The capital to be maintained by a manager of a collective investment scheme in hedge funds must be calculated in relation to the financial statements of a manager as prepared in terms of International Financial Reporting Standards (IFRS) in the manner set out in the Table below:
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1.
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Eligible capital consisting of the total of—
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| (a) |
issued ordinary share capital; |
| (b) |
issued preference share capital (if not redeemable with one year and not redeemable at the option of the holder); |
| (c) |
share premium account; |
| (d) |
non-distributable reserves; |
| (i) |
if audited, 100 per cent must be included; and |
| (ii) |
50 per ofthe positive unaudited retained income or 100 per cent of the negative unaudited retained income must be included; |
| (f) |
loans (only if properly subordinated in favour of the manager); |
| (g) |
guarantees (only from a third party and only if exercisable on demand by the manager). |
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2.
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Less adjustment for—
| (b) |
guarantees provided by the manager; |
| (c) |
contingent liabilities; |
| (d) |
net deferred tax assets; |
| (e) |
any assets which are not convertible into cash within 14 business days including but not limited to— |
| (i) |
fixed assets, net of related secured loans; |
| (ii) |
investment in unlisted businesses. |
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3.
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Adjusted capital [paragraph 1 Table item 1 minus paragraph 1 Table item 2].
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4.
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Less required capital to be maintained consisting of—
| (a) |
a basic capital which must be a sum equivalent to 13 weeks' annual fixed expenditure for the whole of the collective investment scheme business of a manager or such other amount as the registrar may determine in a particular case as provided for under 2 (4); plus |
| (b) |
seed capital of R1 million to be invested by the manager in each portfolio administered by the manager: Provided that— |
| (i) |
the prescribed amount may be withdrawn once the portfolio reaches a size of R50 million net asset value under management; and |
| (ii) |
the sum of R1 million is to be re-invested in the portfolio where the net asset value of the portfolio has been reduced to below R50 million for a continuous period of 6 months; plus |
| (c) |
where the manager buys from and sells to investors participatory interests of its scheme for its own account, position risk capital of a sum equivalent to a percentage of the amount paid for participatory interests in a portfolio determined as follows in respect of each type of hedge fund: |
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Qualified Investor Hedge Fund : 35% |
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Retail Hedge Fund : 40% |
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5.
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Liquid resources [paragraph 1 Table item 3 minus paragraph 1 Table item 4], which must be a positive amount.
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Older Persons Act, 2006
