CHAPTER 79
CAPITAL MARKETS AND SECURITIES ACT

[SUBSIDIARY LEGISLATION]

INDEX TO SUBSIDIARY LEGISLATION

    REGULATIONS

        The Capital Markets and Securities (Registers of Interests in Securities) Regulations

        The Capital Markets and Securities (Establishment of Stock Exchanges) Regulations

        The Capital Markets and Securities (Licensing) Regulations

        The Capital Markets and Securities (Accounting and Financial Requirements) Regulations

        The Capital Markets and Securities (Advertisements) Regulations

        The Capital Markets and Securities (Prospectus Requirements) Regulations

        The Capital Markets and Securities (Collective Investment Schemes) Regulations

        The Capital Markets and Securities (Conduct of Business) Regulations

        The Capital Markets and Securities (Capitalisation and Rights Issue) Regulations

REGULATIONS

THE CAPITAL MARKETS AND SECURITIES (REGISTERS OF INTERESTS IN SECURITIES) REGULATIONS

G.N. No. 415 of 1996

1.    Citation

    These Regulations may be cited as the Capital Markets and Securities (Registers of Interests in Securities) Regulations.

2.    Interpretation

    In these Regulations, unless the context requires otherwise–

    "Act" means the Capital Markets and Securities Act *;

    "register" means a register of interests in securities required under section 51 of the Act.

3.    Form of Registers

    Every licensed dealer, dealers representative, investment adviser, investment representative and financial journalist shall maintain a register of securities in which he has an interest in the form prescribed in the Schedule to these Regulations.

4.    Timing of Entry on Register

    Particulars of the securities in which a person has an interest shall be entered in the register within twenty four hours of acquisition or disposal thereof.

SCHEDULE
FORM OF REGISTERS

FORM APPLICABLE FOR DISCLOSURE OF INTERESTS IN SECURITIES OF DEALERS AND DEALERS REPRESENTATIVES

I
PURCHASES REGISTER

II
SALES REGISTER

FORM APPLICABLE FOR DISCLOSURE OF INTERESTS IN SECURITIES OF INVESTMENT ADVISERS AND REPRESENTATIVES

FORM APPLICABLE FOR DISCLOSURE OF INTERESTS IN SECURITIES OF FINANCIAL JOURNALISTS

THE CAPITAL MARKETS AND SECURITIES (ESTABLISHMENT OF STOCK EXCHANGES) REGULATIONS

ARRANGEMENT OF REGULATIONS

Regulation

Title

PART I
PRELIMINARY PROVISIONS

    1.    Citation.

    2.    Interpretation.

PART II
APPROVAL OF STOCK EXCHANGE

    3.    Application for approval.

    4.    Application to be accompanied by memorandum and articles.

    5.    Application fee.

    6.    Approval subject to conditions.

    7.    Publication of notice of approval.

PART III
PERMIT FOR INTERIM STOCK
TRADING FACILITY

    8.    Application for permit to establish an Interim Stock Trading Facility.

    9.    Application fee.

    10.    Publication of notice of permit.

    11.    Transition of Interim Stock Trading Facility to Stock Exchange.

PART IV
CONDITIONS FOR GRANT OF APPROVAL AND PERMIT

    12.    Requirements as to Stock Exchange.

    13.    Certain conditions attached to approval or permit.

    14    Conditions for trading, settlement and delivery.

    15.    Accounting records.

    16.    Annual reports.

    17.    Amendment of memorandum and articles.

    18.    Compliance with listing requirements.

    19.    Powers of Chief Executive.

    20.    Transparency of transactions.

SCHEDULE

THE CAPITAL MARKETS AND SECURITIES
(ESTABLISHMENT OF STOCK EXCHANGES) REGULATIONS

G.N. No. 416 of 1996

PART I
PRELIMINARY PROVISIONS (regs 1-2)

1.    Citation

    These Regulations may be cited as the Capital Markets and Securities (Establishment of Stock Exchanges) Regulations.

2.    Interpretation

    In these Regulations, unless the context otherwise requires–

    "interim stock trading facility" means the facility to be established in accordance with section 114 of the Act;

    "rules" in relation to a stock exchange means the rules governing the conduct of a stock exchange or its members by whatever name they are called and includes rules contained in the regulations of the stock exchange.

PART II
APPROVAL OF STOCK EXCHANGE (regs 3-7)

3.    Application for approval

    An application for approval of a stock exchange shall be made by a body corporate to the Authority in triplicate in the form specified in the Schedule.

4.    Application to be accompanied by memorandum of association and articles

    An application for approval of the establishment of a stock exchange shall be accompanied by the applicant's memorandum of association which shall be in a form and satisfactory to the Authority and shall–

    (a)    not permit the distribution of profits to members; and

    (b)    restrict the membership of the stock exchange, dealers and such other persons as may be decided by the Authority.

5.    Application fee

    An application to establish a stock exchange, shall be accompanied by an application fee of the sum of five hundred thousand shillings which shall be payable in a manner determined by the Authority.

6.    Approval subject to conditions

    Approval for the establishment of stock exchange shall be granted subject to compliance with the provisions of Part IV of these Regulations.

7.    Publication of notice of approval

    Notice of approval of the establishment of stock exchange shall be published by the Authority in the Gazette and shall take effect on the date of publication of the said notice in the Gazette.

PART III
PERMIT FOR INTERIM STOCK TRADING FACILITY (regs 8-11)

8.    Application for permit to establish an Interim Stock Trading Facility

    (1) Any person who holds a dealer's licence may apply to the Authority for a permit to establish and maintain an interim stock trading facility.

    (2) An application for a permit to establish an interim stock trading facility shall be made in triplicate in the form prescribed in the Schedule.

9.    Application fee

    An application for a permit to establish an interim stock trading facility shall be accompanied by an application fee of the sum of five hundred thousand shillings payable in a manner to be determined by the Authority.

10.    Publication of notice of permit

    Notice of a permit for the establishment of an interim stock trading facility shall be published by the Authority in the Gazette and shall take effect on the date of publication of the notice in the Gazette.

11.    Transition of Interim Stock Trading Facility to Stock Exchange

    An interim stock trading facility granted a permit in accordance with section 114 of the Act and these Regulations shall operate as an interim facility for a maximum period of five years after which the provisions of Part 1 of these Regulations will have to be complied with:

Provided that the Authority may extend the period of five years upon application being made by an interim stock trading facility within three months prior to expiration of the period of five years.

PART IV
CONDITIONS FOR GRANT OF APPROVAL AND PERMIT (regs 12-20)

12.    Requirements as to Stock Exchange

    An interim stock trading facility approved by the Stock Exchange Authority shall–

    (a)    engage solely in the business of operating a securities exchange;

    (b)    maintain a governing body which consists of dealers and persons providing a fair representation for listed companies, investors and the general public who are acceptable to the Authority;

    (c)    employ a Chief Executive and an administration of sufficient capacity to administer the stock exchange including any contractual arrangements with specialised organisations for the settlement, deposit or efficient clearing of business;

    (d)    establish a physical location and mode of operation which contributes to a more orderly and efficient market for securities in Tanzania;

    (e)    establish a physical trading facility at which all bids to purchase and offers to sell can be exposed to each other and at which members of the public are granted an opportunity to witness trading; and

    (f)    maintain a system to be approved by the Authority for granting compensation to investors who suffer pecuniary loss resulting from the failure of a dealer to meet his contractual obligations.

13.    Certain conditions attached to approval or permit

    It shall be a condition for every grant of approval to establish a stock exchange or permit to establish an interim stock trading facility that the authority shall be furnished with–

    (a)    a list of members of the stock exchange or interim stock trading facility and any amendments thereto;

    (b)    names of members of the council of a stock exchange or governing body of an interim stock trading facility and any change thereto;

    (c)    notice of any disciplinary action taken against a member of a stock exchange or interim stock trading facility;

    (d)    changes in the appointment or the terms and conditions of the chief executive officer;

    (e)    a list of securities traded in the stock exchange or interim stock trading facility and any amendments thereto;

    (f)    in the case of a stock exchange, proposed amendments to be made to the conditions under which securities may be listed for trading;

    (g)    proposed amendments to be made to the conditions governing dealing in securities by members of a stock exchange;

    (h)    monthly returns of the volume of securities traded in the stock exchange or interim stock trading facility in a manner prescribed by the Authority;

    (i)    amendments proposed to be made to the rules governing the conduct of the stock exchange, or its members;

    (j)    the days and hours of business of a stock exchange or interim stock trading of the stock exchange;

    (k)    such other information as may be required by the Authority.

14.    Conditions for trading, settlement and delivery

    A stock exchange shall regulate its, members and ensure the day to day management of trading, settlement, delivery and other activities on dealing in securities in accordance with the memorandum and articles, rules, by-laws and regulations of the stock exchange which have been approved by the Authority.

15.    Accounting records

    A stock exchange shall maintain and reserve such books of account and documents, or acceptable alternative accounting records in their place as may be determined by the Authority for a period of seven years.

16.    Annual reports

    A stock exchange shall before the 30th June in each year or such extended period as the Authority may from time to time allow, furnish the Authority with a report of activities during the preceding calendar year in the form as may be required by the Authority.

17.    Amendment of memorandum and articles

    The Memorandum and Articles of Association and by laws of a stock exchange in so far as they have been approved by the Authority, shall not be amended, varied or rescinded without the approval of the Authority.

18.    Compliance with listing requirements

    A stock exchange shall comply with the rules formulated by the Authority to regulate the listing of securities.

19.    Powers of Chief Executive

    The Chief Executive of a stock exchange shall have the power to enforce the rules, by-laws and regulations of the stock exchange and to administer the prescribed penalties including suspension from trading.

20.    Transparency of transactions

    A stock exchange shall make public its transactions in such a manner as may be required by the Authority.

SCHEDULE
APPLICATION FOR APPROVAL TO ESTABLISH A STOCK EXCHANGE OR PERMIT TO ESTABLISH AN INTERIM STOCK TRADING FACILITY

THE CAPITAL MARKETS AND SECURITIES (LICENSING) REGULATIONS

ARRANGEMENT OF REGULATIONS

    Regulation

Title

PART I
PRELIMINARY PROVISIONS

    1.    Citation.

    2.    Interpretation.

PART II
APPLICATION FOR LICENCES

    3.    Form of applications, notices and licences.

    4.    Directions in Forms.

    5.    Manner of application.

    6.    Alteration of facts disclosed in application.

    7.    Examination requirements.

PART III
APPLICATION FEE

    8.    Fees.

    9.    Refusal of application.

PART IV
DEALER'S DEPOSIT

    10.    Dealer's deposit.

    11.    Refund of deposit.

    12.    Application of deposit.

PART V
GRANT OF LICENCES

    13.    Period of application.

    14.    Form of licence.

    15.    General conditions.

PART VI
MISCELLANEOUS PROVISIONS

    16.    Replacement of licence.

    17.    Display of licence.

SCHEDULES

THE CAPITAL MARKETS AND SECURITIES (LICENSING) REGULATIONS

G.N. No. 417 of 1996

PART I
PRELIMINARY PROVISIONS (regs 1-2)

1.    Citation

    Regulations may be cited as the Capital Markets and Securities (Licensing) Regulations.

2.    Interpretation

    In these Regulations, unless the context requires otherwise–

    "Act" means the Capital Markets and Securities Act *;

    "licence" means a licence granted under Part IV of the Act; and

    "licensee" shall be construed accordingly.

PART II
APPLICATION FOR LICENCES (regs 3-7)

3.    Form of applications, notices and licences

    Applications, notices and licences under the Act shall be in the form prescribed in the Schedule to these Regulations.

4.    Directions in Forms

    A form prescribed by these Regulations shall be completed in accordance with any directions specified in the form.

5.    Manner of Application

    (1) An Application for a licence or renewal of a licence in the form prescribed together with any relevant annexure shall be enclosed in a sealed envelope and lodged with the Authority.

    (2) Each application for a licence or renewal of a licence, shall be accompanied by a detailed statement of the applicants assets and liabilities signed by the applicant.

    (3) In the case of an applicant which is a company:

    (a)    by two copies certified by a Director of the company to be true copies of the last balance sheet and of the last profit and loss account (if any), incorporating the results of the last financial year, and which have respectively been audited by the company's auditors (including every document required by law to be annexed or attached thereto); and

    (b)    by a certified copy of the report of the auditors.

    (4)    Each application for a licence shall be accompanied by–

    (a)    a detailed statement of the financial resources available to the applicant for purposes of undertaking the business under licence; and

    (b)    such other information as the Authority may require in the consideration of an application.

6.    Alteration of facts disclosed in application

    An applicant for a licence shall forthwith give written notice to the Authority of–

    (a)    any proposed alteration to; or

    (b)    the occurrence of any event which affects in any material respect, information supplied by him to the Authority in relation to his application, being a proposal or act made or event occurring after lodging of application the decision of which remains pending in the authority.

7.    Examination requirements

    Application for a licence shall comply with examination requirements as may be determined by the Authority.

PART III
APPLICATION FEE (regs 8-9)

8.    Fees

    An application for a licence or renewal of a licence shall be accompanied by the fees prescribed in the Second Schedule.

9.    Refusal of application

    The Authority shall not consider any application made under these Regulations if it is not accompanied by the licence fees.

PART IV
DEALER'S DEPOSIT (regs 10-12)

10.    Dealer's deposit

    An application for a dealer's licence shall be accompanied by the deposit required under section 42 of the Act.

11.    Refund of deposit

    A deposit made under Regulation 10 shall be refunded to an applicant immediately after the application for a dealer's licence has been refused.

12.    Application of deposit

    A deposit made under Regulation 10 may be invested by the Authority in a manner the Authority deems appropriate provided that fifty five per cent of income earned by such investment after deduction of taxes due in accordance with the laws of Tanzania shall be retained by the Authority on behalf of a dealer.

PART V
GRANT OF LICENCES (regs 13-15)

13.    Period of application

    (1)    The Authority shall consider an application and inform an applicant of its decision within forty-five days after an application has been lodged with it provided that where further information has been required in accordance with section 36(2) of the Act, the period of 45 days shall in accordance with section 36(2) of the Act, the period of forty-five days shall be calculated from the time when further information is submitted to the Authority.

    (2)    If no decision is made by the Authority within the period stated in subregulation (1), the respective application shall be deemed to have been refused.

14.    Form of licence

    A licence granted by the Authority shall be in the form specified in Form 7 in the First Schedule.

15.    General conditions

    It shall be a condition of every licence that–

    (a)    the licence shall be personal to the applicant and shall not be transferable;

    (b)    the holder of the licence shall forthwith give written notice to the Authority of–

        (i)    any proposed alteration to; or

        (ii)    the occurrence of any event which affects or may affect in any material respect,

        any matter in respect of which he has supplied or was required to supply information to the Authority in the course of his application for that licence;

    (c)    the holder of the licence shall comply with any directions of the Authority in respect of a proposed alteration or occurrence of the event notified to the Authority pursuant to subparagraph (b);

    (d)    a licensee shall not carry on, nor hold himself out as carrying on, any securities business other than that permitted by his licence and shall carry on the said business from any premises specified in his licence; and

    (e)    a licensee shall communicate to the Authority notices which are required by the Act in the relevant forms prescribed in the First Schedule.

PART VI
MISCELLANEOUS PROVISIONS (regs 16-17)

16.    Replacement of licence

    Where the Authority is satisfied that a licence has been inadvertently lost, destroyed or defaced, the Authority shall replace the licence on payment by the licensee of the fee prescribed in the Second Schedule.

17.    Display of licence

    (1)    Every holder of a licence granted under Part IV of the Act shall display his licence at all premises in which he transacts with the public the business authorised by the licence.

    (2)    The requirement in subregulation (1) shall not be satisfied unless the licence is displayed in such a manner as to be readily visible to the public.

FIRST SCHEDULE
FORMS

FORM 1
APPLICATION BY A COMPANY FOR A DEALER'S LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 36)

FORM 2
APPLICATION BY INDIVIDUAL FOR INVESTMENT ADVISER'S LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 36)

FORM 3
APPLICATION BY A COMPANY FOR AN INVESTMENT ADVISER'S LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 36)

PART 1
INFORMATION ON THE APPLICANT

PART 2
MISCELLANEOUS

FORM 4
APPLICATION FOR RENEWAL OF A DEALERS LICENCE OR FOR INVESTMENT ADVISER'S LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 36)

FORM 5
APPLICATION FOR A REPRESENTATIVE LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 36)

FORM 6
APPLICATION FOR RENEWAL OF REPRESENTATIVE'S LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

FORM 7
LICENCE

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Regulation 14)

FORM 8
NOTICE OF PLACE AT WHICH REGISTER IS TO BE KEPT

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 52 and Regulation 15)

FORM 9
NOTICE OF CHANGE OF PLACE OF BUSINESS AND CHANGE OF PLACE AT WHICH REGISTER IS KEPT

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 44 and Regulation 15)

FORM 10
NOTIFICATION OF CESSATION OF BUSINESS

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 44 and Regulation 15)

FORM 11
NOTICE OF CHANGE OF REPRESENTATIVE'S PRINCIPAL
AND NOTICE OF CHANGE OF PLACE AT WHICH REGISTER IS KEPT

THE CAPITAL MARKETS AND SECURITIES ACT (CAP. 79)

(Section 44 and Regulation 15)

SECOND SCHEDULE
FEES

(Regulation 8)

THE CAPITAL MARKETS AND SECURITIES (ACCOUNTING AND FINANCIAL REQUIREMENTS) REGULATIONS

TABLE OF CONTENTS

PART I
PRELIMINARY PROVISIONS

    Regulation

Title

    1.    Citation.

    2.    Interpretation.

PART II
ACCOUNTING RECORDS

    3.    Records to be up to date.

    4.    Audit trail.

    5.    Reconciliation of customer money.

    6.    Conformity with accounting standards.

    7.    Inspection of records.

PART III
FINANCIAL STATEMENTS

    8.    Duty to prepare annual financial statements.

    9.    Form and content of financial statement.

    10.    Audit of financial statements.

    11.    Submission of financial statements to the Authority.

    12.    Auditor's report.

    13.    Qualified reports.

PART V
FINANCIAL RESOURCES

    17.    Minimum net capital.

    18.    Minimum liquidity margin.

    19.    Inability to comply with financial requirements.

SCHEDULE

THE CAPITAL MARKETS AND SECURITIES (ACCOUNTING AND FINANCIAL REQUIREMENTS) REGULATIONS

G.N. No. 14 of 1997

PART I
PRELIMINARY PROVISIONS (regs 1-2)

1.    Citation

    These Regulations may be cited as the Capital Markets and Securities (Accounting and Financial Requirements) Regulations.

2.    Interpretation

    In these Regulations, unless the context otherwise requires–

    "Act" means the Capital Markets and Securities Act *;

    "approved" means approved by the Authority;

    "customer bank account" means a bank account established for the purposes of Regulation 15.

PART II
ACCOUNTING RECORDS (regs 3-7)

3.    Records to be up to date

    The obligations of dealers and investment advisers spelt out under these Regulations are continuing obligations and continuous performance of them is required so as to ensure that records are updated daily.

4.    Audit Act trial

    (1) Any information required by the, or these Regulations to be recorded shall be recorded in such a way as to enable a particular transaction to be identified at any time and traced through from initiation of the order, to final settlement.

    (2) All records shall be arranged, filed, indexed and cross referenced so as to permit prompt access to any particular record.

5.    Reconciliation of customer money

    Every dealer and every investment adviser shall, at least once every two months, reconcile the balance on each customer bank account as recorded by it with the balance of that account as set out: on the statement issued by the bank.

6.    Conformity with accounting standards

    The accounting records required to be kept under the Act and these Regulation shall conform with the Tanzania Statements of Standard Accounting Practices issued by the National Board, and Auditors.

7.    Inspection of records

    Accounting records which are required to be kept under the Act and these Regulations shall, at any time during the period in which they are required to be preserved, be produced to the Authority or to any person with the mandate of the Authority, on demand at such reasonable time and place as may be specified by the Authority or such person.

PART III
FINANCIAL STATEMENTS (regs 8-13)

8.    Duty to prepare annual financial statements

    A dealer shall, in respect of his securities business, prepare for each financial year an annual financial statement which shall consist of–

    (a)    a balance sheet as at the last day of the financial year; and

    (b)    a profit and loss account for the financial year.

9.    Form and content of financial statements

    (1) Every financial statement required to be prepared under the Act and these Regulations shall comply with the provisions of the Schedule so far as practicable with respect to the form and content of the balance sheet, the profit and loss account and any additional information to be provided by way of notes to the financial statements.

    (2) Where compliance with the provisions of the Schedule and other provisions of the Act and these Regulations as to the matters, to be included in a balance sheet or profit and loss account or in notes to them, would not be sufficient to give a true and fair view, the necessary additional information shall be given in the balance sheet or profit and loss account or in a note to them.

    (3) If in special circumstances compliance with any of these provisions is inconsistent with the requirement to give a true and fair view, the person required to comply shall depart from that provision to the extent necessary to give a true and fair view.

    (4) A departure under subregulation (3) from any such provision shall be accompanied by a note to the financial statements providing the particulars of the departure and the reasons for it.

10.    Audit of financial statements

    (1) An annual financial statement required to be prepared under the Act and these Regulations shall be submitted to an auditor for audit and shall obtain an auditor's report thereon which report shall comply with the requirements under Regulation 12.

    (2) The auditor's report obtained in compliance with these Regulations shall be submitted to the Authority together with–

    (a)    the annual financial statement; and

    (b)    confirmation in writing from the person who prepared the financial statement that he has complied with each and every requirement of the Act and these Regulations pertaining to the preparation of the financial statement.

    (3) Where the auditor's report is qualified on the grounds of the auditor's uncertainty as to the completeness or accuracy of the accounting records, that report shall when submitted by a dealer or exempt dealer be accompanied by a written document signed in the case of a company by two directors, and in the case of an individual by the licensed individual stating whether–

    (a)    all the accounting records of the person submitting the report have been made available to the auditor for purposes of audit;

    (b)    all transactions undertaken by the person submitting the report have been properly reflected and recorded in that person's accounting records; and

    (c)    all other records of the person submitting the report and related information have been made available to the auditor.

11.    Submission of financial statements to the Authority

    Every financial statement prepared in accordance with the Act and these Regulations shall be submitted to the Authority on the prescribed day.

12.    Auditor's report

    (1) Every auditor's report shall be addressed to the Authority and shall state whether the annual financial statement of a dealer or exempt dealer has been audited in accordance with approved auditing standards.

    (2) The auditor's report shall also state whether in the opinion of the auditor–

    (a)    the respective annual financial statements has been properly prepared in accordance with the Act and these Regulations;

    (b)    in the case of the balance sheet, a true and fair view is provided of the affairs of the person audited as at the end of the financial year;

    (c)    in the case of the profit and loss account, a true and fair view is given of the profit or loss of the person audited for the financial year;

    (d)    the person audited has throughout the financial year kept proper accounting records in accordance with the requirements of the Act and these Regulations;

    (e)    the person audited has throughout the financial year, kept customer money properly segregated in accordance with the Act and these Regulations;

    (f)    the balance sheet and the profit and loss account are in agreement with the accounting records of the audited person;

    (g)    he has, obtained all the information and explanations which to the best of his knowledge and belief, are necessary for the purposes of his audit; and

    (h)    the person audited has maintained throughout the financial year systems adequate to enable him to identify documents of title, or documents evidencing title, to securities held in safekeeping for his customers in accordance with the Act.

13.    Qualified report

    (1) If an auditor is of the opinion that one or more of the requirements under Regulation 12 has or have not been met, he shall state the fact in his report and shall specify the relevant requirements and the respects in which they have not been met.

    (2) If an auditor fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, he shall state that fact in his report.

    (3) If an auditor is unable to form an opinion as to whether one or more of the requirements under Regulation 12 has or have been met, he shall state that fact in his report and shall state that fact in his report and shall specify those requirements and give the reasons why he has been unable to form an opinion.

PART IV
CUSTOMER MONEY (regs 14-16)

14.    Customer money to be held on trust

    A dealer or investment adviser shall- hold customer money on trust for the respective customers for whom the money is received or held according to the customers respective shares.

15.    Duty to keep customer money safe

    Every customer money, unless paid out or for a customer, must be kept in an account at a licensed bank on trust for the customer.

16.    Withdrawal of customer money

    (1) Subject to subregulation (2), money may be withdrawn from a customer bank account only if–

    (a)    it is not customer money;

    (b)    it is properly required for payment to or on behalf of a customer; or

    (c)    it is properly transferred to another customer bank account in the customer's own name.

    (2) A dealer or investment adviser withdraw money from a customer bank account for or towards payment of his own fees or commission only if the fees or commissions accord with arrangements agreed with the customer.

PART V
FINANCIAL RESOURCES (regs 17-19)

17.    Minimum net capital

    (1) A dealer shall at all times maintain in his business as a dealer, a net capital of such sum as will be prescribed by the Authority.

    (2) In this Regulation, the expression "net capital" means the sum total of approved assets less approved liabilities of a dealer.

18.    Minimum liquidity margin

    A dealer shall at all times in his business as a dealer maintain a liquidity margin of not less than a per centum of the minimum net capital requirement specified in Regulation 17 to be fixed by the Authority

19.    Inability to comply with financial requirements

    If a dealer becomes aware of his inability to comply with the minimum net capital or liquidity margin requirements, he shall forthwith–

    (a)    notify the Authority, and any securities exchange of which he is a member; and

    (b)    cease dealing in securities otherwise than for the purpose of giving effect to any agreement or arrangement entered into before the time when he becomes so aware.

SCHEDULE
FORM AND CONTENT OF FINANCIAL STATEMENTS

(Regulation 9(1))

PART 1
GENERAL RULES

    1. Subject to the provisions of this Schedule, an annual financial statement required under these Regulations shall show–

    (a)    in the case of the balance sheet the items listed in the balance sheet format set out in Appendix 1 to this Schedule; and

    (b)    in the case of the profit and loss account items listed in the profit and loss account format set out in Appendix 2 to this Schedule.

    2. (1) The corresponding amount for the immediately preceding financial year in respect of every item shown in a balance sheet or profit and loss account or in notes thereto, shall be shown.

    (2) Where the corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount shall be adjusted and particulars of adjustment and the reasons for it shall be disclosed in a note to the account.

PART 2
ACCOUNTING PRINCIPLES AND RULES

    3. Subject to paragraph 5, the amounts to be included in respect of all items shown in a balance sheet and profit and loss account shall be determined in accordance with the accounting standards and guidelines as approved or accepted by the National Board of Accountants and Auditors which are in force from time to time.

    4. Subject to paragraph 3, the items shall be included in such a way as to reflect the substance and not merely the form of the underlying transactions and balances.

    5. If it appears to any person preparing a financial statement that there are special reasons for departing from any of the principles and Regulations stated in paragraphs 3 and 4 in preparing any financial statement in respect of any financial year, he may do so, but particulars of the departure, the reasons for it and its effect shall be given in a note to the financial statement.

APPENDIX 1
BALANCE SHEET FORMAT

A. FIXED ASSETS

    I.    Intangible Assets

        1.    Development costs.

        2.    Goodwill 1.

        3.    Other.

    II.    Tangible Assets

        1.    Freehold land aid buildings.

        2.    Leasehold land and buildings.

        3.    Motor vehicles.

        4.    Office equipment and computers.

        5.    Fixtures and fittings.

        6.    Payments on account.

        7.    Other tangible assets.

    Ill.    Investments

        1.    Losses to and shares in group companies.

        2.    Other listed investments.

        3.    Other unlisted investments.

B. CURRENT ASSETS

    I.    Physical stocks.

    II.    Debtors 2.

        1.    Trade debtors 3.

        2.    Other debtors.

        3.    Amounts due from connected and group companies.

        4.    Prepayments and accrued income.

    III    Investments.

    IV    Cash at bank and in hand.

C. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

        1.    Bank loans and overdrafts.

        2.    Subordinated loans 4.

        3.    Other debenture loans.

        4.    Trade creditors 5.

        5.    Investments (short positions).

        6.    Income tax.

        7.    Amount due to group and connected companies.

        8.    Other creditors.

        9.    Accruals and deferred income.

D. NET CURRENT ASSETS (LIABILITIES)

E. TOTAL ASSETS LESS CURRENT LIABILITIES

F. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR.

        1.    Bank loans and overdrafts.

        2.    Subordinated loans 6.

        3.    Other debenture loans.

        4.    Trade creditors 7.

        5.    Income tax.

        6.    Amount due to group and connected companies.

        7.    Other creditors.

        8.    Accruals and deferred income.

G. PROVISIONS FOR LIABILITIES AND CHARGES

        1.    Commissions on indemnity terms.

        2.    Pension and similar obligations.

        3.    Taxation including deferred taxation.

        4.    Other provisions.

H. TOTAL ASSETS LESS TOTAL LIABILITIES

I. CAPITAL LAND RESERVES

        1.    Called up share capital.

        2.    Share premium account.

        3.    Partner's or proprietor's capital accounts.

        4.    Partner's or proprietor's current accounts.

        5.    Revaluation reserve.

        6.    Other reserves.

        7.    Profit and loss account.

APPENDIX 2
PROFIT AND LOSS ACCOUNT FORMAT

A. DEALING

Gains/losses on principal dealings (trading)

        1.    equities;

        2.    debt instruments;

        3.    units in collective investment schemes;

        4.    foreign exchange;

        5.    other (specify).

B. REVENUE

    I.    Commissions on transaction in collective investment schemes

        1.    authorized mutual fund and unit trust schemes;

        2.    other (specify).

    II.    Commissions on securities transactions

        1.    equities;

        2.    debt instruments;

        3.    other (specify).

    III.    Investment management fees.

    IV.    Fee income in respect of financial advice.

    V.    Company management fee.

    VI.    Trustee fees.

    VII.    Interest and dividends

        1.    investments position;

        2.    loan accounts and margin accounts;

        3.    in respect of balance in customer bank accounts;

        4.    other (specify).

    VIII.    Dealing and settlement services.

    IX.    Revenue from research and consulting services.

    X.    Retained underwriting and placing commissions.

    XI.    Other revenue (specify if material).

C. EXPENDITURE

    I.    Commissions

        1.    paid to staff;

        2.    paid to other investment businesses;

        3.    other (specify).

    II.    Salaries and other employment costs (exclusive of commission).

    III.    Directors emoluments.

    IV.    Staff bonuses.

    V.    Interest charges.

        1.    payable to customer in respect of customer's money balances;

        2.    other (specify).

    VI.    Establishment costs.

    VII.    Communications and marketing.

    VIII.    Office equipment and services.

    IX.    Provisions for losses, bad and doubtful debts.

    X.    Professional charges.

    XI.    Securities exchange and clearing house charges.

    XII.    Regulatory fees and expenses.

    XIII.    Audit fees (including expenses).

    XIV.    Miscellaneous office expenses.

    XV.    Other expenditure specify if material.

D. PROFIT OR LOSS BEFORE TAXATION

E. TAXATION

F. PROFIT OR LOSS AFTER TAXATION

G. EXTRA ORDINARY ITEMS

H. PROFIT OR LOSS FOR THE FINANCIAL YEAR.

THE CAPITAL MARKETS AND SECURITIES (ADVERTISEMENTS) REGULATIONS

TABLE OF CONTENTS

PART I
PRELIMINARY PROVISIONS

    Regulation

Title

    1.    Citation.

    2.    Interpretation.

PART II
RESTRICTIONS AND CONDITIONS

    3.    Advertisement offering securities.

    4.    Advertisement to comply with Schedule.

    5.    Directions by the Authority.

SCHEDULE

THE CAPITAL MARKETS AND SECURITIES (ADVERTISEMENTS) REGULATIONS

G.N. No. 15 of 1997

PART I
PRELIMINARY PROVISIONS (regs 1-2)

1.    Citation

    These Regulations may be cited as the Capital Markets and Securities (Advertisements) Regulations.

2.    Interpretation

    (1) In these Regulations, unless the context otherwise requires–

    "Act" means the Capital Markets and Securities Act *;

    "image advertisement" means an advertisement that–

    (a)    promotes public awareness of a licensee;

    (b)    describes the services a licensee provides or the types of investment a licensee markets;

    (c)    commends a licensee in general but not on any particular service a licensee provides or types of investment a licensee markets; or

    (d)    offers to supply further information on request;

    "licensee" means a person licensed under Part IV of the Act;

    "promotion" means advertising, issuing a prospectus, application form or proposal form, or circulating or making available promotional material;

    "securities advertisement" means any advertisement for or in connection with securities or securities business;

    "short form advertisement" means advertisement that contains a licensee's name and in respect of the business of a licensee's securities business–

    (a)    displays the licensee's address, telephone number, symbol or logogram;

    (b)    describes the licensee's business and the fees charged;

    (c)    contains a statement that the licensee is regulated in the conduct of the licensee's business by the Authority;

    (d)    states in relation to securities that the licensee may buy or sell or arrange to buy or sell their names, indicative prices, difference of prices from previous prices, their income and yields and their earnings or price or earnings ration; or

    (e)    states simply as a matter of fact, and not so as to imply any offer to deal, that the licensee alone or with others named, arranged the issue of or a transaction in a particular security.

    (2) For the purposes of these Regulations) an advertisement issued outside Tanzania shall be treated as issued in Tanzania if–

    (a)    it is directed to persons in Tanzania; or

    (b)    it is made available to persons in Tanzania in a newspaper, journal, magazine or in publication published and circulating principally outside Tanzania or in a sound or television broadcast transmitted principally for reception outside Tanzania.

PART II
RESTRICTIONS AND CONDITIONS (regs 3-5)

3.    Advertisement offering securities

    Every advertisement offering services in the securities services shall include–

    (a)    the name and address of the person making the offer;

    (b)    a description of services offered;

    (c)    a general statement of the terms and conditions of the services offered;

    (d)    the place Where the person making the offer carries on business; and

    (e)    such other information as may be directed by the Authority.

4.    Advertisement to comply with Schedule

    A licensee shall not issue or cause to be issued whether in Tanzania or elsewhere, a securities advertisement unless the requirements of the Schedule to these Regulations are complied with in relation to that advertisement.

5.    Directions by the Authority

    (1) If the Authority considers that any securities advertisement issued, caused to be issued or proposed to be issued by a licensee is misleading or is otherwise in breach of these Regulations, the Authority may by notice in writing give the licensee a direction under this Regulation.

    (2) A direction under this Regulation may contain all or any of the following prohibitions or requirements, namely–

    (a)    a prohibition on the issue of advertisements of a specified kind;

    (b)    a requirement that advertisements of a particular description shall be modified in a specified manner;

    (c)    a prohibition on the issue of any advertisements which is wholly or substantially a repetition of an advertisement which has been issued or is proposed to be issued and which is identified in the direction;

    (d)    a requirement to take all practical steps to withdraw from display in any place or from circulation any advertisement of any advertisements of a particular description specified in the direction;

    (e)    a requirement, in respect of a particular advertisement, that a correction be published in the manner and form specified by the Authority.

SCHEDULE

(Regulation 4)

    1. The significance of any statement or other matter required by the provisions of the Schedule to be included in an advertisement shall not be disguised either through lack of any prominence in relation to the remainder of the advertisement or by the inclusion of matter calculated to minimise the significance of the statement or the other matter required to be included.

    2. (1) The content of a securities advertisement and the manner of its prescription shall be such that the advertisement is not likely to be misunderstood.

    (2) A securities advertisement shall not contain any statement purporting to be a statement of fact that the licensee issuing it has taken all reasonable steps to ensure that each such statement, promise or forecast is not misleading in the form or context in which it appears.

    (3) A securities advertisement shall not contain any statement, purporting to a statement of fact that the licensee issuing it does not reasonably believe at the time, on the basis of evidence of which he has a record in is possession, to be true.

    (4) If the securities or securities business to which an advertisement relates is available in limited quantities, or for a limited period or on special terms for a limited period, the advertisement may say so but if that is not the case, the advertisement shall not contain any statement or matter that implies it is so.

    3. (1) The terms of a securities advertisement and the manner of its presentation shall be such that it appears to be an advertisement issued with the object of promoting the securities business or licensee to it relates.

    (2) Where the medium in which advertisement is carried contains or presents other matter the advertisement shall be distinguished from that other matter so that the part that is an advertisement clearly appears as such.

    4. Except in the case of a short form advertisement or an image advertisement, the nature of the securities or securities business to which the advertisement relates shall be clearly described.

    5. No securities advertisement shall be issued with the intention not of persuading persons who respond to the advertisement to pursue the subject matter of the advertisement but, with the intention instead, of persuading them to enter into an agreement, or use business services, of a description not mentioned in the advertisement.

    6. A securities advertisement shall not contain any matter that states or implies that the securities or securities business which is the subject of the advertisement or any matter in the advertisement has the approval of any Government department or of the Authority.

    7. A securities advertisement that states only some of the rights and obligations attaching to an investment in securities or only some of the terms and conditions of a securities agreement shall–

    (a)    state sufficient of them to give a fair view of the nature of investment in securities, of the financial commitment undertaken by an investor in acquiring the investment in securities and of the risks involved; and

    (b)    state how a written statement of all of them can be obtained.

    8. A securities advertisement shall not compare or contrast one investment in securities with an alternative investment, or one securities service with an alternative securities service, unless the comparisons and contrasts are fair in relation to what is promoted and to the alternative having regard to what is not stated as well as to what is stated.

    9. Any securities advertisement that–

    (a)    refers to taxation shall contain a warning that the levels and bases of taxation can change;

    (b)    contains any matter based on an assumed rate of taxation shall state what that rate is;

    (c)    refers to reliefs from taxation shall–

        (i)    state that the reliefs are those that currently apply; and

        (ii)    contain a statement that the value of a relief from taxation depends upon the circumstances of the taxpayer.

    10. Where a securities advertisement states that an investor who enters into an investment agreement to which the advertisement relates will be given an opportunity to cancel the agreement, the advertisement shall define the period during which the investor will have that right and the time when the period will begin.

    11. A securities advertisement shall not contain information about the past performance of securities investments of any description unless–

    (a)    it is relevant to the performance of the securities investment the subject of the advertisement;

    (b)    except where the source of the information is the advertiser itself, the source of the information is stated;

    (c)    if the whole of the information is not set out–

        (i)    what is included is not unrepresentative, unfair or otherwise misleading; and

        (ii)    the exclusion of what is excluded does not have the effect of exaggerating the success or performance over the period to which the information that is included relates;

    (d)    if the information is presented in the form of a graph or chart, no part -of the information is. omitted so as to give misleading impression of the rate at which variable quantities have changed;

    (e)    in the case of an advertisement of units or shares in a collective investment scheme, any comparison made between the value of an investment in those units or shares at different times is on an offer to bid basis, that is to say, on the basis of what it would have cost to acquire an amount of the units at the earlier time and what a disposal of that amount of those units would have realised at the latter time, and the fact that is the basis of the comparison is stated;

    (f)    the period which is selected as illustrating past performance is a period of not less than three years which period must end no more than three months before the date of the issue of the advertisement; and

    (g)    the advertisement contains a warning that the past is not necessarily a guide to the future.

    12. (1) A securities advertisement shall not contain any statement indicating the scale of the activities or the extent of the resources of a licensee or of any group of which the licensee is a member, so as to imply that the resources available to support the performance of the licensee's obligation are greater than they are.

    (2) Statements which relate to resources of members of a group other than the licensee shall clearly state that fact.

    13. (1) This paragraph applies to any securities advertisement that is not a short form or image advertisement.

    (2) An advertisement shall contain a statement in accordance with this paragraph warning of the risks involved in acquiring or holding the securities investment the subjects of the advertisement.

    (3) Where the advertisement relates to a securities investment in the case of which deductions f r charges and expenses are not made uniformly throughout the life of the investment but are not loaded disproportionately onto the early years, the advertisement shall draw attention to that fact and that accordingly, if the investor withdraws from the investment in the early years, he may not get back the amount he has invested.

    (4) Where the advertisement related to an investment that can fluctuate in value in money terms, the statement shall draw attention to that fact and to the fact that the investor may not get back the amount he has invested.

    (5) Where the advertisement effects an investment as likely to yield a high income or as suitable for an investor particularly seeking income from his investment, the statement shall draw attention to that fact that income from the investment may fluctuate in value in money terms.

    (6) Where the advertisement relates to an investment denominated in a currency other than that of the country in which the advertisement is issued, the advertisement shall draw attention to the fact that changes in rates of exchange between currencies may cause the value of the investment to diminish, or to increase.

    (7) Where the advertisement contemplates the investor entering into an agreement whereby the investor is required to pay unspecified additional, amounts later, the statement shall draw attention to the fact that the investor may or, as the case may be, will have to pay more money later and that accordingly a transaction in that investment can lose the investor more than his first payment.

    (8) Where the advertisement relates to an investment that is not readily realisable–

    (a)    if the investment is not traded on an establishment securities exchange, the statement shall draw attention to the fact that there is no established market for investment so that it may be difficult for the investor to sell the investment or for him to obtain reliable information about its value or the extent of the risks to which it is exposed; or

    (b)    if the investment is traded on an established securities exchange but is dealt in so irregularly or infrequently–

        (i)    that it cannot be certain that a price of that investment will be quoted at all times; or

        (ii)    that is may be difficult to effect transactions at any price that may be quoted,

the statement shall draw attention to that fact.

    14. A securities advertisement shall not describe investment return as being in any way guaranteed, secured, assured or promised, either expressly or impliedly, unless the advertisement has been approved in writing by the Authority prior to its issue.

    15. Every securities advertisement–

    (a)    in a publication shall state in the bottom right hand corner of the advertisement the date on which it was first issued;

    (b)    by way of a prospectus, brochure, handout or similar marketing literature shall state the date on which it was first issued on either the front or back outside cover page;

    (c)    by way of a cinematography film, video or television broadcast shall bear the date on which it was first issued prominently at the beginning or end of the advertisement material.

THE CAPITAL MARKETS AND SECURITIES (PROSPECTUS REQUIREMENTS) REGULATIONS

ARRANGEMENT OF REGULATIONS

    Regulation

Title

PART I
PRELIMINARY PROVISIONS

    1.    Short title.

    2.    Interpretation.

PART II
REQUIREMENTS OF PROSPECTUSES

    3.    Prospectus to contain certain information.

    4.    Prospectus to comply with direction by authority.

    5.    Information on prospectus to be submitted to the Authority.

SCHEDULE

THE CAPITAL MARKETS AND SECURITIES (PROSPECTUS REQUIREMENTS) REGULATIONS

G.N. No. 769 of 1997

PART I
PRELIMINARY PROVISIONS (regs 1-2)

1.    Short title

    These Regulations may be cited as the Capital Markets and Securities (Prospectus Requirements) Regulations.

2.    Interpretation

    In these regulations, unless the context otherwise requires–

    "approval" means approval of a prospectus granted by the Authority in accordance with section 131 of the Act;

    "Schedule" means the Schedule annexed to these Regulations.

PART II
REQUIREMENTS OF PROSPECTUSES (regs 3-4)

3.    Prospectus to contain certain information

    Every prospectus submitted to the Authority for approval shall contain information indicated in Parts I and II of the Schedule.

4.    Prospectus to comply with direction by authority

    (1) The Authority may after consultation with a person who intends to issue a prospectus direct that the prospectus be amended.

    (2) No prospectus shall be published without compliance with an amendment directed by the Authority under subregulation (1) unless such direction has been withdrawn by the Authority.

5.    Information on prospectus to be submitted to the Authority

    A prospectus submitted to the Authority for approval shall be accompanied by the information indicated in Part III of the Schedule.

SCHEDULE

PART I
CERTAIN MATTERS TO BE STATED ON FIRST PAGE OF PROSPECTUS

    A prospectus submitted to the Authority for approval shall state in clearly legible and more prominent letters on its first page a section headed "CAUTION" that–

    "A copy of this Prospectus has been delivered to the Authority for approval and the Registrar of Companies of registration.

    "The securities offered have not been approved or disapproved by the Authority.

    "Prospective investors should carefully consider the matters set forth under the caption 'risk factors'".

PART II
INFORMATION TO BE STATED IN PROSPECTUS

    A prospectus submitted to the Authority for approval in accordance with Regulation three shall include the following information:

RIGHTS OF HOLDERS

    1. The rights applicable to holders of the shares as regards dividends, capital, pre-emptive rights to subscribe to new issues of shares, redemption (where applicable), voting rights and the creation or issue of further shares of equal priority with the shares.

INFORMATION ON BANKERS

    2. The name(s) and business address(es) of the major bank(s) providing services to the issuer as lender, provider of credit facilities, or guarantor of any indebtedness and the name and business address of any registrar appointed by the issuer (to provide services with respect to the issuer).

STATEMENT ON LEGAL STATUS AND AFFAIRS OF ISSUER

    3. (1) A brief of the initial organisation of the business, including the form and name under which the initial organisation took place.

    (2) The nature and results of any bankruptcy, receivership or similar proceedings with respect to the issuer.

    (3) The nature and results of any other material reclassification, merger, or consolidation of the issuer or any of its significant subsidiaries.

    (4) The acquisition or disposition of any material amount of assets otherwise than in the ordinary course of business and any material changes in the mode of conducting the business.

    (5) A summary of the material provisions of the articles of association with respect to annual general meetings of shareholders, voting rights of shareholders, the election and removal of directors and the rights of directors to vote on proposals in which they have a personal interest.

    (6) A legal opinion including but not limited to the following–

    (i)    whether all licences and consents required to perform the business or proposed business of the issuer have been duly obtained;

    (ii)    the validity of evidence of ownership of land, plant and equipment and other important and relevant assets of the issuer;

    (iii)    any agreements or contracts with respect to the proposed issue of securities including where applicable but not limited to underwriting contracts, agreements or contracts with any securities exchange, registrar and trustees of bonds, debentures or other credit securities;

    (iv)    any material litigation, prosecution or other civil or criminal legal action in which the issuer or any of its directors is involved;

    (v)    whether the existing capital of the issuer and any proposed changes thereto is in conformity with applicable laws and has received all necessary authorisations; and

    (vi)    any other material items with regard to the legal status of the issuer and the proposed issue.

INFORMATION RELATING TO DIRECTORS

    4. (1) A brief account of the business experience during the preceding five years of each director or person nominated to be a director including his principal occupation in any company in which he was employed.

    (2) Whether any director, executive officer, person nominated to become a director or executive officer is or has been involved in any of the following events–

    (i)    such person or any partnership in which he was a partner or any company of which he was an executive officer, is or has been the subject of a filing of a petition under any bankruptcy law;

    (ii)    such person has been convicted in a criminal proceeding or is a named subject of a ruling of a court of competent jurisdiction or any governmental body, that permanently or temporarily prohibited him from acting as an investment adviser or as a director or employee of a broker or dealer, director or employee of any financial institution or engaging in any type of business practice or activity.

    (3) The number of each class of shares of the issuer held by each director.

    (4) Whether any director has the intention to sell any holdings in the same class of securities to be issued by the issuer in the public distribution within a period of one year after the conclusion of the public distribution.

    (5) Details of any material acquisitions or disposals of share capital of the issuer by each director within a one year period prior to the public distribution.

    (6) Material details of all options to purchase securities of the issuer or any subsidiary or holding company of the issuer, granted to be purchased or excised by each director within one year period prior to the public distribution.

    (7) Details of any existing contracts between the directors and the issuer.

CAPITAL ISSUER

    5. (1) The authorised share capital, the amount issued, the amount paid-up and the description and nominal value of the shares.

    (2) Particulars of any capital of the issuer's subsidiaries which has within two years immediately preceding the public distribution been issued and fully or partly paid-up otherwise than in cash and the consideration (if any) for which such capital has been issued.

    (3) Particulars of any capital of the issuer or of any of its subsidiaries, which has within two years immediately preceding the publication of the prospectus been issued for cash and the price and terms upon which such capital has been issued and, if not already fully paid, the dates when any instalments are payable with any amounts of instalments in arrears.

    (4) Any other material alterations in the share capital of the issuer within two years immediately preceding the public distribution.

    (5) All substantial shareholders of the issue together with particulars of their respective holdings of share capital.

    (6) The number of shares to be listed upon the first listing date (if applicable) following the public distribution, indicating whether the issuer or any substantial shareholder has the intention to cause additional shares to be listed within a twelve month period after the initial listing.

DEBT OF ISSUER

    6. In relation to the issuer and its subsidiaries, any material outstanding indebtedness, including bank loans, overdrafts, debentures, hire purchase agreements, mortgages, bank acceptance credits and financial guarantees by the issuer and other contingent liabilities shall be indicated in the prospectus; and the particulars shall include the date, maturity and character of such indebtedness, rate of interest, basic repayment provisions and any provisions which allow for the conversion of such debt into another class of securities of the issuer.

LAND AND FIXED ASSETS OF ISSUER AND SUBSIDIARIES

    7. (1) Particulars of the location, area, or tenure (including in the case of leaseholds the rent and unexpired term) of the factories and main buildings.

    (2) Particulars about the primary plant and equipment, including cost, age, model and vendor, indicating whether such plant and equipment is expected to be replaced within two years after the conclusion of the public distribution.

VALUATION REPORT

    8. A valuation report with respect to the estimated value of the land and property and equipment mentioned in 7 above shall be provided if required to the Authority.

MATERIAL CONTRACTS

    9. The dates of and parties to all material contracts (not being contracts entered into in the ordinary course of business) entered into within two years immediately preceding the publication of the prospectus together with a summary of the principal contents of each contract including particulars of any consideration passing to or from the issue or any subsidiary shall be indicated in every prospectus.

RISK FACTORS

    10. In relation to the business of the issuer information should be presented on; any new venture risks, construction risks, licensing risks, potential increased competition, regulation, dependence on key personality, taxation, level of indebtedness, dilution unexpectedness of dividend.

USE OF PROCEEDS OF THE ISSUE

    11. A statement on the intended use of the net proceedings of the issue including transient use of the proceeds.

PART III
INFORMATION ON PROSPECTUS TO BE SUBMITTED TO THE AUTHORITY

    12. A prospectus submitted to the Authority shall be accompanied by a statement showing the financial performance of the issuer and its subsidiaries during the proceding five financial years containing a breakdown between the more important business activities together with an explanation of the reasoning for the breakdown including but not limited to the following information–

    (a)    the principal products produced or services rendered or to be rendered and the principal markets for and methods of distribution of, the principal products and services;

    (b)    a description of the status of the development of products or service (e.g. whether in the planning stage, whether prototypes exist, the degree to which product design has progressed or whether further engineering is necessary) and whether such development will require substantial investment; and the summary of research and development expenditures for the business should also be provided;

    (c)    in the case of a manufacturing enterprise, the sources and availability of new materials and the extent of dependence on any single supplier;

    (d)    the importance to the business activity and the duration and effect of all material patents, trademarks, licences, franchisees, and concessions held;

    (e)    the extent of dependence of the business activity upon a single customer or group of customers;

    (f)    the seasonality, if any, of the business activity;

    (g)    a description of the current level of backlog orders and assignments for the business activity, the development of such orders and assignments over the past year and prospects for such orders or assignments;

    (h)    the number of persons employed by the issuer in the business activity;

    (i)    a breakdown of the revenues of the business activity into those that arise from domestic saddles and those that arise from exports of products or services, which information has to be submitted to the Authority.

    13. The directors of the issuer shall furnish to the Authority a statement analysing the financial statements by a professionally qualified accountant included in the prospectus, and of other statistical data, that serves to explain the present and prospective financial conditions of the issuer, and the analysis shall include–

    (a)    any trends, demands, commitments events or uncertainties known to the directors that shall result in or are reasonably likely to result in material increase or decrease in the issuer's liquidity;

    (b)    the issuer's material commitments for capital expenditures which indicates the purpose of such commitments, the anticipated source of funds needed to fulfil such commitments, the currency in which such commitments are denominated, and any measures that the issuer plans to take to hedge any resulting foreign currency exposure;

    (c)    the extent to which the issuer's future operating results or financial condition are exposed to fluctuations in exchange rates or interest rates; information provided should include information on all foreign currency borrowings or commitments denominated in a foreign currency, as well as indebtedness for which the interest rate payable is not fixed in advance;

    (d)    material product developments, events, trends, competitive conditions expected and uncertainties known to the directors that may cause reported financial information not to be indicative of future operating results or of future financial conditions;

    (e)    any unusual or infrequent events or transactions or any significant economic changes that affected the amount of reported income for the audited financial statements that appear in the prospectus with emphasis on the latest financial statements included therein and a description of any other significant components of revenues or expenses that in the issuer's judgement should be described in order to understand the issuer's operational results;

    (f)    to the extent that the financial statements appearing in the prospectus disclose material increases in net sales or revenues, an analysis of the extent to which such increases can be attributed to increases in prices or to increases in the volume or amount of goods or services sold or to the introduction of new products or services;

    (g)    the impact of inflation and changing prices on the issuer's net sales and revenues and on operating income for the three most recent financial years of the issuer or for such shorter period in which the issuer has been in business;

    (h)    future prospects of the issuer with respect to cash flow and profits.

    14. The issuer shall also provide the following items to the Authority–

    (a)    a copy of its memorandum and articles of association;

    (b)    a copy of all required authorisations with respect to paragraph 10 and to the changes in its structure;

    (c)    where applicable, a copy of proposed underwriting agreements and contracts, proposed agreements with securities exchanges for the listing of the securities to be offered (where appropriate), proposed agreements of contracts with a registrar; and

    (d)    with respect to the public distribution of debt securities, a copy of the proposed trustee agreement, and a proposed contract with a guarantor (where applicable).

THE CAPITAL MARKETS AND SECURITIES (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS

ARRANGEMENT OF REGULATIONS

    Regulation

Title

PART I
PRELIMINARY PROVISIONS

    1.    Short title.

    2.    Interpretation.

    3.    Application.

PART II
APPROVAL OF COLLECTIVE INVESTMENT SCHEMES

    4.    Application for approval.

PART III
TRUSTEE/CUSTODIAN OF COLLECTIVE INVESTMENT SCHEME

    5.    General obligations of trustee/custodian.

PART IV
MANAGER OF SCHEME

    6.    General obligations of a manager.

PART V
SELF-MANAGED SCHEMES

    7.    Self-managed collective investment schemes.

    8.    Directors of self-managed schemes.

    9.    Directors of self-managed schemes not to deal as principals.

    10.    Board of Directors of a self-managed scheme.

    11.    Constitutive documents of self-managed schemes.

PART VI
CONSTITUTIVE DOCUMENTS OF COLLECTIVE INVESTMENT SCHEMES

    12.    Requirements of constitutive documents.

    13.    Non-exemption from liability on the part of trustee/custodian, manager or Board of Directors.

    14    Alteration of constitutive documents.

    15    Alterations subject to approval of the Authority.

PART VII
COLLECTIVE INVESTMENT SCHEME OFFERING DOCUMENT

    16.    Collective investment schemes to issue offering documents.

    17.    Offering documents to be accompanied by audited reports.

    18.    Application form to be supplied to holders.

    19.    Performance data and estimated yield.

PART VIII
INVESTMENT PLANS

    20.    Conditions for investment plans.

PART IX
PRICING, ISSUE AND REDEMPTION OF UNITS/SHARES

    21.    Initial offer.

    22.    Valuation and pricing.

    23.    Valuation of unquoted securities.

    24.    Dealing.

    25.    Redemptions to be prompt.

    26.    Change to dealing.

    27.    Notice of change in method of dealing.

    28.    Temporary changes.

    29.    Suspension and deferral of dealings.

    30.    Authority to be notified of cessation or suspension.

    31.    Deferral of redemptions.

PART X
TRANSACTIONS WITH ASSOCIATED PERSONS

    32.    Underwriting contracts.

    33.    Interest on deposits.

    34.    Transactions to be at arm's length.

    35.    [Omitted].

PART XI
MEETINGS

    36.    Requirements for meetings.

PART XII
MEMBERS REGISTER

    37.    Maintenance of Register.

PART XIII
REPORTING REQUIREMENTS

    38.    Report to holder.

    39.    Notice of changes to document.

    40.    Reports on prices and assets values.

    41.    Reporting to the Authority.

    42.    Authority may demand further information.

    43.    Changes to data in application form.

PART XIV
FEES

    44.    Statement as to costs and charges.

    45.    Sales agents' commission.

    46.    Notice of increase of management fee.

PART XV
ADVERTISING AND PUBLIC ANNOUNCEMENTS

    47.    Authority to approve advertisements.

    48.    Statements as to approval of schemes.

    49.    Mention of unapproved schemes.

    50.    Warning statements.

    51.    Format of warning statements.

PART XVI
INVESTMENT OF A COLLECTIVE INVESTMENT SCHEME

    52.    Investment limits.

    53.    Schemes to observe investment limits.

    54.    Limitation on making loans.

    55.    Unlimited liability.

    56.    Limitation on securities in which directors have an interest.

    57.    Limitations on nil-paid/partly paid securities.

    58.    Prohibition on borrowing.

    59.    Breach of investment limits.

    60.    Investment objective.

PART XVI
AUDIT AND FINANCIAL REPORTS

    61.    Appointment of auditor.

    62.    Qualifications of auditor.

    63.    Independence of auditor.

    64.    Audit of annual report.

SCHEDULES

THE CAPITAL MARKETS AND SECURITIES (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS

G.N. No. 770 of 1997

PART I
PRELIMINARY PROVISIONS (regs 1-3)

1.    Short title

    These Regulations may be cited as the Capital Markets and Securities (Collective Investment Schemes) Regulations.

2.    Interpretation

    In these regulations unless the context otherwise requires–

    "constitutive documents" means the principal documents governing the formation of a collective investment scheme, and includes the trust deed in the cased of a unit trust and the articles of association of an investment company and all material agreements;

    "manager" means a person authorised by the Authority in accordance with section 118 of the Act; and

    "offering document" means the document, or documents issued together, containing information on a scheme calculated to invite offers by the public to subscribe for or purchase units or shares in the scheme;

    "trustee/custodian" means a person authorised by the Authority in accordance with section 118 of the Act.

3.    Application

    (1) The Authority may exempt a collective investment scheme from the application of all or some of these Regulations provided that in so doing, the Authority shall indicate the Regulations which are the subject of an exemption.

PART II
APPROVAL OF COLLECTIVE INVESTMENT SCHEMES (reg 4)

4.    Application for approval

    (1) An application for approval to establish a collective investment scheme shall be made to the Authority by a manager, proposed manager or trustee/custodian of a scheme in the form annexed to these Regulations as the First Schedule.

    (2) An application for approval to establish a collective investment scheme shall be accompanied by–

    (a)    the scheme's constitutive and offering documents;

    (b)    the trustee's/custodian's latest audited report;

    (c)    a letter of consent to the appointment of a trustee/custodian; and

    (d)    a fee of ............................... shillings.

PART III
TRUSTEE CUSTODIAN OF COLLECTIVE INVESTMENT SCHEME (reg 5)

5.    General obligations of trustee/custodian

    The trustee/custodian shall–

    (a)    take into his custody or under his control all the property of the collective investment scheme and hold it in trust for the holders in accordance with the provisions of the constitutive documents; cash and registrable assets shall be registered in the name of or to the order of the trustee/custodian;

    (b)    be liable for any act or omission of any agent with whom any investments in bearer form are deposited as if they were the act or omission of any nominee in relation to any investment forming part of the property of the collective investment scheme;

    (c)    take reasonable care to ensure that the sale, issue, repurchase, redemption and cancellation of units/shares effected by a collective investment scheme are carried out in accordance with the provisions of the constitutive documents;

    (d)    take reasonable care to ensure that the methods adopted by the manager in calculating the value of units or shares are adequate to endure that the sale, issue, repurchase, redemption and cancellation prices are calculated in accordance with the provisions of the constitutive documents;

    (e)    carry out the instructions of the manager in respect of investments unless they are in conflict with the provisions of the offering or constitutive documents;

    (f)    take reasonable care to ensure that the investment and borrowing limitations set out in the constitutive documents, and the conditions under which the collective investment scheme was authorised are complied with;

    (g)    issue a report to the holders to be included in the annual report on whether in the trustee/custodian's opinion, the manager has in all material respects managed the scheme in accordance with the provisions of the constitutive documents; if the manager has not done so, the respect in which he has not done so and the steps which the trustee/custodian has taken in respect thereof;

    (h)    take reasonable care to ensure that unit or share certificates are not issued until subscription moneys have been paid;

    (i)    ensure that any registrable investments which are held for shareholders or unit holders in the collective investment scheme are properly registered in the names of the shareholders or unit holders or, with the consent of the shareholder or unit holder, in the name of an eligible nominee; and

    (j)    where title to investments is recorded electronically, to ensure that entitlements are separately identified from those of the manager of the collective investment scheme in the records of the person maintaining records of entitlement.

PART IV
MANAGER OF SCHEME (reg 6)

6.    General obligations of a manager

    A manager shall–

    (a)    manage a collective investment scheme in accordance with the scheme's constitutive documents in the exclusive interest of the holders and fulfil the duties imposed on it by the general law;

    (b)    maintain or cause to be maintained the books and records of the collective investment scheme and prepare the scheme's accounts and reports, including at least two reports to be published in respect of each financial year and sent to all registered holders in accordance with Regulation 38; and

    (c)    ensure that the constitutive documents are made available for inspection by the public in Tanzania, free of charge at all times during normal working hours at its place of business and make copies of such documents available upon the payment of a reasonable fee.

PART V
SELF-MANAGED SCHEMES (regs 7-11)

7.    Self-managed collective investment schemes

    A collective investment scheme may be managed by its own Board of Directors who shall perform the functions of a management company.

8.    Directors of self-managed schemes

    Where a collective investment scheme is a self-managed scheme, references in these Regulations to directors of a manager are to be deemed to be references to the directors of a self-managed scheme.

9.    Directors of self-managed schemes not to deal as principals

    The directors of a self-managed scheme are prohibited from dealing with the scheme as principals.

10.    Board of Directors of a self-managed scheme

    A Board of Directors of a self-managed scheme shall discharge all the obligations of a manager mentioned in these Regulations.

11.    Constitutive documents of self-managed schemes

    In addition to other requirements of collective investment schemes, the constitutive document of a self-managed scheme shall contain the following provisions–

    (a)    that holders may convene a meeting and, by way of an ordinary resolution, remove any of the directors considered no longer fit and proper to manage the schemes assets; and

    (b)    that the directors' fees and remuneration shall be fixed by the holders at a general meeting.

PART VI
CONSTITUTIVE DOCUMENTS OF COLLECTIVE INVESTMENT SCHEMES (regs 12-15)

12.    Requirements of constitutive documents

    The constitutive documents of a collective investment scheme shall contain all information which is listed in the Third Scheme annexed to these Regulations.

13.    No exemption from liability on the part of trustee/custodian, manager or Board of Directors

    Nothing in the constitutive document may provide that the trustee/custodian, manager or directors of a collective investment scheme be exempted from any liability to holders, unopposed under the law of Tanzania or breaches of trust through fraud or negligence, nor may they be indemnified against such liability by holders or at holder's expense.

14.    Alteration of constitutive documents

    (1) The constitutive document may be altered by the manager and trustee/custodian without consulting holders, provided that the trustee/custodian certifies in writing that in its opinion the proposed alteration–

    (a)    is necessary to enable compliance with fiscal, statutory or other official requirements; or

    (b)    does not materially prejudice holder's interests, does not to any material extent release the trustee/custodian , manager or any other person from any liability to holders and does not increase the costs and changes payable from the scheme's property; or

    (c)    is necessary to correct a manifest error.

    (2) In all other cases, no alteration may be made except by a special or extraordinary resolution of holders.

15.    Alterations subject to approval of the Authority

    (1) All proposed alterations or additions to the offering or constitutive documents shall be submitted to the Authority for prior approval.

    (2) The Authority shall determine whether holders should be notified and the period of notice (if any) be applied before the changes are to take effect.

    (3) Such notice period shall not exceed three months unless the Authority, having regard to the merits of the case, otherwise determines.

PART VII
COLLECTIVE INVESTMENT SCHEME OFFERING DOCUMENT (regs 16-19)

16.    Collective investment schemes to issue offering documents

    Every collective investment scheme shall issue an up-to-date offering document which shall contain all the information necessary for investors to be able to make an informed judgement of the investment proposed to them, and in particular shall contain the information listed in the Second Schedule annexed to these regulations.

17.    Offering documents to be accompanied by Audited reports

    An offering document shall be accompanied by the collective investment scheme's most recent audited annual report and accounts together with its semi-annual report if published after the annual report.

18.    Application form to be supplied to holders

    No application form may be supplied to any person who is not a holder unless accompanied by the offering document, except that an advertisement or report containing all the information listed in the Second Schedule may be allowed to incorporate an application form.

19.    Performance data and estimated yield

    (1) If performance data or estimated yield is quoted in an offering document, advertisement or any other invitation to the public to invest, the Authority may require justification of the calculation.

    (2) No forecast of a scheme's perfomance may be made.

    (3) The publication of a prospective yield does not constitute a forecast of performance.

PART VIII
INVESTMENT PLANS (reg 20)

20.    Conditions for investment plans

    If investment plans are offered–

    (a)    before contracting for a plan, a prospective plan holder shall be given full details in writing of his rights and obligations, of all costs and charges levied on plan holders and of the consequences of terminating his plan;

    (b)    unless he has requested to the contrary, each plan holder shall be advised at least once a year of the opening balance of units, latest transaction details and closing balance of units;

    (c)    the plan shall include a direction to potential investors that they should refer to the offering documents of the scheme to which they are considering linking their plan;

    (d)    an investment plan leaflet to be distributed in Tanzania shall not solicit investment in collective investment schemes which have not been authorised by the Authority; and

    (e)    in respect of any increase of initial fee of investment plans up to the maximum permitted level, at least three months prior notice shall be given to holders concerned.

PART IX
PRICING, ISSUE AND REDEMPTION OF UNITS/SHARES (regs 21-31)

21.    Initial offer

    If initial offer is made, no investment of subscription money can be made until conclusion of the first issue of units or shares at the initial price.

22.    Valuation and pricing

    (1) Offer and redemption prices shall be calculated on the basis of a collective investment scheme's net assets value divided by the number of units or shares outstanding.

    (2) Such prices may be adjusted by fees and charges for management of the scheme, which shall first be charged against investment income, next against dealing profits from the issue and redemption of units of shares in the scheme, and lastly against the capital value of the investments of the fund.

    (3) The amount or method of calculating such fees and charges shall be clearly disclosed in the offering document.

23.    Valuation of unquoted securities

    The value of investments not listed or quoted on a recognised market shall be determined on a regular basis by a professional person approved by the trustee/custodian as qualified to value such investments.

24.    Dealing

    (1) There shall be at least one regular dealing day per month or in three months.

    (2) Any price offer which the manager or the distribution company quotes or publishes shall be the maximum price payable on purchase and any redemption price shall be the net price receivable on redemption.

25.    Redemptions to be prompt

    The maximum interval between the receipt of a properly documented request for redemption of units or shares and the payment of the redemption money to the holder may not exceed a period of one calendar month.

26.    Change to dealing

    Where a collective investment scheme deals at a known price and where, based on information available, the price exceeds or falls short of the current value of the underlying assets by more than x percent, the manager shall defer dealing and calculate a new price as soon as possible.

27.    Notice of change in method of dealing

    A permanent change in the method of dealing may only be made after one month's notice to holders.

28.    Temporary changes

    A temporary change may only be made in exceptional circumstances, having regard to the interest of holders.

29.    Suspension and deferral of dealings

    Suspension of dealings may be provided for only in exceptional circumstances having regard to the interest of holders.

30.    Authority to be notified of cessation or suspension

    (1) The manager shall immediately notify the Authority if dealing in units or shares ceases or is suspended.

    (2) The fact that dealing is suspended shall be published immediately following such decision and at least once a month during the period of suspension, in the newspaper in which a collective investment scheme's price are normally published.

31.    Deferral of redemptions

    Where redemption requests on any one dealing day exceed ten per cent of the total number of units or shares in issue, redemption requests in excess of ten percent may be deferred to the next dealing day.

PART X
TRANSACTIONS WITH ASSOCIATED PERSONS (regs 32-35)

32.    Underwriting contracts

    No person shall be allowed to enter on behalf of a collective investment scheme into underwriting or sub-underwriting contracts without the prior consent of the trustee/custodian and unless the scheme or the manager provides in writing that all commissions and fees payable to the manager under such contracts and all investments acquired pursuant to such contracts shall form part of a collective investment scheme's assets.

33.    Interest on deposits

    If cash forming part of a collective investment scheme's assets is deposited with the trustee/custodian, the manager, or with any associated person of these companies (being an institution authorised to accept deposits), interest shall be received on the deposit at a rate not lower than the prevailing commercial rate for a deposit of that size and term.

34.    Transactions to be at arm's length

    (1) All transactions carried out by or on behalf of a collective investment scheme shall be at arm's length.

    (2) In particular, any transactions between a collective investment scheme and the manager, the directors of the scheme or any of their associated persons as principal may only be made with the prior consent of the trustee/custodian.

    (3) The annual report shall disclose whether one dealer accounted for fifty percent or more of the scheme's transactions in value in any one financial year.

35.    [Omitted].

PART XI
MEETINGS (reg 36)

36.    Requirements for meetings

    A collective investment scheme shall arrange to conduct general meetings of holders as follows–

    (a)    holders shall be able to appoint proxies;

    (b)    votes shall be proportionate to the number of units or shares held, or to the value of units or shares held where there are accumulated units or shares;

    (c)    the quorum for meetings at which a special or extraordinary resolution is to be considered shall be the holders of twenty-five percent of the units or shares in issue, and ten percent if only an ordinary resolution is to be considered;

    (d)    if within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned for not less than fifteen days and the quorum at an adjourned meeting shall be those persons present in person or by proxy;

    (e)    if the possibility exists of a conflict of interests between different classes of holders there shall be provisions for class meetings;

    (f)    an extraordinary general meeting shall be convened for the following purposes–

        (i)    to modify, alter or add to the constitutive documents except as provided in regulation fourteen;

        (ii)    to terminate a collective investment scheme (unless the means of termination of the scheme are stipulated in the constitutive documents, in which case termination shall be effected in accordance with the provisions of the constitutive documents);

    (g)    where bearer units are in issue, proper provision shall be made for notification to bearer holders in Tanzania of the timing and agenda of forthcoming meetings and voting arrangements;

    (h)    the directors of a collective investment scheme, the trustee/custodian, the manager, and their associated persons are prohibited from voting their beneficially owned shares at, or counted in the quorum for, a meeting at which they have a material interest in the business to be conducted;

    (i)    an ordinary resolution may be passed by a simple majority of the votes of those present and entitled to vote in person or by proxy at a duly convened meeting; and

    (j)    a special or extraordinary resolution may only be passed by seventy-five percent or more of the votes of those present and entitled to vote in person or by proxy at a duly convened meeting.

PART XII
MEMBERS REGISTER (reg 37)

37.    Maintenance of Register

    (1) A collective investment scheme shall maintain a register of holders.

    (2) The Authority shall be notified on request of the address where the register is kept.

PART XIII
REPORTING REQUIREMENTS (regs 38-43)

38.    Report to holder

    (1) At least two reports shall be published in respect of each financial year.

    (2) Annual reports shall be published and distributed to holders within four months of the end of a collective investment scheme's financial year and interim reports shall be published and distributed to holders within two months of the end of the period they cover.

39.    Notice of changes to document

    Notification to holders shall be made in respect of any changes to the offering or constitutive documents as determined by the Authority pursuant to Regulation 15.

40.    Reports on prices and assets values

    (1) The scheme's latest available offer and redemption prices or net asset value shall be published at least once a month in at least one of the leading Tanzania daily newspapers.

    (2) If dealing is suspended, notice of this fact shall be published in accordance with regulation 30.

41.    Reporting to the Authority

    Subsequent to the authorisation of a collective investment scheme, all financial reports produced by or for a collective investment scheme, its manager and trustee/custodian shall be filed with the Authority.

42.    Authority may demand further information

    The manager shall supply to the Authority upon request, all information relevant to the scheme's financial reports and accounts.

43.    Changes to data in application form

    The manager shall notify the Authority as soon as possible of any change to the data in the application form.

PART XIV
FEES (regs 44-46)

44.    Statement as to costs and charges

    The level/basis of calculation of all costs and charges payable from a collective investment scheme's property shall be clearly stated, with percentages expressed on a per annum basis in the offering document.

45.    Sales agents' commission

    Commission to sales agents in respect of dealing in units or shares of a collective investment scheme shall not be payable from the scheme's property.

46.    Notice of increase of management fee

    In respect of any increase of the management fee up to the maximum level permitted under the scheme, at least three months prior notice shall be given to all holders.

PART XV
ADVERTISING AND PUBLIC ANNOUNCEMENTS (regs 47-51)

47.    Authority to approve advertisements

    (1) Advertisement and other invitations to the public in Tanzania to invest in a collective investment scheme, including public announcements, shall be submitted to the Authority for approval prior to their issue or publication in Tanzania.

    (2) Any publication submitted for approval which concerns the trustee shall be accompanied by its written consent.

    (3) The approval so granted may be varied or withdrawn by the Authority as it deems fit.

    (4) Once authorised, this advertisement may be used for a maximum period of six months, provided there are no material changes in that period to a unit trust scheme or to the advertisement itself.

    (5) Unless the Authority disapproves submitted material within fourteen calendar days of its submission, the Authority shall be deemed to have approved it.

48.    Statements as to approval of schemes

    (1) If a collective investment scheme is described as having been approved by the Authority it shall be stated that, in giving this approval, the Authority does not take responsibility for the financial soundness of the scheme or for the correctness of any statements made or opinions expressed in this regard.

    (2) Such a statement shall comply with the requirements of Regulation.

49.    Mention of unapproved schemes

    Advertisements and other invitations to the public in Tanzania shall not refer to any collective investment scheme which has not obtained approval from the Authority.

50.    Warning statements

    Advertisements shall include a warning statement that–

    (a)    the price of units or shares, and the income from them (if the scheme pays a dividend), may go down as well as up; and

    (b)    investors are reminded that in certain circumstances their right to redeem their units or shares may be suspended.

51.    Format of warning statements

    (1) Warning statements shall be printed in type of the same size as the rest of the text in the advertisement.

    (2) Notwithstanding subregulation (1), they may be in smaller text if printed in bold type or prominently outlined.

    (3) In all cases the warning shall be capable of being read with reasonable ease by anyone scanning the advertisement.

PART XVI
INVESTMENT LIMITS OF A COLLECTIVE INVESTMENT SCHEME (regs 52-60)

52.    Investment limits

    The Authority may prescribe rules relating to the maximum and minimum limits of investments which may be made by collective investment schemes in securities issued by a single issuer, classes of securities, unquoted securities and other holdings.

53.    Schemes to observe investment limits

    Investments made by a collective investment scheme shall not exceed or fall below the limits prescribed by the Authority under regulation 52.

54.    Limitation on making loans

    A collective investment scheme may not lend, assume, guarantee, endorse or otherwise become directly or contingently liable for or in connection with any obligation or indebtedness of any person without the prior written consent of the trustee/custodian.

55.    Unlimited liability

    A collective investment scheme may not acquire any asset which involves the assumption of any liability which is unlimited.

56.    Limitation on securities in which directors have an interest

    A collective investment scheme may not invest in any security of any class in any company or body if any director or officer of the manager owns more than ........ of the total nominal amount of all issued securities of that class, or, collectively the directors and officers of the manager own more than five percent of those securities.

57.    Limitations on nil-paid/partly paid securities

    The portfolio of a collective investment scheme may not include any security where a call is to be made for any sum unpaid on that security unless that call could be met in full out of cash or near cash by the scheme's portfolio.

58.    Prohibition on borrowing

    A unit trust scheme shall not borrow.

59.    Breach of investment limits

    If the investment limits of this Part are breached, the manager shall take as a priority objective all such steps as are necessary within a reasonable period of time to remedy the situation, taking due account of the interests of the holders.

60.    Investment objective

    If the name of a collective investment scheme indicates a particular objective, geographic region or market, the scheme shall invest at least seventy percent of its non-cash assets in securities and other investments to reflect the particular objective or geographic region or market the scheme represents.

PART XVI
AUDIT AND FINANCIAL REPORTS (regs 61-64)

61.    Appointment of auditor

    The manager shall, at the outset and upon any vacancy, appoint an auditor for a collective investment scheme.

62.    Qualifications of auditor

    A person shall not be qualified for appointment as auditor unless he is a member and holds a valid practising certificate issued by the National Board of Accounts and Auditors.

63.    Independence of auditor

    The auditor shall be independent of the manager and of the trustee/custodian.

64.    Auditor of annual report

    The manager shall cause the scheme's annual report to be audited by the auditor, and such report shall contain the information provided for in clause seventeen of the Fourth Schedule annexed to these Regulations.

FIRST SCHEDULE
APPLICATION FORM FOR AUTHORISATION OF A COLLECTIVE INVESTMENT SCHEME

General details of the scheme

    1.    Name of the scheme.

    2.    Names of the sub-funds (if any).

    3.    Structure of the scheme.

    4.    Quotation on any securities exchange.

    5.    Launch: date and place.

    6.    Dealing: daily/weekly/other.

    7.    Valuation of assets: daily/weekly/monthly.

    8.    Pricing: forward/historic/other.

    9.    Investment plans to be offered.

For each scheme

    10.    

    (a)    Fee structure–

        (i)    level of all charges payable by investor; and

        (ii)    level/basis of calculation of all charges payable by the scheme.

    (b)    For equity/bond funds–

        (i)    investment objective and borrowing powers; and

        (ii)    currency of denomination;

    (c)    minimum initial subscription and the minimum subsequent holding.

Details of the parties to the scheme

    11. The manager:

    (a)    Name;

    (b)    Registered/business address;

    (c)    Name of the ultimate holding company;

    (d)    Previously approved by the Authority to manage authorised schemes? If no, the resumés of the directors and most recent audited financial report;

    (e)    Person(s) for contact with the Authority.

    12. In the case of a self-managed scheme, the resumés of the directors of the scheme and person(s) for contact.

    13. The trustee/custodian:

    (a)    Name;

    (b)    Registered/business address;

    (c)    Name of the ultimate holding company;

    (d)    Previously approved by the Authority to manage authorised schemes? If no, the resumés of the directors and most recent audited financial report;

    (e)    Person(s) for contact with the Authority.

    14. The investment adviser (if any):

    (a)    Name;

    (b)    Registered/business address;

    (c)    Name of the ultimate holding company.

    15. For the trustee/custodian, manager and investment adviser:

    (a)    which, if any, of these companies are associated persons;

    (b)    name anyone who holds appointments, as director or offer, with more than one of these companies.

    16. The auditors:

    (a)    Name;

    (b)    Registered/business address.

    17. The principal dealer (if any):

    (a)    Name;

    (b)    Registered/business address;

    (c)    The approximate percentage of the scheme's transactions in value of securities carried out by the principal broker within the latest financial year of the scheme;

    (d)    Whether the trustee/custodian, the directors of the scheme, the manager or the investment adviser is an associated person of the principal broker.

SECOND SCHEDULE
INFORMATION TO BE DISCLOSED IN THE OFFERING DOCUMENT

(NOTE:    This list is not intended to be exhaustive. The directors of the scheme or the manager are obliged to disclose any information which may be necessary for investors to make an informed judgement.)

Constitution of the scheme:

    1. Name, registered address and place and date of creation of the scheme, with an indication of its duration if limited.

Investment objectives and restrictions:

    2. Details of investment objectives and policy, including summary of the investment and borrowing restrictions.

Operators and principals:

    3. The names and registered addresses of the following parties (where applicable)–

    (a)    the directors of the scheme/manager and its board of directors;

    (b)    the trustee/custodian;

    (c)    the investment adviser;

    (d)    the Tanzania representative;

    (e)    the Tanzania distribution company, if different from (d) above;

    (f)    the auditors;

    (g)    the registrar; and

    (h)    the lawyers to the scheme.

Characteristics of unit or shares:

    4. Minimum investment (if any).

    5. A description of the different types of units or shares, including their currency or denomination.

    6. Form of certification.

    7. Frequency of valuation and dealing, including dealing days.

Application and redemption procedures:

    8. The name(s) of the newspaper(s) in which prices will be published.

    9. Procedure for subscribing/redeeming units or shares.

    10. The maximum interval between the request for redemption and the despatch of the redemption proceeds.

    11. A summary of the circumstances in which dealing in units or shares may be deferred or suspended.

    12. It shall be stated that no money should be paid to any intermediary who is not a licensed dealer or investment adviser.

Distribution policy:

    13. The distribution policy and the approximate dates on which dividends (if any) will be paid (if applicable).

Fees and charges:

    14.(a)    The level of the fees and charges payable by an investor, including all charges levied on subscription and redemption, and conversion (in the case of umbrella funds); and

    (b)    The level of all fees and charges payable by the scheme, including management fees, custodian fees and start-up expenses.

    15. Disclosure of entitlement to brokerage or other transactions benefits of any associated persons to the scheme.

Taxation:

    16. Details of principal taxes levied on the scheme's income and capital, including tax if any, deducted on distribution to holders.

Reports and accounts:

    17. The date of the scheme's financial year.

    18. Particulars of what reports will be sent to registered holders and when, if there are bearer units in issue, information shall be given on where reports can be obtained.

Warnings:

    19. The following statements/warnings shall be prominently displayed in the offering document–

    (a)    "Import - if you are in any doubt about the contents of this offering document, you should consult your stockbroker, bank manager, lawyer, accountant or other financial adviser";

    (b)    a warning that the price of units or shares and the income from them (where income is distributed) may go down as well as up.

    20. A list of constitutive documents and an address where they can be inspected free of charge or purchase.

    21. The date of publication of the offering document.

    22. A statement that the directors of the scheme or the manager accept responsibility for the information contained in the offering document as being accurate as at the date of publication.

    23. Details of schemes not authorised shall be shown in the offering document.

Termination of scheme:

    24. A summary of the circumstances in which the scheme can be terminated.

THIRD SCHEDULE
REQUIRED CONTENTS OF THE CONSTITUTIVE DOCUMENTS

    1. Name of scheme.

    2. Participating parties.

    A statement to specify the participating parties including the manager trustee/custodian, and investment adviser (if appointed).

    3. (1) A statement that the constitutive document in binding on each holder as if he had been a part to it and so to be bound by its provisions and authorises and requires the trustee/custodian and the manager to do as required of them by the terms of the constitutive documents.

    (2) A provision that a holder is not liable to make any further payment after he has paid the purchase price of his units and that no further liability can be imposed on him in respect of the units which he holds.

    (3) A declaration that the property of the scheme is held by the trustee/custodian in trust for the holders of the units pari passu according to the number of units held by each holder. (This may be modified as appropriate for schemes offering income and accumulations units).

    4. Role of manager

    There shall be–

    (a)    a statement to list the obligations of the manager as set out in regulation 6 of these regulations;

    (b)    a statement that the manager should retire in the manner as stipulated in section 122 of the Act.

    5. Investment and borrowing restrictions

    A statement to list the restrictions on the investment of the deposited property and the maximum borrowing limit of the scheme.

    6. Valuation of property and pricing

    The following requirements on valuation of property and pricing shall be stipulated–

    (a)    the method of determining the value of the assets and liabilities of the property of the scheme and the net asset value accordingly;

    (b)    the relationship between the privies at which the manager bids or offers units or shares and the most recent net asset value per unit or share;

    (c)    the permitted spread between bid and offer prices;

    (d)    the circumstances under which the relationship to asset value or the spread may change; and

    (e)    the front-end load management charge to purchase units or shares and, if different, the charge to investors tore-invest the proceeds of realising a holding in the scheme.

    7. Dealing, suspension and deferral of dealing

    The following shall be stated–

    (a)    the circumstances under which the dealing of units or shares can be deferred or suspended; and

    (b)    the maximum interval between the receipt of a properly documented request for redemption funds of shares and the payment of the redemption money to the holder should not exceed one calendar month.

    8. Fees and charges

    The following shall be stated–

    (a)    the maximum percentage of the initial charge payable to the manager out of the issue price of a unit or share;

    (b)    the maximum fee payable to the manager out of the property of the scheme expressed as an annual percentage;

    (c)    fee payable to trustee/custodian;

    (d)    preliminary expenses to be amortised against the property for the scheme; and

    (c)    all other material fees and charges payable out of the property of the scheme

    9. Meetings

    Provisions shall be made as to the manner in which holder's meeting are to be conducted in accordance with regulation 36 of these regulations.

    10. Transactions with associated persons

    The following shall be stated–

    (a)    cash forming part of the property of the scheme may be placed as deposits with the trustee/custodian, manager, the investment adviser or with any connected persons of these companies (being as institution authorised to accept deposits) so long as that institution pays interest thereon at no lower rate that is, in accordance with normal banking practice, the commercial rate for deposits of the size of the deposit question negotiated at arm's length;

    (b)    money can be borrowed from the trustee/custodian, manager, the investment adviser or any of their connected persons (being a bank) so long as that bank charges interest at no higher rate, and any fee from arranging or terminating the loan is of no greater amount than is in accordance with normal banking practice, the commercial rate for a loan of the size and nature of the loan in question negotiated at arm's length;

    (c)    any transactions between the scheme and the manager, the investment adviser, directors of the scheme or any of their connected persons as principal may only be made with the prior written consent of the trustee/custodian.

    11. Distribution policy and date

    The approximate date(s) in the calendar year on which annual income, if any, will be distributed.

    12. Annual accounting period

    The date in the calendar year on which the annual accounting period ends. In the case of an umbrella fund, this accounting period shall be the same for all constituted funds.

    13. Base currency

    A statement of the base currency of the scheme.

    14. Modification of the constitutive documents

    A statement of the means by which modification to the constitutive documents can be effected.

    15. Termination of scheme

    A statement of the circumstances in which the scheme can be terminated.

FOURTH SCHEDULE
CONTENTS OF FINANCIAL REPORTS

General:

    1. Annual report shall contain all the information required in the Schedule. Interim reports shall at least contain the Statement of Assets and Liabilities and the Investment Portfolio. Where the scheme has paid or proposes to pay an interim dividend, the amount of dividend shall be disclosed.

    2. All reports shall contain comparative figures for the previous period except for the Investment Portfolio.

    3. No unauthorised scheme shall be mentioned in the reports.

    4. The items listed under the Statement of assets and Liabilities, Revenue Statement, Distribution Statement, Statement of Movements in Capital Account and the Notes to the Accounts, where applicable, shall be disclosed, it is however, not mandatory to adopt the format as shown or to disclose the items in the same order.

Statement of Assets and Liabilities:

    5. The following shall be separately disclosed–

    (1)    total value of investments;

    (2)    bank balances;

    (3)    formation costs;

    (4)    dividends and other receivable;

    (5)    amounts receivable on subscription;

    (6)    bank loans and overdrafts or other forms of borrowing;

    (7)    amounts payable on redemption;

    (8)    distribution payable;

    (9)    total value of all assets;

    (10)    total value of all liabilities;

    (11)    net asset value;

    (12)    number of units or shares in issue;

    (13)    net asset value per unit or share.

Revenue Statement:

    6. The following shall be separately disclosed–

    (1)    total investment income net of withholding tax, broken down by category;

    (2)    total other income, broken down by category;

    (3)    equalisation on issue and cancellation of units or shares;

    (4)    an itemised list of various costs which have been debited to the scheme including–

        (i)    fees paid to the manager;

        (ii)    remuneration of the trustee/custodian;

        (iii)    amortisation of formation costs;

        (iv)    safe custody and bank charges;

        (v)    auditor's remuneration;

        (vi)    interest on borrowings;

        (vii)    fees paid to investment adviser, if any;

        (viii)    other amounts paid to any associated persons of the scheme;

        (ix)    legal and other professional fees;

        (x)    any other expenses borne by the scheme;

    (5) taxes;

    (6) amounts transferred to and from the capital account;

    (7) net income to be carried forward for distribution.

Distribution Statement:

    7. The following shall be separately disclosed–

    (1)    amount brought forward at the beginning of the period;

    (2)    net income for the period;

    (3)    final distribution per unit or share and date of distribution;

    (4)    final distribution unit or share and date of distribution;

    (5)    undistributed income carried forward.

Statement of movements in capital account:

    8. The following shall be separately disclosed–

    (1)    value of the scheme as at the beginning of the period;

    (2)    number of units or shares issued and the amounts received upon such issuance (after equalisation if applicable);

    (3)    number of units or shares redeemed and the amount paid on redemption (after equalisation if applicable);

    (4)    any items resulting in an increase/decrease in value of the scheme including–

            surplus/loss on sale of investments;

            exchange gain/loss;

            unrealised appreciation/diminution in value of investments;

            net income for the period less distribution;

    (5)    amounts transferred to and from the revenue account;

    (6)    value of the scheme as at the end of the period.

Notes to the accounts:

    9. The following matters shall be set out in the notes to the accounts–

    Principal accounting policies, including–

    (a)    the basis of valuation of the assets of the scheme including the basis of valuation of unquoted and unlisted securities;

    (b)    the revenue recognition policy regarding dividend income and other income;

    (c)    foreign currency translation;

    (d)    the basis of valuation of forward foreign exchange and futures contracts;

    (e)    the basis of amortisation of formation costs;

    (f)    taxation;

    (g)    any other accounting policy adopted to deal with items which are judged material or critical in determining the transaction and in stating the disposition of the scheme.

    Any changes to the above accounting policies and their financial effects upon the accounts shall also be disclosed.

Transactions with associated persons:

    10. The following transactions shall be disclosed–

    (a)    details of all transactions entered into during the period between the scheme and the manager, investment adviser, the directors of the scheme or any entity in which these parties or their connected persons have a material interest; and

    (b)    name of any director of the scheme or any connected person of such director if any such person becomes entitled to profits from transactions in shares or from management of the scheme and the amount of profits worth such person becomes entitled.

Borrowings:

    11. It shall be stated whether the borrowings are secured or unsecured and the duration of the borrowings.

Contingent liabilities and commitments:

    12. Details of any contingent liabilities and commitments of the scheme shall be made available.

    13. If the free negotiability of any asset is restricted by statutory or contractual requirements, this shall be stated.

Commissions, etc:

    14. The total commission paid to dealers in connection with portfolio transactions during the period reported on shall be stated.

    15. The total compensation, other than commissions, paid to dealers in connection with portfolio transactions during the period reported on shall be stated and, where the figure provided is an estimate, the basis for calculating the compensation, and where compensation to a dealer for the sale of shares or units in the scheme includes an allocation of the execution of portfolio transactions to that dealer, the compensation so allocated.

Legal proceedings:

    16. Any legal proceedings material to the operation for the scheme to which the operator is a party or of which any of the property of the scheme is the subject shall be briefly described. A similar statement shall be made as to any such proceedings known to be contemplated (including the date instituted, the principal parties, the nature of the claim, the amount claimed, whether the proceedings are being contestant and the present status of the proceedings).

Contents of auditor's report:

    17. The report of the Auditor shall state–

    (a)    whether in the Auditor's opinion, the accounts prepared for the period have been property prepared in accordance with the relevant provisions of the constitutive documents and this Schedule;

    (b)    whether in the Auditor's opinion, all persons involved with the conduct and operation of the scheme have acted property and in accordance with the requirements of this Schedule;

    (c)    without prejudice to the foregoing, whether in the Auditor's opinion, a true and fair view is given of the disposition of the scheme at the end of the period then ended, and whether the reports and valuations produced on behalf of the scheme during the year were produced on a basis consistent with the figures at the end of the year and with the provisions of this Schedule;

    (d)    if the auditor is of the opinion that proper books and records have not been kept by the scheme, or the accounts prepared are not in agreement with the scheme's books and records, that fact (which shall be reported forthwith by the auditor to the Authority; and

    (e)    if the auditor has failed to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of the audit, that fact (which shall be reported forthwith by the auditor to the Authority).

Investment portfolio:

    18. The following shall be stated–

    (1)    Number of quantity of each holding together with the description and market value. Distinguish between listed and unlisted and categorise by country.

    (2)    The total investment stated at cost.

    (3)    The value of each holding as a percentage of net asset value.

    (4)    Statement of movements in portfolio holdings since the end of the preceding accounting period.

Performance table:

    19. The following shall be provided–

    (1)    A comparative table covering the last three financial years and including, for each financial year, at the end of the financial year–

        (a)    the total net asset value;

        (b)    the net asset value per unit or share.

    (2)    A performance record over the last ten financial years or, if the scheme has not been in existence during the whole of the period, over the whole period in which it has been in existence, showing the highest issue price and the lowest redemption price of the units or shares during each of those years.

THE CAPITAL MARKETS AND SECURITIES (CONDUCT OF BUSINESS) REGULATIONS

ARRANGEMENT OF REGULATIONS

    Regulation

Title

    1.    Short title.

    2.    Interpretation.

    3.    Independence.

    4.    Material interest.

    5.    Inducements.

    6.    Issue of advertisements.

    7.    Fair and clear communications.

    8.    Customer's understanding of risk.

    9.    Information about licensee.

    10.    Information about collective investment scheme.

    11.    Representatives of licensee.

    12.    Where written customer agreement required.

    13.    Customer agreements.

    14.    Customer's rights.

    15.    Suitability.

    16.    Charges.

    17.    Confirmation and periodic information.

    18.    Timely execution.

    19.    Best execution.

    20.    Timely allocation.

    21.    Fair allocation.

    22.    Front running.

    23.    Churning.

    24.    Insider dealing.

    25.    Safeguarding of customer investment.

    26.    Complaints.

    27.    Compliance.

    28.    Supervision.

    29.    Customer confidentiality.

    30.    Cessation of business.

THE CAPITAL MARKETS AND SECURITIES (CONDUCT OF BUSINESS) REGULATIONS

G.N. No. 771 of 1997

1.    Short title

    These Regulations may be cited as the Capital Markets and Securities (Conduct of Business) Regulations.

2.    Interpretation

    In these Regulations:

    "customer" means a person for whom a licensee acts as an agent and to whom the licensee owes a duty of care, and includes a potential customer;

    "licensee" means a person licensed under Part IV of the Act;

    "own account transaction" means a transaction effected arranged by the licensee in the course of carrying on his securities business and which was done on his own account;

    "regulatory system" means the arrangements for regulating a licensee under the Act and regulations made thereunder or directions given by the Authority.

3.    Independence

    No licensee shall, while advising or acting for a customer claim he is independent or impartial if he is not and shall ensure that any claim he makes as to his independence or impartiality adequately includes any limitation that he may be on either.

4.    Material interest

    Where licensee has a material interest in a transaction to be entered into with or for a customer, or he has relationship which gives rise or is likely to give rise to a conflict of interest in relation to such a transaction, the licensee shall not advise or exercise any discretion in relation to that transaction unless he has–

    (a)    fairly disclosed that material interest or that relationship to the customer; or

    (b)    taken reasonable steps to ensure that neither the material interest nor relationship adversely affects the interests of the customer.

5.    Inducements

    A licensee must take reasonable steps to ensure that neither the material interest nor relationship adversely affects the interests of the customer.

6.    Issue of advertisements

    Where a licensee issues an advertisement concerning his securities business, he shall take all reasonable steps to ensure that–

    (a)    the contents and presentation of the advertisement are demonstrably fair and not misleading;

    (b)    the advertisement discloses fairly the risks concerned.

7.    Fair and clear communications

    Where a licensee issues an advertisement concerning securities business, he shall ensure that the advertisement identifies him as the advertiser.

8.    Customer's understanding of risk

    (1) A licensee may make a communication with another person which is designed to promote the provision of securities services only if he can show comprehensive and not misleading.

    (2) A licensee shall take reasonable steps to ensure that any agreement, written communication, notification or information that he gives or sense to customers to whom he provides securities services is presented fairly and clearly.

9.    Information about licensee

    A licensee shall not–

    (a)    recommend transaction to a customer, or effect a discretionary transaction with or for him unless he has taken all reasonable steps to enable the customer understands the risks involved;

    (b)    mislead a customer as to any advantages or disadvantages of a contemplated transaction; or

    (c)    promise a return unless such return is contractually guaranteed.

10.    Information about collective investment scheme

    A licensee shall take reasonable steps to ensure that a customer, to whom he provides securities services, is given adequate information about his identity and business address and the identity and status within the licensee's firm of employees and other relevant representatives whom the customer has contact.

11.    Representatives of licensee

    Before or when making a personal recommendation to a customer to invest in a collective investment scheme, a licensee shall give to the customer–

    (a)    information about the scheme which is adequate to enable the customer to make an informed investment decision;

    (b)    appropriate written particulars.

12.    Where written customer agreement required

    (1) A licensee shall satisfy himself on reasonable grounds and on a continuing basis that any representative he appoints is fit and proper to act for him in that capacity.

    (2) The licensee shall also satisfy himself on reasonable grounds and on a continuing basis that he has adequate resources to monitor and enforce compliance by his representatives with high standards of business conduct.

13.    Customer agreements

    (1) A licensee shall not provide to a customer any securities services relating to–

    (a)    the discretionary management of a portfolio; or

    (b)    any other type of business that is prescribed by the Authority, except under a written agreement signed by the customer and returned to licensee.

    (2) The Authority and a licensed securities exchange may from time to time prescribe special procedures relating to the operation of discretionary accounts and every licensee must follow such special procedures are followed.

14.    Customer's rights

    (1) Where a licensee provides securities services to a customer on written contractual terms (whether pursuant to regulation thirteen or otherwise), the agreement shall set out in adequate detail the basis on which those services are provided.

    (2) The High Court may, if it considers it just and equitable to do so, by order set aside or vary an agreement entered into in contravention of this rule, but no such order affects any dealing or transaction entered into or carried out by the licensee on behalf of the customer.

15.    Suitability

    (1) A licensee shall not, in any written communication or agreement, seek to exclude or restrict–

    (a)    any duty or liability to a customer which he has under the Act or any regulation made thereunder;

    (b)    any other duty to act with skill, care and diligence that is owed to a customer in connection with the provision to him of securities services;

    (c)    any liability owed to a customer for failure to exercise the degree of skill, care and diligence that may reasonably be expected of him in the provision of securities services.

    (2) A purported exclusion or restriction prohibited in this rule shall be void and of not effect.

16.    Charges

    A licensee shall take all reasonable steps to ensure that he does no give securities advice to, nor effect a discretionary transaction with or for, a customer unless that advise of transaction is suitable for him having regard to the facts disclosed by that customer and other relevant facts about the customer or which the licensee is or ought reasonably to be aware.

17.    Confirmation and periodic information

    (1) A licensee's charges shall not be unfair in their incidence or unreasonable in their amount having regard to all relevant circumstances.

    (2) Before a licensee provides securities services to a customer it shall disclose to him the basis or amount of the licensee charges for the provisions of those services and the nature of and amount of any other remuneration receivable by him and attributable to them.

18.    Timely execution

    (1) Where a licensee effects a sale or purchase of securities with or for a customer he shall ensure that the customer is sent with due dispatch a contract not containing the essential details of the transaction in accordance with section fifty-eight of the Act.

    (2) Where a licensee acts an investment manager for a customer, he shall ensure that the customer is sent, at suitable intervals, a report stating the value of the portfolio or account at the beginning and end of the period of, its composition at the end and, in the case of a discretionary portfolio or account, changes in its composition between those dates.

19.    Best execution

    When a licensee has agreed or decided in his discretion to effect or arrange a customer order, he shall effect or arrange the execution of the order as soon as is reasonably practicable in the circumstances.

20.    Timely allocation

    Where a licensee deals with or for a customer he shall take all reasonable steps to find and deal on the terms which are the best available to the customer.

21.    Fair allocation

    A licensee shall ensure that a transaction he executes is promptly allocated.

22.    Front running

    Where a licensee has aggregated an order for a customer transaction with an order for an own account transaction, or with an order for other customer transaction, then in the subsequent allocation–

    (a)    he shall not give unfair preference to himself or to any of those for whom he dealt; and

    (b)    if all orders cannot be satisfied, he shall give priority to satisfying orders for customer transactions.

23.    Churning

    Where a licensee intends to publish to customers a price sensitive recommendation or research or analysis, he shall not knowingly effect an own account transaction in the investment concerned or in any related investment until the customers for whom the publication was principally intended have had, or are likely to have had, a reasonable opportunity to react to it.

24.    Insider dealing

    A licensee shall not–

    (a)    deal or arrange a deal in the exercise or discretion for any customer; or

    (b)    advise a customer to deal, if the dealing could in the circumstances reasonably be regarded as too frequent or too large.

25.    Safeguarding of customer investment

    A licensee who has custody of customer's securities in connection with or with a view to securities business shall–

    (a)    keep safe, or arrange for the safekeeping of, any documents of title or documents evidencing title which relates to them; and

    (b)    ensure that any securities that he buys or holds for a customer are properly registered in his name or with the consent of the customer and in the name of an appropriate nominee.

26.    Complaints

    A licensee shall have internal procedures to ensure the proper handling of complaints from customers and to ensure that any appropriate remedial action on those complaints is promptly taken.

27.    Compliance

    (1) A licensee shall take reasonable steps, including the establishment and maintenance of procedures, to ensure that–

    (a)    his officers, employees and other representatives are aware of their obligations under the Act and any regulations legislation make thereunder, and that they act in conformity with them; and

    (b)    for ensuring that each such person does not give advice or provide services of such a nature as is beyond is competence to give or to provide.

    (2) Records required to be maintained by the regulatory system shall be kept available, for a period of not less than seven years, by the licensee for inspection by any person duly authorised by the Authority.

28.    Supervision

    A licensee shall establish and maintain procedures–

    (a)    for the supervision of each of his officers, employees and other representatives; and

    (b)    for ensuring that each such person does not give advice or provide services of such a nature as is beyond his competence to give or to provide.

29.    Customer confidentiality

    (1) Subject to subregulation (2), all information in the possession of a licensee relating to a customer shall be kept confidential by the licensee.

    (2) A licensee may disclose information relating to a customer when properly required to do so by the Authority, a clearing house or the market supervision department of a licensed securities exchange of which he is a member, or if he is ordered to do so by a court of competent jurisdiction or other due process of law.

30.    Cessation of business

    Where a licensee decides to withdraw from securities business he shall–

    (a)    forthwith notify the Authority and each of his customers of such decision; and

    (b)    ensure to the satisfaction of the Authority that any such business which is outstanding is properly completed or transferred to another licensee.

THE CAPITAL MARKETS AND SECURITIES (CAPITALISATION AND RIGHTS ISSUE) REGULATIONS

G.N. No. 288 of 2000

1.    Citation

    These Regulations may be cited as the Capital Markets and Securities (Capitalisation and Rights Issue) Regulations.

2.    Interpretation

    In these Regulations, unless the context otherwise requires:

    "acquisition" means one company taking over controlling interest in another company;

    "applicant" means a company applying to the Authority for approval of capitalization or rights issue;

    "authority" means the Capital Markets and Securities Authority established by section 6 of the Act;

    "bonus shares" means shares allotted to existing members in a company in proportion to their current holdings where no additional funds from outside the company are raised instead shares are paid up by the company applying either profits or reserves;

    "capitalization" means applying profits in wholly or partly paying for unissued shares in company to be allotted to members in proportion to their present holdings as fully paid or partly paid bonus shares or transferring profits to capital redemption reserves;

    "rights issue" means issue of shares where existing shareholders are given prior right to buy a new issue of shares at a subscription price lower than the market value of the outstanding shares;

    "subsidiary company" means a company in which the majority of its shares are owned by another company.;

3.    Approval of capitalization or rights issue

    (1) No listed company shall issue or authorize its Registrar to issue or register by way of capitalization or rights issue, additional shares of the listed class unless it has applied for approval of such issue to the Authority and the company has been notified by the Authority that the issue has been approved.

    (2) Subject to subregulation (1) and the provisions of the Companies Act * relating to the authorization of issue of new shares, the applicant shall furnish certified copies of resolution or resolutions passed by its shareholders authorizing the issue of new shares.

    (3) An application made under subregulation (1) shall be lodged with the Authority at least three weeks prior to the date of books closure.

    (4) In approving the application, the Authority may impose such conditions as it may deem necessary for the protection of the existing shareholders and potential investors.

    (5) An application made under subregulation (1) shall state:

    (a)    the full name of the applicant;

    (b)    the Exchange at which the applicant's securities are listed;

    (c)    the number of additional shares to be listed;

    (d)    the effective date on which the additional shares shall fully qualify for admission to trading;

    (e)    the names of persons who shall be responsible for the report made pursuant to Regulation 4.

    (6) The application shall be endorsed with the declaration set out below which shall be signed by two directors or one director and the secretary of the applicant:

    "The directors of (name of applicant) whose names appear in the manner specified under Regulation 4(a)(ii) collectively and individually accept full resposibility for the accuracy of the information given and certify that to the best of our knowledge and belief there are no other facts the omission of which would make any statement false or misleading, that we have made all reasonable inquiries to ascertain such facts and that the application contains all information required by law.".

    (7) No person shall make any public announcement of capitalization or rights issue prior to receiving notification of approval of its application by the Authority.

4.    Matters to be stated in the application

    (1) Any application made under these Regulations shall be submitted in triplicate and shall be accompanied by a report stating the following particulars:

    (a)    title page–

        (i)    the applicant's full name, date, place and number of incorporation;

        (ii)    the full names of the applicant's directors and their business experience during the preceding five years;

        (iii)    the full title or designation of security proposed for listing and the number of shares, par value and whether fully paid;

        (iv)    purpose of issuance;

    (b)    the capitalization of the applicant in tabular form indicating–

        (i)    designation or title of each class of security;

        (ii)    per value;

        (iii)    number of shares authorized by the Memorandum and Articles of Association, number of shares issued and number of shares to be issued under the application;

        (iv)    where applicable, the number of unissued shares of each class of security reserved for issuance for any purpose, and the purpose for which they are reserved;

        (v)    a description of the rights attached to the shares with regard to voting, dividends, liquidation proceeds, pre-emption in future capital increase or any other special circumstances; and

        (vi)    the date with effect from which the additional shares will qualify for dividend, whether such dividend will be paid in full and the circumstances relating to limitation of time on the right to dividend.

    (2) For each issue or series of funded or long term debt of the applicant and any of its subsidiary companies, the applicant shall state the following particulars in tabular form:

    (a)    full title (including interest rate and maturity date);

    (b)    amount authorized by the debt instrument;

    (c)    amount already issued at the time of making the application;

    (d)    amount redeemed;

    (e)    amount outstanding;

    (f)    issue price;

    (g)    date of payment of interest; and

    (h)    date and terms of redemption.

    (3) The applicant shall state the date or dates of meetings of shareholders authorizing the issuance of securities applied for and, if there were any proceedings of a court of law involved, the date and outcome of such proceedings.

    (4) In the case of acquisitions, the applicant shall in addition state–

    (a)    whether the securities applied for are to be issued as a total or part of the consideration for the acquisition of–

        (i)    controlling interest in, or the major part of the business and assets of, another company; or

        (ii)    specific assets or properties;

    (b)    full names of all parties involved in the acquisition and the date of any contract entered into for that purpose;

    (c)    the nature of the transaction, and the assets or business to be acquired in sufficient detail to indicate its relative value in relation to the consideration to be paid;

    (d)    the principles followed and factors considered in determining the consideration to be paid for the acquisition, and the persons making the determination and their relationship to the applicant;

    (e)    reasons for which the Management of the applicant perceives the acquisition to be favourable; and

    (f)    whether or not any officer, director or major shareholder of the applicant (or any of the applicant's affiliates) has any direct or indirect beneficial interest in the assets to be acquired or the consideration to be paid and, the description of such interest if it exists.

    (5) Where the controlling interest in or the major part of the business and assets of another company is being acquired, the applicant shall state briefly the history and business of that other company and furnish sufficient financial statements of that other company as is prescribed under Regulation 5 and such other information as the Authority may require.

    (6) Where any engineering, geological or appraisal reports were obtained in connection with the proposed acquisition, the applicant shall furnish such excerpts as shall adequately disclose the contents of the appraisal reports.

    (7) Where the securities in relation to which the application is made are in respect of bonus shares capitalized from reserves, the applicant shall–

    (a)    identify the reserves from which the bonus shares are to be capitalized;

    (b)    show a schedule of the movement in the relevant reserve accounts for the preceding three years;

    (c)    where any of the reserves were created following a revaluation of the assets of the applicant, submit a copy of the relevant appraisal report and a certificate from the applicant's auditors that the reserves are sufficient to cover the capitalization of the bonus issue.

    (8) In the case of a rights issue, the applicant shall in addition–

    (a)    submit a timetable in respect of the following events:

        (i)    books closure date to determine rights entitlement;

        (ii)    last day for splitting;

        (iii)    last day for exercise of rights;

        (iv)    last day for renunciation of rights;

        (v)    last day of application for additional shares;

    (b)    state–

        (i)    the recommended price when existing shareholders exercise their right;

        (ii)    the recommended price of the right;

        (iii)    the expected net proceeds and the application of such proceeds;

        (iv)    whether an underwriting agreement exists, and if such an agreement exists the applicant shall submit a copy of the agreement to the Authority;

        (v)    the names and addresses of the auditors who have audited the accounts of the applicant during the preceding three years;

        (vi)    the names and addresses of the brokers sponsoring the application for admission to listing.

    (9) In all cases referred to in these Regulations, the applicant shall–

    (a)    make a declaration that the annual accounts have been audited; and

    (b)    furnish a statement from the applicant's auditors certifying that all circumstances regarding the additional listing known to the auditors and which could influence the evaluation by investors of the applicant's assets, liabilities, financial position, results and prospects have been included in the report.

5.    Additional information to be admitted with the application for a rights issue

    An application for approval of a rights issue shall in addition be accompanied by the following:

    (a)    a brief account of the business experience during the preceding five years of each member of the management of the applicant;

    (b)    a statement concerning any important development affecting the applicant or it's business since the latest annual report of the applicant;

    (c)    where the applicant is being considered or has been considered for suspension or delisting by any exchange, the details thereof;

    (d)    where the securities to be listed are to a controlling interest in, or of all the assets subject to a liability of another company, the latest balance sheet of such company and its profit and loss account to the date of the last balance sheet supplemented by the last quarterly report;

    (e)    one copy of each contract, plan or agreement pursuant to which the securities applied for are to be issued;

    (f)    where the securities applied for are to be issued for the acquisition of a stock interest in another company or properties or other assets, one copy of any engineering, geological or appraisal report which may have been obtained in connection with the proposed acquisition;

    (g)    one copy of each letter of approval issued by the relevant Government authorities; and

    (h)    a statement of estimate of the cost involved in the application indicating:

        (i)    brokerage expenses;

        (ii)    approval fees;

        (iii)    printing;

        (iv)    advertising;

        (v)    the requisite professional fees;

        (vi)    other costs.

6.    Exclusion of employee share ownership schemes

    The procedure prescribed under these Regulations shall not apply to listing of additional securities to be subscribed for, solely by the employees or former employees of the applicant and the applicant shall, in such event, submit to the Authority for approval the subscription form together with such other documents which shall contain such information as the Authority may require for the approval of the shares for admission to listing. {/mprestriction}