MUTUAL FUND ACT, 1997

PART II - MUTUAL FUND

3. (1) A mutual fund shall not carry on business in or from within Seychelles unless -

(a) it has lodged with the Authority the particulars of -

(i) the address of the registered office or principal place of business of the mutual fund in Seychelles;

(ii) the names, address and any other prescribed particulars of the operators and in addition, in the case of an overseas company, the managing agent in Seychelles, of the mutual fund, and

it informs the Authority of any change in the particulars each time it occurs thereafter within 7 days of its occurrence;

(b) in the case of a mutual fund which is a unit trust, it has as resident trustee which is -

(i) a financial institution; or

(ii) a corporate body which is incorporated under the Companies Act and which has a paid up share capital of not less than the amount prescribed;

(c) it holds a mutual fund licence;

(d) the administration of the mutual fund is being undertaken by a licensed mutual fund administrator;

(e) there is filed with the Authority in respect of the mutual fund a current offering document and a written synopsis of the offering document;

(f) there has been paid the current prescribed annual fee for the mutual fund.

(2) A mutual fund is carrying on business in or from within Seychelles if -

(a) the mutual fund is incorporated, registered or established in Seychelles;

(b) whether it is incorporated, registered or established in Seychelles or not -

(i) its management or administration is carried on in Seychelles; or

(ii) in the case of a unit trust -

A. the trust instrument is governed by the laws of Seychelles; or

B. its administrator, investment adviser, investment manager or one of its trustees -

AA is a company or companies incorporated or registered or established in Seychelles; or

AB is one or more companies or individuals any one of whom has a place of business in Seychelles or uses an address in Seychelles; or

(iii) in the case of a company -

A its profit, income or benefits arises from the operation of a company which is incorporated or registered or has a place of business or uses an address in Seychelles, or

B its administrator, investment adviser, investment manager -

AA is a company or companies incorporated or registered or established in Seychelles; or

AB is one or more companies or individuals any one of whom has a place of business in Seychelles or uses an address in Seychelles.

(3) An offering document for the purposes of subsection (1)(e) shall -

(a) describe the equity interests in all material respects;

(b) contain the prescribed details; and

(c) contain such other information as is necessary to enable a prospective investor in the mutual fund to make an informed decision as to whether or not to subscribe for or purchase any of the equity interests.

(4) A mutual fund shall not have filed a current offering document under subsection (1)(e) if there is a continuing offer of equity interests in the mutual fund and a promoter or operator of the fund -

(a) is aware of any material change that affects a material information in the offering document filed with the Authority; and

(b) has not, within 21 days of becoming aware of the material change, filed with the Authority an amended offering document incorporating the change.

(5) The obligation under subsection (1)(e) shall be without prejudice to any duty under another written law.

(6) Each operator of a mutual fund shall ensure that the mutual fund does not carry on or attempt to carry on business in or from within Seychelles contrary to subsection (1).

4. (1) An application for a mutual fund licence -

(a) shall be made to the Authority in the form provided by the Authority;

(b) shall be accompanied by -

(i) information necessary to satisfy the Authority as provided in subsection (2);

(ii) the current offering document or, where one has not been settled, the latest draft offering document together with a synopsis of the document,

(iii) the prescribed fees.

(2) The Authority shall not grant a mutual fund licence to a mutual fund unless the Authority is satisfied that it is a company or a unit trust and -

(a) the fund has its registered office or a principal place of business in Seychelles;

(b) in the case of a unit trust, that it has a resident trustee as provided in section 3(1)(b);

(c) the fund is a private or public mutual fund;

(d) each promoter of the fund is of sound reputation;

(e) the administration of the fund will be undertaken by a licensed mutual fund administrator;

(f) the business of the fund and any offer of equity interest in it will be carried out in a proper manner;

(g) the name of the fund is not identical to or does not so nearly resemble, as to be likely to deceive, the name of a company, corporation, firm, business or other entity, whether or not within Seychelles;

(h) the name of the fund is not likely to suggest, falsely, the patronage of or connection with some person or authority, whether within Seychelles or elsewhere;

(i) the name of the fund is not likely to suggest, falsely, that the fund has a special status in relation to or derived from the Government or the Republic;

(j) the name of the fund does not contain any word or expression the use of which is prohibited under any written law.

(3) The Authority may grant a mutual fund licence subject to such conditions as the Authority considers appropriate.

(4) The Authority may, on the written application of a licensed mutual fund, waive, vary or revoke any condition of its licence.

(5) Each operator of a mutual fund shall ensure that the mutual fund complies with this Act and all the conditions of its licence.

(6) For the purposes of subsection 2(c) -

"private mutual fund" means a mutual fund which -

(a) in the case of a company, has a fully paid-up share capital of not less than United States Dollar 500,000 (or the equivalent in another currency acceptable to the Authority) which is held by not more than 50 investors the majority of whom are capable of appointing or removing the directors of the fund;

(b) in the case of a unit trust, has equity interest of not less than United States Dollar 500,000 (or the equivalent in another currency acceptable to the Authority) purchasable by not more than 50 prospective investors;

"public mutual fund" means a mutual fund -

(a) which, in the case of a company, has an authorised share capital of not less than United States Dollar 2,000,000 (or the equivalent in another currency acceptable to the Authority) purchasable by prospective investors but of which at least United States Dollar 1,000,000 (or the equivalent in another currency acceptable to the Authority) has been fully paid-up at all time;

(b) which, in the case of a unit trust, has, equity interest of not less than United States Dollar 2,000,000 (or the equivalent in another currency acceptable to the Authority) purchasable by more than 50 prospective investors but of which equity interest at least United States Dollars 1,000,000 (or the equivalent in another currency acceptable by the authority) has been issued and fully paid for at all time;

(c) whose shares are listed on a stock exchange specified by the Authority by Notice in the Gazette.

5. (1) A licensed mutual fund shall have its accounts audited at the end of each of its financial years by an auditor.

(2) A licensed mutual fund shall send its audited accounts for a financial year to the Authority within 4 months of the end of the financial year or within such extension of that period as the Authority may allow.