Most Read Contributor in South Africa, September 2016
Board Notice 92 of 2014 sets out guidelines on how managers of
collective investment schemes (both local and foreign) may market
and advertise schemes to members of the public in South Africa. The
effective date for this notice has been extended from 1 March 2015
to 1 May 2015 in light of the operational challenges which it poses
to managers and operators.
The notice provides a legal framework within which managers of
collective investment schemes must advertise their products. While
previously ASISA monitored advertising of collective investment
scheme investments through the code of conduct applicable to their
members ("ASISA Code"), all advertising
material, fund fact sheets, application forms and minimum
disclosure documents must now be submitted to the Financial
Services Board ("FSB") for review.
Submission will be by way of the FSB's online portal and
receipt will be acknowledged electronically. Once acknowledgment of
receipt has been received, the material may be used by a manager or
operator, unless the Registrar of Collective Investment Schemes
objects to the material (which the Registrar must do within 30
As under the ASISA Code, the general principles of decency,
honesty, legality and truthfulness underpin the requirements of the
new regulations. Managers and operators are required to adhere to
these principles in all advertisements, marketing materials and
application documents, for example, by using plain language and
avoiding misleading or deceptive statements.
While the new regulations substantively include many of the
existing requirements of the ASISA Code they, in addition, require
the production of a minimum disclosure document for investors,
provide for further mandatory disclosures in line with the
FSB's aim of promoting transparency for investors and require
greater disclosure in connection with fees and charges. Some of the
highlights of the new requirements are as follows:
general advertising requirements must be considered by all
managers of local collective investment schemes and operators of
foreign funds approved for distribution in South Africa when
preparing any advertising or marketing material in respect of their
mandatory disclosures must be included in all marketing material
concerning a specific portfolio;
a minimum disclosure document ("MDD")
must be prepared in respect of each portfolio, and must contain the
prescribed information in such a way that it is accessible to an
investors must be provided with the MDD in the prescribed form
prior to investing (or topping up or switching an existing
MDDs must be updated quarterly (and lodged quarterly with the
while managers may provide the MDD to an investor in any medium,
the investor must specifically select that medium or consent to the
provision of information in this way. A manager or operator must
therefore consider the operational requirements which will need to
be put in place in order to ensure that this consent is provided by
managers will be required to prove, upon request, that the MDD
was provided to an investor in compliance with the regulations.
Again, this may require operational amendments to the business
practices of managers and operators;
application forms must also comply with the regulations and must
be lodged with the Registrar at least once annually within 30 days
of the commencement of the manager's new financial
prior to registration and approval by the Registrar of a
collective investment scheme or a portfolio, a manager may not
distribute any advertising or marketing material relating to that
collective investment scheme, or make any reference to that
collective investment scheme or portfolio at product
managers of hedge funds (as hedge funds have now been declared
collective investment schemes and are subject to the legislation
pertaining to collective investments schemes) should have regard to
the new regulations but should note that Board Notice 52 of 2015
"Determination on the requirements for Hedge
Funds" sets out the specific requirements for disclosure
of information and reporting of information to investors applicable
to hedge funds.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In the milieu of global financial markets, securities of various types are often classified as either ‘listed’, ‘unlisted’ or ‘quoted’.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).