in accordance with the provisions of this Subchapter.

 (3) A defined-benefit occupational pension fund promptly notifies the Financial Supervision Authority of making an entry in the commercial register.

 (4) The articles of association of a defined-benefit occupational pension fund must include the data specified in clauses 2, 8, 13 and 15 of subsection 1, clauses 1 and 3 of subsection 2 of § 29 and clauses 2 and 5 of subsection 1 of § 43 of this Act, and:
 1) the business name of the fund;
 2) the agreed amount of payments to persons covered by the pension scheme, including amount of payments in the case contributions to the fund are terminated before the due date established in the articles of association;
 3) the list of the fees, charges and expenses paid for the account of all the persons covered by the pension scheme and the rates and rules of calculation thereof;
 4) the rules for calculation of surrender value of the assets of the fund belonging to the persons covered by the pension scheme.

 (4¹) The articles of association of a defined-benefit occupational pension fund must specify in the description of the investment policy of the fund whether and how the principles of responsible investment are complied with and whether and how environmental, climate, social and governance factors are taken into consideration in making investment decisions.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (5) The articles of association of a defined-benefit occupational pension fund may also prescribe other conditions which are not contrary to legal instruments.

 (6) Persons covered by a pension scheme are employees, public servants and members of management and control bodies for whom an employer of an EEA Member State makes contributions to a defined-benefit occupational pension fund and persons for whom contributions are no longer made but to whom the fund has obligations, including persons to whom payments are made from the fund.

§ 217. Petition for activity licence of defined-benefit occupational pension fund

 (1) Upon application for an activity licence of a defined-benefit occupational pension fund, the Financial Supervision Authority must be submitted a written petition and:
 1) the data and documents provided in clauses 1–9 and 11 of subsection 1 of § 313 of this Act;
 2) the data concerning the actuary of the fund which includes the name and personal identification code, in the absence thereof the date of birth or registry code of the of the actuary;
 3) the depositary contract.

 (2) The business plan of a defined-benefit occupational pension fund must contain the management structure of the fund and description of the rights, obligations and liabilities of the persons connected to the fund as well as a forecast and analysis of all the most important economic indicators of the fund for at least three years, including concerning the following circumstances:
 1) the amount and list of the own funds of the applicant;
 2) the principles and methods of calculation of the technical provisions provided in § 228 of this Act;
 3) the revenue and expenditure of the applicant;
 4) the balance sheet and income statement of the applicant;
 5) the estimated volume of contributions to the fund, claims with respect to the fund and operating expenses and the portion of reinsurance therein and the amount of technical provisions by planned commitments.

 (3) The accuracy of the data and documents of natural persons specified in clause 7 of subsection 1 of § 313 of this Act and clause 2 of subsection 1 of this section is confirmed by these persons with their signatures.

§ 218. Processing of petition for and decision on activity licence

 (1) Where obvious deficiencies are found in a submitted petition for an activity licence, the Financial Supervision Authority may refuse to review the petition.

 (2) Where amendments are made to the data or documents specified in § 217 of this Act during processing of a petition for an activity licence, the applicant promptly submits the respective amended data and documents to the Financial Supervision Authority. Where an amendment is substantial, the Financial Supervision Authority may deem the day of receipt of information concerning this substantial amendment to be the beginning of the procedural time limit. In this case, the Financial Supervision Authority must notify the applicant of a new procedural time limit.

 (3) The Financial Supervision Authority may demand submission of additional data and documents within a reasonable term determined by it where it is not convinced on the basis of the data and documents specified in § 217 of this Act as to whether the applicant for an activity licence meets the requirements established for a defined-benefit occupational pension fund in this Act.

 (4) In order to verify the data submitted by an applicant, the Financial Supervision Authority may require that more specific data and documents be submitted, perform an on-site inspection, order examinations or a special audit, consult databases, request oral explanations from the managers, audit firm of the defined-benefit occupational pension fund, their representatives and third parties concerning the contents of documents and circumstances which are relevant in the making of a decision on the issue of an activity licence.

 (5) The provisions of subsection 1 of § 315 and the first sentence of subsection 3 of this Act apply to processing of a petition for an activity licence and a decision of the Financial Supervision Authority.

§ 219. Bases for refusal to issue authorization

 (1) In addition to the provisions of clauses 1, 2, 5 and 8–11 of § 33 of this Act, the Financial Supervision Authority may refuse to issue an activity licence to a defined-benefit occupational pension fund where:
 1) the applicant does not comply with the requirements provided by legal instruments for a defined-benefit occupational pension fund;
 2) the applicant does not have the necessary resources or experience to operate with continuity as a defined-benefit occupational pension fund;
 3) a member of the management board or supervisory board of the applicant, its audit firm or shareholder does not comply with the requirements provided by legal instruments;
 4) the actuary of the applicant does not comply with the requirements provided in this Act;
 5) close links between the applicant and another person prevent sufficient supervision over the applicant, or the requirements provided by legal instruments or implementation of legal instruments of the state where the persons with whom the applicant has close links has been founded prevent sufficient supervision over the defined-benefit occupational pension fund;
 6) the internal rules specified in § 224 of this Act are not sufficiently accurate or unambiguous for governing the activities of the defined-benefit occupational pension fund.

 (2) The following is among other things considered upon assessment of that provided in clause 2 of subsection 1 of this section:
 1) the level of the organizational and technical administration of the activities of the applicant;
 2) the education, work experience, business contacts, reliability and reputation of the persons related to the management of the applicant;
 3) the business plan provided in subsection 2 of § 217 of this Act and sufficiency thereof;
 4) the activities, financial situation and reputation of the applicant, its parent company and persons which belong to the same consolidation group as the applicant.

§ 220. Amendment of articles of association

 (1) Amendments to the articles of association of a defined-benefit occupational pension fund must be approved by the Financial Supervision Authority.

 (2) The articles of association of a defined-benefit occupational pension fund may not be amended so that the fund no longer is a defined-benefit occupational pension fund for the purposes of this Act.

 (3) A defined-benefit occupational pension fund has a decision to amend the articles of association approved by the employer making contributions to the fund.

§ 221. Approval of amendments to articles of association

 (1) In order to have amendments to the articles of association approved, a defined-benefit occupational pension fund submits a written petition, consent of an employer making contributions to the fund to amendment of the articles of association of the fund and the documents specified in clauses 1, 2 and 4 of subsection 2 of § 37 of this Act (hereinafter in this section petition) to the Financial Supervision Authority.

 (2) The provisions of §§ 218 and 219 of this Act apply to review of a petition, making of a decision to approve amendments and refusal to make this decision.

 (3) Upon bringing the articles of association of a defined-benefit occupational pension fund into compliance with legal instruments, the amendments need not be approved by the Financial Supervision Authority, where the following conditions are met:
 1) only such provisions are amended which the fund is required to amend in accordance with amendments made to legal instruments or by which corrections are made in the wording of the articles of association and which have no impact on the rights and obligations of the person covered by the pension scheme;
 2) the amended articles of association of the fund is promptly submitted to the Financial Supervision Authority.

§ 222. Amendment of articles of association

 (1) In the case the articles of association are amended, a defined-benefit occupational pension fund discloses, promptly after registration of the amendments, the amended text of the articles of association of the fund to persons covered by the pension scheme and notifies the Financial Supervision Authority of the date of disclosing the amendments.

 (2) Where amendments to the articles of association need not be approved by the Financial Supervision Authority in accordance with this Act, a defined-benefit occupational pension fund discloses the amended text of the articles of association thereof to persons covered by the pension scheme promptly after submission of the amendments to the articles of association to the Financial Supervision Authority.

 (3) A defined-benefit occupational pension fund may be offered on the basis of the amended articles of association, after the entry into force of the amendments but not before one month has passed from disclosure of the amended text of the articles of association, to persons covered by the pension scheme.

 (4) The term of disclosure provided in subsection 3 of this section does not apply to bringing the articles of association of a defined-benefit occupational pension fund into compliance with legal instruments.

Subchapter 2 Activities of Fund and Management of Fund 

§ 223. Activities and management of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund must take the provisions of §§ 309, 340, 341 and 343 of this Act into account in its activities, and the provisions concerning unit-holders and shareholders of the fund apply to persons covered by the pension scheme.

 (2) The provisions of subsections 2–4 of § 48, clause 2 of subsection 1 and subsection 2 of § 49, §§ 310–312 and 342, subsections 1–4 of § 345, §§ 345¹ and 354 and subsections 4–7 of § 362 concerning a fund manager of a defined-benefit occupational pension fund or a public limited fund govern the management of an occupational pension fund, and the provisions concerning unit-holders and shareholders of the fund apply to persons covered by the pension scheme.
[RT I, 11.10.2024, 1 - entry into force 17.01.2025]

 (3) The key functions of a defined-benefit occupational pension fund provided in subsection 3 of § 347 of this Act also include the function of an actuary and the actuary, who must possess and, where necessary, be able to certify the knowledge and experience in the field of insurance and financial mathematics which correspond to the nature, scale and complexity of the risks inherent in the activities of the fund, is responsible for the performance of this function.

 (4) An actuary of a defined-benefit occupational pension fund:
 1) coordinates and monitors the calculation of technical provisions;
 2) assesses relevance of the assumptions and methods used upon calculation of technical provisions and the models constituting the basis for these calculation;
 3) assesses sufficiency and quality of data used upon calculation of technical provisions;
 4) compares, upon calculation of technical provisions, the assumption used and the actuary's hitherto experience;
 5) notifies the management board and members of the supervisory board of the fund of reliability and adequacy of the calculation of the technical provisions;
 6) gives an opinion on the principles of assessment of mortality, longevity and incapacity for work risks where the fund covers the specified risks;
 7) gives an opinion on the relevance of the reinsurance programs, where used;
 8) participates in the implementation of the fund's risk management system.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (5) The provisions of subsection 1¹ of § 345 and § 345¹ do not apply to a defined-benefit occupational pension fund where the pension scheme covers fewer than 15 persons.
[RT I, 11.10.2024, 1 - entry into force 17.01.2025]

§ 224. Internal rules, internal control systems and mitigation and avoidance of conflicts of interest of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund must have internal rules which comply with the requirements provided in § 344 of this Act.

 (2) The internal rules of a defined-benefit occupational pension fund also determine the principles and methods for calculation of technical provisions.

 (3) The internal control system of a defined-benefit occupational pension fund must comply with the provisions of §§ 347–350 and 363¹ of this Act, thereupon the provisions concerning unit-holders and shareholders of the fund apply to persons covered by the pension scheme.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (4) A defined-benefit occupational pension fund must establish rules with regard to its fund manager for mitigation and avoidance of conflicts of interest which are in compliance with the requirements provided in §§ 351–353 of this Act and comply with the requirements provided in the specified sections, and the provisions concerning unit-holders and shareholders of the fund apply to persons covered by the pension scheme.

 (5) The risk control function of a defined-benefit occupational pension fund must enable, in addition to the provisions of subsection 1 of § 363¹ of this Act, the monitoring and measuring of risks associated with formation of technical provisions and, in the case the fund covers mortality, longevity and or incapacity for work risks, the risks in turn associated with management of these risks.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

 (6) A defined-benefit occupational pension fund must arrange the assessment of its risks according to § 363²of this Act and cover the following:
 1) assessment of measures adopted for mitigation and prevention of conflicts of interest, where the fund manager has outsourced the performance of the function of an actuary to an employer making contributions to the fund;
 2) measures taken to restore general solvency and, where necessary, the amount of the assets covering technical provisions;
 3) assessment of the risks related to making of payments to persons covered by the pension scheme together with the conditions for adopting the measures provided in subsection 11 of § 228 of this Act and assessment of the efficiency of these measures, potential indexing of payments and the impact thereof, and the impact assessment of the guarantees of employers making contributions issued in accordance with subsection 5 of § 226 of this Act or of the use of reinsurance.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

Subchapter 3 Shares, Share Capital and Prudential Requirements of Fund 

§ 225. Shares, share capital and initial capital of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund may not issue preferred shares.

 (2) The initial capital of a defined-benefit occupational pension fund is at least three million euros.

 (3) The provisions of subsections 3–6 of § 337 of this Act apply to reduction of the share capital of a defined-benefit occupational pension fund and the provisions of subsections 7–9 of the same section apply to increase of the share capital.

§ 226. Own funds of defined-benefit occupational pension fund

 (1) The provisions of subsection 1 of § 334 of this Act apply to own funds of a defined-benefit occupational pension fund.

 (2) A defined-benefit occupational pension fund must have own funds for ensuring its liabilities at least at the level of the minimum solvency margin and the required solvency margin.

 (3) The minimum solvency margin of a defined-benefit occupational pension fund is three million euros and the required solvency margin is found in accordance with § 227 of this Act.

 (4) A defined-benefit occupational pension fund submits the calculation of the required solvency margin to the Financial Supervision Authority together with the annual report and in other cases provided by law.

 (5) The provisions of subsections 2–4 of this Act do not apply to a defined-benefit occupational pension fund where the rate of return or payments to persons covered by the pension scheme are guaranteed by an employer of an EEA Member State making contributions to this fund.

§ 227. Required solvency margin of defined-benefit occupational pension fund

 (1) The required solvency margin of a defined-benefit occupational pension fund is determined according to the liabilities thereof as the sum of the components found on the basis of subsections 2 and 5–7 of this section.

 (2) The required solvency margin is equal to the sum of the following two components:
 1) the amount of technical provisions which has first been multiplied by the coefficient 0.04 and thereafter by a coefficient which is the ratio of the amount of the technical provisions less the reinsurer's share and the total amount of the technical provisions, and the minimum value thereof is 0.85;
 2) in the case of liabilities which risk capital is positive, the amount of the risk capital which has first been multiplied by the coefficient 0.003 and thereafter by a coefficient which is the ratio of the risk capital less the reinsurer's share and the total amount of risk capital, and the minimum value thereof is 0.5.

 (3) By way of derogation from the provisions of clause 2 of subsection 2 of this section, the risk capital is multiplied as follows in the case of liabilities that cover a death risk:
 1) in the case of liabilities with a term of up to three years which risk capital is positive, first by the coefficient 0.001 and thereafter by the coefficient which is the ratio of the risk capital less the reinsurer's share and the total amount of risk capital, and the minimum value thereof is 0.5;
 2) in the case of liabilities with a term from three to five years which risk capital is positive, first by the coefficient 0.0015 and thereafter by the coefficient which is the ratio of the risk capital less the reinsurer's share and the total amount of risk capital, and the minimum value thereof is 0.5.

 (4) For the purposes of this section, risk capital is the amount paid from which the amount of the technical provisions corresponding to the amount of liabilities to the person covered by a pension scheme has been deducted.

 (5) In the case of liabilities which correspond to the type of life assurance specified in clause 10 of subsection 1 of § 13 of the Insurance Activities Act, the value of the respective assets is multiplied by the coefficient 0.01.

 (6) In the case of liabilities which correspond to the types of life assurance specified in clauses 8 and 12 of subsection 1 of § 13 of the Insurance Activities Act, the required solvency margin is equal to the sum of the following products:
 1) the amount of technical provisions for liabilities in the case of which a defined-benefit occupational pension fund bears the investment risk is multiplied by the coefficient 0.04;
 2) the amount of technical provisions for the liabilities in the case of which a defined-benefit occupational pension fund does not bear the investment risk and which management fees have been fixed for a period exceeding five years is multiplied by the coefficient 0.01;
 3) the amount of administrative expenditure reduced by the management or other fees repaid to a defined-benefit occupational pension fund on the investments made by it for liabilities in the case of which the fund bears no investment risk and which management feed has been fixed for a period exceeding five years is multiplied by the coefficient 0.25;
 4) in the case of liabilities which cover a death risk, it is first multiplied by the coefficient 0.003 and thereafter by the coefficient which is the ratio of the risk capital less the reinsurer's share and the total amount of the risk capital, and the minimum value thereof is 0.5.

 (7) In the case of liabilities which correspond to the types of non-life insurance specified in clauses 1 and 2 of subsection 1 of § 12 of the Insurance Activities Act, the required solvency margin is the higher of the amounts calculated on the basis of subsections 8 and 9 or 10–11 of this section.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

 (8) The higher of gross written premiums or gross earned premiums of a financial year is multiplied by the coefficient 0.18 for an amount extending up to 50 million euros, and by the coefficient 0.16 for an amount in excess of that amount.

 (9) The results obtained in accordance with subsection 8 of this section are added together and multiplied by the coefficient which is the ratio of the sum of the claims of the previous financial year less the reinsurer's share and the total amount of the claims of the same period. The minimum value of the specified coefficient is 0.5.

 (10) The amount of claims of the last three financial years, less the amount received from recoveries in the same period, is divided by three and multiplied by the coefficient 0.26 for an amount extending up to 35 million euros, and by the coefficient 0.23 for an amount in excess of that amount.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

 (10¹) The amount of claims incurred during a financial year is the amount of change in the provision of paid claims and outstanding claims, where the change in the provision of outstanding claims is found as the difference between the provisions for outstanding claims at the end of the financial year and the beginning of the financial year.
[RT I, 03.06.2022, 5 - entry into force 13.06.2022]

 (11) The results obtained in accordance with subsection 10 of this section are added together and multiplied by the coefficient which is the ratio of the sum of the claims of the previous financial year less the reinsurer's share and the total amount of claims during the same period. The minimum value of the specified coefficient is 0.5.

 (12) Where the required solvency margin calculated on the basis of subsection 7 of this section is less than the required solvency margin calculated a year earlier, the required solvency margin is the largest of the required solvency margin calculated on the basis of subsection 7 of this section and the required solvency margin calculated on the basis of subsection 13 of this section.

 (13) The required solvency margin calculated a year before the calculation of the required solvency margin is multiplied by a coefficient which is found when the provision for outstanding claims as at the end of a financial year less the reinsurer's share is divided by the provision for outstanding claims as at the end of the preceding financial year less the reinsurer's share. The maximum value of the specified coefficient is 1.

§ 228. Technical provisions of defined-benefit occupational pension fund and assets corresponding thereto

 (1) Technical provisions of a defined-benefit occupational pension fund must correspond at any moment to the amount of liabilities to persons covered by the pension scheme which the fund can reasonably foresee.

 (2) Calculation of the amount of the technical provisions of a defined-benefit occupational pension fund is based on reliable economic and actuarial estimates, taking account of the risks associated with amendments to the conditions which constituted the basis for these estimates and taking account of the liabilities to persons covered by the pension scheme, including:
 1) all guaranteed indemnities;
 2) bonuses determined or guaranteed during the past periods;
 3) potential liabilities of the fund arising from the choices of persons covered by the pension scheme established by the articles of association of the fund;
 4) expenses.

 (3) When calculating the technical provisions, a defined-benefit occupational pension fund uses, upon discounting of the future cash flows arising from the obligations to persons covered by the pension scheme, the interest rates shown on the current interest rate term structure of the debt securities of the central governments of the euro area countries with the highest credit rating published on the website of the European Central Bank on the last settlement day before the calculation.

 (4) Where the interest rate term structure of the debt securities specified in subsection 3 of this section does not show the interest rates of debt securities with the duration necessary to calculate the technical provisions, the Financial Supervision Authority must be previously notified of the method of extrapolation of the interest rate term structure.

 (5) Where the interest rate term structure of the debt securities specified in subsection 3 of this section and published on the website of the European Central Bank is unavailable due to any technical problems related to the website, a defined-benefit occupational pension fund uses the best known data concerning the interest rates shown on the interest rate term structure of the specified debt securities for calculation of the technical provisions and notify the Financial Supervision Authority previously thereof.

 (6) A defined-benefit occupational pension fund discloses the principles and methods of calculation of the technical provisions on its website and gives reasons to the Financial Supervision Authority for the changes made in the principles and methods of calculation of the technical provisions.

 (7) The amount of the assets of a defined-benefit occupational pension fund corresponding to the technical provisions must continuously cover at least the amount of the technical provisions of the fund.

 (8) Investment of the assets covering the technical provisions is based on the provisions of § 232 of this Act, taking account of the nature and duration of the obligations assumed by a defined-benefit occupational pension fund. Upon investment of the assets covering the technical provisions, the investments must be of high quality and the safety, liquidity and profitability of the investments must be ensured, maintaining at the same time diversity and spread of the investments.

 (9) A defined-benefit occupational pension fund must submit to the Financial Supervision Authority a report of an actuary covering the following areas at the latest at the time of disclosure of its annual report:
 1) sufficiency of technical provisions and the principles and methods of calculation thereof;
 2) assets covering the technical provisions;
 3) sufficiency of contributions;
 4) sufficiency of own funds of the fund and their compliance with the requirements established in this Act.

 (10) Where the technical provisions of a defined-benefit occupational pension fund do not comply with the provisions of subsection 1 of this section, the Financial Supervision Authority may prohibit, by a compliance notice, carrying out of transactions or performing of acts involving the assets of the fund or restrict the volume of the transactions or acts related to the assets thereof.

 (11) Where the amount of the assets covering the technical provisions of a defined-benefit occupational pension fund is less than the amount of the technical provisions, the defined-benefit occupational pension fund may increase, by the agreement of the employer making contributions to the fund, its contributions to the fund, or by agreement with the specified employer and persons covered by the pension scheme reduce the amount of the payment agreed upon in the articles of association of the fund, and allow to exit from the pension scheme on the basis of the principles of calculation of the surrender value that differs from those provided in the articles of association.

Subchapter 4 Offer of Defined-benefit Occupational Pension Fund, Information to be Disclosed and Reporting 

§ 229. Offer of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund may be offered only to employees, public servants and members of management and control bodies of such an employer of such an EEA Member State where offer of the respective pension scheme is permitted.

 (2) A defined-benefit occupational pension fund may not be offered to employees, servants or members of the management and control bodies of an Estonian employer.

 (3) The provisions of §§ 437 and 438 of this Act apply to cross-border activities of a defined-benefit occupational pension fund and offer in another EEA Member State.

§ 230. Disclosure of information concerning defined-benefit occupational pension fund

 (1) The information to be disclosed concerning a defined-benefit occupational pension fund must be true and unambiguous and not misleading.

 (2) Employers who intend to commence making of or who make contributions to a defined-benefit occupational pension fund and each person covered by the pension schemes thereof must have an opportunity to examine the documents specified in clauses 1–3 of subsection 2 of § 81 of this Act at the seat, branches and on website thereof.

 (3) In addition to the provisions of subsection 2 of this section, a defined-benefit occupational pension fund must submit once a year to each person covered by its pension scheme a pension statement in a form reproducible in writing in compliance with the requirements provided in subsections 1–4 and 6–9 of § 94¹ of this Act and apply the provisions concerning unit-holders of a fund to persons covered by the pension scheme.

 (4) A pension statement of a defined-benefit pension fund must contain the following information in addition to the provisions of subsection 1 of § 94¹ of this Act:
 1) the nature of the guarantees in the pension scheme, including the sums payable in the future to a person covered by the pension scheme which amounts are guaranteed by the defined-benefit occupational pension fund or the employer making contributions to such fund, together with a reference to where it is possible to obtain additional information about the guarantees;
 2) the amount of the technical provisions corresponding to the pension scheme and the assets corresponding to them;
 3) the annuity rate, term of the annuity used upon calculation of the amount of payments to a person covered by the pension scheme, and other prerequisites where the payments are made in the form of an annuity;
 4) the amount of payments to a person covered by the pension scheme in the case contributions to the fund are terminated before the due date provided in the articles of association.

 (5) At the request of a person covered by a pension scheme and at the latest six months before commencement of payments, the defined-benefit occupational pension fund notifies the person covered by the pension scheme of the modes of payment offered to the person.

 (6) Where payments are made to a person covered by a pension scheme, the defined-benefit occupational pension fund notifies the person at least once a year of the payments to which the person is still entitled, and the mode of payment chosen.

 (7) Documents specified in clauses 1–3 of subsection 2 of § 81 of this Act and subsection 3 of this section must be disclosed in the official language of the EEA Member State where the defined-benefit occupational pension fund is offered. The Financial Supervision Authority has the right to demand from the defined-benefit occupational pension fund translation of the documents specified in this section into Estonian.

 (8) A defined-benefit occupational pension fund provided free copies of the documents specified in clauses 1–3 of subsection 2 of § 81 of this Act and subsection 3 of this section to a person covered by the pension scheme at their request.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 231. Accounting and reporting of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund is required to keep separate accounting concerning the contributions made for each person covered by the pension scheme, rights earned and surrender value of the assets of the fund as well as payments made to the person.

 (2) The financial year of a defined-benefit occupational pension fund is a calendar year and its accounting and reporting are organized on the basis of the Accounting Act, this Act, other legal instruments and the internal rules of the fund.

 (3) The provisions of subsection 4 of § 81 of this Act apply to disclosure of an annual report and semi-annual report of a defined-benefit occupational pension fund.

 (4) The provisions of §§ 86, 87 and 371 of this Act apply to an audit of a defined-benefit occupational pension fund.

 (5) The audit firm of a defined-benefit occupational pension fund must also assess sufficiency of the technical provisions of the fund.

 (6) The provisions of subsections 1–8 of § 370 of this Act apply to reports submitted to the Financial Supervision Authority concerning a defined-benefit occupational pension fund.

Subchapter 5 Management and Investment of Assets of Defined-benefit Occupational Pension Fund 

§ 232. Requirements for investment of assets of defined-benefit occupational pension fund

 (1) Investment of the assets of a defined-benefit occupational pension fund, including assets covering technical provisions is based on the provisions of this Act concerning investment of assets of an occupational pension fund, and the provisions concerning unit-holders and shareholders of the fund apply to persons covered by pension schemes.

 (2) A defined-benefit occupational pension fund invests the assets covering technical provisions in the same currency in which the liabilities were assumed. The assets covering the technical provisions may be invested in other currencies to the total extent of up to 30 per cent of the amount of the technical provisions.

§ 233. Partial outsourcing of tasks of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund may only engage in the management of its assets and may not provide fund management services or other services to third parties.

 (2) Outsourcing of the tasks of a defined-benefit occupational pension fund is based on the provisions of §§ 364–367 of this Act and the provisions concerning unit-holders and shareholders of the fund apply to persons covered by the pension scheme.

 (3) A defined-benefit occupational pension fund may also outsource investment of the assets of the fund, in addition to the persons specified in clause 2 of subsection 1 of § 365 of this Act, to insurers which are founded in Estonia or a foreign country and which hold an activity licence for the classes of life insurance specified in clause 12 of subsection 1 of § 13 of the Insurance Activities Act.

 (4) A defined-benefit occupational pension fund must inform the Financial Supervision Authority, upon outsourcing the tasks related to the performance of the actuary function or other key functions provided in subsection 3 of § 347 of this Act to a third party, before the entry into force of the contract for outsourcing of these tasks.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

§ 233¹. Transfer of liabilities to persons covered by pension schemes and assets

 (1) A defined-benefit occupational pension fund (hereinafter in this Subchapter transferor) may transfer, on the conditions provided in this Act, its liabilities to persons covered by a pension scheme and assets or any part thereof (hereinafter in this Subchapter liabilities and assets) to a defined-benefit occupational pension fund established in Estonia or another contracting state or to an insurer which holds an activity licence for the class of life insurance specified in clause 12 of subsection 1 of § 13 of the Insurance Activities Act (hereinafter both in this Subchapter recipient).

 (2) The liabilities and assets are transferred by a contract for transfer of liabilities and assets in which the rights and obligations of the transferor and recipient are provided. The conditions provided in the contract for transfer of liabilities and assets must not harm the interests of the persons covered by the pension scheme, and the contract may not prescribe covering of any costs related to the transfer for the account of persons covered by other pension schemes of the transferor or the recipient.

 (3) A transferor notifies the persons covered by its pension scheme of the conditions of transfer of the liabilities and assets.

 (4) In order to transfer the liabilities and assets of a defined-benefit occupational pension fund, the consent of the employer making contributions to the pension fund and the majority of the persons covered by the pension scheme is required, including the majority of the persons covered by the pension scheme and to whom payments are already made.

 (5) In order to obtain an authorization for transfer of liabilities and assets, the recipient must submit to the Financial Supervision Authority a written petition and the following data and documents (hereinafter together in this Subchapter petition):
 1) the business name and address of the seat of the transferor and the recipient and the other EEA Member State, where the transferor is a defined-benefit occupational pension fund of another EEA Member State;
 2) the business name and address of the seat of the employer which makes contributions to the defined-benefit occupational pension fund and in relation to the pension scheme of which the liabilities and assets are transferred;
 3) the consent to transfer the liabilities and assets by the employer which makes contributions to the defined-benefit occupational pension fund and the majority of the persons covered by the pension scheme, including the majority of the persons covered by that pension scheme to whom payments are already made;
 4) other EEA Member States which social and labour law is applied to the pension scheme the liabilities and assets related to which are transferred;
 5) the contract for transfer of the liabilities and assets;
 6) the petition and documents specified in subsections 1 of § 221 of this Act for approval of amendments to the articles of association of the defined-benefit occupational pension fund;
 7) relevant conditions of the pension scheme the liabilities and assets related to which are transferred;
 8) the list and amount of the technical provisions and other liabilities transferred and the assets corresponding to them.

 (6) The recipient must notify the Financial Supervision Authority promptly of any changes made during the proceedings in the data and documents specified in subsection 5 of this section.

 (7) Where the transferor is a defined-benefit occupational pension fund of another EEA Member State, the Financial Supervision Authority notifies the financial supervision authority of this EEA Member State of receipt of a petition for an authorization to transfer liabilities and assets and, forwards it to the latter.

 (8) Subsections 1–9 and 13 and of § 137³ of this Act apply to proceedings of a petition for authorization to transfer liabilities and assets and to grant of authorization, by implementing the provisions concerning a fund manager are to a defined-benefit occupational pension fund and the provisions concerning unit-holders of the fund to persons covered by pension schemes.

 (9) Subsection 3 of § 229 of this Act does not apply to a cross-border offer of a defined-benefit occupational pension fund associated with transfer of liabilities and assets.

 (10) Where the recipient is a defined-benefit occupational pension fund established in another EEA Member State or an insurer which holds an activity licence for the class of life insurance specified in clause 12 of subsection 1 of § 13 of the Insurance Activities Act, the authorization of the financial supervision authority of this other EEA Member State is required to transfer the liabilities to persons covered by the pension scheme and assets.
[RT I, 28.12.2018, 1 - entry into force 13.01.2019]

Subchapter 6 Division, Transformation, Merger and Dissolution of Defined-benefit Occupational Pension Fund 

§ 234. Division and transformation of defined-benefit occupational pension fund

 (1) Division of a defined-benefit occupational pension fund is not permitted.

 (2) A defined-benefit occupational pension fund may not be transformed into a company of a different type.

§ 235. Merger of defined-benefit occupational pension fund

 (1) A defined-benefit occupational pension fund may only merge with another defined-benefit occupational pension fund founded on the basis of the Estonian law.

 (2) The provisions of subsection 2 of § 393 and §§ 399 and 433¹–433¹⁰ of the Commercial Code do not apply to mergers of defined-benefit occupational pension funds.
[RT I, 23.12.2022, 2 - entry into force 01.02.2023]

 (3) A merger agreement of defined-benefit occupational pension funds may not be entered into with a suspensive or resolutive condition, except in the case the condition is to obtain an authorization for merger from the Financial Supervision Authority. Rights and obligations arise from the merger agreement after issue of an authorization for merger, unless a later deadline is provided in the agreement or authorization for merger.

 (4) Within three days after entry into a merger agreement, the management boards of merging defined-benefit occupational pension funds must notify the Financial Supervision Authority and submit a joint merger plan concerning the acts related to the merger which includes the merger schedule, processes and activities planned in the context of the merger and the structure of the fund after the merger.

 (5) The report of a sworn auditor on the merger agreement of defined-benefit occupational pension funds must include an opinion as to whether the acquiring fund or fund being founded has proper technical provisions and assets covering these.

§ 236. Authorization for merger of defined-benefit occupational pension fund

 (1) In order to merge, a defined-benefit occupational pension fund applies to the Financial Supervision Authority for an authorization (hereinafter in this section authorization for merger) and submits a written petition and the following data and documents (hereinafter petition, data and documents jointly in this section petition):
 1) the merger agreement;
 2) the merger report;
 3) the report of a sworn auditor specified in subsection 5 of § 235 of this Act.

 (2) The Financial Supervision Authority issues an authorization for merger where the interests of the persons covered by the pension schemes of the merging defined-benefit occupational pension funds are sufficiently protected and the required solvency margin and assets covering the technical provisions of the fund comply with the requirements.

 (3) The Financial Supervision Authority may refuse to issue an authorization for merger where:
 1) the data or documents submitted upon application for an authorization for merger do not fulfil the requirements established by this Act or are inaccurate, misleading or incomplete;
 2) the defined-benefit occupational pension fund fails to submit in due time the data, documents or information subject to submission to the Supervision Authority upon applying for an authorization for merger or other data, documents or information required by the Financial Supervision Authority;
 3) the financial situation of the acquiring defined-benefit occupational pension fund does not comply with the requirements provided in this Act;
 4) the merger is likely to harm the legitimate interests of the persons covered by the pension schemes of the merging defined-benefit occupational pension funds.

 (4) The Financial Supervision Authority makes a decision to issue or refuse to issue an authorization for merger within one month after submission of all the necessary and proper data and documents but not later than three months after submission of the petition.

§ 237. Notification of merger of defined-benefit occupational pension fund

 (1) An acquiring defined-benefit occupational pension fund and a defined-benefit occupational pension fund being acquired publishes, promptly after receipt of an authorization for merger, a notice concerning the merger of the fund on its website and indicates the data concerning the date of issue of the authorization for merger and the planned effective date of the merger provided in the merger agreement.

 (2) An acquiring defined-benefit occupational pension fund and a defined-benefit occupational pension fund being acquired are required to notify the employers making contributions to the fund and the persons covered by their pension schemes, taking account of the provisions of subsections 3–5 of § 159 of this Act concerning submission of information to unit-holders, and submit:
 1) the explanations of and reasons for the merger;
 2) the conditions of the merger process, including information about passing the merger resolution and the planned effective date of the merger resolution;
 3) the rights of employers and persons covered by the pension schemes, including conditions for making payments.

§ 238. Voluntary dissolution and compulsory dissolution of defined-benefit occupational pension fund

 (1) The general meeting of a defined-benefit occupational pension fund may decide to dissolve the fund only where all the obligations to the persons covered by the pension scheme and the assets have been transferred to another defined-benefit occupational pension fund or the insurer which holds an activity licence for the class of life insurance specified in clause 12 of subsection 1 of § 13 of the Insurance Activities Act, or all the obligations to the persons covered by the pension scheme have been fulfilled and the assets of the fund are sufficient to fully satisfy justified claims of all creditors.

 (2) The provisions of §§ 131–136 of the Insurance Activities Act concerning transfer of insurance portfolios apply to transfer of obligations to persons covered by pension schemes and assets to another defined-benefit occupational pension fund or insurer.

 (3) A defined-benefit occupational pension fund submits, within 20 days after adopting a decision of dissolution of the fund, a petition to the Financial Supervision Authority for an authorization for voluntary dissolution of the fund together with the opinion of the depositary and the data which certify compliance with the conditions specified in subsection 1 of this section.

 (4) The Financial Supervision Authority issues an authorization for voluntary dissolution of a defined-benefit occupational pension fund only where the condition provided in subsection 1 of this section is met.

 (5) Compulsory dissolution of a defined-benefit occupational pension fund is initiated by the Financial Supervision Authority.

 (6) The Financial Supervision Authority may file a petition with a court for compulsory dissolution of a defined-benefit occupational pension fund where the activity licence of the fund has been revoked.

 (7) The provisions §§ 162–164 of the Insurance Activities Act concerning compulsory dissolution of an insurer apply to compulsory dissolution of a defined-benefit occupational pension fund.

 (8) The provisions §§ 172 and 180 of this Act apply to a notice of liquidation of a defined-benefit occupational pension fund and the provisions of § 181 of this Act apply to submission of a petition to the commercial register concerning liquidation of the fund.

 (9) The Financial Supervision Authority promptly notifies the financial supervision authorities of the EEA Member States to the employees, public servants and members of the management and control bodies of the employer of which a defined-benefit occupational pension fund is offered of the decision to dissolve the fund and explains the consequences of the decision and other matters which have relevance to the case in the opinion of the Financial Supervision Authority.

§ 239. Bankruptcy of defined-benefit occupational pension fund

 (1) Filing of and proceedings of a bankruptcy petition of a defined-benefit occupational pension fund, declaration of bankruptcy and bankruptcy proceedings thereof are carried out in accordance with the rules provided in the Bankruptcy Act, taking account of the special rules provided for a fund manager in §§ 389–393 and 395 of this Act and the special rules provided in this Chapter.