ADVOKS GLOBAL · KENYA
The Capital Markets (Collective Investments Schemes) Regulations, 2023
157. Suspension and resumption of issue and redemption of participatory interests
Edition: 2023-12-15 · In force
157. Suspension and resumption of issue and redemption of participatory interests
(1)The fund manager may, with the prior agreement of the trustee, or shall, if the trustee so requires, at any time for a period not exceeding twenty-eight days, suspend the issue and the redemption of participatory interests if the fund manager or the trustee is of the opinion that there is good and sufficient reason to do so, having regard to the interests of participants or potential participants.(2)At the time of suspension under subregulation (1), the fund manager, or the trustee, if trustee required the fund manager to suspend the issue and redemption, shall—(a)obtain approval from the Authority of the suspension, stating the reasons for its action;(b)immediately give written confirmation of the suspension and the reasons for it to the Authority, participants in the affected collective investment scheme and the authorities who are responsible for the authorisation of collective investment schemes in each country in which the fund manager holds itself out as willing to sell or redeem participatory interests in the collective investment schemes concerned; and(c)publish a notice of the suspension in a newspaper of nationwide circulation and on its website.(3)The Authority may order a suspension of a collective investment scheme where it is in the interest of the participants.(4)Where issue and redemption are suspended—(a)the trustee shall not create or cancel participatory interests; and(b)the fund manager shall not buy or sell participatory interests as an agent of the trustee or on its own account.(5)Before the resumption of issue and redemption of participatory interests, the fund manager shall inform the Authority of the proposed resumption and immediately after the resumption, it shall—(a)confirm the resumption by giving notice in writing to the Authority, holders of participatory interests in the affected collective investment scheme and the bodies and authorities specified in subregulation (2)(b); and(b)notify the participants and publish a notice of the resumption in a newspaper of nationwide circulation and on its website.(6)During the suspension period—(a)the fund manager shall keep the Authority and participants in the collective investment scheme informed and updated regarding the status and or any developments concerning the suspension; and(b)none of the obligations in Part VI relating to the creation, cancellation, issue or redemption of participatory interests or to the valuation of participatory interests shall apply.Provided that the circumstances are fully disclosed in the scheme documents, the fund manager in consultation with the trustee may as an alternative to suspension of dealings in participatory interests implement other methods for dealing with exceptional circumstances including gating, side pockets and or discounts on redemption as defined in subregulation (7)(7)For the purposes of subregulation 6—"gating" means the partial restriction to an investor’s ability to redeem his or her participatory interests;"side pockets" means segregation of the illiquid portion of a fund’s portfolio and their transfer into a separate, illiquid investment vehicle; and"discount" is the percentage or amount by which the redemption price of a participatory interest, calculated on the basis of net asset value, is reduced.