Collective Investment Schemes Regulation

Collective Investment Schemes

Introduction

The regulations address the types and regulatory requirements to register and operate a Collective Investment Scheme (CIS) in Kenya. To register a CIS, the promoters must secure consent from the CMA before formal registration. If the application is successful, the registration is required to take place within three months as the consent lapses at the end of the third month. The promoter will be notified of CMA’s take on the registration within thirty days. Collective Investment Scheme.

Collective Investment Scheme

Issue of shares

The CIS will not offer any of its shares to the public or a section of the public for sale unless there is a clear information memorandum that CMA has approved. It is essential to note that where there are projections, CMA may require justification of such projections or how the CIS has arrived at such a conclusion. The information memorandum will be reviewed/revised at least once every six months to consider the changes taking place. Further, CMA will have to issue prior approval on the amendments to the information memorandum.

Fund Manager

The CIS must appoint a CMA-approved fund manager that will handle all obligations concerning a fund manager as per the regulations. It is also a regulatory requirement for the CIS to appoint a trustee and a Custodian. The trustee and Custodian must be a bank or financial institution that is approved by CMA.

What is the purpose of a collective investment scheme?

Umbrella Scheme

Portfolio enhancement is provided under regulations by allowing CIS to develop sub-funds, also called umbrella schemes. An umbrella scheme requires no approval from CMA unless it is meant to operate as a CIS save for certain provisions that apply to umbrella schemes.

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