The Securities and Exchange Commission of Pakistan (SECP) has directed all Asset Management Companies (AMCs) to ensure complete disclosures along with requisite documents while offering Collective Investment Scheme (CIS). In this regard, the SECP has issued circular number 26 of 2015 here on Tuesday.
According to the SECP, the commission in exercise of the powers conferred under section 282B (3) of the Companies Ordinance, 1984 read with the Regulation 54 of the Non-Banking Finance Companies and Notified Entities Regulations, 2008 hereby directs all Asset Management Companies (AMCs) to ensure that where the offering document of the Collective Investment Scheme (CIS) permits charging of sales load, the cumulative sales load does not exceed 3 percent of the NAV per unit.
In this respect the AMC shall ensure following complete disclosures along with requisite documents: Firstly, clearly disclose, at the time of investment, the maximum rate of Sales Load that is being charged to the unit holder. Secondly, AMC should obtain duly signed acknowledgement from the unit holder to ascertain that all the terms and conditions along with details of Sales Load to be deducted, have been read and understood by the unit holder and issue to the unit holder, within 48 hours of the realization of funds, break-up of the total amount received from the unit holder, sales load charged and net amount invested in the fund on his behalf as per specified format.
The SECP said that an AMC shall ensure that no sales load is charged if the investor approaches directly for investment or where transactions are done online, through a website. For the purpose of this circular, sales load means front end load deducted at the time of investment or back end load charged at the time of redemption from the CIS. However, the load charged upon redemption and which forms part of the CIS property shall not classify as sales load. The circular shall come into force with immediate effect. Any non-compliance will be dealt in accordance with prevalent regulatory framework, the SECP added.
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