| 54.1 | Part XII of the rules applies only to legal practitioners conducting a trust account practice. |
| 54.2 | If a firm at any time administers and controls its practice as a whole from premises in two or more buildings which, in the opinion of the Council, do not constitute such a single composite entity as is contemplated in the definition of 'main office' in rule 1, the Council may require the firm to declare to it in writing, within a time stipulated by the Council, which one or more of those buildings as may constitute such an entity contains or contain its main office, and thereafter that firm shall administer and control its practice as a whole from the premises so declared. |
| 54.3 | The Council may make such enquiry as it deems fit, including inspection of the premises concerned, and the firm concerned shall furnish the Council with such information and render such assistance as it may require to enable it to form an opinion in terms of accounting rule 54.2. |
| 54.4 | A declaration made by a firm under accounting rule 54.2 shall remain effective until such time as the firm: |
| 54.4.1 | moves its main office from the premises which are the subject of the declaration; or |
| 54.4.2 | makes a declaration in terms of accounting rule 54.2 in respect of other premises. |
| 54.5 | Should a firm fail to make a declaration under accounting rule 54.2 within the time stipulated by the Council, the Council may by notice in writing to the firm determine which of the premises concerned constitutes its main office, whereupon the remaining provisions of accounting rules 54.2, 54.3 and 54.4 shall apply as though those premises had been so declared by the firm. |
Accounting Requirements - General
| 54.6 | A firm shall keep in an official language of the Republic such accounting records, which record both business account transactions and trust account transactions, as are necessary to enable the firm to satisfy its obligations in terms of the Act, these rules and any other law with respect to the preparation of financial statements that present fairly and in accordance with an acceptable financial reporting framework in South Africa the state of affairs and business of the firm and to explain the transactions and financial position of the firm including, without derogation from the generality of this rule: |
| 54.6.1 | records showing all assets and liabilities as required in terms of sections 87 of the Act; |
| 54.6.2 | records containing entries from day to day of all monies received and paid by it on its own account, as required by sections 87(1) and 87(3) of the Act; |
| 54.6.3 | records containing particulars and information of: |
| 54.6.3.1 | all monies received, held and paid by it for and on account of any person; |
| 54.6.3.2 | all monies invested by it in terms of section 86(3) or section 86(4) of the Act; |
| 54.6.3.3 | any interest referred to in section 86(5) of the Act which is paid over or credited to it; |
| 54.6.3.4 | any interest credited to or in respect of any separate trust savings. |
Acceptable financial reporting framework
| 54.7 | For purposes of these rules: |
| 54.7.1 | acceptable financial reporting frameworks which are to be recognised and applied are: |
| 54.7.1.1 | "IFRS" being International Financial Reporting Standards as issued from time to time by the International Accounting Standards Board, or its successor body; and |
| 54.7.1.2 | "IFRS for SMEs", being IFRS for Small and Medium Enterprises. |
| 54.7.2 | In determining what is meant by "acceptable financial reporting frameworks" regard shall be had, inter alia, to any rulings of the Council published to trust account practitioners with respect to specific additional disclosures required to be made in the financial statements or trust account Schedules. |
Distinguishing between trust account and business account transactions
| 54.8 | The accounting records shall distinguish in readily discernible form between business account transactions and trust account transactions. |
Retention of accounting records and files
| 54.9 | A firm shall retain its accounting records, and all files and documents relating to matters dealt with by the firm on behalf of clients: |
| 54.9.1 | for at least seven years from the date of the last entry recorded in each particular book or other document of record or file; |
| 54.9.2 | save with the prior written consent of the Council, or when removed therefrom under other lawful authority, at no place other than its main office, a branch office or, in the case of electronic accounting records or files, the location at which such accounting records or files are ordinarily hosted; provided that: |
| 54.9.2.1 | in the case of electronic accounting records or files hosted offsite, such records or files shall always be kept confidential, shall be reasonably secured and shall remain immediately accessible to authorised persons from the office of the firm, to the Council, and to all persons entitled to access thereto by law. Where the firm engages a service provider to provide offsite storage facilities for the records and files of the firm, the firm shall procure that the contractual arrangements with the service provider shall bind the service provider to ensure compliance with the aforegoing provisions |
[Part XII Rule 54.9.2.1 substituted by the South African Legal Practice Council, Notice No. 191, GG44427, dated 9 April 2021]
| 54.9.2.2 | in the case of a branch office, only insofar as they relate to any part of its practice conducted at that branch office. |
| 54.9.2.3 | where the accounting records are required to be made available elsewhere than as provided for in this rule to enable an auditor or inspector to comply with the provisions of rule 54.24, the accounting records may be removed temporarily to the premises of the auditor or inspector, as the case may be, for that purpose, but shall be returned to the place referred to in rule 54.9.2 as soon as the accounting records have served that purpose. |
Updating accounting records
| 54.10 | A firm shall update and balance its accounting records monthly and shall be deemed to comply with this rule if, inter alia, its accounting records have been written up by the last day of the following month. |
Trust money to be kept separate from other money
| 54.11 | Trust money shall in no circumstances be deposited in or credited to a business banking account. Money other than trust money found in a trust banking account at any time shall be transferred to a business banking account without undue delay. A firm shall be deemed to have complied sufficiently with this rule if it: |
| 54.11.1 | makes transfers from its trust banking account to its business banking account at least once a month; and |
| 54.11.2 | ensures that, when making a transfer from its trust banking account to its business banking account: |
| 54.11.2.1 | the amount transferred is identifiable with, and does not exceed, the amount due to the firm; |
| 54.11.2.2 | the trust creditor from whose account the transfer is made is identified; and |
| 54.11.2.3 | the balance of any amount due to the firm remaining in its trust banking account is capable of identification with corresponding entries appearing in its trust ledger. |
Accounting to clients
| 54.12 | Every firm shall, within a reasonable time after the performance or earlier termination of any mandate, account to its client in writing and retain a copy of each such account for not less than seven years. Each account shall contain details of— |
[Part XII Rule 54.12 substituted by the South African Legal Practice Council, Notice No. 626, GG43872, dated 6 November 2020]
| 54.12.1 | all amounts received by it in connection with the matter concerned, appropriately explained; |
| 54.12.2 | all disbursements and other payments made by it in connection with the matter; |
| 54.12.3 | all fees and other charges charged to or raised against the client and, where any fee represents an agreed fee, a statement that such fee was agreed upon and the amount so agreed; |
| 54.12.4 | the amount owing to or by the client. |
Payment to clients
| 54.13 | A firm shall, unless otherwise instructed, pay any amount due to a client within a reasonable time. Prior to making any such payment the firm shall take adequate steps to verify the bank account details provided to it by the client for the payment of amounts due. Any subsequent changes to the bank account details must be similarly verified. |
| 54.14 | Accounting Requirements - Accounting Records |
| 54.14.1 | A firm shall maintain its accounting records in terms of the Act and these rules. |
| 54.14.2 | A firm shall report to the Council forthwith, in writing, any loss, theft or destruction of any such records. |
| 54.14.3 | A firm shall, in the case of the accounting records being computerised, make monthly back-ups which shall be kept in a safe, fireproof place remote from the firm or, in the case of accounting records being in the form of manual books of account, by ensuring that, outside normal business hours, such records are kept in a safe place. |
| 54.14.4 | If the firm keeps any of its accounting records in electronic form, the firm shall: |
| 54.14.4.1 | provide adequate precautions against loss of the records as a result of damage to or failure of the media in which the records are maintained; and |
| 54.14.4.2 | ensure that the records are at all times capable of being retrieved to a readable and printable form, including by converting the records from legacy to later systems or software from time to time. |
| 54.14.5 | A firm shall, where the firm utilises electronic banking in respect of payments from the trust account, keep a proper audit trail, which shall include verification of the payee's banking account details. |
| 54.14.6 | The firm's accounting records shall not, save with the prior written consent of Council or under lawful authority, and except for electronic records in terms of accounting rule 54.14.3 and backups of computerised records, be maintained at any place other than its main office or branch office, but in the latter instance, only insofar as they relate to any part of its practice conducted at that branch. |
| 54.14.7 | A firm shall ensure: |
Internal controls
| 54.14.7.1 | that adequate internal controls are implemented to ensure compliance with these rules and to ensure that trust funds are safeguarded; and in particular to ensure— |
| 54.14.7.1.1 | that the design of the internal controls is appropriate to address identified risks; |
| 54.14.7.1.2 | that the internal controls have been implemented as designed; |
| 54.14.7.1.3 | that the internal controls which have been implemented operate effectively throughout the period ; |
| 54.14.7.1.4 | that the effective operation of the internal controls is monitored regularly by designated persons in the firm having the appropriate authority; |
Prompt depositing of trust monies
| 54.14.7.2 | that all money received by it on account of any person is deposited intact into its trust banking account on the date of its receipt or the first banking day following its receipt on which it might reasonably be expected that it would be banked; provided that a firm which does not deposit trust money into a banking product at his registered bank in South Africa with which the Fund has made an arrangement as contemplated in section 63(1)(g) of the Act without the prior written consent of the Council shall be guilty of misconduct; provided further that if any arrangement made by the Fund with a bank in terms of section 63(1)(g) is withdrawn or cancelled, the firm shall forthwith withdraw its trust funds from that bank with immediate effect, or on maturity of the investments concerned, as the case may be. |
Transfers from trust investment account
| 54.14.7.3 | unless the firm has received written authorisation for the payment of any guarantees issued by a bank on the strength of a trust investment, that any amount withdrawn by it from a trust investment account is deposited promptly by it in its trust banking account. |
Trust moneys not to be less than trust balances
| 54.14.8 | A firm shall ensure that the total amount of money in its trust banking account, trust investment account and trust cash at any date shall not be less than the total amount of the credit balances of the trust creditors shown in its accounting records. |
Trust accounts not to be in debit
| 54.14.9 | A firm shall ensure that no account of any trust creditor is in debit. |
Reports to Council of non-compliance
| 54.14.10 | A firm shall immediately report in writing to the Council should the total amount of money in its trust bank accounts and money held as trust cash be less than the total amount of credit balances of the trust creditors shown in its accounting records, together with a written explanation of the reason for the debit and proof of rectification. |
| 54.14.11 | A firm shall immediately report in writing to the Council should an account of any trust creditor be in debit, together with a written explanation of the reason for the debit and proof of rectification. |
Transfer from trust bank account to business bank account
| 54.14.12 | A firm shall employ and maintain a system to ensure that the requirements of these rules are not infringed when amounts are transferred from its trust banking account to its business banking account. |
Deposits on account of charges
| 54.14.13 | Amounts received by a firm in advance to cover a prospective liability for services rendered or to be rendered or for disbursements (including counsel's fees) to be made must be deposited forthwith to the credit of its trust banking account. |
Withdrawals from trust banking account
| 54.14.14 | Withdrawals from a firm's trust banking account shall be made only: |
| 54.14.14.1 | to or for a trust creditor; or |
| 54.14.14.2 | as transfers to the firm's business banking account, provided that such transfers shall be made only in respect of money due to the firm; and provided that no transfer from its trust banking account to its business banking account is made in respect of any disbursement (including counsel's fees) or fees of the firm unless: |
| 54.14.14.2.1 | the disbursements have actually been made and debited by the firm; or |
| 54.14.14.2.2 | a contractual obligation has arisen on the part of the firm to pay the disbursement; or |
| 54.14.14.2.3 | fees and disbursement have been correctly debited in its accounting records. |
Payments from trust banking account
| 54.14.15.1 | Any cheque drawn on a firm's trust banking account shall be made payable to or to the order of a payee specifically designated. |
| 54.14.15.2 | Payments from the trust banking account of a firm shall only be by cheque or electronic transfer. |
| 54.14.15.3 | No withdrawals from the trust banking account of a firm may be made by way of cellular and telephone transacting. |
Interest accrued on trust banking account
| 54.14.16.1 | Any interest referred to in section 86(5) of the Act which relates to a trust banking account opened in terms of section 86(2) of the Act which has accrued on money deposited during the course of a calendar month, shall be paid over by the trust account practice's bank to the Fund within five (5) working days of the calendar month following the calendar month in which the trust interest vested in the Fund, using the Automated Monthly Transfer System. |
| 54.14.16.2 | Any interest referred to in section 86(5) of the Act which relates to an account opened in terms of section 86(3) of the Act which has accrued on money deposited during the course of a calendar month, shall be paid over by the trust account practice's bank to the Fund within five (5) working days of the calendar month following the calendar month in which the trust interest vested in the Fund, using the Automated Monthly Transfer System. |
| 54.14.16.3 | Any interest referred to in section 86(5) of the Act which relates to an account opened in terms of section 86(4) of the Act, accrued on money deposited during the course of a calendar month or on maturity shall be paid over by the trust accounts practice’s bank to the Fund within five (5) working days of the calendar month following the calendar month in which the trust interest vested in the Fund, using the Automated Monthly Transfer System. |
| 54.14.16.4 | Any interest referred to in section 86(5) of the Act which relates to an account opened in terms of section 86(4) of the Act, accrued on money deposited during the course of a calendar month or on maturity shall be paid over to the Fund or its nominee on or before the last day of the next succeeding calendar month. |
| 54.14.16.5 | A legal practitioner shall be guilty of misconduct if he or she fails to pay over, in accordance with this rule 54.14.16, any interest that vests in the Fund. |
[Part XII Rule 54.14.16 substituted by the South African Legal Practice Council, Notice No. 2234, GG49833, dated 8 December 2023]
Lists of balances
| 54.15.1 | Every firm shall extract monthly, and in a clearly legible manner, a list showing all persons on whose account money is held or has been received and the amount of all such moneys standing to the credit of each such person, who shall be identified therein by name, and shall total such list and compare the said total with the total of the balance standing to the credit of the firm's trust banking account, trust investment account and amounts held by it as trust cash, in the estates of deceased persons and other trust assets in order to ensure compliance with the accounting rules. |
| 54.15.2 | The balance listed in respect of each such account shall also be noted in some permanent, prominent and clear manner in the ledger account from which the balance was extracted. |
| 54.15.3 | Each such list shall be part of the accounting records of the firm to be retained for the seven-year period referred to in accounting rule 54.9. |
[Part XII Rule 54.15.3 substituted by the South African Legal Practice Council, Notice No. 626, GG43872, dated 6 November 2020]
Notification of trust banking account
| 54.16.1 | immediately notify the Council in writing of the name and address of the bank or banks at which its trust banking account or accounts are kept and shall thereafter notify the Council immediately of any change in the name and address of such bank or banks; |
| 54.16.2 | whenever so required by the Council, furnish to the Council within ten days or such longer period as the Council may stipulate, a signed statement issued by the bank or banks with which it keeps its trust banking account or accounts and a signed statement issued by the bank with which the firm keeps any trust investment account, certifying the amount of the balance of such trust banking account or accounts or trust investment account or accounts at such date or dates as may be specified by the Council. |
Trust account investments in terms of section 86(4)
| 54.17 | A firm which invests funds on behalf of any person shall, in addition to all other requirements applicable to the holding or investment of trust money: |
| 54.17.1 | not invest such funds other than in a trust savings or other interest-bearing account with a bank; |
| 54.17.2 | obtain that person's written confirmation of the investment as soon as is reasonably possible, or notify that person forthwith thereof in writing; and |
| 54.17.3 | forthwith cause the relevant trust savings or other interest-bearing account to be endorsed to the effect that it is an account opened in terms of Section 86(4) of the Act. |
| 54.18 | A firm shall not, in connection with any mandate which the firm has accepted to invest trust funds, agree or arrange to receive from a bank any commission, fee or other reward, without having disclosed, in writing, such commission, fee or reward to the person who has given the firm the mandate to invest. |
Responsibility for ensuring compliance
| 54.19 | Every partner of a firm, and every director of a juristic entity referred to in section 34(7) of the Act, and every advocate referred to in section 34(2)(b) of the Act, will be responsible for ensuring that the provisions of the Act and of those rules relating to trust accounts of the firm are complied with. |
Reporting Requirements
| 54.20 | A firm shall at its expense once in each calendar year or at such other times as the Council may require, appoint an auditor to discharge the duties assigned to the auditor in terms of these rules; provided that: |
| 54.20.1 | the Council may refuse to recognise the appointment by a firm of an auditor of whom the Council on good cause does not approve; |
| 54.20.2 | the Council may at any time, in its discretion and at its expense, appoint an auditor or a suitably qualified inspector to discharge those duties; |
| 54.20.3 | on the written application of a firm the Council may authorise the firm to appoint a person who in the opinion of the Council is suitably qualified as an inspector to perform the functions of an auditor in terms of these rules, subject to such terms as the Council in its discretion may determine; provided that the mere appointment of a person who is not an auditor as an inspector in terms of this rule will not imply that that inspector is engaging in public practice or holding himself or herself out as a registered auditor in public practice. |
| 54.21 | A firm which commences practice for the first time shall, within six months of so commencing practice, furnish the Council with a report substantially in the form of the Eighth Schedule to these rules (or in such other form as the Council may determine after consultation with the Independent Regulatory Board for auditors) covering the first four months of that firm's practice. |
| 54.22 | A firm shall allow an auditor or inspector appointed under accounting rule 54.20 access to such of its records as the auditor or inspector may deem necessary to examine for the purposes of discharging his duties under accounting rule 54.24 and shall furnish the auditor or inspector with any authority which may be required to enable the auditor or inspector to obtain such information, certificates or other evidence as the auditor or inspector may reasonably require for such purposes. |
| 54.23 | A firm shall ensure that the report to be furnished by an auditor or inspector in terms of accounting rule 54.21 or 54.22 is furnished in its original format (which may include an electronic format specified by the Council) within the required time or on the required date; provided that on written application by a firm relating to a particular report the Council may, in its discretion and on such conditions as it may stipulate, condone a failure by that firm to comply with this requirement. The form of such report shall be obtained only from the Council, which shall issue it on request to any firm or to any auditor or inspector appointed in terms of accounting rule 54.20. |
| 54.24 | A firm shall ensure that every auditor or inspector who has accepted an appointment in terms of accounting rule 54.20 shall: |
| 54.24.1 | within six months of the annual closing of the accounting records of the firm concerned or at such other times as the Council may require and subject to any conditions that the Council may impose, furnish the Council with a report which shall be in the form of the Eighth Schedule to these rules or in such other form as the Council may determine after consultation with the Independent Regulatory Board for Auditors; |
| 54.24.2 | without delay report in writing directly to the Council if at any time during the discharge of his or her functions and duties under this rule: |
| 54.24.2.1 | it comes to his or her notice that at any date the total of the balances shown on trust accounts in the accounting records of the firm exceeded the total amount of the funds in its trust banking account, its trust investment account and held by it as trust cash; |
| 54.24.2.2 | any material queries regarding the firm's accounting records which the auditor or inspector has raised with the firm have not been dealt with to his satisfaction; |
| 54.24.2.3 | any reasonable request made by the auditor or inspector for access to the firm's records or for any authority referred to in accounting rule 54.24 has not been met to his or her satisfaction; |
| 54.24.3 | state in his or her report in terms of accounting rule 54.24.1 that to the best of his or her belief: |
| 54.24.3.1 | the firm has not, during the period under review, carried on the business of an investment practice; or |
| 54.24.3.2 | the firm has carried on the business of an investment practice and has complied with these rules. |
| 54.25.1 | The Council may reject a report in terms of accounting rule 54.24 from an auditor or inspector whose appointment the Council has refused to recognise, as provided in accounting rule 54.20.1, or which is not in the prescribed format. |
| 54.25.2 | A copy of the report on the prescribed form required under accounting rule 54.24.1 and any report made in terms of accounting rule 54.24.2 shall be sent by the auditor or inspector to the firm concerned. |
| 54.26 | Where the Council is satisfied that it is not practicable to obtain the services of an auditor or inspector for the issuing of a report as prescribed under accounting rule 54.24, it may in lieu thereof accept as compliance with the requirements of accounting rule 54.24 such other evidence as it may deem sufficient. |
| 54.27 | The Council may by notice to trust account practices amend the Schedule or the audit report form as may be required from time to time to report such information as may be required. |
| 54.28 | A firm is obliged to report in the relevant sections of the accounting rule 55 report the gross interest earned and the gross charges levied in respect of trust accounts in terms of sections 86(2) or 86(3) or 86(4) of the Act, even if no claim in respect of bank charges is to be made. |
| 54.29 | In order to qualify for the issue of a Fidelity Fund certificate, a trust account practitioner must ensure that an unqualified audit or inspector's report is issued in respect of any firm or firms of which he or she is or was a partner or director or sole practitioner during the financial period under review, and is delivered timeously to the Society. |
| 54.30 | Where the audit or inspector's report in respect of the trust account of the firm is qualified by the auditor or inspector, as the case may be, the firm shall provide the Council with such information as the Council may require to satisfy itself that the firm's trust account is in good order, that the trust account practitioner remains fit and proper to continue to practise and that Fidelity Fund certificates may be issued to the members of the firm. |
Closure of firm
| 54.31 | A trust account practitioner who practises for his or her own account and who intends to cease practising shall, before he or she so ceases to practice, provide the Council, in writing, with the following information: |
| 54.31.1 | notice of the trust account practitioner's intention to cease practising for his or her own account; |
| 54.31.2 | his or her future contact particulars, being his or her residential and business address, fax, e-mail and telephone details; |
| 54.31.3 | the steps to be taken to satisfy the Council that provision has been made for the effective winding up of his or her practice, both in respect of current files and archived files and in respect of accounting records; |
| 54.31.4 | the name, address and telephone number of his or her bookkeeper; |
| 54.31.5 | the status of the writing up of his or her accounting records by providing the Council with a copy of the latest trust reconciliation; |
| 54.31.6 | the name of the auditor or inspector who will be submitting the final audit report; |
| 54.31.7 | updated contact particulars if the trust account practitioner remains on the roll. |
| 54.32 | A trust account practitioner shall be required to submit, within three months of the date that such practitioner ceases to practise: |
| 54.32.1 | an audit or inspector's report for any period for which an audit or review is outstanding, up to date of closure of the trust banking account; |
| 54.32.2 | a final list of trust creditors as at the date on which the trust account practitioner ceased to practise; |
| 54.32.3 | confirmation from the auditor or inspector that all trust creditors have been paid; |
| 54.32.4 | in the event of trust creditors being taken over by another firm, a list of trust creditors, signed by the trust account practitioner, after the auditor or inspector confirms that that list is correct, and signed by or on behalf of the partners of the firm taking over the trust creditors, confirming that they accept liability for claims of the trust creditors listed and that they have received the funds; |
| 54.32.5 | a certificate of nil balance from the trust account practitioner's bank confirming that the trust banking account has been closed. |
| 54.33 | In the event of non-compliance with accounting rule 54.31 or 54.32, or if at any time the Council has reason to believe that adequate provision has not been made for the winding up of the practice or for the protection of the interests of clients' affairs, the Council may take such steps as it deems necessary to wind up the practice subject to the Council being entitled to recover the reasonable expenses incurred and reasonable compensation for work done in connection therewith from the trust account practitioner concerned. |
Opening of practice
| 54.34 | An office other than a branch office opened by a firm, which for the first time opens a practice within the jurisdiction of a Provincial Council, shall be designated as a main office of the firm in that jurisdiction, and the firm shall ensure that: |
| 54.34.1 | banking accounts for the firm are opened; |
| 54.34.2 | consolidated accounting records are kept for the firm, including all branch offices. |
[Part XII Rule 54.34 substituted by the South African Legal Practice Council, Notice No. 664, GG45482, dated 12 November 2021]
| 54.35 | The Council may at any time inspect or cause to be inspected the accounting records of any firm to satisfy itself that the provisions of sections 86 and 87 of the Act, read with these rules, have been or are being complied with. Such inspection may be conducted by the Council, or by an auditor or suitably qualified inspector appointed by the Council, or by the Board at the request of the Council. |
Report of dishonest or irregular conduct
| 54.36 | Unless prevented by law from doing so every legal practitioner is required to report to the Council any dishonest or irregular conduct on the part of a trust account practitioner in relation to the handling of or accounting for trust money on the part of that trust account practitioner. |
| 55. | Investment Practice Rules |
Definitions
| 55.1 | A firm shall for the purpose of this rule be deemed to be carrying on the business of an investment practice if it invests funds on behalf of a client or clients and it controls or manages such investments, whether directly or indirectly. |
| 55.2 | A client shall for the purpose of this investment practice rule include any person on whose behalf a firm invests funds or manages or controls investments, whether or not such person is otherwise a client of the firm concerned. |
| 55.3 | This investment practice rule shall not apply to: |
| 55.3.1 | investments made pursuant to sections 86(3) of the Act, which are not transactions contemplated in investment practice rule 55.1; |
| 55.3.2 | any investment of a temporary nature that is made in the course of and incidental to a conveyancing or other matter, including litigation, to which the investing client is a party; |
| 55.3.3 | investments made by attorneys in their capacity as executors, trustees, curators or in any similar capacity in so far as such investments are governed by any other statutory enactment or regulation; |
| 55.3.4 | any investment (other than one referred to in investment practice rule 55.1) made with a bank in the name of that client alone and on the written instructions of that client. |
Mandates
| 55.4 | A firm carrying on an investment practice shall obtain an investment mandate from each client before or as soon as possible after investing funds for that client. The form of the investment mandate shall be substantially in the form of the Ninth Schedule to these rules, and shall contain a statement that the client acknowledges that moneys so invested do not enjoy the protection of the Fund. |
Reports to clients in relation to investments
| 55.5 | Every firm carrying on an investment practice shall report to its client in writing in terms of the client's investment mandate at least once every twelve months on income earned and capital movements during the period of the report. That report shall reflect all commission earned or other charges made by the firm in carrying out the mandate. |
Accounting records for investment practices
| 55.6 | Every firm carrying on an investment practice shall, in addition to its normal accounting records, also keep a separate trust account record and supporting documents in respect of each client, which record shall reflect: |
| 55.6.1 | payments of all monies entrusted to it from time to time by the client for investment pursuant to the mandate granted by the client in terms of investment practice rule 55.4; |
| 55.6.2 | payments of all monies invested by it on the client's behalf; |
| 55.6.3 | payments of all amounts, both capital and income, derived from investments and received for the client's account; |
| 55.6.4 | all payments made by it to the client in respect of the client's investments, and |
| 55.6.5 | all charges paid to the firm in respect of services rendered by it to the client pursuant to the client's mandate in terms of investment practice rule 55.4. |
| 55.7 | The accounting records and other supporting documents referred to in investment practice rule 55.6 shall be retained by the firm in such manner as to enable it to furnish each client upon request with all current details of the client's investments as recorded in investment practice rule 55.6. Such accounting records, other supporting documents and systems shall be maintained in sufficient detail and be cross-referenced to the trust account records retained in respect of each client, in such a way as to provide an adequate and appropriate audit trail which will enable a particular transaction to be identified at any time and traced through the accounting records to the client. The system shall collect the information in an orderly manner and the accounting records and other supporting documents shall be properly arranged, filed and indexed so that any particular record can be promptly accessed. Where accounting records are maintained by means other than on paper, adequate facilities must exist for such records to be reproduced in printed form. |
| 55.8 | All accounting records required to be retained in terms of investment practice rule 55.3 and copies of all reports dispatched in terms of rule 55.3 shall be retained for at least five years, unless there is statutory provision to the contrary, from the date of the last entry recorded in each particular book or other document of record, and shall be held at the same office as the firm's other accounting records. |
Pooling of investments
| 55.9 | No firm may mix deposits in a pooled account or make other money market investments in any manner otherwise than by accepting funds as agent for each participating client and placing such funds with a bank in a savings account or on the money market on behalf of the client. The firm shall obtain from the bank an acknowledgement of receipt of each deposit or money market investment and such written receipts shall be retained by the firm as part of its accounting records. |
| 55.10 | All monies received by a firm for investment with a bank shall be paid to such bank as soon as reasonably possible after receipt by the firm, having regard to matters such as whether a payment by cheque has been cleared with the issuing bank. |
Restrictions applicable to certain investments
| 55.11 | A firm may not invest on behalf of a client: |
| 55.11.1 | in shares or debentures in any company which is not listed on a licensed securities exchange in the Republic, unless it is a subsidiary of a listed company; or |
| 55.11.2 | in loans in respect of which, in the firm's reasonable opinion at the time of making the investment, there is no adequate security |
unless the client's specific written authorisation for each such investment has first been obtained.
Compliance with requirements of Financial Advisory and Intermediary Services FAIS Act.
| 55.12 | Every firm carrying on an investment practice must comply with all the applicable requirements of the Financial Advisory and Intermediary Services Act, 37 of 2002 and the regulations thereunder. |
Investment of funds by firms on behalf of persons, otherwise than in terms of investment practice rule 55
| 56.1 | A firm shall not invest any funds on behalf of any person otherwise than in accordance with the written instructions of that person, detailing the manner and form of the investment. |
| 56.2 | The written instructions referred to in rule 56.1: |
| 56.2.1 | shall be obtained by the firm concerned before the investment is made, save that, in cases of urgency, the firm may obtain them as soon as possible thereafter and shall forthwith upon making the investment request the person concerned in writing to furnish it with such instructions, detailing in that request the manner and form of the investment; |
| 56.2.2 | may be incorporated in a written contract to which the person giving the instructions is a party. |
| 56.3 | If the firm does not receive the written instructions to be obtained by it in terms of rule 56.2 within one month after its written request the firm shall forthwith notify the Council in writing and at the same time furnish the Council with copies of all relevant letters of request and responses, if any. |
General Provisions
| 57.1 | Failure by a firm to comply with any of the provisions of the rules contained in Part XII of the rules shall constitute misconduct on the part of the partners or directors of the firm. |
| 57.2 | An administrative fine in an amount to be determined by the Council from time to time shall be payable by all firms whose audit reports are not submitted within six months of the annual close of the accounting records of the firms concerned, as prescribed by accounting rule 54.24. |
| 57.3 | It shall constitute misconduct, or an abuse or misuse of trust funds, for a trust account practitioner to enter into any abnormal or unusual banking arrangement in relation to trust accounts such as "no interest - no charges" or to agree to or acquiesce in reduced interest or to increased charges in return for, or in the expectation or hope of, work allocated or referred to the trust account practitioner by the bank or corresponding advantages allowed by the bank to him or her in respect of his or her business or private accounts. |
| 57.4 | The Council shall be entitled to recover from any firm any expenditure incurred by the Council resulting from the firm's failure to comply with these accounting rules. |
