BILL
To regulate and control the establishment and administration of collective investment schemes; to amend or repeal certain laws; and to provide for incidental matters.
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:-
ARRANGEMENT OF SECTIONS
PART I
COLLECTIVE INVESTMENT SCHEMES
PART II
FUNCTIONS OF REGISTRAR
PART III
ASSOCIATION OF COLLECTIVE INVESTMENT SCHEMES
PART IV
COLLECTIVE INVESTMENT SCHEMES IN SECURITIES
PART V
COLLECTIVE INVESTMENT SCHEMES IN PROPERTY
PART VI
COLLECTIVE INVESTMENT SCHEMES IN PARTICIPATION BONDS
PART VII
DECLARED COLLECTIVE INVESTMENT SCHEMES
PART VIII
FOREIGN COLLECTIVE INVESTMENT SCHEMES
PART IX
TRUSTEE OR CUSTODIAN
PART X
AUDITOR
PART XI
CONVERSION OF COLLECTIVE INVESTMENT SCHEME
PART XII
GENERAL
SCHEDULE 1
MATTERS WHICH MUST BE PROVIDED FOR IN DEED OF COLLECTIVE INVESTMENT SCHEME IN SECURITIES
(SECTION 97)
SCHEDULE2
MATTERS WHICH MUST BE PROVIDED FOR IN DEED OF COLLECTIVE INVESTMENT SCHEME IN PROPERTY
(SECTION 97)
SCHEDULE3
LAWS REPEALED OR AMENDED BY THIS ACT
(SECTION 117)
SCHEDULE4
RULES OF ASSOCIATION
(SECTION 32)
"administration" means any function performed in connection with a collective investment scheme including-
- the management or control of a collective investment scheme;
- the receipt, payment or investment of money or other assets, including income accruals, in respect of a collective investment scheme;
- the sale, repurchase, issue or cancellation of a participatory interest in a collective investment scheme; and
- the buying and selling of assets or the handing over thereof to a trustee or custodian for safe custody;
"advisory committee" means the Collective Investment Schemes Advisory Committee referred to in section 8;
"assets" means the investments comprising or constituting a portfolio of a collective investment scheme and includes any income accruals derived or resulting from the investments in the portfolio which are held for or are due to the investors in that portfolio;
"association" means an association licenced in terms of section 26;
"auditor" means a person registered under the Public Accountants' and Auditors' Act, 1991 (Act No. 80 of 1991), and appointed by a manager in terms of section 73;
"authorised agent" means a person authorised by a manager to solicit investments in a portfolio from members of the public or to perform a function contemplated in the definition of "administration";
"Board" means the Financial Services Board established by section 2 of the Financial Services Board Act, 1990 (Act No. 97 of 1990);
"close corporation" means a close corporation incorporated in accordance with the Close Corporations Act, 1984 (Act No. 69 of 1984);
"collective investment scheme" means a scheme, in whatever form, including an open-ended investment company, in pursuance of which members of the public are invited or permitted to invest money or other assets in a portfolio, and in terms of which-
- two or more investors contribute money or other assets to and hold a participatory interest in a portfolio of the scheme through shares, units or any other form of participatory interest; and
- the investors share the risk and the benefit of investment in proportion to their participatory interest in a portfolio of a scheme or on any other basis determined in the deed, but not a collective investment scheme authorised by any other Act;
"company" means a company incorporated or registered under the Companies Act, 1973 (Act No. 61 of 1973);
"court" means any division of the High Court of South Africa having jurisdiction; "custodian" means a custodian appointed in terms of section 68;
"deed" means the agreement between a manager and a trustee or custodian, or the document of incorporation whereby a collective investment scheme is established and in terms of which it is administered, and includes the deed of a management company which immediately prior to the commencement of this Act was a management company in terms of any law repealed by this Act;
"exchange" means an exchange licenced under the Stock Exchanges Control Act, 1985 (Act No. I of 1985), the Financial Markets Control Act, 1989 (Act No. 55 of 1989), or an exchange outside the Republic referred to in section 45;
"exchange securities" means securities which are listed and authorised to be dealt in on an exchange, and the prices of which are quoted in a list issued for publication by such exchange;
"income accruals" means any dividends or interest or any other income for distribution received by the trustee, custodian or manager on behalf of investors in a portfolio in the course of any income distribution period or carried forward from any previous income distribution period or due to such investors in respect of dividend or interest or any other income declarations made but not yet distributed;
"investor" means the holder of a participatory interest in a portfolio in the Republic;
"manager" means a person who is authorised in terms of this Act to administer a collective investment scheme;
"members of the public" includes-
- members of any section of the public, whether selected as clients, members, shareholders, employees or ex- employees of the person issuing an invitation to acquire a participatory interest in a portfolio; and
- a financial institution regulated by any law, but excludes persons confined to a restricted circle of individuals with a common interest who receive the invitation in circumstances which can properly be regarded as a domestic or private business venture between those persons and the person issuing the invitation;
"Minister" means the Minister of Finance;
"open-ended investment company" means a company with an authorised share capital, which is structured in such a manner that it provides for the issuing of different classes of shares to investors, each class of share representing a separate portfolio with a distinct investment policy;
"participatory interest" means any interest, undivided share or share whether called a participatory interest, unit or by any other name, and whether the value of such interest, unit, undivided share or share remains constant or varies from time to time, which may be acquired by an investor in a portfolio;
"portfolio" means a group of assets including any amount of cash in which members of the public are invited or permitted by a manager to acquire, pursuant to a collective investment scheme, a participatory interest or a participatory interest of a specific class which as a result of its specific characteristics differs from another class of participatory interests;
"prescribed" means prescribed by regulation;
"registrar" means the registrar or the deputy registrar of collective investment schemes referred to in section 7;
"regulation" means a regulation made under this Act; "rule" means a rule referred to in section 32;
"sell" or "repurchase" includes exchange;
"solicit" means any act to promote investment by members of the public in a collective investment scheme;
"this Act" includes a regulation, notice, rule and any other measure having the force of law made under this Act;
"trustee" means the trustee appointed in terms of section 68.
(2) The assets of an investor must be properly protected by application of the principle of segregation and identification.
- information about the investment objectives of the collective investment scheme, the calculation of the nett asset value and dealing prices, charges, risk factors and distribution of income accruals must be disclosed to the investor; and
- information that the manager considers necessary to enable the investor to make an informed decision must be given to the investor timeously and in a comprehensible manner.
(2) The manager must disclose the interests of its directors and management to the investors.
(3) A manager must maintain adequate financial resources to meet its commitments and to manage the risks to which its collective investment scheme is exposed.
(4) A manager must-
- organise and control the collective investment scheme in a responsible manner;
- keep proper records;
- employ adequately trained staff and ensure that they are properly supervised;
- have well defined compliance procedures;
- maintain an open and co-operative relationship with the office of the registrar and must promptly inform that office about anything that might reasonably be expected to be disclosed to such office; and
- promote investor education, either directly or through initiatives undertaken by an association.
- is registered as a manager by the registrar or is an authorised agent; or
- is exempted from the provisions of this Act by the registrar by notice in the Gazette.
(2) The registrar may on application by a person who is required to change his or her name by virtue of subsection (1) allow such person to effect such change on the conditions and within a period, not exceeding 6 months, determined by the registrar.
(3) A person who contravenes subsection (1) is guilty of an offence.
(2) As from the commencement of this Act the Unit Trusts Advisory Committee referred to in subsection (1) is known as the Collective Investment Schemes Advisory Committee (in this Act referred to as the advisory committee) and a reference to the Unit Trusts Advisory Committee in any law must, unless clearly inappropriate, be construed as a reference to the Collective Investment Schemes Advisory Committee.
(3) The members of the Unit Trusts Advisory Committee who were in office as such immediately before the commencement of this Act remain in office for the remainder of their term of office or until their membership is terminated in terms of this Act.
(2) When appointing the members of the advisory committee the Minister must appoint-
- one person with knowledge of collective investment schemes in securities;
- one person with knowledge of collective investment schemes in property;
- one person with knowledge of collective investment schemes in participation bonds;
- one person with knowledge of other collective investment schemes; and
- one person to represent the interests of investors.
(3) A member of the advisory committee holds office for three years and is eligible for re-appointment upon the expiration of his or her period of office: Provided that if on the expiry of the period of office of a member reappointment is not made or a new member is not appointed, the former member must remain in office until an appointment has been made.
(4) The Minister may terminate the membership of a member of the advisory committee for good reason after having given the member sufficient opportunity to show why his or her membership should not be terminated.
(2) The advisory committee must advise the Minister or the registrar on any matter referred to it by the Minister or the registrar.
(3) The registrar may submit to the advisory committee any information in his or her possession which is relevant to any matter being investigated or considered by the advisory committee.
(4) The Commissions Act, 1947 (Act No. 8 of 1947), applies to any investigation by the advisory committee and witnesses and their evidence as if the advisory committee were a commission to which the said Act applied and the chairperson of the advisory committee were the secretarv of such a commission.
(5) The advisory committee may call upon any person to assist it or to investigate a matter relating to collective investment schemes.
(6) Officers or employees in the office of the registrar designated by the registrar must perform the administrative work incidental to the performance of the functions of the advisory committee and its subcommittees.
(2) The chairperson may at any time convene an extraordinary meeting of the advisory committee to be held at a time and place determined by him or her.
(3) The advisory committee determines its own procedure for its meetings.
(4) The quorum for a meeting of the advisory committee is a majority of its members.
(5) The decision of a majority of the members of the advisory committee present at any meeting thereof is the decision of the advisory committee, and in the case of an equality of votes, the chairperson has a casting vote in addition to his or her deliberate vote.
(2) A subcommittee consists of so many members of the advisory committee or so many other persons as the advisory committee considers necessary, and the advisory committee may at any time dissolve or reconstitute a subcommittee.
(3) The advisory committee must designate one of the members of the subcommittee as chairperson, and if the chairperson is absent from a meeting of the subcommittee, the members present must from among themselves elect a person to preside at the meeting.
(4) The advisory committee may make rules regarding the manner in which meetings of a subcommittee are to be convened, the procedure at, the functions of, and the quorums for, such meetings and the manner in which minutes of such meetings must be kept.
(2) The expenditure connected with the functions of the advisory committee must be paid out of the funds of the Board, whose approval must be obtained for all expenditure proposed to be incurred, or actually incurred, by the advisory committee.
PART II
FUNCTIONS OF REGISTRAR
(2) For purposes of an investigation in terms of subsection (1), the registrar may in writing direct the person to-
- provide him or her with any information, document or record about such business;
- appear before the registrar at a specified time and place if he or she has reason to believe that such person is contravening or failing to comply with this Act.
(3) In addition to the powers and duties conferred or imposed upon him or her by this Act, the registrar has, in respect of a person referred to in subsection (1), all the powers and duties conferred or imposed upon him or her by the Inspection of Financial Institutions Act, 1998 (Act No. 80 of 1998).
(4) A reference in this Act to a directive, an investigation or an inspection made under this section is construed as a reference to a directive, an investigation or an inspection under the Inspection of Financial Institutions Act, 1998.
- apply to the court under section 346 of the Companies Act, 1973 (Act No. 61 of 1973), for the winding-up of a manager or of a collective investment scheme as if he or she were a creditor thereof;
- apply to the court under section 427(2) of the Companies Act, 1973, for a judicial management order in respect of a manager or of a collective investment scheme as if he or she were a creditor thereof;
- apply to the court under section 5 of the Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001), for the appointment of a curator for the business of the manager or for the business of a portfolio;
- require a manager to appoint, in accordance with the registrar's directions, in place of the serving trustee or custodian, a competent person nominated by the registrar;
- require a manager to take steps, in accordance with the registrar's directions and the provisions of section 102, for the winding-up of a portfolio of its collective investment scheme, the realisation of the assets, and the distribution of the net proceeds thereof, together with any income accruals or other moneys available for distribution among the investors in proportion to their respective participatory interests;
- direct a manager or a trustee or custodian to take any steps, or to refrain from doing or continuing to do any act, in order to terminate or remedy any irregularity or undesirable practice or state of affairs disclosed by an investigation or inspection;
- direct a manager to withdraw from the administration of a collective investment scheme, whereupon the trustee or custodian must in accordance with the registrar's directions, but subject to this Act, arrange for another manager to take over the administration of the collective investment scheme; or
- if a person administers a collective investment scheme in contravention of this Act, apply to the court to have the collective investment scheme wound-up, in which case the court may make any order it considers appropriate for the winding-up of the collective investment scheme.
(2) The registrar may oppose any application in terms of the Companies Act, 1973 (Act No. 61 of 1973), for-
- the winding-up of a manager;
- a judicial management order in respect of a manager; or
- the winding-up of a portfolio of a collective investment scheme in terms of section 102.
(3) Any person who intends to make an application contemplated in subsection (2) must give timely notice of such application to the registrar.
(4) A person who refuses or fails to comply with a request or direction referred to in paragraphs (d), (e), (f) or (g) of subsection ( I ) is guilty of an offence and on conviction liable to a fine or to imprisonment for a period not exceeding one year or to both a fine and such imprisonment.
- if he or she is satisfied that the manager has contravened or failed to comply with any provision of this Act, or with any direction or requirement given or imposed under this Act, and that such contravention or failure has resulted or may result in serious prejudice to the interests of the public or of investors;
- if he or she is satisfied, upon completion of an investigation or inspection in terms of section 14, that the manner in which a manager carries on the business of a collective investment scheme is unsatisfactory or undesirable or not calculated to serve the best interests of its investors;
- if it is apparent that the registration of the manager was obtained through misrepresentation; or
- if a manager is wound-up, either voluntarily or by the court, or may, on any ground referred to in paragraph (a), (b) or (c) suspend the registration of a manager for a period not exceeding 12 months at a time subject to such conditions as the registrar may determine.
(2) The registrar may not cancel or suspend the registration of a manager on any ground contemplated in subsection (1)(a), (b) or (c) unless he or she has-
- notified the manager of his or her intention and of the grounds upon which he or she proposes to do so;
- allowed the manager to make representations to him or her in connection with the proposed cancellation or suspension; and
- afforded the manager a reasonable opportunity to rectify or eliminate the defect, irregularity or undesirable practice.
(3) An application for re-registration as a manager by a company whose registration has been cancelled under this section must be dealt with as if it were its first application for registration.
(4) If the registration of a manager is cancelled in terms of subsection (1)(a), (b) or (c), the provisions of this Act with regard to the continuance or the winding-up of the portfolio of a collective investment scheme or the winding-up of the manager apply: Provided that the registrar may in any such case direct the former manager to defray in whole or in part the expenses incurred in continuing the administration of the collective investment scheme, or in realising any of the assets, and also any remuneration to which a trustee or custodian may be entitled.
(5) If the registration of a manager has been suspended under subsection (1), the manager may not, during the period of suspension, issue any fresh participatory interests, but must, in respect of participatory interests issued, continue the administration of the collective investment scheme and deal with such interests in all respects as it would have been bound to do had its registration not been suspended.
(2) The registrar may summarily take action under this Act against a manager referred to in subsection (1) or condone the failure or inability and afford the manager an opportunity to comply with the relevant provisions within a specified period and subject to such conditions as the registrar may determine.
(3) Irrespective of whether criminal proceedings in terms of this Act have been or are to be instituted against a manager in respect of any failure or inability referred to in subsection (1), the registrar may, by way of a written notice impose upon that manager, in respect of such failure or inability, a fine-
- in the case of any failure or inability to comply with section 88, not exceeding three per cent of the amount of the shortfall for each day on which such failure or inability continues;
- in the case of any failure or inability to comply with any other prudential or supervisory requirement imposed by or under this Act, not exceeding one per cent of the amount of the shortfall for each day on which such failure or inability continues or in the absence of any shortfall, not exceeding one million rand; or
- in the case of any failure to submit to the registrar or any other person, within any period fixed by or under this Act, any statement, report, return or other document or information required by or under this Act to be so submitted, not exceeding R 1 000, or such other amount determined by the Minister for every day during which the failure continues.
(4) A fine imposed under subsection (3) must be paid to the Board within such period as may be specified in the relevant notice, and if the manager concerned fails to pay the fine within the specified period the registrar may by way of civil action in a competent court recover from that manager the amount of the fine.
(2) Any person who, in respect of an audit contemplated in subsection (1), gives information, an explanation or access to records which he or she knows to be false or misleading, is guilty of an offence.
('2) An executive officer of an association must on request furnish the registrar with all notices, minutes and documents which are furnished to the members of the association, and the members of the executive committee or a subcommittee of that committee.
- the registrar has given notice in the Gazette of his or her intention to declare a practice or manner of administration to be irregular or undesirable not less than 30 days before such approval is given and in which notice all interested persons are invited to make representations in writing to the Minister within 21 days from the date of publication of the notice; and
- the registrar has consulted with the advisory committee.
(2) No person may, after 21 days from the date of publication of the notice whereby a practice or manner of administration has been declared to be irregular or undesirable, employ such a practice or manner of administration otherwise than for the sole purpose of fulfilling any obligations entered into before the date of such notice or to comply with any direction by the registrar under subsection (3).
(3) The registrar may in writing direct any person who employed a practice or manner of administration, whether before. during or after the date of the notice referred to in subsection (2), which was declared to be irregular or undesirable, to rectify, in a manner required by the registrar, anything which was caused by or arose out of the employment of that irregular or undesirable practice or manner of administration.
(4) A person who has been directed in terms of subsection (3) to rectify anything, must effect such rectification within seven days after being so directed or within such longer period as the registrar may approve.
(5) A person who-
- contravenes subsection (2); or
- refuses or fails to comply with a direction referred to in subsection (3) or fails to comply with subsection (4), is guilty of an offence and on conviction liable to a fine or to imprisonment for a period not exceeding two years or to both a fine and such imprisonment.
- a manager; or
- any category of persons, from any provision of this Act on such conditions and to such extent as he or she may determine.
- his or her activities in relation to this Act;
- the activities of all managers and associations; and
- all matters relating to the administration of collective investment schemes and analogous schemes.
(2) A report contemplated in subsection (1) must be Tabled in Parliament within 14 days of publication thereof, if Parliament is then in session or, if Parliament is not then in session, within 14 days of the commencement of its next ensuing session.
(2) An application for the issue or renewal of an association licence must be made on the form determined by the registrar and be accompanied by the documents and the fee determined by the registrar: Provided that if a licence is issued after 30 June of a particular year one-half of the annual fee is payable.
(3) A licence expires on 31 December of each year.
- the association is reasonably representative of the interests of the industry;
- the association has sufficient financial resources for performing its functions;
- the proposed rules of the association comply with the requirements of this Act;
- the interests of the public will be served by the issue or renewal of the licence; and
- the members of the association carry on the business of a collective investment scheme independently and in competition with one another.
Refusal of renewal of association licence
(2) A refusal under subsection (1) is of no force unless the registrar has by notice in writing given the association concerned his or her reasons for the intended refusal and an opportunity to show cause within a period specified in the notice why renewal should not be refused.
(2) Cancellation or suspension of a licence under subsection (1) is of no force unless the registrar has by notice in writing given the association concerned his or her reasons for the intended cancellation or suspension and an opportunity to show cause within a period specified in the notice why its licence should not be cancelled or suspended.
(2) Stoppage or suspension referred to in subsection ( I )(u) may not be effected by the executive committee where the member concerned has not had the opportunity of making representations to the executive committee in support of the continued performance of an activity.
(3) In the case of-
(4) (a) Whenever the registrar considers it desirable in the public interest, he or she may, after consultation-
(b) Subsections (2) and (3) apply to the exercise of the powers referred to in paragraph (a), and in such application a reference therein to an executive committee or an executive officer, as the case may be, is construed as a reference to the registrar.
(2) The court may, on good cause shown, vary or revoke a declaration made under subsection (1).
(3) The registrar of the court or the clerk of the court which has made a declaration under subsection (1) or varied or revoked a declaration under subsection (2), must as soon as possible notify the registrar and the association concerned thereof.
(4) A declaration made under subsection (1) in respect of a member does not affect any right of an executive committee to take disciplinary action in terms of the rules against the member.
(2) Subject to subsection (1), the provisions of the Companies Act, 1973 (Act No. 61 of 1973), relating to the voluntary winding-up of companies, apply with the necessary changes to the voluntary dissolution of an association.
(3) The liquidator of an association must-
(4) When the affairs of an association have been completely wound up, the Master of the High Court must send a certificate to that effect to the registrar, who must cancel the association's licence, and thereupon the association is dissolved.
(2) (a) Subject to the provisions of subsection (1), the provisions of the Companies Act, 1973 (Act No. 61 of 1973), relating to the winding-up of companies by the court apply with the necessary changes to an association.
(b) In the application of the provisions of that Act-
(3) An order for the winding-up of an association by the court may only be made if the court is satisfied that it is undesirable that an association be placed under judicial management.
(2) Subject to section 37, the provisions of the Companies Act, 1973 (Act No. 61 of 1973), relating to the judicial management of companies apply with the necessary changes to an association.
(2) Only a company which-
(3) A person who contravenes subsection (1) is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years or to both a fine and such imprisonment.
(2) The registrar may call upon any applicant which has applied for registration under subsection (1) to furnish him or her with any further information which is relevant to the application.
(3) If the registrar is satisfied-
(4) The registrar may not register any company as a manager under this section unless he or she is satisfied that such company-
(2) The registrar may by notice require a manager to terminate the appointment of a director or officer of that manager, if the director or officer is not fit and proper to hold the office in question.
(3) When the registrar intends to act as contemplated in subsection (2), the registrar must give notice to the manager, and, unless it is impracticable to do so, the director or officer concerned, of the registrar's intention and the reasons therefor, and the director or officer must thereupon cease to perform the functions of the office in question pending the final outcome of any appeal under section 24.
(2) When a manager is unable to determine a market price for a security, whether listed on an exchange or not, for the purposes of a collective investment scheme in securities, a fair market price for such security must, at the request of such manager, be determined by a stockbroker who is a member of a licenced exchange.
(3) If such manager does not agree with the price determined by the stockbroker, it must refer the matter to the committee of the exchange concerned, which thereupon must determine the fair market price for such security.
(ii) non-equity securities are securities to which the manager has applied the due diligence guidelines for issuers determined by the registrar;
(ii) equity securities are securities listed on an exchange to which the manager has applied the due diligence guidelines determined by the registrar.
(2) The registrar may determine different manners, limits and conditions for different securities or classes of securities or different portfolios of a collective investment scheme in securities.
"collective investment scheme in property" includes a scheme the portfolio of which consists of property shares, immovable property, assets determined under subsection (2) or any investment permitted under section 49;
"fixed property company" means a company all the issued shares of which are included in a portfolio, and the principal business of which consists in the acquisition and holding of(a) urban immovable property, any undivided share or interest therein or leasehold in respect thereof; and (b) such other immovable property, any undivided share or interest therein or leasehold in respect thereof, as the registrar may have approved;
"property shares" means shares in and of(a) a fixed property company; or (b) a holding company which has no subsidiaries other than fixed property companies which are wholly owned subsidiaries as referred to in section 1(5) of the Companies Act, 1973 (Act No. 61 of 1973); and
"urban immovable property" means any piece of land registered as an erf, lot or stand in a deeds registry, including the office of the Rand Townships Registrar, which erf, lot or stand is situated in a township as defined in section I of the Advertising on Roads and Ribbon Development Act, 1940 (Act No. 21 of 1940), and, for purposes of section 49, any piece of land registered as an erf, lot or stand, in a foreign deeds registry.
(2) The registrar may, for the purposes of this Part determine assets, other than those referred to in the definition of "collective investment scheme in property", which may be included in a portfolio of a collective investment scheme in property.
(2) Only a company which-
(3) A person who contravenes subsection (1) is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years or to both a fine and such imprisonment.
(2) Chapter V of the Companies Act, 1973 (Act No. 61 of 1973), applies to the repurchase of a participatory interest by a collective investment scheme in property and for the purposes of this subsection, "shares" as referred to in that Chapter, are regarded as including participatory interests in a collective investment scheme in property.
"collective investment scheme in participation bonds" means a scheme, the portfolio of which, subject to the provisions of this Act, consists mainly of assets in the form of participation bonds, and in pursuance of which members of the public are invited or permitted to acquire a participatory interest in all the participation bonds included in the scheme;
"nominee company" means a nominee company, which has been approved by the registrar and which-
has appointed directors responsible for the management and control of the nominee company of whom more than 50 per cent are independent from the manager or its holding company or subsidiary of such holding company or fellow subsidiary of such manager;
"participant" means a person who holds a participatory interest in all the participation bonds included in a collective investment scheme in participation bonds;
"participation bond" means a mortgage bond over immovable property-
"principal debt" means the cash amount in money actually received by or on behalf of the mortgagor in terms of the money lending transaction secured by a participation bond; and
"rules" means the rules referred to in subsection (2).
(2) The registrar may, for the purposes of this Part, make rules, which are consistent with this Act, for the administration of a collective investment scheme in participation bonds.
(3) Such rules do not have the force of law until published by notice in the Gazette.
(2) Only a company which has capital and reserves as determined in terms of section 88 available for employment in its collective investment scheme may be or remain registered as a manager under this Part.
(3) A person who contravenes a provision of subsection (1) is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years or to both a fine and such imprisonment.
(2) (a) A manager of a participation bond scheme which has been exempted by the registrar of unit trust companies in terms of section 37(2)(a) of the Unit Trusts Control Act, 1981 (Act No. 54 of 1981), and a nominee company approved by that registrar in terms of that section, is regarded as from the date of the commencement of this Part to be registered as a manager or approved as a nominee company, as the case may be, under this Part.
(b) The registrar must issue to a manager referred to in paragraph (a) a certificate of registration in terms of this Act.
(3) Within 90 days after the commencement of this Part, the manager must exchange participations in a participation bond registered in terms of the Participation Bonds Act, 1981, for a participatory interest of equal value in a collective investment scheme in participation bonds in terms of this Part.
(4) Sections 42 and 43 apply, to the extent in which they can be applied, in respect of a manager of a collective investment scheme in participation bonds.
(2) When acting as a principal in respect of a transaction which is subject to the provisions of any other law the manager is entitled to charge such finance charges as may be charged in terms of the said law in connection with a money lending transaction.
(2) The names of the participants need not be listed in a participation bond.
must be registered in the name of the nominee company as nominee for or representative of the participants, and any contract relating to such security must be drawn and executed in favour of the nominee company as nominee for or representative of the participants.
(2) Despite any contrary law, a contract of suretyship relating to a debt secured by a participation bond and accepted by a manager subject to subsection (1), is enforceable by the nominee company in its own name against the surety on behalf of the participants.
(3) Sections 56(2), 57, 58, and 59 apply with the necessary changes to the extent to which they can be applied, in respect of collateral security accepted by a manager for the purposes referred to in subsection (1), and a reference to a participation bond is construed so as to include a reference to a participation bond and collateral security, and a reference to a mortgagor is construed so as to include a reference to a mortgagor and the grantor of collateral security.
(4) This section applies with the necessary changes to any collateral security accepted before 21 June 1978 by the manager for the purposes referred to in subsection (1) and in respect of which the contract or arrangement or other document containing the terms and conditions thereof was in force at that date.
"declared collective investment scheme" means a collective investment scheme other than a collective investment scheme in securities, property or participation bonds, which has been declared to be a collective investment scheme under section 63.
(2) The Minister may for the purposes of subsection (1)-
(2) A scheme approved in terms of subsection (1) must, for the purposes of section 15A of the Financial Services Board Act, 1990 (Act No. 97 of 1990), be regarded as a financial institution and the provisions of that section apply, with the necessary changes required by the context, to such a scheme.
(3) A person who solicits investments in a foreign collective investment scheme which is not approved in terms of subsection (1) is guilty of an offence and liable on conviction to a fine or imprisonment for a period not exceeding five years or to both a fine and such imprisonment.
(2) Notice may not be served in terms of subsection (1) unless-
(3) A notice must-
(4) A notice in terms of subsection (1) may suspend, disqualify, restrict or partially restrict the administration of a collective investment scheme by a person and may provide for-
(5) A partially restrictive notice may prohibit a manager from-
(6) For the purposes of this section a person or manager is connected with a foreign country or the Republic, as the case may be, if-
(2) A person may not become or act as a trustee or custodian unless that person is registered as such under section 69.
(3) When the appointment of a trustee or custodian is terminated, otherwise than as contemplated in section 69(3), that trustee or custodian must as soon as possible submit a report to the registrar stating-
- whether any irregularity or undesirable practice is contemplated, has taken place or is taking place in the conduct of the affairs of the collective investment scheme which has caused or is likely to cause financial loss to investors in a portfolio of the collective investment scheme;
- particulars of any such irregularity or undesirable practice; and
- the reason, if known, for the termination of the appointment.
(4) A trustee or custodian intending to retire from an appointment in terms of this section, must give to the manager and to the registrar not less than six months' notice of such intention, and during the said period of six months the manager concerned must take steps to appoint as trustee or custodian some other person competent to act as such in terms of section 69.
(5) If a manager fails to take the steps mentioned in subsection (4) within the said period of six months, the registrar may, after consultation with the manager, direct the manager to appoint as trustee or custodian a competent person nominated by the registrar.
(6) (a) When it is impracticable for a trustee or custodian to perform any or all its duties under section 70, the trustee or custodian may appoint a representative which is independent from the manager and any of its agents, to perform such duties.
(b) A trustee or custodian of a collective investment scheme who has appointed a representative under paragraph (a), is not divested of the functions referred to in that paragraph.
Qualifications and registration of trustee or custodian
- a public company under the Companies Act, 1973 (Act No. 61 of 1973);
- a company or institution incorporated under a special Act, excluding a close corporation referred to in the Close Corporations Act, 1984 (Act No. 69 of 1984);
- an institution or branch of a foreign institution which is entitled to carry on the business of a bank under the Banks Act, 1990 (Act No. 94 of 1990); or
- an institution which is registered as an insurer under the Long-term Insurance Act, 1998 (Act No. 52 of 1998).
(2) A company or institution referred to in subsection (1) may not become or act as a trustee or custodian unless it-
- maintains capital and reserves together amounting to not less than 10 million rand; and
- has been registered by the registrar as a trustee or custodian.
(3) (a) The registrar may not register any company or institution as a trustee or custodian under this section unless he or she is satisfied that-
- the company or institution is not, in relation to the manager, either a holding company or a subsidiary or fellow subsidiary company within the meaning of those terms as defined in the Companies Act, 1973 (Act No. 61 of 1973); and
- the general financial and commercial standing and independence of the company or institution is such that it is fit for performing the functions of a trustee or custodian and that the company or institution is by reason of the nature of its business sufficiently experienced and equipped to perform such functions.
(b) The registrar may revoke or suspend any such registration already granted if at any time thereafter he or she ceases to be satisfied that the requirements contained in paragraph (a) are met by the trustee or custodian.
(4) Any person who contravenes subsection (1) or (2) is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding one year or to both a fine and such imprisonment.
(5) The registrar must, before revoking or suspending a registration in terms of subsection (3)(b), notify the trustee or custodian concerned of the grounds upon which such action is contemplated against it, and must give it a reasonable opportunity of showing cause why the proposed action should not be taken.
(6) The trustee or custodian has the right to present its case verbally to the registrar and in doing so to be represented by any other person.
Duties of trustee or custodian
(2) A trustee or custodian must report to the manager any irregularity or undesirable practice, whether declared in terms of section 21 or not, concerning the collective investment scheme of which it is aware and if steps to rectify the irregularity or practice in question are not taken to the satisfaction of the trustee or custodian, it must as soon as possible report such irregularity or undesirable practice to the registrar.
(3) The trustee or custodian must satisfy itself that every income statement, balance sheet or other return prepared by the manager in terms of section 90 fairly represents the assets and liabilities, as well as the income and distribution of income, of every portfolio of the collective investment scheme administered by the manager.
(4) At the request of the trustee or custodian, every director or employee of the manager must submit to the trustee or custodian, any book or document or information relating to the administration by the manager of its collective investment scheme which is in his or her possession or at his or her disposal, and which the trustee or custodian may consider necessary to perform its functions.
(5) A person may not interfere with the performance by a trustee or custodian of its functions.
(6) A trustee or custodian of a collective investment scheme which fails to perform any of its duties referred to in this section, is guilty of an offence.
(2) No director or employee of a manager, trustee or custodian and no firm of which any such director or employee is a member, may be appointed as an auditor of a collective investment scheme.
(3) A manager must within 30 days from the date of appointment of an auditor apply to the registrar for approval of such appointment.
(4) The registrar may withdraw a prior approval of the appointment of an auditor.
(5) An auditor who has been removed by a manager from his or her office as auditor, must inform the registrar thereof.
(2) The auditor must-
(3) When the auditor of a collective investment scheme has conducted an audit in terms of subsection (2), he or she must report to the manager that the accounting records and the annual financial statements have been examined in accordance with generally accepted auditing standards and in the manner required by this Act and state whether in his or her considered opinion it fairly presents the financial position and the results of the operations of the manager and its collective investment scheme.
(4) If the auditor is unable to make such a report or to make it without qualification, he or she must include in his or her report a statement explaining the facts or circumstances which prevented him or her from making his or her report or from making it without qualification.
(5) The auditor's report under subsection (3) must, unless all the members present agree to the contrary, be read out at the annual general meeting of the manager.
(6) An auditor who fails to perform any of the duties referred to in this section, is guilty of an offence.
(2) For purposes of this section a report is of material significance to the registrar if it deals with a matter which, because of its nature or potential financial impact has caused or is likely to cause financial loss to the scheme or any of its investors or creditors.
(3) An auditor who fails to perform any of the duties referred to in this section, is guilty of an offence.
"applicable date", in relation to a conversion of a collective investment scheme, means the date of the conversion;
"collective investment scheme" includes one or more portfolios under such scheme and may, depending on the structure of the scheme, include a manager;
"conversion" means a conversion of a collective investment scheme to any other format of a collective investment scheme permissible under this Act;
"conversion scheme" means a scheme regulating a conversion and governing the reciprocal rights and obligations of the parties to the conversion;
"qualifying interest", in relation to a collective investment scheme which is converted, means any participatory interest in such scheme which was issued before the applicable date.
(2) A conversion scheme must-
(2) An application referred to in subsection (1) must be accompanied by the following documents in duplicate, namely-
(3) A manager must furnish the additional particulars in connection with the conversion that the registrar may require.
(2) (a) For the purposes of considering the basis and conditions on which a participatory interest in any proposed collective investment scheme is offered to investors or to investors and members of the public referred to in section 76(2)(c) the registrar may, after consultation with the manager, designate a person to investigate and advise him or her, on the reasonableness and fairness of the proposed basis and conditions.
(b) The costs of an investigation in terms of paragraph (a) must be paid by the manager.
(3) The registrar may not refuse an application without having afforded the manager a reasonable opportunity to amend the relevant document in accordance with the registrar's requirements.
(2) If the investors pass a resolution authorising the conversion, the registrar must, at the request of the manager, issue a certificate to the manager confirming the registrar's approval of the conversion.
(2) The Registrar of Companies may not register the memorandum and articles of association of a company contemplated in this section unless the application is accompanied by a certificate issued in terms of section 82(1).
(3) For the purposes of the registration of the memorandum and articles of association of any such company in terms of the Companies Act, 1973 (Act No. 61 of 1973), the persons referred to in section 78(2)(e) must, if they accept their appointment as the first directors of the company, sign the memorandum and articles of association as if they were the subscribers of such company as contemplated in section 54(2) of the Companies Act, 1973.
(2) The registrar must give notice in the Gazette of any conversion and the applicable date of a conversion in terms of this Part.
(2) Except in so far as this section provides otherwise, a conversion does not derogate from the obligations of the collective investment scheme or the rights of any creditor of the collective investment scheme before the conversion.
(2) The provisions of the Companies Act, 1973 (Act No. 61 of 1973), with respect to the issue of a prospectus or an offer of shares, do not apply to an offer referred to in subsection (1).
(3) Upon a request made in writing by an investor holding a qualifying interest to a manager, (except a manager of a collective investment scheme in property) to apply the proceeds of such interest for the payment of a participatory interest in a converted collective investment scheme-
such proceeds may be applied for the payment of such participatory interest.
(2) A manager may, subject to section 95, lend or offer to lend assets included in a portfolio in the manner, within the limits or on the conditions determined in the deed.
(3) Different manners, limits and conditions for different assets or portfolios may be determined or provided for under subsection (1) or (2).
(2) The registrar may on such conditions as he or she may determine approve the application of a manager to conduct other business, if the investors in the collective investment scheme administered by the manager are not likely to be prejudiced.
(2) The registrar may exempt the managers of a particular category of collective investment schemes from any or all the requirements referred to in subsection (1) and determine capital requirements for such managers.
(3) The registrar may exempt a manager from compliance with the requirements of this section for such period, not exceeding six months, and on such conditions as he or she may lay down.
(4) A manager who ceases to comply with subsection (1), and who has not been exempted under subsection (3), must, within 30 days notify the registrar in writing to that effect.
(2) A manager who, immediately before the commencement of this Act, was a management company registered under any law repealed by this Act, must within 60 days after such commencement comply with the capital requirement determined under section 88.
(2) A manager must, not later than 90 days after the close of the financial year of every portfolio of the collective investment scheme administered by the manager, send to every investor in such portfolio a report relating to the portfolio containing the information determined by the registrar.
(3) Copies of the financial statements, other statements or information referred to in subsections (1) and (2) must be kept available at every office of the manager or of its authorised agents for inspection during ordinary office hours by any investor in the collective investment scheme concerned or other person interested in investing in a participatory interest in such scheme.
(4) A manager must, in the manner determined by the registrar, lodge with the registrar-
- copies of all advertisements, brochures, pamphlets, circulars and announcements published or proposed to be published by the manager or any of its authorised agents, and of all proposed additions thereto and variations thereof, signed and certified, in the manner determined by the registrar, by or on behalf of the directors of the manager, unless the manager is exempted from such an obligation by the registrar;
- a copy of every return or notice which the manager is required to furnish to the Registrar of Companies under section 216(2) of the Companies Act, 1973 (Act No. 61 of 1973).
Exercise of voting power by manager
(2) Amounts other than those referred to in subsection (1) may not be deducted by a manager from a portfolio unless determined by the registrar.
(b) Where participatory interests in a new portfolio are offered to the public for the first time the manager may make an initial offer-
(2) In making payment to the investors in a portfolio of a distribution of income accruals on the participatory interests belonging to them, a manager may round off to the nearest one cent, any amount so paid in respect of such number of participatory interests as represents the minimum number which, in terms of the portfolio's deed, must be purchased at any one time, but any amount which, by virtue of such rounding-off, is left in the portfolio, must be carried forward to the credit of investors in the next ensuing distribution.
(2) A manager, other than a manager of a collective investment scheme in securities, may for the account of a portfolio borrow money for the purposes and subject to the limits and conditions determined in the deed.
(2) The registrar may by notice in the Gazette exempt a particular type or category of collective investment schemes from the provisions of subsection (1) and determine the matters to be complied with or to be provided for in a deed by such type or category of collective investment schemes.
(3) The registrar may by notice in the Gazette suspend a provision of any deed and determine the matters to be complied with or suspend such a provision and determine matters in respect of which any deed must be amended.
(2) (a) The parties to a deed may by supplemental deed amend a deed but no amendment of a deed is valid unless the consent thereto of a majority in value of investors has been obtained in the manner prescribed in the deed.
(b) If the registrar is satisfied that any such amendment-
(3) Subject to subsection (2), a deed which immediately prior to the date of commencement of this Act was a deed in terms of any law repealed by this Act, must within 12 months from the date of commencement of this Act be amended, supplemented or replaced in order to comply fully with the requirements of this Act.
- (a) investors holding a majority in value of participatory interests in each collective investment scheme or portfolio (hereinafter referred to as an original scheme or portfolio) to which a proposed amalgamation, cession, transfer or take- over refers; and
- the registrar, granted on such conditions as he or she in writing may determine.
(2) A copy of the transaction (hereinafter referred to as the proposed transaction) whereby the proposed amalgamation, cession, transfer or take-over is to be effected and such other particulars as may be necessary to enable the registrar to exercise his or her powers under this section, must be submitted to the registrar by the parties to the proposed transaction.
(3) The registrar may grant his or her consent under subsection (1)(b) only if he or she is satisfied that-
- every investor, of whose address the manager is aware, in an original scheme or portfolio has been furnished in writing, within a reasonable period before the date determined by the registrar, with particulars of the proposed transaction and of the procedure which the parties concerned intend to follow, so as to ensure that every such investor shall, on the date on which the proposed transaction becomes effective, hold in the new scheme or portfolio such participatory interests with an aggregate money value which is not less than the lower of the nett asset value or market value, as may be fair and reasonable in the circumstances, of the participatory interests which such investor, immediately before the date on which the proposed transaction becomes effective, held in an original scheme or portfolio;
- the proposed transaction will not be detrimental to any investor in an original scheme or portfolio; and
- investors holding a majority in value of participatory interests in an original scheme or portfolio have consented to the proposed transaction.
(4) When a proposed transaction becomes effective-
- the provisions of the deed of the new scheme or portfolio or of the scheme or portfolio which acquired rights by amalgamation, cession, transfer or take-over bind the investors in an original scheme or portfolio;
- all the assets of an original scheme or portfolio vest in and form part of the new scheme or portfolio or, as the case may be, the scheme or portfolio which acquired such assets by amalgamation, cession, transfer or take-over;
- the provisions of the deed of the new scheme or portfolio or of the scheme or portfolio which acquired rights by amalgamation, cession, transfer or take-over, apply to the assets referred to in paragraph (b) and to any income accruals or other benefits which accrue therefrom to investors; and
- an investor in an original scheme or portfolio acquires participatory interests in the new scheme or portfolio or in the scheme or portfolio which acquired rights by amalgamation, cession, transfer or take-over, having the same aggregate money value as that of the participatory interests held, immediately before the date on which the proposed transaction became effective, by such investor in an original scheme or portfolio.
(5) If a proposed transaction becomes effective, every Registrar of Deeds-
- in whose deeds registry property or other rights are registered in the name of or in favour of an original scheme or portfolio;
- on production to him or her of a certificate in which the registrar states that
- he or she in terms of subsection (1)(b) has granted consent to the proposed transaction; and
- the amalgamation, cession, transfer or take-over in question has been carried out properly; and
- on production to him or her of the title deed or other deed or document in question, must, on such title deed or other deed or document and in his or her registers or other books, make such endorsements and entries as may be necessary as a result of the said amalgamation, cession, transfer or take-over to effect or record the transfer of the said property or other rights to the new scheme or portfolio or, as the case may be, to the scheme or portfolio acquiring rights by means of the amalgamation, cession, transfer or take- over in question.
(6) Except in so far as this section provides otherwise, an amalgamation, cession, transfer or take-over in terms of this section does not derogate from the rights of any creditor or any obligation relating to an original scheme or portfolio.
(7) No transfer or stamp duty or registration or other fees are payable in respect of any endorsement or entry made in terms of subsection (5), and no stamp duty or other fees are payable in respect of the issue of a substituting participatory interest or the transfer of assets as a result of any amalgamation, cession, transfer or take-over in terms of this section.
Contents of price list, advertisement, brochure and similar document
(2) Any reference in any price list, advertisement, brochure or similar document published by a manager or by any of its authorised agents, to the yield to be derived from any participatory interest offered for sale by the manager, must be confined-
(3) If, in any price list, advertisement, brochure or similar document published by a manager or by any of its authorised agents, it is stated that investors in a portfolio of the collective investment scheme are entitled to participate in its profits, there must also be stated what amount was so distributed during the previous financial year, expressed as a percentage of the aggregate market value, as at the close of that year, of all assets then held on behalf of investors in that portfolio.
(4) There must be included in every price list, advertisement, brochure or similar document published by a manager or by any of its authorised agents in which participatory interests are commended to the public, a statement in clear and unambiguous terms, to the effect that the value of participatory interests in a portfolio is subject to fluctuation from time to time relative to the market value of the assets comprised in the portfolio: Provided that the registrar may, subject to such conditions as he or she may deem fit, exempt a manager or any such agent from the provisions of this subsection in relation to any advertisement or any particular type of advertisement which is of such a nature that it would be unreasonable to require the manager or such agent to comply with this subsection.
(2) Whenever a manager has changed its principal office or has appointed a new public officer, it must within 30 days from such change or appointment give notice in writing thereof to the registrar.
(3) Process in any legal proceedings against a manager may be served at the principal office of the manager, and if such office is no longer in existence, service upon the registrar is deemed to be service upon the manager.
(2) Despite subsection (1), any competent division of the court may, on the application of a manager, trustee or custodian, order any such portfolio to be wound-up if the court is satisfied that to do so would be in the interest of investors in that portfolio.
(3) Upon the winding-up of a portfolio in terms of this section the manager must under the control and supervision of the trustee or custodian realise all the assets of such portfolio as soon as possible having regard to the interest of investors, but the manager incurs no liability by reason of the exercise in good faith of its discretion as to the time of realisation of any assets unless the discretion is exercised in a grossly negligent manner.
(4) The net proceeds of the realisation of such assets must be deposited in the trust account referred to in section 105 and must under the control and supervision of the trustee or custodian be distributed by the manager or the trustee or custodian, as the case may be, amongst the investors and the manager in proportion to their respective participatory or other interests in the portfolio.
(5) Pending the realisation of the assets in such winding-up the manager, trustee or custodian must on behalf of the collective investment scheme collect all income accruals in respect of such portfolio and must deposit and distribute the amounts collected in the manner prescribed in subsection (4).
(6) Despite the provisions of the Companies Act, 1973 (Act No. 61 of 1973), this section and sections 103 and 104 of this Act must be applied to the winding-up of a portfolio of an open-ended investment company and none of the assets of a portfolio administered by such a company may be utilised for the payment of any claim of a creditor of the company.
(2) A manager, trustee or custodian acting in accordance with a direction of the registrar given in terms of subsection (1) may terminate his or her functions as manager, trustee or custodian on giving six months' notice in writing to the registrar, and the registrar may thereupon appoint some other fit and proper person to take over the functions of the manager, trustee or custodian, subject to such conditions as the registrar may stipulate.
(3) As remuneration for any services rendered in terms of this section a manager, trustee or custodian or a person appointed by the registrar to take over the functions of a manager, trustee or custodian is entitled to a fee, calculated at such rate as the registrar may determine, on all moneys received by him or her in carrying out his or her duties under this section, and the registrar may authorise the amount of such fee to be deducted, in such proportions as he or she may determine, from income accruals or any moneys realised by the sale of assets in terms of this section.
(2) Funds deposited into an operational trust account referred to in subsection (1) may only be withdrawn for the purposes of making payment-
(3) Any excess remaining in the operational trust account after payment of or provision for all claims of investors whose funds have, or should have been deposited in such account, is not trust property as determined in section 71.
(4) The division of the court having jurisdiction over a manager may, on application by an association, the registrar or by any other person having a financial interest in or claim against an operational trust account, on good cause shown, prohibit such manager from operating such account in any way and may appoint a curator to control and administer such account with such duties and powers in relation thereto as the court may deem fit.
(b) The defences applying to an action for damages in respect of a breach of a statutory duty are available to any defendant in an action contemplated in paragraph (a).
(2) A person who contravenes a provision of section 106 or 107 is liable to pay damages to any other person who, by dealing in or purchasing a participatory interest, suffers a loss as a result of the difference between the price at which the dealing takes place and the price at which it is likely to have taken place if the contravention had not occurred.
(3) The amount of damages for which a person is liable in terms of subsection (2) is limited to twice the profit gained or likely to be gained, or loss avoided or likely to be avoided, by him or her as a result of the relevant contravention.
(4) An action contemplated in subsection ( I ) or (2) does not lie after the expiration of a period of three years commencing-
(5) The registrar may bring an action in a competent court in the name of, and for the benefit of, an investor or a specific group of investors for recovery of damages for a loss referred to in subsection (2).
(6) Nothing contained in this section affects any liability which a person may incur under the common law or any other law but any damages previously awarded in terms of this section which arise from the same cause must be taken into consideration for purposes of any further claim referred to in this subsection.
(2) (a) Sections 85 to 89 of the Companies Act, 1973, do not apply to an open-ended investment company.
(b) Chapter VI of the Companies Act, 1973, does not apply to any offer of participatory interests to members of the public or to investors by an open-ended investment company or a foreign collective investment scheme approved in terms of section 65.
(3) In the application of section 357 of the Companies Act, 1973 (Act No. 61 of 1973), to a manager, the registrar is regarded as having been included amongst the persons to whom notice is required to be given under subsection (1)(b) of that section.
(4) In the application of section 427(2) of the Companies Act, 1973, to a manager, section 346(4)(x) of that Act must be construed as if the words "or to the Registrar of Collective Investment Schemes appointed under the Collective Investment Schemes Control Act, 2002", had been inserted in that section after the words "shall be lodged with the Master".
(5) The registrar may, in respect of any manager being wound-up or judicially managed, in writing direct the liquidator or the judicial manager, as the case may be, to furnish him or her with a copy of any particular account, return, statement or other document which the liquidator or the judicial manager is required under any provision of the Companies Act, 1973, to furnish to the Registrar of Companies or the Master, or to furnish him or her from time to time with copies of all or any of such accounts, returns, statements or documents as and when they are furnished to the said Registrar or to the Master.
(6) Immediately after the confirmation of the final account in the winding-up of a manager, the Master of the High Court concerned must give the registrar notice thereof.
(2) An association rnay-
(3) The registrar may-
(4) Any delegation under subsection (1), (2)(a) or (3)(a) does not prohibit the exercise of the power in question by the Minister, association or registrar, as the case may be.
(2) The Minister may make different regulations-
(3) The registrar may, for the purposes of this Act, by notice in the Gazette determine-
(4) The registrar may issue different notices-
(5) Any matter which the registrar may or must determine in terms of this Act must be determined by notice in the Gazette.
(6) Fees which are by virtue of a provision of this Act payable, and interest so payable in respect of overdue fees, are a debt due to the Board and may be recovered by the registrar by action in any competent court.
(7) A regulation may provide for penalties for a contravention thereof or failure to comply therewith.
(2) Anything done under any provision of a law repealed or amended by subsection (1), and which could be done under a provision of this Act, is regarded as having been done under the last-mentioned provision.
(3) (a) A management company or a trustee which immediately before the date of commencement of this Act was registered as such under the Unit Trusts Control Act, 1981, is regarded, from the date of such commencement as being registered as a manager or trustee under this Act.
(b) The registrar must issue to a manager or trustee referred to in paragraph (a) a certificate of registration in terms of this Act.
A deed must provide for the requirements applicable to the administration by a manager of a collective investment scheme in property and must, amongst others and as far as applicable, contain provisions regarding the following matters:
|
No. and year |
Short title |
Extent of repeal or amendment |
| Act No. 54 of 1981 | Unit Trusts Control Act, 1981 | Repeal of the whole |
| Act No. 55 of 1981 | Participation Bonds Act, 1981 | Repeal of the whole |
| Act No. 51 of 1988 | Financial Institutions Amendment Act, 1988 | Repeal of sections 8 to 17 |
| Act No. 64 of 1990 | Financial Institutions Amendment Act, 1990 | Repeal of section 12 |
| Act No. 97 of 1990 | Financial Services Board Act, 1990 | Amendment of section 1 by the substitution in the definition of "financial institution" for subparagraph (iii) of para- graph (a) of the following subparagraph: "(iii) a collective investment scheme as defined in section 1 of the Collective Investment Schemes Control Act, 2002, a manager, trustee or custodian registered in terms of that Act, and an authorised agent of such a manager." |
| Act No. 54 of 1991 | Financial Institutions Amend- ment Act, 1991 | Repeal of sections 5 to 8 |
| Act No. 83 of 1992 | Financial Institutions Amend- ment Act, 1992 | Repeal of section 30 |
| Act No. 7 of 1993 | Financial Institutions Amend- ment Act, 1993 | Repeal of section 6 |
| Act No. 104 of 1993 | Financial Institutions Second Amendment Act, 1993 | Repeal of sections 39 to 49 |
| Act No. 53 of 1996 | Unit Trusts Control Amend- ment Act, 1996 | Repeal of the whole. |
| Act No. 12 of 1998 | Unit Trusts Control Amend- ment Act, 1998 | Repeal of the whole. |
(bb) that the membership of a member may not be suspended or terminated unless he or she has been informed of the reasons for such suspension or termination and has had an opportunity of making representations to the executive committee, and that a person who has so made representations to the executive committee is entitled to be supplied with a copy of a record of the meeting at which his or her representations were considered;
(bb) for the furnishing by members of an association to their investors of other information in respect of the business conducted by the members on behalf of investors;
(aa) for the recording of the transactions effected by the members of an association, their investors and trustee or custodian;
(bb) for the separation of a client's funds and other corporeal or incorporeal things from the assets of the member;
(cc) for prohibition of the use of funds belonging to one investor to finance the dealings of another investor;
(dd) for prohibition of the use of an investor's funds in operating the member's own business; and
(ee) that a member who buys a participatory interest from an investor or sells any participatory interest to an investor on his or her own account, must notify the investor concerned in advance that such participatory interest was bought or sold by the member for its own account;
(bb) for the stoppage or suspension of the administration of a collective investment scheme or any part thereof by a member of an association or the quotation of prices in respect of such administration; and
(cc) for the application of new or amended conditions imposed by an executive committee of an association upon the carrying on of existing business;
(bb) that every member must contribute to such fund.
(b) No amendment (other than a suspension) of the rules is valid, unless -
(c) The registrar must, after considering any objection contemplated in paragraph (f), approve or disapprove an amendment referred to in paragraph (b) within a period of 60 days after expiry of the period referred to in paragraph (f).
(d) If the registrar does not disapprove of an amendment referred to in paragraph (b) within a period of 60 days after expiry of the period referred to in paragraph (f), the registrar is regarded as having approved it and such amendment comes into operation on the day immediately following upon the date of expiry of the aforesaid period of 60 days.
(e) Upon receipt of an application for approval in terms of paragraph (b), the registrar must cause to be published at the expense of the association in English and any one other official language in the Gazette a notice setting forth the proposed amendment.
(f) The said notice must call upon all interested persons (other than members of the association concerned) who have any objection to the proposed amendment to lodge their objection with the registrar within a period of 30 days from the date of publication of the notice in the Gazette.
(b) The rule contemplated in paragraph (a) may also specify that full particulars regarding the imposition of a penalty must be published and that any member, officer or employee who contravenes or fails to comply with a rule may be ordered to pay the costs incurred in the investigation or hearing in question.
(b) Items 3 and 4 apply in respect of any contravention of or non-compliance with a directive.
The Collective Investment Schemes Control Bill ("the Bill") will replace two existing Acts, namely the Unit Trusts Control Act, 54 of 1981, and the Participation Bonds Act, 55 of 1981. This Bill will provide a comprehensive legislative framework to regulate and supervise the collective investment industry based on internationally accepted principles and best practice.
The Bill will provide a modern legislative framework for the equity unit trust, property unit trust and participation mortgage bond scheme industries in line with international best practice. These products represent significant savings vehicles in South Africa as reflected in the following statistics as at 30 June 2001:
|
South African Unit trusts |
Foreign cis's |
Property unit trusts |
Participation bond schemes |
|
|
Assets under management |
8133,8 bn
|
R57,ibn*
|
R4,9 bn
|
R3,9 bn
|
| Schemes |
29 |
67
|
6
|
17
|
|
Portfolios |
372
|
314
|
8
|
-
|
| Number of investors |
2 000 000
|
N/A
|
N/A
|
83 346
|
"* S. A. residents only"
Source : Financial Services Board
N/A-Not available
The first legislation for the regulation and supervision of the unit trust industry was promulgated in 1947 and has been amended several times in an attempt to keep abreast of developments within the industry and the needs of investors. To enable local industry to become more competitive, to remain competitive and to upgrade regulation and supervision of the industry, the revision of the current legislation has become necessary and in the public interest.
The Policy Board for Financial Services and Regulation, in its review of the regulatory framework for financial services industries, amongst others, proposed that all forms of collective investment schemes should be regulated by one act. This Act must also provide for the establishment of new structures, which is not possible in the context of current legislation. The Association of Unit Trusts of South Africa ("AUT") conducted a survey of opinion of the unit trust industry, the South African regulatory authorities as well as other related institutions. The AUT reviewed the legislation and regulatory approaches of selected international authorities and the principles thereof. Workshops were held on the topic. The AUT, in consultation with the Financial Services Board, compiled a document setting out the principles within which the drafting of the legislation should take place. Subsequently a committee, representative of the Financial Services Board, consumers and the industry, was appointed which prepared the Bill.
The Bill therefore provides for:
The Financial Services Board and the AUT believe that there is an urgent need for the introduction of the proposed legislation and that there are notable benefits to be gained for the South African economy as a whole. Some of these reasons are:
These reasons are dealt with in more detail below.
The relaxation of exchange control and the integration of international financial markets have resulted in a significant increase in the investment options available to local investors in foreign jurisdictions and has furthermore been expanded by the numerous foreign financial institutions which are now actively soliciting investments from local investors. There is no quantitative data to show cross border market penetration in South Africa by value but the current structure, which limits unit trusts, to trust based vehicles only can be seen as a severe hindrance for local industry to compete efficiently with foreign competitors.
The proposed Bill therefore does not only set a regulatory framework which permits a diversification of trust based collective investment schemes by allowing for more competitive company based collective investment schemes that are now prevalent internationally. It also provides for prudential requirements and for the inclusion, into the regulatory net, of other types of financially based collective investment schemes that are not regulated at the moment.
The combination of trust structure, exchange control and taxation has, furthermore, also driven South African companies to establish off-shore investment companies and apply capital and skill to do business internationally.
It would be sensible to make it worthwhile for all those activities to be carried out in South Africa and to reverse the impression that South Africa is declining more and more as an investment destination.
It is internationally accepted that innovation is not possible within a trust-based collective investment scheme. Open-ended investment company schemes should allow much greater innovation in the collective investment scheme arena. Many such products already exist internationally and are sold to local investors. They are also used offshore by local companies but cannot be sold in South Africa at present. It would be beneficial to South Africa's balance of trade and employment prospects if these products could be designed locally and sold in the domestic and foreign markets.
The Financial Services Board and the AUT believe that the proposed legislation to allow for the diversification of collective investment schemes would serve many worthwhile purposes.
The Bill does not have financial implications for the State.
The National Treasury and the State Law Advisers are of the opinion that this Bill should be dealt with in terms of section 75 of the Constitution since it contains no provision to which the procedure set out in section 74 or 76 of the Constitution applies.