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Finland

A government Bill to carry out EC Directives 2001/107/EC and 2001/108/EC relating to undertakings for collective investment in transferable securities (Ucits) was submitted to the Finnish parliament on October 24 2003. The proposal is subject to parliamentary approval, but the new act is expected to come into force in 2004. The Bill also introduces a separate act relating to foreign investment funds in Finland.

Carrying out the Directives will broaden the right of Finnish investment funds to invest in money market instruments, derivatives and shares in other investment funds. Management companies can also set up index funds. A Finnish investment fund's activities will include individual asset management and related investment advisory services as well as custody and management services. Financial service groups are expected to able to simplify their structures, which will improve economic efficiency.

To improve information available to investors and make it more comprehensible, management companies will be required to publish, as well as a fund prospectus, a simplified prospectus for each fund under their management. The simplified prospectus will have to be made available to investors free of charge and be prepared so that an average investor can easily understand it.

Investment funds increasingly offer their services across borders, so the Directives aim to further harmonize regulation. For example, regulations on entry into the market will be uniform in all EU countries, which is expected to enhance competition. But certain provisions still might hinder this development. For example, the requirement to publish a simplified prospectus for each fund will create additional costs, as will the extensive translation requirements relating to materials when marketing funds across borders. This may impede funds entering into new markets and prevent competition.

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