Notice on Cancellation Period for Units in Authorised Collective Investment Schemes

Monetary Authority of Singapore SECURITIES AND FUTURES ACT (CAP. 289) NOTICE ON CANCELLATION PERIOD FOR UNITS IN AUTHORISED COLLECTIVE INVESTMENT SCHEMES

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 2 Notice No : SFA 04/13-N01 Issue Date : 1 October 2002 (Last revised on 16 March 2020*) SECURITIES AND FUTURES ACT (CAP. 289) NOTICE ON CANCELLATION PERIOD FOR UNITS IN AUTHORISED COLLECTIVE INVESTMENT SCHEMES

Introduction 1 This Notice is issued pursuant to sections 101 and 293 of the Securities and Futures Act (Cap. 289) ["the Act"]. It sets out the obligations of the persons specified in paragraph 5 of this Notice in relation to a cancellation of purchase of units in an Authorised CIS by an investor. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020] 2 This Notice shall not apply to an Authorised CIS that is listed on an approved exchange approved under section 9 of the Act. [SFA 04/13-N01 (Amendment) 2018] [SFA 04/13-N01 (Amendment) 2020] 3 This Notice (as revised) shall come into effect on 16 March 2020. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2018] [SFA 04/13-N01 (Amendment) 2020]

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 3 Definitions 4 For the purposes of this Notice:

“Authorised CIS” means a collective investment scheme which is authorised under section 286(2), (2A) or (4) of the Act; “collective investment scheme” has the same meaning as in section 2(1) of the Act; “participant” has the same meaning as in section 2(1) of the Act; “prospectus” has the same meaning as in section 283(1) of the Act; “purchase” includes subscription of units in an Authorised CIS; “sub-fund”, in relation to an umbrella fund, has the same meaning as in regulation 2(1) of the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005; “umbrella fund” has the same meaning as in regulation 2(1) of the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005. [SFA 04/13-N01 (Amendment) 2020] Application 5 This Notice applies to - (a) the responsible person of an Authorised CIS; or (b) any holder of a capital markets services licence, exempt person, or representative of a holder of a capital markets services licence or exempt person (other than the responsible person referred to in sub-paragraph (a)), who – (i) purchases or arranges for the purchase of, on behalf of an investor, units in an Authorised CIS and through whom the investor would redeem the units so purchased; and

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 4 (ii) arranges for the units purchased by the investor, to be held in a nominee account or to be held by a nominee corporation or on trust. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020] 6 In this Notice, “the relevant person” shall mean - (a) in the case where the investor is registered as a participant in the register of participants of the Authorised CIS, the responsible person of the Authorised CIS; and (b) in the case where an investor purchases units in an Authorised CIS from the person referred to in paragraph 5(b), that person. [SFA 04/13-N01 (Amendment) 2020] 7 For the avoidance of doubt, a sub-fund of an umbrella fund is considered to be a single Authorised CIS in this Notice. [SFA 04/13-N01 (Amendment) 2020] Right to Cancel

8 The relevant person shall give an investor a right to cancel an agreement to purchase units in an Authorised CIS (referred to in this Notice as the (“purchase agreement”). For the purposes of this Notice, a purchase agreement includes an agreement to participate in a regular savings plan. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020] 9 Subject to paragraph 11, where an investor has a right to cancel, the relevant person shall provide that the right must be exercised within 7 calendar days from the date the investor signs the purchase agreement (referred to in this Notice as the “cancellation period”). Where the last day of the cancellation period falls on a Sunday or a public holiday, the cancellation period shall be extended to the next calendar day, not being a Sunday or a public holiday.

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 5 Example If an investor enters into a purchase agreement on Tuesday, he would need to exercise his right to cancel no later than Monday of the following week. In the event the 7th day falls on a Sunday or a public holiday, the cancellation period is extended to the next calendar day, (assuming it is not a public holiday). [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020] 10 The right to cancel referred to in paragraph 8 need not be given in any of the following circumstances: (a) where the investor is not an individual; (b) where the investor is an existing participant in the Authorised CIS and the purchase agreement is the investor’s second or any subsequent purchase agreement, unless such purchase agreement (other than one which results from a switch of units in the Authorised CIS referred to in paragraph 24) was entered into by the investor within the cancellation period (referred to in paragraph 9) of his first purchase agreement in respect of the Authorised CIS; Example An investor who enters into a purchase agreement on Tuesday would need to exercise his right to cancel no later than Monday of the following week. If the investor enters into a subsequent purchase agreement of the same Authorised CIS any time before Monday of the following week, he shall be entitled to the right to cancel his second purchase agreement, which must be exercised within 7 calendar days from the date the second agreement is signed. (c) where the investor switches units in accordance with paragraph 24; or (d) where the investor participates in a regular savings plan, the second and any subsequent payment. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020]

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 6 11 The relevant person may give the investor a longer cancellation period (i.e., more than 7 days) and it shall disclose in the purchase agreement the investor’s rights for the extended period (i.e., for the period after the 7th day). 12 Without prejudice to paragraph 11, the relevant person shall not be permitted to contract out of or alter an investor’s rights as specified under this Notice by the terms and conditions of the purchase agreement between the investor and the relevant person, or otherwise. Giving the Investor Notice of the Right to Cancel 13 The relevant person shall give the investor, in writing, clear and prominent notice of his right to cancel before the purchase agreement is concluded.

14 The notice shall state - (a) that the investor has a right to cancel the purchase agreement; (b) the duration of the cancellation period, including the point in time where the cancellation period begins; (c) the steps the investor has to take to cancel the purchase agreement, including details of how and where he can exercise his cancellation right; (d) that the relevant price for calculating the amount to be refunded will be the dealing price following the receipt of the cancellation request by the relevant person, as determined by the relevant person’s time-stamp or any other reasonable means; (e) the effect of cancelling the purchase agreement, including any adjustment to the amount to be repaid; and (f) the restrictions imposed on the investor in relation to redemption and switching during the cancellation period, as stated at paragraphs 23 and 24, respectively, and be accompanied by a form to enable the investor to effect the cancellation request.

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 7 Guidance The Authority will accept that clear and prominent notice of the investor’s right to cancel referred to in paragraph 13 of this Notice is complied with if the investor’s right to cancel is disclosed in or together with the relevant application form for Authorised CIS. However, the application form should prominently feature words like: “IMPORTANT: information about your right to cancel this agreement is enclosed.”

Exercising the Right to Cancel 15 The relevant person must specify reasonable means by which the investor could exercise his right to cancel. In the case where the cancellation request is to be sent by post, the relevant day for determining whether the right to cancel has been exercised within the cancellation period is the date on which such request is posted by the investor (i.e., as determined by the postmark). The relevant person must entitle the investor to send the cancellation request by ordinary post. [SFA 04/13-N01 (Amendment) 2020] 16 A cancellation request is valid only when it is served on the relevant person or any agent of the relevant person with authority to accept notice on the relevant person’s behalf.

Calculation of the Amount to be Repaid 17 Subject to paragraphs 18 to 21, when an investor has made payment for his purchase agreement and thereafter validly exercises his right to cancel, the relevant person shall, in making refund of the monies to the investor, comply with the requirements under the Code on Collective Investment Schemes in respect of payment of redemption proceeds, subject to any modification by an exemption granted by MAS to the relevant Authorised CIS, as if the cancellation was a redemption. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020]

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 8 18 In determining the amount payable to the investor under paragraph 17, the relevant person shall in determining the amount that is payable to the investor, be entitled to an adjustment to reflect the change in market value of the units held by the investor. 19 Where the market value of the units held by the investor is greater than the original amount paid by the investor, the relevant person may agree to pay the excess amount to the investor, save that a relevant person who is the responsible person of an Authorised CIS must ensure that such excess amount is not paid out of the funds or assets of the Authorised CIS. [SFA 04/13-N01 (Amendment) 2020] Recovery of Expenses Incurred by the Relevant Person 20 The relevant person shall be entitled to recover any expense it incurred by reducing the amount to be repaid to the customer, provided that such expense is

(a) reasonably related to the original purchase and subsequent cancellation of units by the investor; and (b) disclosed, in writing, to the investor before the purchase agreement is concluded. [SFA 04/13-N01 (Amendment 02) 2003] 21 For the avoidance of doubt, where an investor exercises his right to cancel, any sales charge or front-end load fee imposed by the relevant person in respect of any purchase agreement shall not be chargeable to the investor. In addition, the relevant person shall be prohibited from imposing any penalty on the investor for the termination of the purchase agreement. [SFA 04/13-N01 (Amendment 02) 2003]

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 9 Realisation Charge 22 Where an Authorised CIS provides for the levy of a realisation charge (or by whatever name it is called) on an investor who redeems his units, the relevant person shall not be entitled to impose such charge on an investor who has submitted a valid cancellation request. [SFA 04/13-N01 (Amendment) 2020] Redemption and Switching 23 During the cancellation period, the relevant person must permit an investor to choose to redeem his units instead of exercising his right to cancel. In this case, the redemption procedures as stated in the prospectus of the Authorised CIS will apply. The relevant person shall make it clear to the investor that - (a) the investor will not be able to enjoy the benefits of cancellation in the event that he chooses to redeem his units (i.e., no refund of initial sales charge will be given for redemption and levy of realisation charge is allowed) and that the redemption proceeds that the investor will receive may be lower than the amount being refunded had he exercised his cancellation right if the appreciation in the value of units in the Authorised CIS is less than the initial sales charge; and (b) the published prices are indicative in nature and can change during the period between the submission and processing of the redemption request. [SFA 04/13-N01 (Amendment) 2020] 24 Where the purchase agreement allows an investor to switch his units to another Authorised CIS during the cancellation period applicable to such purchase agreement, the relevant person may also give the investor the right to cancel units in the other Authorised CIS. Before any switch of units is made by the investor pursuant to the purchase agreement in respect of the original Authorised CIS, the relevant person shall inform the investor in writing -

Notice on Cancellation Period for Units in Authorised Collective Investment Schemes 10 (a) that the investor shall not receive any refund of initial sales charge in relation to the purchase agreement in respect of the original Authorised CIS; (b) that it is not certain whether the investor would be in a better or worse position if he switches Authorised CISs; (c) of any charge or fee involved in switching from the original Authorised CIS to the other Authorised CIS; and (d) whether the investor shall be entitled to the right to cancel the units in the other Authorised CIS. [SFA 04/13-N01 (Amendment 02) 2003] [SFA 04/13-N01 (Amendment) 2020]

• Notes on History of Amendment

1. SFA 04/13-N01 (Amendment) 2003 with effect from 20 March 2003.
2. SFA 04/13-N01 (Amendment 02) 2003 with effect from 26 June 2003.
3. SFA 04/13-N01 (Amendment) 2018 with effect from 8 October 2018.
4. SFA 04/13-N01 (Amendment) 2020 with effect from 16 March 2020.