Management Companies

A collective investment is:
• a business activity
• aimed at raising capital from investors
• with the aim of their joint investment
• in accordance with a determined investment policy
• for the benefit of investors,
• while the investors are exposed to market risk.

Raising capital for the purpose of their subsequent investment is prohibited:
• provided that the return of raised capital from investors is to be, even partially, dependent on the value or yield from the assets that were acquired for the raised capital, and at the same time,
• provided that it is not carried out on the basis of an authorization or under the conditions established by the Act on Collective Investment.

In order to evaluate whether a planned or an ongoing activity is or is not a collective investment, it is necessary to assess:
• whether all the main characteristics of the definition of collective investment are met, taking into account secondary (auxiliary) characteristics, too, and
• whether the assessed activity does not fall under any of the exemption under the Act on Collective Investment or under the ESMA Guidelines.

The main activity of a management company is the establishment and management of funds based on an authorization granted by Národná banka Slovenska (“NBS”).

The NBS can grant two types of authorizations to a management company:
(i) an authorization to establish and manage standard funds and European standard funds (so-called UCITS funds) (authorization according to § 28 of the Act on Collective Investment) or
(ii) an authorization to establish and manage alternative investment funds and foreign alternative investment funds (so-called AIF funds) (authorization according to § 28a of the Act on Collective Investment).

The management company cannot perform any other activity than the activities according to the Act on Collective Investment.

The management company may provide other services, as long as this is expressly stated in the authorization under the Act on Collective Investment, while no separate authorization is required under the Act on Securities and Investment Services:
(i) if it is explicitly stated in the authorization, also the following activities:
• portfolio management of financial instruments or investment management for funds created under the Act on Supplementary Pension Scheme (“portfolio management”);
(ii) if it is explicitly stated in the authorization and at the same time the authorization also includes the portfolio management service, the following activities:
• investment advice;
• safekeeping and administration of selected securities, including custodianship and related services, such as cash/collateral management;
(iii) if it is explicitly stated in the authorization according to § 28a Act on Collective Investment and at the same time the authorization also includes the portfolio management service, the following activities:
• reception and transmission of orders in relation to one or more financial instruments.

The management company can apply to Národná banka Slovenska for authorization to establish and manage the so-called UCITS funds. This is an authorization pursuant to § 28 of the Act on Collective Investment to establish and manage:
• standard funds and
• European standard funds.

Standard funds are:
• funds that meet the conditions of the UCITS Directive for investing in transferable instruments and for spreading the risk, and at the same time are
• established based on the NBS authorization in the Slovak Republic.

European standard funds are:
• funds that meet the conditions of the UCITS Directive for investing in transferable instruments and for spreading risk, and at the same time are
• established based on an authorization in another EU member state.

The management company can apply to Národná banka Slovenska for authorization to establish and manage the so-called AIF funds. This is an authorization pursuant to § 28a of the Act on Collective Investment to establish and manage:
• alternative investment funds and
• foreign alternative investment funds.

Alternative investment funds (AIF) are:
• funds that do not meet the conditions of the UCITS Directive,
• are regulated through EU legal acts known under the abbreviation AIFMD,
• usually established based on the NBS authorization in the Slovak Republic.

Foreign alternative investment funds are:
• funds that do not meet the conditions of the UCITS Directive,
• are regulated through EU legal acts known under the abbreviation AIFMD,
• usually established based on an authorization in another EU member state (European foreign AIF) or in other state (non-European foreign AIF).

Management companies with an authorization pursuant to § 28a of the Act on Collective Investment are also required to fulfill the reporting obligation pursuant to the Decree of NBS No. 1/2015 for the purposes of supervision and monitoring of systemic risk.