MUTUAL FUND ACT, 1997

(Act No. 13 Of 1997)

I assent

F. A. Rene

President

29th December, 1997

AN ACT to regulate mutual funds and their administrators carrying on business in or from within Seychelles and for related purposes.

ENACTED by the President and the National Assembly

PART I - PRELIMINARY

1. This Act may be cited as the Mutual Fund Act, 1997 and shall come into operation on such date as the Minister may, by Notice published in the Gazette, appoint.

2. In this Act -

"auditor" means a person licensed to provide services as an auditor under the Licences Act and approved by the Authority to act as an auditor under this Act;

"Authority" means the Authority referred to in Part IV;

"company" means a body corporate incorporated or registered under the Companies Act;

"Companies Act" means the Companies Act 1972 or the written law which replaces that Act;

"equity interest" means a share or trust unit that -

(a) carries an entitlement to participate in the profits or gains of a company or unit trust, and

(b) may or may not be redeemable or re-purchasable at the option of the investor before the commencement of winding up or dissolution of the company or unit trust;

"investor", in respect of a mutual fund, means the legal holder of record or legal holder of a bearer instrument representing an equity interest in the mutual fund but does not include a promoter or director;

"licensed mutual fund" means a mutual fund that is licensed under this Act;

"licensed mutual fund administrator" means a mutual fund administrator that is licensed under this Act;

"mutual fund" means a unit trust or an investment company that issues or has equity interests, the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and enabling investors in the mutual fund to receive profits or gains from the acquisition, holding, management or disposal of investments but does not include -

(a) a person licensed under -(i) Financial Institutions Act to carry on banking business, (ii) the Insurance Act;

(b) a co-operative established under the Co-operatives Act;

(c) a corporation, international business company established under the International Business Companies Act, a statutory corporation, a trust or partnership which is primarily engaged in industrial, commercial or charitable enterprise;

"mutual fund administration", in respect of a mutual fund, means -

(a) to manage (including to control all or substantially all the assets of the mutual fund) or to administer the mutual fund;

(b) to provide the principal office of the mutual fund in Seychelles;

(c) to provide a director to the mutual fund; or

(d) to provide the administrative services for a mutual fund including the accounting, valuation or reporting services;

but does not include -

(e) the provision of a registered office to a mutual fund where the usual corporate secretarial and related services are provided;

(f) in relation to a mutual fund, the maintenance of any register of equity interests or the filing and payment of fees under the Companies Act, the International Business Companies Act, the International Trusts Act or this Act;

(g) the provision of investment advice or management or trading execution services;

"mutual fund administrator" or "administrator" means a person who conducts mutual fund administration in or from Seychelles and includes -

(a) a company incorporated under the Companies Act,

(b) a foreign company registered under the Companies Act,

(c) an International Business Company incorporated under the International Business Companies Act,

that conducts mutual fund administration outside Seychelles;

"offering document", in respect of a mutual fund, means a document or series of documents on the basis of which-

(a) equity interests in the mutual fund are offered for sale; or

(b) persons are invited to subscribe for or purchase equity interests in the mutual fund,

but does not include any other notice, circular, advertisement, letter or other communication used in connection with the offer for sale of any equity interest in the mutual fund or the invitation to any person to subscribe for or purchase any equity interest in the mutual fund if before the offer or invitation is taken up or accepted the prospective investor is given the opportunity to consider an offering document containing the information specified by section 3(3);

"operator," in respect of a mutual fund, means -

(a) where the mutual fund is a unit trust, a trustee of that trust;

(b) where the mutual fund is a company, a director of that company; "professional adviser" means -

(a) a legal practitioner; or

(b) an accountant;

"promoter", in respect of a mutual fund or proposed mutual fund, means any person whether within or outside Seychelles who causes the preparation or distribution of an offering document in respect of the mutual fund or proposed mutual fund but does not include a professional adviser acting for or on behalf of such a person;

"record" means any means by which information may be stored.

"registered office" means -

(a) in respect of a company incorporated under the Companies Act, the registered office in terms of that Act;

(b) in respect of an overseas company registered under the Companies Act, the principal place of business in Seychelles under that Act;

(c) in the case of an international business company incorporated under the International Business Companies Act, the registered office of the company under that Act;

(d) in the case of a unit trust, the registered office of the trustee in Seychelles or the place of business of an individual trustee;

"share" in the case of a company limited by guarantee, includes an interest of a member of the company;

"trust unit" means a unit of participation in a unit trust;

"unit trust" means a trust established by a trustee which for valuable consideration issues trust units in the undertaking of the trust entitling the holder of a trust unit to a share in the profits or gains arising from the acquisition, holding, management or disposal of investments by the trustee of the trust, the proper law of which is the law of Seychelles or the law of any other jurisdiction.