FSCA Exemption of Collective Investment Scheme Managers from Certain Board Notice 92 Requirements

FSCA COMMUNICATION 15 OF 2022 (CIS)
PUBLICATION OF EXEMPTION OF MANAGERS OF COLLECTIVE INVESTMENT SCHEMES FROM CERTAIN REQUIREMENTS OF BOARD NOTICE 92 OF 2014

1. PURPOSE
   The purpose of this Communication is to inform stakeholders that the Financial Sector Conduct Authority (“FSCA”) published the following documents on its website today:
   1.1 FSCA CIS Notice 5 of 2022 - Exemption of Managers of Collective Investment
   Schemes from certain Requirements in Board Notice 92 of 2014; and
   1.2 Responses to comments received on the draft exemption that was published for
   comment.
2. BACKGROUND AND CONTEXT
   2.1 Paragraph 18(1), read with paragraph 18(3), of the Notice on Advertising,
   Marketing and Information Disclosure Requirements for Collective Investment Schemes, published under Board Notice 92 of 2014 in Government Gazette No. 37895 on 8 August 2014 (BN 92), requires that a manager must obtain a signed application form or a contract from an investor. However, BN 92 is silent on the format or form that such signature must adopt when contracting through electronic means.
   2.2 Section 13(1) of the Electronic Communications and Transactions Act, 2002 (Act
   No. 52 of 2002) (“ECTA”) provides that where the signature of a person is required by law and such law does not specify the type of signature, the requirement in relation to a data message is met only if an advanced electronic signature (“AES”) is used.
   2.3 Therefore, as BN 92 is silent in this regard, when a CIS manager provides an
   investor with the opportunity to complete and submit an application form or contract electronically on an online platform, that investor must sign the application form or contract by using an advanced electronic signature, as defined in the ECTA.
   2.4 It has come to the attention of the FSCA that, due to the technicalities relating to
   AES as set out in the ECTA, it may often be difficult for CIS Managers to comply with the AES requirements in the abovementioned circumstances. Even though the Main Deeds of CIS managers have provisions that govern electronic transactions between the CIS manager and the investor, the terms of the Main Deed will not override the requirements set out in the ECTA.
   2.5 Electronic transacting supports easier access for customers and is, as a result,
   supportive of financial inclusion. Accordingly, the FSCA is of the view that it would be in the public interest not to require CIS managers to apply an AES when transacting electronically. As such, the FSCA is exempting CIS Managers from the requirement to obtain a signed application form or contract from an investor as required in paragraph 18(1), read with paragraph 18(3)(k) of BN 92, when receiving electronic applications from investors.

2.6 Conditions have been imposed in the exemption to ensure that both the CIS
managers and the investors are afforded the necessary protection and that the exemption will not prejudice the achievement of the objects of CISCA.
3. CONTACT
For further information regarding this Communication please contact the Regulatory Framework Department of the FSCA by emailing Marianne van Rooyen at marianne.vanrooyen@fsca.co.za. KATHERINE GIBSON DEPUTY COMMISSIONER FINANCIAL SECTOR CONDUCT AUTHORITY Date of publication: 3 June 2022