./.WORLD TRADE
ORGANIZATIONS/C/N/92
15 January 1999
(99-0139)
Council for Trade in Services Original:  English
NOTIFICATION PURSUANT TO ARTICLE III.3 OF THE
GENERAL AGREEMENT ON TRADE IN SERVICES
The following notification has been received from the delegation of the Czech Republic.
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1. Member notifying:
The Czech Republic
2. Notification under:
Article III, paragraph 3, of the General Agreement on Trade in Services.
3. Date of entry into force:
8 June 1998
Duration
Indefinite
4. Agency responsible for implementation  and enforcement of the measures:
Ministry of Finance of the Czech Republic
5. Description of the measures:
Measures
Act No. 124/1998 Coll. (valid since 8 June 1998) amending Investment Companies and
Investment Funds Act No. 248/1992 Coll. of Laws.
Description
According to this amendment important changes are introduced, among which the most
important are the following ones:
• An authorisation allowing establishment of  new closed-end mutual funds may be issued
only for a definite period which does not exceed 10 years.S/C/N/92
Page 2
• Investment companies and investment funds may not carry out transactions with assets in
mutual funds or of investment funds throug h persons who are interconnected asset-wise
or personnel-wise.
• Acquisition of more than 10%-share of registered capital of an investment company or
investment fund is subject to the prior Securities Commission approval.  A compositionof the Board of Directors or Supervisory Board is subject to the same obligation.
• According to the Act the portfolio of investment funds or mutual funds may not consist of
the shares of joint-stock companies whose shares on registered capital of a management
investment company or investment fund exceeds 10 per cent.
• According to the Act either an investment co mpany or investment fund is not permitted to
use its assets for the provision of an advance payment on a purchase of securities.
• The Act introduced an obligatory transformation of closed-end mutual funds and
investment funds into open-end mutual funds in cases where the discount limits stipulatedby the Act are exceeded.  Closed-end mutual funds and investment funds which have not
been transformed under the legal requirement must be transformed into open-end mutualfunds gradually not later than 31 December 2002.
• According to the Act an investment limit stipulated the legal stake of capital of companies
which may be held by funds was decreased.  The total nominal value of securities of a
single type issued by the same issuer may not comprise more than 11% of a mutual fund
assets or investment fund assets.  An investment company must also make sure that
mutual funds portfolio which it manages do not contain more than 11% of the totalnominal value of securities of a single type issued by the same issuer.
• The control functions of a depository was strengthened by the Act.  If a depository notes
that the interests of shareholders of the investment fund or of the unit holders of the
mutual fund have been violated in the execution of the activities by the investment
company or investment fund or if the deposi tory has reasonable suspicion that there could
be an instance of this sort, it may suspend access by this transaction's participants to the
securities accounts at the Securities Centre for a maximum of three days.
6. Members specifically affected if any:
None
7. The texts are available from:
Collection of Laws of the Czech Republic, Year 1998, Part 42, Distributed on 8 June 1998.
The Act No. 124 amending Investment Compan ies and Investment Funds Act No. 248/1992
Coll. of Laws.
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