Investment Fund

 

An investment fund is a collective investment scheme that raises capital from investors in order to invest that capital for the benefit of investors following a defined investment policy.

 

Investment funds based in Georgia are divided into two categories:

• Authorized Investment Fund - an investment fund authorized by the National Bank (Undertakings for the Collective Investment in Transferable Securities (UCITS) or Retail Investment Fund), which has the right to make a public offering and to have more than 20 retail investors;

• Registered Investment Fund - An investment fund registered by the National Bank that has the right to make only a private offering and to have no more than 20 retail investors. 

 

Investment funds that have the right to make a public offering in Georgia are divided into two categories: 

• Authorized Investment Fund;

• A foreign investment fund that is recognized by the National Bank of Georgia.

 

Investment funds that have the right to make a private offering in Georgia are divided into two categories: 

• Registered Investment Fund;

• A foreign investment fund that notifies the National Bank of Georgia in advance about making a private offering.

 

 

Asset Management Company

 

An asset management company is a legal entity whose function is to manage investment funds, i.e. collective portfolio management.

 

Asset management companies based in Georgia are divided into two categories: 

• Licensed Asset Management Company - an asset management company licensed by the National Bank, that is entitled to manage both authorized and registered investment funds, and to perform additional functions provided by law;

• Registered Asset Management Company - an asset management company registered by the National Bank, that is entitled to manage only registered investment funds;

 

A Foreign Asset Management Company has the right to manage an investment fund based in Georgia upon its recognition by the National Bank of Georgia. 

 

 

Specialized Depositary

 

A specialized depositary is a legal entity that provides an investment fund with depository services under an applicable agreement.

 

As indicated in the law, specialized depositary services are rendered to an authorized investment fund. A registered investment fund is not required to have a specialized depositary.

 

A financial institution licensed in Georgia (a commercial bank or other legal entity that is entitled to provide financial services), as well as the National Bank of Georgia may be a specialized depositary of an authorized investment fund. To act as a specialized depositary of an authorized investment fund, the licensed financial institution is required to obtain consent from the National Bank.

 

The functions of a specialized depositary are: 

• Receiving/keeping securities held by the investment fund;

• Oversight of investment funds (including cash flow monitoring of the investment fund, control over compliance with the legislation governing the transactions of the investment fund, the constituting instrument of the investment fund, the prospectus and so on).

 

The National Bank of Georgia supervises the investment fund, as well as the investment fund asset management company and the specialized depositary. The supervision encompasses the introduction of standards and principles developed by the EU and other successful jurisdictions.

 

Only investment funds, asset management companies and specialized depositaries listed on the NBG webpage  have the authority to perform the respective functions.