NEW
REGULATIONS ON REPORTING OF ACCOUNTING AND PERIODIC INFORMATION
CONCERNING COLLECTIVE INVESTMENT SCHEMES (CNMV Circulars 3/2008 and
4/2008)
On 11 September 2008, the CNMV passed two circulars which introduced
several modifications to the rules regarding the information that the
Spanish Collective Investment Schemes (“CIS”) must make public and the
manner in which this is to be done.
Circular 3/2008 on accounting rules, annual accounts and confidential
statements relating to CIS, was published on 2 October 2008 and will
come into force on 31 December 2008. Its main purpose is to adapt the
CIS accounting framework to the innovations of the General Accounting
Plan (the “GAP”) approved by Royal-Decree 1514/2007 of 16 November.
Circular 3/2008 revokes Circular 7/1990 on financial CIS, and certain
sections (in particular, section two and regulation nine) of Circular
4/1994, for real estate CIS, which governed the previous accounting
framework.
Circular 4/2008 was published on 7 October 2008 and will come into
force on 31 March 2009 (thus, it will be in force from the second
quarter of 2009). This Circular contains regulations on the contents of
CIS quarterly, half-yearly and annual reports and of their mutual fund
statements, adapts the current regulatory framework and abrogates the
regulations in force until its entry into force.
1. ACCOUNTING CRITERIA
Circular 3/2008 sets out the applicable regulations for financial and
real estate CIS on reporting obligations in connection with their
accounting information.
One of the significant aspects of the new regulations is the
application of the “fair value” principle as valuation for the entire
CIS assets portfolio. Under the prior framework, unpaid capital gains of
these assets were not included in the balance sheet within pro-forma
accounts. The net amount (free of charge) of these unpaid capital gains
was used to calculate the net asset value of the CIS. With the new
regulations, the CIS net asset value will be closer to reality.
1.1 Formal and procedural
issues
1.1.1 Unity of block
accounts
Without prejudice to the obligation to report information broken
down by sub-fund level and/or unit class or share class level, the CIS
must publish their annual accounts in block. In addition, CIS are
exempt from the business combination regulations (only applicable in
cases of mergers between CIS) and from accounting consolidation rules.
1.1.2 Reporting of
annual accounts
The balance sheet and the profit and loss statement comprising the
annual accounts must be audited and filed with the CNMV in accordance
with the new templates established in regulation 21 of Circular
3/2008. The cash flow statement will not be required, since it does
not accurately represent the CIS present status.
1.2 Financial CIS
According to GAP terminology, the following are some of the different
types of financial instruments:
1.2.1 Financial assets
and liabilities
Both sections are treated similarly under Circular 3/2008, although
they are separate and have specific features. They have been
classified as “other financial assets and liabilities at fair value
with changes to profit and loss”, according to the GAP criteria.
However, in the case of treasury or cash that are not deposits
forming part of the portfolio and other credit and debit balances, the
harmonised cost or the face value criterion will apply, the latter
being more suitable in view of its nature.
1.2.2 Equity
instruments
Circular 3/2008 classifies CIS shares and share quotas in this
section, which will be reflected in the mutual fund assets account as
“reimbursable funds attributed to unitholders and shareholders” rather
than financial liabilities. This is the case, since unitholder and
shareholder’s contributions represent their ownership over the CIS and,
therefore, unitholders and shareholders will be placed after creditors
in the event of winding-up.
1.3 Real estate CIS
1.3.1 Real estate
assets
As mentioned above, the of fair value criterion will be used for
valuation. This is the case for properties contained in the real
estate investments portfolio of the CIS, and will also be used as a
calculation basis of the value for those properties used by the
investment company itself.
1.3.2 Calculation of
result
The results of real estate investments will be reduced by
additional, supplementary or refurbishment investments regarding
construction work already carried out and/or compensations to lessees
that have been accounted for.
2. FILING OF PERIODIC REPORTS
2.1 Scope and contents of
the reports
Circular 4/2008 will apply to quarterly, half-yearly, and to the
first part (relating to the second semester) of the annual reports.
Amendments introduced must begin to be reflected in the first half-yearly
reports of 2009.
As a significant novelty, these reports may be:
a) Full, providing a detailed account
of the investment portfolio.
b) Simplified, providing information
of subtotals or totals.
In both cases, reports must have, among others, the following minimum
contents:
a) Total expenses, expressed as a
percentage over the CIS’ average mutual fund assets.
b) Relevant facts related to the CIS,
occurring and announced during the term to which the report refers.
c) Information on related-party
transactions referred to in article 99 of the CIS Regulations.
2.2 Sending of information
2.2.1 Obligees
Management companies and, when applicable, investment companies and
marketing entities are obliged to provide periodic reports regarding
the funds they manage.
2.2.2 Reporting to the
CNMV
Publicity and availability obligations relate to complete reports
and their submission to the CNMV. Submission should be carried out
using the CIFRADOC system.
2.2.3 Reporting to
unitholders and shareholders
The CIS unitholder or shareholder will periodically receive free
simplified reports prior to and after subscription . Receipt of such
reports can be waived as established in Circular 2/2006 for foreign
CIS registered with the CNMV. Waivers will be made in writing, on a
separate and duly signed document. The sending of information to
investors by electronic means is also permitted, whenever so agreed.
Both the waiver and the option to send information by electronic means,
can be revoked at any time by the investor. Revocation will be carried
out in the same way as the waiver: it must be in writing, on a
separate and duly signed document, including the date from which it is
to be effective.
Full text of these circulars (Spanish version) can be found at:
- Circular 3/2008:
http://www.boe.es/boe/dias/2008/10/02/pdfs/A39612-39673.pdf
- Circular 4/2008:
http://www.boe.es/boe/dias/2008/10/07/pdfs/A40206-40252.pdf
