The fund is a collective investment system that aims to collect funds from investors for the purpose of investing on their behalf in various fields according to the principles of professional management of collective investment, and is managed by the fund manager for a specified fee.
Forms of collective investment funds
According to the regulation of the law establishing the Capital Markets Authority, collective investment funds are divided according to their form into closed funds and open funds:
A closed fund is a fund with a fixed capital, and its investment units may not be redeemed except at the end of the fund’s term, and its capital may be increased or decreased in accordance with what is decided by its articles of association.
An open fund is a fund with variable capital whose capital increases by issuing new investment units or decreases by redeeming some of its units during the period specified in its articles of association.
Types of Collective Investment Fund
The fund, according to the nature of its activity, may follow one of the following types:
- Securities Investment Fund
- private equity fund
- Money Market Fund
- debt instrument fund
- real estate fund
- Holding Fund
- Income generating real estate fund (traded)
- Any other type approved by the Capital Markets Authority
Collective investment fund capital
The capital of the Collective Investment Fund is divided into investment units of equal value, and what is meant by the investment unit is an indivisible security that represents a share in the assets of the fund and entitles its holder directly to all the rights arising from it. Non-Kuwaitis may subscribe to or own investment units.
The responsibility of unit holders in the fund is limited to the value of their participation in the capital, and the value of the units is paid in cash upon subscription or subscription. The value of the subscription may be paid in installments if this is stipulated in the articles of association of the real estate fund, the private equity fund and any other fund type allowed by the Markets Authority As an exception to that, the income-generating real estate fund (circulating) and private subscription funds may pay the value of the units in kind, provided that the articles of association provide for that.
The legal personality of the fund
The Fund shall have a legal personality and a financial liability independent of the unit holders or the entity managing it. The Fund acquires its legal personality from the time of its registration in the Funds Register with the Capital Markets Authority.
Requirements for establishing a collective investment fund
In accordance with the regulation of the law establishing the Capital Markets Authority, the collective investment fund is established according to the following steps:
- The application for establishing the fund shall be submitted according to the form prepared for this, provided that all documents and information indicated in this form shall be attached to the application, and the prescribed fee shall be paid.
- The Capital Markets Authority may, at any time after receiving the request to establish a Collective Investment Fund that meets the requirements, request additional information or documents that it deems necessary for deciding on the application, and if the applicant fails to provide such information and documents within the period specified by the Authority, the application shall be considered null and void. .
- The Authority shall decide on the application for establishing the fund after receiving the application, complete with all the required information and documents.
- If the application is rejected, the rejection decision must be justified.
- If the application is approved, the applicant will be notified of the payment of the license fee, and the Authority will issue a temporary license for a period of three months, during which the Authority’s requirements and the minimum capital stipulated in the Fund’s Articles of Association will be completed. It is not permissible to practice any of the Fund’s activities based on this temporary license.
- In the event that the term of the temporary license expires without completing the required requirements, the temporary license shall be forfeited, unless the validity of the license is extended for another similar period at the request of the licensee before the original term of the license expires.
- The Authority issues the final license at the request of the licensee as soon as the required requirements are completed. In all cases, the Authority notifies the applicant of its decisions, and publishes its decisions related to the issuance of licenses in the Official Gazette.
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