In Macedonia, on 4 February 2011 the amendments to the Law of Investment Funds entered into force while the amendments to the Law on Foreign Exchange Operations are applicable since the 1 April 2011. Further amendments to the Law on Foreign Exchange Operations Act are in a preparatory phase.

Changes in the Law on Foreign Exchange Operations in Macedonia

Since 1 April 2011 all of the changes prescribed by the Law on Amendments of the Law on Foreign Exchange Operations (Official Gazette of Republic of Macedonia no. 34/2001, 49/2001, 103/2001, 51/2003, 81/2008, 24/2011, "FOREX Law Amendments") are now applicable.

Operations by residents with securities abroad. The most important amendments are the ones that allow residents to subscribe (free of charge) and to sell securities abroad using the services of authorized participants of foreign stock exchanges or other organized securities markets abroad. This change comes alongside the previously given opportunity to indirectly participate on international stock markets by utilising the services of authorized participants of the securities market in Macedonia (i.e., broker-dealer houses, banks, insurance companies, pension funds, investment funds). Furthermore, the FOREX Law Amendments place an obligation upon residents that perform the registration or trade of securities abroad, using the services of authorized participants of the foreign markets, requesting them to submit a respective report to the National Bank of Republic of Macedonia. The respective report should be submitted on a monthly basis, by the 20th day in the month reporting for the previous month. Reports are submitted only for the months where transactions were performed.

However, regardless of aforementioned amendments, as opposed to the subscription (free of charge) and sale of securities abroad, residents (other than authorized banks) are still not allowed to purchase the securities abroad. The final provisions of the FOREX Law Amendments prescribe that this restriction would be removed (and the provision that limits the right of residents to trade directly on foreign securities markets would be invalidated) after the entrance in the second stage of the Stabilization and Association Agreement between Macedonia and the European Union. However, this decision depends on other political issues and it cannot be predicted when this will formally happen.

Supervision and implementation. The FOREX Amendments expand the authorised institutions for supervision of the implementation of the law. Aside the previously authorized institutions (National Bank of the Republic of Macedonia, Customs Administration, Ministry of Economy and Securities and Exchange Commission (the "SEC")), the amendments introduce the State Foreign Exchange Inspectorate, body within the Macedonian Ministry of Finance, as responsible for supervision of the implementation of the FOREX Law Amendments.

Furthermore, the changes introduce new rights and obligations for the inspectors that supervise the enforcement of the FOREX Law Amendments. The amendments aim to increase the efficiency of the inspectorate.

Amendments related to the non-compliance. Regarding the sanctions envisaged by the FOREX Amendments, there are changes that introduce a fine for legal entities that perform criminal offences: (i) unlawful use of foreign currency and (ii) illegal collection or payment of foreign currencies in cash. Additionally, the amendments prescribe a ban for conducting professional activity for the offenders. On the other hand, the amendments of the FOREX Amendments in general reduce the fines for the misdemeanours envisaged therein.

Amendments of the Law on Investment Funds in Republic of Macedonia

The Law on Amendments of the Law on Investment Funds (Official Gazette of Republic of Macedonia, nos. 12/2009, 67/2010 and 24/2011) has been enacted on 4 February 2011 and is in force as of 5 March 2011. According to the newest amendments, the companies for management of investment funds are obliged to keep the data on the shareholders of the closed/opened investment fund, as well as the data on payments, as confidential. Furthermore, these companies are also obliged to provide the SEC with that data, upon SEC's request.

Amendments related to non-compliance. The amendments introduce a new provision regarding settlements and payment orders related to the offences prescribed by the Law on Investment Funds. Overall tendency of reduction of the amount of fines is evident, compared with the previous provisions of the law. On the other hand, there are new misdemeanours introduced which are related to (i) conclusion of written agreements with clients, (ii) principles of advertising of investment funds, as well (iii) establishment of risk management of the funds.

Further development of the Macedonian securities regulations

At this moment, the Macedonian Assembly is processing draft amendments to the Law on Securities (Official Gazette of the Republic of Macedonia, nos. 95/2005 25/2007, 7/2008 and 57/2010). Such amendments should improve the procedures before the SEC related to the obtainment of authorisations, approvals and other similar documents. The proposed amendments should reduce the time period in which the SEC would have to decide on requests regarding the extension of licences of brokers and investment consultants. In that direction, the amendments in details prescribe a new administrative procedure for cases of silence of administration. Moreover, it is expected that the changes would introduce opportunity to address the president of the SEC and further alarm the State Administration Inspectorate, prior to initiation of administrative disputes.

The amendments of the Law on Securities should introduce the changes mentioned here, as well as other changes, and are expected to be enacted until the end of 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.