A financial services company wishes to launch a collective investment scheme. It hopes to choose a vehicle that will allow the free transfer of the interests of investors, and which will permit the rules governing the scheme to be changed where necessary.
What options are available to it?
Austrian private law recognises one type of collective investment scheme, namely, investment funds that fall under the Austrian Investment Fund Act (InvFG). Austrian investment funds are open-ended funds that work on the principle of risk diversification and lend themselves to an open clientele. It is also possible to create special funds that only have a limited number of investors. All types of Austrian investment funds allow for changes of terms and conditions and for changes of investors, although there is no secondary market for trading the investment fund ‘certificates’. Under the Austrian Investment Fund Act, the investors have the right of redemption.
A change of the terms and conditions of an investment fund, under s. 22(3) InvFG, does not require the consent of the investors, but it must be made in their interest, must be approved by the supervisory board and must be published. Section 22(3) InvFG deals only with the public law of the modification.
Different supervision schemes apply for Austrian investment funds. Supervision under the InvFG includes a bank supervisor, a supervisory board, an investment company (a special bank) and the depository bank. The investment company manages the fund and makes the investment decisions.