New Act on Securities and Investment Services

Act No. 566/2001 Coll. on Securities and Investment Services and amending certain other acts (the ``Act'')

This new Act regulates securities, investment services, securities dealers (the ``Security Dealers''), certain contractual relationships relating to securities, establishment and organisation of Central Depository of Securities (the ``Central Depository''), protection of financial market and supervision over capital market.

The intention of the Act is to harmonise the Slovak law with the law of European Union in the field of capital market and to solve its main problems, in particular quality and access to information for investors, transparency of capital market, protection of clients contributions and effectiveness of system of securities holder accounts.

At the same time, the Act amends several other acts. First of all, it amends the former Act No. 600/1992 Coll. on Securities as amended. However, this former Act has not been abolished in full and some of its parts are still valid. Moreover, mainly the following acts have been amended: the Act on Securities Stock Exchange, the Act on Bankruptcy, the Act on Collective Investment, the Act on Bonds, the Act on Protection against Legalisation of Incomes from Criminal Activities.

The Act introduces a general definition of security which was missing in the Slovak law. According to the Act, security means any instrument or record representing a determinable financial value made in a form specified by the law, carrying rights as defined herein and in special laws (e.g. the Act on Bonds, the Act on Bills of Exchange and Cheques), in particular the right to demand certain assets or exercise certain rights against persons specified by the law.

Similarly to the former Act on Securities, a system of securities has been stated. The system comprises of: shares, interim certificates, shares in mutual funds, bonds, certificates of deposit, treasury bills, bank books, coupons, bills of exchange/promissory notes, cheques, travellers cheques, bills of lading, warehouse certificates, warehouse warrants, goods warrants, shares in co-operatives and other securities declared to be securities under special laws.

Contrary to the former regulation, ``depository certificates'' and ``contribution certificates'' have been excluded from the system of securities. However, according to Section 12 para. 1 of the Act, these expressions can be still used instead of the term ``certificates of deposit''. After more than 35 years, bank books regulated under the Civil Code have been included into the system of securities again. In respect of treasury bills, the reference to the Civil Code has been cancelled and the treasury bills are defined and regulated under this new Act.

As for the face and form of securities, there were no significant changes in their respective definitions. Also according to the new Act, securities can be in face of certificates (documentary securities) or book-entered (dematerialised) securities and can have a form on order, on bearer or a form of registered securities. The choice of face and form of securities is still limited by special acts (e.g. in case of shares of banks and shares of the Central Depository or the Securities Dealers only book-entered registered shares are permitted).

The Act has cancelled the term ``publicly tradable'' securities. As for tradability, securities shall be divided into securities accepted to the market of listed securities of the securities stock exchange (the ``Stock Exchange'') and securities traded on a free market, eventually securities issued on a basis of a public bid.

Securities which were public tradable until 1 January 2002 and which have not been accepted to be traded on the listed securities market of the Stock Exchange are considered to be securities issued on a basis of a public bid.

Furthermore, the Act regulates prerequisites of securities, their issue, change of face, cancellation, transfer and transmission of securities including registration of the transfer and retention of disposition right.

Subsections

Last modified: 2003-03-01



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The intention of the Act is to harmonise the Slovak law with the law of European Union in the field of capital market and to solve its main problems, in particular quality and access to information for investors, transparency of capital market, protection of clients contributions and effectiveness of system of securities holder accounts. At the same time, the Act amends several other acts. First of all, it amends the former Act No. 600/1992 Coll. on Securities as amended. However, this former Act has not been abolished in full and some of its parts are still valid. Moreover, mainly the following acts have been amended: the Act on Securities Stock Exchange, the Act on Bankruptcy, the Act on Collective Investment, the Act on Bonds, the Act on Protection against Legalisation of Incomes from Criminal Activities. The Act introduces a general definition of security which was missing in the Slovak law. According to the Act, security means any instrument or record representing a determinable financial value made in a form specified by the law, carrying rights as defined herein and in special laws (e.g. the Act on Bonds, the Act on Bills of Exchange and Cheques), in particular the right to demand certain assets or exercise certain rights against persons specified by the law. Similarly to the former Act on Securities, a system of securities has been stated. The system comprises of: shares, interim certificates, shares in mutual funds, bonds, certificates of deposit, treasury bills, bank books, coupons, bills of exchange/promissory notes, cheques, travellers cheques, bills of lading, warehouse certificates, warehouse warrants, goods warrants, shares in co-operatives and other securities declared to be securities under special laws. Contrary to the former regulation, ``depository certificates'' and ``contribution certificates'' have been excluded from the system of securities. However, according to Section 12 para. 1 of the Act, these expressions can be still used instead of the term ``certificates of deposit''. After more than 35 years, bank books regulated under the Civil Code have been included into the system of securities again. In respect of treasury bills, the reference to the Civil Code has been cancelled and the treasury bills are defined and regulated under this new Act. As for the face and form of securities, there were no significant changes in their respective definitions. Also according to the new Act, securities can be in face of certificates (documentary securities) or book-entered (dematerialised) securities and can have a form on order, on bearer or a form of registered securities. The choice of face and form of securities is still limited by special acts (e.g. in case of shares of banks and shares of the Central Depository or the Securities Dealers only book-entered registered shares are permitted). The Act has cancelled the term ``publicly tradable'' securities. As for tradability, securities shall be divided into securities accepted to the market of listed securities of the securities stock exchange (the ``Stock Exchange'') and securities traded on a free market, eventually securities issued on a basis of a public bid. Securities which were public tradable until 1 January 2002 and which have not been accepted to be traded on the listed securities market of the Stock Exchange are considered to be securities issued on a basis of a public bid. Furthermore, the Act regulates prerequisites of securities, their issue, change of face, cancellation, transfer and transmission of securities including registration of the transfer and retention of disposition right. Subsections Investment Services Contracts on Securities and Securing of Obligations by Securities Securities Dealers Investment Services Agent Investment Guarantee Fund Central Depository Protection of Financial Market Takeover Bid Public Bid of Securities Supervision Sanctions Decrees on Execution of the Act Next: Investment Services Up: February 2002 Previous: New Insurance Act Last modified: 2003-03-01

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New Act on Securities and Investment Services