A check fund wants to be a mutual fund.

LUKOIL Fund ran ahead of the locomotive
As Kommersant has learned, this week documents should be prepared on the liquidation of the LUKOIL Fund check investment fund and the creation of two mutual investment funds on its basis. This is the first time such a transformation has been conceived. However, it will most likely not be possible due to the lack of a regulatory framework.

The initiative of the LUKOIL Fund is quite understandable. The status of CHIF today does not allow it to work effectively. Shareholder income is taxed twice. In addition, shares cannot be sold at the actual price. The status of a mutual fund, firstly, will allow you to avoid double taxation, and secondly, the shareholder will be able to sell his share to the fund at any time and receive its market value.
At the beginning of February, the next absentee meeting of shareholders of the CHIF "LUKOIL Fund" will take place, which must approve the transfer of its property "by inheritance" to two mutual funds: "LUKOIL Fund-1" (open) and "LUKOIL Fund-2" (interval). True, it is highly doubtful that the Federal Securities Market Commission will approve this decision.
The fact is that the mechanism for such a transformation has not yet been defined by law. The draft of the corresponding presidential decree was prepared back in October (Kommersant wrote about this), but has not yet been signed.
The only “guide to action” for the LUKOIL Fund now can only be presidential decree #765 of July 26, 1995 “On additional measures to improve the efficiency of the investment policy of the Russian Federation.” However, it only declares the possibility of transforming private investment funds into mutual funds, and the mechanism for this transformation is not detailed - for this, in fact, a new decree was being prepared. And until Boris Yeltsin has put his signature on it, the Chairman of the Federal Securities Commission, Dmitry Vasiliev, is unlikely to take responsibility for registering a new entity on the securities market.
In addition, the FCSM is unlikely to like the fact that the LUKOIL Fund did not coordinate its actions with the commission itself. As its press secretary Vadim Bely told Kommersant, this is the first time he has heard about the fund’s intentions. At the same time, the NIKoil-Management company, which is involved in the transformation of the LUKOIL Fund, claims that the actions of the CHIF have been coordinated with the Federal Commission for the Securities Market. Although, however, they do not rule out that “a number of discrepancies are possible.”
Meanwhile, in mid-January, the exchange of LUKOIL Fund shares for shares of future mutual funds had already begun. And if the FCSM refuses registration, another scandal will arise with “deceived investors.” But it seems that NIKoil Management is not even considering this possibility.
VITALY Kommersant-BUZA

Newspaper "Kommersant" No. 6 dated January 20, 1998, p. 11