Board Notice 92 of 2014 sets out guidelines on how managers of collective investment schemes (both local and foreign) may market and advertise schemes to members of the public in South Africa. The effective date for this notice has been extended from 1 March 2015 to 1 May 2015 in light of the operational challenges which it poses to managers and operators.

The notice provides a legal framework within which managers of collective investment schemes must advertise their products. While previously ASISA monitored advertising of collective investment scheme investments through the code of conduct applicable to their members (“ASISA Code”), all advertising material, fund fact sheets, application forms and minimum disclosure documents must now be submitted to the Financial Services Board (“FSB”) for review. Submission will be by way of the FSB’s online portal and receipt will be acknowledged electronically. Once acknowledgment of receipt has been received, the material may be used by a manager or operator, unless the Registrar of Collective Investment Schemes objects to the material (which the Registrar must do within 30 days). 

As under the ASISA Code, the general principles of decency, honesty, legality and truthfulness underpin the requirements of the new regulations. Managers and operators are required to adhere to these principles in all advertisements, marketing materials and application documents, for example, by using plain language and avoiding misleading or deceptive statements. 

While the new regulations substantively include many of the existing requirements of the ASISA Code they, in addition, require the production of a minimum disclosure document for investors, provide for further mandatory disclosures in line with the FSB’s aim of promoting transparency for investors and require greater disclosure in connection with fees and charges. Some of the highlights of the new requirements are as follows:

  • general advertising requirements must be considered by all managers of local collective investment schemes and operators of foreign funds approved for distribution in South Africa when preparing any advertising or marketing material in respect of their funds; 
  • mandatory disclosures must be included in all marketing material concerning a specific portfolio;
  • a minimum disclosure document (“MDD”) must be prepared in respect of each portfolio, and must contain the prescribed information in such a way that it is accessible to an investor; 
  • investors must be provided with the MDD in the prescribed form prior to investing (or topping up or switching an existing investment); 
  • MDDs must be updated quarterly (and lodged quarterly with the Registrar);
  • while managers may provide the MDD to an investor in any medium, the investor must specifically select that medium or consent to the provision of information in this way. A manager or operator must therefore consider the operational requirements which will need to be put in place in order to ensure that this consent is provided by an investor;
  • managers will be required to prove, upon request, that the MDD was provided to an investor in compliance with the regulations. Again, this may require operational amendments to the business practices of managers and operators;
  • application forms must also comply with the regulations and must be lodged with the Registrar at least once annually within 30 days of the commencement of the manager’s new financial year;
  • prior to registration and approval by the Registrar of a collective investment scheme or a portfolio, a manager may not distribute any advertising or marketing material relating to that collective investment scheme, or make any reference to that collective investment scheme or portfolio at product launches; 
  • managers of hedge funds (as hedge funds have now been declared collective investment schemes and are subject to the legislation pertaining to collective investments schemes) should have regard to the new regulations but should note that Board Notice 52 of 2015 “Determination on the requirements for Hedge Funds” sets out the specific requirements for disclosure of information and reporting of information to investors applicable to hedge funds.