2. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Off-site supervision of the investment funds industry in Poland cont. Supervision over the management companies. National regulations. Bartłomiej Kurzeja

3. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Management companies – premier legislation Investment fund management companies (abbreviated: Management companies) Investment fund management companies (abbreviated: Management companies)  Regulation of the Minister of Finance on periodic reports and current informations of investment funds and management companies reported to the PFSA  Act on Investment Funds

4. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Management companies – basic regulations Article 38.1 – Only a joint-stock company which has a registered office in the Republic of Poland and holds the PFSA authorisation to conduct defined set of activities, may be an investment fund management company. Article 4 – Management company shall create investment funds, manage them and represent them in relations with third parties. Article 14.1 – An investment fund may be created only by a management company, subject to the PFSA authorisation, Article 41.1-2 – The name of a management company shall also include the designation “investment fund management company” (Polish: “towarzystwo funduszy inwestycyjnych”),which may only be used by a management company operating pursuant to Act on Investment Funds,

5. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Management & supervisory boards (Article 42, 44) Management company

6. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Scope of activities (Article 45) creating investment funds managing investment funds, which shall include o intermediation in the sale and redemption of units, o representation of investment funds in relations with third parties, o management of a unit investment trust. discretionary management of securities portfolios, advisory services in the area of securities trading, intermediation in the sale and redemption of units of investment funds created by other management companies or units of foreign funds, acting as a representative of foreign funds default scope PFSA approval required notification to the PFSA required extended scope

7. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Outsourcing (Article 46, 64) Management company may commission some of its duties on third parties: o Portfolio management, o Alloting approporiate number of units for payments, o Calculating redemption proceeds, o Maintaining register of unit-holders, o Asset valuation o Bookkeeping and accounting o Distribution of products Article 64.1 – A management company shall be liable for any damage caused by non-performance or undue performance of its responsibilities, unless such non- performance or undue performance results from circumstances for which the management company is not responsible. Article 64.3 – The commissioning of a third party to carry out certain responsibilities of a management company shall not limit such management company’s liability.

8. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Internal control (Article 48) (1) With the exception of companies managing solely private equity funds, which issue non-public investment certificates, a management company shall have internal control procedures in place to verify: o the legality and correctness of the activities conducted o the correctness and reliability of the reports and o the correctness and reliability of information issued by the management company and the funds it manages. Scope of regulations concerning internal control (non-exhaustive list): o procedure for keeping records of the funds’ transactions and discretionary portfolio management, o methods of preventing conflicts of interest, o employee transactions, o methods of documenting sources of information that serve as the grounds for investment decisions.

9. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Internal control (Article 48) (2) Management company is obliged to work out and implement: o detailed procedures for making investment decisions in a process of managing investment portfolio of a fund o procedures enabling monitoring and measuring at any time a risk related to particular exposures and a risk of entire investment portfolio of a fund, particularly taking into account derivatives, including OTC derivatives, as well as commodity derivatives. Above mentioned procedures are forwarded to the depositary of the investment fund.

10. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Capital requirements (Articles 49 – 52) (1) Initial Capital shall be no less than the PLN equivalent of EUR 125,000 EUR 730,000, if scope of MC’s activities include discretionary management of securities portfolios shall be no less than the PLN equivalent of EUR 125,000 EUR 730,000, if scope of MC’s activities include discretionary management of securities portfolios Share capital paid in + Share premium + Undistributed retained profit + Current net profit undergoing approval, as disclosed in the audited financial statements + Reserve capital - Uncovered retained losses Share capital paid in + Share premium + Undistributed retained profit + Current net profit undergoing approval, as disclosed in the audited financial statements + Reserve capital - Uncovered retained losses

11. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Capital requirements (Articles 49 – 52) (2) Requirements with respect to shareholders’ equity (SE) of a management company o SE ≥ Initial Capital o SE ≥ 25% × (Total costs – Variable cost of distribution) o Once the value of the assets under management exceeds the złoty equivalent of EUR 250,000,000, management company shall increase its shareholders’ equity by an additional amount equal to: 0,02% × (AUM – PLN equivalent of EUR 250,000,000, until shareholders’ equity exceeds the złoty equivalent of EUR 10,000,000 o PFSA may revoke authorisation to conduct management company business, if the value of a management company’s shareholders’ equity is not increased to the level required by the Act, within 3 months, If as a result of changes in the euro exchange rate the value of a management company’s shareholders’ equity falls below the level required by the Act, management company shall be obliged to increase its shareholders’ equity to the required level within 6 months.

12. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Supervisory Review an Evaluation Process (SREP) (1) Quality of management Capital adequacy Risk SREP areas Periodic reports and current information of funds and management companies Supervisory questionnaire Overall mark for internal use of PFSA Overall mark for internal use of PFSA

13. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Supervisory Review an Evaluation Process (SREP) (2) Risk - Market risk - Credit risk - Operational risk - Other risks Capital adequacy Compliance with capital requirements specified in the Act on Investment Funds Quality of management - Board of directors - Corporate governance - Financial effectiveness - Organisational structure - HR - Obligatory reporting - Internal control

14. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX A management company shall not… (Article 65) (1) 1) acquire or subscribe for shares or other securities, derivatives, units in investment funds or units issued by foreign collective investment undertakings, or be a shareholder in companies without legal personality 2) grant loans, issue sureties or guaranties (*) 3) contract loans or issue bonds which aggregate value exceeds 10% of its shareholders’ equity (*) The provisions of 1) shall not apply to: o securities issued by the State Treasury or the National Bank of Poland, o units or investment certificates acquired by way of the subscription, o units purchased in order to increase the fund’s net asset value, in the case of a decline in the net asset value of an open-end investment fund to a level below PLN 2,500,000, o units of funds managed by the given management company: money market funds, funds investing at least 85% of their assets in securities issued or guaranteed by the State Treasury, the National Bank of Poland or local government institutions.

15. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX A management company shall not… (Article 65) (2) The provisions of 1) shall not apply to (continued): o investment certificates issued by a securitisation fund which is managed by the given management company, if such management company manages only securitisation funds, o shares in companies which maintain registers of unit-holders of investment funds managed by the given management company, settle transactions concluded on a regulated market, (*) act as intermediaries selling and redeeming units of investment funds, (*) o shares in companies operating stock exchanges or OTC markets o various instruments purchased for a collective securities portfolio securities, currencies, derivatives, property rights referred to in Art. 145.1.6., money o the management company’s own shares, purchased for retirement

16. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Obligatory reporting (1) Types of obligatory reporting Current reports Financial statements

17. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX Obligatory reporting (2) Current reports - examples - decrease in shareholder’s equity below capital requirements - changes in shareholding - proprietary transactions - changes in management and supervisory board - approval/disapproval of annual financial statement by AGM - legal proceedings instituted against MC - changes in articles of association - rotation of key employees - entities commissioned to carry out MC’s responsibilities Financial statements - Monthly Report (extended selected financial data) - Annual Financial Statements (subject to audit)

18. Ukraine (nr 46514): Expert Mission on Supervision of Investment Funds` Activities - TAIEX 17 Opened part