| Abstract [eng] |
This paper examines the law of the Republic of Lithuania on the collective investment undertakings (further in the text – law of UCI) and regulation of portfolio management services provided by investment management companies (further in the text – Managers). The newest version of the law of UCI came into force on the 1 st of March, 2008. In this newest version Managers are given the rights to establish special UCIs like hedge funds. The new law of UCI is very advanced compared with the old one. Before entry into force Managers and the Government expected that the new regulation will make Lithuania the new Luxembourg in the field of the investment vehicles, such as UCIs, but right after the law came into force a new version of the legislature was already being prepared and also the fact that only one new UCI was registered and functioning showed that the system was in need of further correcting and was not working as planned. For example it is not possible to register immovable property in the name of the UCI. The conservative attitude of the Securities Commission also stands in the way of establishing hedge funds that would be competitive with UCIs established in Luxembourg. Although the positive expectations did not come true, there is still hope that positive changes will take place when the amendment comes into force. The other form of investment management, which is examined in this paper, is portfolio management. The services of portfolio management are quite new and rare in Lithuania. For this reason the regulation of relationship between Managers, clients and third parties (usually banks) is limited to the very minimum. Although most of the questions are left for the parties to decide, some specific situations (e.g. concerning the investor’s rights) are in need of the clarification by the supervising authorities (The Securities Commission). The need for the clarifications is very desirable in the context of managing a private portfolio. Especially clarification of what rights do the Managers have, when the parties (banks and Managers) cannot agree whether the relationship between the client and the Manager is based on trust or agency. According to the research done in this paper the relationship between the Manager and the client should be based on trust law. Trust gives the needed balance of interests for both Managers and clients, because it allows managing the Portfolio effectively and protects the investor’s rights as well. |
