Open Mutual Funds in Czech Republic
Open Mutual Funds in Czech RepublicUpdated on Friday 21st October 2016
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One of the possibilities to start a business in Czech Republic is to set up an investment fund. Foreign investors can choose from a wide range of investment funds, such as mutual funds. The general understanding on this type of investment vehicle is that its funds are collected from numerous investors with the main purpose of investing in various financial assets, such as stocks or bonds. Our team of lawyers in Czech Republic can offer legal assistance for the incorporation of a mutual fund in this country.
Types of mutual funds in Czech Republic
Before opening a company in Czech Republic registered as a mutual fund, the investors are advised to study the legislation in this sense, including the types of mutual funds provided on the local market.
As a general rule, investors can choose from the following types of mutual funds:
• closed-ended mutual funds;
• open-ended mutual funds.
In a closed-ended mutual fund, the investors can only issue a limited amount of shares, while in an open-ended mutual fund the Czech law does not prescribe any limitations.
Investors should also know that a closed-ended mutual fund can be incorporated to perform financial activities for a limited period of time. This type of vehicle does not represent a legal entity, as it is generally set up under an investment company.
However, a mutual fund requires to be acknowledged on the local market and the investors will have to obtain a license for its activities, which is issued by the Czech National Bank.
Our attorneys in Czech Republic can help investors in obtaining a special license in order to start their activities here.
The management of a Czech mutual fund
As mentioned above, the mutual fund must be controlled and managed by an investment company. The entity is created through the issuance of participation certificates. Such vehicles must also be represented by a custodian, which is usually a licensed bank registered in Czech Republic. It is also allowed to have as a custodian a foreign bank which is represented in Czech Republic by a branch.
Businessmen are invited to contact our law firm in Czech Republic for more details referring to the registration of a mutual fund.