CHAPTER 56:09
COLLECTIVE INVESTMENT UNDERTAKINGS
ARRANGEMENT OF SECTIONS
SECTION
CHAPTER I
Preliminary
1. Short title
2. Interpretation
3. Application of Act
CHAPTER II
Powers of the Regulatory Authority
4. Financial services law under Non-Bank Financial Institutions Regulatory Authority Act
5. Powers of Regulatory Authority in relation to collective investment undertakings
6. Powers of Regulatory Authority to issue licences, exemptions and recognitions of collective investment undertakings
7. Regulatory Authority to appoint inspector or investigator
8. Inspection of licensed and recognised collective investment undertakings
9. Investigative powers in relation to collective investment undertakings
10. Investigation by officer
11. Confidential information
12. Exemptions for disclosure of confidential information
13. Co-operation
14. Investigations in support of foreign regulatory authority
15. Maintenance of register of collective investment undertakings by Regulatory Authority
CHAPTER III
Collective Investment Undertakings: Generally
PART I
Meaning, Objectives and Structure of Collective Investment Undertakings
16. Meaning and objective of collective investment undertaking
17. Arrangements not constituting collective investment undertaking
18. Structure of collective investment undertakings
PART II
Licensing and Recognition of Collective Investment Undertakings
19. Prohibition of unlicensed collective investment undertakings
20. Licensing of collective investment undertakings
21. Recognition of foreign collective investment undertakings
22. Determining licensing or recognition
23. Issue and notification of licence or recognition
24. Refusal to issue licence or recognition
25. Alteration of licensed collective investment undertakings
26. Variation, suspension or cancellation of licence or recognition by Regulatory Authority
PART III
Exemption of Collective Investment Undertakings
27. Exemption of domestic collective investment undertakings
28. Exemption of foreign collective investment undertakings
29. Determining exemption of collective investment undertakings
30. Issue and notification of exemption
31. Refusal to exempt
32. Withdrawal of exemption of foreign collective undertakings
33. Alteration of exempted collective investment undertakings
34. Variation, suspension or cancellation of exemption by Regulatory Authority
PART IV
Constituting Document and Prospectus of Collective Investment Undertakings
35. Constituting document of collective investment undertaking
36. Requirements for prospectus of collective investment undertaking
37. Responsibility and liability for prospectus of collective investment undertaking
38. Publicity of prospectus
PART V
Offers and Participations in Collective Investment Undertakings
39. Offers
40. Offer to public
41. Offer not to public
42. Participations in collective investment undertakings
43. Register for collective investment undertakings
44. Transfer of ownership of participations
45. Spread of investment risk by collective investment undertakings
PART VI
Auditor of Collective Investment Undertakings
46. Requirements for auditor of collective investment undertaking
47. Resignation of auditor of collective investment undertaking
48. Co-operation with auditor
PART VII
Reports and Accounts of Collective Investment Undertakings
49. Requirements for annual and half yearly reports and accounts
50. Approval of reports and accounts
CHAPTER IV
Types of Collective Investment Undertakings
PART I
Investment Companies
51. Establishment of investment company
52. Constitution of investment company
53. Prospectus of investment company
54. Public offering in investment company
55. Annual report and accounts of investment company
56. Licensing and exemption of investment companies with fixed capital
57. Licensing and exemption of investment companies with variable capital
PART II
Unit Trusts
58. Establishment of unit trust
59. Licensing and exemption of unit trusts
PART III
Collective Investment Undertaking Partnerships
60. Establishment of collective investment undertaking partnership
61. Exemption of collective investment undertaking partnership
CHAPTER V
Licensed Collective Investment Undertakings
PART I
Operation of Licensed Collective Investment Undertakings: Management Companies
62. Requirements for management company
63. Duties of management company
64. Functions of management company
65. Replacement of management company
PART II
Trustees and Supervisory Custodians of Licensed Collective Investment Undertakings
66. Duties of trustee of licensed unit trust and supervisory custodian of licensed investment company
67. Functions of trustee of licensed unit trust or supervisory custodian of licensed investment company
68. Keeping of books and records
69. Furnishing information to Regulatory Authority
70. Property of licensed collective investment undertaking not to be property of trustee or supervisory custodian
71. Requirements for trustee of licensed unit trust or supervisory custodian of licensed investment company
72. Replacement of trustee of licensed unit trust or supervisory custodian of licensed investment company
PART III
Participations in Licensed Collective Investment Undertakings
73. Purchase of participations
74. Repurchase of participations in open ended or interval collective investment undertakings
75. Suspension of purchase and repurchase of participations in open ended or interval collective investment undertakings
76. Approval of participants
PART IV
Payments by Participants in Licensed Collective Investment Undertakings
77. Payments by participants
78. Payments from licensed collective investment undertakings
PART V
Short Form Documentation for Licensed Collective Investment Undertakings
79. Short form prospectus
80. Short form annual and half yearly report
PART VI
Investment and Borrowing Powers of Licensed Collective Investment Undertakings
81. Permitted investments, lending and borrowing for licensed collective investment undertakings
PART VII
Valuation of Licensed Collective Investment Undertakings
82. Requirements for valuation of licensed collective investment undertakings
CHAPTER VI
Termination, Winding Up and Transfers of Collective Investment Undertakings
83. Limitations on winding up of collective investment undertaking
84. Winding up of solvent collective investment undertaking
85. Winding up by trustee
86. Winding up by operator
87. Winding up of collective investment partnership
88. Required activities during termination and winding up
89. Winding up by order of High Court
90. Effect of winding up petition
91. Transfer of collective investment undertaking
CHAPTER VII
Miscellaneous Provisions
92. Review of decisions
93. Regulations
94. Rules
95. Repeal of Cap. 56:09
96. Transitional and savings provisions
Act 23, 2021,
S.I. 16, 2022.
An Act to provide for the supervision and regulation of collective investment undertakings, to enhance protection for investors and to provide for matters connected with or incidental thereto.
[Date of Commencement: 28th February, 2021]
CHAPTER I
Preliminary (ss 1-3)
This Act may be cited as the Collective Investment Undertakings Act.
In this Act, unless the context otherwise requires—
"advertisement" means a communication including oral, written, visual and electronic communication to the public or any section of the public, to clients, or any group of clients that provides information about a collective investment undertaking;
"asset manager" has the meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act (Cap. 46:08);
"associated enterprise" means—
(a) a holding company of a management company, asset manager, trustee, collective investment undertaking auditor or supervisory custodian or custodian;
(b) a subsidiary company of a management company, asset manager, trustee, collective investment undertaking auditor or supervisory custodian or custodian;
(c) a company which is a subsidiary of a body corporate, where the management company, asset manager, trustee, collective investment undertaking auditor or supervisory custodian or custodian concerned is also a subsidiary of the body corporate, but neither company is a subsidiary of the other;
(d) in the case of a management company, asset manager, trustee, collective investment undertaking auditor or a supervisory custodian or custodian, any other body corporate that is not a subsidiary of the management company, asset manager, trustee or collective investment undertaking auditor or supervisory custodian or custodian but, in respect of which, the company is beneficially entitled to more than 20 per cent in nominal value of either the allotted share capital or of the shares carrying voting rights (other than voting rights which arise only in specified circumstances) in that other body corporate; or
(e) a partnership in which the management company, trustee or supervisory custodian or custodian has an interest, and whose business is or, at the relevant time, was, in the opinion of the Regulatory Authority, materially relevant to an inspection being carried out or proposed to be carried out under this Act in the management company, trustee or supervisory custodian or custodian;
"beneficial owner" has the meaning assigned to it in the Financial Intelligence Act (Cap. 08:07);
"beneficially owned" means the rights over the property of a unit trust conferred by a trust deed on a unit-holder proportionate to the number of units held relative to the total number of units in issue;
"capital property" means the undertaking property, other than the income property and any amount for the time being standing to the credit of the distribution account;
"closed ended", in relation to a collective investment undertaking, means an undertaking which, after the initial investment period, is closed for a set period during which no transactions with the manager of the fund take place in the units of the fund;
"closed ended investment company" means an investment company which has a fixed number of shares in issue;
"compensation scheme" means a compensation fund of last resort for customers of collective investment undertakings;
"constituting document" means for—
(a) an investment company, the constitution of that company;
(b) a partnership, the partnership agreement; and
(c) a unit trust, the trust deed;
"controller" has the same meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act;
"custodian" has the meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act;
"debenture" has the meaning assigned to it under the Companies Act (Cap. 42:01);
"deposit" means a sum of money paid on terms under which it will be repaid, with or without interest or a premium, either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it;
"director" has the meaning assigned to it in the Companies Act;
"distribution account" means the account to which the income property of a collective investment undertaking may be transferred at the end of each annual accounting period;
"durable medium" means paper, electronic or any other instrument that enables the recipient to store information addressed personally to that recipient in such a way that it is accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;
"eligible facilities agent" means a person eligible to be appointed to facilitate the purchase and repurchase of collective investment undertaking participations and provision of information and services in relation to foreign collective investment undertakings within Botswana;
"exempt collective investment undertaking" means a collective investment undertaking exempted under section 19(2);
"expert client" means an investor who has signed a declaration, as may be prescribed, and who meets the following criteria—
(a) an individual holding financial assets (either single or jointly with a spouse) of P1 000 000 or more;
(b) a financial services business licensed to conduct a regulated activity;
(c) a bank licensed in Botswana or equivalent outside Botswana;
(d) an institutional investor such as a pension fund, insurance fund, medical aid fund, collective investment undertaking, or any other entity as the Minister may prescribe; or
(e) governments, statutory bodies, central banks or other national monetary authorities, local authorities and state owned organisations;
"feeder collective investment undertaking" means a collective investment undertaking the principal object of which is invested in a single collective investment undertaking;
"foreign company" has the same meaning assigned to it under the Companies Act;
"foreign exempted collective investment undertaking" means a collective investment undertaking domiciled outside Botswana permitted by the Regulatory Authority to be offered to expert clients only within Botswana;
"Guardian's Fund" means the Fund established under the Administration of Estates Act (Cap. 31:01);
"holding company" has the meaning assigned to it under the Companies Act;
"income property" means the total amount of money that the management company considers to be in the nature of income received or receivable for the account of and in respect of the property of a collective investment undertaking, but excluding any amount for the time being standing to the credit of a distribution account;
"independent director" means a non-executive director of an investment company who meets the requirements to be able to act independently of the management company of that undertaking, of its investment adviser, its auditor, its legal adviser, its trustee or supervisory custodian or custodian and who is not a director, employee, partner, officer or professional adviser to any of these entities and who has not acted in that capacity three years prior to the appointment;
"investment adviser" has the meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act;
"investment company" means a collective investment undertaking which is a body corporate, the principal object of which is the diversified investment of its property in securities and real or personal property of whatever kind;
"investment company with fixed capital" means a company under the Companies Act which is closed ended in terms of section 18(3)(a) and has a fixed number of shares in issue, and is licensed or exempted under this Act;
"investment company with variable capital" means a company which has a share capital that varies according to the value of the assets which represent the share capital and which satisfies the requirements of section 18(3)(b) and (c);
"key person" has the same meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act;
"licensed corporate director" means a body corporate licensed which is a management company of an investment company with variable or fixed capital;
"management company" means a body corporate licensed, and responsible for the establishment, promotion, operation, investment management and administration of a separately constituted collective investment undertaking, under this Act;
"master undertaking" means an undertaking which has amongst its participants at least one feeder collective investment undertaking and which is not itself a feeder collective investment undertaking and which does not hold participations in a feeder collective investment undertaking;
"money market collective investment undertaking" means an open ended collective investment undertaking whose primary objective must be to maintain the net asset value of the undertaking either constant at par (net of earnings) or at the value of the participants' initial capital plus earnings and which must sell and repurchase its participations every working day;
"net asset value" means the—
(a) value of a unit trust's fund less the service charge, the administration expenses and the remuneration of the trustee and any other liabilities of the fund not already taken into account in determining the value of the fund and shall include a provision for duties and charges; or
(b) value of a share or shares of a particular class in an investment company for any particular dealing day as determined by the directors in accordance with the articles of that investment company;
"net asset value per participation" means the net asset value of the collective investment undertaking divided by the number of participations in issue at the time of the calculation of the net asset value;
"open ended", in relation to a collective investment undertaking, means arrangements which are continually creating new shares, units or partnership interests when investors buy or sell securities and consequently, the net asset value of the collective investment undertaking increases or decreases as investors buy and sell shares, units or partnership interests, the net asset value calculated periodically and investors may buy or sell shares, units or partnership interests at net asset value, net of certain charges, at regular intervals;
"operator of a collective investment undertaking" means an operator of a licensed collective investment undertaking or an operator of an exempt collective investment undertaking, or both;
"operator of a licensed collective investment undertaking" means, in relation to an investment company, the licensed corporate director of that company which is the management company; and, in relation to a unit trust, the management company;
"operator of an exempt collective investment undertaking" means—
(a) in relation to an investment company which has a licensed corporate director which is the management company, that management company;
(b) in relation to an investment company which does not have a licensed corporate director, the Board of that company;
(c) in relation to a unit trust, the management company; and
(d) in relation to a partnership which is a collective investment undertaking, the general partner of that partnership;
"participant" means any person holding units or shares or a partnership interest or any other form of participation, right or interest in a collective investment undertaking by reason of having invested capital in the collective investment undertaking;
"participation" includes, a share, a unit, a partnership interest and any other instrument or interest granting a proportionate entitlement to undertaking property and the income earned by undertaking property and capital returns earned by undertaking property;
"prospectus" means a document that discloses the terms of the offering of a collective investment undertaking;
"recognised collective investment undertaking" means a collective investment undertaking recognised by the Regulatory Authority under section 22;
"records", in relation to a collective investment undertaking, has the meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act and section 186 of the Companies Act, and includes account records of the undertaking, valuation of the undertaking assets, calculation of the net asset value of participations in an undertaking or sub-undertaking; of the issue, cancellation and purchase and repurchase of participations; and of the portfolio and portfolio transactions for the undertaking;
"Regulatory Authority" means the Non-Bank Financial Institutions Regulatory Authority established under the Non-Bank Financial Institutions Regulatory Authority Act;
"related company" has the same meaning assigned to it under the Companies Act;
"scheme of arrangement" means a procedure that allows a company to reconstruct its capital, assets or liabilities with the approval of its shareholders and the court;
"securities" has the meaning assigned to it under the Securities Act (Cap. 56:08);
"share", in relation to the capital of a company, has the meaning assigned to it under the Companies Act;
"stand-alone undertaking" means an undertaking which is not an umbrella undertaking or a sub-undertaking;
"sub-undertaking" means the various portfolios that are part of the undertaking property of an umbrella undertaking that are pooled, managed and accounted for separately;
"sub-undertaking property" means the property of a sub-undertaking which is beneficially owned by the participants in that sub-undertaking;
"subsidiary company" has the meaning assigned to it under the Companies Act;
"supervisory custodian", in relation to a licensed investment company or any licensed collective investment undertaking constituted otherwise than as a unit trust, means a body corporate to whom the property subject to the undertaking is entrusted for safekeeping that has the duties and functions set out in Chapter V, Part II which is a trustee or is eligible to be a trustee under this Act;
"territory", in relation to a collective investment undertaking, means a geographical region governed by a legal regime specific to that geographic region;
"third party" means any person not working for the Regulatory Authority but is contracted by the Regulatory to assist with specific assignments;
"Tribunal" has the same meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act;
"trust deed" means any agreement deed between a management company and a trustee which is the constituting document of a unit trust;
"trust property" has the same meaning assigned to it under the Trust Property Control Act (Cap. 31:05);
"trustee" means a body corporate holding the property constituting a unit trust undertaking on trust for the participants, which is eligible to be a trustee under this Act and which carries out the duties and functions set out in Chapter V;
"umbrella undertaking" means an open ended collective investment undertaking which, to the extent as may be approved and subject to such conditions as may be applied by the Regulatory Authority or a foreign equivalent, may be divided into a number of sub-undertakings in which participants are entitled to exchange rights in one sub-undertaking for rights in another;
"undertaking property" means the property subject to the collective investment undertaking;
"unit" means securities issued by a collective investment undertaking and representing the rights of the participants in such an undertaking over its assets;
"unit-holder" means any person who by reason of the holding of units or by reason of having invested capital in a unit trust is entitled to a proportionate part of undertaking property;
"unit trust" means a collective investment undertaking constituted by a trust deed between a management company and a trustee binding the trustee to deal with the trust property solely for the benefit of unit-holders, any of whom may enforce such obligation; and
"working days" means Monday to Friday, and shall exclude Saturdays, Sundays and public holidays.
(1) Subject to any exception contained in this Act, this Act shall apply to a—
(a) collective investment undertaking investing in real and personal property and resident in Botswana within the meaning of section 9; and
(b) foreign collective investment undertaking marketing or proposing to market a unit in Botswana.
(2) This Act shall not apply to a collective investment undertaking which raise capital without promoting the sale of such collective investment undertaking unit to the public.
CHAPTER II
Powers of the Regulatory Authority (ss 4-15)
4. Financial services law under Non-Bank Financial Institutions Regulatory Authority Act
This Act is a financial services law under the Non-Bank Financial Institutions Regulatory Authority Act.
5. Powers of Regulatory Authority in relation to collective investment undertakings
(1) The Regulatory Authority's powers and authority under the Non-Bank Financial Institutions Regulatory Authority Act shall be exercisable in relation to collective investment undertakings under this Act.
(2) The powers and authority of the Regulatory Authority under subsection (1) shall also be exercisable in relation to the general partner of a collective investment undertaking and to the directors of an investment company licensed or exempted under this Act.
(3) The Regulatory Authority may disqualify a controller, key person, custodian, trustee or auditor of a collective investment undertaking from acting as a director of an investment company.
6. Powers of Regulatory Authority to issue licences, exemptions and recognitions of collective investment undertakings
The Regulatory Authority may—
(a) issue licences, exemptions and recognitions collective investment of undertakings or sub-undertakings and to suspend or cancel such licences, exemptions or recognitions for violating their fiduciary duties and laws applicable to collective investment undertakings;
(b) impose conditions in relation to a licence, an exemption or recognition; and
(c) order the removal of a controller or key person, custodian or trustee from the board of an investment company, or remove an auditor of a collective investment undertaking for violating their fiduciary duties and laws applicable to collective investment undertakings.
7. Regulatory Authority to appoint inspector or investigator
(1) The Regulatory Authority may, in writing, appoint a person to be an inspector or investigator of a collective investment undertaking.
(2) The Regulatory Authority shall provide an identity card to each inspector and investigator appointed under subsection (1).
(3) An inspector or investigator shall, when exercising a power conferred by this Act, produce his or her identity card for inspection.
8. Inspection of licensed and recognised collective investment undertakings
(1) An inspector may, at any time, with or without prior notice, inspect the affairs or any part of the affairs of a collective investment undertaking to check whether a collective undertaking investment—
(a) is being offered and operated in compliance with this Act;
(b) is complying or has complied with a financial services law;
(c) satisfies the criteria or standards set out in or made under a financial services law; or
(d) is or has committed a financial offence.
(2) For the purposes of such an inspection, the inspector may enter any premises used by an undertaking or its operator or its trustee, supervisory custodian, custodian and auditor, at any reasonable time and may inspect and make copies or take extracts from any relevant record, document or thing in those premises and may interview any person relevant to the inspection.
(3) An undertaking and its operator or its trustee, supervisory custodian, custodian and auditor shall allow an inspector to have full and free access to its premises, records, personnel and documents as may be relevant to the inspection and where any of these persons has delegated any task for which the undertaking is responsible to another entity, he or she shall ensure that the inspector has the same access in relation to that entity.
(4) A person who contravenes subsection (3) commits an offence and is liable to a—
(a) civil penalty not exceeding P2 500 for each day on which the offence occurs or continues to occur up to 90 days; or
(b) cancellation of a licence or recognition where the offence continues beyond 90 days.
9. Investigative powers in relation to collective investment undertakings
(1) The Regulatory Authority shall, where it appears to it that there is good reason to do so, investigate the affairs, or any aspect of the affairs, of any person so far as relevant to any collective investment undertaking activities which it was carrying on or appears to the Regulatory Authority to be or to have been carrying on or appears to be about to carry out.
(2) The Regulatory Authority may require the person whose affairs are to be investigated, in this Part referred to as "the person under investigation", or any other connected person to appear before the Regulatory Authority at a specified time and place to answer questions or otherwise provide information with respect to any matter relevant to the investigation.
(3) The Regulatory Authority may require the person under investigation or any other connected person, to produce, at a specified time and place, any specified documents which appear to the Regulatory Authority, to relate to the matter being investigated.
(4) The Regulatory Authority may—
(a) upon receipt of any documents referred to under subsection (3), make copies of them or require the person producing them or any other connected person to provide an explanation relating to the documents; and
(b) where a person fails to produce the documents referred to in subsection (3), require the person or any other connected person who was required to produce them to State, to the best of his or her knowledge and belief, where the documents are.
(5) A statement by a person or other connected person in compliance with a requirement imposed under subsection (4) may be used as evidence in any proceedings against the person.
(6) The Regulatory Authority shall have the power to protect an investor's interest including the appointment of a curator or statutory manager taking action to withdraw a collective investment undertaking authorisation or suspension of prospectus while taking corrective action as directed by the Regulatory Authority.
(7) In this section, the word, "connected" in relation to a person under investigation means—
(a) any person who is or was a partner, employee, agent, appointed representative, banker, auditor or attorney of a person under investigation;
(b) where the person under investigation is a body corporate, any person who is or was a director, secretary or controller of that body corporate or of another body corporate of which it is or was a subsidiary;
(c) where the other person is an unincorporated association, any person who is or was a member of the governing body or an officer or controller of the association;
(d) where the other person is a representative of a person, any person who is or was his or her principal; and
(e) where the other person is the person under investigation and is a body corporate, any related company of that body corporate and any person who is a connected person in relation to that company.
(8) In this section, "documents" include information recorded in any form and, in relation to information recorded otherwise than in legible form, the power to require its production includes power to require the production of a copy of the information in legible form.
(1) The Regulatory Authority may appoint any of its officers or any other person to exercise, on its behalf, all or any of the investigation powers and such power to investigate shall specify the affairs, or any aspects of the affairs of the person to be investigated in a notice to investigate.
(2) A person investigated by an officer or other person appointed in accordance with subsection (1) shall not be bound to comply with any requirement imposed by an officer or person exercising powers by virtue of a notice to investigate granted under this section unless the officer or person exercising such powers has, if required to do so, produced evidence of his or her appointment by the Regulatory Authority.
(3) A person shall not, by virtue of a notice of investigation, be required to disclose any confidential information or produce any confidential documents unless—
(a) he or she is the person under investigation or a related company;
(b) the person to whom the obligation of confidence is owed is the person under investigation or a related company;
(c) the person to whom the obligation of confidence is owed consents to the disclosure or production; or
(d) the Regulatory Authority has specifically required the information or documents.
(4) Where the Regulatory Authority appoints a person other than one of its officers to exercise any investigation powers, that person shall make a report to the Regulatory Authority on the exercise of those powers and the results of exercising them.
(5) The Regulatory Authority shall impose a condition that, upon appointment under this section, a third party shall be liable for loss suffered by an investor as a result of the negligence or failure to perform obligations by the third party.
(1) A person referred to in subsection (3) or any person who obtains the information directly or indirectly from a person referred to in subsection (3), shall not, subject to exemptions and restrictions, without the consent of the person from whom the primary recipient obtained the information and if different, the person to whom it relates, disclose information which is restricted for the purposes of this section and relates to the business or other affairs of any related person.
(2) For purposes of this section, information is—
(a) confidential if it was obtained by the primary recipient for the purposes of, or in the discharge of his or her functions under this Act; and
(b) not confidential if it has been made available to the public by virtue of being disclosed in any circumstances which are not excluded by this section.
(3) The persons referred to in subsection (1) are—
(a) the Regulatory Authority;
(b) any person administering a compensation scheme;
(c) any member of the Tribunal;
(d) any person appointed or authorised by the Regulatory Authority to exercise any powers of investigation; or
(e) any officer or representative of such persons as are referred to in paragraphs (a) to (d).
(4) This section shall not preclude the disclosure of information for the purpose of enabling or assisting any public or other body to discharge its functions as may be further specified in rules issued by the Regulatory Authority.
(5) Any person who contravenes this section commits an offence and is liable to a fine not exceeding P250 000 or to imprisonment for a term not exceeding 10 years, or to both.
12. Exemptions for disclosure of confidential information
Notwithstanding the provisions of section 11, confidential information may be disclosed if the disclosure is for the following reasons—
(a) the institution of or otherwise for the purposes of civil or criminal proceedings;
(b) the institution of or otherwise for the purposes of any disciplinary proceedings or proceedings before the Tribunal;
(c) for the purpose of enabling or assisting the Regulatory Authority to exercise any powers conferred on it by this Act;
(d) for the purpose of enabling or assisting a stock exchange, regulated market, central securities depository or a clearing and settlement organisation, or any other securities infrastructure business as defined under the Securities Act to discharge its functions under this Act or enabling or assisting the body administering a compensation scheme under this Act to discharge its functions under the scheme;
(e) for the purpose of enabling or assisting an official receiver to discharge his or her functions under the Insolvency Act (Cap. 42:02);
(f) for the purpose of enabling or assisting any firm appointed to exercise any investigation powers or any auditor appointed under this Act to discharge his or her functions; or
(g) for the purpose of enabling or assisting a regulatory agency outside Botswana to exercise its regulatory functions in terms of section 13.
The Regulatory Authority may take such steps as it considers appropriate to co-operate with a foreign regulatory authority which has functions—
(a) which correspond to those exercisable by the Regulatory Authority under this Act; or
(b) in relation to the detection of financial crime.
14. Investigations in support of foreign regulatory authority
(1) At the request of a foreign regulatory authority the Regulatory Authority may—
(a) exercise the power conferred by section 9; or
(b) appoint one or more competent persons to investigate any matter.
(2) An investigator appointed under subsection (1) shall have the same powers and duties as an investigator appointed under section 10.
(3) In deciding whether or not to exercise its investigative powers, the Regulatory Authority may take into account—
(a) whether in the country or territory of the foreign regulatory authority concerned, corresponding assistance would be given to the Regulatory Authority;
(b) whether the case concerns the breach of a law, or other requirement, which has no close similarity in Botswana or involves the assertion of a jurisdiction not recognised by Botswana;
(c) the seriousness of the case and its importance to persons in Botswana; and
(d) whether it is otherwise appropriate in the public interest to give the assistance sought.
(4) The Regulatory Authority may decide not to exercise its investigative power unless the foreign regulatory authority undertakes to make such contribution towards the cost of its exercise as the Regulatory Authority considers appropriate.
(5) If the Regulatory Authority has appointed an investigator in response to a request from a foreign regulatory authority, it may direct the investigator to permit a representative of that foreign regulator to attend, and take part in, any interview conducted for the purposes of the investigation.
(6) A direction under subsection (5) is not to be given unless the Regulatory Authority is satisfied that any information obtained by a foreign regulatory authority as a result of the interview will be subject to safeguards equivalent to those contained in sections 9, 10 and 11.
15. Maintenance of register of collective investment undertakings by Regulatory Authority
(1) The Regulatory Authority shall create and maintain a register of licensed, recognised and exempted collective investment undertakings and shall make the register of licensed, recognised and exempted undertakings publicly accessible free of charge.
(2) The Regulatory Authority shall record, in the register variations, suspensions and cancellations of licences, recognitions and exemptions of collective investment undertakings.
CHAPTER III
Collective Investment Undertakings: Generally (ss 16-50)
PART I
Meaning, Objectives and Structure of Collective Investment Undertakings (ss 16-18)
16. Meaning and objective of collective investment undertaking
(1) A collective investment undertaking means any arrangement with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangement (the "participants"), whether by becoming owners of the property or any part of it or otherwise, to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
(2) The arrangement referred to in subsection (1) shall be such that—
(a) the participants do not have day to day control over the management of the property in question, whether or not they have the right to be consulted or to give directions;
(b) it has any of the characteristics specified in subsection (3); and
(c) it satisfies the conditions set out in subsection (4).
(3) The arrangement referred to in subsection (1) shall have any of the following characteristics—
(a) the contributions of the participants and the profits or income out of which payments to be made are pooled; or
(b) the property in question is managed as a whole by or on behalf of the operator of the collective investment undertaking.
(4) The property referred to in subsection (1) shall be beneficially owned and be managed by or on behalf of, a company, the trustee of a unit trust or some other entity or arrangement having as its purpose the investment of its funds with the aim of spreading investment risk and giving its members the benefit of the results of the management of those funds by or on behalf of that company, unit trust, entity or management.
(5) Where any arrangement provides for the pooling referred to in subsection (3)(a) in relation to separate parts of the property, and each of the parts is maintained in a portfolio segregated in the books of the undertaking from the other assets of the undertaking, then the arrangement shall be regarded as constituting a collective investment undertaking:
Provided that the undertaking shall be regarded as an umbrella undertaking on the condition that the participants are entitled to exchange rights in one part for rights in another part.
(6) Where each part of the undertaking property is segregated in the books of the umbrella undertaking and is a sub-undertaking—
(a) the property subject to the sub-undertaking that is beneficially owned by the participants in that sub-undertaking shall not be used to discharge any liabilities of the participants in any other sub-undertaking;
(b) any liability of the participants in the sub-undertaking arising from the acquisition, management or disposal of the property subject to the sub-undertaking shall be discharged solely out of that property;
(c) a participant in the umbrella undertaking shall not be liable for debts arising from the acquisition, management or disposal of the property subject to a sub-undertaking in which the participant has participations beyond the amount which, at the time when any debts fall to be discharged, is equal to the value at that time of the participant's participations in that sub-undertaking;
(d) the operator, and no other person, of the sub-undertaking may, on behalf of participants in a sub-undertaking take and defend proceedings for the resolution of any matter relating to an authorised contract and take action in relation to the enforcement of any judgment given in such proceedings; and
(e) the Regulatory Authority may exercise its powers in relation to a sub-undertaking as if that undertaking were a stand-alone undertaking.
17. Arrangements not constituting collective investment undertaking
An arrangement shall not constitute a collective investment undertaking if it is—
(a) an arrangement operated by a person other than by way of business;
(b) an arrangement where each of the participants carries on a business other than a business concerned with dealing in, arranging deals, managing or advising on securities or investments and enters into the arrangement for commercial purposes related to that business;
(c) an arrangement where each of the participants is a company in the same group as the management company of the undertaking;
(d) an arrangement where—
(i) each of the participants is a bona fide employee or former employee, or the spouse, widow, widower, child or step-child under the age of 18 years of age of such an employee or former employee, of a company in the same group as the management company, and
(ii) the property to which the arrangement relates consists of shares or stock, debentures, loan stock or any other instrument creating or acknowledging indebtedness or warrants or certificates conferring rights in relation to any such investment, in each case being an investment in or in a member of that group;
(e) a franchise arrangement, that is to say, an arrangement under which a person earns profits or income by exploiting a right conferred by the arrangements to use a trade name or design or other intellectual property right or the goodwill attached to it;
(f) an arrangement the predominant purpose of which is to enable persons participating in it to share in the use or enjoyment of a particular property or to make its use or enjoyment available gratuitously to other persons;
(g) an arrangement under which the rights or interests of the participants consist of the benefit of certificates or other instruments conferring rights in relation to securities other than shares in an investment company;
(h) a contract of insurance;
(i) a pension scheme;
(j) a closed ended investment company which is established by the operator of another collective investment undertaking—
(i) for the purposes of holding investments, directly or indirectly, on behalf of that undertaking, or a series of collective investment undertakings established by a single sponsor to invest in parallel one with another, the "owning undertakings", and
(ii) the shares of which are not marketed to or otherwise available to any participant other than the owning undertakings;
(k) a building society;
(l) a co-operative society;
(m) a credit union; and
(n) any other arrangement that the Minister, in consultation with the Regulatory Authority, may specify by notice in the Gazette.
18. Structure of collective investment undertakings
(1) A collective investment undertaking shall be constituted as—
(a) a unit trust in compliance with the requirements of Schedule II;
(b) an investment company with—
(i) fixed capital, or
(ii) variable capital; or
(c) a limited partnership in compliance with the requirements of Schedule I.
(2) Without prejudice to subsection (1), the Minister may, in consultation with the Regulatory Authority, prescribe arrangements, other than those set out in subsection (1), under which collective investment undertakings may be constituted.
(3) A collective investment undertaking shall be constituted by type as—
(a) a closed ended undertaking which has no obligation to repurchase its participations from holders upon their request;
(b) an open ended undertaking, which is obliged to repurchase its participations from holders upon their request at a price related to net asset value of the undertaking property not less frequently than twice a month at regular intervals; or
(c) an interval undertaking, which is obliged to repurchase its participations from holders at a price related to net asset value of the undertaking property on a regular periodic basis which shall not be less frequently than twice per annum.
(4) A collective investment undertaking which is an open ended undertaking in terms of subsection (3)(b) may be—
(a) an umbrella undertaking;
(b) a master undertaking;
(c) a feeder collective investment undertaking; or
(d) any other formation as may be prescribed.
(5) A collective investment undertaking shall not offer or purport to offer any guarantee or certainty whatsoever as to performance relating either to income or to capital.
PART II
Licensing and Recognition of Collective Investment Undertakings (ss 19-26)
19. Prohibition of unlicensed collective investment undertakings
(1) A person shall not—
(a) establish or operate a collective investment undertaking in Botswana, or purport to establish or operate such an undertaking, or act or purport to act as a trustee, supervisory custodian, management company or custodian of an undertaking in Botswana unless that person is licensed by the Regulatory Authority as required by this Act;
(b) issue or cause to be issued an advertisement offering participations in a collective investment undertaking in Botswana unless—
(i) that person is licensed as a management company by the Regulatory Authority as required by this Act, and
(ii) the undertaking has been licensed or recognised by the Regulatory Authority under this Act; or
(c) by way of business, arrange or offer to arrange or recommend the purchase of participations in a collective investment undertaking in Botswana unless—
(i) that person has been licensed by the Regulatory Authority as required under this Act, and
(ii) the undertaking is a licensed or recognised undertaking under this Act.
(2) The Minister may, in consultation with the Regulatory Authority, prescribe conditions under which any collective investment undertaking—
(a) created or organised under this Act or under any foreign law whose participants are restricted to not more than 100 participants acting as principals that are expert clients domiciled in Botswana or outside Botswana; and
(b) which is offered only in compliance with sections 27 and 28, may be exempted from subsection (1).
(3) Any agreement entered into by a person in the course of, or in consequence of, a contravention of subsection (1) shall be unenforceable against the other party, and that party shall be entitled to recover any money or other property paid or transferred by him or her under the agreement, together with compensation for any loss sustained by him or her as a result.
(4) The compensation recoverable under subsection (3) shall be such as the parties may agree or as the court may, on the application of either party, determine.
(5) The court may allow an agreement to which subsection (3) applies to be enforced, or money and property paid or transferred under that agreement to be retained if the court is satisfied that the person referred to in that subsection reasonably believed that his or her entering into the agreement did not constitute a contravention of subsection (1).
(6) Where a person elects not to perform an agreement which, by virtue of this section is unenforceable against him or her, or by virtue of this section recovers money paid or other property transferred by him or her under an agreement, the person shall repay any money and return any other property received by him or her under the agreement.
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