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VOLUME: XII
COLLECTIVE INVESTMENT UNDERTAKINGS
CHAPTER: 56:09 An Act to re-enact the law governing the regulation of collective investment undertakings so as to provide for the designation of Bank of Botswana as the Regulatory Authority conferred with specified powers for regulating such undertakings; to provide com

ARRANGEMENT OF SECTIONS

PART I
Preliminary

                 1.        Short title

                 2.        Interpretation

 

PART II
Regulatory Authority

                 3.        Designation of the Bank of Botswana as the Regulatory Authority

                 4.        Functions of Regulatory Authority

 

PART III
Collective Investment Undertakings

                 5.        Application of Act

                 6.        Objectives and structure of collective investment undertakings

                 7.        Conversion of collective investment undertakings prohibited

 

PART IV
General Provisions on the Licensing of Collective Investment Undertakings

                 8.        Residence of collective investment undertakings

                 9.        Prohibition on conducting business without a licence

                10.        Directors required to be of good repute and competent experience

                11.        Appointment to be approved

                12.        Application for a licence

                13.        Refusal of licence and right of appeal

                14.        Right of appeal of a collective investment undertaking resident in another country

 

PART V
Unit Trusts

                15.        Management company

                16.        Prohibition on management company engaging in other activities

                17.        Assets of a unit trust

                18.        Trustee

                19.        Obligations of a trustee

                20.        Liability of trustee

                21.        Prohibition on a single company acting as management company and trustee

 

PART VI
Investment Companies with Variable Capital

                22.        Licensing by Regulatory Authority

                23.        Share capital of investment companies with variable capital

                24.        Power of company to purchase own shares

                25.        Shareholder can request company to purchase his shares

                26.        Treatment of purchased shares

                27.        Name

                28.        Purchase of shares at request of shareholder and treatment of purchased shares

                29.        Legal reserve

                30.        Restriction of Companies Act

                31.        General

 

PART VII
Custodian

                32.        Assets of investment companies

                33.        Custodian

                34.        Obligations of a custodian

                35.        Exemption from requirement to have custodian

                36.        Liability of custodian

                37.        Prohibition on single company combining functions of investment company and custodian

 

PART VIII
Investment Policies of Collective Investment Undertakings

                38.        Permitted investments

                39.        Regulations concerning limitations on investments

                40.        Debt instrument, debentures and property required for an investment company's business

                41.        Ancillary liquid assets and investment techniques and instruments

                42.        Securities issued or guaranteed by countries, local authorities or public international bodies

                43.        Investment in other collective investment undertakings

                44.        Acquisition of shares carrying voting rights

                45.        Breaches of limits

 

PART IX
General Provisions Relating to Collective Investment Undertakings

                46.        Obligation on collective investment undertaking to purchase units

                47.        Issue of units

                48.        Purchase of units

                49.        Value of assets

                50.        Suspension of purchase of units

                51.        Creation and cancellation of units of unit trust

                52.        Issue of registered certificates or bearer securities

                53.        Replacement of management company, trustee and custodian

                54.        Remuneration and expenditure

                55.        Application of income

                56.        Borrowing

                57.        Granting loans or guarantees

                58.        Sales of securities

 

PART X
Prospectus, Reports and Publication of Information

                59.        Publication of prospectus

                60.        Annexation of trust deed or articles to prospectus

                61.        Offering of prospectus to investors

                62.        Publication of annual and half-yearly reports

                63.        Time limits

                64.        Contents of annual report

                65.        Contents of half yearly report

                66.        Transmission of reports to Regulatory Authority

                67.        Offering of reports to investors before contract concluded

                68.        Reports to be available to public

                69.        Supply of reports to participants

                70.        Auditing requirements in relation to annual report

                71.        Publication of issue and purchase prices

                72.        Publicity and advertising

 

PART XI
Special Provisions in Relation to the Regulatory Authority

                73.        Collaboration with competent authorities in other countries

                74.        Professional secrecy

                75.        Application of professional secrecy to information exchanged with other competent authorities

                76.        Restriction on the use of information received from other countries

 

PART XII
Inspection and Enforcement Powers of the Regulatory Authority

                77.        Compliance with additional requirements imposed by Regulatory Authority

                78.        Keeping of books and records

                79.        Furnishing of information to Regulatory Authority

                80.        Revocation of licence

                81.        Notice of intention to revoke

                82.        Regulatory Authority's powers of intervention

                83.        Review of Regulatory Authority's decision, etc, by the High Court

 

PART XIII
Miscellaneous Provisions

                84.        Liability of Regulatory Authority

                85.        Publication and register of names of licensed collective investment undertakings

                86.        Regulatory Authority to approve subsequent changes

 

PART XIV
Offences, Regulations and Transitional Provisions

                87.        Offences

                88.        Regulations

                89.        Repeal of Act No. 20 of 1996 and savings

 

Act 20, 1999.

[Date of Commencement: 22nd June, 2001]

Part:I Preliminary (ss 1-2)

1.       Short title

            This Act may be cited as the Collective Investment Undertakings Act.

2.       Interpretation

            In this Act, unless the context otherwise requires-

            "advertisement" includes the display or publication of any matter by way of leaflet, notice, circular, pamphlet, brochure, photograph, film, video, sound broadcasting, television, electronic communication or personal canvassing;

            "appropriate person" means-

     (a)     an officer of the Regulatory Authority; or

     (b)     in relation to any particular inspection (including a proposed inspection), any other person who, in the opinion of the Regulatory Authority possesses appropriate qualifications or experience to carry out the inspection or any part thereof;

            "articles" and "memorandum" have the meaning ascribed thereto in the Cap. 42:01 Companies Act;

            "associated enterprise" means, as appropriate-

     (a)     a holding company of a management company or trustee;

     (b)     a subsidiary company of a management company or trustee;

     (c)     a company which is a subsidiary of a body corporate, where the management company or investment company or trustee concerned is also a subsidiary of the body corporate, but neither company is a subsidiary of the other;

     (d)     in the case of a management company or investment company or a trustee of a collective investment undertaking, any other body corporate that is not a subsidiary of the management company or trustee but, in respect of which, the company is beneficially entitled to more than 20 per cent in nominal value of either the allotted share capital or of the shares carrying voting rights (other than voting rights which arise only in specified circumstances) in that other body corporate; or

     (e)     a partnership in which the management company or investment company or trustee has an interest, and whose business is or, at the relevant time, was, in the opinion of the Regulatory Authority, materially relevant to any inspection of the management company or investment company or trustee being carried out or proposed to be carried out under this Act;

            "beneficial owner" means a unit-holder with beneficial ownership over property of a unit trust;

            "beneficial ownership" means the rights over the deposited property of a unit-trust conferred by a trust deed on a unit-holder;

            "collective investment undertaking" has the meaning assigned to it in section 6;

            "Companies Act" means the Companies Act, Chapter 42:01 of the Laws of Botswana, or as may subsequently be replaced;

            "country" means an organised political community, unitary or federal, with one sovereign government recognised by the United Nations;

            "custodian" means an entity which meets the qualifying conditions set out in section 33 and which holds the assets of an investment company in accordance with the provisions of this Act;

            "debentures" means any debentures, debenture stock or bonds of any body corporate, incorporated in or outside Botswana, whether constituting a charge on the assets of the body or not;

            "deposited property" means a fund and all undistributed income arising from the investments comprised therein excluding any sums standing for the time being to the credit of a distribution account;

            "director" means a person who, together with other directors, under the Companies Act or a trust deed or a memorandum and articles of a company, represents the management company, the investment company or the trustee or who effectively determines the policy of the management company, the investment company or the trustee;

            "fiduciary duty" means a duty-

     (a)     to act in good faith;

     (b)     not to take a profit out of one's trust other than remuneration previously agreed with the person to whom the fiduciary duty is owed;

     (c)     not to place oneself in a position where one's duty and one's interests may conflict; and

     (d)     not to act for one's own benefit or the benefit of a third person without the informed consent of the person to whom the fiduciary duty is owed;

            "foreign company" means a company incorporated outside Botswana;

            "fund" means the investments and cash for the time being held by a trustee or custodian in trust for the unit-holders or shareholders of a collective investment undertaking in accordance with the provisions of the trust deed or memorandum and articles, as the case may be, with the exception that-

     (a)     it does not include any undistributed net income nor sums standing to the credit of any distribution account; and

     (b)     whenever there is an agreement to purchase or sell investments but such purchase or sale has not been completed, such investments shall be included or excluded, as the case may be, as if the purchase or sale had been completed;

            "holding company" has the meaning ascribed to it under the Companies Act;

            "investment" means the act of placing monetary resources into the creation or acquisition of assets as specified by the Regulatory Authority, including the purchase of real and personal property and securities;

            "investment company" means a company the principal object of which is the investment of its funds in real or personal property of whatever kind;

            "investment company with variable capital" means a company which has a share capital that varies according to the value of the assets which represent the share capital and which satisfies the requirements of section 23;

            "management company" means an incorporated body responsible for the establishment, promotion, management and administration of a collective investment undertaking as laid down in this Act, in regulations or in any other conditions prescribed by the Minister, after consultation with the Regulatory Authority;

            "net asset value" means-

     (a)     the value of a unit trust's fund less the service charge, the administration expenses and the remuneration of the trustee and any other liabilities of the fund not already taken into account in determining the value of the fund and shall include a provision for duties and charges; or

     (b)     the value of a share or shares of a particular class in an investment company for any particular dealing day as determined by the directors in accordance with the articles of that investment company;

            "participant" means either a person who is a shareholder in an investment company or else a unit-holder in a unit-trust, as the context may require;

            "prescribed exemptions" means such exemptions to the provisions of this Act as the Minister may, in accordance with section 88(1), prescribe;

            "purchase of shares or units" includes action taken by an undertaking to ensure that the stock exchange value of its shares or units does not significantly vary from its net asset value;

            "recognised stock exchange" means a stock exchange approved by the Regulatory Authority for the purposes of this Act;

            "Regulatory Authority" means the Bank of Botswana designated as the Regulatory Authority under section 3;

            "resident" has the meaning assigned to it in section 8;

            "security" means any medium of investment in the money market or capital market specified by the Regulatory Authority including a government security, a share or debenture, or right or interest, whether described as a unit or otherwise, in any share or debenture or a right, whether actual or contingent, in respect of money lent to, or deposited with, any holder of a licence issued under the Bank of Botswana Act;

            "subsidiary company" has the meaning ascribed to it in the Cap. 42:01 Companies Act;

            "transferable securities" means securities in respect of which the right of transfer is unrestricted;

            "trust" means an obligation imposed by a trust deed binding the trustee to deal with the deposited property solely for the benefit of the unit-holders, anyone of whom may enforce the obligation;

            "trust deed" means a deed formulated as provided for under section 6(5);

            "trustee" means a person or body of persons who fulfils the requirements of a trustee under section 6(6);

            "umbrella fund" means a collective investment undertaking which, to the extent as may be approved and subject to such conditions as may be applied by the Bank of Botswana, may be divided into a number of sub-funds and in which shareholders or unit-holders are entitled to exchange rights in one sub-fund for rights in another;

            "unit-holder" means any person who by reason of the holding of units or shares in a collective investment undertaking or by reason of having invested capital in the collective investment undertaking is entitled to any of the investments or relevant income of the undertaking; and the terms "shareholder" and "participant" shall be construed accordingly;

            "unit of a collective investment undertaking" includes, where the context so requires, a share and any other instrument granting an entitlement to share in the investments or relevant income of an investment company ;

            "unit of a unit trust" means one of the units into which the beneficial interests in the assets subject to the trust are divided or a share or any other instrument granting an entitlement to share in the investments or relevant income of the unit trust;

            "unit trust" means a collective investment undertaking constituted in accordance with the provisions of section 6;

            "usual time limits" means those time limits which are acceptable market practice in the context of a particular transaction.

 

 

 


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