Bank of Russia establishes rules for creating special UIFs with frozen assets
The Bank of Russia has approved requirements for the procedure to create special closed-end unit investment funds (closed-end UIFs) consisting of blocked foreign securities. Such securities will be withdrawn from the existing retail UIFs. This will allow UIFs to start managing their remaining liquid assets and resume operations with investment units.
If the share of blocked securities in a retail UIF exceeds 10%, then before 1 September 2023 its management company shall invest them in a special closed-end UIF. Each unit holder will receive the same number of units in a new fund as in the main fund. Another option is to change a retail fund status to a closed-end fund.
The new rules will not be mandatory for funds with the share of blocked assets less than 10%. However, a management company may invest blocked assets in a special closed-end UIF.
In addition, it is now required that unit holders should be informed of the consequences of investing blocked securities in a special UIF. If in the future such securities are sold, management companies shall be obliged to pay investment unit holders at least 90% of the proceeds on a quarterly basis.