Built-in mechanisms to protect the rights of investors
Management fund takes money from investors and issue an investment certificate acquisition stake. The money invested by shareholders in accordance with the rules in the securities, real estate or shares in companies. All these investments are "special assets". Objects related to the specific assets, may, in accordance with the terms of the contract governing the relationship between shareholders and the investment company, owned by an investment company or jointly owned by shareholders. But in any case, specific assets are kept separate from the assets of their own investment company. As the investment management company regulated by two documents, namely, the charter company and the terms of the contract with the fund, then the latter KAGG provides stringent requirements. Terms and conditions, as well as their changes that require coordination with the banking supervision authorities. Resolution of this body shall be issued only if the terms of the contract in line with legislation and the interests of shareholders reliably protected. Strict requirements for the contract due to the fact that they serve as the main criterion in deciding the investor on the acquisition of stake. Permit to operate an investment company shall be issued only if the following conditions:
* Principal or founder's share capital must be at least 5 million marks. This requirement is intended to protect the interests of investors, because an investment company serves as the guarantor of the agreed use of the money entrusted to it and responsible to the investors for the damage caused to them; * Investment management companies must have the necessary qualifications; * Requires at least two managers. This principle of "four eyes" guaranteed mutual supervision by senior officials in the company; * Scope of activities defined in the agreement on formation of the company, should focus only on the operations of investment fund. In so doing, prevented dissipation of forces on a foreign operation, management and staff, the management company could and should focus exclusively on the management fund or funds.
Activity fund management controls another entity. KAGG requires that the operations of investment companies controlled the Supervisory Board. Members of the Supervisory Board for their skills and knowledge required to protect the interests of shareholders. Another rule prohibits the Governor or members of the Supervisory Board of the investment company to conduct personal transactions with the Fund. In doing so, excluded transactions that give rise to conflict of interests of shareholders and management fund. To reduce the probability of fraud, the auditor checks the accounts of the Fund. The results of the audit the auditor should be reflected in a separate paper, and its conclusion in the report is reproduced in full. The auditor must submit a report on the Fund, immediately after its completion, authorities Banking Supervision and the Federal Bank of Germany.
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