Fund management companies
A fund management company collects funds from private individuals and entities and invests them in financial instruments to form mutual funds. A fund management company manages the invested assets in one or several mutual funds. The investment assets are not owned by the fund management company, but by the investors.
A fund management company must separate fund assets from its own assets by assigning the former to a custodian.
Fund management companies may engage in the business of mutual funds and other essentially related business if doing so does not materially conflict with the interests of mutual fund shareholders. In addition, fund management companies may be granted authorisation for the provision of asset management services and investment advice as well as custody and administration of shares in mutual funds and undertakings for collective investment in transferable securities (UCITS).
Fund management companies are subject to authorisation
Fund management companies need FIN-FSA authorisation. Reliable corporate governance is an essential issue when applying for authorisation. The application process includes an examination of the company's key practices as well as internal guidelines and control. Reliable corporate governance requires procedures for internal control and related key processes, such as valuation, maintenance of share registers and portfolio management.
Fund management companies must have sufficient financial strength to operate effectively and must not be closely associated with companies or individuals that could prevent effective supervision of the fund management company.
FIN-FSA supervises fund management companies
The FIN-FSA supervises fund management companies on a continuous basis. Fund management companies and mutual funds submit their financial accounts to the FIN-FSA according to the Act on Mutual Funds. Mutual funds must also supply financial information during the financial year.
Fund management companies are obliged to submit to the FIN-FSA annual and half-yearly reports and fund prospectuses (with all changes) and details of changes in company management as well as any calculation errors.
The FIN-FSA confirms the terms and conditions of mutual funds and approves all changes in the administration and management of fund management companies.
The FIN-FSA publishes monthly data on mutual funds on its website.
If the fund management company also offers investment services, see section Investment service providers.