The Rules on Issue, Replacement and Revocation of the Licenses for Management Companies and Investment Companies have been approved
As from 28 March 2008 the Rules on Issue, Replacement and Revocation of the Licenses for Management Companies and Investment Companies approved by Lithuanian Securities Commission have come into force.
The Rules replaced the analogical rules which were in effect until now. The new Rules have been adopted in pursuance to implement the provisions of the Law amending the Law on Collective Investment Undertakings, which came into force on 1 March 2008 and are related to the special collective investment undertakings.
It was provided in the Rules that the operating license of a management company authorized the management company to engage in the principal activities, i.e. manage the investment funds and investment companies with variable capital, and to engage in additional activities, i.e. manage portfolios of investment instruments of other persons, grant advice on issues related to investment into investment instruments and other. The new Rules extend the list of principal activities. From now on the operating license of a management company will grant the right to manage harmonised collective investment undertakings, private capital collective investment undertakings, collective investments undertakings of alternative investment, real estate collective investment undertakings and other undertakings provided by the Rules, if such activities are indicated in the license. Moreover, the list of additional activities has also been extended by providing the opportunity for the management companies to manage the portfolios of financial instruments of pension funds which are based on additional voluntary pension accumulation.
The management companies, which in addition to the activities carried out by them until now, intend to manage the special collective investment undertakings, should apply to the Lithuanian Securities Commission for the supplement of their operating license.
The Rules on the Content of Prospectuses of Collective Investment Undertakings have been adopted
On 6 April 2008 the Lithuanian Securities Commission has adopted the Rules on the Content of Prospectuses of Collective Investment Undertakings.
These Rules replaced the Rules on the Content and Submission of Prospectuses of Collective Investment Undertakings effective until now. The new Rules have been approved in order to implement the new wording of the Law on Collective Investment Undertakings, effective as from 1 March 2008.
Whereas the Law provided the opportunity to establish the special collective investment undertakings, the Rules have been accordingly supplemented with the new provisions as much as they are related to the special collective investment undertakings. The principal introduction the different order of preparing the prospectus has been established for different kind of collective investment undertakings, i.e. from now on the prospectuses of harmonised collective investment undertaking, collective investment undertaking to transferable securities and of other special collective investment undertakings shall be prepared following the different order.
The Rules have come into force as from 6 April 2008.
The Rules on Preparation and Submission of Information by Management Companies and Investment Variable Capital Companies which the Management has not been Transferred to a Management Company have been adopted
On 10 April 2008 the Lithuanian Securities Commission has approved the Rules on Preparation and Submission of Information by Management Companies and Investment Variable Capital Companies which the Management has not been Transferred to a Management Company.
The new Rules have been adopted in order to implement the provisions of the Law on Collective Investment Undertakings effective as from 1 March 2008 and replace the rules with the same title effective until now.
The Rules provide the new requirements for the periodic reports of the special collective investment undertakings. From now on the information about the value of the net assets and comparative index, the amount and value of investment instruments or shares, portfolio of investment instruments and other information indicated in the Rules will have to be presented in the periodic report.
The mentioned Rules also amend and supplement some currently effective requirements. After the Rules come into force, the management companies will no longer have to announce financial reports in a daily newspaper it will be sufficient to announce such information on the internet site of the company. Moreover the financial statements will no longer have to be submitted in quarterly reports. The Rules also provide other amendments related to the preparation and submission of information.
The new Rules will come into force as from 1 July 2008.
The Recommendations of the Lithuanian Securities Commission concerning the Advertising have been approved
The Lithuanian Securities Commission has approved the Recommendatory Instructions for the Advertisement of Financial Instruments and Investment Services and other Related Advertising Information.
The Recommendations have been prepared in order to protect the nonprofessional investors from misleading information. The approved Recommendations have been prepared following the requirements of the Directive of Market in Financial Instruments (MiFID), laws, other legal acts of the Republic of Lithuania and the experience of other European Union states in the area of implementation of the legal acts which are related to the advertisement of financial instruments and investment services.
As from 1 November 2007 the Law on Markets in Financial Instruments has come into force to the whole extent. It establishes strict requirements for advertisement: the advertisement must be fair, clear and not misleading. The Recommendations provide the implementation provisions of this requirement, especially when it is related to the content and form of the advertisement. First of all, the advertisement should be balanced, i.e. the information about potential profit must be in proportion to the information about the potential risks, the potential profit and risks should be announced in the same advertisement as well. Moreover, the extent of the announced risks must be clearly disclosed by indicating that the investor may lose part of the invested capital, may not get financial profit, etc.
It is important to note that the Lithuanian Securities Commission supervises the conformity of the advertisement with the requirements of the legal acts which are related to the advertisement of financial services. In certain cases the Commission acts in cooperation with State Consumer Rights Protection Authority and Competition Council, which also supervise at their competence, how the requirements of legal acts in the area of advertisement are being followed.