Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002)Board NoticesDetermination on the requirements for hedge fundsPart 4 : General Provisions Applicable to all Hedge Fund27. Disclosure and reporting to investors |
| (1) | Despite the requirements determined by the registrar under Board Notice 92 of 2014 published in Government Gazette No 37895 of 8 August 2014, the provisions of this paragraph apply in respect of the disclosure and reporting of information to investors by a hedge fund. |
| (2) | A manager must provide the following information to a potential investor before investing in a portfolio— |
| (a) | the name of the hedge fund and of the manager stated clearly and unambiguously; |
| (b) | the name of the portfolio; |
| (c) | the date of establishment of the portfolio; |
| (d) | a list of all portfolios in the hedge fund; |
| (e) | names of the members of the board of the manager; |
| (f) | the legal structure of the portfolio; |
| (g) | accounting and distribution dates of the portfolio; |
| (h) | a description of the investment strategy and objectives of the portfolio and all associated risks; |
| (i) | a description of the procedures by which the portfolio may change its investment strategy or investment policy, or both; |
| (j) | whether the portfolio invests in underlying funds; |
| (k) | a description of the types of assets in which the portfolio may invest; |
| (l) | any investment restrictions applicable to the portfolio; |
| (m) | the circumstances in which the portfolio may use leverage, the types and sources of leverage permitted and the associated risks, any restrictions on the use of leverage and any collateral and asset re-use arrangements, and the maximum level of leverage which the portfolio is entitled to use; |
| (n) | where applicable, the identity of the hedge fund's depository, custodian, fund administrator, prime broker, auditor, hedge fund FSP and any other service provider and a description of their duties; |
| (o) | where applicable, a description of any material arrangements of the manager with a prime broker or other counterparty, including— |
| (i) | the manner in which conflicts of interest are managed; |
| (ii) | any provision in the contract with the custodian and depository on the possibility of transfer and re-hypothecation of assets; and |
| (iii) | the level of counterparty exposure; and |
| (iv) | the methodology of calculating counterparty exposure; |
| (p) | a description of any delegated administration function and of any safe-keeping function delegated by the depository, identification of the delegated person and any conflicts of interest that may arise from such delegations; |
| (q) | a description of the portfolio's valuation and pricing methodologies; |
| (r) | a description of the liquidity risk management of the portfolio, including the repurchase rights both in normal and in exceptional circumstances; |
| (s) | any gating, side pocket or repurchase restrictions that may exist in the portfolio and how those restrictions may be triggered; |
| (t) | any special repurchase arrangement or rights of some investors; |
| (u) | a description of all fees, charges and expenses and the maximum amount thereof which is borne directly by investors; |
| (v) | a description of all charges paid by the portfolio; |
| (w) | a description of how the manager ensures fair treatment of investors; |
| (x) | whenever an investor receives preferential treatment or has the right to receive preferential treatment, including ring-fencing arrangements— |
| (i) | a description of that preferential treatment; |
| (ii) | the type of investors who may receive such preferential treatment; and |
| (iii) | where relevant, those investors' legal or economic relationship with the manager or the portfolio; |
| (y) | the latest annual report referred to in section 90 of the Act; |
| (z) | the procedure and conditions for the issue and sale of participatory interests of a portfolio; |
| (A) | the latest net asset value of the portfolio and the latest price of the participatory interests of the portfolio; and |
| (B) | a description of how and when the quarterly reporting under subparagraph (2) will be provided. |
| (3) | A manager must disclose to the investor quarterly, within 30 days after the end of each calendar quarter— |
| (a) | the sources of leverage, including the type, the value and the providers of leverage; |
| (b) | the exposure limit or value-at-risk permitted in the founding document and mandate; |
| (c) | highest exposure or value at risk applied during the reporting period; |
| (d) | the exposure or value-at-risk as at the quarter-end; |
| (e) | the extent to which assets are encumbered or re-hypothecated; |
| (f) | the methodology for conducting stress-testing; |
| (g) | a report on the portfolio's counterparty exposure; |
| (h) | the latest total expense ratio applicable to the portfolio; and |
| (i) | any changes to the liquidity risk profile of the portfolio. |
| (4) | A manager must disclose to an investor by way of an investor statement at least quarterly, the following minimum information— |
| (a) | the name of the portfolio invested in, together with the series or class of participatory interests invested in; |
| (b) | the net asset value and participatory interest price multiplied by the number of notional participatory interests held in the portfolio; |
| (c) | where applicable, equalisation credit and debit or series invested in; |
| (d) | monthly return; |
| (e) | transactions of assets bought and sold; |
| (f) | subscriptions (new investments) and number of participatory interests; |
| (g) | repurchases and number of participatory interests; |
| (h) | a breakdown of net profit or loss for the period, including— |
| (i) | realised gain or loss; |
| (ii) | unrealised gain or loss; |
| (iii) | dividends and dividend expenses; |
| (iv) | manufactured dividends; |
| (v) | interest earned and interest incurred; |
| (vi) | management fees; |
| (vii) | performance fees; |
| (i) | trading expenses in aggregate; including— |
| (i) | brokerage costs; |
| (ii) | scrip borrowing fees; and |
| (iii) | transaction fees; |
| (j) | other expenses in aggregate, including— |
| (i) | accounting fees; |
| (ii) | administration fees; |
| (iii) | audit fees; |
| (iv) | bank charges; |
| (v) | custodian or depository fee; |
| (vi) | exit fees payable for involuntarily premature dis-investment of assets; and |
| (vii) | other transaction fees. |