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Investment
Date of compensation
Level of compensation for investments
Giving notification to investors
Procedure for grantin compensation
Payment of compensation
Term of compensation
Investments not subject to guarantee and compensation Investment
For the purposes of the Guarantee Fund Act, an investment is a claim which is based on an agreement between the parties or on legislation and pursuant to which an investment institution is required to:
- repay the money owed to or belonging to investors and held or managed for their account by the investment institution in connection with the provision of investment services;
- return to investors the securities owed to or belonging to them and held, managed or administered for their account by the investment institution in connection with the provision of investment services.
Date of compensation
Investments made through an investment institution registered in Estonia or the Estonian branch of a foreign investment institution shall be guaranteed and compensated for the investors out of the Investor Protection Sectoral Fund in accordance with the provisions of this the Guarantee Fund Act.
In the case of the investments of credit institutions providing investment services, the obligation of the Fund to compensate for the investments under the conditions and pursuant to the procedure provided for in the Guarantee Fund Act arises on the date on which deposits become unavailable and, in the case of the investments of other investment institutions, on one of the following dates, whichever occurs first (hereinafter the compensation date):
- the date on which a bankruptcy order of an investment institution is declared;
- the date on which the activity licence of an investment firm is revoked or the date on which the authorisation granted to a foreign investment institution to found a branch in Estonia is revoked;
- the date on which the activity licence of a management company is revoked;
In addition, the Supervision Authority may, by a resolution thereof, deem the compensation date to have arrived if an investment institution fails to return the securities or money belonging to investors to such investors or if circumstances become evident which indicate the insolvency of the investment institution.
Level of compensation for investments
Investments shall be guaranteed and compensated for pursuant to the provisions of the Guarantee Fund Act to the extent of 100 per cent of their value as at the compensation date but not more than in the amount of 313 000 kroons (20 000 euro) per investor in any one investment institution.
For the purposes of the Guarantee Fund Act, the value of an investment is the value of the money and securities, determined pursuant to the methods established by the Minister of Finance mainly on the basis of the market value of the money and securities.
Giving notification to investors
Within three working days after the compensation date, the Fund shall publish a notice in at least one daily national newspaper setting out at least the following information:
- the name of the investment institution or the branch of an investment institution the investments of which are subject to compensation;
- the term and place for submission of claims and the format of the claims;
- the term and procedure for payment of compensation;
- a list of the documents required upon the payment of compensation.
Procedure for granting compensation
Not later than within forty-five days after the date of compensation, a member of the management board, trustee in bankruptcy, moratorium administrator or liquidator of an investment institution is required to:
- provide each investor with information regarding his or her investments;
- provide the Fund with information regarding the investors and their investments which are subject to compensation.
Investors have the right to submit their positions regarding their investments and the value thereof to the trustee within five months after publication of the notice in one daily national newspaper.
The Fund shall determine the investments subject to compensation and the amount of compensation payable under the conditions and pursuant to the procedure provided for in the Guarantee Fund Act on the basis of the information submitted by the trustee.
The amount of compensation shall be determined on the basis of the value of the investment on the compensation date. The value of a foreign currency and securities nominated in a foreign currency shall be converted into Estonian kroons on the basis of the exchange rate of the Bank of Estonia as at the compensation date. The Minister of Finance may establish more detailed bases and the procedure for granting compensation.
Compensation for joint investments shall be granted to the investors in equal parts unless otherwise agreed upon between the investment institution and the investors. For the purposes of the Guarantee Fund Act, a joint investment is an investment which is jointly owned by two or more persons. For the purposes of compensation for a joint investment, each owner of the joint investment shall be deemed to be an investor.
Payment of compensation
Compensation shall be paid in money by a bank transfer to the account indicated by the investor. Compensation shall be paid through one or several Estonian credit institutions specified in a resolution of the supervisory board.
Investors shall pay for the transfer of compensation unless otherwise agreed upon between the Fund and the credit institution making the payments. If the fee payable by an investor for the transfer is higher than or equal to the amount of compensation, the compensation shall not be paid. The fee charged for the transfer of compensation shall not exceed the ordinary transfer fee charged by the credit institution.
Compensation for investments seized pursuant to the procedure prescribed by law shall be paid after the entry into force of the corresponding judgment or ruling by a court or any other competent authority.
Term of compensation
Compensation shall be paid to an investor not later than within one month after determination of the value of the investment subject to compensation, but not before the investor has submitted his/her position regarding their investment and the value thereof or the term for submission has expired (that is within 5 months).
Payment of compensation shall be completed within six months after publication of the notice in one daily national newspaper.
The Fund may extend the terms specified under extraordinary circumstances and with good reason. A term may be extended by up to three months at a time, but not for more than a total of twelve months.
If the Fund fails to pay compensation within the term specified or pays less compensation than prescribed, the investor has the right to file a claim against the Fund. The limitation period for filing a claim shall be five years.
Investments not subject to guarantee and compensation
Investments guaranteed on the basis of the Estonian Central Register of Securities Act
Investments subject to compensation on the basis of ยง 52 and 53 of the Estonian Central Register of Securities Act according of which the registrar of the Estonian Central Register of Securities and account administrators bear civil liability and shall compensate for damages, shall not be guaranteed or compensated for out of the Investor Protection Sectoral Fund.
Investments of Estonian or foreign persons
Investments belonging to professional investors or any of the following Estonian or foreign persons as at the date of compensation shall not be guaranteed or compensated for out of the Sectoral Fund:
1) the state;
2) a local government;
3) a financial institution;
4) a company belonging to the same consolidation group as the given investment institution;
5) a member of the supervisory board or management board or an auditor of the same investment institution or a company belonging to the same consolidation group as the investment institution, and a person holding at least five per cent of the share capital of the investment institution or a company belonging to the same consolidation group as the investment institution;
6) a close relative of a person specified in clause 5) or a third party acting on behalf of such person.
For the purposes of the Guarantee Fund Act, a professional investor is an investor specified in subsection 6 (2) or (4) of the Securities Market Act. For the purposes of the Securities Market Act, each of the following is a professional investor: a credit institution; an insurance company or other insurer established by legislation; an investment firm; a management company; an investment fund; the Bank of Estonia; the Republic of Estonia through the Ministry of Finance; foreign central banks and other foreign persons who are deemed to be professional investors by the legislation of their respective states.
Investments which owner has outstanding liabilities to the investment institution
An investment the owner of which has outstanding liabilities to the same investment institution shall not be compensated for out of the Sectoral Fund to the extent of such liabilities.
Investments connected with money laundering
Investments in connection with which a judgment of conviction has been made for money laundering shall not be compensated for out of the Sectoral Fund. Compensation for an investment in connection with which a criminal proceeding relating to money laundering has been commenced shall be suspended until the entry into force of the court judgment.
Investments which owned by a legal person
Investments owned by a legal person shall not be guaranteed out of the Sectoral Fund if, on the basis of the latest approved annual report, at least two of the following three economic indicators of the person exceed the following:
Investments of Estonian branch of a foreign investment institutions
Investments of the investors of a branch which under a guarantee scheme of the home country of the foreign investment institution are guaranteed and compensated to the same or a higher level than prescribed by the Guarantee Fund Act shall not be guaranteed and compensated pursuant to the Guarantee Fund Act.
Investments of a foreign branch of Estonian investment institution
Investments of a foreign branch of an Estonian investment institution which are guaranteed and compensated under a guarantee scheme of the host country of the branch to the same or a higher level than prescribed by the Guarantee Fund Act shall not be guaranteed and compensated pursuant to the Guarantee Fund Act. |
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