ADVOKS GLOBAL · KENYA
The Capital Markets (Collective Investment Schemes) Regulations
31. Matters to be provided for in the trust deed
Edition: 2022-12-31 · In force
31. Matters to be provided for in the trust deed
(1)A collective investment scheme trust deed shall make provisions on all the matters specified in the Third Schedule of these Regulations.(2)Every trust deed shall prescribe the rules for the administration of the collective investment scheme complying with provisions of the Third Schedule and including the following—(a)appointment of a custodian;(b)the issue of a receipt evidencing the purchase of the shares of the collective investment scheme;(c)the issue of a certificate of entitlement to the holders within thirty days specifying shares held by each holder and showing the transactions in the holder's account during the preceding month, and that such certificate shall be prima facie evidence of the title of the holder to the units or shares;(d)authentication of every share certificate by the trustee, provided that before it is issued by the fund manager to the purchaser, the trustee shall not countersign any share certificate unless it has received from the fund manager a full account of the cash proceeds of the issue of that certificate or securities to the required value, together with all documents necessary to effect transfer thereof;(e)the funds of the collective investment scheme to be deposited in the trust account(s) with the custodian approved by the Authority and the securities of the collective investment scheme be kept with such custodian;(f)that—(i)any funds for investment accruing from the issue of shares;(ii)dividends, interest or any other income accruing on underlying securities;(iii)the proceeds of capital gains, rights or bonus issues; and(iv)any funds received by the fund manager from the realization of underlying securities,be accounted for in full to the trustee by the fund manager and the custodian and deposited in the trust account(s):(g)that the proceeds of capital gains, rights and bonus issues be vested in the collective investment scheme for the benefit of the holders;(h)all transactions of the collective investment scheme portfolio be individually reported to the trustee by the fund manager by the next working day following such transaction;(i)the obligation of the fund manager to repurchase, subject to such terms and conditions as may in terms of the trust deed apply, any number of shares offered to it, on such basis as may be prescribed in the trust deed;(j)that the specific method of calculation of the value of the collective investment scheme portfolio and of the share value at which holders shall transact their holdings with the collective investment scheme, should be acceptable to the Authority including the specific time of the day, the week or date of the month and time for taking the valuation of securities, and the particulars relating to valuation given in Part VI of these Regulations;(k)the fee charged by the fund manager (which shall be the only monies payable to the fund manager annually) be disclosed in the financial reports of the collective investment scheme;(l)the accounts and financial records of a collective investment scheme be maintained in a system and manner acceptable to the Authority;(m)the fees payable to the trustee and the custodian of the collective investment scheme portfolio be disclosed in the financial reports of the collective investment scheme; and(n)amendment of the trust deed be in accordance with the provisions of the trust deed, these Regulations, the incorporation documents, the information memorandum and with the prior approval of the Authority.(3)Every such trust deed shall further prescribe—(a)the investment policy to be followed in respect of the scheme concerned;(b)the manner in which the selling price of shares is to be calculated;(c)the terms and conditions on which the fund manager will repurchase shares and the manner in which repurchase price is to be calculated;(d)the manner in which shares can be transferred from one holder to another;(e)if applicable, the manner in which additional shares are to be calculated;(f)the manner in which yield from shares is to be calculated; and(g)the manner in which the initial charge and other charges are to be calculated.(4)The Authority may authorize any—(a)inclusion in the trust deed or the information memorandum as the case may be of any provisions that in its opinion is deemed to be consistent with international market practices; or(b)omission from the trust deed or the information memorandum as the case may be of any information whose inclusion would otherwise be required under these Regulations if in the opinion of the Authority such information would be inconsistent with the international market practices or would be inappropriate to the nature of the collective investment scheme or would not be in the best interest of the holders.(5)The parties to a trust deed may by a supplemental deed alter or rescind any provisions of such trust deed or add further to the provisions thereto, but no alteration or rescission of, or addition to a trust deed shall be valid—(a)unless the consent thereto of the holders and the Authority has been obtained in the manner prescribed in the trust deed; or(b)the Authority is satisfied that any such alteration, rescission or addition does not contain anything inconsistent with the provisions of the Act or with sound financial principles.(6)A provision in any trust deed, whether entered into before or after the commencement of these Regulations purporting to relieve any party from liability to the holders on account of his own negligence, shall be void.