|
|
MINISTRY OF FINANCE
|
|
S.I. No. 99 of 2003
|
|
THE INVESTMENT FUNDS ACT
|
|
(Act No. 20 of 2003)
|
|
The Investment Funds (SMART Fund) Rules, 2003
|
|
In the exercise of
powers conferred by section 5(3) of the Investment Funds Act, 2003,
the Securities Commission of The
Bahamas makes the following rules
-
|
1.
These rules may be cited as
the Investment Funds (SMART Fund) Rules, 2003.
|
Citation.
|
|
|
Interpretation.
|
|
"fund" means investment fund as
defined under the Investment Funds Act, 2003;
|
|
"financial institution", means
a financial institution defined in regulation 2 of the Investment
Funds Regulations, 2003;
|
|
"SFM 001", means SMART Fund
Model SFM 001 licensed under rule 3;
|
|
"SFM 002", means SMART Fund
Model SFM 002 licensed under rule 4;
|
|
"SFM 003", means SMART Fund
Model SFM 003 licensed under rule 5;
|
|
"SFM 004", means SMART Fund
Model SFM 004 licensed under rule 6;
|
|
"term sheet", means the
offering document of a SMART Fund that complies with the offering
document requirements as provided in the
schedule applicable to
that particular SMART Fund Model.
|
|
3(1) A licensor may
license a fund as a SFM 001 if -
|
Description of SFM
001.
|
(a)
the promoter of the fund is a
financial institution; and
|
(b)
an investor in the fund is a
customer of the promoter and is a party to a Discretionary
Management Agreement with the Promoter.
|
(2)
The assets of the investors in
the fund shall not be subject to fees both at the fund level and at
the Discretionary Management Agreement
level.
|
(3)
Subject to paragraph (4), the
Investment Funds Act and Regulations 2003 shall apply to a fund
operating as a SFM 001.
|
(4)
A SFM 001 in relation to the
items set out in column 1 of the table appearing in Schedule 1,
shall comply with the provisions prescribed
in column 2 of that
table.
|
|
4(1) A licensor may
license a fund as a SFM 002 if -
|
Description of SFM
002.
|
(a)
investment fund has not more than
ten investors who hold equity interest in the fund;
|
(b)
an investor of the fund is a
person to whom a professional fund may be offered; and
|
(c)
a majority of the investors who
hold equity interests in the fund have the power to appoint and
remove the operators of the fund.
|
(2)
Subject to paragraph (3) the
Investment Funds Act and Regulations 2003 shall apply to a fund
operating as a SFM 002.
|
(3)
A SFM 002 in relation to the
items set out in column 1 of the table appearing in Schedule 2,
shall comply with the provisions prescribed
in column 2 of that
table.
|
|
5(1) A licensor may
license a fund as a SFM 003 if -
|
Description of SFM
003.
|
(a)
the fund is operating as a mutual
fund exempt pursuant to section 3(4) of the Mutual Funds Act, 1995
at the time of the repeal of
that Act; and
|
(b)
the fund has not more than
fifteen investors holding equity interests in the fund, the
majority of whom have the power to appoint
or remove the operators
of the fund.
|
(2)
Subject to paragraph (3), the
Investment Funds Act and Regulations 2003 shall apply to a fund
operating as a SFM 003.
|
(4)
A SFM 003 in relation to the
items set out in column 1 of the table appearing in Schedule 3,
shall comply with the provisions prescribed
in column 2 of that
table.
|
|
6(1) A licensor may
license a fund as a SFM 004 if -
|
Description of SFM
004.
|
(a)
the investment fund has not more
than five investors who hold equity interests in the fund;
and
|
(b)
the fund operates as a private
investment company.
|
(2)
Subject to paragraph (3), the
Investment Funds Act and Regulations 2003 shall apply to a fund
operating as a SFM 004.
|
(3)
A SFM 004 in relation to the
items set out in column 1 of the table appearing in Schedule 4,
shall comply with the provisions prescribed
in column 2 of that
table.
|
|
(rule 3)
|
|
SCHEDULE 1
|
|
OFFERING
DOCUMENT/TERM SHEET
|
A term sheet is not required.
Where there is a term sheet it shall contain the following
information :
|
|
|
i.
|
Name of Fund
|
|
|
ii.
|
Date established
|
|
|
iii.
|
Structure of the
Fund
|
|
|
iv.
|
Name and address of
operators
|
|
|
v.
|
Nature of Equity
Interests
|
|
|
vi.
|
Investment objective and
policy
|
|
|
vii.
|
Dealing policy
|
|
|
viii.
|
Distribution policy
|
|
|
ix.
|
Name and address of all parties
related to the fund
|
|
|
x.
|
A statement that the fund is
not required to have its financial statements audited, but that
annual unaudited financial statements
and semi-annual performance
reports of the fund shall be filed with the Commission.
|
|
|
xi.
|
Fees and Expenses
|
|
|
xii.
|
A statement that the assets of
the investors in the fund shall not be subject to fees at both the
fund level and the Discretionary
Management Agreement
Level.
|
|
|
xiii.
|
Termination
|
|
|
xiv.
|
A statement that "the fund is
licensed as an SFM 001 pursuant to the Investment Funds Act, 2003
operating as a fund whose -
|
|
|
(a)
|
Promoter is a financial
institution ; and
|
|
|
(b)
|
Investors are customers of the
promoters and are parties to a Discretionary Management Agreement
with the promoters.
|
|
SUBSCRIPTION
AGREEMENT
|
|
The Subscription Agreement of
the fund shall contain a statement by the promoter confirming that
a Discretionary Management Agreement
exists between the promoter
and the Investor.
|
|
FINANCIAL REPORTING
REQUIREMENTS
|
(a) The fund shall file with
the Commission performance reports of the fund every six months
summarizing :
(i) Subscriptions and redemptions to the fund ;
(ii) NAV at the end of the relevant period ;
(iii) Return earned at the end of period ; and
(iv) The asset allocation of the fund.
(b) The unaudited financial
statements of the fund shall be filed with the Commission
annually ;
|
|
ANNUAL
CERTIFICATION
|
The Operators of the fund no
later than January 31 of each year shall certify to the Commission
that the fund is qualified to operate
as a SFM 001.
|
|
|
(rule 4)
|
|
SCHEDULE 2
|
|
OFFERING
DOCUMENT/TERM SHEET
|
A SFM 002 shall have a term
sheet containing the following information :
|
|
|
i.
|
Name of Fund
|
|
|
ii.
|
Date established
|
|
|
iii.
|
Structure of the
Fund
|
|
|
iv.
|
Name and address of
operators
|
|
|
v.
|
Nature of Equity
Interests
|
|
|
vi.
|
Investment objective and
policy
|
|
|
vii.
|
Dealing policy
|
|
|
viii.
|
Distribution policy
|
|
|
ix.
|
Name and address of all parties
related to the fund
|
|
|
x.
|
A statement that the financial
statements of the fund shall be audited annually unless unanimously
waived by the holders of the equity
interests in the fund and that
if there is such a waiver a performance report of the fund shall be
filed with the Commission every
six months for as long as the
waiver is valid.
|
|
|
xi.
|
Fees and Expenses
|
|
|
xii.
|
Termination
|
|
|
xiii.
|
A statement that "the fund is
licensed as a SFM 002 pursuant to the Investment Funds Act, 2003
operating as a fund - a.
|
|
|
|
a.
|
which is limited to having no
more then ten investors who hold equity interests in the
fund ;
|
|
|
|
b.
|
whose investors are persons to
whom a professional fund may be offered ; and
|
|
|
|
c.
|
where a majority of the
investors who hold equity interests in the fund have the power to
appoint and remove the operators of the
fund.
|
|
SUBSCRIPTION
AGREEMENT
|
The Subscription Agreement of
the fund shall contain confirmation that the investor in the fund
agrees with the regulatory requirements
applicable to the SFM
002.
|
|
CONSTITUTIVE
DOCUMENTS
|
The Constitutive Documents
shall provide for the majority of the holders of equity interests
in the fund to have the power to appoint
or remove the operators of
the fund.
|
|
FINANCIAL REPORTING
REQUIREMENTS
|
|
(a)
|
The financial statements of the
fund shall be audited unless all of the holders of the equity
interests in the fund unanimously agree
to waive the annual audit
of the fund's financial statements ;
|
|
|
(b)
|
Where the annual audit of the
financial statements of the fund has been waived the fund shall
file with the Commission within six
months of the waiver, a
performance report of the fund and shall file such a report every
six months thereafter as long as the waiver
exists ;
|
|
|
(c)
|
The administrator of the fund
shall make the NAV reports available to investors upon
request.
|
|
ANNUAL
CERTIFICATION
|
The Operators of the fund no
later than January 31 of each year shall certify to the Commission
that the fund is qualified to operate
as a SFM 002.
|
|
|
(rule 5)
|
|
SCHEDULE 3
|
|
OFFERING
DOCUMENT/TERM SHEET
|
A SFM 003 fund shall have an
term sheet containing the following information :
|
|
|
i.
|
Name of Fund ;
|
|
|
ii.
|
Date established ;
|
|
|
iii.
|
Structure of the
Fund ;
|
|
|
iv.
|
Name and address of
operators ;
|
|
|
v.
|
Nature of Equity
Interests ;
|
|
|
vi.
|
Investment objective and
policy ;
|
|
|
vii.
|
Dealing policy ;
|
|
|
viii.
|
Distribution
policy ;
|
|
|
ix.
|
Name and address of all parties
related to the fund ;
|
|
|
x.
|
A statement that the financial
statements of the fund shall be audited annually unless unanimously
waived by the holders of equity
interests in the fund and that if
there is such a waiver a performance report of the fund shall be
filed with the Commission every
six months for as long as the
waiver is valid.
|
|
|
xi.
|
Fees and Expenses
|
|
|
xii.
|
Termination
|
|
SUBSCRIPTION
AGREEMENT
|
The Subscription Agreement of
the fund shall contain confirmation that the investor in the fund
agrees with the regulatory requirements
applicable to the SFM
003.
|
|
CONSTITUTIVE
DOCUMENTS
|
The Constitutive Documents
shall provide for the majority of the holders of equity interests
in the fund to have the power to appoint
or remove the operators of
the fund.
|
|
FINANCIAL REPORTING
REQUIREMENTS
|
|
(a)
|
the financial statements of the
fund shall be audited unless all of the holders of equity interests
in the fund unanimously agree
to waive the annual audit of the
fund's financial statements ;
|
|
|
(b)
|
Where the annual audit of the
financial statements of the fund has been waived the fund shall
file with the Commission within six
months of the waiver, a
performance report of the fund and shall file such a report every
six months thereafter as long as the waiver
exists ; and
|
|
|
(c)
|
The administrator of the fund
shall make the NAV reports available to investors upon
request
|
|
LICENSING
REQUIREMENT
|
The administrator of the fund
shall submit no later than thirty (30) days after the date of its
license :
|
|
|
(i)
|
a certified copy of the
register of the holders of equity interests in the fund ;
or
|
|
|
(ii)
|
certification by Counsel and
Attorney or the administrator of the fund that the fund has not
more than fifteen individual holders
of equity
interests.
|
|
ANNUAL
CERTIFICATION
|
The Operators of the fund no
later than January 31 of each year shall certify to the Commission
that the fund is qualified to operate
as a SFM 003.
|
|
|
(rule 6)
|
|
SCHEDULE 4
|
|
OFFERING
DOCUMENT/TERM SHEET
|
A term sheet is not required.
Where there is a term sheet it shall contain the following
information :
|
|
|
i.
|
Name of Fund ;
|
|
|
ii.
|
Date established ;
|
|
|
iii.
|
Structure of the
Fund ;
|
|
|
iv.
|
Name and address of
operators ;
|
|
|
v.
|
Nature of Equity
Interests ;
|
|
|
vi.
|
Investment objective and
policy ;
|
|
|
vii.
|
Dealing policy ;
|
|
|
viii.
|
Distribution
policy ;
|
|
|
ix.
|
Name and address of all parties
related to the fund ;
|
|
|
x.
|
A statement that the financial
statements of the fund shall be audited annually unless unanimously
waived by the holders of equity
interests in the fund and that if
there is such a waiver a performance report of the fund shall be
filed with the Commission every
six months for as long as the
waiver is valid.
|
|
|
xi.
|
Fees and Expenses
|
|
|
xii.
|
Termination
|
|
|
xiii.
|
A statement that "the fund is
licensed as a SFM 004 pursuant to the Investment Funds Act, 2003
operating as a fund which can not have
more than five holders of
equity interests".
|
|
SUBSCRIPTION
AGREEMENT
|
The Subscription Agreement of
the fund shall contain confirmation that the investor in the fund
agrees with the regulatory requirements
applicable to the SFM
004.
|
|
ADMINISTRATOR
|
The fund is not required to
appoint an administrator. The operators may administer the fund,
however the fund will not be treated
as a self-administered fund.
Where the fund does not appoint an administrator it shall be
licensed by the Commission.
|
|
FINANCIAL REPORTING
REQUIREMENT
|
|
(a)
|
the financial statements of the
fund shall be audited unless all of the holders of equity interests
in the fund unanimously agree
to waive the annual audit of the
fund's financial statements ;
|
|
|
(b)
|
Where the annual audit of the
financial statements of the fund has been waived the fund shall
file with the Commission within six
months of the waiver, a
performance report of the fund and shall file such a report every
six months thereafter as long as the waiver
exists ; and
|
|
|
(c)
|
The administrator of the fund
shall make the NAV reports available to investors upon
request
|
|
ANNUAL
CERTIFICATION
|
The Operators of the fund no
later than January 31 of each year shall certify to the Commission
that the fund is qualified to operate
as a SFM 004.
|
|
|
Made this 17th day of
December, 2003.
|
|
Signed
|
|
CALVIN KNOWLES
|
|
Chairman
|
|
The Securities Commission
of The Bahamas
|
