Gas Regulator Levies Act, 2002
R 385
Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002)Board NoticesDetermination of Securities, Class of Securities, Assets or Classes of Assets that may be included in a portfolio of a Collective Investment Scheme in Securities and the manner in which and the limits and conditions subject to which Securities or Assets may be so includedChapter l : Standard Portfolio3. Conditions and limits of inclusion |
(1)
| (a) | Subject to sub-paragraphs (3), (8), (9), (10) and (11), a manager may include in a portfolio— |
| (i) | equity securities issued by any one concern— |
| (aa) | with a market capitalisation of less than R2 billion, to an amount of five percent of the market value of all the assets comprised in the portfolio; |
| (bb) | with a market capitalisation of R2 billion or more, 10 percent of the market value of all the assets comprised in the portfolio; or |
| (ii) | 120 percent, of that equity security's weighting in its relevant index, subject to— |
| (aa) | a maximum of 20 percent of the market value of all the assets comprising the portfolio where the benchmark is the index representing the overall market or exchange; |
| (bb) | a maximum of 35 percent of the market value of all the assets comprising the portfolio where the benchmark is an index, which is a sub-set of an overall market or exchange index; |
| (iii) | equity securities of any one class issued by any one concern— |
| (aa) | with a market capitalisation of less than R2 billion, to an amount of five percent; or |
| (bb) | with a market capitalisation of R2 billion or more, 10 percent, or |
| (cc) | which is an investment company, 10 percent; |
of the aggregate amount of the equity securities of any one class issued by such concern or company, subject to—
| (AA) | an overall limit of 15 percent of the aggregate amount of equity securities of any one class issued by a concern within the same group as the manager, across the portfolios in all schemes administered by the manager; and |
| (BB) | an overall limit of 24 percent of the aggregate amount of equity securities of any one class issued by a concern other than a concern within the same group as the manager, across the portfolios in all schemes administered by the manager, |
(b)
| (i) | Where a portfolio breaches the limits set out in sub-paragraphs (a)(i) and (a)(ii) due to appreciation or depreciation of the market value of the equity securities in that portfolio, or as a result of any non-optional corporate action by the relevant concern, the manager may not purchase any further equity securities issued by that concern for as long as the market value of an equity security in any particular concern exceeds the limit specified in subparagraph (a)(i) and (ii). |
| (ii) | Where a portfolio breaches the limits set out in sub-paragraph (a)(iii) due to an amalgamation, cession, transfer or take-over in terms of section 99 of the Act, or as a result of any non-optional corporate action by the relevant concern, the manager— |
| (aa) | may not make any further investments in the equity securities of the class in question as long as any limit determined in subparagraph (a)(iii) is exceeded; |
| (bb) | must within 12 months after the date on which such amalgamation, cession, transfer, take-over or non-optional corporate action becomes effective or within such further period as the registrar may determine, reduce the equity securities of the class in question to the limits determined in sub-paragraph (a)(iii). |
(2)
| (a) | Subject to sub-paragraphs (3) and (9), at least 90 percent of the market value of a portfolio must consist of— |
| (i) | securities traded on an exchange; |
| (ii) | instruments contemplated in sub-paragraphs (8) and (9); |
| (iii) | securities (other than exchange securities) acquired by the manager pursuant to the exercise of rights attaching to any exchange securities included in the portfolio; or any combination thereof. |
| (b) | If any securities which are not listed on an exchange are included in a portfolio, such securities must be valued daily based on a generally recognised methodology and by a person acceptable to the trustee, subject to the requirements of the Act. |
| (c) | Prior to a manager including any financial instruments or unlisted securities in a portfolio, it must satisfy the trustee that a risk management program designed to identify, measure, on a daily basis, and adequately cover risks emanating from exposure to the security, is in place and is efficient. |
(3)
| (a) | A manager may include in a portfolio participatory interests in portfolios ("underlying portfolios") of collective investment schemes in securities, including exchange traded funds registered as collective investment schemes, collective investment schemes in property or of foreign collective investment schemes to a maximum aggregate value of 80 percent of the market value of the first-mentioned portfolio, provided that— |
| (i) | the maximum exposure to any one underlying portfolio may not exceed 20 percent of the market value of the first-mentioned portfolio; |
| (ii) | in the case of an underlying portfolio which is part of a foreign collective investment scheme, the foreign collective investment scheme must— |
| (aa) | be subject to a due diligence investigation conducted by the manager, to the satisfaction of the trustee, to ascertain whether the portfolio would qualify for approval in terms of section 65(1)(c) of the Act and that the portfolio is available for investment and is not otherwise prohibited in its domicile of registration and; |
| (bb) | be subject to an annual review by the manager to ensure that it continues to comply with the requirements of section 65 if the foreign collective investment scheme has not been approved in terms of 65 of the Act; |
| (iii) | in the case of an underlying portfolio that is managed, directly or by delegation, by the same manager or by any other company with which the manager is linked by common management or control, or by a substantial direct or indirect holding, that manager or other company may not charge any form of manager's charge (including initial or upfront fees, redemption fees or exit fees) on the underlying portfolio; |
| (iv) | in the case of an underlying portfolio holding participatory interests in other portfolios, each of those portfolios may not constitute more than 20 percent of their respective investments in other portfolios; |
| (v) | a manager may only include physical exchange traded funds or exchange traded notes in a portfolio; |
| (vi) | a manager may not include exchange traded funds or exchange traded notes which are capable of obtaining leveraged exposure to underlying assets. |
| (b) | The limit determined in sub-paragraph 3(a) may be exceeded only if the excess is due to appreciation or depreciation of the value of the underlying participatory interests constituting the portfolio, provided that a manager may not, for as long as the excess continues, purchase any further participatory interests for the portfolio. |
| (4) | For the purposes of sub-paragraph (3)(a), the value of a participatory interest held by one portfolio in another must be calculated by reference to the lower of the repurchase price or the net asset value of the relevant participatory interest, at the latest available price before a repurchase price is calculated, or the market value in the case of exchange traded funds. |
| (5) | A manager must ensure that a portfolio's investment policy provides for the inclusion of participatory interests in that portfolio. |
| (6) | A manager may only include in a portfolio, participatory interests issued by a fund of funds if— |
| (a) | that fund of funds holds at least 85 percent of its assets outside the Republic; and |
| (b) | the fund of funds is not invested in another fund of funds or feeder fund. |
| (7) | If a manager finds that a fund of funds is invested in another fund of funds or a feeder fund contrary to the provisions of sub-paragraph (6)(b), the manager concerned must, if the non-compliance is not rectified within 30 days of the date on which the manager became aware of the non-compliance, furnish the registrar with a detailed plan setting out measures to rectify the non-compliance. |
(8)
| (a) | A manager may include in a portfolio listed and unlisted financial instruments, subject to the limits and conditions determined in Chapter V of this Notice. |
| (b) | The financial instruments referred to in sub-paragraph 8(a) may only be included for purposes of efficient portfolio management with the aim of reducing risk, reducing cost or generating capital or income for a portfolio with an acceptable level of risk or to achieve the investment objective of the portfolio. In this instance, the manager must ensure that a portfolio's investment policy provides for the inclusion of listed and unlisted financial instruments. |
| (c) | The manager must ensure that the listed or unlisted financial instruments are not used to leverage or gear the portfolio and are covered at all times. |
(9)
| (a) | A manager may include the following non-equity securities, whether listed on an exchange or not, in a portfolio, subject to the limits prescribed in Table 1 below and, in respect of foreign non-equity securities, a due diligence investigation in accordance with the relevant provisions in Chapter VI of this Notice— |
| (i) | any money market instrument as defined in Chapter II of this Notice; |
| (ii) | bonds, debentures, debenture stock and debenture bonds, notes, whether or not they have inherent option rights or are convertible; |
| (iii) | assets in liquid form; |
| (iv) | Islamic Bonds (Sukuk) and Islamic Compliant Instruments; |
| (v) | preference shares determined as non-equity securities in accordance with sub-paragraph 12(b); |
| (vi) | an instrument issued by a bank as the counter party, that is fully paid for (fully funded) by the purchaser, not synthetic and that provides a return profile that follows, is similar to, or is clearly referenced to an index whose return profile is clearly described in the offering documentation; and |
| (vii) | other non-equity securities as determined in item 4 of Table 1 |
TABLE 1
|
Item |
Categories of non-equity securities |
Limits being the maximum percentage of the aggregate market value of the portfolio |
|
|
Per issuer/guarantor as applicable |
In aggregate for all issuers/guarantors as applicable |
||
|
1 |
Non-equity securities issued or guaranteed by: |
|
100% |
|
1.1 |
the government of the Republic of South Africa; |
100% |
100% |
|
1.2 |
any foreign government which has been assigned a foreign currency sovereign rating not lower than that of the Republic of South Africa; |
100% |
100% |
|
1.3 |
any foreign government that does not comply with 1.2; |
30% |
100% |
|
1.4 |
the South African Reserve Bank; and |
100% |
100% |
|
1.5 |
the African Development Bank. |
30% |
30% |
|
2 |
Non-equity securities issued or guaranteed by a local or foreign bank which forms part of a group of companies (in terms of international accounting standards) of which the holding company is listed on an exchange: |
|
100% |
|
2.1 |
with a market capitalisation for the listed group holding company of more than R 20 billion; |
30% |
100% |
|
2.2 |
with a market capitalisation for the listed group holding company of between R 2 billion and R 20 billion. |
20% |
100% |
|
2.3 |
with a market capitalisation for the listed group holding company less than R2 billion. |
10% |
100% |
|
3 |
Non-equity securities issued or guaranteed by: |
|
100% |
|
3.1 |
a public entity under the Public Finance Management Act,1999 (Act No.1 of 1999); and |
10% |
100% |
|
3.2 |
a municipality under the Local Government Municipal Finance Management Act, 2003 (Act No. 56 of 2003) |
10% |
20% |
|
3.3 |
any local or foreign entity which is listed on an exchange, |
10% |
100% |
|
4 |
Non-equity securities issued or guaranteed by local or foreign entities not described above where such security is: |
|
25% |
|
4.1 |
listed and traded on an exchange |
5% |
25% |
|
4.2 |
not listed on an exchange, including, participatory interests in participation bonds |
5% |
10% |
| (b) | In order to determine the market capitalisation of an internationally listed group holding company, a conversion must be done to Rand at the prevailing foreign exchange rate on the date of inclusion and thereafter at least once every 30 days. |
| (c) | The limits prescribed in Table 1 may be exceeded only if the breach is due to appreciation or depreciation of the market value of the instruments comprising a portfolio; provided that a manager may not, for as long as the excess continues, purchase any further instruments of the class in respect of which the excess occurs for the portfolio. |
| (d) | If, after the date of inclusion of an instrument in a portfolio, a limit, prescribed in Table 1 becomes applicable to any instrument which limit is lower than the previous limit, the manager must rectify the position within 30 days of such reduced limit becoming applicable. If the manager and the trustee are of the view that rectification of the position within 30 days would be detrimental to a particular portfolio, the manager must, within seven days of the date of becoming aware of the change in limits, submit a detailed plan setting out measures to rectify the position, to the registrar for consideration for approval. |
| (e) | Where a manager, through no fault of its own, due to reasons other than the appreciation or depreciation of the market value of the instruments comprising a portfolio, is unable to comply with a limit prescribed in this paragraph, the manager must, if the breach is not rectified within 30 days of the date on which the manager becomes aware of the breach, submit a detailed plan setting out measures to rectify the breach, for consideration for approval by the Registrar. |
| (10) | A manager may include in any index tracking portfolio, securities issued by any concern to an amount of 120 percent of that concern's weighting in a relevant index, subject to a maximum of 35 percent of the market value of all the assets comprising that portfolio. |
| (11) | A manager may include in a precious metal and minerals portfolio, securities issued by any concern, equal to that concern's weighting in its relevant precious metal Index, subject to a maximum of 60 percent of the market value of all the assets comprising that portfolio. |
(12)
| (a) | Where a manager includes preference shares in a portfolio, the shares must be treated as equity securities where the issuer of the shares has included them as part of its share capital on its balance sheet. |
| (b) | Preference shares which do not form part of the share capital of an issuer must be treated as non-equity securities. |
| (13) | A manager may only include in a portfolio instruments based on the value of any precious metal as defined in the Precious Metals Act, 2005 (Act No. 37 of 2005), to an aggregate maximum limit of 10 percent of the market value of all the assets comprising the portfolio, provided that— |
| (a) | such instruments are listed and traded on an exchange and are not synthetic instruments; |
| (b) | where the instruments are issued as exchange traded funds in the form of non-equity securities as contemplated for inclusion in terms of this Chapter, the exposure to such instruments must be added to the overall exposure permitted in terms of Table 1 for the relevant guarantor, or in the absence of a guarantor, the official market maker appointed by the issuer of the non-equity security; |
| (c) | the portfolio may not be obliged to take physical delivery of the precious metal; |
| (d) | the limit constitutes the entire commodity exposure of a portfolio; and |
| (e) | these commodity exposure limits apply equally to a portfolio investing in a foreign collective investment scheme or exchange traded fund. |
(14)
| (a) | Despite the provisions of sub-paragraph (3) and subject to the provisions of paragraph 3(13), a manager may only invest in an exchange traded fund or an exchange traded note, whether organised as a portfolio of a collective investment scheme or not, where that exchange traded fund or exchange traded note ordinarily owns securities permitted by this Notice. |
| (b) | A manager may only include physical exchange traded funds or exchange traded notes in a portfolio. |
| (c) | A manager may not include exchange traded funds or exchange traded notes which are capable of obtaining leveraged exposure to underlying assets. |
| (15) | The inclusion limits determined in this Chapter will apply, according to the type of instrument it is, irrespective of whether the instrument issued by an exchange traded fund is an equity instrument, a non-equity instrument or a participatory interest of a collective investment scheme. |
| (16) | Where a manager enters into a repurchase agreement, the manager must ensure that— |
| (a) | the securities which are the subject of such an agreement, and are to be included in a portfolio on the basis that one security has been exchanged for another, are— |
| (i) | of equal value, |
| (ii) | included subject to the limits and conditions of this Notice and the investment policy contained in the supplemental deed; |
| (b) | the portfolio does not suffer any losses other than changes in value attributable to market movements; and |
| (c) | any gains are applied for the benefit of the portfolio. |
(17)
| (a) | The manager must assess the quality of a security, and in doing so the manager must consider all applicable factors including the liquidity profile and the nature of the asset class represented by the security. |
| (b) | In carrying out its due diligence investigation, the manager must not place inappropriate reliance on the credit rating of the security. |
| (18) | The manager must ensure that if the inclusion of instruments in a portfolio will result in further exposure to another issuer, whose instruments are already included in the portfolio, the exposure created by the inclusion of the first-mentioned instruments is taken into account when determining the overall permissible exposure to the issuer. |
(19)
| (a) | In order to ensure that an Islamic Compliant Instrument purchased complies with the requirements for inclusion in a Shari'ah compliant portfolio, the instrument must— |
| (i) | be based on the ownership of an underlying tangible asset or basket of tangible assets; |
| (ii) | be negotiable; and |
| (iii) | be such that title to the underlying tangible asset or basket of tangible assets passes from a portfolio to a third party within seven business days as from the date on which the relevant transaction of purchase and sale is concluded. |
| (b) | The sale price of the underlying tangible assets or basket of tangible assets must be fixed at the time of conclusion of the purchase and cannot be varied due to a movement in the market value of the underlying tangible assets or basket of tangible assets. |
| (c) | A manager that administers a portfolio in compliance with the relevant Standards of AAOIFI, in terms of which the portfolio may invest in Islamic Bonds (Sukuks) or Islamic Compliant Instruments, must, despite the limits prescribed at item 2 of Table 1, comply with the limits as set out in Table A for a period of 24 months from date of commencement of this Notice ("the initial period"), after which date the limits as set out in Table 1 shall apply: |
Table A
|
Item |
Categories of Securities |
|
|
Per issuer/guarantor as applicable |
||
|
2 |
Non-equity securities issued or guaranteed by a local or foreign bank which forms part of a group of companies (in terms of international accounting standards) of which the holding company is listed on an exchange: |
|
|
2.1 |
with a market capitalisation for the listed group holding company of more than R 20 billion; |
50% |
|
2.2 |
with a market capitalisation for the listed group holding company of between R2 billion and R 20 billion. |
34% |
| (d) | Each manager must review and assess the development and growth of the Islamic financial services in South Africa on a continuous basis and, at least four months prior to the end of the initial period, furnish the Registrar with a report indicating the status of the market for Islamic financial services in South Africa. |
