Cayman Islands: CSX - Continuing Obligations For Mutual Funds

INTRODUCTION

A fund must undertake to comply with its on-going obligations, as specified in the Cayman Islands Stock Exchange ("CSX") Listing Rules and as summarised below, as a condition of being granted, and of maintaining, a listing on the CSX.

OBLIGATIONS

General Obligation of Disclosure

A listed fund must notify the CSX immediately of (i) any price sensitive information; and (ii) material new developments which are not public knowledge and which may reasonably be expected materially to affect the financial position or general course of business of the fund or the market activity in and the price of its listed securities, for dissemination by the CSX.

Equality of Treatment

The fund must ensure equal treatment of all holders of its listed securities of the same class.

Net Asset Value Calculations

All net asset value ("NAV") calculations must be notified immediately to the CSX. The CSX will charge an administrative fee in accordance with the schedule of fees published on their website for any late notifications of the net asset value of the fund's listed securities.

Interim and Annual Accounts

The first set of published annual financial statements prepared in accordance with International Accounting Standards, United States, United Kingdom or Canadian generally accepted accounting principles or other standards acceptable to the CSX must be in respect of a period not exceeding eighteen months from the first date of issue of the securities in the fund.

The fund must make available a copy of its annual financial statements and any interim financial statements to shareholders and to the CSX as soon as they have been published and must make further copies available to investors or prospective investors upon request.

The annual financial statements must include:

1. a detailed analysis of the fund's portfolio of investments by type of security (equity securities, convertible securities, fixed income securities, types or categories of derivative products, currencies and other investments) and by broad industrial or commercial sector, giving the market value of each category analysed or such other portfolio details as may be agreed by the CSX;
2. a statement as at the end of the relevant financial year showing:
   
   
   1. interests of any director, investment manager or investment advisor in the securities of the fund or any subsidiary, distinguishing between beneficial and non-beneficial interests;
   2. details of any right to subscribe for securities of the fund granted to any director, investment manager or investment advisor and of the exercise of any such right; and
   3. the interests of each director of the fund in any entity which receives fees or their compensation from the fund;
3. in the event the operating results shown by the financial statements differ materially from any published forecast made by the fund, an explanation for the difference;
4. details of any emoluments or other income payable by the fund to the directors, services providers or any other their associates during the period under review; and
5. details of any arrangements whereby a director or any other service provider has waived or agreed to waive any emoluments from the fund or any subsidiary undertaking.

Marketing Materials

The fund is required to maintain a complete file of all marketing materials which must be produced to the CSX on demand.

Dividends

The fund must notify the CSX immediately of any proposed dividend payments, including details of the record date, payment date and amount of any such dividend.

Matters Requiring Prior Consultation

The fund or its listing agent must consult with the CSX in advance of any matter which, in the reasonable opinion of the fund, may affect the suitability of the fund for listing or may materially adversely affect the interests of security holders.

Other Disclosures

The fund must notify the CSX immediately for dissemination by the CSX of any of the following:

1. any material change in the fund's constitution;
2. any change in the rights of any class of listed securities. Where the listed securities are convertible this requirement will also apply to any change in the rights of any class of securities into which the listed securities are convertible;
3. any change in the general character or nature of the fund including if the fund becomes an umbrella or feeder fund or funds of funds;
4. the creation of any additional class of security in the fund, whether such class will be listed or not;
5. any material change in the investment policies or objectives, investment restrictions or borrowing restrictions of the fund;
6. any change in the directors of the fund and in the directors of the investment manager (in which case the fund must procure and lodge with the CSX as soon as practicable a signed declaration and undertaking in the form specified in the Listing Rules for each new director);
7. any changes in the service providers or auditors of the fund;
8. any change in the way in which the NAV or issue or redemption prices are calculated;
9. any change in the frequency of calculation of the NAV or the frequency of subscriptions or redemptions;
10. any suspension in the calculation of NAV or of subscriptions or redemptions;
11. any intention of the fund to extend the life or terminate the fund or to compulsorily redeem all of its securities;
12. the redemption of all of its securities;
13. any change in the status of the fund for taxation purposes;
14. the fund agreeing to acquire from or dispose of an investment of a member of the fund family, unless such transaction has been fully disclosed in the listing document;
15. the fund agreeing to acquire or dispose of an asset in which a director or member of the fund family is materially interested, unless such transaction has been fully disclosed in the listing document;
16. unless otherwise disclosed as an investment objective or policy of the fund, the incurring of any material debt;
17. there occurs any material change in the holdings or identity of any persons who, directly or indirectly, jointly or severally, exercise or could exercise control over the fund;
18. any involvement in material litigation proceedings (where the amount involved is equal to or greater than twenty per cent. of the book value of the existing net assets of the fund);
19. if its securities cease to be listed on another stock exchange or if it is the subject of disciplinary action by another stock exchange or any other securities or regulatory body; and
20. any change in the fund's registered or principal office.

FURTHER ISSUE OF SECURITIES

A listing document is not required in the case of an application by a listed issuer for a further issue of securities where:

1. the securities are of the same class as a class of securities already listed on the CSX, which shall include series, and the nominal par value of securities to be issued does not exceed twenty percent of the nominal value of the securities of that class which are already listed;
2. the securities are allotted by way of a capitalisation or bonus issue to existing holders in proportion to their existing holdings out of the issuer's reserves or profits without payment of any kind to the issuer by the existing holders; and
3. the securities result from the exercise of options, warrants or similar rights to subscribe or purchase securities which are already listed on the CSX.

In such cases, application for admission to listing must be made to the CSX at least 48 hours prior to the issue of such securities. Such application will comprise of the submission of the application for listing in the form set out in Appendix 1A to the Listing Rules and the prescribed fee (Rule 2.25).

FEES – MUTUAL FUNDS/INVESTMENT FUNDS

Further Issue Fees

A further issue fee, charged at the same rate as the initial fee, shall be payable by the issuer on making an application for listing for a further issue of a class or series which is already listed on the CSX.

This charge does not apply to the issue of securities on the exercise of options, warrants or similar rights to subscribe or purchase securities, the granting or issue of which has already been approved by the CSX, or to a capitalisation issue or an issue of securities under a script dividend scheme.

Annual Fee

The annual fee in respect of the first year shall be payable on the admission of the securities to the listing and thereafter shall be payable on the anniversary of the listing date.

Where annual fees are paid in advance a discount may be applied.

Supplementary or revised listing documents

A further fee of US$500 (CI$410) shall be payable by the issuer of securities already listing on the CSX on submission of a supplementary or revised listing document for approval by the CSX.

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.