Marketing of UCITS established in another European Union Member State within the territory of the Republic of Croatia
- The concept of marketing units of UCITS from another Member State and regulatory framework of the Republic of Croatia
- Notification procedure
- Cross-border marketing fees
- Changes to the information in the notification letter and annexes
- Advertising of UCITS
- Offering of units of UCITS
- Information to investors in the Republic of Croatia
- Termination of issue or redemption of units of UCITS
- List of UCITS established in another Member State registered for cross-border marketing in the Republic of Croatia
The concept of marketing units of UCITS from another Member State and regulatory framework of the Republic of Croatia
Marketing units of UCITS covers all services and activities related in any way to distribution of units of UCITS from a management company to investors. Marketing of units also includes activities related to advertising and offering units of UCITS and providing information to investors in UCITS.
Marketing of units of UCITS established in another Member State within the territory of the Republic of Croatia is regulated by Articles 137 to 143 of the Croatian Act on Open-Ended Investment Funds with a Public Offering (hereinafter referred to as: Act, Available in Croatian only).
Units of a UCITS established in another Member State may be marketed in the Republic of Croatia only by management companies from Croatia or another Member State which are authorised UCITS management companies pursuant to the regulation transposing the provisions of Directive 2009/65/EC into the legal system of the Member State.
Articles 137 to 143 of the Act relating to a management company from another Member State shall also apply to a management company from Croatia which is authorised for management of a UCITS established in another Member State.
For the purpose of marketing units of a UCITS established in another Member State in the Republic of Croatia, a management company must ensure that facilities are available in the Republic of Croatia for:
- making payments to UCITS unit-holders,
- issuing and redeeming units of the UCITS,
- making available documents and information related to the UCITS and communicating all relevant documents and information to investors who have purchased units in the Republic in Croatia, and
- handling investor complaints in accordance with Article 63 of the Act.
Payment of the units of an UCITS established in another Member State and marketed on the territory of the Republic of Croatia is carried out by the selected paying agent(s).
Paying agent can be:
• one or several banks established within the Republic of Croatia and holding an authorisation of the Croatian National Bank to provide bank services
• one or several banks from another Member States holding an authorisation from the national competent authority to provide bank services
• one or several subsidiaries of the banks from another Member States or third countries established within the Republic of Croatia in accordance with the banking regulations
It is often the case that the one legal entity has a dual role and acts as a paying agent and also a distributor of fund units, but in such cases agreement(s) with such legal entity is/are concluded for the performance of such services with clearly defined rights and obligations of the parties in relation to performing those services.
Management company also decides who will be the information agent (management company itself, distributor or some other entity).
NOTE! Management companies must familiarize themselves with instructions on the website of the competent authority of UCITS home Member State on the notification procedure for cross-border marketing activity in another Member State.
Management company must submit the notification letter with its annexes concerning the commencement of marketing in the Republic of Croatia to the competent authority of UCITS home Member State. The notification letter must be prepared in accordance with the standard model prescribed by Commission Regulation (EU) No 584/2010 in the English language and sent to the designated e-mail address published on the website of the competent authority of the UCITS home Member State.
The content of Part A and Part C of Annex I to the Commission Regulation (EU) No 584/2010 is provided as a standard text and there is no Croatian regulation stipulating that content in any other manner, whereas the additional content of Part B of Annex I to the mentioned Regulation is prescribed separately and provides:
- Under the description of arrangements made for marketing of units of UCITS in the Republic of Croatia, the information on all intended marketing channels
- Under the description of arrangements made for the provision of facilities to unit-holders, the following information:
- details of paying agent (considering that in Republic of Croatia paying agent is mandatory);
- details of any other person from whom investors may obtain information and documents: all the legal and natural persons (entrepreneurs) who conduct marketing of units of UCITS in the Republic Croatia on behalf of the management company; also the link to the up-to-date list of all persons from whom investors may obtain information and documents;
- manner in which the issue, sale, repurchase or redemption prices of units of UCITS will be made public.
- Other information which includes:
- a precise description of the division of functions and responsibilities between the paying agent and the primary depositary of the UCITS, in particular in connection with the administration of the register of unit holders
- a precise description of the manner in which the register of unit holders who invested in the Republic of Croatia is administered (how data confidentiality and security will be assured)
- a precise description of the legal consequences for investor in the event of a rescission of the contract between the paying agent and the management company
- in case it differs from one described in UCITS’s prospectus, a precise description of the procedure of subscription and redemption of units of UCITS in the Republic Croatia, in particular an indication of the time period and unit price at which subscription payments for units will be charged, and of the time period within which units will be redeemed, counted from the day a request for redemption is received. An indication of the deadline by which and the manner in which unit holders are notified of their unit balance.
The abovementioned notification letter must be accompanied by the following documents as annexes:
- fund rules, its prospectus, latest annual report and where appropriate, any subsequent half-yearly reports. The documents submitted must be translated into Croatian or English.
- key investor information document (KIID) in Croatian.
- an attestation granted by the competent authority that the UCITS fulfills the conditions imposed by the UCITS Directive (2009/65/EC) (so-called UCITS attestation). The attestation must be submitted in the English language.
Competent authority of the UCITS home Member State shall forward notification letter and its annexes to Hanfa in accordance with the rules set out in the Commission Regulation (EU) No 584/2010.
Management company may commence marketing of units of UCITS established in another Member State on the territory of the Republic of Croatia as of the date when the competent authority of UCITS home Member State informs management company that the documents referred to above have been forwarded to Hanfa.
Management company must notify Hanfa when it starts marketing activity in the Republic of Croatia without delay.
Cross-border marketing fees
From the moment of the commencement of marketing activity in Croatia, management company from the Republic of Croatia or another Member State which markets units of UCITS established in another Member State in the Republic of Croatia directly is required to pay 14.000,00 Kuna per fund on a yearly basis (supervision fee). In the case of an umbrella fund, this fee increases for 3.000,00 Kuna for the second and each subsequent sub-fund.
Management company from another Member State which markets units of UCITS established in another Member State in the Republic of Croatia through a branch is required to pay 20.000,00 Kuna per fund on a yearly basis (supervision fee). In the case of an umbrella fund, this fee increases for 4.500,00 Kuna for the second and each subsequent sub-fund.
Changes to the information in the notification letter and annexes
Management company must directly notify Hanfa of any changes to the notification letter or annexed documents referred to above and indicate where they are available in electronic form. In addition, the amended documents must be submitted to Hanfa in electronic form to the address firstname.lastname@example.org.
In the event of a change in the information regarding the arrangements made for marketing communicated in the notification letter, or a change regarding share classes to be marketed, management company shall give written notice via above mentioned e-mail address before implementing the change.
Advertising of UCITS
Advertising of UCITS includes all promotional information in the print or electronic media, intended for investors or potential investors in UCITS, the purpose of which is to obtain new payments for units. In accordance with Article 156 of the Act, in the Republic of Croatia it is allowed to advertise only those UCITS that are marketed in the Republic of Croatia.
Promotional information is also considered to be any mentioning of a name, yield, manner of investing in a UCITS or mentioning financial products related to a UCITS in the case of advertising carried out by a financial group or a person related in any other way to the management company with its registered office in a Member State or with its branch, irrespective of the manner and media used to distribute the promotional information to the public.
A management company is responsible for completeness and accuracy of the information published for the purpose of promotion of a UCITS.
Promotional information on UCITS and their management company made available by print or electronic media is specified by Article 158 of the Act and includes:
- advertisements in newspapers, magazines, on the radio and television, and on the Internet,
- communications sent by regular or electronic mail, facsimile or by any other means,
- telemarketing, which includes us of a specialised provider of telemarketing services on the basis of an agreement concluded with a management company,
- letters, telephone communication or personal contacts,
- means of offering promotion with the characteristics of financial promotion,
- investment or other publications offering impersonal recommendations concerning offering, holding or redemption of units,
- presentations to a large group of people,
- other promotional methods or means which entities from the Republic of Croatia may read, see or receive.
All the above mentioned promotional materials must be provided in Croatian and approved by persons authorised to represent the management company.
Communications exempt from the application of the provisions of the Act on the conditions for advertising UCITS are prescribed by Article 163 of the Act.
When publishing promotional materials on UCITS and their management companies:
- there may be no disguising or misrepresentation of its promotional purpose,
- a complete, accurate and truthful description must be provided of the UCITS being promoted and of the imposed obligations and any associated risks,
- it must be ensured that the facts and statements given therein are integral, clear, accurate, true and unambiguous on the date when they are presented and that they are not misleading, whereby all statements must be substantiated,
- it must be ensured that each given opinion is accurate, complete and unambiguous and that approval of the management company is obtained for any further use thereof,
- it must be ensured that any use of comparisons is based on facts that are accurate and up-to-date or that their key assumptions are clearly stated, and that any such comparisons is presented in a fair and balanced way which is not misleading and which includes all factors important for such comparison,
- no false indicators must be provided, in particular as regards skills and competences of responsible persons, resources and the scope of activities of UCITS and its management company and as regards the rights arising from the fact that somebody is a unit-holder in a UCITS,
- it must be ensured that the design, the contents or the form of promotional materials do not distort, disguise or diminish the significance of any statement, warning or any other information which must be disclosed in accordance with the Act or any regulation adopted pursuant to the Act,
- it must be ensured that no mention is made of any approval granted by the competent authority without approval of Hanfa or another competent authority and no third parties should be led to a conclusion that approval granted by Hanfa has any meaning other than the meaning of an attestation that the said company has satisfied the requirements for the acquisition of the legal status indicated in the approval,
- no information must be omitted if absence of such information would result in the promotional material being inaccurate, untruthful, vague or misleading.
The presentation of operating results of a UCITS:
- may not be subject to any warranty, guarantee or promise,
- may not be prepared in the form of estimate of any kind,
- must reflect operating results of the UCITS at least from the date of its establishment to the date of the presentation or its performance in the last five years, whichever of the two periods is shorter,
- must contain up-to-date information available at the time of presentation of operating results of the UCITS,
- must be drawn up on a consistent basis in terms of the periods covered, including or excluding specific factors which have impact on such results,
- may not be provided in a manner that might be construed as a forecast of possible future operating results of the UCITS concerned.
Offering of units of UCITS
The activity of offering units in UCITS may, in addition to management companies, be pursued by other legal persons in the Republic of Croatia acting as sales agents of the management company on the basis of a written business cooperation agreement, when they are authorised to do so by the provisions of the Act or another relevant regulation. The management company is obliged to inform Hanfa of each agreement concluded in this regard.
Information to investors in the Republic of Croatia
A management company which markets the units of UCITS from another Member State shall provide investors within the territory of the Republic of Croatia with all documents and information which it provides to investors in the UCITS home Member State in relation to the operation of the UCITS from a Member State whose units are marketed in the Republic of Croatia.
Documents and information on a UCITS from another Member State must be delivered or made available to investors who have purchased units of that UCITS in the Republic of Croatia even after UCITS is no longer marketed in the Republic of Croatia for as long as there are unit-holders who have purchased units in these UCITS in the Republic of Croatia.
A management company must provide investors with all the documents and information in the manner provided for in the Act. However, the frequency of publication of prices of units in a UCITS from a Member State is regulated by the law of the UCITS home Member State.
Documents and information related to a UCITS from a Member State must be made available or delivered to investors in the Republic of Croatia no later than on the day when those documents and information are made available or delivered to investors in the UCITS home Member State.
The key investor information document (KIID) must be made available to investors in the Republic of Croatia in Croatian.
The remaining documentation and information concerning a UCITS from another Member State must be made available or delivered to investors in the Republic of Croatia in Croatian or English.
The management company is responsible for authenticity and accuracy of the translation of the documentation and information referred to above.
Termination of issue or redemption of units of UCITS
Termination of issue or redemption of units of UCITS is regulated by Articles 177 and 178 of the Act.
List of UCITS established in another Member State registered for cross-border marketing in the Republic of Croatia
The list of UCITS from another Member State marketing their units in the Republic of Croatia can be found here.