A LIGHT AT THE END OF THE TUNNEL FOR THE SLOVAK CAPITAL MARKETS, PART II (MAY 14, 2014)
Last February we informed you about the initial steps taken by the Slovak government to revive the Slovak capital markets (http://bargerprekop.com/resources/a-light-at-the-end-of-the-tunnel-for-the-slovak-capital-markets-february-26-2014/).
On April 23, 2014, the Government agreed on the way forward for capital markets development and set timeframes by which to complete drafts of decisive legislation to make it a reality. If all goes smoothly, Slovakia could have new capital markets legislation by the end of 2015.
Below is a summary of the respective timeframes and issues to be addressed in the capital markets legislation. Exact details are still unavailable, but we will monitor and report them when they are published.
a) Amendment to Securities Act
Proposed date for submission for approval to Government: December 31, 2014
Main issues to be addressed:
- improvement of legal framework for issuance of investment certificates
- process of change to full membership principle of the Central Securities Depositary of the Slovak Republic (CSD)
b) Amendment to Bonds Act
Proposed date for submission for approval to Government: June 30, 2015
Main issues to be addressed:
- decrease of administration in bond issuance
- start-up bond issuance
c) New Act that will provide for unitary administration of pension funds, supplementary pension funds and collective investment funds
Proposed date for submission for approval to Government: June 30, 2015
Main issues to be addressed:
- collective investing in connection with retirement saving
d) Amendment to Health Insurance Act
Proposed date for submission for approval to Government: December 31, 2014
Main issues to be addressed:
- investments into publicly held companies on regulated stock market
e) Amendment to Income Tax Act
Proposed date for submission for approval to Government: June 30, 2015
Main issues to be addressed:
- capital market investments
f) Amendment to Commercial Code
Proposed dates for submission for approval to Government: (A) June 30, 2015, (B) December 31, 2014
Main issues to be addressed:
- (A) introduction of new company type and facilitation of investments in start-ups
- (B) bond issues by start-ups and convertible bond issues by limited liability companies
g) Amendment to Bankruptcy Act
Proposed date for submission for approval to Government: December 31, 2014
Main issues to be addressed:
- debt discharge by trading bonds on capital market
h) New act on venture capital funds
Proposed date for submission for approval to Government: June 30, 2015
Main issues to be addressed:
- lex specialis to collective investment act and other general regulations
i) Amendment to Collective Investments Act
Proposed date for submission for approval to Government: December 31, 2014
Main issues to be addressed:
- legalization of new forms of collective investment methods such as SICAV
Discussions about the future of the CSD advanced as well. Five alternatives have been introduced:
(i) Creating a new CSD
(ii) Outsourcing CSD services
(iii) Eliminating CSD and transferring its duties to Bratislava Stock Exchange
(iv) Modernizing CSD and changing to a full membership principle
(v) Transferring CSD’s duties to the National Bank of Slovakia
The Government seems to prefer alternative (i). The new Slovak Clearing CSD is expected to begin operations in 2015. It will be owned by the Slovak Ministry of Finance. This change is intended to promote the quality of CSD’s services.
In addition, other quality-improving and fee-reducing measures were introduced, including:
- Optimization of the process to transfer “priceless” stocks and bonds with the intention of reducing the number of accounts without any real value
- Technical interconnection with foreign central stock depositories
- Introduction of reduced fee policies
We are delighted that progress is being made on this legislation and hope to be able to inform you about more concrete steps in this process very soon.