The Retirement Benefits (Managers and Custodians) Regulations

Legal Notice 123 of 2000

This is the latest version of this Legal Notice.
Citation
Legal Notice 123 of 2000
Primary work
Retirement Benefits Act
Date
Language
English
Type
Legal Notice
Publication
Download PDF (4.5 MB)
Related documents
LAWS OF KENYA

RETIREMENT BENEFITS ACT

THE RETIREMENT BENEFITS (MANAGERS AND CUSTODIANS) REGULATIONS

LEGAL NOTICE 123 OF 2000

  • Published in Kenya Gazette Vol. CII—No. 64 on 13 June 2000
  • Commenced on 13 October 2000
  1. [Amended by Retirement Benefits (Managers and Custodians) (Amendment) Regulations, 2002 (Legal Notice 102 of 2002) on 14 June 2002]
  2. [Amended by Retirement Benefits (Managers and Custodians (Amendment) Regulations, 2003 (Legal Notice 82 of 2003) on 20 June 2003]
  3. [Amended by Retirement Benefits (Managers and Custodians (Amendment) Regulations, 2007 (Legal Notice 86 of 2007) on 15 June 2007]
  4. [Amended by Retirement Benefits (Managers and Custodians (Amendment) Regulations, 2009 (Legal Notice 87 of 2009) on 12 June 2009]
  5. [Amended by Retirement Benefits (Managers and Custodians (Amendment) Regulations, 2011 (Legal Notice 49 of 2011) on 10 June 2011]
  6. [Amended by Retirement Benefits (Managers and Custodian)(Amendment) Regulations, 2015 (Legal Notice 110 of 2015) on 19 June 2015]
  7. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

Part I – PRELIMINARY

1. Citation

These Regulations may be cited as the Retirement Benefits (Managers and Custodians) Regulations.

2. Application

These Regulations shall apply to managers and custodians of schemes.

3. Interpretation

In these Regulations unless the context otherwise requires—"pooled fund" means a fund established by a limited liability company other than approved issuer for purposes of pooling scheme funds for collective investment.

Part II – REGISTRATION OF MANAGER AND CUSTODIAN

4. Application for registration of manager

(1)An application for registration as a manager shall be submitted to the Authority in the prescribed form together with registration of the prescribed fee.Provided that where the applicant has been registered as a fund manager under the Capital Markets Act (Cap. 485A) the Authority may accept that registration to constitute registration as a manager under the Act, subject to an agreement to that effect between the Capital Markets Authority and the Retirement Benefits Authority.
(2)The minimum paid up share capital including unimpaired reserves of a manager shall be ten million shillings or as may be prescribed from time to time.
(3)A manager shall at all times have in its top management including the board of directors persons who are academically and professionally qualified in matters relating to either banking, insurance, law, accounting, actuarial studies finance, economics or investment of scheme funds.
(4)The Authority shall within ninety days from the date of receipt of an application for registration consider the application of a manager and notify the applicant in writing whether the manager is acceptable for registration and the reason is thereof if it is not acceptable.
(5)The Authority shall after notifying the applicant that it is acceptable for registration proceed to register the applicant and forward to the applicant the certificate of registration.[L.N. 102/2002, r. 2, L.N. 87/2009, r. 2.]

5. The manager

(1)A manager of a scheme fund or a pooled fund shall be appointed by the trustees of the scheme on such terms and conditions of service as shall be determined by the trustees in the instrument of appointment or otherwise in writing from time to time.Provided that—
(a)this regulation shall not apply to schemes that have invested all the funds in guaranteed funds;
(b)the approved issuer of the scheme whose funds are in a guaranteed fund shall submit quarterly investment reports to the Authority.
(2)A manager shall have all the powers necessary for the performance of his functions under this Act and in particular the manager shall —
(a)advise the scheme or pooled fund on the asset classes which are available for investment;
(b)assist the scheme or pooled fund to formulate a prudent investment policy on the investment of scheme funds or pooled fund;
(c)invest capital moneys which form part of the scheme or pooled fund subject to the investment policy;
(d)reinvest any income of the scheme fund or pooled fund which is not required by the trustees for any immediate payments;
(e)submit to the scheme or pooled fund at least quarterly from the date of commencement of the financial year of the scheme or pooled fund—
(i)a valuation of the scheme fund or pooled fund and of all the investments representing the same including details of the cost of such investments and their estimated yields;Provided that, for assets tradable at a stock exchange, the investment report shall provide, at a minimum, a one-year and three-year time weighted performance figure calculated on the basis of a "mark to market" value using official prices as issued by the primary exchange where the assets are ordinarily traded;
(ii)a report reviewing the investment activity and performance of the investment portfolios comprising the scheme fund or pooled fund since the last report date and containing the manager's proposals for the investment of the scheme fund or pooled fund during the following period as recommended by the Authority;
(iii)a record of all investment transactions during the previous period;
(f)sit in-attendance, in the case of a scheme whose funds are not invested in a pooled fund, at the meetings of the Board of trustees whenever the trustees have an agenda item involving management of the scheme fund;
(g)issue instructions on behalf of the trustees or the pooled fund to the custodian to transfer, exchange, deliver in the required form and manner scheme or pooled fund assets held by such custodian;
(h)issue instructions on behalf of the trustees or pooled fund to the custodian to effect payment in respect of purchased securities or any other assets;
(i)keep or cause to be kept such books, records and statements as may be necessary to give a complete record of —
(i)the scheme fund or pooled fund and investment portfolio held by the custodian;
(ii)the investment transactions carried out by the custodian as instructed by the manager, and shall permit the scheme or pooled fund, their officers or duly authorized agents to inspect within the premises of the manage such books, records and statements a any time during business hours.
(3)A manager shall ensure that minutes, statements and resolutions in respect of a scheme fund or pooled fund investment portfolio shall be properly filed.
(4)A manager shall not be liable for any loss, damage or depreciation in the value of the scheme fund or pooled fund of any investment comprised therein or the income therefrom which may arise by reason of depreciation of the market value of the securities and other assets in which scheme funds or pooled funds are invested unless such loss, damage or depreciation in the value of the scheme fund or pooled fund arises from negligence whether professional or otherwise, willful default or fraud by the manager or any of his agents or employees.
(5)A Manager shall submit to the Authority within thirty days from the date of his or her appointment and subsequently within thirty days after every quarter—
(a)a statement of the scheme fund or pooled fund and investment portfolio including details of the cost of such investments;
(b)a statement detailing the investment transactions carried out within the quarter period of reporting;
(c)a report reviewing the investment activity and performance of the investment portfolio comprising the scheme fund or pooled fund and proposed investments of the scheme fund or pooled fund during the following quarter.
(6)A manager shall invest the assets of the pooled fund in the name of the pooled fund and all accrued investments income, commissions, fees and direct and indirect gains from investing the pool fund shall be credited into the pooled fund account which is maintained by a custodian on behalf of the pooled fund.
(7)A manager shall not engage the services of a property manager on behalf of the scheme or pooled fund without the written approval by the trustees or pooled fund.
(7A)A manager shall not provide management or custodial services to any scheme or pooled fund in resepct of which the custodian is a company related to such manager:Provided that where a manager and the related company are, at the commencement of this paragraph, already providing such services, the manager shall—
(a)within thirty days from the date of commencement of this paragraph notify the Authority of the fact; and
(b)comply with the provisions of this paragraph within three years from the date of such notification.
(8)All monetary benefits, commissions or gains arising directly or indirectly out of managing scheme or pooled funds shall be credited into the scheme fund or pooled fund by the manager or custodian as the case may be.
(9)An agreement between a scheme or pooled fund and manager shall make provision for the computation of the management fee in respect of management services.[L.N. 102/2002, r. 3, L.N. 86/2007, r. 2, L.N. 87/2009, r. 3, L.N. 49/2011, r. 2, L.N. 110/2015, r. 2.]

6. Termination of management agreement

(1)Either party to the management agreement referred to in regulation 5(1) may at any time terminate the agreement.
(2)In the event of termination of the agreement referred to in paragraph (1) the manager shall within thirty days, or in the case of a manager of a pooled fund, within ninety days, from the date of termination, hand-over, transfer and deliver to a manager appointed in writing by the scheme all the information in relation to its contractual duties to the scheme including—
(i)statements pertaining to the entire scheme fund;
(ii)investment portfolio including details of the cost of such investments and their estimated yields;
(iii)statements pertaining to all incomplete transactions;
(iv)any other information as may be reasonably required by the scheme:
Provided that copies of the said information shall be submitted to the Authority within the same period.
(3)A manager shall within twenty-one days or such shorter period as may be stipulated in the agreement from the date of deregistration or from the date a winding up order has been issued by a competent court against such manager hand over, transfer and deliver all minutes, statements and resolutions in respect of the scheme fund or pooled fund investment portfolio together with any other information as may be reasonably required by the scheme or pooled fund to a manager appointed in writing by such scheme or pooled fund.

7. Application for registration of custodian

(1)An application for registration as a custodian in accordance with section 25A of the Act shall be in the prescribed form together with the prescribed fee.Provided that where the applicant has been registered as an authorized depository under the Capital Markets Act, (Cap. 485A) the Authority may accept that registration to constitute registration as an authorized depository under the Act, subject to an agreement to that effect between the Capital Markets Authority and the Authority.
(2)The minimum paid up share capital including unimpaired reserves of a custodian shall be two hundred and fifty million shillings, or as may be prescribed from time to time.
(3)The Authority shall within ninety days from the date of receipt of an application for registration consider the application of a custodian and notify the applicant in writing whether the custodian is acceptable for registration and the reason thereof if it is not acceptable.
(4)The Authority shall after notifying the applicant that it is acceptable for registration proceed to register the applicant and forward to the applicant the certificate of registration.[L.N. 102/2002, r. 4, L.N. 87/2009, r. 4.]

8. The custodian

(1)A custodian of a scheme fund or a pooled fund shall be appointed by the trustees of the scheme on such terms and conditions of service as shall be determined by the trustees in the instrument of appointment or otherwise in writing from time to time.
(2)A custodian shall have all the powers necessary for the performance of his functions under this Act and in particular the custodian shall—
(a)receive and keep in safe custody the title documents, securities and cash of the scheme fund or pooled fund;
(b)open a bank account or banking accounts with a bank duly registered under the Banking Act on behalf of the scheme, or a pooled fund, for the exclusive benefit of such scheme or pooled fund.
(c)transfer exchange or deliver in the prescribed form securities held by a custodian upon receipt of proper instructions from the manager;
(d)keep or cause to be kept such books, records and statements as may be necessary to give a complete record of—
(i)the entire scheme fund, or pooled fund investment portfolio held by the custodian;
(ii)the transactions carried out by the custodian on behalf of the scheme, or pooled fund, and shall permit the scheme or pooled fund, their officers or duly authorized agents to inspect such books, records and statements within the premises of the custodian at any time during business hours;
(da)submit to the scheme or pooled fund at least quarterly from the date of commencement of the financial year of the scheme or pooled fund—
(i)a valuation of the scheme fund or pooled fund and of all the investments representing the respective fund including details of the cost of such investments and their estimated yields;
(ii)a report reviewing the investment activity and performance of the investment portfolios comprising the scheme fund or pooled fund for the period succeeding the date of the last report and containing the manager's Proposals for the investment of the forthcoming period as recommended by the Authority;
(iii)a record of all investment transactions during the period after the date of the last report.
(e)deliver to the scheme, or pooled fund or to such other persons as the scheme or pooled fund may in writing authorize copies of all notices, proxies, proxy soliciting materials received by the custodian in relation to any of the securities held in the scheme or pooled fund account, all public information financial reports and stockholder communications as the custodian may receive from issuers of securities and all information the custodian may receive from an offer relating to exchange or tender offers or other rights or offerings or as may be agreed upon from time to time;
(f)submit to the scheme, or pooled fund—
(i)a written report on specified dates listing all assets of the scheme, or pooled fund, in the scheme or pooled fund account together with a full account of all receipts and payments made and other actions taken by the custodian;
(ii)advice or notification of any transfers of property or securities to or from the scheme or pooled fund account indicating securities acquired for the account and, the identity of the party in possession of such securities;
(iii)a copy of the most recent audited financial statements of the custodian prepared together with such information regarding the policies and procedures of the custodian as the scheme, or pooled fund, may request in connection with the agreement or the duties of the custodian under that agreement.
(g)exercise subscription, purchase or other similar rights represented by the securities subject to receipt of proper instructions from the manager,
(h)exercise the same standard of care that it exercises over its own assets in holding, maintaining, servicing and disposing of property and in fulfilling any other obligations in the agreement:
Provided that the custodian shall exercise the degree of care expected of a prudent professional custodian for hire.
(3)Except in cases where a scheme, or a pooled fund, has offshore investments, a custodian in discharging its contractual functions to the scheme, or a pooled fund, shall not contract out the discharge of the custodial services to third parties.
(3A)A custodian shall not provide custodial services to any scheme or pooled fund in respect of which the manager is a company related to such custodian:Provided that where the custodian and the related company are, at the commencement of this paragraph, already providing such services, the custodian shall—
(a)within thirty days from the date of commencement of this paragraph notify the Authority of the fact; and
(b)comply with the provisions of this paragraph within three years from the date of such notification.
(4)An agreement between a scheme or a pooled fund and a custodian shall make provision for the computation of the fee in respect of custodial services.[L.N. 102/2002, r. 5, L.N. 83/2003, r. 2.]

9. Termination of custodial agreement

(1)An agreement between a scheme, or a pooled fund, custodial custodian may be terminated at any time agreement.
(2)In the event of termination of the agreement between a custodian and a scheme, or a pooled fund, the custodian shall within thirty days from the date of such termination hand over, and deliver all the assets documents and funds including the bank account of the scheme held by such custodian to a custodian appointed in writing by the scheme, or pooled fund.
(3)A custodian shall within thirty days or such shorter period as may be stipulated in an agreement, from the date of deregistration or from the date a winding up order has been issued by a competent court against such custodian handover, transfer and deliver all the assets, documents and funds including the bank account of the scheme, or pooled fund, held by such custodian to a custodian appointed in writing by the scheme, or pooled fund.
(4)A custodian shall within thirty days from the date of termination of the agreement arising out of a breach of such agreement by either party submit to the Authority an audit report indicating the assets, liabilities and an inventory of the scheme fund or pooled fund, securities and title documents of the scheme, or pooled fund and assets which have been handed-over, transferred and delivered to the appointed custodian.
(5)The party liable for the termination of the agreement shall meet the cost of the audit report referred to in paragraph (4).
(6)A scheme, or a pooled fund, shall be served with an audit report and inventory as specified in paragraph (4) before the handing-over, transfer and delivery to the appointed custodian is effected.

10. Insolvency and winding up of a manager and custodian

(1)A manager or a custodian shall be deemed to be insolvent in accordance with the provisions of the Companies Act (Cap. 486).
(2)A manager or custodian which is insolvent shall be wound up in the manner provided for in the Companies Act (Cap. 486).
▲ To the top