The Capital Markets (Collective Investment Schemes) Regulations

These Regulations may be cited as the Capital Markets (Collective Investment Schemes) Regulations.

AI-assisted research synopsis — verify against the official legal text below.

Jurisdiction: Kenya
Instrument: Notice
Citation: Legal Notice 181 of 2001
Version: Undated source snapshot
Language: en

Source attribution: Source: Kenya Law

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About this statute

These Regulations may be cited as the Capital Markets (Collective Investment Schemes) Regulations. Section 2. Interpretation Section In these Regulations, unless the context otherwise requires— "Act" means the Capital Markets Act; "certificate of entitlement" means a document of title, statement of account or any other document Application for consent: the prescribed application fee; Lists documents required with an application and states that consent for registration lapses after three months. Application for registration of a collective investment scheme — text: "the incorporation documents;"

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Provisions of The Capital Markets (Collective Investment Schemes) Regulations

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Part I

PRELIMINARY

1
PRELIMINARY - 1. Citation

AI-assisted research summary: These Regulations may be cited as the Capital Markets (Collective Investment Schemes) Regulations.

Section 1. Citation Section These Regulations may be cited as the Capital Markets (Collective Investment Schemes) Regulations.
2
PRELIMINARY - 2. Interpretation

AI-assisted research summary: Section 2. Interpretation Section In these Regulations, unless the context otherwise requires— "Act" means the Capital Markets Act; "certificate of entitlement" means a document of title, statement of account or any other document

Section 2. Interpretation Section In these Regulations, unless the context otherwise requires— "Act" means the Capital Markets Act; "certificate of entitlement" means a document of title, statement of account or any other document evidencing ownership of the holder thereof to one or more shares acquired by the holder in a collective investment scheme; "custodian" means a company approved by the Authority to hold in custody funds, securities, financial instruments or documents of title to assets of a collective investment scheme; "dealing" means an act of buying, selling or agreeing to buy or sell or trade shares by a fund manager; "collective investment scheme portfolio" means all cash and other collective investment scheme portfolio for the time being held or deemed to be held upon trust pursuant to a trust deed establishing a collective investment scheme or other incorporation or offering document of a collective investment scheme, other than the amount for the time being standing to the credit of the distribution account; "dilution" means that a collective investment scheme may suffer reduction in the value of its collective investment scheme portfolio as a result of costs incurred in dealing in its underlying investments and of any spread between the buying and the selling prices of such investments; "holder" means any person (other than a fund manager) who is the lawful holder of a certificate evidencing that he has an interest in the collective investment scheme and includes a purchaser of or a subscriber for such an interest who is entitled to have a certificate issued to him; "initial charge" means that portion of the selling price of a share which represents the fund manager's charge in respect of expenditure incurred and work performed by it in connection with the creation and issue of such share but does not include any compulsory charge; "portfolio" means a group of securities in which members of the public are invited to acquire shares pursuant to the collective investment scheme and include any amount in cash forming part of the assets pertaining to such portfolio; "shillings" means shillings in the currency of the Republic of Kenya; "trust" means a trust within the meaning of the Trustee Act (Cap. 167); "trust deed" in relation to a collective investment scheme, means the trust deed that sets out the trusts governing the unit trust or mutual fund and includes every instrument that varies those trusts, or effects the powers, duties, or functions of the trustee or manager of the unit trust or mutual fund; "trustee" in relation to a unit trust, means a trustee in which are invested the money, investments or other collective investment scheme portfolio that are for the time being subject to the trusts governing the unit trust; "unit" means an undivided share in the collective investment scheme portfolio of a unit trust scheme; "working day" excludes Saturday, Sunday and public holidays.

Part II

CONSENT, REGISTRATION AND APPROVAL OF COLLECTIVE INVESTMENT SCHEMES

3
CONSENT, REGISTRATION AND APPROVAL OF COLLECTIVE INVESTMENT SCHEMES - 3. Application for consent.

AI-assisted research summary: Application for consent: the prescribed application fee;

Section 3. Application for consent. Section the prescribed application fee;
4
CONSENT, REGISTRATION AND APPROVAL OF COLLECTIVE INVESTMENT SCHEMES - 4. Documents to accompany application.

AI-assisted research summary: Lists documents required with an application and states that consent for registration lapses after three months.

Section 4. Documents to accompany application. Section 4(1)(a) draft incorporation documents of the collective investment scheme; Section 4(1)(b) memorandum and articles of association of the promoter; Section 4(1)(c) memorandum and articles of association of the proposed fund manager; Section 4(1)(d) business plan; Section 4(1)(e) one bank reference; and Section 4(1)(f) two professional or business references. Section 4(2) Consent granted for the registration of a collective investment scheme shall lapse after three months.
5
CONSENT, REGISTRATION AND APPROVAL OF COLLECTIVE INVESTMENT SCHEMES - 5. Application for registration of a collective investment scheme

AI-assisted research summary: Application for registration of a collective investment scheme — text: "the incorporation documents;"

Section 5. Application for registration of a collective investment scheme Section the incorporation documents;
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CONSENT, REGISTRATION AND APPROVAL OF COLLECTIVE INVESTMENT SCHEMES - 6. Notification of registration.

AI-assisted research summary: The Authority must advise the promoter within thirty days of receipt of the application whether registration of the collective investment scheme has been granted.

Section 6. Notification of registration. Section The Authority shall advise the promoter within thirty days of receipt of the application for registration of a collective investment scheme whether registration has been granted.
7
CONSENT, REGISTRATION AND APPROVAL OF COLLECTIVE INVESTMENT SCHEMES - 7. Form of certificate

AI-assisted research summary: The certificate of registration for a collective investment scheme must be in Form 2 set out in the First Schedule.

Section 7. Form of certificate Section The certificate of registration of a collective investment scheme shall be in Form 2 set out in the First Schedule.

Part III

INCORPORATION DOCUMENTS OF A COLLECTIVE INVESTMENT SCHEME

10
INCORPORATION DOCUMENTS OF A COLLECTIVE INVESTMENT SCHEME - 10. Alterations subject to approval of the Authority.

AI-assisted research summary: Alterations to a collective investment scheme are subject to approval and, where made, must be filed with the Authority within seven days of the decision; permissible alterations include those necessary to comply with official requirements, that do not materially prejudice holders or increase costs or release certain parties from liability, or that correct a manifest error.

Section 10. Alterations subject to approval of the Authority. Section 10(1)(a) is necessary to enable compliance with fiscal, statutory or other official requirements; or— Section 10(1)(b) does not materially prejudice holders' interests, does not to any material extent release the trustee, custodian, fund manager or the board of directors, their agents or associates from any liability to holders and does not materially increase the costs payable from the collective investment scheme portfolio concerned; or Section 10(1)(c) is necessary to correct a manifest error. Section 10(2) All alterations under this Regulation shall be filed with the Authority within seven days of the relevant decision.
11
INCORPORATION DOCUMENTS OF A COLLECTIVE INVESTMENT SCHEME - 11. Inspection

AI-assisted research summary: The fund manager must make the incorporation documents available for inspection free of charge to any holders during ordinary office hours at the fund manager's registered office.

Section 11. Inspection Section The fund manager shall make the incorporation documents available for inspection free of charge to any of the collective investment scheme's holders at all times during ordinary office hours at the registered office of the fund manager.
8
INCORPORATION DOCUMENTS OF A COLLECTIVE INVESTMENT SCHEME - 8. Requirements of incorporation documents

AI-assisted research summary: The incorporation documents of a collective investment scheme must include the documents set out in the Second Schedule, and those incorporation documents must not contain any provision exempting or indemnifying trustees, custodians, fund managers or directors from liability to holders for breach of trust, fraud or negligence.

Section 8. Requirements of incorporation documents Section 8(1) The incorporation documents of a collective investment scheme shall contain the documents specified in the Second Schedule. Section 8(2) Nothing in the incorporation documents may provide that a trustee, custodian, fund manager or board of directors of a collective investment scheme shall be exempt from liability to a holder for breach of trust, fraud or negligence, or be indemnified against such liability by holders or at the holder's expense.
9
INCORPORATION DOCUMENTS OF A COLLECTIVE INVESTMENT SCHEME - 9. Alteration of incorporation documents

AI-assisted research summary: The Authority must decide whether holders must be notified of any alterations or additions to the incorporation documents and set any notice period; the notice period in regulation (2) must not exceed three months unless the Authority otherwise determines.

Section 9. Alteration of incorporation documents Section 9(1) All proposed alterations or additions to the incorporation documents shall be submitted to the Authority for prior approval. Section 9(2) The Authority shall determine whether holders shall be notified of any alterations or additions to the incorporation documents and the period of notice if any to be applied before the changes are to take effect. Section 9(3) The notice period referred to in subregulation (2) shall not exceed three months unless the Authority, having regard to the merits of the case, otherwise determines.

Part IV

COLLECTIVE INVESTMENT SCHEME INFORMATION MEMORANDUM

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COLLECTIVE INVESTMENT SCHEME INFORMATION MEMORANDUM - 12. Collective Investment scheme to issue information memorandum

AI-assisted research summary: A collective investment scheme must not offer its shares for sale to the public or a section of the public unless there is an information memorandum approved by the Authority that complies with the Fourth Schedule.

Section 12. Collective Investment scheme to issue information memorandum Section A collective investment scheme shall not offer its shares for sale to the public or a section of the public issued an information memorandum approved by the Authority which complies with the Fourth Schedule.
13
COLLECTIVE INVESTMENT SCHEME INFORMATION MEMORANDUM - 13. Requirements of information memorandum

AI-assisted research summary: Every information memorandum for a collective investment scheme must contain the information listed in the Fourth Schedule.

Section 13. Requirements of information memorandum Section 13(1) Every information memorandum of a collective investment scheme shall contain the information listed in the Fourth Schedule. Section 13(2) Application forms supplied to persons who are not holders shall be accompanied by the information memorandum but advertisements or investment plans containing an application form and all the information listed in the Fourth Schedule may also be used. Section 13(3) Where performance data or estimated yields are included in an information memorandum, advertisement or any other invitation to the public to invest in the collective investment scheme, the Authority may require justification of the calculations resulting in such performance data or estimated yields. Section 13(4) Forecast of a collective investment scheme's performance shall not be made in the information memorandum and the publication of a prospective yield shall not constitute a forecast of performance and a statement to the effect that the publication is that of a prospective yield and not a forecast of performance shall be made in the information memorandum, advertisement or any other invitation to the public.
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COLLECTIVE INVESTMENT SCHEME INFORMATION MEMORANDUM - 14. Revision of information memorandum

AI-assisted research summary: The information memorandum must be reviewed and revised periodically (at least once every six months) and revised immediately for material changes or new material information; revisions may be a full substitution or a supplement and must display the date; amendments require prior approval of the Authority.

Section 14. Revision of information memorandum Section 14(1)(a) reviewed and revised at least once in every six months to take account of any change or new matter, other than a matter which reasonably appears to the fund manager to be insignificant; Section 14(1)(b) revised immediately upon the occurrence of any material change in the matters stated therein or upon the occurrence of any new material information which ought to be disclosed therein. Section 14(2) A revision of the information memorandum may take the form of a complete substitution of the previous information memorandum or a supplement to the information memorandum and the date of the revision shall be prominently displayed. Section 14(3) Any amendments to the information memorandum shall require the prior approval of the Authority.

Part IX

EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS)

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EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 109. Approval of and registration with the Authority

AI-assisted research summary: A listed company may set up an ESOP subject to Authority approval; every ESOP must be registered with the Authority.

Section 109. Approval of and registration with the Authority Section 109(1) A listed company may set up an employee share owner-ship plan (hereinafter referred to as ESOP) to enable its employees own shares of the listed company subject to approval of the Authority. Section 109(2) Every ESOP shall be registered with the Authority.
110
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 110. ESOP Unit trust

AI-assisted research summary: An Employee Share Ownership Plan must be structured as a unit trust (the ESOP Unit Trust).

Section 110. ESOP Unit trust Section An Employee Share Ownership Plan shall be structured as a unit trust (the ESOP Unit Trust).
111
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 111. Requirements for ESOPS

AI-assisted research summary: Mentions proposed trust deed and scheme rules for ESOPS.

Section 111. Requirements for ESOPS Section proposed trust deed and scheme rules;
112
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 112. Investment parameters

AI-assisted research summary: An ESOP Unit Trust must acquire or purchase shares of the listed company as required by its rules, and must not acquire or purchase other securities.

Section 112. Investment parameters Section An ESOP Unit Trust shall acquire or purchase shares of the listed company from time to time as may be required by the rules of the ESOP. Provided that an ESOP Unit Trust shall not acquire or purchase any securities other than the shares of the listed company for which it is established.
113
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 113. Minimum number of trustees

AI-assisted research summary: There shall be at least three trustees of an ESOP Unit Trust, except that a trust corporation may act as sole trustee of an ESOP Unit Trust.

Section 113. Minimum number of trustees Section There shall be at least three trustees of an ESOP Unit Trust save that a trust corporation may act as sole trustee of an ESOP Unit Trust.
114
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 114. Creation of units

AI-assisted research summary: Trustees of an ESOP Unit Trust must hold the listed company share certificates in their names and create matching units to be allotted and issued to the entitled employee under the ESOP.

Section 114. Creation of units Section The trustees of an ESOP Unit Trust shall hold the certificates representing the shares of the listed company in the trustees' names and create corresponding units in the same denominations as the listed company's shares purchased by the trustees to be allotted and issued to the employee entitled thereto under the ESOP.
115
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 115. Certificate of entitlement to holders

AI-assisted research summary: Trustees must issue each entitled employee a certificate showing the number of units and must maintain a register of unit holders.

Section 115. Certificate of entitlement to holders Section The trustees shall issue to every employee entitled to the units under the ESOP a certificate of entitlement representing the number of units owned by the employee in the ESOP Unit Trust within thirty days of receiving the company's certificate of entitlement against which such units were issued and maintain a register of all unit holders.
116
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 116. Rights on the certificate of entitlement

AI-assisted research summary: Certificates for employee-owned units cannot be transferred or traded on a securities exchange; units may be pledged or repurchased by the trustees for cash at the option of the unit holder.

Section 116. Rights on the certificate of entitlement Section The certificates representing the units owned by employees shall not be transferable nor traded at any securities exchange but the units represented therein may, at the option of the unit holder be pledged or re-purchased by the trustees for cash.
117
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 117. Price of units

AI-assisted research summary: The ESOP rules must set the price for allotting units to employees, the price for trustees to re-purchase units, and liability for incidental expenses; re-purchase must reflect the latest traded share price on the securities exchange.

Section 117. Price of units Section The rules of the ESOP shall prescribe the price at which an ESOP Unit Trust shall allot the units to the employee, the price at which the trustees shall re-purchase units and the liability for incidental expenses but such re-purchase shall reflect the latest traded price of the company's shares at the securities exchange.
118
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 118. Surrender of certificates by employee

AI-assisted research summary: When an employee's employment ends, the employee must surrender all certificates representing their ESOP units to the trustees.

Section 118. Surrender of certificates by employee Section On termination of employment of an employee, the employee shall surrender all certificates representing the units held by such employee in an ESOP Unit Trust to the trustees at such time as prescribed by the ESOP rules.
119
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 119. Redemption or transfer

AI-assisted research summary: Transfer in a private transaction the shares of the listed company to the name of the employee corresponding to the units in the surrendered share certificate and register the employee as owner.

Section 119. Redemption or transfer Section transfer in a private transaction in accordance with the prescribed procedure for private transactions, to the name of the employee, the number of shares of the listed company corresponding in value to the units represented in the surrendered share certificate and cause the employee's name to be registered as the owner of such shares in the register of the listed company; or
120
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 120. Exchange of units not permitted

AI-assisted research summary: The trust deed of an ESOP Unit Trust must not allow exchange of its units for shares of the listed company.

Section 120. Exchange of units not permitted Section Save as provided in these Regulations, the trust deed of an ESOP Unit Trust shall not permit the exchange of units of an ESOP Unit Trust with shares of the listed company.
121
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 121. Audit

AI-assisted research summary: The trustees of an ESOP Unit Trust must cause an annual audit by qualified persons and submit a copy of the auditor's report to unit holders and the Authority within sixty days of completion.

Section 121. Audit Section The trustees of an ESOP Unit Trust shall cause an audit of the ESOP to be carried out once every year by qualified persons and shall submit a copy of the auditor's report to the unit holders and the Authority within sixty days of the completion of the audit.
122
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 122. Winding up

AI-assisted research summary: An ESOP Unit Trust may be varied or wound up in accordance with its rules; three months' notice of intention to wind up must be given to the unit holders and the Authority.

Section 122. Winding up Section An ESOP Unit Trust may be varied or wound up in accordance with its rules but three months' notice of intention to wind up an ESOP Unit Trust shall be given to the unit holders and the Authority.
123
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 123. Disclosures

AI-assisted research summary: Section title: "Disclosures"

Section 123. Disclosures
124
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 124. Definition

AI-assisted research summary: Defines a "special interest collective investment scheme" as a collective investment scheme set up by a promoter to facilitate investment by a special group of individuals with a common interest in a listed company; examples include farmers, distributors and a supplier.

Section 124. Definition Section For the purposes of these Regulations, a special interest collective investment scheme means a collective investment scheme established by a promoter for the purposes of facilitating investment by a special group of individuals with a common interest in a listed company and may include farmers, distributors, supplier, among others.
125
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 125. Approval and registration with the Authority

AI-assisted research summary: Promoters may establish special interest collective investment schemes to invest in securities of a specified listed company if approved by the Authority; such schemes must be registered with the Authority.

Section 125. Approval and registration with the Authority Section 125(1) A promoter may set up a special interest collective investment scheme for the purposes of investing in the securities of a specified listed company subject to the approval of the Authority. Section 125(2) Every special interest collective investment scheme shall be registered with the Authority.
126
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 126. Special interest unit trust

AI-assisted research summary: A special interest collective investment scheme must be structured as a unit trust; the promoter must notify the listed company upon approval and registration with the Authority.

Section 126. Special interest unit trust Section A special interest collective investment scheme shall be structured as a unit trust and the promoter shall notify the listed company upon approval and registration with the Authority.
127
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 127. Requirements for special interest unit trust

AI-assisted research summary: Requires proposed trust deed and scheme rules for a special interest unit trust.

Section 127. Requirements for special interest unit trust Section proposed trust deed and scheme rules;
128
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 128. Investment parameters

AI-assisted research summary: A special interest collective investment scheme must acquire or purchase shares of the listed company as may be required by the scheme's rules, and must not acquire or purchase securities other than those shares for which it was established.

Section 128. Investment parameters Section A special interest collective investment scheme shall acquire or purchase shares of the listed company from time to time as may be required by the rules of the scheme: Provided that a special interest collective investment scheme shall not acquire or purchase any securities other than the shares of the listed company for which it is established.
129
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 129. Minimum number of trustees

AI-assisted research summary: A special interest collective investment scheme must have at least three trustees.

Section 129. Minimum number of trustees Section There shall be at least three trustees of a special interest collective investment scheme.
130
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 130. Creation of units

AI-assisted research summary: Trustees of a special interest collective investment scheme must hold the purchased listed-company share certificates in their names and create matching units to allot and issue to the entitled holder under the scheme.

Section 130. Creation of units Section The trustees of a special interest collective investment scheme shall hold the certificates representing the shares of the listed company in the trustees' names and create corresponding units in the same denominations as the listed company's shares purchased by the trustees to be allotted and issued to the holder entitled thereto under the special interest collective investment scheme.
131
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 131. Certificate of entitlement to holders

AI-assisted research summary: Trustees must issue each entitled holder a certificate of entitlement for their units within thirty days of receiving the company's corresponding certificate and must maintain a register of unit holders.

Section 131. Certificate of entitlement to holders Section The trustees shall issue to every holder entitled to the units under the special interest collective investment scheme a certificate of entitlement representing the number of units owned by the holder in the special interest collective investment scheme within thirty days of receiving the company's certificate of entitlement against which such units were issued and maintain a register of all unit holders.
132
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 132. Rights on the certificate of entitlement

AI-assisted research summary: Certificates representing a holder's interest may not be transferred or traded on any securities exchange; however, the units represented may be pledged or repurchased by the trustees for cash at the option of the holder.

Section 132. Rights on the certificate of entitlement Section The certificates representing the interest of a holder shall not be transferable nor traded at any securities exchange but the units represented therein may, at the option of the holder be pledged or repurchased by the trustees for cash.
133
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 133. Price of units

AI-assisted research summary: The scheme's rules must set the price for allotting units to holders or potential holders, the price trustees use to re-purchase units, and who pays incidental expenses; any re-purchase price must reflect the latest or previous day's traded price of the company's shares on the securities exchange.

Section 133. Price of units Section The rules of the special interest collective investment scheme shall prescribe the price at which that unit trust shall allot units to the holders or potential holders, the price at which the trustees shall re-purchase units and the liability for incidental expenses but such re-purchase shall reflect the latest or previous day's traded price of the company's shares at the securities exchange.
134
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 134. Redemption or transfer

AI-assisted research summary: Permits transfer in a private transaction, following the prescribed procedure, to convert the units in a surrendered share certificate into the corresponding number of shares and register the holder as owner in the company's register.

Section 134. Redemption or transfer Section transfer in a private transaction in accordance with the prescribed procedure for private transactions to the name of the holder, the number of shares of the listed company corresponding in value to the units represented in the surrendered share certificate and cause the holder's name to be registered as the owner of such shares in the register of listed company; or
135
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 135. Exchange of units not permitted

AI-assisted research summary: The trust deed of a special interest collective investment scheme must not permit exchanging the scheme's units for shares of the listed company, except as provided in the Regulations.

Section 135. Exchange of units not permitted Section Save as provided in these Regulations, the trust deed of a special interest collective investment scheme shall not permit the exchange of units of the scheme with shares of the listed company.
136
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 136. Audit

AI-assisted research summary: The trustees of a special interest collective investment scheme must have the scheme audited annually by qualified persons and must submit a copy of the auditor's report to the holders and the Authority within sixty days of completion of the audit.

Section 136. Audit Section The trustees of a special interest collective investment scheme shall cause an audit of the scheme to be carried out once every year by qualified persons and shall submit a copy of the auditor's report to the holders and the Authority within sixty days of the completion the audit.
137
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 137. Winding up

AI-assisted research summary: A special interest collective investment scheme may be varied or wound up according to its rules; three month's notice of intention to wind up must be given to the holders and the Authority.

Section 137. Winding up Section A special interest collective investment scheme may be varied or wound up in accordance with its rules but three month's notice of intention to wind up the scheme shall be given to the holders and the Authority.
138
EMPLOYEE SHARE OWNERSHIP PLANS (ESOPS) - 138. Disclosures

AI-assisted research summary: Every listed company must disclose in its annual report any collective investment scheme that has acquired or will acquire shares, the number of shares bought from the exchange, and the scheme's aggregate holding in the listed company.

Section 138. Disclosures Section Every listed company shall disclose an special interest collective investment scheme which has an acquired or is to acquire shares, the number of shares purchased from the exchange and the aggregate holding of the scheme in the listed company in its annual report.

Part V

MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME

15
MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 15. Obligation to appoint a fund manager

AI-assisted research summary: Collective investment schemes must appoint in writing a fund manager approved by the Authority to manage their day-to-day operations.

Section 15. Obligation to appoint a fund manager Section Every collective investment scheme shall appoint in writing a fund manager approved by the Authority to manage the day to day operation of the collective investment scheme.
16
MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 16. Management of a collective investment scheme

AI-assisted research summary: Persons may not be appointed as fund managers unless licensed by the Authority; fund managers may be holding or subsidiary companies related to the custodian/trustee but investments in related companies are limited to 10% of total funds; fund managers must maintain paid-up share capital and unimpaired reserves of not less than ten million shillings.

Section 16. Management of a collective investment scheme Section 16(1) No person shall be appointed as a fund manager of a collective investment scheme unless such a person holds a licence to operate as a fund manager issued by the Authority. Section 16(2) A fund manager of a collective investment scheme may in relation to the custodian or trustee of such collective investment scheme, be a holding company or a subsidiary company within the meaning of the terms as defined in section 154 of the Companies Act, (Cap. 486) or be deemed by the Authority to be otherwise under control of substantially the same persons or the consist substantially of the same shareholders, provided that the investment in a related company shall be limited to ten percent of the total funds managed by the fund manager. Section 16(3) A fund manager shall at all times maintain a paid-up share capital and unimpaired reserves of not less than ten million shillings for the operation of the collective investment scheme. [L.N. 165/2002 , r. 2.]
17
MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 17. Duties of a fund manager

AI-assisted research summary: A fund manager of a collective investment scheme must carry out administration and manage the scheme’s portfolio in accordance with the trustee or board of directors' directions and authority and with the incorporation documents, information memorandum, scheme rules and these Regulations.

Section 17. Duties of a fund manager Section 17(1) A fund manager of a collective investment scheme shall carry out the administration of the fund including the management of the portfolio of investments in accordance with the direction and the authority of the trustee or the board of directors, as the case may be, as well as the provisions of the incorporation documents, the information memorandum, the rules of the collective investment scheme and these Regulations. Section 17(2)(a) advising the trustee or board of directors, as the case may be, on the asset classes which are available for investment; Section 17(2)(b) formulating a prudent investment policy; Section 17(2)(c) investing the scheme's assets in accordance with the scheme's investment policy; Section 17(2)(d) reinvesting any income of the scheme fund which is not required for immediate payments; Section 17(2)(e) instructing the custodian to transfer, exchange, deliver in the required form and manner the scheme assets held by such custodian; Section 17(2)(f) ensuring that the shares or units in the collective investment scheme are priced in accordance with the information memorandum, the rules of the collective investment scheme and these Regulations; Section 17(2)(g) not selling any shares otherwise than on the terms and at a price calculated in accordance with the provisions of the information memorandum, rules of the collective investment scheme or these Regulations; Section 17(2)(h) rectifying any breach of matters arising under paragraph (f) or (g) provided that where the breach relates to incorrect pricing of shares or to the late payment in respect of the issue or redemption of shares, rectification shall, unless the trustee or board of directors, as the case may be, otherwise directs, extend to the reimbursement or payment or arranging the reimbursement or payment of money by the fund manager to the holders or former holders, by the fund manager to the scheme, or by the scheme to the fund manager; Section 17(2)(i) purchasing at the request of a holder, any shares held by such holder on the terms and at a price calculated in accordance with the provisions hereof; Section 17(2)(j) publishing daily the price of shares in at least two daily newspapers of national circulation, published in the English language: Provided that where a collective investment scheme is not dealing on a daily basis, there shall be at least one publication a month of the prices of shares in at least two daily newspapers of national circulation, at least three days before the dealing day, specifying therein the date of the dealing day. Section 17(2)(k) preparing and timeously dispatching all cheques, warrants, notices, accounts, summaries, declarations, offers and statements required under the provisions of the information memorandum, rules of the collective investment scheme or these Regulations, to be issued, served or sent and signing and executing all certificates and all transfers of securities; Section 17(2)(l) making available for inspection to the trustee or board of directors or any approved auditor appointed by the trustee or directors, the records and the books of account of the fund manager giving to the trustee or board of directors or to any such auditor such oral or written information as it or he requires with respect to all matters relating to the fund manager, its properties and its affairs; Section 17(2)(m) making available or ensuring that there is made available to the trustee or board of directors such details as the trustee or board of directors may require with respect to all matters relating to the collective investment scheme; and Section 17(2)(n) being fair and equitable in the event of any conflict of interest that may arise in the course of its duties. Section 17(3)(a) the fund manager shall remain liable for any act or omission of the sub-contracted fund manager; Section 17(3)(b) the fees and expenses of any such persons shall be payable by the fund manager and shall not be payable out of the collective investment scheme portfolio; Section 17(3)(c) any expenses incurred by any such persons which, if incurred by the fund manager would have been payable out of the collective investment scheme portfolio, may be paid out of the collective investment scheme portfolio to the fund manager by way of reimbursement; and Section 17(3)(d) any such appointment or termination of appointment shall be notified in writing to all holders. Section 17(4) All monetary benefits or commissions arising out of managing scheme funds shall be credited to the scheme fund by the fund manager. Section 17(5) The fund manager shall account to the trustee within thirty days after receipt by the fund manager any monies payable to the trustee. Section 17(6) Every fund manager shall issue a receipt evidencing the purchase of shares of the collective investment scheme for each purchase. Section 17(7) The fund manager shall issue a certificate of entitlement to the holders every thirty days, specifying any shares held by any holder and showing the transactions in the holder's account during the preceding month and which shall be prima facie evidence of the title of the holder to the units or shares.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 18. Records to be maintained by a fund manager

AI-assisted research summary: The fund manager must keep and maintain comprehensive records (minutes, accounts, resolutions, transaction books, daily share and valuation records) and must make those records available free of charge for inspection or copies by the trustee, board of directors or the Authority during office hours on request.

Section 18. Records to be maintained by a fund manager Section 18(1)(a) keep and maintain a record of all minutes, statements of accounts and resolutions in respect of the scheme's investment portfolio; Section 18(1)(b) keep or cause to be kept proper books of accounts and records in which shall be entered all transactions effected by the fund manager for the account of the collective investment scheme and permit the trustee or board of directors from time to time on demand to examine and take copies of or extracts from any such books and records; Section 18(1)(c) maintain a daily record of shares held by the fund manager, including the type of such shares acquired or disposed of, and of the balance of any acquisitions and disposals; and Section 18(1)(d) keep and maintain a daily record of the shares of the scheme which are held, issued, redeemed, exchanged, and the valuation of the collective investment scheme portfolio including particulars given in Regulation 69, required upon completion of a valuation. Section 18(2) The fund manager shall make the collective investment scheme's records available for inspection by the trustee, board of directors or the Authority free of charge at times during office hours and shall supply the trustee, board of directors or Authority with a copy of the records or any part of such records on request at no charge.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 19. Fund manager's reports

AI-assisted research summary: Fund managers must prepare reports including valuations, investment review and transaction records; keep copies of accounts at their registered office for inspection; provide information to the Authority within 30 days of a written request (or longer if allowed); and mutual fund managers must report share creations and cancellations to the board within seven days.

Section 19. Fund manager's reports Section 19(1)(a) a valuation of the scheme fund and of all the investments representing the same, including the details of the cost of such investments and their estimated yields; Section 19(1)(b) a report reviewing the investment activity and performance of the investment portfolios comprising the scheme fund since the last report date and containing the fund manager's proposals for the investment of the scheme fund during the period; and Section 19(1)(c) a record of all investment transactions during the previous period. Section 19(2)(a) the fund manager's capital resources actually employed or immediately available for employment for the purposes of the scheme; Section 19(2)(b) as a percentage of the total market value of the collective investment scheme portfolio; Section 19(2)(b)(i) as a percentage of the total market value of the collective investment scheme portfolio; Section 19(2)(b)(ii) as a percentage of the total amount of securities of that class issued by the concern in which the investment is held; and Section 19(2)(b)(iii) indicating the percentage of such securities in relation to the investment guidelines specified in Regulation 78(2). Section 19(2)(c) the amount of dividends and interest and any other income for distribution which have accrued to the underlying securities comprised in the collective investment scheme portfolio, indicating the classes of income and the amount derived from each class, and how the income has been or is intended to be allocated; Section 19(2)(d) the amount of proceeds of capital gains, rights and bonus issues and any other accruals and receipts of a capital nature which have been or are to be invested in the scheme for the benefit of the holders, indicating the classes thereof and the amount derived from each class, but excluding amounts derived from the sale of shares; Section 19(2)(e) the total amount derived from the sale of shares, indicating the total amount paid in respect of compulsory charges, and the total amount paid in respect of the repurchase of shares; Section 19(2)(f) the fund, manager's income derived from all sources in the operation of the scheme, indicating the sources and the amount derived from each source, and its net profit or loss derived from such operation; Section 19(2)(g) a review of the fluctuations in the selling and repurchase prices per share during the period in question including the highest and lowest selling prices and the highest and lowest repurchase price. Section 19(3) Copies of the accounts and statements referred to in subregulation (2) shall be kept at the registered office of the fund manager and made available for inspection during ordinary office hours by any holder or other person bona fide interested in the purchase of shares of the scheme. Section 19(4) A fund manager shall in addition, within a period of thirty days after receipt of a written request from the Authority, or within such further period thereafter as the Authority may allow, lodge with the Authority such further information and explanations in connection with any accounts or statement referred to in subregulation (2) as may be specified in the request. Section 19(5) The fund manager of a mutual fund shall report to the board of directors within seven days of the creation and cancellation of shares.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 20. Liability of a fund manager

AI-assisted research summary: The fund manager of a collective investment scheme is not liable for losses or depreciation in scheme value except where caused by negligence, willful default or fraud by the manager or its agents, and (absent fraud or negligence) does not incur liability for acts done in good faith under scheme documents; liability only arises if expressly assumed in those documents or these Regulations.

Section 20. Liability of a fund manager Section 20(1) The fund manager of a collective investment scheme shall not be liable for any loss, damage or depreciation in the value of the scheme fund or of any investment comprised therein or the income therefrom which may arise by reason of depreciation of the market value of the shares and other assets in which scheme funds are invested unless such loss, damage or depreciation in the value of the scheme fund arises from negligence whether professional or otherwise, willful default or fraud by the fund manager or any of its agents, employees or associates. Section 20(2) In the absence of fraud or negligence by the fund manager, the fund manager shall not incur any liability by reason of any matter or thing done or suffered or omitted by it in good faith under the provisions of the incorporation documents, information memorandum, rules of the collective investment scheme or these Regulations. Section 20(3) The fund manager shall not be under any liability except such liability as may be expressly assumed by the fund manager under the incorporation documents, information memorandum, the rules of the collective investment scheme and these Regulations, nor shall the fund manager save as expressly provided herein be liable for any act or omission of the trustee.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 21. Remuneration of a fund manager

AI-assisted research summary: The fund manager may waive or rebate charges referred to in subregulation (1) at its discretion, and must report any such changes and reasons to the trustee or board of directors.

Section 21. Remuneration of a fund manager Section 21(1)(a) the initial charge referred to in Regulation 65(1); or Section 21(1)(b) any charge disclosed in the information memorandum. Section 21(2) The fund manager may at any time at the fund manager's discretion waive or rebate in full or any part of the amounts mentioned in subregulation (1); Provided that the fund manager shall report to the trustee or board of directors any such changes and give the reasons therefor.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 22. Removal of a fund manager

AI-assisted research summary: Section 22 lists circumstances under which a fund manager is to be removed, including court-ordered liquidation, appointment of a receiver, trustee or board requesting a change in writing, or removal by holders (extraordinary resolution or three-quarters-in-value written request).

Section 22. Removal of a fund manager Section 22(1)(a) if a court of competent jurisdiction orders liquidation of the fund manager (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the trustee, board of directors, as the case may be, and the Authority); or Section 22(1)(b) if a receiver is appointed for the undertaking of the fund manager's assets or any part thereof; or Section 22(1)(c) if for good and sufficient reason the trustee or board of directors, as the case may be, is of the opinion and so states in writing to the Authority that a change of fund manager is desirable in the interest of the holders. Section 22(2)(a) if an extra-ordinary resolution is passed by the holders removing the fund manager; or Section 22(2)(b) if the holders of three quarters majority in value of the shares in existence (excluding shares held or deemed to be held by the fund manager or by any associate of the fund manager) request in writing to the trustee or board of directors as the case may be, that the fund manager be removed.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 23. Resignation of a fund manager

AI-assisted research summary: A fund manager may resign by giving three months' notice to the trustee or board of directors of the collective investment scheme and must give reasons for the resignation.

Section 23. Resignation of a fund manager Section A fund manager may resign by giving three months notice, to the trustee or board of directors as the case may be, of the collective investment scheme, and shall give reasons for the resignation.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 24. Service of notice and handing over

AI-assisted research summary: A notice is deemed served seven days after dispatch, comes into effect four days after it is served, and any termination is deemed effective ninety days after the notice comes into effect.

Section 24. Service of notice and handing over Section 24(1) Notice shall be deemed to have been served seven days from the date of its dispatch and shall come into effect four days after it is served and such termination will be deemed to be effective ninety days after the notice comes into effect. Section 24(2)(a) statements pertaining to the entire scheme fund; Section 24(2)(a)(i) statements pertaining to the entire scheme fund; Section 24(2)(a)(ii) investment portfolio including details of the cost of such investments and estimated yields; Section 24(2)(a)(iii) statements pertaining to all incomplete transactions; and Section 24(2)(a)(iv) any other information as may reasonably be required by the scheme. Section 24(2)(b) hand over, transfer and deliver all records of accounts required to be maintained by a fund manager under Regulation 18, as may be reasonably required by the incoming fund manager:
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 25. Obligation to appoint a trustee

AI-assisted research summary: A collective investment scheme must in writing appoint as trustee a person approved by the Authority, subject to these Regulations.

Section 25. Obligation to appoint a trustee Section Subject to these Regulations, a collective investment scheme shall in writing appoint as trustee a person approved by the Authority.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 26. Eligibility for appointment of a trustee

AI-assisted research summary: Trustees of a collective investment scheme may be holding or subsidiary companies as described, subject to a 10% limit on investment in a related company; the Authority may revoke approvals if trustees cease to meet requirements.

Section 26. Eligibility for appointment of a trustee Section 26(1) No person shall be appointed a trustee of a collective investment scheme unless such person is a bank or financial institution approved for that purpose by the Authority. Section 26(2) A trustee of a collective investment scheme may in relation to the fund manager or custodian of such collective investment scheme, be a holding company or a subsidiary company within the meaning of the terms as defined in section 154 of the Companies Act (Cap. 486) or be deemed by the Authority to be otherwise under control of substantially the same persons or consist of substantially of the same shareholders provided that the investment in a related company shall be limited to ten percent of the total funds managed by the fund manager. Section 26(3) The Authority may revoke any approval already granted if at any time thereafter a trustee ceases to satisfy the requirements of these Regulations. [L.N. 165/2002 , r. 3.]
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 27. Duties and obligations of a trustee

AI-assisted research summary: Trustees must perform various duties including ensuring proper accounting, custody of scheme assets, execution of documents to secure transactions, collection and direction of income, carrying out fund manager instructions (including voting), forwarding notices, ensuring compliance of fund manager with documents and regulations, issuing an annual report on fund manager performance, ensuring fund manager record-keeping and pricing procedures, and informing the Authority if not satisfied.

Section 27. Duties and obligations of a trustee Section 27(1) In the case of a unit trust, a trustee shall cause proper books of accounts to be kept by the fund manager, in respect of the unit trust and shall make available annually in such manner as may be prescribed by the Authority, audited statement of accounts in respect of the unit trust, together with a summary of any amendments of the trust deed that have been made since the date of the last statement. Section 27(2)(a) ensure that the custodian takes into custody all the collective investment scheme portfolio and holds it in trust for the holders in accordance with these Regulations; Section 27(2)(b) take all steps and execute all documents which are necessary to secure acquisitions or disposals properly made by the fund manager in accordance with the trust deed, incorporation documents and these Regulations; Section 27(2)(c) collect any income due to be paid to the scheme and or claim any repayment of tax and direct any income received in trust for the holders to the custodian in accordance with these Regulations or the trust deed; Section 27(2)(d) to enable it to comply with these Regulations; and Section 27(2)(d)(i) to enable it to comply with these Regulations; and Section 27(2)(d)(ii) to demonstrate that such compliance has been achieved. Section 27(2)(e) execute all documents as are necessary and take all steps to ensure that instructions properly given to it by the fund manager as to the exercise of rights (including voting rights) attaching to the ownership of collective investment scheme portfolio are carried out; Section 27(2)(f) exercise any right of voting conferred by any of the collective investment scheme portfolio which is in shares in other collective investment schemes managed or otherwise operated by the fund manager; Section 27(2)(g) execute and deliver to the fund manager or its nominee upon the written request of the fund manager from time to time such powers of attorney or proxies as the fund manager may reasonably require, in such name or names as the fund manager may request, authorising such attorneys and proxies to vote consent or otherwise act in respect of all or any part of the collective investment scheme portfolio; Section 27(2)(h) forward to the fund manager and the custodian without delay all notices of meetings, reports, circulars, proxy solicitations and other documents of a like nature received by it as registered holder of any investment; Section 27(2)(i) ensure that the collective investment scheme is managed by the fund manager in accordance with the agreement of service with the fund manager, these Regulations, the incorporation documents, the information memorandum and the rules of the collective investment scheme; Section 27(2)(j) issue a report to be included in the annual report of the collective investment scheme on whether in the opinion of the trustee, the fund manager has in all material respects managed the scheme in accordance with the provisions of these Regulations, incorporation documents, the information memorandum and the rules of the collective investment scheme, and if the fund manager has not done so, the respect in which it has not done so and the steps which the trustee has taken in respect thereof; Section 27(2)(k) ensure that decisions about the constituents of the collective investment scheme portfolio do not exceed the powers conferred on the fund manager; and Section 27(2)(l) ensure that the fund manager maintains sufficient records and adopts such procedures and methods for calculation of prices at which shares are issued and redeemed to ensure that those prices are within the limits prescribed by these Regulations, the incorporation documents, the information memorandum and the rules of the collective investment scheme. Provided that if the trustee is not satisfied with any matters specified in this Regulation it must inform the Authority. Section 27(3) In this rule 'voting' includes giving any consent or approval of any arrangement, scheme or resolution or any alternation in or abandonment of any rights attaching to any part of the collective investment scheme portfolio and 'right' includes a requisition or joining in a requisition to convene any meeting or to give notice of any resolution or to circulate any statement or to consent to any short notice of any meeting.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 28. No delegation of duties of a trustee

AI-assisted research summary: Trustees are prohibited from delegating their duties.

Section 28. No delegation of duties of a trustee Section any function of oversight in respect of the fund manager; or
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 29. Resignation of trustee

AI-assisted research summary: A trustee may not resign unless a new trustee is appointed; a resigning trustee must give three months' written notice to the fund manager and the Authority; the fund manager must appoint a qualified person within two months of that notice; if the fund manager fails, the trustee may appoint a qualified company.

Section 29. Resignation of trustee Section 29(1) A trustee shall not be entitled to resign except upon the appointment of a new trustee. If a trustee wishes to resign it shall give three months notice in writing to that effect to the fund manager and the Authority and the fund manager shall appoint within two months after the date of such notice, some other qualified person as the new trustee upon and subject to such person entering into a trust deed supplemental to the trust deed comprised in the incorporation documents. If the fund manager is unable to appoint a new trustee as aforesaid within such period of two months, the trustee shall be entitled to appoint a qualified company selected by it as the new trustee on the same basis as aforesaid. Section 29(2) In this clause the expression "qualified person" means a company qualified to act as trustee in terms of these Regulations.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 30. Removal of a trustee

AI-assisted research summary: The fund manager must, by deed supplemental to the trust deed and with the Authority's approval, appoint another qualified person as trustee to replace a removed trustee.

Section 30. Removal of a trustee Section 30(1)(a) a court of competent jurisdiction orders its liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation under a scheme approved by the Authority); Section 30(1)(b) a manager or a receiver is appointed over any of its assets; or Section 30(1)(c) the trustee ceases to carry on business as a bank or financial institution. Section 30(2)(a) the trustee fails or neglects after reasonable notice from the fund manager to carry out or satisfy any duty imposed on the trustee in accordance with the trust deed, the incorporation documents, the information memorandum, the rules of the collective investment scheme or these Regulations; or Section 30(2)(b) the holders, by extra ordinary resolution resolve that such notice be given. Section 30(3) The fund manager shall by deed supplemental to the trust deed appoint as trustee some other qualified person with the approval of the Authority to replace a trustee who has been removed.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 31. Matters to be provided for in the trust deed

AI-assisted research summary: Sets matters the trust deed of a collective investment scheme must provide for and prescribes specific operational obligations for the fund manager and restrictions on the trustee.

Section 31. Matters to be provided for in the trust deed Section 31(1) A collective investment scheme trust deed shall make provisions on all the matters specified in the Third Schedule of these Regulations. Section 31(2)(a) appointment of a custodian; Section 31(2)(b) the issue of a receipt evidencing the purchase of the shares of the collective investment scheme; Section 31(2)(c) the issue of a certificate of entitlement to the holders within thirty days specifying shares held by each holder and showing the transactions in the holder's account during the preceding month, and that such certificate shall be prima facie evidence of the title of the holder to the units or shares; Section 31(2)(d) authentication of every share certificate by the trustee, provided that before it is issued by the fund manager to the purchaser, the trustee shall not countersign any share certificate unless it has received from the fund manager a full account of the cash proceeds of the issue of that certificate or securities to the required value, together with all documents necessary to effect transfer thereof; Section 31(2)(e) the funds of the collective investment scheme to be deposited in the trust account(s) with the custodian approved by the Authority and the securities of the collective investment scheme be kept with such custodian; Section 31(2)(f) any funds for investment accruing from the issue of shares; Section 31(2)(f)(i) any funds for investment accruing from the issue of shares; Section 31(2)(f)(ii) dividends, interest or any other income accruing on underlying securities; Section 31(2)(f)(iii) the proceeds of capital gains, rights or bonus issues; and Section 31(2)(f)(iv) any funds received by the fund manager from the realization of underlying securities, Section 31(2)(g) that the proceeds of capital gains, rights and bonus issues be vested in the collective investment scheme for the benefit of the holders; Section 31(2)(h) all transactions of the collective investment scheme portfolio be individually reported to the trustee by the fund manager by the next working day following such transaction; Section 31(2)(i) the obligation of the fund manager to repurchase, subject to such terms and conditions as may in terms of the trust deed apply, any number of shares offered to it, on such basis as may be prescribed in the trust deed; Section 31(2)(j) that the specific method of calculation of the value of the collective investment scheme portfolio and of the share value at which holders shall transact their holdings with the collective investment scheme, should be acceptable to the Authority including the specific time of the day, the week or date of the month and time for taking the valuation of securities, and the particulars relating to valuation given in Part VI of these Regulations; Section 31(2)(k) the fee charged by the fund manager (which shall be the only monies payable to the fund manager annually) be disclosed in the financial reports of the collective investment scheme; Section 31(2)(l) the accounts and financial records of a collective investment scheme be maintained in a system and manner acceptable to the Authority; Section 31(2)(m) the fees payable to the trustee and the custodian of the collective investment scheme portfolio be disclosed in the financial reports of the collective investment scheme; and Section 31(2)(n) amendment of the trust deed be in accordance with the provisions of the trust deed, these Regulations, the incorporation documents, the information memorandum and with the prior approval of the Authority. Section 31(3)(a) the investment policy to be followed in respect of the scheme concerned; Section 31(3)(b) the manner in which the selling price of shares is to be calculated; Section 31(3)(c) the terms and conditions on which the fund manager will repurchase shares and the manner in which repurchase price is to be calculated; Section 31(3)(d) the manner in which shares can be transferred from one holder to another; Section 31(3)(e) if applicable, the manner in which additional shares are to be calculated; Section 31(3)(f) the manner in which yield from shares is to be calculated; and Section 31(3)(g) the manner in which the initial charge and other charges are to be calculated. Section 31(4)(a) inclusion in the trust deed or the information memorandum as the case may be of any provisions that in its opinion is deemed to be consistent with international market practices; or Section 31(4)(b) omission from the trust deed or the information memorandum as the case may be of any information whose inclusion would otherwise be required under these Regulations if in the opinion of the Authority such information would be inconsistent with the international market practices or would be inappropriate to the nature of the collective investment scheme or would not be in the best interest of the holders. Section 31(5)(a) unless the consent thereto of the holders and the Authority has been obtained in the manner prescribed in the trust deed; or Section 31(5)(b) the Authority is satisfied that any such alteration, rescission or addition does not contain anything inconsistent with the provisions of the Act or with sound financial principles. Section 31(6) A provision in any trust deed, whether entered into before or after the commencement of these Regulations purporting to relieve any party from liability to the holders on account of his own negligence, shall be void. [L.N. 165/2002 , r. 5.]
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 32. Remuneration of trustee

AI-assisted research summary: Remuneration of trustee

Section 32. Remuneration of trustee
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 33. Obligation to appoint a custodian

AI-assisted research summary: Every collective investment scheme must appoint a custodian approved by the Authority.

Section 33. Obligation to appoint a custodian Section Every collective investment scheme shall appoint a custodian approved by the Authority.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 34. Eligibility for appointment of a custodian

AI-assisted research summary: Only banks or financial institutions approved by the Authority may be appointed as custodians; custodians may be related companies subject to limits; the Authority can revoke approval if requirements cease to be met.

Section 34. Eligibility for appointment of a custodian Section 34(1) No person shall be appointed a custodian of a collective investment scheme unless such person is a bank or financial institution approved for that purpose by the Authority. Section 34(2) A custodian of a collective investment scheme may in relation to the fund manager or the trustee of such collective investment scheme, be a holding company or a subsidiary company within the meaning of the terms as defined in section 154 of the Companies Act (Cap. 486) or be deemed by the Authority to be otherwise under control of substantially the same persons or consist substantially of the same shareholders, provided that the investment in a related company shall be limited to ten percent of the total funds managed by the fund manager. Section 34(3) The Authority may revoke the approval of a custodian if at any time thereafter the custodian ceases to satisfy the requirements of these Regulations. [L.N. 165/2002 , r. 4.]
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 35. Duties of a custodian

AI-assisted research summary: A custodian must perform a set of duties for a collective investment scheme including custody of portfolio assets, safe-keeping title documents and cash, opening scheme accounts, acting on proper instructions, exercising rights on instruction, applying the same standard of care as for its own assets, ensuring electronic entitlements are separately identified, attending holder meetings, and delivering notices and information; the custodian must not delegate its contractual duties except that it may appoint an approved overseas sub-custodian for offshore investments with notification to the Authority.

Section 35. Duties of a custodian Section 35(1)(a) to maintain the custody of all the collective investment scheme portfolio and hold it to the order of the trustee or fund manager in accordance with the provisions of these Regulations, the incorporation documents, the information memorandum and the rules of the collective investment scheme; Section 35(1)(b) to receive and keep in safe custody title documents, securities and cash amounts of the collective investment scheme; Section 35(1)(c) to open an account in the name of the collective investment scheme for the exclusive benefit of such collective investment scheme; Section 35(1)(d) to transfer, exchange or deliver in the required form and manner securities held by the custodian upon receipt of proper instructions from the fund manager, trustee or board of directors, as the case may be; Section 35(1)(e) to require from the fund manager, board of directors or trustee, such information as it deems necessary for the performance of its functions as a custodian of the collective investment scheme; Section 35(1)(f) to promptly deliver to the trustee or fund manager or to such other persons as the fund manager or trustee may authorize, copies of all notices, proxies, proxy soliciting materials received by the custodian in relation to the securities held in the collective investment scheme portfolio, all public information, financial reports and stockholder communications the custodian may receive from the issuers of securities and all other information the custodian may receive, as may be agreed between the custodian, trustee or fund manager, as the case may be, from time to time; Section 35(1)(g) to exercise subscription, purchase or other similar rights represented by the securities subject to receipt of proper instructions from the fund manager or the trustee as the case may be; Section 35(1)(h) to exercise the same standard of care that it exercises over its own assets in holding, maintaining, servicing and disposing of the collective investment scheme portfolio and in fulfilling obligations in the agreement; Section 35(1)(i) where title to investments are recorded electronically, to ensure that entitlements are separately identified from those of the fund manager or the trustee, as the case may be, of the collective investment scheme in the records of the person maintaining records of entitlement; Section 35(1)(j) to attend general meetings of the holders and be heard at any general meeting on matters which concern it as custodian. Section 35(2) A custodian discharging its contractual duties to the scheme shall not contract an agent to discharge those functions; except where a portion of the collective investment scheme portfolio is invested in offshore investments, in which case the custodian may engage the services of an overseas sub-custodian approved by the trustee or board of directors, with the notification of such appointment to the Authority. Section 35(3) The agreement between the custodian and the trustee or board of directors or fund manager, as the case may be, shall make provision on the computation of the fee in respect of custodial services which shall be disclosed to the holders in the annual report each year.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 36. Records to be maintained by a custodian

AI-assisted research summary: A custodian must maintain records of the entire fund portfolio of the collective investment scheme held by the custodian.

Section 36. Records to be maintained by a custodian Section the entire fund of the collective investment scheme portfolio held by the custodian; and
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 37. Reports by a custodian

AI-assisted research summary: A custodian must provide a written statement, at agreed reporting dates, listing all scheme assets and giving a full account of receipts, payments and other actions taken.

Section 37. Reports by a custodian Section a written statement at agreed reporting dates which lists all assets of the scheme in the scheme account(s) together with a full account of all receipts and payments made and other actions taken by the custodian;
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 38. Resignation of a custodian

AI-assisted research summary: A custodian may only resign once a new custodian is appointed; before resigning the custodian must give three months written notice and reasons to the board or fund manager and the Authority. The fund manager must appoint a qualified new custodian within two months, subject to Authority approval and a similar agreement; if it cannot, the custodian may appoint a qualified company. Receipt of notice deems the agreement terminated. If a custodian retires or ceases registration the fund manager may, with Authority approval, appoint another eligible custodian.

Section 38. Resignation of a custodian Section 38(1) The custodian shall not be entitled to resign except upon the appointment of a new custodian and if the custodian wishes to resign it shall give three months notice in writing to that effect to the board of directors or the fund manager, as the case may be and the Authority and the custodian shall give reasons for the resignation. Section 38(2) The fund manager shall appoint within two months after the date of a notice under subregulation (1) some other qualified person as the new custodian upon and subject to such person being approved by the Authority and entering into an agreement similar to the agreement comprised in the incorporation documents. Section 38(3) If the fund manager is unable to appoint a new custodian as within the period of two months, the custodian shall be entitled to appoint a qualified company selected by it as the new custodian on the same basis as a custodian appointed under Regulation 34. Section 38(4) On receipt of the notice by the trustee, board of directors or the fund manager as the case may be, the agreement between the board of directors, fund manager as the case may be and the custodian shall be deemed to have been terminated. Section 38(5) In the event the custodian desiring to retire or ceasing to be registered as a custodian with the Authority, the fund manager, may with the approval of the Authority appoint another eligible person to be a custodian in its place.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 39. Removal of a custodian

AI-assisted research summary: Specifies duties when a custodian is removed: the custodian must hand over scheme assets and documents and submit an audit report within set timeframes; the fund manager must provide notices to trustee/board and notify the Authority if there is disagreement.

Section 39. Removal of a custodian Section 39(1)(a) a court of competent jurisdiction orders its liquidation, except a voluntary liquidation for the purpose of reconstruction or amalgamation approved by the Authority; or Section 39(1)(b) a statutory manager or a receiver is appointed over any of its assets; or Section 39(1)(c) the custodian ceases to carry on business as a bank or financial institution. Section 39(2)(a) the custodian fails or neglects after reasonable notice from the fund manager, trustee or board of directors as the case may be, to carry out or satisfy any duty imposed on the custodian in accordance with the agreement; or Section 39(2)(b) the holders, by extra ordinary resolution resolve that such notice be given, and the fund manager appoint as custodian some other qualified institution with the approval of the Authority. Section 39(3) In the event of a termination of the agreement provided for under Regulation 38(4), or from the date of a winding up order issued by a competent court against the custodian, the custodian shall immediately hand over, and deliver all assets, documents and funds including those from the bank accounts of the collective investment scheme held by such custodian to the custodian appointed in writing by the board of directors, fund manager or trustee, as the case may be, and approved by the Authority, within thirty days from the date of such termination. Section 39(4) Within twenty days from the termination of the agreement, the custodian shall submit to the Authority an audit report indicating the assets, liabilities and an inventory of the scheme fund, securities and title documents of the scheme assets which have been handed over, transferred and delivered to the appointed custodian. Section 39(5) A copy of the notice given to the custodian for termination of services by the fund manager shall be given to the trustee and the board of directors. Section 39(6) In the event of any disagreement between the fund manager, the trustee or the board of directors as the case may be and the custodian, notification shall be made to the Authority by the fund manager giving reasons for the termination of services of the custodian.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 40. Meaning of umbrella scheme

AI-assisted research summary: A promoter of a collective investment scheme may establish two or more sub-funds under the management of one fund manager.

Section 40. Meaning of umbrella scheme Section A promoter of a collective investment scheme may establish two or more sub-funds under the management of one fund manager (hereinafter called an umbrella scheme).
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 41. Minimum requirements for umbrella schemes

AI-assisted research summary: Trustees or the board must act to restore multiple sub-funds if fewer than two sub-funds have shares in issue for 24 consecutive months; the fund manager must notify holders and the Authority before or when that 24-month period expires.

Section 41. Minimum requirements for umbrella schemes Section 41(1) An umbrella scheme does not qualify for approval from the Authority to operate unless each of its proposed sub-funds qualify for a separate approval to operate as a collective investment scheme, except as provided in Regulation 80. Section 41(2) Subject to the provisions of subregulation (4), if for a period of twenty-four consecutive months commencing at any time after the first issue of any shares of an umbrella scheme, shares in respect of less than two sub-funds are in issue, the trustee or board of directors of the scheme shall take such action as is necessary to change the category of the scheme or to cause shares in respect of more than one sub-fund to be in issue. Section 41(3) If subregulation (2) becomes, or should reasonably be expected by the trustee or board of directors to become, applicable, the fund manager shall, prior to or forthwith upon, the expiry of the twenty-four month period notify the holders and the Authority of any action proposed in order to comply with subregulation (2). Section 41(4) Sub regulation (2) shall not apply if, on or prior to the expiry of the twenty-four month period, winding up of the umbrella scheme has commenced.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 42. Allocation of costs for umbrella schemes

AI-assisted research summary: When certain portfolio items or costs of an umbrella collective investment scheme are not attributable to a single sub-fund, the umbrella scheme must allocate those assets or costs between and among the sub-funds fairly to holders.

Section 42. Allocation of costs for umbrella schemes Section In so far as any of the collective investment scheme portfolio of an umbrella scheme, or any assets to be received as part of the collective investment scheme portfolio, or any costs, charges or expenses to be paid out of the collective investment scheme portfolio, are not attributable to one sub-fund only, the umbrella scheme shall allocate such assets, costs, charges or expenses between and among the sub-funds in a manner which is fair to the holders of the umbrella scheme generally.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 43. Reports

AI-assisted research summary: Regulation 19 (fund manager's reports) must be applied as if each sub‑fund were a separate collective investment scheme.

Section 43. Reports Section Regulation 19 (fund manager's reports) shall be applied as if each sub-fund were a separate collective investment scheme.
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MANAGEMENT OF A COLLECTIVE INVESTMENT SCHEME - 44. Special provisions relating to investment companies

AI-assisted research summary: Investment companies must list on an approved securities exchange within six months after two years from registration; must raise at least twenty-five million shillings; may offer securities only with the Authority's express approval; and must refund subscriptions if the minimum amount is not raised.

Section 44. Special provisions relating to investment companies Section 44(1) Every collective investment scheme incorporated as an investment company shall list on an approved securities exchange within six months of a period of expiry of two years after the date of registration of the collective investment scheme. Section 44(2) The minimum amount to be raised for a collective investment scheme set up as an investment company shall be twenty five million shillings. Section 44(3) The investment company with the express approval of the Authority shall offer its securities for sale. Section 44(4) The investment company will be registered as a collective investment scheme upon providing proof that it has raised the minimum amount of twenty-five million shillings. Section 44(5) In the event that the minimum amount of twenty-five million shillings is not raised then the investment company shall refund the monies received as subscriptions to the subscribers.

Part VI

PRICING, VALUATION AND DEALING OF SHARES

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PRICING, VALUATION AND DEALING OF SHARES - 45. Application

AI-assisted research summary: This subpart applies to setting up a new scheme by means of an initial offer and to the period of that offer.

Section 45. Application Section This subpart applies to the setting up of a new scheme by way of an initial offer, and during the period of such offer.
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PRICING, VALUATION AND DEALING OF SHARES - 46. Compliance with incorporation documents

AI-assisted research summary: A fund manager must not issue or sell shares of a collective investment scheme except at a price calculated in accordance with the Regulations, the incorporation documents, the latest information memorandum and the scheme rules.

Section 46. Compliance with incorporation documents Section A fund manager shall not issue or sell shares of a collective investment scheme otherwise than at a price calculated in accordance with these Regulations, the incorporation documents, the latest information memorandum and the rules of the collective investment scheme.
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PRICING, VALUATION AND DEALING OF SHARES - 47. Period of initial offer

AI-assisted research summary: An initial offer period must not exceed thirty days from the date of launch and must be specified in the initial information memorandum; subject to Regulation 46 the initial offer remains open for the prescribed period.

Section 47. Period of initial offer Section A period of initial offer shall not exceed thirty days from the date of launch, to be so specified in the initial information memorandum and subject to the provisions of Regulation 46, an initial offer shall remain open for the prescribed period.
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PRICING, VALUATION AND DEALING OF SHARES - 48. Creation of shares during initial offer

AI-assisted research summary: During an initial offer the fund manager must create, or (if a unit trust) instruct the trustee to create, shares at the start of the first business day and while the period continues; the fund manager must choose before that day between the 'up and running' or 'pay over and wait' procedures and notify the trustee; the trustee must create shares on receipt of instructions and must not create shares otherwise.

Section 48. Creation of shares during initial offer Section 48(1) The fund manager shall create or in the case of a unit trust, instruct the trustee to create shares in the scheme at the beginning of the first day of business in the initial offer period and during the period. Section 48(2) At or before, the beginning of the day referred to in subregulation (1) the fund manager must irrevocably choose, in respect of that initial offer, to proceed either under paragraph (3)(a) ('up and running') or under paragraph (3)(b) ('pay over and wait') and in the case of a unit trust, notify its choice to the trustee. Section 48(3)(a) create shares or instruct the trustee (in the case of a unit trust), at the beginning of the next business day, to create shares in the scheme in such number at least as will enable the fund manager immediately to fulfill that obligation, whether from the shares so created or from other shares; or Section 48(3)(b) pay to the custodian or trustee (in any case where the purchaser has sent a remittance) on the day of receipt of the remittance or on the next business day, the total amount (or the total amount less the total of the fund manager's preliminary charge, if any, in respect of those shares); and Section 48(3)(b)(i) pay to the custodian or trustee (in any case where the purchaser has sent a remittance) on the day of receipt of the remittance or on the next business day, the total amount (or the total amount less the total of the fund manager's preliminary charge, if any, in respect of those shares); and Section 48(3)(b)(ii) as soon as the period of the initial offer has come to an end, create shares or in the case of a unit trust, instruct the trustee to create shares in the scheme in such number at least as will enable the fund manager to fulfill its obligation to issue shares whether from the units so created or from other shares. Section 48(4) The instructions given by the fund manager to the trustee shall state, in relation to each type of share to be created, the number to be created, expressed either as a number of shares or as an amount in value or as a combination of the two. Section 48(5) The trustee must create shares on receipt of instructions by the fund manager given under this rule, and must not, during an initial offer create shares otherwise.
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PRICING, VALUATION AND DEALING OF SHARES - 49. Initial price

AI-assisted research summary: The fund manager must remit the proceeds of the issue to the custodian of the collective investment scheme with advice to the trustee.

Section 49. Initial price Section 49(1) The initial issue price and offer period, which shall not exceed thirty days from the date of the launching, shall be prescribed in the incorporation documents and the latest information memorandum and the proceeds of the issue shall be remitted by the fund manager to the custodian of the collective investment scheme with advice to the trustee. Section 49(2) The initial issue of shares of a new fund shall not be less than the issue price paid by investors during the launching and offer period less the fund manager's fee and service charges prescribed in the incorporation documents and the latest information memorandum.
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PRICING, VALUATION AND DEALING OF SHARES - 50. Determination of selling and re-purchase price

AI-assisted research summary: The fund manager must base the quoted selling and repurchase price on the net asset value of the fund; for securities listed on the exchange, value them using the last done market (last transacted) price.

Section 50. Determination of selling and re-purchase price Section 50(1) The selling price and repurchase price quoted by the fund manager shall be based on the net asset and value of the fund in this respect, the value of an investment in securities listed and quoted on the securities exchange shall be the value based on the last done market price which is the last transacted price of the securities. Section 50(2) In the event of a suspension in the quotation of securities for a period exceeding fourteen days, or such shorter period as determined by the trustee, the value of such securities shall be based on other methods such as the net tangible assets of the issuer of the securities and the nominal value of the securities. Section 50(3) With respect to unlisted securities, the valuation shall be based on methods that are fair and reasonable and that are acceptable to the fund manager and approved by the trustee.
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PRICING, VALUATION AND DEALING OF SHARES - 51. Pricing of additional shares

AI-assisted research summary: Additional shares must be priced based on the fund's net asset value; the same basis applies to the price payable by the trustee on redemption.

Section 51. Pricing of additional shares Section The price of additional shares created and payable by the fund manager to the trustee, after the offer period of the initial offer of new fund shall be based on the net asset value of the fund. The same basis in the computation of the price shall also be applicable to the price payable by the trustee on redemption by way of cancellation of shares.
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PRICING, VALUATION AND DEALING OF SHARES - 52. Valuation point for selling price

AI-assisted research summary: The selling price quoted by the fund manager and the price payable by the fund manager to the trustee on creation of additional shares must be the net asset value at the end of the business day immediately preceding the business day on which the written request to buy and create shares is received.

Section 52. Valuation point for selling price Section The value of the fund to be used in determining the selling price quoted by the fund manager and the price payable by the fund manager to the trustee on creation of additional shares shall be the net asset value at the end of the business day immediately preceding the business day on which the written request to buy and create shares is received by the fund manager and the trustee respectively.
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PRICING, VALUATION AND DEALING OF SHARES - 53. Valuation point for repurchase price

AI-assisted research summary: When a written request to repurchase or redeem units is received, the fund manager and the trustee must use the net asset value at the end of that business day to set the repurchase and redemption prices.

Section 53. Valuation point for repurchase price Section The value of the fund to be used in determining the repurchase price quoted by the fund manager and the price payable by a trustee of a collective investment scheme on the redemption of units shall be the net asset value at the end of the business day on which the written request to repurchase and redeem is received by the fund manager and the trustee respectively.
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PRICING, VALUATION AND DEALING OF SHARES - 54. Allowance for service charge

AI-assisted research summary: The fund manager may charge a service fee, in addition to the selling price derived from the net asset value, where the fee is disclosed in the information memorandum and the charge shall be disclosed separately in the application form.

Section 54. Allowance for service charge Section In addition to the selling price which is derived from the net asset value, the fund manager may charge a service fee as disclosed in the information memorandum and such charge shall be disclosed separately in the application form.
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PRICING, VALUATION AND DEALING OF SHARES - 55. Determination of repurchase price

AI-assisted research summary: The fund manager must quote the repurchase price as the fund's net asset value; if using a different basis the quoted price must not be less than net asset value, and no deductions may be made except incidental expenses such as stamp duty.

Section 55. Determination of repurchase price Section The repurchase price quoted by the fund manager shall be the net asset value of the fund. However, if the determination of the repurchase price is computed on a different basis, the repurchase price so computed and quoted by the fund manager shall not be less than the net asset value of the fund and no deductions, other than deductions for incidental expenses such as stamp duty shall be made from the computed repurchase price.
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PRICING, VALUATION AND DEALING OF SHARES - 56. Calculation of net asset value per share

AI-assisted research summary: The fund manager must calculate the fund's net asset value and net asset value per share at the end of each business day.

Section 56. Calculation of net asset value per share Section 56(1) The formula to be adopted to determine the value of the fund per share is to divide the value of the assets of the fund less its liabilities (including such provisions and allowances for contingencies as the fund manager may think appropriate) by the number of shares issued and fully paid. Section 56(2) The net asset value of the fund and the net asset value per share shall be calculated by the fund manager as at the end of each business day. Section 56(3) Liabilities shall include the amount of any accrued fees and expenses at the relevant valuation date of the fund. Section 56(4) The number of units in issue shall be those units that are issued and fully paid.
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PRICING, VALUATION AND DEALING OF SHARES - 57. Cancellation of shares

AI-assisted research summary: The fund manager must cancel shares (and for unit trusts instruct the trustee to cancel units), include the number or value to be cancelled in its instruction, and must not have outstanding obligations to issue shares that would prevent cancellation; the trustee must cancel units on receipt of the fund manager's instructions.

Section 57. Cancellation of shares Section 57(1) Where the fund manager wishes that shares be cancelled, it shall cancel such shares and in the case of a unit trust, instruct the trustee to cancel such shares; and any instruction given by the fund manager shall state, in relation to each type of shares to be cancelled, the number to be cancelled, expressed either as a number of shares or as an amount in value or as a combination of the two. Provided that at any moment of such instruction the fund manager shall not have any outstanding obligation to issue shares, which by cancellation of shares, would prevent the fund manager from fulfilling any such instruction. Section 57(2) The trustee shall cancel the units on receipt of instructions given by the fund manager. Section 57(3)(a) to the person who was the holder of those shares; or Section 57(3)(b) in accordance with the relevant provisions of the information memorandum, trust deed and incorporation documents.
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PRICING, VALUATION AND DEALING OF SHARES - 58. Repurchase price

AI-assisted research summary: The custodian or the trustee must base the repurchase price for each share on the fund's net asset value.

Section 58. Repurchase price Section The repurchase price payable for each share by the custodian or the trustee shall be based on the net asset value of the fund.
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PRICING, VALUATION AND DEALING OF SHARES - 59. Timing of instructions to create or cancel units

AI-assisted research summary: A fund manager may at any time instruct the trustee to create or cancel units; the trustee must create or cancel units only after the next valuation point. If instructions are given less than twelve hours after the last valuation point and before the next valuation point, they must be by reference to the price for the last valuation point.

Section 59. Timing of instructions to create or cancel units Section 59(1) A fund manager may at any time give instructions to the trustee to create or to cancel units. Section 59(2) Where instructions are given at a time which is less than twelve hours after the last valuation point and before the next valuation point the instructions must be given by reference to the price calculated or being calculated for the last valuation point. Section 59(3)(a) instructions must be given by reference to the price next to be calculated; and Section 59(3)(b) the trustee shall create or cancel the units only after the next valuation point has been reached.
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PRICING, VALUATION AND DEALING OF SHARES - 60. Dealing

AI-assisted research summary: Collective investment schemes must state in their information memorandum the days when dealings in shares are computed; the fund manager must immediately notify the Authority if dealing is cancelled or suspended and must publish the cancellation immediately and at least once weekly during suspension.

Section 60. Dealing Section 60(1) Every collective investment scheme shall stipulate in the information memorandum the days when dealings in its shares shall be computed. Section 60(2) In the event of a scheme not dealing on a daily basis, there shall be at least one regular dealing day every two weeks. Section 60(3) Suspension in dealings may be provided for only in exceptional circumstances having regard to the interest of all the holders. Section 60(4) The fund manager shall immediately notify the Authority if dealing has been cancelled or suspended and the fact of the cancellation shall be published immediately following such decision and at least once every week during the period of suspension, in the newspaper in which the scheme's prices are normally published.
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PRICING, VALUATION AND DEALING OF SHARES - 61. Fund manager's obligation to issue or redeem shares

AI-assisted research summary: The fund manager must at all times during the dealing day issue or redeem the scheme's shares at a price arrived at under these Regulations, subject to subregulation (2) and the specific grounds listed in (2)(a)–(c).

Section 61. Fund manager's obligation to issue or redeem shares Section 61(1) Subject to the provisions of subregulation obligation to (2), the fund manager shall at all times during the dealing day issue or redeem shares of the scheme at a price arrived at under these Regulations. Section 61(2)(a) number or value of the shares sought to be issued or redeemed is less than any number or value stated in the information memorandum as the minimum number or value to be purchased or held or redeemed; Section 61(2)(b) fund manager believes on reasonable grounds that the number or value of shares sought to be issued would lead to the holding by any one person or by any one person and any other person appearing to the fund manager to be acting in concert with that person of more shares than any number stated in the information memorandum as the maximum number to be purchased or held; or Section 61(2)(c) fund manager has reasonable grounds, having regard to the interests of all the holders relating to the circumstances of the person concerned, for refusing to issue units to or redeeming shares from such person. Section 61(3) This Regulation shall also apply during an initial offer in so far as it relates to the issuing of shares.
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PRICING, VALUATION AND DEALING OF SHARES - 62. Restrictions on issued shares in an investment company

AI-assisted research summary: No person may hold beneficial interest in more than 25% of the issued shares of a collective investment scheme set up as an investment company after six months from the closing date of the initial offer period.

Section 62. Restrictions on issued shares in an investment company Section No person shall after expiry of six months from the closing date of the initial offer period have beneficial interest in shares of collective investment scheme set up as an investment company representing more than twenty five per cent of the collective investment scheme's issued shares.
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PRICING, VALUATION AND DEALING OF SHARES - 63. Issue price parameters

AI-assisted research summary: For an initial offer, the fund manager's issue price for shares must not exceed the initial price.

Section 63. Issue price parameters Section 63(1)(a) the relevant creation price, and Section 63(1)(b) the current initial charge. Section 63(2) In the case of an initial offer, the fund manager's price for issue of shares shall not exceed the initial price.
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PRICING, VALUATION AND DEALING OF SHARES - 64. Redemption price parameters

AI-assisted research summary: A fund manager's redemption price for shares must not be less than the relevant minimum repurchase price already notified to the trustee.

Section 64. Redemption price parameters Section 64(1) A fund manager's price for redemption of shares shall not be less than the relevant minimum repurchase price already notified to the trustee. Section 64(2) The minimum repurchase price shall not be less than the relevant repurchase price. Section 64(3) In case of an umbrella fund, the maximum price at which shares in one constituent part may be exchanged for shares in another such part shall not exceed the relevant maximum issue price (less any preliminary charge) of the new shares; and the minimum price at which the old shares may be taken in exchange shall not be less than the equivalent minimum repurchase price.
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PRICING, VALUATION AND DEALING OF SHARES - 65. Charges on Issue

AI-assisted research summary: Fund managers must give 90 days' written notice, after trustee or board approval, to specified parties before increasing the current initial charge; issue prices may include an initial charge if permitted and not exceeding the information memorandum's stated current initial charge.

Section 65. Charges on Issue Section 65(1) If the trust deed or the information memorandum so permits, the issue price may include an initial charge which may be expressed either as a fixed amount or calculated as a percentage of the creation price and such initial charge shall not exceed the amount stated in the information memorandum as the current initial charge. Section 65(2) A fund manager wishing to increase the current initial charge, shall give a ninety day notice in writing after obtaining approval from the trustee or board of directors, as the case may be, of that increase and the date of its commencement to the trustee and all persons who ought reasonably to be known to the fund manager to have made an arrangement for the purchase of shares at regular intervals and the information memorandum shall be revised in accordance with these Regulations to reflect the new initial charge and the date of its commencement.
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PRICING, VALUATION AND DEALING OF SHARES - 66. Charges on redemption or cancellation

AI-assisted research summary: Amounts or percentages charged on redemption or cancellation may be expressed as diminishing over the time the holder has held the shares, but may not be expressed as varying in any other respect.

Section 66. Charges on redemption or cancellation Section the amount or percentage may be expressed as diminishing over the time during which the holder has held the shares, but may not be expressed as liable to vary in any other respects;
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PRICING, VALUATION AND DEALING OF SHARES - 67. Dilution Levy

AI-assisted research summary: A dilution levy applies to payment on issue or sale of shares and to deductions on redemption or cancellation; it becomes due when the related payment is due, may be imposed fairly as practicable, and the maximum rate must be disclosed in the current information memorandum.

Section 67. Dilution Levy Section 67(1)(a) the payment of a dilution levy in respect of the issue or sale of shares or any class of shares; and Section 67(1)(b) the deduction of a dilution levy in respect of the redemption or the cancellation of shares or any class of shares. Section 67(2) Any payment or deduction provided for under subregulation (1) shall become due the same time as payment becomes due in respect of the relevant issue, save redemption or cancellation. Section 67(3) A dilution levy may be imposed only in a manner that is, so far as practicable, fair to all holders and potential holders and the maximum rate must be disclosed in the current information memorandum.
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PRICING, VALUATION AND DEALING OF SHARES - 68. Payment on Redemption

AI-assisted research summary: The fund manager must pay the appropriate redemption proceeds to the holder within the period specified in subregulation (2), subject to not being required to pay if it has not received earlier issue proceeds from the holder.

Section 68. Payment on Redemption Section 68(1) On agreeing to redeem shares, the fund manager shall, within the period specified in subregulation (2) pay the appropriate proceeds of redemption to the holder. Section 68(2) The period provided for under subregulation (1) expires at the close of business on the sixth (6) business day next after the valuation point immediately following receipt by the fund manager of the request to redeem. Section 68(3) Nothing in this Regulation shall require the fund manager to part with money in respect of a cancellation or redemption of shares where it has not yet received money due on the earlier issue or sale of those shares from the holder. Section 68(4)(a) any redemption charge permitted under Regulation 66; Section 68(4)(b) any withholding taxes or other taxes to be deducted; and Section 68(4)(c) any dilution levy permitted under Regulation 67.
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PRICING, VALUATION AND DEALING OF SHARES - 69. Notification of price to the trustee or custodian

AI-assisted research summary: Requires notification of various share prices (creation, repurchase, maximum issue, minimum repurchase, and maximum issue on exchange) and states that notified prices are those relevant to deals based on prices determined at that valuation day; any such notification must include a statement of the number of shares owned by the trustee or fund manager for the scheme at that valuation day or notified point.

Section 69. Notification of price to the trustee or custodian Section 69(1)(a) the creation price; Section 69(1)(b) the repurchase price; Section 69(1)(c) the maximum issue price; Section 69(1)(d) the minimum repurchase price; together, in the case of an umbrella fund; and Section 69(1)(e) the maximum issue price for shares in any part on an exchange of shares. Section 69(2) The prices to be notified under subregulation (1) are those relevant to deals based on prices determined at that valuation day. Section 69(3) Any notification under paragraph (1) shall include a statement of the number of shares owned by the trustee or fund manager as the case may be, for the scheme at that valuation day or notified point if there is one.
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PRICING, VALUATION AND DEALING OF SHARES - 70. Publication of price

AI-assisted research summary: The fund manager must publish, on the business day after any valuation, the repurchase price, the maximum selling price and, if applicable, the current initial charge and redemption charge last notified to the trustee or custodian under Regulation 69; and during the initial offer the fund manager must not agree to issue shares at a price other than the initial price.

Section 70. Publication of price Section 70(1) The fund manager shall publish on the business day following any valuation, the repurchase price of those shares and the maximum selling price and if there is one, the current initial charge and redemption charge if any which shall be the relevant prices last notified to the trustee or custodian under Regulation 69. Section 70(2) Publication required by subregulation (1) shall not be in less than two daily newspapers of national circulation published in the English language. Section 70(3) During the period of the initial offer, the fund manager shall not agree to issue shares of the scheme at a price other than the initial price.
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PRICING, VALUATION AND DEALING OF SHARES - 71. General

AI-assisted research summary: The fund manager must value the collective investment scheme portfolio at each valuation point when determining prices for issuing, cancelling, selling or redeeming shares in a unit trust or mutual fund (including sub-funds).

Section 71. General Section 71(1) For the purposes of determining the price which shares of any class in a unit trust or a mutual may be issued, cancelled, sold or redeemed, the fund manager shall carry out a valuation of the collective investment scheme portfolio at each valuation point for the unit trust or mutual fund, or a sub fund of an umbrella scheme, as the case may be, at each valuation point. Section 71(2) An investment included in the collective investment scheme portfolio for which different prices are quoted according to whether it is being bought or sold shall be valued at its mid-market price. Section 71(3) For the purposes of the preceding paragraphs, there shall be excluded from the value of an investment or other part of the collective investment scheme portfolio and fiscal charges or commissions or other charges that were paid or would be payable on the acquisitions or disposals of the investment or other part of the collective investment scheme portfolio. Section 71(4) There must be at least two valuation points in each calendar month and if there are only two valuation points in any calendar month they must be two weeks apart. Section 71(5) The frequency of regular valuation points and the manner in which valuations will be carried out, must be specified in the information memorandum. Section 71(6) Subregulations (1) to (5) shall not apply to a collective investment scheme set up as an investment company under the Companies Act and listed on a securities exchange.
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PRICING, VALUATION AND DEALING OF SHARES - 72. Annual income allocation date

AI-assisted research summary: A collective investment scheme must have an annual income allocation date.

Section 72. Annual income allocation date Section 72(1) A collective investment scheme shall have an annual income allocation date which is the date in the calendar year stated in the most recently published information memorandum as the date on or before which, in respect of each annual accounting period, an allocation of income is to be made. Section 72(2) The annual income allocation date shall be a date within three calendar months after the relevant accounting reference date.
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PRICING, VALUATION AND DEALING OF SHARES - 73. Annual allocation of income

AI-assisted research summary: Trustees, the board of directors or the fund manager must have the custodian transfer portfolio income to a 'distribution account' at the end of each accounting period; the trustee/board/fund manager need not do so if allocation per holder would be below a minimum prescribed in the information memorandum. Income not transferred under that exception is carried forward, and the fund manager must disclose the maximum carry‑forward periods. On or before the annual income allocation date the fund manager must allocate available income to share classes in issue.

Section 73. Annual allocation of income Section 73(1) At the end of each accounting period, the trustee, board of directors or the fund manager, as the case may be, shall arrange for the custodian to transfer the income of a collective investment scheme portfolio to an account to be known as 'the distribution account'. Section 73(2) The trustee, board of directors or the fund manager, as the case may be, are not obliged to comply with subregulation (1) if it appears to them that the average the allocations of income from the distribution account to the holders would be less than such minimum amount as may be prescribed in the information memorandum. Section 73(3) Any income that in accordance with subregulation (2) is not transferred to the distribution account must be carried forward to the next accounting period and be regarded as received at the start of the next period and the fund manager shall disclose the maximum number of periods in which any income in accordance with this subregulation can be carried forward. Section 73(4)(a) take the aggregate of the income of a collective investment scheme portfolio received or receivable for the account of the collective investment scheme in respect of the period; Section 73(4)(b) deduct the charges and expenses of the collective investment scheme paid or payable out of the income of the collective investment scheme portfolio in respect of the period; Section 73(4)(c) add the fund manager's best estimate of any relief from tax on such charges and expenses; Section 73(4)(d) taxation; Section 73(4)(d)(i) taxation; Section 73(4)(d)(ii) the proportion of the price received or paid for shares that is related to income (taking account of any provisions in the incorporation documents relating to equalisation); Section 73(4)(d)(iii) potential income which is unlikely to be received until twelve months after the income allocation date; Section 73(4)(d)(iv) income which should not be accounted for on an accrual basis because of lack of information about how it accrues; Section 73(4)(d)(v) any transfer between income and capital account; and Section 73(4)(d)(vi) any other adjustments that the fund manager considers appropriate after consulting the auditors. Section 73(4)(e) on or before the annual income allocation date, the fund manager shall allocate the available income to the shares of each class in issue taking account of the provision of its incorporation documents relating to the proportion of available income attributable to each class in the case of an umbrella scheme.
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PRICING, VALUATION AND DEALING OF SHARES - 74. Annual allocation to accumulation shares

AI-assisted research summary: Income allocated to accumulation shares shall become part of the scheme's capital and holders' interests are satisfied by an end-of-period adjustment keeping the accumulation share price unchanged.

Section 74. Annual allocation to accumulation shares Section 74(1) The amount of income allocated to accumulation shares shall with effect from the end of the allocation to annual accounting period, become part of the capital of accumulation the collective investment scheme portfolio and the interests of the holders in the amount shall be satisfied by an adjustment as at the end of the period, in the proportion of the value of the collective investment scheme portfolio to which the price of a share of the relevant class is related. Section 74(2) The adjustments under subregulation (1) shall be such as will ensure that the price of an accumulation share of the relevant class remains unchanged notwithstanding the transfer of the income to the capital of the collective investment scheme portfolio.
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PRICING, VALUATION AND DEALING OF SHARES - 75. Annual distribution to holders of income shares

AI-assisted research summary: The fund manager must give the custodian timely instructions so the custodian can distribute income on income shares by the annual income allocation date, and the custodian must pay the distribution according to those instructions.

Section 75. Annual distribution to holders of income shares Section 75(1) Subject to subregulation (2), where the shares in issue in a collective investment scheme are or include income shares, on or before each annual income allocation date, the fund manager shall give the custodian timely instructions sufficient to enable the custodian to distribute the income allocated to income shares amongst the holders in accordance with the number of such shares held or deemed to be held by them respectively at the end of the relevant annual accounting period and the custodian shall pay the distribution in accordance with the instructions. Section 75(2)(a) deduct any amounts previously allocated by way of interim allocation of income in respect of that annual accounting period; and Section 75(2)(b) deduct and carry forward in the income account such amount as shall be necessary to adjust that allocation of income to the nearest one hundredth of a cent (or the equivalent amount in the base currency) per income share or such lesser fraction as the trustee or board of directors, as the case may be, from time to time determine.
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PRICING, VALUATION AND DEALING OF SHARES - 76. Interim allocation of income

AI-assisted research summary: Allows interim allocation of income for an interim accounting period and requires the trustee or board of directors to treat as the available amount for that interim allocation the sum which, in the fund manager's opinion, would be available if the interim periods together were an annual accounting period.

Section 76. Interim allocation of income Section 76(1)(a) states that an allocation of income will be made before the annual income allocation date in any year in respect of a period (`hereinafter referred to as an interim accounting period') within the annual accounting period; and Section 76(1)(b) specifies a date as the interim income allocation date in relation to that interim accounting period. Section 76(2)(a) the interim accounting period in question and all previous interim accounting periods in the same annual accounting period taken together, were the annual accounting period; Section 76(2)(b) the interim income allocation date were the annual income allocation date; and Section 76(2)(c) the trustee or board of directors were to treat as the available amount of income for the interim allocation a sum which, in the opinion of the fund manager, would be available for allocation of income if the interim accounting period and all previous interim accounting periods in the same annual accounting period taken together were an annual accounting period.
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PRICING, VALUATION AND DEALING OF SHARES - 77. Income equalization

AI-assisted research summary: An information memorandum may state that income allocations include a capital sum called 'income equalisation'.

Section 77. Income equalization Section An information memorandum may provide that an allocation of income whether annual or interim to be made in respect of each share issued or sold during the accounting period in respect of which that income allocation is made shall include a capital sum to be referred to as 'income equalisation'.

Part VII

INVESTMENT, BORROWING, LENDING

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INVESTMENT, BORROWING, LENDING - 78. Broad investment guidelines

AI-assisted research summary: Section 78 sets investment guidelines and percentage limits for a collective investment scheme's portfolio and prohibits a fund manager from using scheme assets to acquire partly paid investments or investments that the trustee believes may create contingent liabilities.

Section 78. Broad investment guidelines Section 78(1)(a) be consistent with the objectives of the scheme; Section 78(1)(b) be transferable; Section 78(1)(c) have a ready price or value; and Section 78(1)(d) have adequate proof of title or ownership to allow proper custodial arrangements to be made. Section 78(2)(a) securities listed on a securities exchange in Kenya - 80%; Section 78(2)(b) securities issued by the Government of Kenya — 80%; Section 78(2)(c) immovable property — 25% Section 78(2)(d) other collective investment schemes including umbrella schemes — 25%; Section 78(2)(e) any other security not listed on a securities exchange in Kenya — 25%; Section 78(2)(f) off-shore investments - 10%: Section 78(2)(i) no limits shall apply to investment of the collective investment scheme portfolio in an interest bearing account, product or financial instrument of or issued by a bank or financial institution as defined by the Banking Act; or and insurance company as defined in the Insurance Act (Cap. 487); Section 78(2)(ii) the book value of an investment in an interest bearing account, financial product or instrument of or issued by any single bank or financial institution or insurance company or a combination of any such investment in a single bank, financial institution or insurance company shall not in aggregate exceed 25 % of the collective investment scheme portfolio and net asset value; Section 78(2)(iii) the book value of a collective investment scheme's holding of securities relating to any single issuer shall not exceed twenty five per cent of the collective investment scheme's properties net asset value; and Section 78(2)(iv) a collective investment scheme established for the investment of retirement benefits schemes shall comply with the investment guidelines prescribed under the Retirement Benefits Act; Section 78(2)(v) subregulation 78(2)(c) and (e) shall not apply to a collective investment scheme established as an investment company Section 78(3) A fund manager shall not apply any part of the collective investment scheme portfolio in the acquisition of any investments which are for the time being, partly paid or otherwise in the opinion of the trustee likely to involve the trustee in any liability contingent or otherwise. Section 78(4) The limits and restrictions in this Part shall be complied with at all times based on the most up-to-date value of the collective investment scheme portfolio, but a five percent allowance in excess of any limit or restriction shall be permitted where the limit or restriction is breached through the appreciation in value of the collective investment scheme portfolio.
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INVESTMENT, BORROWING, LENDING - 79. Restriction on borrowing and lending

AI-assisted research summary: Restricts lending all or any part of the collective investment scheme portfolio.

Section 79. Restriction on borrowing and lending Section lend all or any part of the collective investment scheme portfolio; or
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INVESTMENT, BORROWING, LENDING - 80. Investment and borrowing powers for umbrella schemes

AI-assisted research summary: Title: Investment and borrowing powers for umbrella schemes

Section 80. Investment and borrowing powers for umbrella schemes
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INVESTMENT, BORROWING, LENDING - 81. Advertising only for approved schemes

AI-assisted research summary: No person shall advertise or invite the public in Kenya to invest in a collective investment scheme that has not obtained approval from the Authority.

Section 81. Advertising only for approved schemes Section 81(1) No person shall advertise or make other invitations to the public or a section of the public in Kenya to invest in a collective investment scheme which has not obtained approval from the Authority. Section 81(2) Every advertisement or invitation to the public, or a section of the public shall be submitted to the Authority at least forty-eight hours before the date of publication, and may be used until such a significant or material changes arise in the information contained in the advertisement, invitations, public announcement or other promotional materials, after which a new submission for approval may be made to the Authority.
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INVESTMENT, BORROWING, LENDING - 82. General contents

AI-assisted research summary: Requires certain statements and warning content to accompany promotional material for collective investment schemes, including trustee consent where trustee information is shown, a disclaimer about the Authority not taking responsibility for financial soundness when approval is claimed, warnings that prices can fall as well as rise and that redemption rights may be suspended, and that warnings must be legible.

Section 82. General contents Section 82(1) Any advertisement or invitation or other promotional material to the public or a section of the public, which includes information on the trustee, shall be accompanied by the trustee's written consent. Section 82(2) If a collective investment scheme is described as having been approved by the Authority it shall be stated that, in giving this approval, the Authority does not take responsibility for the financial soundness of the scheme or for the correctness of any statements made or opinions expressed in this regard. Section 82(3)(a) the price of shares, and the income therefrom if the collective investment scheme pays dividends may go down as well as up; and Section 82(3)(b) investors are reminded that in certain specified circumstances their right to redeem their shares may be suspended. Section 82(4) Warning statements shall be written in such a manner as to be capable of being read with reasonable ease by anyone reading the advertisement.
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INVESTMENT, BORROWING, LENDING - 83. General and extra-ordinary meetings

AI-assisted research summary: Trustees, the board of directors, the fund manager or holders must convene a general meeting within three months of the relevant meetings; the same actors may convene an extra-ordinary meeting but not later than six weeks after receipt of a requisition.

Section 83. General and extra-ordinary meetings Section 83(1) The trustee, board of directors, fund manager or holders, as the case may be, shall convene a general meeting within three months after the relevant meetings. Section 83(2) The trustee, board of directors, fund manager or holders, as the case may be, may convene an extra-ordinary meeting of holders at any time but not later than six weeks after receipt of the requisition. Section 83(3)(a) state the objects of the meeting; Section 83(3)(b) be dated; Section 83(3)(c) be signed by holders who, at that date, are registered as the holders of shares representing not less than one-tenth in value of all of the shares in the collective investment scheme then in issue; Section 83(3)(d) be deposited at the head office of the collective investment scheme. Section 83(4) A requisition may consist of several documents deposited with the fund manager at the same time, each being in like form and signed by one or more holders.
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INVESTMENT, BORROWING, LENDING - 84. Notice of meetings

AI-assisted research summary: At least twenty-one days' written notice must be given to holders of a general meeting.

Section 84. Notice of meetings Section 84(1) Not less than twenty-one days written notice, inclusive of the date on which the notice is deemed to be served and the day of the meeting, shall be given to the holders of a general meeting. Section 84(2) Subregulation (1) shall not apply to notice of an adjourned meeting. Section 84(3) The non-receipt of notice by, a holder shall not invalidate the proceedings at any meeting.
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INVESTMENT, BORROWING, LENDING - 85. Quorum

AI-assisted research summary: The section sets quorum rules for meetings of holders: the quorum is specified in the information memorandum or trust deed; no business may be transacted unless the requisite quorum is present at the start; if no quorum within half an hour certain outcomes follow including adjournment and appointment of place by the chairman or otherwise by the trustee, board of directors or fund manager; at an adjourned meeting holders present after fifteen minutes shall form the quorum; notice of adjourned meetings must state that holders present form a quorum.

Section 85. Quorum Section 85(1) The quorum at a meeting of holders shall be specified in the information memorandum or the trust deed. Section 85(2) No business shall be transacted at any meeting unless the requisite quorum is present at the commencement of the meeting. Section 85(3) If within half an hour from the time appointed for the meeting a quorum is not present the meeting, if convened on the requisition of holders, shall be dissolved and in any other case it shall stand adjourned to such day and time not being less than seven days thereafter and to such place as may be appointed by the chairman if any has been appointed pursuant to the incorporation documents or otherwise by the trustee, board of directors or fund manager, as the case may, be and if at such adjourned meeting a quorum is not present within fifteen minutes from the time appointed for the meeting, the holders present shall comprise the quorum. Section 85(4) Notice of any adjourned meeting of holders shall be given and such notice shall state that the holders present at the adjourned meeting whatever their number and the number of shares held by such holder or holders shall form a quorum.
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INVESTMENT, BORROWING, LENDING - 86. Resolutions

AI-assisted research summary: Resolutions required under the Companies Act or these Regulations must be passed by a simple majority of votes cast at a general meeting of holders; if votes are equal the chairman appointed under the incorporation documents is entitled to a casting vote; an extra-ordinary resolution is defined by reference to Regulation 83(2).

Section 86. Resolutions Section 86(1) Except where an extraordinary resolution is specifically required or permitted by these Regulations, any resolution required under the Companies Act or these Regulations shall be passed by a simple majority of the votes validly cast for and against the resolution at a general meeting of holders. Section 86(2) In the case of an equality of votes cast, in respect of a resolution, put to a general meeting, any chairman appointed pursuant to the incorporation documents shall be entitled to a casting vote in addition to any other vote he may have. Section 86(3) An extra-ordinary resolution shall mean a resolution passed at an extra-ordinary meeting as defined in Regulation 83 (2).
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INVESTMENT, BORROWING, LENDING - 87. Voting Rights

AI-assisted research summary: Rules governing how holders vote: individual holders present in person or corporations by authorised representatives have one vote on a show of hands; votes may be given personally, by proxy or as the incorporation document permits; voting rights per share are proportional to share price; senior joint holder's vote prevails; directors and their associates are generally not counted in quorum or entitled to vote except in a specified exception.

Section 87. Voting Rights Section 87(1) On a show of hands, every holder who, being an individual is present in person or, being a corporation, is present by its representative duly authorized in that regard, shall have one vote. Section 87(2) Votes may be given either personally or by, proxy or in any other manner permitted by the incorporation document and the voting rights attached to each shall be such proportion of the voting rights attached to all of the shares in issue as the price of the share bears to the aggregate price or prices of all the shares in issue at the date specified in Regulation 84 and a holder entitled to more than one vote need not, if he votes, use all his votes or cast all his votes in the same way. Section 87(3) In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose, seniority shall be determined by the order in which the names stand in the register of holders. Section 87(4) No director of a collective investment scheme shall be entitled to be counted in the quorum of, and no director or any associate of the director shall be entitled to vote at, any meeting of a collective investment scheme except in respect of any shares which the director or his associate holds on behalf of or jointly with a person who, if himself the registered holder would be entitled to vote and from whom the director or its associate, as the case may be, has received voting instructions, and accordingly, shares held by any director shall not, except as mentioned in this subregulation be regarded as being in issue.
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INVESTMENT, BORROWING, LENDING - 88. Proxies

AI-assisted research summary: Holders entitled to attend and vote may appoint proxies (including non-holders); holders may appoint multiple proxies unless incorporation documents say otherwise; proxies may vote only on a poll; the scheme or any person may not require proxy appointment documents to be received more than 48 hours before the meeting for the appointment to be effective.

Section 88. Proxies Section 88(1) A holder entitled to attend and vote at a meeting of a collective investment scheme is entitled to appoint another person to attend and vote in his place whether such other person is a holder or not. Section 88(2) Except insofar as the incorporation documents otherwise provides a holder shall be entitled to appoint more than one proxy to attend on the same occasion but a proxy shall be entitled to vote only on a poll. Section 88(3) Every notice calling a meeting of the holders in the collective investment scheme shall contain a reasonably prominent statement that a holder entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him. Section 88(4) An instrument appointing a proxy, or any other document necessary to show the validity of, or otherwise relating to, the appointment of a proxy shall not be required to be received by the collective investment scheme or any other person more than forty-eight hours before the meeting or adjourned meeting in order that the appointment may be effective.
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INVESTMENT, BORROWING, LENDING - 89. Holders to be notified

AI-assisted research summary: Defines who the term "holders" means for this Part: only persons who were holders seven days before the notice of the relevant meeting was deemed served, excluding anyone the fund manager knows is not a holder at the meeting.

Section 89. Holders to be notified Section In this Part, "holders" shall mean only the persons who were holders seven days before the notice of the relevant meeting was deemed to have been served in accordance with Regulation 84 (1), but excluding any persons who are known to the fund manager not to be holders at the time of the meeting.
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INVESTMENT, BORROWING, LENDING - 90. Special resolutions required for amendments to incorporation documents

AI-assisted research summary: The incorporation documents of a collective investment scheme may be amended by an extraordinary resolution, subject to the listed subregulation exceptions and conditions in subregulation (2).

Section 90. Special resolutions required for amendments to incorporation documents Section 90(1) The incorporation documents of a collective investment scheme may be amended by an extraordinary resolution subject to subregulation (2). Section 90(2)(a) the instrument of incorporation provides for amendment to be made in such manner; and Section 90(2)(b) to implement any change in the law, including a change brought by an amendment of these Regulations; or Section 90(2)(b)(i) to implement any change in the law, including a change brought by an amendment of these Regulations; or Section 90(2)(b)(ii) as a direct consequence of any such change; or Section 90(2)(b)(iii) to change the name of the collective investment scheme; or Section 90(2)(b)(iv) to remove from the incorporation documents obsolete provisions; or Section 90(2)(b)(v) to make any other change to the instrument of incorporation which the board of directors consider does not involve any holder or potential holder in any material prejudice, and Section 90(2)(c) it would not introduce or affect any provision relating to the descriptions of the transferable securities in which the collective investment scheme portfolio may be invested unless it is required solely to reflect the introduction of a new sub-fund.
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INVESTMENT, BORROWING, LENDING - 91. Service of notices and other documents

AI-assisted research summary: Notices or documents required to be served on a holder are deemed served if posted to or left at the holder's registered address; notices to others (including the Authority) must be in writing or a form that records time of receipt and preserves a legible copy; postal service is deemed effective on the fourth day after posting if the letter was properly addressed, stamped and posted; notices left or delivered at a registered address are deemed served on the day they are left or delivered.

Section 91. Service of notices and other documents Section 91(1) Any notice or document required to be Service of served upon a holder shall be deemed to have been duly notices and served if it is sent by post to or left at holder's address other appearing in the register documents Section 91(2) Any notice required to be served or information to be supplied or given to any other person, including the Authority, shall be in writing or in such other form as enables the recipient to know or to record the time of receipt and to preserve a legible copy of the notice. Section 91(3) Any notice or document served by post shall be deemed to have been served on the fourth day following that on which the letter containing the same is posted, and in providing such service it shall be sufficient to prove that such letter was properly addressed, stamped and posted; and any notice or document left at a registered address or delivered other than by post shall be deemed to have been served on the day it was so left or delivered.
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INVESTMENT, BORROWING, LENDING - 92. Obligation to appoint an auditor

AI-assisted research summary: The fund manager must appoint an auditor at the start and whenever there is a vacancy for the collective investment scheme.

Section 92. Obligation to appoint an auditor Section The fund manager shall at the outset and upon any vacancy, appoint an auditor for the collective investment scheme.
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INVESTMENT, BORROWING, LENDING - 93. Qualifications of an auditor

AI-assisted research summary: A person is not qualified for appointment as auditor unless they are a member and hold a valid practicing certificate issued by the Institute of Certified Public Accountants of Kenya.

Section 93. Qualifications of an auditor Section A person shall not be qualified for appointment as auditor unless he is a member of and holds a valid practicing certificate issued by the Institute of Certified Public Accountants of Kenya.
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INVESTMENT, BORROWING, LENDING - 94. Independence

AI-assisted research summary: An auditor shall be independent of the trustee, board of directors, fund manager and the custodian, their agents or associates.

Section 94. Independence Section An auditor shall be independent of the trustee, board of directors, fund manager and the custodian, their agents or associates.
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INVESTMENT, BORROWING, LENDING - 95. Accounting period

AI-assisted research summary: Collective investment schemes must have a yearly accounting period ending 31 December; the fund manager must publish and submit an unaudited interim half-year report (for the period ending 30 June) to the Authority within 30 days of that month end.

Section 95. Accounting period Section Every collective investment scheme shall have an annual accounting period ending the last day of December in each year; but the fund manager shall publish and submit to the Authority an un-audited interim report for the half-year period ending on the last day of June in each year within thirty days from the end of that month. [L.N. 100/2009 , r. 2.]
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INVESTMENT, BORROWING, LENDING - 96. Audit of annual report

AI-assisted research summary: The fund manager must have the scheme's annual report audited.

Section 96. Audit of annual report Section The fund manager shall cause the scheme's annual report to be audited, and such report shall contain the information provided in the Fifth Schedule.

Part VIII

AMALGAMATION AND RECONSTRUCTION

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AMALGAMATION AND RECONSTRUCTION - 100. When a collective investment may be wound up

AI-assisted research summary: A collective investment scheme must be wound up under these Regulations if an extraordinary resolution is passed or its instrument of incorporation triggers winding up; the Authority must first exercise intervention powers before an application is made to court.

Section 100. When a collective investment may be wound up Section 100(1)(a) unless and until effect may be given in accordance with the provisions relating to winding up given in the Companies Act, to a proposal to wind up the affairs of a company otherwise than by the court, and provided that the Authority shall have first exercised its powers to intervene in the management of the collective investment scheme before an application is made to court for winding up of the collective investment scheme; Section 100(1)(b) unless a statement has been prepared and sent or delivered to the Authority in accordance with paragraphs 3(a), 4 and 5 and received by the Authority prior to satisfaction of the condition in paragraph 1 (a). Section 100(2) Subject to subregulation (1) and the subsequent provisions of this Regulation, a collective investment scheme shall be wound up under these Regulations if an extraordinary resolution to that effect has been passed; or when the period (if any) fixed for duration of the collective investment scheme by its incorporation documents, expires or the event occurs, on the occurrence of which its instrument of incorporation provides that the collective investment scheme is to be wound up. Section 100(3)(a) confirm that the collective investment scheme will be able to meet all its liabilities within twelve months of the date of the statement; or Section 100(3)(b) state that such confirmation cannot be given. Section 100(4)(a) relate to the collective investment scheme's affairs at the date which must not be more than twenty-one days prior to the date on which notice is given to the Authority; and Section 100(4)(b) be approved by the trustee or board of directors and be signed on their behalf by the fund manager, and if it is given under paragraph (a) of subregulation (3) of this Regulation by at least one other director or alternatively be signed by the fund manager and contain a statement signed by the auditor to the effect that in his opinion the enquiry required by subregulation (3) has been properly made and is fairly reflected by the confirmation. Section 100(5) Following compliance with subregulation (4), the statement referred to in subregulation (3) must be sent or delivered to the Authority and a copy sent to the custodian.
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AMALGAMATION AND RECONSTRUCTION - 101. Consequences of commencement of winding up

AI-assisted research summary: When winding up of a collective investment scheme begins, the scheme and its fund manager must stop certain activities: the scheme must stop issuing and cancelling shares and carrying on business (except as needed to complete winding up), and the fund manager must stop selling, redeeming, or arranging issuance/cancellation of shares. Notices and publication relating to commencement of winding up are also required.

Section 101. Consequences of commencement of winding up Section 101(1) In this Regulation the 'effective time' means either the time at which the both conditions of referred to in subregulation (1) of Regulation 100 are satisfied or, if later, the time, determined in accordance with subregulation (2) of Regulation 100, at which the collective investment scheme shall be wound up. Section 101(2)(a) regulations pertaining to pricing, dealing, investment and borrowing powers shall cease to apply to the collective investment scheme; Section 101(2)(b) the collective investment scheme shall cease to issue and cancel shares; Section 101(2)(c) the fund manager shall cease to sell or redeem shares or to arrange for the collective investment scheme to issue to cancel them; Section 101(2)(d) no transfer of a share shall be registered and no other change to register or holders shall be made without the sanction of the trustee or board of directors, as the case may be; and Section 101(2)(e) the collective investment scheme shall cease to carry on its business, except so far as may be required for its beneficial winding up; however the corporate state and corporate powers of the scheme and (subject to the preceding provisions of this Regulation) the powers of the trustee or board of directors shall continue until the collective investment scheme is dissolved. Section 101(3)(a) publish in not less than two daily newspapers of national circulation published in the English language management's decision to wind up the collective investment scheme and the date of commencement of the winding up; and Section 101(3)(b) if the fund manager has not previously notified the holders of the proposal to wind up, give written notice of the commencement of the winding up to the holders.
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AMALGAMATION AND RECONSTRUCTION - 102. Manner of winding up

AI-assisted research summary: The fund manager must realize the scheme portfolio, apply proceeds to liabilities, instruct the custodian on holding proceeds prudently, may make interim distributions if sufficient liquid funds exist, and must make a final distribution to holders once assets and known liabilities are realized and met; subregs 1–4 are subject to any sanctioned amalgamation or reconstruction scheme.

Section 102. Manner of winding up Section 102(1) The fund manager shall, as soon as practicable after the effective time cause the collective investment scheme portfolio to be utilized and the liabilities of the collective investment scheme to be met out of the proceeds. Section 102(2) The fund manager shall give instructions to the custodian as to how such proceeds (until utilized to meet liabilities or make distributions to holders) shall be held and such instructions shall be with a view to the prudent protection of the creditors and holders against loss. Section 102(3) Provided there are sufficient liquid funds available after making adequate provision for the expenses of the winding up and the discharge of the liabilities of the collective investment scheme remaining to be discharged, the fund manager may arrange to make one or more interim distributions out of such funds to the holders proportionately to the right to participate in collective investment scheme portfolio attached to their respective shares as at the effective time. Section 102(4) When the fund manager has caused all the collective investment scheme portfolio to be realized and all of the liabilities of the collective investment scheme known to the fund manager to be met, the fund manager shall make a final distribution, on or prior to the date on which the final account is sent to the holders in accordance with Regulation 103, of the balance remaining (net of a provision for any further expenses of the collective investment scheme) to the holders in the same proportions as provided in sub-regulation (3). Section 102(5) Subregulations 1 to 4 are subject to the terms of any scheme of amalgamation or reconstruction sanctioned by an extraordinary resolution of the collective investment scheme passed on or before the effective time.
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AMALGAMATION AND RECONSTRUCTION - 103. Final account

AI-assisted research summary: When a collective investment scheme is fully wound up the fund manager must prepare a final account; the auditor must report on it; the final account must be signed as described; and within two months of the end of the final accounting period the fund manager must send the final account and auditor's report to the Authority and to holders.

Section 103. Final account Section 103(1) As soon as the collective investment scheme's affairs are fully wound up including distribution or provision for distribution in accordance with Regulation 102 (3), the fund manager shall prepare an account of the winding up showing how it has been conducted and how the collective investment scheme portfolio has been disposed of and the account shall, following its approval by the trustee or board of directors as the case may be, be signed on their behalf by the fund manager and the trustee or at least one other director as the case may be and the account once signed, shall be the 'final account' for the purposes of these Regulations. Section 103(2) The final account shall state the date on which the collective investment scheme's affairs were fully wound up and the date stated shall be regarded as the final day of the accounting period of the scheme then running of the 'final accounting period'. Section 103(3) The collective investment scheme's auditor shall make a report in respect of the final account, which shall state the auditor's opinion as to whether the final account has been properly prepared for the purpose of subregulation (1). Section 103(4) Within two months of the end of the final accounting period, the fund manager shall send a copy of the final account and the auditor's report on it to the Authority, and to each person who was a holder (or the first named joint holders) immediately before the final accounting period.
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AMALGAMATION AND RECONSTRUCTION - 104. Duty to ascertain liabilities

AI-assisted research summary: The fund manager must use all reasonable endeavours to ensure the scheme's liabilities are discharged before winding up; if it rejects a claim it must promptly notify the claimant and must immediately notify the trustee or board, who must forthwith present (or cause the scheme to present) a petition for winding up under the Companies Act (Cap. 486).

Section 104. Duty to ascertain liabilities Section 104(1) The fund manager shall have a duty to use all reasonable endeavours to ensure that all the liabilities of the collective investment scheme are discharged prior to the completion of the winding up. Section 104(2)(a) the fund manager is, or becomes, aware prior to the completion of the winding up; or Section 104(2)(b) the fund manager would have become aware of prior to the completion of the winding up had it used all reasonable endeavours to ascertain the liabilities of the collective investment scheme. Section 104(3) If the fund manager rejects any claim against the collective investment scheme in whole or part, the fund manager shall forthwith send to the claimant written notice of its reasons for doing so. Section 104(4)(a) the fund manager shall notify the trustee or board of directors as the case may be immediately; and Section 104(4)(b) the trustee or board of directors as the case may be shall forthwith present a petition or cause the collective investment scheme to present a petition for the winding up in accordance with the provisions in the Companies Act (Cap. 486).
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AMALGAMATION AND RECONSTRUCTION - 105. Accounts and reports

AI-assisted research summary: Accounting periods and reporting continue to apply; the fund manager need not send copies of reports for periods beginning after the effective time if the trustee or board (after consulting the Authority) are satisfied it is unnecessary, but must send a free copy to any holder who requests one.

Section 105. Accounts and reports Section 105(1)(a) the annual and half-yearly accounting periods shall continue to run; Section 105(1)(b) the provisions about annual and interim allocation of income shall continue to apply; and Section 105(1)(c) annual and half-yearly reports shall continue to be required. Section 105(2) The fund manager need not send to each holder a copy of any report relating to an accounting period or half-yearly accounting period which began after the effective time, if the trustee or board of directors of the collective investment scheme as the case may be, after consulting the Authority, are satisfied that the interests of the holders are not such as to require the report to be sent to the holders, but a copy of the report shall be sent or supplied free of charge to any holder requesting the same.
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AMALGAMATION AND RECONSTRUCTION - 106. Liability of a fund manager

AI-assisted research summary: The fund manager is personally liable for unpaid liabilities of a wound-up collective investment scheme and must cover deficits in a sub-fund when its assets are insufficient, subject to specified defences.

Section 106. Liability of a fund manager Section 106(1) The fund manager shall be personally liable to meet any liability of a collective investment scheme wound up under these Regulations (whether or not the collective investment scheme has been dissolved) that was not discharged prior to the completion of the winding up, except to the extent that the fund manager can show that it has complied with Regulation 104. Section 106(2) If the proceeds of the realization of the assets attributable, or allocated to a particular sub fund of an umbrella scheme are insufficient to meet the liabilities attributable or allocated to that sub-fund, the fund manager shall pay to the scheme for the account of that sub-fund the amount of the deficit, except and to the extent that the fund manager can show that the deficit did not arise as a result of any failure by the fund manager to comply with these Regulations. Section 106(3) The obligations of the fund manager under this Regulation shall not affect any other obligation of the fund manager under these Regulations or the general law.
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AMALGAMATION AND RECONSTRUCTION - 107. Additional provisions applicable to umbrella schemes

AI-assisted research summary: Liabilities of an umbrella scheme attributable or allocated to a particular sub-fund shall be met out of the scheme collective investment scheme portfolio attributable or allocated to such sub-fund.

Section 107. Additional provisions applicable to umbrella schemes Section 107(1) Liabilities of an umbrella scheme attributable, or allocated in accordance with Regulation 42 to a particular sub-fund shall be met out of the scheme collective investment scheme portfolio attributable or allocated to such sub-fund. Section 107(2)(a) references to shares are references to shares of the class(es) related to the sub-fund to be terminated; Section 107(2)(b) references to holders are references to holders of such shares; Section 107(2)(c) references to a resolution or extra-ordinary resolution are references to such resolution passed at a meeting of holders of shares of the class or classes referred to in paragraph (a); Section 107(2)(d) references to collective investment scheme portfolio are references to collective investment scheme portfolio allocated or attributable to the sub-fund to be terminated; and Section 107(2)(e) references to liabilities are references to liabilities of the company allocated or attributable to the sub-fund to be terminated.
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AMALGAMATION AND RECONSTRUCTION - 108. Capital Markets Tribunal

AI-assisted research summary: Any dispute or difference arising between the holders, fund manager, trustee, board of directors, custodian and others shall be referred to the Capital Markets Tribunal.

Section 108. Capital Markets Tribunal Section Any dispute or difference which may arise between the holders, fund manager, trustee or the board of directors as the case may be, custodian and the other or others shall be referred to the Capital Markets Tribunal, established under Section 35A of the Act.
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AMALGAMATION AND RECONSTRUCTION - 97. General

AI-assisted research summary: Defines 'amalgamation' as a scheme where the whole collective investment scheme portfolio becomes the portfolio of a regulated collective investment scheme (not the first), holders receive shares in that regulated scheme, and 'collective investment scheme' includes sub-funds or separately pooled parts.

Section 97. General Section 97(1) In this part, 'amalgamation' means a scheme of arrangements whereby the whole of the collective investment scheme portfolio becomes the collective investment scheme portfolio (but not the first collective investment scheme portfolio) of a regulated collective investment scheme and whereby holders in the collective investment scheme receive shares in the regulated collective investment scheme and reference to a collective investment scheme includes a sub-fund or equivalent separately pooled part of such a scheme. Section 97(2)(a) part of the collective investment scheme portfolio becomes the collective investment scheme portfolio of a regulated collective investment scheme (which includes a sub-fund or equivalent separately pooled part, of a regulated collective investment scheme); or Section 97(2)(b) the whole of that collective investment scheme portfolio becomes the collective investment scheme portfolio of two or more regulated collective investment schemes; or Section 97(2)(c) the whole of that collective investment scheme portfolio becomes the first collective investment scheme portfolio of a regulated collective investment scheme.
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AMALGAMATION AND RECONSTRUCTION - 98. Amalgamation and reconstruction

AI-assisted research summary: Rules on amalgamation and reconstruction: schemes and amalgamation sub-funds must not be amalgamated or reconstructed in a way that makes their holders into holders of any body other than a regulated collective investment scheme; the fund manager must obtain Authority approval in writing and submit the extraordinary resolution within two days of the meeting.

Section 98. Amalgamation and reconstruction Section 98(1) Neither a collective investment scheme nor an Amalgamation sub-fund of an umbrella fund shall be subject to an amalgamation or reconstruction which would result in its holders becoming holders in any body other than a regulated collective investment scheme that complies with these Regulations. Section 98(2) Where for the purpose of an amalgamation or reconstruction, it is proposed that the collective investment scheme portfolio or collective investment scheme portfolio attributable to a sub-fund of an umbrella scheme, should become the collective investment scheme portfolio of another regulated collective investment scheme or sub-fund (or equivalent separately pooled part) of a regulated collective investment scheme, the proposal shall not be implemented without the sanction of an extraordinary resolution of the holders of the collective investment scheme or as the case may be, of the class or classes of shares related to the sub-fund. Section 98(3) Where it is proposed that a collective investment scheme or a sub-fund of an umbrella scheme should receive a collective investment scheme portfolio of another collective investment scheme as a result of amalgamation or reconstruction of some other collective investment scheme or sub-fund (or equivalent separately pooled part) of such a scheme or of a body corporate, then the proposal shall not be implemented without the sanction of an extraordinary resolution of the holders of the collective investment scheme or, as the case may be, of the class or classes of shares related to the sub-fund unless subregulation (4) applies. Section 98(4)(a) is not likely to result in any material prejudice to the interests of the holders of the collective investment scheme; and Section 98(4)(b) is consistent with the objectives of the collective investment scheme or its sub-fund. Section 98(5) The fund manager shall obtain the approval of the Authority in writing, of the proposed amalgamation or reconstruction and shall submit a copy of the extraordinary resolution by the holders approving the amalgamation or reconstruction within two days after holding of the extraordinary meeting.
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AMALGAMATION AND RECONSTRUCTION - 99. Suspension and resumption of dealings in shares

AI-assisted research summary: The fund manager may suspend dealings in shares with prior agreement of the trustee or board, or must do so without delay if the trustee or board require it; the fund manager must notify the Authority of suspensions and confirm them in writing, must inform before resumption and confirm after resumption; suspension ends as soon as practicable and in any event within twenty-eight days.

Section 99. Suspension and resumption of dealings in shares Section 99(1) The fund manager may, at any time, with prior agreement of the trustee or directors as the case may and be, or shall without delay, if the trustee or board of or dealings directors, as the case may be, so require, suspend the in issue, cancellation, sale and redemption of shares (referred to in this Regulation as 'dealings in shares') if the fund manager, or the trustee or board of directors as the case may be, are of the opinion that due to exceptional circumstances there is good and sufficient reason to do so having regard to the interests of holders. Section 99(2)(a) inform the Authority of the suspension, stating the reason for its action; and Section 99(2)(b) forthwith give written confirmation of the suspension and the reasons for it to the Authority. Section 99(3) During the period of suspension, none of the obligations in Part VI relating to the issue, cancellation, sale or redemption of shares or to the valuation of the collective investment scheme portfolio shall apply. Section 99(4) The suspension of dealings in shares shall cease as soon as practicable after the trustee or board of directors as the case may be are no longer of the opinion referred to in subregulation (1) and in any event within twenty-eight days of the commencement of the suspension of dealings in shares. Section 99(5) Before the suspension of dealings in shares ceases, the fund manager shall inform the Authority of the proposed resumption and forthwith after the resumption shall confirm the resumption by giving notice in writing to the Authority. Section 99(6) This Regulation may be applied to one or more classes of shares without being applied to other classes of shares in an umbrella scheme and shall apply to a sub-fund as it applies to the collective investment scheme, but by reference to the shares of the class or classes related to the sub fund and to the collective investment scheme portfolio attributable to the sub-fund, however, for the purpose of subregulation (1), the fund manager shall have regard to the interests of all the holders in the collective investment scheme or the umbrella scheme.

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