🌱 How are your investments protected?
Grünfin AS is a contributor to the Estonian Guarantee Fund. The purpose of the Guarantee Fund is to guarantee the protection of the funds invested by investors via investment institutions in the event of an investment institution’s insolvency.
There are strict measures in place to protect the assets of investors. We must keep the assets of our clients separate from our own assets. The assets of clients do not belong to the bankruptcy estate of us and the claims of creditors cannot be satisfied on account of the clients; nevertheless the insolvency of an investment institution (such as us) is still not impossible. The investment protection is applied primarily in the event of fraud, misuse of an administrative official’s position or an error, which means that the investment institution is unable to return assets to its clients. Investor protection does not cover investment risk, i.e. losses caused by decreases in the market value of investments or bankruptcy of an issuer of securities.
In order to meet this purpose, the Guarantee Fund collects single and quarterly contributions from investment institutions (such as us) into the Investment Guarantee Sectoral Fund (IGSF) and compensates for the investments made by investors via investment institutions to the investors.
Investments of clients of investment institutions registered in Estonia – investors – are guaranteed and compensated for the account of the Investment Guarantee Sectoral Fund (IGSF). An investment institution registered in Estonia means an investment institution that has obtained an activity license from the Estonian Financial Supervision and Resolution Authority. The investments of the investors of a foreign branch of the same investment institution and cross-border investments received in foreign countries are also guaranteed and compensated for the account of the Investment Guarantee Sectoral Fund.
The following investments are not subject to compensation: investments guaranteed on the basis of the Estonian Central Register of Securities Act, investments of qualified investors, investments of the state, local governments and financing institutions, investments of persons related to investment institutions that have become insolvent, investors whose holders have unperformed obligations to the credit institution to the extent of these obligations, and investments associated with money laundering. See more.
The investor compensation scheme established with the Guarantee Fund Act in Estonia meets the requirements of the European Union investment guarantee directive. The existence of the scheme also allows small investors to purchase investment services from branches of foreign investment institutions or as cross-border services as safely as from domestic investment institutions. Investor guarantee schemes spare investors the need to participate in lengthy insolvency proceedings, where the payouts made usually cover only a small part of the initial investment.
🌱 What is meant by investment in this context?
For the purposes of the Guarantee Fund Act, an investment is a claim which is based on an agreement between the parties or on legislation and pursuant to which an investment institution (such as a securities portfolio management service provider) is required to: repay the money owed to or belonging to investors and held or managed for their account by the investment institution in connection with the provision of investment services; return to investors the securities owed to or belonging to them and held, managed or administered for their account by the investment institution in connection with the provision of investment services.
🌱 What is the level of compensation for investments?
Investments shall be guaranteed and compensated for under the provisions of the Guarantee Fund Act to the extent of 100 per cent of their value as at the compensation date but not more than in the amount of 20 000 euro per investor in any one investment institution (see more). For the purposes of the Guarantee Fund Act, the value of an investment is the value of the money and securities, determined pursuant to the methods established by the minister responsible for the area mainly on the basis of the market value of the money and securities.
Currency of payment of Compensation: The value of a foreign currency and securities nominated in a foreign currency is converted into euros based on the foreign exchange reference rate of the European Central Bank as of the compensation date (on euro cent basis – to two decimal places and rounded off in accordance with the mathematical rules).
Compensation shall be paid to an investor not later then within one month after determination of the value of the investment subject to compensation by the Estonian Guarantee Fund. The Estonian Guarantee Fund may extend the term under extraordinary circumstances and with good reason. A term may be extended by up to three months at a time, but not for more than a total of twelve months. In the event no compensation is paid to the customer within the terms indicated above, the customer should contact the Estonian Guarantee Fund, because the investor’s entitlement to compensation remains valid for 5 years after the date on which deposits become unavailable, following which the investor may lose their right to claim the compensation. In the cases provided by the Act of the Republic of Estonia on Guarantee Fund, the pay out of the compensation may be postponed, e.g. in case of the lack of data to evidence the right to the compensation or due to the ongoing legal proceedings about compensation, or in case the right to dispose of the compensation is restricted to the investor.
Please find additional information and more detailed information on the conditions for liabilities to investors and the cases where compensation to certain investors are not paid and where insurance benefits are not paid to certain investors is provided in the internet website of Guarantee Fund at www.tf.ee.