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COLLECTIVE INVESTMENT SCHEMES ACT, 2003.

ARRANGEMENT OF SECTIONS.

PART I
PRELIMINARY.

   Section

   1.   Short title.

   2.   Interpretation.

   3.   Meaning of collective investment scheme.

PART II
UNLICENCED PERSONS AND SCHEMES.

   4.   Restrictions on unlicenced persons.

   5.   Offences.

   6.   Agreements made by or through unlicenced persons.

   7.   Injunctions and restitution orders.

PART III
LICENCED PERSONS.

   8.   Types of licenced persons.

   9.   Application for licence.

   10.   Grant and refusal of licence.

   11.   Notice of proposed refusal.

   12.   Withdrawal of applications and licences by consent.

PART IV
LICENCED SCHEMES.

   13.   Types of licenced schemes.

   14.   Application for scheme licence.

   15.   Licences.

   16.   Registrar of Companies approval of names.

   17.   Criteria for licencing.

   18.   Representation against refusal.

PART V
ESTABLISHMENT OF INVESTMENT COMPANIES WITH VARIABLE CAPITAL.

   19.   Incorporation of investment company with variable capital.

   20.   Registration.

   21.   Notifications to Registrar of Companies.

   22.   Safekeeping of scheme property by depositary.

   23.   Corporate code.

PART VI
RECOGNITION OF FOREIGN SCHEMES.

   24.   Schemes licenced or authorised in designated countries or territories.

   25.   Other foreign schemes.

   26.   Refusal of recognition.

   27.   Facilities and information in Uganda.

PART VII
FEES.

   28.   Application fees.

   29.   Annual fees.

PART VIII
GENERAL CONTROLS.

   30.   General regulations.

   31.   Regulations as to prospectus or scheme particulars.

   32.   Statements of principle.

   33.   Modification or waiver of statements of principle.

   34.   Codes of practice.

   35.   Alterations.

   36.   Restrictions on activities of manager and retirement of trustee.

   37.   Avoidance of exclusion clauses.

   38.   Actions for damages.

   39.   Restriction on right of action.

PART IX
POWERS OF INTERVENTION.

   40.   Withdrawal or suspension of licence.

   41.   Notice of proposed withdrawal or suspension.

   42.   Employment of prohibited persons.

   43.   Public statement.

   44.   Injunctions and restitution orders.

   45.   Restriction of business.

   46.   Restriction on dealing with assets.

   47.   Vesting of assets in trustee.

   48.   Rescission and variation.

   49.   Notices.

   50.   Breach of prohibition or requirement.

   51.   Revocation of licence.

   52.   Representations against revocation.

   53.   Directions.

   54.   Notice of directions.

   55.   Applications to court.

PART X
WINDING UP.

   56.   Winding up orders.

   57.   Winding up by court.

   58.   Dissolution on winding up by court.

   59.   Dissolution in other circumstances.

PART XI
INVESTIGATIONS.

   60.   Investigations.

   61.   Investigations: disclosure.

   62.   Investigations: supplementary.

PART XII
THE HIGH COURT.

   63.   Reference of matters to court.

   64.   Decisions on references by applicant or licenced person etc.

   65.   Decisions on references by third parties.

   66.   Withdrawal of references.

   67.   Reports.

PART XIII
INFORMATION.

   68.   Register.

   69.   Inspection of register.

   70.   Power to call for information.

PART XIV
RESTRICTIONS ON DISCLOSURE.

   71.   Restrictions on disclosure of information.

   72.   Exceptions from restrictions on disclosure.

   73.   Directions restricting disclosure of information overseas.

   74.   Offences under section 73.

PART XV
COMPENSATION SCHEME.

   75.   Establishment of compensation scheme.

PART XVI
MISCELLANEOUS AND SUPPLEMENTARY.

   76.   Exemption from liability for damages.

   77.   Jurisdiction of court.

   78.   Powers of entry.

   79.   False and misleading statements.

   80.   Offences under section 79.

   81.   Offences by bodies corporate, partnerships and unincorporated associations.

   82.   Jurisdiction and procedure in respect of certain offences.

   83.   Service of notices.

   84.   Regulations.

   85.   Publication of information and advice.

   86.   Amendments to Companies Act and Capital Markets Authority Statute.

      Schedule 1   Formation documents.

      Schedule 2   Application of companies act.

      Schedule 3   Depositaries.

      Schedule 4   Corporate code.

      Schedule 5   Currency point.

      Schedule 6   Criteria for determining fit and proper persons.

COLLECTIVE INVESTMENT SCHEMES ACT, 2003.

Commencement: 17 November, 2003.

   An Act to provide for the licencing and control of collective investment schemes and for connected purposes.

PART I
PRELIMINARY.

1.   Short title.

   This Act may be cited as the Collective Investment Schemes Act, 2003.

2.   Interpretation.

   (1) In this Act, unless the context otherwise requires—

   "authorised corporate director" or "ACD", in relation to an investment company with variable capital means the director of the company responsible on a day-to-day basis for carrying out such functions as may be required by this Act or the scheme regulations to be carried out by such a director;

   "Authority" means the Capital Markets Authority established by section 5 of the Capital Markets Authority Statute;

   "body corporate" includes a body corporate constituted under the law of a country or territory outside Uganda;

   "collective investment scheme" has the meaning in section 3;

   "Court" means the High Court and includes any division of the High Court designated for the hearing of commercial cases;

   "currency point" means the value of a currency point specified in Schedule 5;

   "depositary", in relation to an investment company with variable capital, means the person with whom the property of the collective investment scheme is entrusted for safekeeping;

   "director", in relation to a body corporate, includes a person occupying the position of a director, by whatever name called, and any person in accordance with whose directions or instructions, not being advice given in a professional capacity, the directors of that body are accustomed to act;

   "formation documents", in relation to an open ended investment company, means the instrument of incorporation and the prospectus and, in relation to a unit trust scheme, means the trust deed and the scheme particulars;

   "investment advisor" means a person who is retained by an open ended investment company, its directors or its ACD or, in relation to a unit trust scheme, by the manager, in each case under a commercial arrangement not being a mere contract of employment—

   (a)   to provide advice in relation to the company or scheme as to the merits of investment opportunities or information relevant to the making of judgments about the merits of investment opportunities; or

   (b)   to exercise any function concerning the management of the property of the scheme;

   "investment company with variable capital" has the meaning given in section 19(2);

   "licenced person" has the meaning given in section 8;

   "licenced scheme" means a collective investment scheme for the time being licenced by the Authority;

   "licenced unit trust scheme" means a unit trust scheme for the time being licenced by the Authority;

   "Minister" means the Minister responsible for finance;

   "open-ended investment company" means a collective investment scheme under which—

   (a)   the property in question belongs beneficially to and is managed by or on behalf of, a body corporate having as its purpose the investment of its funds with the aim of spreading risk and giving its members the benefit of the results of the management of those funds by or on behalf of that body; and

   (b)   the rights of the participants are represented by shares in or securities of that body which—

      (i)   the participants are entitled to have redeemed or repurchased, or which, otherwise than under section 60 of the Companies Act, are redeemed or repurchased from them by, or out of funds provided by, that body; or

      (ii)   the body ensures shares can be sold by the participants on an investment exchange at a price related to the value of the property to which they relate;

   "operator", in relation to an open-ended investment company, means that company and, in relation to a unit trust scheme, means the manager;

   "participants" has the meaning given in section 3(2);

   "partnership" includes a partnership constituted under the law of a country or territory outside Uganda;

   "prospectus" means a document containing information about an open-ended investment company as specified in Part II of Schedule 1;

   "recognised scheme" means a scheme recognised under Part VI;

   "Registrar of Companies" means the Registrar of Companies under the Companies Act;

   "scheme particulars" means a document containing information about a unit trust scheme as specified in Part IV of Schedule 1;

   "scheme regulations" means regulations made under section 30 or section 31;

   "shadow director", in relation to an investment company with variable capital, means a person in accordance with whose directions or instructions, not being advice given in a professional capacity, the directors of that company are accustomed to act;

   "trustee" means the person holding title to the property of a unit trust scheme on trust for the participants and, in relation to a collective investment scheme constituted under the law of a country or territory outside Uganda, means any person who, whether or not under a trust, is entrusted with the custody of the property in question;

   "umbrella company" means an investment company with variable capital whose instrument of incorporation provides for such pooling as is mentioned in section 3(3)(a) in relation to separate parts of the scheme property and whose shareholders are entitled to exchange rights in one part for rights in another;

   "unit trust scheme" means a collective investment scheme under which the property is held in trust for the participants;

   "units" means the rights or interests (however described) of the participants in a unit trust scheme.

   (2) Any reference to a participant in or shareholder of an investment company with variable capital is a reference to—

   (a)   the person who holds the share certificate, or other documentary evidence of title, mentioned in paragraph 14 of Schedule 4; and

   (b)   the person whose name is entered on the company's register of shareholders in relation to any share or shares other than a bearer share.

   (3) Unless the contrary intention appears, expressions used in this Act and which are also used in the Companies Act have the same meaning as in that Act.

3.   Meaning of collective investment scheme.

   (1) In this Act, a collective investment scheme means, subject to this section, any arrangement with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangement, whether by becoming owners of the property or any part of it or otherwise, to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.

   (2) The arrangements must be such that the persons who are to participate as mentioned in subsection (1), in this Act referred to as "participants", do not have day-to-day control over the management of the property in question, whether or not they have the right to be consulted or to give directions; and the arrangements shall also have either or both of the characteristics mentioned in subsection (3).

   (3) The characteristics referred to in subsection (2) are—

   (a)   that the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; and

   (b)   that the property in question is managed as a whole by or on behalf of the operator of the scheme.

   (4) Where any arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts of the property in question, the arrangements shall not be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another.

   (5) The following are not collective investment schemes—

   (a)   an arrangement operated by a person other than by way of business;

   (b)   an arrangement where each of the participants carries on a business other than a business concerned with dealing in, arranging deals, managing or advising on securities or similar financial investments and enters into the arrangement for commercial purposes related to that business;

   (c)   an arrangement where each of the participants is a body corporate in the same group as the operator;

   (d)   an arrangement where—

      (i)   each of the participants is a bona fide employee or former employee, or the wife, husband, widow, widower, child or stepchild under the age of 18 years of such an employee or former employee, of a body corporate in the same group as the operator; and

      (ii)   the property to which the arrangement relates consists of shares or stock; debentures, loan stock or any other instrument creating or acknowledging indebtedness or warrants or certificates conferring rights in relation to any such investment, in each case being an investment in or in a member of that group;

   (e)   a franchise arrangement, that is to say, an arrangement under which a person earns profits or income by exploiting a right conferred by the arrangements to use a trade name or design or other intellectual property or the goodwill attached to it;

   (f)   an arrangement the predominant purpose of which is to enable persons participating in it to share in the use or enjoyment of a particular property or to make its use or enjoyment available gratuitously to other persons;

   (g)   an arrangement under which the rights or interests of the participants consist of the benefit of certificates or other instruments conferring rights in relation to securities other than shares in an open-ended investment company;

   (h)   an arrangement the purpose of which is the provision of clearing services and which is operated by a person designated by an order of the Authority for the time being in force for the purposes of this section;

   (i)   a contract of insurance;

   (j)   an occupational pension scheme; and

   (k)   any other arrangement as may be determined by order of the Authority.

   (6) No body corporate other than an open-ended investment company shall be regarded as constituting a collective investment scheme: except that the Minister may, on reasonable grounds, by statutory order, specify the activities of any body corporate other than an open-ended investment company, to be subject to regulation under this Act as a collective investment scheme.

PART II
UNLICENCED PERSONS AND SCHEMES.

4.   Restrictions on unlicenced persons.

   (1) No person other than a licenced person shall—

   (a)   establish or operate a collective investment scheme in Uganda, including acting as a depositary or trustee, or purport to establish or operate such a scheme, unless that person is a licenced person and the scheme is a licenced scheme or a recognised scheme;

   (b)   issue or cause to be issued in Uganda, a scheme advertisement unless that person is a licenced person, or the contents of the advertisement have been approved by a licenced person; or

   (c)   advise or procure any person to become a participant in a collective investment scheme unless the scheme is a licenced scheme or a recognised scheme.

   (2) In subsection (1)(b), a "scheme advertisement" means an advertisement inviting persons to participate or to offer to participate in a collective investment scheme or to exercise any right conferred by a scheme to acquire, dispose of, underwrite or convert shares or units in a scheme or containing information calculated to lead directly or indirectly to persons doing so.

   (3) The Minister may, by statutory order, specify activities which are to be treated as subject to or excluded from control under subsection (1).

5.   Offences.

   Any person who contravenes section 4 commits an offence and is liable on conviction to a fine not exceeding 500 currency points or imprisonment for a term not exceeding five years or both.

   (2) In proceedings brought against any person for an offence under section 4(1)(a), it shall be a defence for that person to prove that he or she took all reasonable precautions and exercised all due diligence to avoid the commission of the offence.

   (3) In proceedings brought against any person for an offence under section 4(1)(b), it shall be a defence for that person to prove that he or she acted to the order of another person and that he or she believed, on reasonable grounds, that—

   (a)   the person to whose order the advertisement was issued was a licenced person;

   (b)   the contents of the advertisement were approved by a licenced person; or

   (c)   the advertisement was permitted by virtue of a statutory order under section 4(3).

   (4) In proceedings brought against any person for an offence under section 4(1)(c), it shall be a defence for that person to prove that he or she acted to the order of another person, and that he or she believed, on reasonable grounds, that the scheme was a licenced scheme or recognised scheme.

6.   Agreements made by or through unlicenced persons.

   (1) Subject to subsection (3), any agreement which is entered into by a person in the course of, or in consequence of a contravention by that person of section 4 shall be unenforceable against the other party; and that party is entitled to recover any money or other property paid or transferred by him or her under the agreement, together with compensation for any loss sustained by him or her as a result of having parted with it.

   (2) The compensation recoverable under subsection (1) shall be such as the parties may agree or as the court may, on the application of either party, determine.

   (3) A court may allow an agreement to which subsection (1) applies to be enforced, or money and property paid or transferred under that agreement to be retained if the court is satisfied that the person mentioned in that subsection reasonably believed that his or her entering into the agreement did not constitute a contravention of section 4.

   (4) Where a person elects not to perform an agreement which, by virtue of this section is unenforceable against him or her, or by virtue of this section recovers money paid or other property transferred by him or her under an agreement, he or she shall repay any money and return any other property received by him or her under the agreement.

   (5) Where any property transferred under an agreement to which this section applies has passed to a third party, the references to that property in subsections (1), (3) and (4) shall be construed as references to its value at the time of its transfer under the agreement.

   (6) A contravention of section 4 shall not make an agreement illegal or invalid to any greater extent than is provided in this section.

7.   Injunctions and restitution orders.

   (1) The court may, on the application of the Authority, grant an injunction where it is satisfied that—

   (a)   there is a reasonable likelihood that a person will contravene section 4; or

   (b)   any person has contravened section 4 and that there is a reasonable prospect that the contravention will continue or be repeated.

   (2) If, on the application of the Authority, the court is satisfied that a person has entered into any transaction in contravention of section 4, the court may order that person and any other person who appears to the court to have been knowingly concerned in the contravention, to take such steps as the court may direct for restoring the parties to the position in which they were before the transaction was entered into.

   (3) The court may, on the application of the Authority, make an order under subsection (4) if satisfied that a person has been carrying on business in contravention of section 4 and—

   (a)   that profits have accrued to that person as a result of carrying on that business; or

   (b)   that one or more investors have suffered loss or been otherwise adversely affected in consequence.

   (4) The court may, under this subsection, order the person concerned to pay into court, or appoint a receiver to recover from him or her, such sum as appears to the court to be just having regard—

   (a)   in a case within subsection (3)(a), to the profits appearing to the court to have accrued;

   (b)   in a case within subsection (3)(b), to the extent of the loss or other adverse effect; or

   (c)   in a case within both subsection (3)(a) and (3)(b), to the profits and to the extent of the loss or other adverse effect.

   (5) The court may under this subsection order the person concerned to pay to the applicant such sum as appears to the court to be just, having regard to the considerations mentioned in subsection (4)(a), (b) and (c).

   (6) Any amount paid into court by or recovered from a person in pursuance of an order under subsection (4) or (5) shall be paid out to that person or distributed among such persons as the court may direct, being a person or persons appearing to the court to have entered into transactions with that person as a result of which the profits mentioned in subsection (3)(a) have accrued to him or her, or the loss or other adverse effect mentioned in subsection (3)(b) has been suffered.

   (7) On an application under subsection (3), the court may require the person concerned to furnish it with such accounts or other information as it may require for establishing whether any and, if so, what profits have accrued to him or her as mentioned in subsection (3)(a), and for determining how any amounts are to be paid or distributed under subsection (6); and the court may require any such accounts or other information to be verified in such manner as it may direct.

   (8) Nothing in this section affects the right of any person, other than the Authority, to bring proceedings in respect of any of the matters to which this section applies.

PART III
LICENCED PERSONS.

8.   Types of licenced persons.

   The following are licenced persons—

   (a)   a person holding a licence granted by the Authority under this Part in respect of the activities specified in the licence; and

   (b)   an investment company with variable capital in respect of activities which consist in, or are carried out by the company in connection with or for the purposes of, operating the collective investment scheme constituted by the company.

9.   Application for licence.

   (1)An application for a licence under this Part may only be made by a body corporate and, in the case of an application to be licenced as a trustee or depositary, may only be made by a bank as defined in the Financial Institutions Statute or an insurance company as defined in the Insurance Statute or such other financial institution as the Authority may prescribe.

   (2) An application under this section shall—

   (a)   be made in such manner as the Authority may direct;

   (b)   specify whether the applicant seeks to be licenced as an operator, authorised corporate director, depositary or trustee;

   (c)   contain or be accompanied by—

      (i)   information relating to the scheme or schemes with which the applicant proposes to be involved; and

      (ii)   such other information as the Authority may reasonably require for the purpose of determining the application; and

   (d)   contain the address of a place in Uganda for the service on the applicant of any notice or other document required or authorised to be served on him or her under this Act.

   (3) At any time after receiving an application and before determining it, the Authority may require the applicant to furnish additional information.

   (4) The directions and requirements given or imposed under subsections (2) and (3) may differ as between different applications.

   (5) Any information to be furnished to the Authority under this section shall, if it is so required, be in a form or verified in a manner as the Authority may specify.

10.   Grant and refusal of licence.

   (1) The Authority may, on an application duly made in accordance with section 9 and after being furnished with the information required under that section, grant or refuse the application.

   (2) The Authority shall grant the application if it appears to it from the information furnished by the applicant, and having regard to any other information in its possession, that the applicant is a fit and proper person to carry on the activities described in the application.

   (3) The Authority may, in determining whether to grant or refuse an application take into account any matter relating to—

   (a)   any person who is or will be employed by or associated with the applicant for the purposes of the business in question;

   (b)   any person who is or will be acting as an appointed representative in relation to that business; and

   (c)   any director or controller of the body to any other body corporate in the same group or to any director or controller of any such other body corporate.

   (4) The Authority may, in determining whether to grant or refuse an application, also have regard to any business which the applicant proposes to carry on in connection with his or her activities as a licenced person.

   (5) The Authority shall give an applicant for a licence written notice of the grant of the licence, specifying the date on which the licence takes effect.

11.   Notice of proposed refusal.

   (1) Where the Authority proposes to refuse an application under section 10, it shall give the applicant written notice of its intention to do so, stating the reasons for which it proposes to act.

   (2) Where the reasons stated in the notice under this section relate specifically to matters which—

   (a)   refer to a person identified in the notice other than the applicant; and

   (b)   are, in the opinion of the Authority, prejudicial to that person in any office or employment,

the Authority shall, unless it considers it impracticable to do so, serve a copy of the notice on that person.

   (3) A notice under this section shall give particulars of the right to require the case to be referred to the court under Part XII.

   (4) Where a case is not required to be referred to the court by a person on whom a notice is served under this section, the Authority shall, at the expiration of the period within which such a requirement may be made, give that person written notice of the refusal or, as the case may be, the grant of the application.

   (5) The Authority shall give public notice of any decision notified by it under subsection (4) and the reasons for the decision but shall not do so in the case of a decision to grant the application unless the person concerned consents to it doing so.

12.   Withdrawal of applications and licences by consent.

   (1) An application under section 9 may be withdrawn before it is granted or refused and, subject to subsections (2) and (3), a licence granted under section 9 may be withdrawn by the Authority at the request, or with the consent of the licenced person.

   (2) The Authority may refuse to withdraw a licence if it considers that the public interest requires any matter affecting the licenced person to be investigated as a preliminary matter to a decision on the question whether the Authority should, in respect of that person, exercise its powers under section 60 or under any provision of this Part.

   (3) The Authority may also refuse to withdraw a licence where, in its opinion, it is desirable that a prohibition or restriction should be imposed on the licenced person under Part IX, or that a prohibition or restriction imposed on that person under that Part should continue in force.

   (4) The Authority shall give public notice of any withdrawal of a licence under subsection (1).

PART IV
LICENCED SCHEMES.

13.   Types of licenced schemes.

   A licenced scheme may be a unit trust scheme or an investment company with variable capital.

14.   Application for scheme licence.

   (1) An application for a licence in respect of a collective investment scheme—

   (a)   shall be made in such manner as the Authority may direct;

   (b)   shall be accompanied by the scheme's formation documents prescribed in Schedule 1;

   (c)   shall state—

      (i)   in the case of an investment company with variable capital, the particulars of the directors of the company specified in subsection (2) and the corporate name and registered or principal office of the depositary of the scheme or;

      (ii)   in the case of a unit trust scheme, the corporate name and registered or principal office of the manager and of the trustee of that scheme;

   (d)   shall specify any activities other than in relation to the scheme in which the operator or depositary or, in the case of a unit trust scheme, the manager or trustee are or are proposed to be engaged; and

   (e)   shall contain or be accompanied by such other information as the Authority may reasonably require for the purpose of determining the application.

   (2) The particulars of the directors to be specified in the case of an investment company with variable capital are—

   (a)   in the case of an individual, his or her present name, any former name, his or her usual residential address, his or her nationality, his or her business occupation if any, particulars of any other directorships held by him or her or which have been held by him or her and his or her date of birth; and

   (b)   in the case of a company, its corporate name and the address of its registered or principal office.

   (3) At any time after receiving an application and before determining it, the Authority may require the applicant to furnish additional information in accordance with subsection (1)(e).

   (4) The directions and requirements given or imposed under subsection (1) and (3) may differ as between different applications.

   (5) Any information to be furnished to the Authority under this section shall, if it is so required, be in such form or verified in such manner as the Authority may specify.

15.   Licences.

   (1) The Authority may, on an application duly made in accordance with section 14 and after being furnished with all information it may require under that section, grant a licence in respect of a collective investment scheme if—

   (a)   it appears to the Authority that the criteria mentioned in section 17 are satisfied in relation to the scheme and the scheme complies with the requirements of any regulations made by the Authority under section 30 or 31 as apply to the scheme; and

   (b)   in the case of an investment company with variable capital, it has received a notification under section 16 from the Registrar of Companies.

   (2) In determining whether the criterion of fitness and propriety mentioned in section 17(2)(b) is satisfied in respect of any proposed director of an investment company with variable capital, the Authority may take into account any matter relating—

   (a)   to any person who is or will be employed by or associated with the proposed director, for the purposes of the business of the company;

   (b)   if the proposed director is a body corporate, to any director, shadow director or controller of the body, to any other body corporate in the same group or to any director, shadow director or controller of any such other body corporate;

   (c)   if the proposed director is a partnership, to any of the partners; and

   (d)   if the proposed director is an unincorporated association, to any member of the governing body of the association or any officer or controller of the association.

   (3) The Authority shall inform the applicant of its decision, not later than six months after the date on which the Authority received the application.

   (4) A licence shall specify the date on which it is to come into effect.

   (5) In subsection (2)(b), "shadow director", in relation to a body corporate, means any person in accordance with whose directions or instructions, not being advice given in a professional capacity, the directors of that body are accustomed to act.

16.   Registrar of Companies approval of names.

   (1) Where, in respect of a proposed investment company with variable capital, it appears to the Authority that the requirements of section 15(1)(a) are or will be met, the Authority shall send the papers mentioned in subsection (2) to the Registrar of Companies.

   (2) The papers referred to in subsection (1) are—

   (a)   a copy of the instrument of incorporation supplied for the purposes of section 14(1);

   (b)   a statement of the proposed company's head office;

   (c)   a statement with respect to each person named in the application as director of the company of the particulars set out in section 14(2); and

   (d)   a statement of the corporate name and registered or principal office of the person named in the application for a licence as the first depositary.

   (3) The Registrar of Companies shall retain the papers delivered to him or her under subsection (1) and, if it appears to him or her that subsection (4) has not been contravened in relation to the proposed company, the Registrar of Companies shall notify the Authority to that effect.

   (4) An investment company with variable capital shall not have a name that—

   (a)   includes the word "unlimited" or an abbreviation of that word; or

   (b)   is the same as any other name appearing in the Registrar of Companies index of company names.

   (5) In determining, for the purposes of subsection (4)(b), whether one name is the same as another, the following shall be disregarded—

   (a)   the definite article, where it is the first word of the name;

   (b)   "company", "and company", "company limited", "limited", "unlimited", "investment company with variable capital";

   (c)   abbreviations of any of the words or expressions in paragraph (b) where they appear at the end of the name; and

   (d)   type and case of letters, accounts, spaces between letters and punctuation marks; and "and" and "&" are to be taken as the same.

17.   Criteria for licencing.

   (1) The criteria referred to in section 15(1)(a) are as follows—

   (a)   the scheme has an operator and a depositary or, in the case of a unit trust scheme, an operator and a trustee who are independent of each other;

   (b)   the operator and the depositary or trustee are each—

      (i)   a body corporate incorporated in and with its registered or head office in Uganda; and

      (ii)   a licenced person;

   (c)   subject to any scheme regulations, the formation documents comply with the requirements of Schedule 1;

   (d)   the scheme complies with any scheme regulations applicable to it;

   (e)   the name of the investment company with variable capital or, in the case of a unit trust scheme, of the scheme or the manager is neither undesirable nor misleading;

   (f)   the aims of the scheme are reasonably capable of being achieved;

   (g)   the shareholders or participants are either entitled to have their shares or units redeemed or repurchased in accordance with the formation documents and scheme regulations at a price related to the net value of the scheme property or are able to sell their shares or units on an investment exchange at a price not significantly different from that price; and

   (h)      in the case of an investment company with variable capital, subsection (2) is satisfied.

   (2) In the case of an investment company with variable capital—

   (a)   the company has at least one director;

   (b)   the directors of the company are fit and proper persons to act as directors of such a company;

   (c)   if the company has only one director, that director is the authorised corporate director;

   (d)   if the company has two or more directors, the combination of their experience and expertise is such as is appropriate for the purposes of carrying on the business of the company;

   (e)   an authorised corporate director has been appointed by the directors of the company from amongst such of their number as are bodies corporate and not prohibited by scheme regulations from acting in that capacity; and

   (f)   the depositary is independent of the persons appointed as directors of the company.

   (3) The criteria prescribed by subsection (1)(b), shall be treated as satisfied in the case of an investment company with variable capital if they will become so upon incorporation.

   (4) In determining whether an applicant is a fit and proper person for the purposes of this Act, the Authority shall, in addition to the criteria prescribed by section 15(2), have particular regard to the criteria prescribed in Schedule 6.

18.   Representation against refusal.

   (1) Where the Authority proposes to refuse an application under section 15, it shall give the applicant written notice of its intention to do so, stating the reasons for which it proposes to refuse the application and giving particulars of the rights conferred by subsection (2).

   (2) A person on whom a notice is served under subsection (1) may, within 21 days after service, make written representations to the Authority and, if desired, oral representations to a person appointed for that purpose by the Authority.

   (3) The Authority shall have regard to any representations made in accordance with subsection (2) in determining whether to refuse the application.

PART V
ESTABLISHMENT OF INVESTMENT COMPANIES WITH VARIABLE CAPITAL.

19.   Incorporation of investment company with variable capital.

   (1) Where the Authority grants a licence in respect of an open-ended investment company then, immediately upon the coming into effect of the licence, a body shall be deemed to have been incorporated, notwithstanding that at the time of its incorporation under this section, the body will not have any shareholders or property.

   (2) Any body incorporated under subsection (1) shall be known as an investment company with variable capital.

   (3) The name of an investment company with variable capital shall be the name mentioned in the licence granted in respect of the company or, if it changes its name in accordance with this Act and scheme regulations, by its new name.

   (4) Once a licence has been granted in respect of a company, no amendments may be made to the statements contained in the company's instrument of incorporation which are required by paragraph 2 of Part I of Schedule 1.

   (5) Subject to paragraph 3(3) of Part I of Schedule 1 and to any restriction imposed by scheme regulations, a company may amend any other provision which is contained in its instrument of incorporation.

   (6) A provision which is contained in a company's instrument of incorporation by virtue of paragraph 3 of Part I of Schedule 1 shall not be amended unless the amendment has been approved by the shareholders of the company in a general meeting.

   (7) The provisions of a company's instrument of incorporation shall be binding on the officers and depository of the company and on each of its shareholders; and those persons shall be taken to have notice of the provisions of the instrument.

   (8) A person is not barred from obtaining damages or any other compensation from a company by reason only of his or her holding or having held shares in the company.

20.   Registration.

   (1) As soon as is reasonably practicable after the coming into effect of a licence in respect of an investment company with variable capital, the Authority shall send a copy of the licence to the Registrar of Companies.

   (2) The Registrar of Companies shall, upon receipt of the copy of the licence, immediately register—

   (a)   the instrument of incorporation of the company; and

   (b)   the details in relation to the company, its directors and its depositary which are contained in the papers retained by him or her under section 16(3).

   (3) A company shall not carry on any business unless its instrument of incorporation has been registered under subsection (2).

   (4) Schedule 2 has effect in relation to the application of the Companies Act to a company registered under this section.

   (5) In this section, any reference to the instrument of incorporation of a company is a reference to the instrument of incorporation which was supplied for the purposes of section 14(1)(b).

21.   Notifications to Registrar of Companies.

   (1) An investment company with variable capital shall, as soon as is reasonably practicable, but in any case not more than seven days, after the coming into effect of a licence in respect of the company, send to the Registrar of Companies a copy of the company's prospectus.

   (2) A company shall—

   (a)   not later than 14 days after the coming into effect of a licence in respect of the company, send to the Registrar of Companies notice of—

      (i)   the place where the copies and memoranda required to be kept by paragraph 3 of Schedule 4 are kept; and

      (ii)   the place where the register of shareholders is kept; and

   (b)   not later than 14 days after the occurrence of any change in any such place, send to the Registrar of Companies notice of that change.

   (3) A company shall, not later than 14 days after the making of any alteration to the company's instrument of incorporation, send to the Registrar of Companies—

   (a)   any document making or evidencing the alteration; and

   (b)   a printed copy of the instrument of incorporation as altered.

   (4) A company shall, not later than 14 days after the occurrence of the change in question, notify the Registrar of Companies of—

   (a)   any change in the address of the head office of the company;

   (b)   any change in the directors of the company;

   (c)   any change in the depositary of the company; and

   (d)   in respect of any director or depositary, any change in the information mentioned in section 14(1)(c) or (d);

   (5) A company shall before the end of the period allowed by scheme regulations for the publication of the company's annual report send to the Registrar of Companies—

   (a)   a copy of that report; and

   (b)   a copy of the most recent revision of the company's prospectus.

   (6) A company shall, not later than 14 days after the completion of a revised annual report under paragraph 53 of Schedule 4, send to the Registrar of Companies a copy of that revised report.

   (7) Where a resolution removing an auditor is passed at a general meeting of a company under paragraph 64 of Schedule 4, a company shall, not later than 14 days after the holding of the meeting, notify the Registrar of Companies of the passing of the resolution.

   (8) Where an auditor of a company deposits a notice of his or her resignation from office under paragraph 67 of Schedule 4, a company shall, not later than 14 days after the deposit of the notice, send a copy of the notice to the Registrar of Companies.

   (9) Where the affairs of a company are to be wound up otherwise than by the court, the company shall, as soon as reasonably practicable, but in any case not more than seven days after the commencement of the winding up, notify the Registrar of Companies of that fact.

22.   Safekeeping of scheme property by depositary.

   (1) Subject to subsection (2), all the scheme property of an investment company with variable capital shall be entrusted for safekeeping to a depositary.

   (2) Nothing in subsection (1)—

   (a)   shall apply to any scheme property designated for the purposes of this section by scheme regulations;

   (b)   shall prevent a depositary from—

      (i)   entrusting to a third party all, or some of the assets in its safekeeping; or

      (ii)   in a case falling within paragraph (i), authorising the third party to entrust all or some of those assets to other specified persons.

   (3) Schedule 3 has effect in relation to the safekeeping of scheme property of an investment company with variable capital by the depositary.

23.   Corporate code.

   Schedule 4, which provides for the Corporate Code, has effect in relation to companies with variable capital.

PART VI
RECOGNITION OF FOREIGN SCHEMES.

24.   Schemes licenced or authorised in designated countries or territories.

   (1) Subject to subsection (3), a collective investment scheme which is managed in and licenced or authorised under the law of a country or territory outside Uganda is a recognised scheme if—

   (a)   that country or territory is designated for the purposes of this section by an order made by the Authority; and

   (b)   the scheme is of a class specified by the order.

   (2) The Authority shall not make an order designating any country or territory for the purposes of this section unless it is satisfied that the law under which collective investment schemes of the class to be specified by the order are licenced or authorised and supervised in that country or territory, affords to investors in Uganda protection at least equivalent to that provided for them by this Act.

   (3) Nothing in subsection (2) shall require the comparison set out in that subsection to be made where—

   (a)   the class of collective investment schemes to be specified in an order includes schemes having characteristics corresponding to those of an investment company with variable capital; and

   (b)   having regard to the characteristics of such schemes, it appears more appropriate to consider whether investors in Uganda are afforded protection at least equivalent to that provided for them in respect of such schemes by this Act;

and, to that extent that the requirements of paragraph (b) are met, the relevant comparison shall be between the protection afforded to investors in Uganda by the law under which collective investment schemes of the class to be specified in the order are licenced or authorised and supervised in the country or territory concerned and the protection provided for such investors by this Act.

   (4) A scheme shall not be recognised by virtue of this section unless the operator of the scheme gives written notice to the Authority that he or she wishes it to be recognised; and the scheme shall not be recognised if, within such period after receiving the notice as may be prescribed, the Authority notifies the operator that the scheme is not to be recognised.

   (5) The notice given by the operator under subsection (4)—

   (a)   shall contain the address of a place in Uganda for the service on the operator of notices or other documents required or authorised to be served on the operator under this Act; and

   (b)   shall contain or be accompanied by such information and documents as may be prescribed.

   (6) Section 31 has effect in relation to a scheme recognised under this section as it has effect in relation to a licenced scheme, and regulations made by virtue of this subsection may make provision whereby compliance with any requirements imposed by or under the law of a country or territory designated under this section is treated as compliance with any requirement of the regulations.

   (7) An order under subsection (1) may contain such transitional provisions as the Authority deems necessary or expedient.

25.   Other foreign schemes.

   (1) The Authority may, on the application of the operator of a scheme which is managed in a country or territory outside Uganda, but in relation to which there is no relevant order under section 24(1), make an order declaring the scheme to be a recognised scheme if it appears to the Authority that it affords adequate protection to the participants, makes adequate provision for the matters dealt with by regulations under section 30 and 31, and satisfies the requirements of this section.

   (2) The operator must be a body corporate or the scheme must take the form of an open-ended investment company.

   (3) Subject to subsection (4), the operator and the depositary or trustee, if any, must be fit and proper persons to act as operator or, as the case may be, as depositary or trustee; and for that purpose, the Authority may take into account any matter relating to—

   (a)   any person who is or will be employed by or associated with the operator or depositary or trustee for the purposes of the scheme;

   (b)   any director or controller of the operator or depositary or trustee; and

   (c)   any other body corporate in the same group as the operator or depositary or trustee and any director or controller of any such other body.

   (4) Subsection (3) does not apply to an operator or depositary or trustee who is a licenced person and not prohibited from acting as operator or depositary or trustee, as the case may be, by or under regulations made under section 30 or by any prohibition imposed under section 45.

   (5) If the operator is not a licenced person, he or she must have a representative in Uganda who is a licenced person and has power to act generally for the operator and to accept service of notices and other documents on his or her behalf.

   (6) The name of the scheme must not be undesirable or misleading; and the purposes of the scheme must be reasonably capable of being successfully carried into effect.

   (7) The participants must be entitled to have their shares or units redeemed in accordance with the scheme at a price related to the net value of the property to which the shares or units relate and determined in accordance with the scheme; but a scheme shall be treated as complying with this subsection if it requires the operator to ensure that a participant is able to sell his shares or units on an investment exchange at a price not significantly different from that mentioned in this subsection.

   (8) Subsections (2) to (5) of section 14 apply to an application under this section.

   (9) So much of section 35 as applies to an alteration of the scheme shall apply also to a scheme recognised under this section; and if the operator or depositary or trustee of any such scheme is to be replaced, the operator or, as the case may be, the depositary or trustee, or in either case the person who is to replace him or her, shall give at least one month's notice to the Authority.

   (10) Section 31 has effect in relation to a scheme recognised under this section as it has effect in relation to a licenced scheme.

26.   Refusal of recognition.

   (1) Where the Authority proposes to notify the operator of a scheme under section 24(4) it shall give the operator written notice of its intention to do so, stating the reasons for which it proposes to act and giving particulars of the rights conferred by subsection (2).

   (2) A person on whom a notice is served under subsection (1) may, within 21 days after the date of service, make written representations to the Authority and, if desired, oral representations to a person appointed for that purpose by the Authority.

   (3) The Authority shall have regard to any representations made in accordance with subsection (2) in determining whether to notify the operator, give the direction or refuse to make or revoke the order, as the case may be.

27.   Facilities and information in Uganda.

   (1) The Authority may make regulations requiring operators of recognised schemes to maintain in Uganda, or in such part or parts of Uganda as may be specified in the regulations, such facilities as it thinks desirable in the interests of participants.

   (2) The Authority may, by notice in writing, require the operator of a recognised scheme to include such explanatory information as is specified in the notice in any investment advertisement issued or caused to be issued by the operator in Uganda in which the scheme is named.

PART VII
FEES.

28.   Application fees.

   (1) Every application made under sections 9, 14 or 25, and every notice given to the Authority under section 24(4) shall be accompanied by a fee prescribed by the Minister.

   (2) An application or notice referred to in subsection (1) shall not be regarded as duly made or given unless this section is complied with.

29.   Annual fees.

   The operator of each licenced scheme and of each recognised scheme shall pay an annual fee prescribed by the Minister by statutory instrument.

PART VIII
GENERAL CONTROLS.

30.   General regulations.

   (1) The Authority may, by statutory instrument, make regulations for—

   (a)   the constitution and management of collective investment schemes;

   (b)   the powers and duties of licenced persons, including regulations relating to the conduct of business and the financial resources to be maintained by collective investment schemes; and

   (c)   the rights and obligations of the participants in any collective investment scheme.

   (2) Without prejudice to the generality of subsection (1), regulations under this section may provide for—

   (a)   the issue and redemption of the shares or units under the scheme;

   (b)   the expenses of the scheme and the means of meeting them;

   (c)   the appointment, removal, powers and duties of an auditor for the scheme;

   (d)   restricting or regulating the investment and borrowing powers exercisable in relation to the scheme;

   (e)   the keeping of records with respect to the transactions and financial position of the scheme and for the inspection of those records;

   (f)   the preparation of periodical reports with respect to the scheme and the furnishing of those reports to the participants and to the Authority; and

   (g)   the amendment of the scheme.

   (3) Regulations made under this section may provide for the contents of the instrument of incorporation, in the case of an investment company with variable capital, and the trust deed in the case of a unit trust scheme, including provision requiring any of the matters mentioned in subsection (2) to be dealt with in such a document; but regulations under this section shall be binding on the operator, depositary or trustee and participants independently of the contents of the document and, in the case of the participants, shall have effect as if contained in it.

   (4) Regulations made under this section shall not impose limits on the remuneration payable to the operator of a scheme.

   (5) Regulations made under this section may contain such incidental and transitional provisions as the Authority deems necessary or expedient.

31.   Regulations as to prospectus or scheme particulars.

   (1) The Authority may make regulations requiring the operator of a collective investment scheme to submit to it and publish or make available to the public on request a document, "a prospectus" in the case of an investment company with variable capital and "scheme particulars" in the case of a unit trust scheme, containing information about the scheme and complying with such requirements as are specified in the regulations.

   (2) Regulations made under this section may require the operator of a collective investment scheme to submit and publish or make available a revised or further document if—

   (a)   there is a significant change affecting any matter contained in the document previously published or made available whose inclusion was required by the regulations; or

   (b)   a significant new matter arises, the inclusion of information in respect of which would have been required in the previous document if it had arisen when that document was prepared.

   (3) Regulations made under this section may provide for the payment, by the person or persons who in accordance with the regulations are treated as responsible for any such document, of compensation to any person who has become or agreed to become a participant in the scheme and suffered loss as a result of any untrue or misleading statement in the document or the omission from it of any matter required by the regulations to be included.

   (4) Regulations made under this section shall not affect any liability which any person may incur apart from the regulations.

32.   Statements of principle.

   (1) The Authority may issue statements of principle with respect to the conduct and financial standing expected of licenced persons.

   (2) The conduct expected may include compliance with a code or standard issued by another person, as for the time being in force, and may allow for the exercise of discretion by any person under any such code or standard.

   (3) Failure to comply with a statement of principle under this section is a ground for the taking of disciplinary action or the exercise of powers of intervention, but it does not of itself give rise to any right of action by investors or other persons affected, or affect the validity of any transaction.

   (4) The disciplinary action which may be taken under subsection (3) is—

   (a)   withdrawal or suspension of a licence under section 40;

   (b)   giving of a disqualification direction under section 42;

   (c)   making of a public statement under section 43; or

   (d)   application by the Authority for an injunction, interdict or other order under section 44;

and the reference in subsection (3) to powers of intervention is a reference to the powers conferred by Part IX.

   (5) Where a statement of principle relates to compliance with a code or standard issued by another person, the statement of principle may provide—

   (a)   that failure to comply with the code or standard shall be a ground for the taking of disciplinary action, or the exercise of powers of intervention, only in such cases and to such extent as may be specified; and

   (b)   that no such action shall be taken, or any such power exercised, except at the request of the person by whom the code or standard in question was issued.

   (6) The Authority shall exercise its powers in such manner as appears to it appropriate to secure compliance with statements of principle under this section.

33.   Modification or waiver of statements of principle.

   (1) The Authority may on the application of any person—

   (a)   modify a statement of principle issued under section 32 so as to adapt it to the applicant's circumstances or to any particular kind of business carried on by him or her; or

   (b)   exempt the applicant from compliance with any such statement of principle, generally or in relation to any particular kind of business carried on by him or her.

   (2) The powers conferred by this section shall not be exercised unless it appears to the Authority—

   (a)   that compliance with the statement of principle in question would be unduly burdensome for the applicant, having regard to the benefit which compliance would confer on investors; and

   (b)   that the exercise of those powers will not result in any undue risk to investors.

   (3) The powers conferred by this section may be exercised unconditionally or subject to conditions; and section 32 applies in the case of failure to comply with a condition as in the case of failure to comply with a statement of principle.

34.   Codes of practice.

   (1) The Authority may issue codes of practice with respect to any matters dealt with by statements of principle issued under section 32 or by rules or regulations made under any provision of this Act.

   (2) In determining whether a person has failed to comply with a statement of principle—

   (a)   a failure by him or her to comply with any relevant provision of a code of practice may be relied on as tending to establish failure to comply with the statement of principle; and

   (b)   compliance by him or her with the relevant provisions of a code of practice may be relied on as tending to negative any such failure.

   (3) A contravention of a code of practice with respect to a matter dealt with by rules or regulations shall not of itself give rise to any liability or invalidate any transaction; but in determining whether a person's conduct amounts to contravention of a rule or regulation—

   (a)   contravention by him or her of any relevant provision of a code of practice may be relied on as tending to establish liability; and

   (b)   compliance by him or her with the relevant provisions of a code of practice may be relied on as tending to negative liability.

35.   Alterations.

   (1) The operator of a licenced scheme shall give written notice to the Authority of—

   (a)   any proposed alteration to the scheme; and

   (b)   any proposal to replace the depositary or, in the case of a unit trust scheme, the trustee of the scheme.

   (2) In the case of an open-ended investment company, the following shall be treated as a proposal to alter the scheme—

   (a)   any proposed alteration to the company's instrument of incorporation;

   (b)   any proposed alteration to the company's prospectus which, if made, would be significant;

   (c)   any proposed reconstruction or amalgamation involving the company;

   (d)      any proposal to wind up the affairs of the company otherwise than by court; and

   (e)   any proposal to replace a director of the company, to appoint any additional director or to decrease the number of directors in post.

   (3) The depositary of a licenced scheme or, in the case of a unit trust scheme, the trustee, shall give written notice to the Authority of any proposal to replace the operator of the scheme.

   (4) No alteration to a scheme shall be made, nor shall the operator or depositary or, in the case of a unit trust scheme, the trustee, be replaced if any of the criteria set out in section 17 would not be satisfied if the alteration or replacement were made.

   (5) In such cases as may be specified in scheme regulations, effect shall not be given to a proposal for alteration of a scheme or the replacement of the operator or the depositary or trustee unless—

   (a)   the Authority has given its approval to the proposal; or

   (b)   three months have elapsed since the date on which the notice was given under subsection (1) or (2) without the Authority having notified the operator or the depositary or, as the case may be, the trustee, that the proposal is not approved.

36.   Restrictions on activities of manager and retirement of trustee.

   (1) A prohibition under section 45 may prohibit the manager of a licenced unit trust scheme from inviting persons in any specified country or territory outside Uganda to become participants in the scheme.

   (2) The trustee of a licenced unit trust scheme may not retire except upon the appointment of a new trustee.

37.   Avoidance of exclusion clauses.

   Any provision of the trust deed of a licenced unit trust scheme or of the instrument of incorporation of an investment company with variable capital shall be void in so far as it would have the effect of exempting the manager or trustee, in the case of a unit trust scheme, or the ACD or depositary, in the case of an investment company with variable capital, from liability for any failure to exercise due care and diligence in the discharge of its functions in respect of the scheme.

38.   Actions for damages.

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