Regulatory Alerts2018-03-31
Circular Letter 2: Utilisation of Demutualisation Share Proceeds
The South African Financial Services Board issued this circular to address the illegal or erroneous use of demutualisation share proceeds by certain pension funds in violation of the Pension Funds Act and fund rules. Citing Section 5(1) of the Act, the Registrar mandates that all fund assets belong exclusively to the registered body corporate and requires defaulting trustees to disclose the misappropriated amounts and submit repayment plans. Affected boards must formally explain their defaults to the Registrar, while independent auditors will be instructed to verify and report on the corrective actions taken.
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