Krungsri Asset Management Company Limited (“the Management Company”) would like to notify unitholders of the amendments to the mutual fund project and/or the commitment between the unitholders and the management company (“Amendment to the Project”) of the funds under management (the fund list as attached) which have been approved by the Office of the Securities and Exchange Commission (“the SEC Office”). The main amendments are summarized as follows:
1. Meaning/Definition Such as deleting certificates of deposits and deposit receipts from the definition of “deposits or deposit-equivalent instruments” in order to reflect only the instruments that have the feature of a deposit; adding the definitions of “private equity fund/private equity unit” “special resolution”, “majority resolution”, etc.
2. Calculation of Investment Limits according to Fund Type Classification (Label Fund) Adding a paragraph stating that the Management Company may not count the period of 30 days before termination of the fund, or the period during which the fund has to dispose of its assets due to the redemption or switching orders placed by investors, or the period during which the fund is waiting for investment, which must not be longer than 10 working days, in order to allow more flexibility for fund management. In this respect, the utmost interests of the investors shall be taken into consideration.
3. Calculation of Concentration Limit for Investment in Debt Instruments/Hybrid Instruments/Basel III-Compliant Instruments/ Sukuk Instruments (if any) of any issuer
Old: The fund can invest in such instruments not exceeding one-third of the financial liabilities of their respective issuers as disclosed in the financial statements of the latest accounting period, without taking into account such financial liabilities of the debtors who are connected persons of the issuers such as borrowings from related parties, etc.
New: In the case where the instrument issuer has minimal value of financial liabilities and plans to issue a large amount of new instruments which have not been disclosed in the latest financial statements, the Management Company may add the new financial liabilities (such as the newly issued debt instruments) incurred before ending of the latest accounting period and have not disclosed in the financial statements to the financial liabilities in the latest financial statements, provided that the information of the newly incurred financial liabilities is the public information.
4. Investment in Structured Notes (SNs)
Old: Investment in SNs that are offered for sale domestically shall be in accordance with the following criteria: (1) the issuer of the SNs shall calculate the fair value of such SNs and notify the ThaiBMA on every 15th and the end of each month; (2) Upon occurrence of an event that has significant impact on the price of the SNs, the issuer shall calculate the fair value of the SNs and notify the ThaiBMA immediately.
New: There is no requirement for the reporting of fair value as well as the rule on product limit for investment in SNs as specified above in the case where such SNs are offered broadly to the public and registered with ThaiBMA in accordance with the regulations on issuance and offering for sale of debt instruments such as callable/puttable bonds that already have their fair value announced by the ThaiBMA on a daily basis.
5. Reporting in the Case that the Invested Assets become Disqualified or the Investment is in Non-Compliance with the Prescribed Investment Limits without Additional Investment (Passive Breach) or the Age of Assets of a Money Market Fund is in Non-Compliance with the Prescribed Rule without Additional Investment
Old: The Management Company shall prepare a report and submit it to the SEC Office and the Trustee within the business day next to the date of occurrence of such circumstance, and submit a report notifying the accomplishment of rectification within the business day next to the date on which the rectification is accomplished.
New:
(1) Reporting to the SEC Office: The Management Company shall report to the SEC Office only when it is able to rectify the non-compliant investment in accordance with the stipulated guidelines within 3 business days form the due date of the specified period.
(2) Report Submission Period: The Management Company shall submit the report to the Trustee within 3 business days from the occurrence date of such circumstance or within 3 business days from the date on which the rectification is accomplished.
In this regard, the above-mentioned rectification shall not apply to the money market funds or the CIS units having a policy to invest in money market funds which have the duty to report to the SEC Office according to the existing requirements.
6. Reporting of Investment that is in Non-Compliance with the Investment Policy according to Fund Type Classification Changing the submission period of such report to the SEC Office and the Trustee from within the business day to within 3 business days from the non-compliant date.
7. Purchase of Mutual Fund Units through a Regular Saving Plan: Adding the following statements (1) Investors may purchase the mutual fund units through the electronic channel of the Management Company or any other channels to be specified in the future (2) Investors may purchase the mutual units through the appointed selling agents who offer a Regular Saving Plan service. The purpose of such arrangement is to provide convenience to the investors.
8. Restriction on Holding of Mutual Fund Units in Excess of One-Third of the Total Number of Mutual Fund Units Sold (“the one-third rule”) Relaxing the one-third rule by allowing any person or group of persons to hold more than one-third of the mutual fund units for a period of no longer than one year unless an additional relaxation is granted by the SEC Office.
9. Dividend Payment
Old: The Management Company shall publish the notification of dividend payment in at least one newspaper.
New: The Management Company shall make the notification of dividend payment through any channels that the general investors are able to receive the information such as the website of the Management Company. Additional modes of dividend payment are also added in order to facilitate the unitholders in the future.
10. Change of Fees or Expenses Changing the time period for disclosing information pertaining to the increase of fees or expenses from within 3 business days currently to no less than 3 business days in advance prior to the collection of the higher fees or expenses.
11. Notification of Net Asset Value, Net Asset Value per Unit Rearranging the statements and the sequence of items in accordance with the Notification of the SEC Office which is considered as non-significant modification.
12. Seeking of Unitholders’ Resolution and the Methods of Amendment of Mutual Fund Project or Amendment of Fund Management Procedures
(1) Improving the criteria for seeking unitholders’ resolution in order to provide more convenience for the Management Company in making amendments to the mutual fund project and the fund management procedures.
(2) Establishing a clearer framework for the SEC Office in granting approval to the amendment of mutual fund project.
(3) Setting out operational guidelines for seeking unitholders’ resolution to ensure clear-cut operating processes and ease of understanding
13. Cash or In-kind Payment Made to Unitholders In the case where the Management Company has not recorded the value of the debt instrument or claims of the fund as zero, it needs to seek approval from the unitholders by a special resolution each time before accepting debt payment in the form of assets other than the collateral.
14. Fund Dissolution
Old: The Management Company shall proceed to dissolve the fund when the net redemption of mutual fund units is greater than two-thirds of the total number of mutual fund units sold (“the two-thirds rule”).
New: In case of falling under the two-thirds rule, the Management Company may use its discretion to decide whether to dissolve the fund if it has considered with good faith belief and reasonable ground that the dissolution of the fund is not beneficial to existing unitholders, and the fund still has remaining quality assets and sufficient liquidity, and the unitholders are not affected by such redemption of mutual fund units.
15. Dissolution of RMF/LTF In order to enhance operational flexibility and to ensure that the investors receive continual tax privilege, the periods required for disposal of securities or assets, collection of proceeds from disposal of securities or assets, and transfer of investment to other RMF/LTF are relaxed. According to the new requirements, the securities or assets shall be disposed of within 5 business days, the proceeds from disposal of securities or assets shall be collected within 10 business days, and the transfer of investment to other RMF/LTF shall be done without delay.
16. Liquidation upon Dissolution of the Fund In order to solve the problem of foreign unitholders who are not domiciled in Thailand which prevents the Management Company from placing the property for the purpose of fund liquidation and dissolution, the new regulation allows the Management Company to specify its own address as the domicile for property consignation in the case that the unitholders are not domiciled in Thailand.
17. Use of Benchmark
(1) Changing benchmark due to the imposition of income tax on investment in debt instruments through mutual funds in order to appropriately reflect the returns of the mutual funds;
(2) Changing of benchmark as deemed fit and appropriate by the Management Company within the prescribed investment policy framework.
You can read the details of benchmark change at www.krungsriasset.com.
18. Eligible Assets
Old: The eligible assets of the fund are classified according to the type of instruments such as debt instruments, equity instruments, hybrid instruments, etc.
New: The eligible assets of the fund are transferrable securities (TS) according to the UCITS regulations which have the qualifications as prescribed.
19. Private Equity Units Allowing the fund to invest in private equity units that have similar qualifications as the transferable securities, specifying the same single entity limit for investment in private equity units as that for investment in listed/unlisted securities, and specifying the concentration limit of not exceeding one-third of the total private equity units of that private equity fund.
20. CIS Units
Old: The foreign CIS units invested by a Thai fund shall invest not exceeding 20% of the net asset value such foreign CIS in non-eligible assets of the Thai fund. In addition, the Thai fund cannot invest in the CIS units of a listed fund if such CIS units do not have the qualifications as prescribed by the SEC Office.
New: A Thai fund may invest in the investment units of a foreign CIS of which aggregate investments in non-eligible assets not exceeding 20% of NAV of the Thai fund and such CIS units must have a policy to invest mainly in the eligible assets of the Thai fund. In addition, the Thai fund may invest in the CIS units of a listed fund with the same single entity limit as investment in general listed securities.
21. Type of Fund Classified by Foreign Investment For funds with exposure to investment risks both locally and abroad that have clearly specified the investment limits for foreign assets, changing the period for maintaining such foreign investment limits from “at any time” to “on average in an accounting year” in order to provide flexibility for fund management and allow the Management Company to use its discretion as deemed appropriate according to the prevailing market situation.
22. Type of Fund Classified by Investment Policy For balanced funds that have clearly specified the investment limits for each type of assets, changing the period for maintaining such investment limits from “at any time” to “on average in an accounting year” in order to provide flexibility for fund management and allow the Management Company to use its discretion as deemed appropriate according to the prevailing market situation.
23. Details of Investment Policy Allowing investment in or holding of structured notes which are confined to callable or puttable bonds in order to accommodate the rule on investment in such instruments as prescribed by the SEC Office.
• The amendments of fund project are made to ensure consistency and compliance with the following relevant Notifications:
(1) Notifications of the SEC Office:
- SorNor. 21/2561 Re: Rules, Conditions, and Procedures for Management of Retail Funds, Mutual Funds for Accredited Investors, Mutual Funds for Institutional Investors, and Private Funds (No. 12); which applies to the amendments as per Item No.9-11 and No.14-15
- SorNor. 23/2562 Re: Details of the Mutual Fund Project (No. 9); which applies to the amendments as per Item No.16
- SorNor. 38/2562 Re: Rules, Conditions, and Procedures for Management of Retail Funds, Mutual Funds for Accredited Investors, Mutual Funds for Institutional Investors, and Private Funds (No. 14); which applies to the amendments as per Item No.12-13
- SorNor. 39/2562 Re: Details of the Mutual Fund Project (No. 11); which applies to the amendments as per Item No.12
- SorNor. 48/2562 Re: Rules, Conditions, and Procedures for Management of Retail Funds, Mutual Funds for Accredited Investors, Mutual Funds for Institutional Investors, and Private Funds (No. 15); which applies to the amendments as per Item No.10
(2) Notifications of the Capital Market Supervisory Board:
- TorNor. 13/2562 Re: Rules on Restriction of Investment Unit Holding in Mutual Funds and Duties of Management Companies (No. 6); which applies to the amendments as per Item No.8
- TorNor. 20/2562 Re: Investment of the Funds (No. 12); which applies to the amendments as per Item No.1-6 and No.20-23
- TorNor. 33/2562 Re: Rules, Conditions, and Procedures for Seeking of Unitholders’ Resolution and the Arrangement of Unitholders’ Meeting; which applies to the amendments as per Item No.12
- TorNor. 34/2562 Re: The Commitment between the Unitholders and the Management Company (No. 6); which applies to the amendments as per Item No.12
(3) Letter of the Association on Investment Management Companies (AIMC):
- No. SorKorJor.054//2562 Re: Clarification on Benchmark of Fixed Income Funds and Accounting Entry for Debt Securities of Mutual Funds; and SorKorJor.046//2562 Re: Benchmark of Fixed Income Funds regarding Impact of Taxation on Interest Derived from Debt Securities; which applies to the amendments as per Item No.17
• Effective Dates
(1) The amendment of fund project as per Item Nos. 1 to 17 shall take effect from 31 October 2019 onwards.
(2) The amendment of fund project as per Item Nos. 18 to 23 shall take effect from 14 January 2020 onwards. In this respect, the Management Company shall not collect the redemption fee or switching-out fee (if any) during 13 November 2019 to 13 January 2020.
Should you have any queries or require any further information, please contact your account manager or our Client Service at 02-657-5757 press 2 or via email at krungsriasset.clientservice@krungsri.com.
Please be informed accordingly.