ADVOKS GLOBAL · KENYA
The Capital Markets (Licensing Requirements) (General) Regulations
35. Duties of a custodian
Edition: 2023-10-06 · In force
35. Duties of a custodian
(1)A custodian shall render custodial services to the investment portfolio managed by the investment adviser or fund manager in accordance with the written service agreement between the custodian and the investment adviser or fund manager as the case may be and such service shall include—(a)taking into its custody or under its control all the property of the clients of the fund manager and hold it in trust for the clients in accordance with the provisions of the written service agreement provided that cash and registrable assets shall be registered in the name of or to the order of the clients by the custodian;(b)receiving and keeping in safe custody title documents, securities and cash amounts of the investment portfolio;(c)opening an account in the name of each client for the exclusive benefit of such investment portfolio;(d)transferring, exchanging or delivering in the required form and manner securities held by the custodian upon receipt of proper instructions from the investment adviser or fund manager;(e)requiring from the investment adviser or fund manager as the case may be, such information as it deems necessary for the performance of its functions as a custodian;(f)promptly delivering to the fund manager or to such other persons as fund manager may authorize, copies of all notices, proxies, proxy soliciting materials received by the custodian in relation to the securities held in the fund account, all public information, financial reports and stockholder communications the custodian may receive from the issuers of securities and all other information the custodian may receive, as may be agreed between the custodian, fund manager;(g)exercising subscription, purchase or other similar rights represented by the securities subject to receipt of proper instructions from the fund manager;(h)exercising the same standard of care that it exercises over its own assets in holding, maintaining, servicing and disposing of property and in fulfilling obligations in the agreement;(i)where title to investments are recorded electronically, ensuring that entitlements of the clients of the fund manager are separately identified in the records of entitlement maintained by the custodian.(2)A custodian shall in executing its duties under paragraph (1) exercise the degree of care expected of a prudent professional custodian for hire.(3)A custodian discharging its contractual duties to an investment adviser or fund manager shall not contract agents to discharge those functions except where a portion of the investment portfolio is invested in offshore investments in which case the custodian may engage the services of an overseas sub-custodian approved by the fund manager as the case may be with notification of such appointment to the Authority.(4)The agreement referred to in paragraph (1) between the custodian and the fund manager shall make provision on the computation of the fee in respect of custodial services which will be disclosed to the clients by the fund manager in the annual report.