CREATION OF THE NATIONAL DEVELOPMENT FUND (2024)

Law Summary

Creation of the National Development Fund

• The National Development Company (NDC) was created under Presidential Decree No. 1648 to promote economic development in various sectors.
• The NDC has participated in the development of economically viable ventures that contribute to the country's economic growth.
• The government's policy is to transfer its investments in pioneering projects and business enterprises to the private sector once they become viable.
• To allow small investors to benefit from these ventures and generate additional funds for the NDC, there is a need to create a fund to participate in economically viable projects.

Creation and Management of the Fund

• The NDC is authorized to enter into investment management agreements with interested investors.
• The funds contributed by investors will be pooled for administrative purposes in a fund called the National Development Fund (the "Fund").
• The Fund will be invested in economically viable projects of the NDC.
• The NDC will act as the agent of the investors and manage the Fund.
• The NDC will not charge a management fee or share in the income of the Fund but will be entitled to reimbursem*nt of expenses.
• The specific features of the Fund and the guidelines for its operation will be formulated by the NDC.

Issuance of National Development Fund Certificates

• The NDC is authorized to issue certificates called National Development Fund Certificates (NDF Certificates) to investors to evidence their investments in the Fund.
• The issuance of NDF Certificates by the NDC will not be considered as exercising "quasi-banking functions" or "financial intermediations" as defined under the General Banking Act.
• The NDF Certificates will not be considered as "deposit substitutes" as defined under the General Banking Act.

Board of Trustees

• The investors in the Fund will be represented by a Board of Trustees.
• The NDC will report to the Board of Trustees on the operations of the Fund.

Protection of Investment

• To safeguard the interests of investors, the NDC is directed to stand ready to purchase any of the investments of the Fund if the total net asset value falls below its total original acquisition cost.
• This ensures that each investor can redeem their investment at least at the face value of each NDF Certificate.

Taxation

• The Fund will not be considered a "corporation" under the National Internal Revenue Code and will not be subject to income tax.
• The Fund will be deemed owned by the investors in proportion to their respective interests.
• All income earned by the Fund will be deemed the income of the investors, and they will be responsible for bearing all taxes on that income.
• If the income earned by the Fund is subject to final taxes, those taxes will be deemed paid by the investors.

Auditor

• The NDC will appoint an independent Certified Public Accountant to be the auditor of the National Development Fund.

Separability Clause

• If any provision of this Order is held to be unconstitutional, it will not affect the validity of the other provisions.

Effectivity

• This Order will take effect immediately upon its publication in the Official Gazette.