Globalisation and technological innovation have connected financial systems like never before. There is an ever-present growing interest from Asset Managers to market offshore regulated portfolios to the South African general public.
A Collective investments Scheme (“CIS”) is a scheme in which a group of investors invest into a portfolio and hold a participatory interest in the portfolio. The investors share the risk and the benefit in proportion to their holdings. A foreign CIS is a CIS that is domiciled outside South Africa and is regulated by the Regulator within the relevant foreign jurisdiction where the portfolio is domiciled. Types of CIS schemes include CIS in Securities, CIS in Qualified Investor Hedge Funds, CIS in Retail Hedge Funds, CIS in Participation Bonds, and CIS in Property.
Foreign CISs that wish to market their portfolios to the South African general public would need to ensure that the scheme and funds are registered and approved by the Financial Sector Conduct Authority (“FSCA”) under Section 65 of the Collective Investment Schemes Control Act, 2002 (“CISCA”). The approval is to ensure that the offshore portfolio has a regulatory environment that is comparable to the South African regulatory environment to ensure homogeneity between the offshore and local portfolios in terms of structure and governance.
For a foreign CIS to be promoted to South African investors, the foreign investment manager must either establish a representative office in South Africa and seek authorisation from the FSCA or enter into a representative agreement with a third-party FSCA approved management company such as Sanne Management Company (RF) (Pty) Ltd (“Sanne”).
All foreign CISs who wish to solicit investments into their portfolios from members of the public in South Africa would need to apply to the FSCA indicating compliance with the conditions set out by the FSCA for approval below.
- be available for investment in its domicile of registration; and
- be promoted in South Africa to the same type of investors under the same or substantially similar requirements and conditions relating to the type of investors as in its domicile of registration.
- enter into a representative agreement; or
- establish and maintain a representative office.
- the scheme is sufficiently liquid to meet investor redemptions;
- the scheme does redemptions at regular intervals;
- the scheme does not permit investment in an instrument that compels the acceptance of physical delivery of a commodity and the scheme particulars or prospectus prohibits it from accepting physical delivery;
- the assets of the portfolio are properly protected by the application of the principle of segregation and identification.
- require written confirmation from the applicable regulator that the Manager is fit and proper and in good standing with such regulator; and
- take into consideration any other information regarding the Manager, derived from whatever source, including any regulatory or supervisory authority, provided such information is disclosed to the applicant and the latter is provided a reasonable opportunity to respond to the information.
The regulatory landscape governing CISs continues to evolve, resulting in changes in reporting obligations. Asset Managers will need to partner with a trusted service provider with the necessary skills, experience, and resources. Sanne continuously monitor changing regulations to ensure regulatory compliance.
Submission Process to the FSCA
Ongoing Compliance Support and Maintenance
Facts about Sanne Manco
Collective Investment Schemes are generally medium- to long-term investments. The value of participatory interests (units) may go down as well as up. Past performance is not necessarily a guide to future performance. Collective investments are traded at ruling prices and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions, as well as a detailed description of how performance fees are calculated and applied, is available on request from Sanne Management Company (RF)(Pty) Ltd (“the Manager”). The Manager does not provide any guarantee in respect to the capital or the return of the portfolio. The Manager is registered and approved by the Financial Sector Conduct Authority under CISCA. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. CIS prices are calculated on a net asset basis, which is the total value of all the assets in the portfolio including any income accruals and less any permissible deductions (brokerage, STT, VAT, auditor’s fees, bank charges, trustee and custodian fees and the annual management fee) from the portfolio divided by the number of participatory interests (units) in issue. Forward pricing is used. The Manager retains responsibility for any portfolio marketed on its platform. Where foreign securities are included in a portfolio there may be potential constraints on liquidity and the repatriation of funds, macroeconomic risks, political risks, foreign exchange risks, tax risks, settlement risks; and potential limitations on the availability of market information. The investor acknowledges the inherent risk associated with the selected investments and that there are no guarantees. This document is for information purposes only and does not constitute or form part of any offer to issue or sell or any solicitation of any offer to subscribe for or purchase any particular investments. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable directly or indirectly to the use of or reliance upon the information.
Sanne Management Company (RF) (Pty) Ltd, Registration number: 2013/096377/07 Physical address: Pier Place, Heerengracht Street, Foreshore, Cape Town, 8001. Telephone number: +27 21 202 8282 Fax number: +27 21 202 8282 E-mail address: [email protected] Website: www.snnmanco.com