Sale of established corporate investment funds

How to purchase an established corporate investment fund in Ukraine

Corporate investment fund (CIF) – is a subject of the financial market in Ukraine that is formed in a form of a joint-stock company with an objective of co-investing, also the organization may attract financial means of natural persons and legal entities in exchange for their own shares (price is set individually), which confirm rights of participants to obtain dividends or part of assets in case of its liquidation.

The formation of the authorized capital in Ukraine comes from investments in the forms of monetary funds, securities, real estate. The authorized capital may be increased by the acquisition of shares by shareholders. The charter of the organization shall contain information about name, type, its kind, class, joint investments, operating term of business, amount of investments, the estimated value of securities and their amount, a procedure for reimbursement from interest accruing.

Investment companies: classification

Each organization is classified by certain parameters. Joint investment institution is no exception: organizations differentiate by the operating term and can be definite or indefinite. The first ones carry out business within a definite period of time, stipulated by the documents, but the second ones may be of indefinite period.

In our country (Ukraine) there are 3 types of investment funds, that differ only by the time of securities redeem from securities-holders, they may be: of open-end type, of closed-end type, interval; the main difference between a corporate investment fund and an open-end fund lies is that the first one sells shares to their investors, but the second one sells a certificate. An open organization redeems securities anytime, an interval one – on certain days, but a closed-end investment fund – only after termination of activities. Joint investment institutions may be:

  • Diversified. The structure of these investments fully complies with current legislation and is aimed at reducing the risk of founders;
  • Specialized. This type of organization may invest in certain assets stipulated at the legislative level;
  • Qualified. Investments are targeted at one class of assets. Also, this type does not have any special requirements for the structure of investments.
  • Non-diversified. Thanks to the absence of any limitations, it is possible to manage investments in a flexible form.

These funds cannot conduct an independent activity. A special company (an asset management company) manages on the basis of a contract. This organization acts as an executor keeps records, as well as provides reports.

Procedure for CIF registration

Foundation and registration of an investment company in Kyiv and another Ukrainian city begins with a meeting of founders, solving questions concerning frequent securities offering, approval of charter, and formation of an authorized capital which is formed by contribution of shareholders expressed as an amount of money. Launching an investment company consists of the following stages:

  • Submitting necessary documents to approve the charter and register production of securities to form an authorized capital;
  • Registration of shares issue, approval of rules, issue of a temporary work permit for organization;
  • Assignment of International Securities Identification Number;
  • Signing of contractual documents with a depository;
  • Distribution of securities among holders;
  • Payment of the total cost of securities by shareholders to establish ownership;
  • Registration at specialized state authorities;
  • Conclusion of a contract with an asset management company, which will be responsible for records and reports;
  • Submission of a package of documents to sum up shares offering among holders and entering data into a state registry;
  • Obtaining a certificate of state registration of a corporate joint investment institution.

The establishment and registration of a fund require a lot of time, finances, and effort, therefore, it is easier to purchase an established investment organization (CIF), as it is a good opportunity to obtain an individual legally-founded company in minimum time. Particularly, Ukrainian legislation allows to purchase it legally.

Venture CIF: special features

Registration of a venture institution is very popular, it is a closed-end type of non-diversified JII with a frequent offer of securities (50%). In this type of activity, it is possible to buy bonds back only after termination of joint-stock company work. An advantage of this organization is obtaining dividends and a 100% return of assets in case of liquidation or closing up of an entity. Private securities offering means that they are not available for sale, which is not accompanied by advertisements and announcements in media. This type of work is quite legal, it may attract foreign investors, natural persons, and legal entities. The main advantage of this type of organization is the impossibility of disclosure of financial information to competitors.

The concept of non-diversification means that there is a small number of them in the assets portfolio. A venture organization may manage corporate rights and securities of issuers. Legislation of a country allows only companies of this type to offer interest-bearing loans to legal entities, which hold securities of this institution.

Advantages of purchasing an established CIF

Purchase of any investment fund has a number of advantages, first of all – it is an opportunity to choose a variant with favorable conditions on your own, start work the next day after making a deal. By purchasing an investment fund in Ukraine a client:

  • Saves time significantly. Purchasing established joint-stock, individual or international public corporate companies are much quicker and more profitable, as there is no need to go through all stages of foundation;
  • Does not make any mistakes when establishing an organization. Often state authorities do not accept documents because of incorrect and wrong information, it leads to the loss of precious time. A purchase will let to avoid inspections and frequent refers to the authorities;
  • Saves funds. When establishing a joint-stock company on your own, you may encounter large state fees and driving around the city carrying documents from one authority to another.

Many businessmen consider that it is much easier to purchase a Ukrainian public or non-diversified investment fund with authorized capital. Also, it is possible to purchase venture JII, whose work is based on the mechanism of providing loans to founders of an organization.

Most often purchasers are beginner investors or representatives of small and medium businesses. These clients often have no experience of stock trading, therefore, by organizing this type of activity, they get guarantees of security of investing.

Tailored investment company from the Attorneys at Law “Bachynskyy and Partners”

The Attorneys at Law “Bachysnkyy and Partners” offer to purchase an established international, closed-end, venture, corporate investment fund while receiving a lot of advantages in the form of saving time and means, independent choice of type of activity, also lawyers shall tell in consultations how to gain profits after making a deal in Ukraine and how to non-diversify assets portfolio.

All agreements are legal, and documents comply with current laws. Ukrainian businessmen with our assistance may become owners of a CIF in one day. Our lawyers have extensive experience, support a client at all stages of purchase and re-registration of CIF. The main reason for purchasing a tailored corporate investment fund with the Attorneys at Law “Bachynskyy and Partners” is that it is possible to attract investments from natural persons, as it significantly increases the number of founders that causes a positive impact on the activity of an organization. The company works in Lviv and Kyiv, as well as other regions of Ukraine.

Articles
A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.
20/01/2022
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