3
SUNDAY, JULY 2, 1978
CODE ON UNIT TRUSTS AND MUTUAL FUNDS
******
THE HONG KONG CODE ON UNIT TRUSTS AND MUTUAL FUNDS WHICH IS DESIGNED TO PROTECT THE PUBLIC AGAINST MALPRACTICE AND TO ENSURE THAT TRUSTS SUPPLY A CONTINUING FLOW OF INFORMATION WILL BE PUBLISHED TOMORROW (MONDAY).
THE SECURITIES COMMISSION NOW REQUIRES UNIT TRUSTS AND MUTUAL FUNDS TO COMPLY WITH THIS CODE AS A CONDITION OF AUTHORISATION, UNDER SECTION 15 OF THE SECURITIES ORDINANCE.
THIS APPLIES QUITE IRRESPECTIVE OF WHETHER THE TRUST OR FUND IS BASED IN HONG KONG OR OVERSEAS. COMPLIANCE WITH THE CODE DOES NOT GUARANTEE AUTHORISATION: AN APPLICANT TRUST'S CREDENTIALS WILL ALSO BE TAKEN INTO ACCOUNT.
LEGISLATION DOES NOT PERMIT UNAUTHORISED TRUSTS TO ADVERTISE IN HONG KONG, WHICH MEANS THAT COMPLIANCE IS ESSENTIAL IF A TRUST IS TO BE MARKETED TO THE PUBLIC HERE.
THE CODE WILL BE ADMINISTERED BY A COMMITTEE ON UNIT TRUSTS. THE COMMITTEE WILL BE RESPONSIBLE FOR RECOMMENDING TO THE SECURITIES COMMISSION THE AUTHORISATION OF APPLICANT TRUSTS,
THE MEMBERS OF THE COMMITTEE ARE: UISDEIN MCINNES, COMMISSIONER FOR SECURITIES (CHAIRMAN)- C.H. WONG, PARTNER, P.C. WOO AND CO.- G.M. MACWHINNIE, DIRECTOR, BISHOPSWELL (HONG KONG) LTD.- P.J. PEARSON, DIRECTOR, HENDERSON BARING MANAGEMENT LTD. - A.H. SMITH, DIRECTOR, JARDINE FLEMING AND CO. LTD.- AND P.A.L. VINE, CHAIRMAN, THE CHARTERED BANK HONG KONG TRUSTEE LTD.
A SPOKESMAN FOR THE SECURITIES COMMISSION SAID: THE CODE HAS BEEN DRAFTED AFTER EXTENSIVE DISCUSSIONS WITH A REPRESENTATIVE GROUP OF LOCAL INVESTMENT MANAGERS AND AS A CONSEQUENCE THE APPROACH HAS BEEN ESSENTIALLY PRAGMATIC.+
THE CODE REQUIRES THAT AN APPLICANT TRUST MUST HAVE AS TRUSTEE A TRUSTEE COMPANY ACCEPTABLE TO THE COMMITTEE ON UNIT TRUSTS. THE TRUSTEE MUST HAVE NO CONNECTION WITH THE TRUST'S MANAGEMENT COMPANY, INVESTMENT ADVISER OR DISTRIBUTION COMAPNY, HOWEVER, THE CODE STATES THAT THE COMMITTEE WILL NORMALLY WAIVE THIS REQUIREMENT, PROVIDED IT IS SATISFIED THAT THE TRUSTEE WILL ACT AS IF IT WERE IN FACT INDEPENDENT OF THESE THREE COMPANIES.
IT ALSO REQUIRES THAT THE TRUST DEED INCLUDES A LONG LIST OF PROVISIONS FOR INSTANCE, THOSE SETTING OUT HOW OFFER AND REDEMPTION PRICES WILL BE CALCULATED, SPECIFYING WHICH COSTS ARE CHARGEABLE TO THE ASSETS BELONGING TO UNIT HOLDERS, EMPOWERING THE TRUSTEE TO DISMISS THE MANAGEMENT COMPANY AND LIMITING THE TRUST'S ABILITY TO BORROW.
IN ADDITION THE CODE SPECIFIES CERTAIN ITEMS OF INFORMATION WHICH THE TRUST'S EXPLANATORY MEMORANDUM MUST CONTAIN. SINCE THE U.K. AUTHORITIES DO NOT REQUIRE UNIT TRUSTS TO PUBLISH AN EXPLANATORY MEMORANDUM AT ALL, LET ALONE LAY DOWN ITS CONTENTS
IN DETAIL, THE CODE IS IN THIS RESPECT IN ADVANCE OF U.K. PRACTICE.
14 .....
No comments yet.
Private notes are available after approval.