Topic of this thesis is the functioning of the capital market in Croatia. Karic (2010) highlights that capital market includes all institutes (investment funds, Stock Excange, banks, insurers and others) participating in the issuance and placement of long-term securities (stocks and bonds) and loans to investors or otherwise affect their supply and demand. Through the capital market financial institution transfers (transferred) the cumulative savings to investors and companies obtain permanent capital to finance investments (investment) in facilities, equipment and other permanent resources. The capital market in Croatia has undergone a number of changes. Great progress in the development of the capital market are: connecting Zagreb and Varazdin Stock Exchange, the introduction of a new trading system and technological change, the increasing role of the scope of the supervisory agencies. High insolvency of the market is an obstacle to the further development of the capital market, although there are positive developments. The lack of stable and high daily traffic, becoming numerous highly illiquid shares, the power to determine prices for large transactions and high volatility in share prices characteristic of the illiquidity of the market. High liquidity is a feature of developed capital markets. It allows the execution of transactions of significant amounts with very little impact on prices. The development of the Croatian capital market and the rapid development of investment funds largely influenced European decisions, and the revival of the securities markets and the development of the stock market business had a positive impact outflow of capital from banks in the field of relatively low yields in the assets of investment funds. Capital Market Act and The law on the adoption of joint stock companies in Croatia is regulated by the Capital Market as well as the scope and jurisdiction of HANFA.