Investment Funds (SMART Fund) Rules, 2005

EXTRAORDINARY OFFICIAL GAZETTE THE BAHAMAS PUBLISHED BY AUTHORITY NASSAU \6'" November, 2005

MINISTRY OF FINANCE S.l. No. 97 of 2005 THE INVESTMENT FUNDS ACT (Act No. 20 of 2003) The Investment Funds (SMART Fund) Rules, 2005 In the exercise of powers conferred by section 5(3) of the Investment Funds Act. 2003 the SeClllities Commission of The Bahamas makes the following rules - Citation. 1. These rules may be cited as the Investment Funds (SMART Fund) Rules, 2005. Interpretation. 2. In these Rulcs- "SFM 005" means SMART Fund Model SFM 005 as licensed under mle 3; "financial inslilution" means a financial institution S.1. No. defined in regulation 2 of the Investment Funds 9~ of Regulations, 2003; 2003. "term sheet" means the offering document of a Sl'.'IART Fund that complies with the offering document requirements as provided in Schedule 1. Description 3. No fund shall be licensed to operate as a ofSFM 005. SFM 005 unless-

Parameters and RC(llIil'emcnts of a SFM 005. No. 20 of 2003. S.I. No. 94 of 2003. 4. (a) the invcstmcnt fund is limited to having no more than five (5) investors who hold equity intcrests in the fund; (b) each investor in the fund is a person to whom a professional fund may be offered; (c) the fund operates as a private investment vehicle; and (d) the fund has appointed an administrator, which administrator shall be a financial institution. (1) Subject to paragraph (2), the Investment Funds Act and Investment Funds Regulations, 2003 shall apply to a fund operating as a SFM 005. (2) A SFM 005 in relation to the items set out in column 1 of the table appearing in Schedule 1, shall comply with the provisions prescribed in Column 2..Df that table.

OFFERING DOCUMENT{[ERM SHEET SUBSCRIPTION AGREEMENT ADMINISTRATOR SCHEDULE 1 A term sheet is not required. \Vhere there is a term sheet it shall contain the following information: i. Name of Fund 11. Date established Ill. Structure of the Fund IV. Name and address of operators v, Nature of Equity Interests VI. Investment objective and policy VII. Dealing policy viii. Disuibution policy ix. Name and address of all parties related to the fund; x. A statement that the financial statements of the fund shall be audited annually unless unanimously waived by the holders of the equity interests in the fund and that if there is such a waiver a performance report of the fund shall be filed with the Commission every SIX months for as long as the \Vai ver is valid. xi. Fees and Expenses xii. Termination XIII. A statement that "the fund is licensed as a SFM 005 pursuant to the Investment Funds Act, 2003 operating as a fund which can not have more than five (5) holders of equity interests, which investors are persons to whom a professional fund may be offered". The Subscliption Agreement of the fund shall contain confinnation that the investor in the fund agrees with and conforms with the regulatory requirements applicable to the SFM 005. The fund shall appoint an administrator which shall be a financial institution. \Vhere the administrator appointed is a licensed unrestricted investment fund administrator it may license the fund provided it will be the administrator of the

TRANSFER OF FUND ADMINISTRATION FINANCIAL REPORTING REQUIREMENTS fund and will provide the principal office. \'here the fund does not appoint a licensed investment fund administrator it shall not be regarded as a self-administered fund. (i) Where the fund is licensed by the Commission as a SFM 005 it shall notify the Commission of its transfer from one administrator to another fOUlieen (14) days plior to the effective date of transfer. (ii) \'here the fund is licensed by an unrestIicted investment fund administrator as a SFM 005 it shall not transfer to a financial institution or a restricted investment fund administrator, unless prior to the transfer, the fund is licensed by the Commission. \Vhere the fund transfers to another unrestricted investment fund administrator the fund shall not be required to be licensed by the Commission plior to its transfer PROVIDED that the unrestricted investment fund administrator to whom it transfers will license the fund and provide the fund's plincipal office. (a) The financial statements of the fund shall be audited unless all of the holders of equity imerests in thc fund unanimously agree to waivc the annual audit of the funds' financial statements; (b) Where the annual audit of the financial statements of the fund has been waived the fund shall file with the Commission within six months of the wai vcr, a performance repOJ1 of the fund and shall file such a repOi1 every six months thereafter as long as the waiver exists; and (c) The administrator of the fund shall make the NA V rep011s available to

ANNUAL CERTIFICATION investors upon request. The Operators of the fund no later than January 31 of each year shall certify to the Commission that the fund is qualified to ogerate as a SFM 005. Made the 10lh day of November, A.D., 2005. Signed CALVIN KNOWLES The Securities Commission of The Bahamas Chairman