LM Legal Services Blog

The investment funds will be able to buy properties on territory of EU-member-states, according to the draft amendments of the law for the investment funds suggested by the Committee for Financial Supervision. Until now these funds could invest only in Bulgaria. The other significant amendment is that the minimal capital will increase from 600 000 levs to 1 million levs. The funds will be able to cooperate and work together on large property project which they would not be able to do on their own. The requirement that the depository bank which holds the money of the fund should give credits to them shall be removed. Other amendments include the possibility for investment in bonds and futures issued with the aim to finance major infrastructural projects. The requirement to obligatory increase the initial capital in order to get the right to operate as a fund will be also removed.

The rules for terminating the license of the company. The fund will be able to request it and in such case it will continue to operate as a normal company not as an investment fund.

The Bulgarian investment funds have shrunk by 37% since the beginning of the year according to the Bulgarian Association of the Investment Funds. Funds amounted to 880 million levs in December 2007, but they have come down to 556.9 million levs by the end of August 2008.

Only in August 2008, 8.3 million levs have been withdrawn from the investment funds which is a decrease of 1.4% in comparison to July 2008. Brokers claim that the withdrawal was lower than expected due to the holiday season. For comparison, as much as 45 million levs have beed withdrawn in July 2008 only.  Portfolio menagers expect further withdrawals due to the record low capital exchange index.