SOUTH AFRICA OUTLINES FRAMEWORK FOR NEW CLASS OF FOREIGN INVESTMENT FUNDS

PRETORIA– The National Treasury has published the Foreign Member Funds Framework for public comment on its proposal to introduce an alternative class of investment funds called Foreign Member Funds (FMF) so as to promote South Africa as a financial management hub, particularly for investments into Africa.

The initiative is aimed not only at creating a favourable regulatory environment but also facilitating the flow of foreign capital to Africa through South Africa. The aim is to make it seamless and attractive for foreign funds to be managed and invested into the rest of the continent.

The proposal for the Foreign Member Funds was first announced by the Finance Minister during the presentation of the 2014 Budget.

Subsequent to the announcement, a working group consisting of officials from the Financial Services Board (FSB) and South African Reserve Bank (SARB), working with Treasury, has prepared a framework document for the introduction of FMFs in South Africa, which is now ready for public consultation, the Treasury, the FSB and the SARB said in a joint statement here Wednesday.

Currently, South African institutional investors are allowed to invest offshore, subject to various foreign investment limits, depending on the type of institutional investor.

Retirement funds and the non-market linked business of insurance companies can invest up to 30 per cent of their total retail assets and collective investment schemes, asset managers and market-linked business of insurers can invest up to 40 per cent of their total retail assets. An additional 10 per cent is allowed for investments into Africa.

The FMFs will be piloted through the collective investment structure under the Collective Investment Schemes Control Act (Act No 45 of 2002) (CISCA). Section 63 of CISCA empowers the Finance Minister to declare a specific type of business to be a collective investment scheme to which the act will apply.

The declaration will also include those provisions of the Act that will be applicable to FMFs.

Comments on the draft framework document of the FMF should be submitted by 30 April, 2018.

Source: NAM NEWS NETWORK