Who we are ?
“Olimp Asset Investment”, an asset management company (AMC), is a professional participant of the financial market. We offer a corporate investment fund as an instrument for the investment activities at the new-built real estate market, investment protection and tax planning.
What is JII?
Joint Investment Institution (JII) is a fund that raises funds from investors (legal entities and individuals) and has the right to invest them in the property rights and real estate items, equity rights, real estate, securities, and other revenue generating assets.
The corporate investment fund (hereinafter referred to as the CIF) is established as a joint-stock company. The CIF activity is regulated by the Laws of Ukraine on Joint Investment Institutions and on Investment Activity, the Tax Code of Ukraine and regulatory acts of the Securities and Stock Market State Commission.
Advantages of using an investment fund in construction
Building owners, Developers and Investors involve the CIF in construction projects at the new-built real estate market using it as a tool for financing the construction projects at the initial stages and for the subsequent sale of apartments to an end consumer. The CIF allows to build transparent, reliable and legally understandable relations between all project participants and to protect their interests.
The main advantages of using an investment fund in construction are:
1) tax exemptions which exempt the CIF from paying income tax in accordance with clause 6 of Article 146 of the Tax Code of Ukraine;
2) protection of the JII from obligations and unlawful interference in the activities is provided for in Article 8 of the Law of Ukraine on Joint Investment Institutions;
3) a legal mechanism of investment in the new-built real estate items in accordance with Article 8 of the Law on Investment Activity is one of the permitted financial and credit mechanisms for attracting investments in construction.
How to arrange the sale of real estate items under construction
The sale of real estate item is an interim but one of the main components of a successful investment project; having a house built or under construction, there is a need for financing and receipt of funds.
With the CIF it is easy to arrange an effective model of sales of new-built real estate or property rights. In turn, the CIF employs one of the models of raising funds from future real estate owners:
– conclusion of forward contracts;
– conclusion of investment contracts;
– investment in construction with targeted bonds.
Tax exemptions apply to all these sale mechanisms and the investment protection mechanisms provided for by the applicable law are used.
How to optimize a tax burden in the process of project implementation?
For the effective tax planning and successful implementation of the project, the roles and functions of the project participants have to be clearly identified; the corporate structure of the project has to be developed and approved; the rights and responsibilities of each participant have be legally agreed.
Involving the CIF as the main “player” of the project provides the following advantages over other legal entities (companies, joint ventures, co-operatives), namely:
1) the CIF exempts from paying income tax;
2) the CIF allows to pay dividends to the CIF shareholders at a reduced rate of 8%;
3) the CIF is enabled to grant interest-bearing loans to the related companies, and an interest income is exempted from income tax;
4) the CIF provides a reliable legal structure capable of protecting the project against raiding and tax arbitrariness.
How to protect investments from raider attacks or tax arbitrariness?
Taking advantage of the JII legislation, it is possible to shape and build a reliable legal structure that will further protect the Developer, Investor, and other project participants from damages (losses) and contingency risks.
What are the advantages of the CIF over other legal corporate forms:
1) Possibility to show a nominee as an ultimate beneficiary;
2) Three-level management of the corporate investment fund: the AMC, the Supervisory Board and the Meeting of Shareholders;
3) Special legislation of Ukraine, which protects and regulates the investment activity;
4) Control by the National Securities and Stock Market Commission.
How to build relations with partners during project implementation?
Building quality partnership relations with all project participants is a guarantee of the successful project implementation and high efficiency of the invested capital.
As a rule, the participants of the investment project for construction of a new-built real estate item are:
– Building owner (developer);
– Corporate Investment Fund;
– Asset Management Company;
– Real Estate Agencies;
Figure 1 shows one of the models.
A properly established legal structure between all project participants provides allows to use all advantages of the legislation and meet the needs of all project participants.