|
The Role of Regulator
The Securities Commission Act 1993 provides that the Securities Commission
(SC) is responsible for regulating all matters relating to unit trust
schemes. The SC has drawn up a set of Guidelines on Unit Trust Funds
(Guidelines) to ensure a fair and consistent application of policies in
considering proposals by management companies of unit trust funds.
The Guidelines are formulated with the objective of providing a regulatory
framework that would protect the interests of the investing public and
facilitate an orderly development of the unit trust industry. The
requirements of the Guidelines are to be complied with by all parties
involved in a unit trust scheme. In addition to the above Act and
Guidelines, all unit trust management companies must comply with the
Companies (Amendments) Act 1997, the Securities Industry Act 1983 and
Trustee Act 1949.
The Role Of The Trustee
Whatever may happen to their performance over time, unit trust managers have
a reputation for the stability of their funds that is second to none. Much
of this is due the legal framework in which they operate. The government
lays down strict rules that unit trusts have to follow and the machinery for
ensuring that this is done.
Every individual fund has its own independent trustee, although for
administrative simplicity, it is not unusual for unit trust management
companies to engage one trustee for all funds. The trustee can be the Public
Trustee of Malaysia or any independent trustee of Malaysia or any
independent trustee companies. The trustee's primary role is to see that the
terms of the fund's deed are adhered to. The deed is a set of rules under
which the trust is run, setting out such things as the investment scope of
the fund.
The funds' assets are always in the custody of the trustee. Although the
manager makes the decisions about the management of those assets, when to
buy and sell, he cannot get his hands on them directly. This system ensures
that the funds will not be used for fraudulent purposes. The manager has to
deal via the trustee who will ensure that the day-to-day work of running the
trust, the funds' accounts, valuations and calculations of unit prices are
carried out properly and in accordance with both the deed and the rules laid
down by the SC. The trustee is also responsible for seeing that all the
relevant paperwork is carried out. The trustee takes responsibility for
overseeing the creation and cancellation (release) of units in the fund. The
Guidelines also stipulate that unit trust managers have to produce semi
annual and annual reports to its unit holders.
Where Would The Trust In Units Be Without The Trustee?
Guidelines On Unit Trust Funds
In addition to the regulatory and safeguarding roles of the Regulator and
Trustee respectively, the Guidelines provide additional safety features to
protect the interest of the investing public. The Guidelines describe the
characteristics of the investments permitted as opposed to prescribing the
investments (which was previously investment in authorised Malaysian assets
only) Furthermore, the Guidelines also reinforce the safety net by ensuring
the funds are not overly exposed to high risk stocks and any single group of
companies.
The Guidelines are subject to review by the Securities Commission as and
when it deems fit and necessary to protect and ensure the growth of the
industry.
|
|
|
