The Investor Compensation Fund guarantees payment of compensation to the clients of an investment intermediary by the raised money in the Fund in the cases where the investment intermediary is not able to pay its liabilities to the client due to reasons directly linked to its financial situation. If the investment intermediary fails to pay his premiums due under the Law on Public Offering on Securities the client is not deprived of compensation.
The Fund pays compensation to the clients of investment intermediary in the cases where:
- By a decision of the respective district court bankruptcy proceedings have been instituted for the investment intermediary, including also when the bankruptcy proceedings have been terminated on the grounds on the grounds of Art. 632 of the Commercial Law;
- The license or the authorization for activities as investment intermediaries has been withdrawn by a decision of the competent authorities in the cases under Art.20, para (2), Item 3 of the Markets in Financial Instruments Act and in cases when investment intermediaries are banks – under Art.36, para (2) of the Law on Credit Institutions.
Compensation shall be paid for receivables that have arisen as a result of the inability of the investment intermediary to return the clients’ assets in compliance with the legal and contractual provisions.
When circumstances occur for payment of compensations to the clients, the Fund should publish at least in two daily national newspapers and on its web site a notification for this event e.g. the period during which investors can make their claims for compensation from the Fund as well as the bank through which the compensation will be paid out.