MUTUAL FUND ACT, 1997

PART V - SUPERVISORY POWER OF THE AUTHORITY

14. The Authority may at any time direct a licensed mutual fund or licensed mutual fund administrator to change its name to a name approved by the Authority if it is of the opinion that the name of the mutual fund or mutual fund administrator is a name which if it were the name of an applicant for a licence for a mutual fund or mutual fund administrator the Authority would have been prevented from granting a licence to the applicant under section 4(2) or section 8(2).

15. The Authority may at any time require a licensed mutual fund or licensed mutual fund administrator to have its accounts audited and to submit the audited accounts to the Authority within such time as the Authority may specify.

16. The Authority may at any time request such information or explanation which it reasonably requires to enable it to carry out its functions under this Act from -

(a) the promoter or operators of a licensed mutual fund in respect of the fund, or

(b) a licensed mutual fund administrator or an operator of a mutual fund administrator in respect of the mutual fund administrator or in respect of its mutual fund administration.

17. (1) The Authority may at any time -

(a) request the promoters, operators or other senior officers of a licensed mutual fund to give to an authorised officer of the Authority access to the records relating to the mutual fund,

(b) request a licensed mutual fund administrator or the promoters or other senior officers of the licensed mutual fund administrator to give to an authorised officer of the Authority access to -

(i) the records of the administrator, and

(ii) any records under the control of the mutual fund administrator,

relating to mutual fund administration carried out by the mutual fund administrator.

(2) An authorised officer of the Authority may take copy of or extract from any records to which the authorised officer has been given access under subsection (1).

18. (1) Where the Authority has reasonable grounds for believing that -

(a) a person is carrying on business as a mutual fund in breach of section 3, or

(b) a person is carrying on business as a mutual fund administrator in breach of section 7,

the Authority may direct the person to provide the Authority with such information or explanation as the Authority reasonably requires or to provide the Authority with access to the records under the control of the person to enable the Authority to carry out its functions under the Act.

(2) An authorised officer of the Authority may take copy of or extract from any records to which access has been given under subsection (1).

19. Where the Authority has reasonable grounds for believing that -

(a) a person is carrying on business as a mutual fund in breach of section 3, or

(b) a person is carrying on business as a mutual fund administrator in breach of section 7,

the Authority may apply to the court for such orders as it thinks fit to preserve the assets or interests of persons who have invested in or with or are creditors of the person referred to in paragraph (a) or of a mutual fund administered by a person referred to in paragraph (b).

20. (1) The Authority may take all or any of the actions specified in subsection (3) if it is satisfied that a licensed mutual fund -

(a) is or is likely to become unable to meet its obligations as they fall due;

(b) is carrying on business or is winding up its business voluntarily in a manner that is prejudicial to its investors or creditors; or

(c) is carrying on business without complying with a condition of its licence.

(2) For the purposes of ascertaining whether or not an event referred to in subsection (1) has occurred or is likely to occur, the Authority may at any time inquire into the reason for any failure of -

(a) a licensed mutual fund -

(i) to change its name in accordance with a direction given to it under section 14;

(ii) to have its accounts audited in accordance with section 5(1) or to send its audited accounts to the Authority in accordance with section 5(2);

(iii) to pay its prescribed annual licence in accordance with section 6;

(iv) to have its accounts audited or to submit the audited accounts to the Authority when required to do so under section 15; or

(b) a promoter or operator of a licensed mutual fund -

(i) to give the Authority information or an explanation when requested to do so under section 16, or

(ii) to give the Authority access to records when requested to do so under section 17.

(3) For the purpose of subsection (1) the Authority may -

(a) revoke the licence of a mutual fund,

(b) impose conditions or further conditions on the licence of a mutual fund or amend or revoke any conditions,

(c) require the substitution of any promoter or operator of a mutual fund,

(d) appoint a person to advise a mutual fund on the proper conduct of its affairs,

(e) appoint a person to assume control of the affairs of a mutual fund,

(f) apply to the court for an order to take such other action as it considers necessary to protect the interest of investors in and creditors of a licensed mutual fund,

and, for avoidance of doubt, the taking of one or more actions under this subsection in respect of a mutual fund shall not prevent the Authority at any time thereafter from taking any further action under this subsection in respect of the mutual fund.

(4) Where it is practical to do so, the Authority shall inform the investors and operators of a licensed mutual fund of any action the Authority is taking or intends to take in respect of the mutual fund.

(5) A person appointed under subsection (3) (d) or (e) in respect of a licensed mutual fund is appointed at the expense of the mutual fund and any expenses incurred by the Authority by virtue of the appointment is an amount due to the Authority payable by the mutual fund.

(6)A person appointed under subsection (3) (e) in respect of a licensed mutual fund has all the powers necessary, to the exclusion of the operators of the mutual fund, to administer the affairs of the mutual fund in the best interests of the investors and creditors of the mutual fund.

(7) The powers referred to in subsection (6) include the power to terminate the business of the mutual fund if it is adjudged insolvent.

(8)A person appointed in respect of a mutual fund under subsection (3) (d) or (e) shall -

(a) when requested to do so by the Authority, supply the Authority with such information or explanation in respect of the mutual fund as is specified by the Authority;

(b) within three months of being appointed, or within such other period as the Authority may specify, prepare and supply to the Authority a report on the affairs of the mutual fund making, where appropriate, recommendations in respect of the mutual fund; and

(c) if the appointment of the person is not terminated after supplying the report referred to in paragraph (b), subsequently supply to the Authority such other explanation, information, reports and recommendations as the Authority shall specify.

(9) If a person appointed in respect of a licensed mutual fund under subsection (3) (d) or (e) -

(a) fails to comply with an obligation under subsection (8), or

(b) in the opinion of the Authority, is not carrying out the obligations imposed on the person in respect of the mutual fund satisfactorily,

the Authority may revoke the appointment and appoint some other person.

(10) On receipt of any explanation, information or a report under subsection (8) in respect of a licensed mutual fund, the Authority may-

(a) require the mutual fund to reorganise its affairs in a manner specified by the Authority,

or

(b) apply to the court for the mutual fund to be wound up under the Companies Act,

and may take such action in respect of the appointment or continued appointment of the person appointed under subsection (3) (d) or (e) as the Authority considers appropriate.

(11) If the Authority takes action under subsection (10) it may -

(a) apply to the court for an order to take such other action as it consider necessary to protect the interests of investors and creditors of the mutual fund; and

(b) take any other action provided for in that subsection or subsection (3).

(12) Without prejudice to any other power of the Authority, the Authority may at any time revoke the licence of a mutual fund if-

(a) the Authority is satisfied that it has ceased to carry on or to attempt to carry on business as a mutual fund; or

(b) it is placed in liquidation or is dissolved.

(13)For the purposes of subsection (10)(b), the Authority shall be deemed to be empowered under the Companies Act to present a winding up petition in respect of the licensed mutual fund on the ground that it is just and equitable that the mutual fund be wound up.

21. (1) The Authority may take all or any of the actions specified in subsection (3) if it is satisfied that a licensed mutual fund administrator -

(a) is or is likely to become unable to meet its obligations as they fall due;

(b) is carrying on business or is winding up its mutual fund administration business in a manner that is prejudicial to investors in a mutual fund it is administrating or to its creditors or to the creditors of a mutual fund it is administering; or

(c) is carrying on the business of mutual fund administration without complying with a condition of its licence.

(2) For the purpose of ascertaining whether or not an event referred to in subsection (1) has occurred or is likely to occur, the Authority may at any time inquire into the reason for -

(a) the issue by the mutual fund administrator of shares without the approval of the Authority contrary to section 9(1);

(b) the appointment of an operator or similar senior officer or the changing of an agent resident in Seychelles of the administrator without the written approval of the Authority contrary to section 9(1);

(c) any shares in the mutual fund administrator being disposed of or dealt in without the approval of the Authority contrary to section 9(2), or

(d) any failure of a licensed mutual fund administrator -

(i) to provide a guarantee or insurance cover or other financial support or to increase its fully paid-up capital in accordance with a direction given under section 10;

(ii) to give the Authority notice that it has started to provide the principal office of a licensed mutual fund in accordance with section 11(1);

(iii) to pay the prescribed annual fee in respect of a licensed mutual fund in accordance with section 11(4) (a) or to pay its prescribed fee in accordance with section 11(4)(b);

(iv) to satisfy itself with respect to a licensed mutual fund or a promoter or operator of a fund as required by section 11(2)(b);

(v) to give the Authority written notice in respect of the affairs of a licensed mutual fund as required by section 11(3);

(vi) to have its accounts audited in accordance with section 12(1) or to send its audited accounts to the Authority in accordance with section 12(2);

(vii) to change its name in accordance with a direction given to it under section 14;

(viii) to have its accounts audited and to submit the audited accounts to the Authority when instructed to do so under section 15;

(ix) to give the Authority information or explanation when requested to do so under section 16, or

(x) to comply with a request of the Authority under section 17(1)(b) to give access to the records specified under section 17(1)(b).

(3)For the purpose of subsection (1) the Authority may-

(a) revoke the licence of a mutual fund administrator,

(b) impose conditions or further conditions on the licence of a mutual fund administrator or amend or revoke any condition,

(c) require the substitution of an operator or similar senior officer of the administrator,

(d) appoint a person to advise the administrator on the proper conduct of its mutual fund administration,

(e) appoint a person to assume control of the affairs of the administrator relating to mutual fund administration,

(f) apply to the court for an order to take such other action as it considers necessary to protect the interests of investors in the funds administered by the administrator, the creditors of the funds and the creditors of the administrator,

and, for avoidance of doubt, the taking of one or more actions under this subsection in respect of an administrator shall not prevent the Authority at any time after from taking any further action under this subsection in respect of the administrator.

(4) A person appointed under subsection (3) (c) or (d) in respect of a licensed mutual fund administrator is appointed at the expense of the administrator and any expenses incurred by the Authority by virtue of the appointment is an amount due to the Authority payable by the administrator.

(5) A person appointed under subsection (3) (d) in respect of a licensed mutual fund administrator has all the powers necessary, to the exclusion of any other person (other than a liquidator, receiver or judicial administrator), to administer the affairs of the administrator relating to mutual fund administration in the best interest of investors in the funds administered by the administrator and its creditors and the creditors of the administrator.

(6) The powers referred to in subsection (5) include the power to terminate the business of the administrator if it is adjudged insolvent so far as it relates to mutual fund administration.

(7) A person appointed in respect of a licensed mutual fund administrator under subsection (3) (c) or (d) shall -

(a) when requested to do so by the Authority, supply the Authority with such information in respect of the administration of mutual funds by the mutual fund administrator as is specified by the Authority;

(b) within three months of being appointed, or within such other period as the Authority may specify, prepare and supply to the Authority a report on the administration of mutual funds by the mutual fund administrator making, where appropriate, recommendations in respect of the administrator; and

(c) if the appointment of the person is not terminated after supplying the report referred to in paragraph (b), subsequently supply to the Authority such other information, reports and recommendations as the Authority in respect of a licensed mutual fund administrator shall specify.

(8) If a person appointed under subsection (3) (c) or (d) -

(a) fails to comply with an obligation under subsection (7), or

(b) in the opinion of the Authority, is not carrying out the obligations imposed on the person in respect of the mutual fund administrator satisfactorily,

the Authority may revoke the appointment and appoint some other person.

(9) On receipt of any information or a report under subsection (7) in respect of a licensed mutual fund administrator, the Authority may -

(a) require the administrator to reorganise its affairs in a manner specified by the Authority, or

(b) apply to the court for the administrator to be wound up under the Companies Act,

and may take such action in respect of the appointment of the person appointed under subsection (3) (c) or (d) as the Authority shall consider appropriate.

(10) If the Authority takes action under subsection (9) it may-

(a) apply to the court for an order to take such other action as it considers necessary to protect the interests of investors in the funds administered by the administrator and its creditors and the creditors of the administrator; and

(b) take any other action provided for in that subsection or subsection (3).

(11) Without prejudice to any other power of the Authority, the Authority may at any time revoke the licence of a mutual fund administrator if -

(a) the Authority is satisfied that it has ceased to carry on business as a mutual fund administrator;

(b) it is placed in liquidation or is dissolved; or

(c) it is in breach of any other duty or obligation prescribed by this Act.

(12) For the purposes of subsection (9)(b), the Authority shall be deemed to be empowered under the Companies Act to present a winding up petition in respect of the mutual fund administrator on the ground that it is just and equitable that the mutual fund administrator be wound up.