1 FUND CHARTER Manulife Progressive Fund (MAFPF1) April 2008
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FUND CHARTER
Manulife Progressive Fund
(MAFPF1)
April 2008
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Table of Contents
I. LEGAL BASIS ..................................................................................................................... 5
II. DEFINITIONS...................................................................................................................... 5
CHAPTER I: GENERAL PROVISIONS .......................................................................................................... 8
ARTICLE 1: NAME AND ADDRESS OF MAFPF1.................................................................................. 8
ARTICLE 2: FUND OPERATION TERM................................................................................................. 8
ARTICLE 3: PRINCIPLES OF THE FUND ORGANIZATION AND OPERATION .................................. 8
ARTICLE 5: APPOINTMENT OF REPRESENTATIVE FOR CAPITAL RAISING AND THE FUND CERTIFICATES OFFERING............................................................................................... 8
ARICLE 6: FUND MANAGEMENT COMPANY .................................................................................... 9
ARTICLE 7: SUPERVISORY BANK........................................................................................................ 9
CHAPTER II: REGULATIONS ON INVESTMENT......................................................................................... 9
ARTICLE 8: INVESTMENT OBJECTIVE OF THE FUND....................................................................... 9
ARTICLE 9: INVESTMENT STRATEGY................................................................................................. 9
ARTICLE 10: INVESTMENT RESTRICTIONS ....................................................................................... 10
CHAPTER III: INVESTORS, REGISTER OF INVESTORS, TRANSFER OF FUND UNITS....................... 12
ARTICLE 12: INVESTORS...................................................................................................................... 12
ARTICLE 13: RIGHTS AND OBLIGATIONS OF INVESTORS............................................................... 12
ARTICLE 14: REGISTER OF INVESTORS ............................................................................................ 13
ARTICLE 15: TRANSFER OF FUND UNIT(S)........................................................................................ 13
ARTICLE 16: INHERITANCE OF FUND UNIT(S)................................................................................... 13
CHAPTER IV: GENERAL MEETING OF INVESTORS ............................................................................... 15
ARTICLE 18: ANNUAL GENERAL MEETING OF INVESTORS ............................................................ 15
ARTICLE 19: EXTRAORDINARY GENERAL MEETING OF INVESTORS............................................ 15
ARTICLE 20: RIGHTS AND DUTIES OF THE GENERAL MEETING OF INVESTORS........................ 16
ARTICLE 21: CONDITIONS AND PROCEDURES TO CONDUCT THE GENERAL MEETING OF INVESTORS...................................................................................................................... 16
ARTICLE 22: DECISION OF THE GENERAL MEETING OF INVESTORS........................................... 17
CHAPTER V: FUND REPRESENTATIVE BOARD ..................................................................................... 19
ARTICLE 23: ORGANIZATION OF THE FUND REPRESENTATIVE BOARD ...................................... 19
ARTICLE 24: SELECTION CRITERIA FOR THE FUND REPRESENTATIVE BOARD......................... 19
ARTICLE 25: RIGHTS AND OBLIGATIONS OF THE FUND REPRESENTATIVE BOARD.................. 19
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ARTICLE 26: CHAIRMAN OF THE FUND REPRESENTATIVE BOARD .............................................. 20
ARTICLE 27: MANAGEMENT OF THE FUND REPRESENATIVE BOARD.......................................... 20
ARTICLE 28: OPERATING PROCEDURE OF THE FUND REPRESENTATIVE BOARD .................... 20
ARTICLE 29: DISCHARGE OF CHAIRMAN/ MEMBERS OF THE FUND REPRESENTATIVE BOARD AND APPOINTMENT OF NEW MEMBERS..................................................................... 21
CHAPTER VI: FUND MANAGEMENT COMPANY...................................................................................... 23
ARTICLE 30: SELECTION CRITERIA FOR THE FUND MANAGEMENT COMPANY.......................... 23
ARTICLE 31: RIGHTS AND OBLIGATIONS OF FUND MANAGEMENT COMPANY ........................... 23
ARTICLE 32: TERMINATION OF FUND MANAGEMENT COMPANY’S RIGHTS AND OBLIGATIONS TO THE FUND .................................................................................................................. 24
ARTICLE 33: RESTRICTIONS APPLICABLE FUND MANAGEMENT COMPANY..................................... 25
CHAPTER VII: SUPERVISORY BANK ........................................................................................................ 27
ARTICLE 34: SELECTION CRITERIA FOR SUPERVISORY BANK ..................................................... 27
ARTICLE 35: RIGHTS AND OBLIGATIONS OF SUPERVISORY BANK .................................................... 27
ARTICLE 36: TERMINATION OF SUPERVISORY BANK’S RIGHTS AND OBLIGATIONS TO THE FUND................................................................................................................................. 28
CHAPTER VIII: AUDITING, ACCOUNTING AND REPORTING REGIME.................................................. 29
ARTICLE 37: SELECTION AND CHANGE CRITERIA FOR AUDITOR................................................. 29
ARTICLE 38: FISCAL YEAR................................................................................................................... 29
ARTICLE 39: ACCOUNTING REGIME................................................................................................... 29
ARTICLE 40: FINANCIAL STATEMENT................................................................................................. 29
ARTICLE 41: OTHER REPORTS ........................................................................................................... 29
CHAPTER IX: VALUATION METHODS OF NET ASSET VALUE.............................................................. 30
ARTICLE 42: DETERMINATION OF NET ASSET VALUE OF THE FUND ........................................... 30
ARTICLE 43: POLICY ON ASSET VALUATION OF THE FUND ........................................................... 30
CHAPTER X: ADDITIONAL PUBLIC OFFERING ....................................................................................... 31
ARTICLE 44: ADDITIONAL PUBLIC OFFERING ................................................................................... 31
CHAPTER XI: TERMINATION OF THE FUND ............................................................................................ 33
ARTICLE 45: CONDITIONS FOR TERMINATION OF THE FUND........................................................ 33
ARTICLE 46: LIQUIDATION OF THE FUND’S ASSETS........................................................................ 33
CHAPTER XII: ISSUING CHARGES, OPERATION COSTS AND DIVIDEND(S)....................................... 35
ARTICLE 47: ISSUING CHARGE ........................................................................................................... 35
ARTICLE 48: MANAGEMENT FEE......................................................................................................... 35
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ARTICLE 49: SUPERVISORY FEE, REGISTRAR FEE AND SETTLEMENT FEE: .............................. 35
ARTICLE 50: PERFORMANCE-RELATED BONUS............................................................................... 35
ARTICLE 51: OTHER FEES AND CHARGES PAYABLE BY MAFPF1 ................................................. 35
ARTICLE 52: FUND DIVIDEND DISTRIBUTION.................................................................................... 36
CHAPTER XIII: SOLVING CONFLICT OF INTERESTS.............................................................................. 37
ARTICLE 53: CONTROL POSSIBLE CONFLICT OF INTERESTS BETWEEN THE FUND AND OTHER FUNDS .............................................................................................................................. 37
CHAPTER XIV: INFORMATION DISCLOSURE AND AMENDMENT OF THE FUND CHARTER ............ 38
ARTICLE 54: INFORMATION DISCLOSURE......................................................................................... 38
ARTICLE 55: AMENDMENT/ SUPPLEMENT OF THE FUND CHARTER............................................. 39
ARTICLE 56: REGISTRATION OF THE FUND CHARTER.................................................................... 39
ARTICLE 57: IMPLEMENTATION PROVISION ..................................................................................... 39
APPENDIX 1 .......................................................................................................................................... 40
COMMITMENT BY THE FUND MANAGEMENT COMPANY TO THE FUND
APPENDIX 2 .......................................................................................................................................... 42
COMMITMENT BY THE SUPERVISORY BANK TO THE FUND
APPENDIX 3 .......................................................................................................................................... 43
JOINT COMMITMENT BY THE FUND MANAGEMENT COMPANY AND THE SUPERVISORY TO THE FUND
APPENDIX 4 .......................................................................................................................................... 44
POLICY ON DETERMINING PERFORMANCE-RELATED BONUS
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I. LEGAL BASIS
This document is prepared in accordance with the following regulations:
- Law on Securities No.70/2006/QH11 passed by the National Assembly on 29 June 2006 (the “Securities Law”);
- Decree No. 14/2007/NĐ-CP by the Government on 19 January 2007 providing detailed guidelines for implementing some articles of the Law on Securities;
- Decision No. 45/2007/QĐ-BTC by Ministry of Finance dated 5 June 2007 promulgating Regulations on Establishment and Management of Securities Investment Funds.
- Any other laws, decrees, circulars, decisions and regulations governing securities investment fund and securities market.
Hereinafter collectively referred to as prevailing laws which expression includes their
amendments, supplements or replacement.
II. DEFINITIONS Unless otherwise defined, the following terms shall have the following meanings: Manulife Vietnam Fund Management Company (MVFM)
means the fund management company established under the Business Registration No. 4104000117 granted by Department of Planning and Investment of Ho Chi Minh City on 10 June 2006, for business of investment fund management and investment counsultancy. The fund company is authorised by investors to manage the Fund, with power and duty provided in the Fund Charter.
Manulife Progressive Fund (MAFPF1) or the Fund
means securities investment fund issuing fund certificates to the public.
Supervisory Bank
means Hong Kong and Shanghai Banking Corporation Limited (HSBC) – Ho Chi Minh City Branch, established under the license No. 15/NH-GP granted by State Bank of Vietnam under the Law on Credit Institutions and is granted with Certificate of Custodial Activity Registration No. 05 /GPHDLK by State Securities Commission, to carry out activities of custody of securities, economic contracts and documents and records related to the Fund’s assets as well as to supervise the Fund’s activities. The Supervisory Bank is appointed by the General Meeting of Investors. The bank’s power and duty are provided in the Fund Charter and Supervisory Agreement.
Auditor means an independent auditor licenced to provide auditing services to MAFPF1 Fund. Auditor is appointed by the General Meeting of Investors.
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Prospectus Means the document containing accurate, honest and objective information related to the offer, listing of the MAFPF1 Certificates, including, but not limited to, its objectives, investment strategy, financials.
Fund Charter means this document and attached appendices and any amendment thereof from time to time. The Fund Charter is prepared in accordance with the laws of Vietnam and approved by the General Meeting of Investors.
Supervisory Agreement means the agreement signed between MVFM and the Supervisory Bank and approved by the General Meeting of Investors.
Closed-end fund means a securities investment fund of which the Fund’s Units having already been distributed to the public are not redeemed upon request of the investors.
Investor(s) means any Vietnamese organization, Vietnamese individual, foreign organization or foreign individual who holds MAFPF1 Certificate(s).
General Meeting of Investors means the meeting of all Investors with voting power, the highest decision-making authority of MAFPF1. The General Meeting of Investors shall be convened on an annual or extraordinary basis to consider and make decisions on important matters related to MAFPF1 within the authority of the General Meeting of Investors as stipulated in the Fund Charter.
Fund Representative Board represents the interests of all Investors, and shall be appointed by the General Meeting of Investors to supervise, on the investors’ behalf, the activities of the Fund. The rights and obligations of the Representatives Board shall be stipulated in the Fund Charter.
Charter Capital means total actual cash capital contributed by the Investors and registered in the Fund Charter.
Fund Unit(s) means the Charter Capital being equally divided at the par value of VND10,000 per Fund Unit. Each Fund Unit represents for equal capital and interest in the Fund.
MAFPF1 Certificate(s) Means the securities issued by MVFM, on behalf of MAFPF1, to certify the legitimate rights and interests of Investors on the assets and capital of MAFPF1 in equivalent to number of Fund Units held by such Investors. MAFPF1 Certificate(s) may take the form of certificates, book entries, or electronic data.
Offering Price equals par value plus issuing charge per Fund Unit as provided in the Fund Charter.
Management Fee payable by Investors to MVFM for providing fund management services. The Management Fee shall be payable on a monthly basis and in accordance with the formula specified herein.
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Performance-related Bonus is the bonus payable to MVFM at the end of each
financial year if the performance of the Fund in such year exceeds specified investment criteria as provided herein.
Dividend(s) is the retained earning of the Fund after deduction of reasonable expenses, approved by the General Meeting of Investors to distribute to Investors in proportion with their ownership in the Fund.
Fund Offering Period shall be a minimum period of 20 days or a maximum period of 90 days from the effective date of public offering of the Fund to the public as licensed by SSC.
Fund Closing Date shall be ending date of capital raising for MAFPF1 in accordance with current legislation. .
Fiscal Year shall be 12 months starting the 1st of January and ending 31st of December. The first fiscal year of MAFPF1 starts on the date it is officially granted establishment license by the SSC and ends on 31st December of the same year.
Net Asset Value or NAV equals the value of total MAFPF1’s assets minus the value of total MAFPF1‘s liabilities on the Valuation Date.
Valuation Date means the last working day of the week or any other day as may be determined by MVFM for the purpose of determination of the Net Asset Value of the Fund.
State Securities Commission, SSC
means the state regulator on fund management and securities market sectors in Vietnam.
Related Person(s) shall have the meaning defined in Article 6(34) of the Securities Law.
Fund Assets means any securities and cash or cash equivalence and other assets under the ownership of the Fund, which are listed in Article 43.3.
Other definitions Other definitions shall be construed in accordance with prevailing laws.
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CHAPTER I GENERAL PROVISIONS
ARTICLE 1: NAME AND ADDRESS OF MAFPF1
Full name: Manulife Progressive Fund
Short name: MAFPF1
7th Floor, Manulife Plaza
75 Hoang Van Thai, District 7, Ho Chi Minh City, Vietnam
Telephone: 08-4166777
Fax: 08-4160761
Website: www.manulifefunds.com.vn
ARTICLE 2: FUND OPERATION TERM
The operation term of MAFPF1 is 7 years from the date of the Fund Closing Date.
The operation term of the Fund may be extended subject to the recommendation of the MVFM
and the approvals of the General Meeting of Investors.
ARTICLE 3: PRINCIPLES OF THE FUND ORGANIZATION AND OPERATION
1. MAFPF1 is a public closed-end fund. The Fund has no obligation to redeem Fund
Unit(s) that has been issued to Investors throughout the Fund’s operation term.
2. General Meeting of Investors comprises all Investors and is the highest decision-making
authority of MAFPF1.
3. The Fund Representative Board represents the interest of Investors and shall be
elected by the General Meeting of Investors. The rights and obligations of the Board and
its composition are stipulated in Chapter V of this Fund Charter.
ARTICLE 4: MOBILIZED CAPITAL AND NUMBER OF FUND UNITS OFFERED
1. The total capital raised from the public is VND214,095,300,000.
2. The number of Fund Units offered is 21,409,530 Fund Units.
3. The increase or decrease of the Charter Capital must be approved by the General
Meeting of Investors in accordance with the provisions of this Fund Charter and the
prevailing laws.
ARTICLE 5: APPOINTMENT OF REPRESENTATIVE FOR CAPITAL RAISING AND THE
FUND CERTIFICATES OFFERING
Legal representative of the Fund Management Company shall be appointed to be representative for capital raising and the fund certificates offering.
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ARICLE 6: FUND MANAGEMENT COMPANY
Manulife Vietnam Fund Management Company (MVFM) is established under Business
Registration Certificate No. 4104000117 dated 10 June 2005 issued by the HCMC Planning and
Investment Department and under Fund Management Licence No.04/UBCK-GPHDQLQ dated 14
June 2005 issued by the State Securities Commission.
MVFM’s head office: 7th Floor, Manulife Plaza, 75 Hoang Van Thai, District 7, Ho Chi Minh City,
Vietnam
Telephone: 08-4166777
Fax: 08-4160761
ARTICLE 7: SUPERVISORY BANK
The Hong Kong and Shanghai Banking Corporation Limited (HSBC) – Ho Chi Minh City Branch is
appointed by the General Meeting of Investors as the supervisory bank of MAFPF1. HSBC is
established under 15/NH-GP issued by the State Bank of Vietnam on 22 March 1995 and
Custodian Licence No.05/GPHDLK issued by the State Securities Commission 13 July 2000.
Address: 6/F, The Metropolitan, 235 Dong Khoi Street, District I HCMC
Telephone: 84-8-8292288
Fax: 84-8-8230530
CHAPTER II REGULATIONS ON INVESTMENT
ARTICLE 8: INVESTMENT OBJECTIVE OF THE FUND
The investment objective of MAFPF1 is to provide medium to long-term growth potential to be
achieved by investing in equity securities in Vietnam. As the primary objective of the fund is
capital growth, it is not anticipated that Dividend payment, if any, will be substantial.
ARTICLE 9: INVESTMENT STRATEGY
MAFPF1 will invest in a diversified portfolio with progressive style; mainly focus in equities of
companies operating in Vietnam, with high quality earnings growth and long term potential which
have (i) good opportunity of growth after the WTO accession: integrity, transparency, and position
in their relevant markets; and (ii) good corporate governance: strong senior management, solid
business strategies and sound balance sheets.
MAFPF1 may invest overseas subject to the approval of the SSC in accordance with the
prevailing laws.
9.1. Investment Structure
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The asset of the Fund is VND214,095,300,000 (In words: two hundred fourteen billion ninety-five
million three hundred thousand Vietnam Dongs) shall be invested in accordance with the
following parameters:
65% - 95% of the Fund will be invested into in listed equities
0% - 25% of the Fund will be invested into OTC equity
0% - 10% of the Fund will be invested into cash and fixed income
The above is target long-term asset mix according to the investment strategy of the Fund. Under
certain exceptional cases (determined by Fund Managers), the asset mix may vary from the
above target.
9.2. Investment Sectors
MAFPF1 will invest in the fields and industries not prohibited by laws, mainly in the following
sectors:-
o Banking; financial sector;
o Consuming products focused on branding and distribution;
o Manufacturers of furniture, wood-products and handicrafts;
o Light manufacturing including garments, footwear and plastics;
o Manufacturers of industrial raw materials;
o Telecommunication;
o Software outsourcing and business process outsourcing;
o Logistic;
o Other services and industries.
ARTICLE 10: INVESTMENT RESTRICTIONS
In investment of the Fund’s assets, MAFPF1 will apply a set of investment restrictions that are
stricter than those under the prevailing laws. The purpose is to maintain the diversified portfolio
and effective risk management.
The investment of the Fund’s Assets shall be subject to the following restrictions:
MAFPF1’s self restrictions:-
o To invest not more than 10% of the Net Asset Value of the Fund in a single listed security or
listed securities of a single issuer;
o To invest not more than 5% of the Net Asset Value of the Fund in a single unlisted security
or unlisted securities of a single issuer;
o The value of securities of a group of 5 Issuers (listed or unlisted) will not exceed 40% of the
Net Asset Value of the Fund;
Regulatory restrictions subject to regulatory changes from time to time:-
o No investment in Fund Certificates of the Fund itself or other funds;
o No provision of loans or guarantee for any loans;
o The Fund shall not borrow for financing its activities, except for short-term borrowing to
cover its necessary expenses. The total value of short-term borrowing shall not exceed 5%
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of the Net Asset Value of the Fund (or any other applicable rate permitted under the
prevailing laws from time to time) at any one point of time, and the maximum term of a
borrowing shall be 30 days.
o To invest not more than 15% of the total value of securities of a single issuer, except
government bond;
o To invest not more than 30% of the Net Asset Value of the Fund in companies within a
group of companies having mutual ownership relationship;
o To invest not more than 10% of the Net Asset Value of the Fund in securities of a single
issuer.
The investment portfolio of the Fund may deviate from the aforesaid restrictions by a maximum of
15%, provided that such deviation is due to an increase or decrease in the market value of the
Fund’s Assets and legitimate payments of the Fund.
ARTICLE 11: INVESTMENT SELECTION
11.1 Investment selection for equity
In selecting investments, MVFM will focus in companies listed or plan to be listed in the Vietnam
stock market. The selection of invested companies is specified in Article 9. Company analysis
then follows in order to determine the portfolio holding.
The management style is broadly termed “value oriented growth” where growth investments are
made after careful consideration regarding the price level and the timing of entry.
MVFM also emphasizes a bottom-up approach to selected individual stock and seeks to identify
companies that are regularly traded and appear most attractive in terms of sustainable earnings
growth and attractive valuation.
Fundamental financial analysis of individual companies could also be used to identify those with
substantial cash flows, reliable revenue streams and strong competitive positions.
11.2 Investment selection for fixed income
Investment of fixed income shall be managed actively in the forms of term deposits, government
bonds or corporate bonds. The Fund also permitted to invest in convertible bonds of such target
companies as mentioned in Article 11.1.
The fund manager will pay particular attention to quality when selecting investments, and
prospective investments will be subject to careful scrutiny by the fund manager. However
investors should note that returns on the investment in fixed income would depend on the credit
standing of the issuer.
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CHAPTER III INVESTORS, REGISTER OF INVESTORS, TRANSFER OF FUND UNITS
ARTICLE 12: INVESTORS
12.1 Investors include institutional and individual investors being Vietnamese or foreigner
who hold MAFPF1 Certificate(s). Investors shall bear financial and legal responsibility to
MAFPF1 to the extent of their contribution to the Fund.
12.2 Institutional Investors must be the organizations recognized under the laws of Vietnam.
Institutional Investor shall appoint a representative to represent for the interests and
rights attached to the number of Fund Unit(s) under its holding. The appointment,
termination or replacement of such representative must be informed in writing to
MAFPF1 and the Fund Management Company and signed by the legal representative
of the Investors.
12.3 Limit on Fund Unit(s) holding by foreign Investors in the Fund shall be in compliance
with the prevailing laws from time to time.
ARTICLE 13: RIGHTS AND OBLIGATIONS OF INVESTORS
13.1 Investors shall have the rights:-
(a) to receive profits from the investment activities of MAFPF1 in proportion to the
Investors' capital contribution ratio;
(b) to receive benefits and assets which are legally distributed following liquidation of
the assets of the Fund;
(c) to initiate legal proceedings against the Fund Management Company, the
Supervisory Bank or their affiliated organizations if any of such organizations
violate the lawful rights and interests of Investors;
(d) to exercise rights via the General Meeting of Investors;
(e) to self-nominate or be nominated to the Fund Representative Board if the
Investors have met the requirements set out in Article 24.1;
(f) to transfer MAFPF1 Certificate(s) in accordance with the provisions in the Fund
Charter;
(g) at the expiry of the Fund, Investors may switch the Fund Unit(s) they hold into
corresponding values of any other investment funds under the management of
MVFM without paying any issuing charge, if that is in compliance with the
regulations of the new fund(s) and the prevailing laws.
(h) to exercise other rights stipulated in the Fund Charter.
13.2 Investors shall have the obligations:-
(a) to comply with resolutions of the General Meeting of Investors;
(b) to make full payment for the purchase of MAFPF1 Certificate(s);
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(c) to comply with applicable anti-money laundering laws and guidelines. The Fund
Management Company or its approved distributors reserve the right to request
such information as may, in the opinion of the Fund Management Company or its
approved distributors, be necessary to verify the identity of the Investors.
(d) Other obligations stipulated in the Fund Charter.
ARTICLE 14: REGISTER OF INVESTORS
14.1 The Supervisory Bank and the Fund Management Company must establish and keep the
Register of Investors updated from the date on which the Fund has completed its IPO.
The Register of Investor may be in the form of written document, electronic data or both.
The Register of Investors comprises the following:
(a) Name of the Fund;
(b) Number of the Register of Investors, total capital successfully raised, the Fund
operation term;
(c) Name, licence, and head office address of the Fund Management Company and the
Supervisory Bank;
(d) Total number of Fund Units permitted to issue;
(e) Actual total number of Fund Units issued and total value of the contribution;
(f) Investor’s name, contact address, and number of Fund Unit(s) held by each
Investor, ratio of Fund Unit(s) holding by each Investor to the Charter Capital, and
ownership register date.
(g) Date of the Register of Investors
14.2 Register of Investor shall be kept at the head office of the Supervisory Bank or the Fund
Management Company and such places must be informed in writing to State Securities
Commission and to all Investors.
ARTICLE 15: TRANSFER OF FUND UNIT(S)
15.1 MAFPF1 is a public closed-end fund hence it and the Fund Management Company
have no obligation to redeem Fund Unit(s) from Investors.
15.2 Investors may transfer Fund Unit(s) via the Stock Exchange in accordance with the
prevailing laws after the Fund has been listed.
ARTICLE 16: INHERITANCE OF FUND UNIT(S)
16.1 The inheritance of Fund Units shall be in compliance with the applicable laws on
inheritance. MAFPF1 and the Fund Management Company shall only accept the lawful
inheritor and not be held responsible for any dispute related to such inheritance or
inheritor.
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16.2 The Supervisory Bank and the Fund Management Company shall register the lawful
inheritor in the Register of Investors upon his/her full submission of evidences of
inheritance.
ARTICLE 17: SETTLEMENT OF LOSSES OF THE FUND 17.1. In case where there are losses due to the objective reasons or events of force majeur, the
Investors shall bear such losses at a portion equivalent to their capital contribution ratio and shall not receive Dividend(s) in the period of such losses occurrence. In such case, the Fund Representative Board shall consider and propose to the General Meeting of Investors one of the following solutions:
(a) Decrease and re-registration of the Charter Capital; or (b) Increase of the Charter Capital by contribution from the current Investors at the portion
equivalent to their respective capital ratio; or (c) Termination of the Fund.
17.2. The increase or decrease of the Charter Capital as provided in Article 17.1 shall be
subject to the approval from General Meeting of Investors and State Securities Commission. The termination of the Fund shall be in accordance with the Chapter XI of this Charter.
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CHAPTER IV GENERAL MEETING OF INVESTORS
ARTICLE 18: ANNUAL GENERAL MEETING OF INVESTORS
18.1 The General Meeting of Investors is the highest decision-making authority of the Fund.
All Investors named in the Register of Investors on or before the record date shall be
entitled to attend the General Meeting of Investors.
18.2 The General Meeting of Investors shall be convened annually by the Fund Management
Company and the Supervisory Bank within ninety (90) days from the ending date of the
Fiscal Year.
18.3 The first General Meeting of Investors shall be convened by the Fund Management
Company and the Supervisory Bank within twenty five (25) days from the Fund Closing
Date.
ARTICLE 19: EXTRAORDINARY GENERAL MEETING OF INVESTORS
19.1 An extraordinary General Meeting of Investors shall be convened by the Fund
Representative Board, the Fund Management Company or the Supervisory Bank or an
Investor / Investor group holding 10% or more of the Charter Capital for a continuous
period of at least 6 months, to decide on:-
19.1.1 amendment, supplement of the Fund Charter or the Supervisory Agreement;
19.1.2 change of investment strategy, investment objective, and plan on distribution of
Dividend(s);
19.1.3 change of the Fund Management Company or the Supervisory Bank who have brought
damages to the Fund;
19.1.4 change of the Fund Management Company or the Supervisory Bank who goes
bankrupt, terminates their operation or violates the Fund Charter or the Prospectus;
19.1.5 revision of increasing fees payable to the Fund Management Company and/or
Supervisory Bank as per their respective request, which is outside the increase range
provided in the Fund Charter;
19.1.6 termination of the Fund; or
19.1.7 merger of the Fund into other funds under management of the Fund Management
Company.
19.2 The General Meeting of Investors held pursuant to Article 19.1 must be organized within
thirty (30) days from the occurrence date of such events. At least fifteen (15) working
days prior to the General Meeting of Investors, the party who has called the meeting
must inform all Investors of such meeting.
19.3 Expenses for an extraordinary General Meeting of Investors shall be paid by the Fund,
unless the meeting is organized in the event of any breaches by the Fund Management
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Company, the Supervisory Bank. In such event, the expenses shall be borne by the
Fund Management Company and the Supervisory Bank respectively.
ARTICLE 20: RIGHTS AND RESPONSIBILITIES OF THE GENERAL MEETING OF
INVESTORS
The General Meeting of Investors shall have the rights and responsibilities:
20.1 to elect, terminate or replace the chairman or members of the Fund Representative
Board; to elect additional members of the Fund Representative Board in case the
number of its members falls below the statutory minimum number of the Board’s
members as stipulated in Article 23 of this Charter.
20.2 To approve the appointment of Supervising Bank;
20.3 to make decisions on remuneration and operational expenses for the Fund
Representatives Board;
20.4 to adjust fees payable to the Fund Management Company and the Supervisory Bank;
20.5 to handle any breaches by the Fund Management Company, the Supervisory Bank or
the Fund Representatives Board which has caused losses or damage to the Fund;
20.6 to decide on amendment or supplement of the Fund Charter or the Supervisory
Agreement;
20.7 to decide on listing of the Fund;
20.8 to decide on basic changes in investment strategy, investment objectives and plan on
distribution of Dividend(s);
20.9 to decide on any additional public offering of the Fund, increase of the Charter Capital,
number of Fund Units to be issued and Unit price, plan of issuance and use of capital
raised from such issuance;
20.10 to decide on termination of the Fund;
20.11 to decide on change of the Fund Management Company or the Supervisory Bank;
20.12 to request the Fund Management Company or the Supervisory Bank to submit
accounting books or transaction documents to the General Meeting of Investors;
20.13 to approve annual financial statements, reports on assets and operation of the Fund;
and
20.14 to approve for selection of an accreditied auditor to audit annual financial statements of
the Fund;
ARTICLE 21: CONDITIONS AND PROCEDURES TO CONDUCT THE GENERAL MEETING
OF INVESTORS
21.1 Conditions to conduct the General Meeting of Investors:
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21.1.1 The General Meeting of Investors will be organized if the attending Investors represent
at least 65% of the Charter Capital. Investors may physically attend the meeting or
through their proxy.
21.1.2 In case the meeting fails to meet the conditions stipulated in Article 21.1.1, the next
meeting will be convened within 30 days from the proposed date of the first meeting. In
such case, the meeting will be organized irregardless the number of attending Investors.
21.1.3 Each Fund Unit attaches a voting right.
21.1.4 The Fund Management Company, the Supervisory Bank, Auditor, and other service
providers to the Fund are entitled to attend the General Meeting of Investors but have
no voting right.
21.2 Procedures to conduct the General Meeting of Investors:
21.2.1 The General Meeting of Investors may be held in the form of either face-to-face meeting
or distant meeting by written consultation;
21.2.2 Timing, venue and agenda of the General Meeting of Investors shall be informed to all
Investors at least five (05) working days prior to the date of the meeting;
21.2.3 All the General Meeting of Investors shall be documented and kept at the head office of
the Fund Management Company.
ARTICLE 22: DECISION OF THE GENERAL MEETING OF INVESTORS
22.1 Decision of the General Meeting of Investors shall be made by voting or collecting
written opinions. Investors who have rights and obligations on the matters to be voted
are not entitled to vote for such matters.
22.2 Each Fund Unit has one vote.
The Fund Management Company, Supervising Bank, Auditor and services providers of
the Fund will be entitled to attend the General Meeting of Investors but have no vote.
22.3 Decision of the General Meeting of Investors will be approved if:-
22.3.1 It is approved by the attending Investors representing at least 51% of the total votes of
all the attending Investors and Investors with votes in other forms; or
22.3.2 As for decision to amend or supplement the Fund Charter or terminate the Fund, it is
approved by the attending Investors representing 65% of the total votes of all attending
Investors and Investors with votes in other forms.
22.3.3 In case of collecting opinions in writing, decision of the General Meeting of Investors will
be approved if the Investors representing 75% of the total votes of all Investors.
22.3.4 The Fund Representative Board, the Fund Management Company and the Supervisory
Bank shall ensure that all decisions of the General Meeting of Investors have been
made in compliance with the prevailing laws and the Fund Charter. The Fund
Representative Board, the Fund Management Company and the Supervisory Bank shall
abide by and implement these decisions.
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22.3.5 State Securities Commission shall have power to request change of any contents in the
decisions of the General Meeting of Investors should such decisions are not in
compliance with the prevailing law.
19
CHAPTER V FUND REPRESENTATIVE BOARD
ARTICLE 23: ORGANIZATION OF THE FUND REPRESENTATIVE BOARD
- The Fund Representative Board shall represent the interests of Investors and shall be elected by the General Meeting of Investors.
- The Fund Representative Board shall have the term of appointment of 2 years.
- The Fund Representative Board shall pass decisions by way of voting at meetings or collecting written opinions. Each Member of the Board shall have one vote.
- The Fund Representative Board comprises five (5) members, of whom two-thirds must be independent members and not Related Persons to the Fund Management Company or the Supervisory Bank.
ARTICLE 24: SELECTION CRITERIA FOR THE FUND REPRESENTATIVE BOARD
24.1 A member of the Fund Representative Board must be an Investor who meets one of the following conditions:
a) hold at least 5% of the Charter Capital. A group of Investors representing such amount of capital contribution is entitled to nominate its representative to the Board; or
b) have good prestige and experience in finance or capital market and recommended by the General Meeting of Investors.
24.2 Members of the Fund Representative Board shall elect amongst themselves a Chairman of the Board. The Chairman must be independent and not a Related Person to the Fund Management Company or the Supervisory Bank.
24.3 The chairman and members of the Fund Representative Board must hold all their MAFPF1 Certificate(s) for at least 6 months from the listing date and at least 50% of the number of their MAFPF1 Certificate(s) for the next 6 months.
24.4 Members of the Fund Representative Board are not allowed to authorize others to exercise rights and perform obligations related to the Fund.
ARTICLE 25: RIGHTS AND OBLIGATIONS OF THE FUND REPRESENTATIVE BOARD
The Fund Representative Board has the rights and obligations:-
a) to supervise the operation of the Fund Management Company, the Supervisory Bank and other service providers to the Fund in accordance with the Charter and the prevailing laws;
b) to call the General Meeting of Investors on an annual or extraordinary basis in accordance with the provisions of this Charter;
c) to minute and send resolutions/ minutes of the General Meeting of Investors to all Investors and the State Securities Commission in accordance with the Fund Charter and the prevailing laws;
d) to appoint, remove or replace the chairman of the Board;
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e) to examine and monitor the implementation of the process and policy on asset valuation of the Fund;
f) to approve for any transactions between the Fund with the Fund Management Company, the Supervisory Bank, or with Related Persons in accordance with the Fund Charter and the prevailing laws;
g) to approve for any reasonable fees or charges incurred by the Fund other than those set out in the Fund Charter upon the proposal of the Fund Management Company;
h) to recommend the change of investment strategy and objective of the Fund;
i) to recommend and approve plan on dividend distribution of the Fund;
j) to recommend the change of the Fund Management Company or the Supervisory Bank;
k) to recommend the termination of the Fund and plan on such termination;
l) to recommend the change of fees payable to the Supervisory Bank or other service providers to the Fund;
m) the Fund Representative Board and its members are responsible to abide by resolutions of the General Meeting of Investors, the Fund Charter and the prevailing laws.
ARTICLE 26: CHAIRMAN OF THE FUND REPRESENTATIVE BOARD
The General Meeting of Investors elects one of the members of the Fund Representative Board to be Chairman of Board. The Chairman must be an independent member. The Chairman shall have following powers and duties: a. To work out the action program and plan of the Fund Representative Board; b. To prepare the program, agenda, document for and convene and chair the Fund
Representative Board’s meetings; c. To monitor the implementation of the Fund Representative Board’s decision; and d. Other powers and duties provided in the Fund Charter.
ARTICLE 27: MANAGEMENT OF THE FUND REPRESENATIVE BOARD
27.1. In case where Chairman of the Fund Representative Board is absent or unable to fulfill his
tasks, the member of the board, who is authorized by the Chairman shall exercise the Chairman’s powers and duties.
27.2. In case of unavailability of authorized person, the members of the Fund Representative
Board shall, on unanimous basis, select one of the independent members to be interim chairman of the board. The election of new Chairman shall be made in the immediately next annual General Meeting of Investors.
ARTICLE 28: OPERATING PROCEDURE OF THE FUND REPRESENTATIVE BOARD
28.1 The Fund Representative Board meets at least quarterly to discuss and decide on matters
within the authority of the Fund Representative Board. The Chairman shall call and chair
the meetings. The Chairman must send a written notice to all members of the Fund
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Representative Board at least ten (10) working days before the meeting of the Fund
Representative Board.
28.2 The Fund Representative Board shall convene an extraordinary meeting if requested by
the Chairman of the Fund Representative Board, the Fund Management Company, or
the Supervisory Bank or by at least two thirds (2/3) of the members of the Fund
Representative Board.
28.3 Quorum of the meetings of the Fund Representative Board is two thirds (2/3) of the
members. The members may physically attend the meeting or through their proxy.
28.4 Quorum for resolutions of the Fund Representative Board:
26.4.1 51% of the attending members. In case the number of the votes is equal, the final
decision will be from the Chairman.
26.4.2 65% of the attending members regarding the matters stipulated in Article 25 (f) and (i).
26.4.3 Unanimous vote is required for the matters stipulated in Article 25 (e), (h), (j) and (k).
28.5 The Fund Management Company and the Supervisory Bank are entitled to attend the
Fund Representative Board’s meetings but have no voting rights.
28.6 All reasonable expenses of the Fund Representative Board meetings shall be borne by
the Fund. Traveling and accommodation expenses related to the Board meetings or
other business trips for the Fund shall be borne by members of the Fund Representative
Board.
28.7 The Fund Representative shall appoint a competent staff of the Fund Management
Company to be secretary and take minutes of the Fund Representative Board’s
meeting.
28.8 All contents in the minutes of the Fund Representative Board’s meeting shall not be
valid and enforceable unless such minutes is signed by every member of the board.
Such minutes shall be decisions of the Fund Representative Board.
ARTICLE 29: DISCHARGE OF CHAIRMAN/ MEMBERS OF THE FUND REPRESENTATIVE
BOARD AND APPOINTMENT OF NEW MEMBERS
29.1 Chairman/ members of the Fund Representative Board will be discharged by the General
Meeting of Investors in the following events:
29.1.1 they are sued for criminal proceedings;
29.1.2 they are declared by the courts as incapacitated or of unsound mind;
29.1.3 resignation, end of the term of appointment or death;
29.1.4 they no longer hold Fund Unit(s); or
29.1.5 they have committed actions against the rights and interest of Investors and the Fund.
29.2 The appointment of replacement member(s) is decided at the immediately following
General Investors Meeting unless an extraordinary General Meeting of Investors is
called when the discharge of membership stipulated at this Article would cause the
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number of Fund Representatives Board fell below the statutory minimum number of
members.
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CHAPTER VI
FUND MANAGEMENT COMPANY
ARTICLE 30: SELECTION CRITERIA FOR THE FUND MANAGEMENT COMPANY
The selected Fund Management Company must satisfy the following conditions:-
30.1 Having obtained fund management license granted by the SSC.
30.2 Not being a Related Person to the Supervisory Bank.
30.3 Having sufficient ability to provide fund management services.
30.4 Agreeing to fulfill its commitments to the Fund as stated in Appendices 1 and 3 of this
Charter.
ARTICLE 31: RIGHTS AND OBLIGATIONS OF FUND MANAGEMENT COMPANY
31.1 The Fund Management Company has the rights:
31.1.1 To be entitled to management fees and bonuses as stipulated in the Fund Charter, the Prospectus in accordance with the prevailing laws;
31.1.2 To be entitled to conduct securities business and provide services related to the fund management business in accordance with the prevailing laws;
31.1.3 To represent the interests of Investors as provided for under the Fund Charter hence exercise voting-rights at any general meeting of investors to which such Investors are parties;
31.1.4 To attend the General Meeting of Investors in accordance with the Fund Charter;
31.1.5 To request Investors provide all and any information which at the Fund Management Company’s sole discretion is necessary to verify Investors’ indemnification and the proof of the monies contributed by Investors for full compliance with the Company’s regulations on anti-money laundering and that of under the prevailing laws.
31.2 The Fund Management Company has the obligations:-
31.2.1 To abide by the Fund Charter and the prevailing laws;
31.2.2 To manage the Fund in accordance with the Fund Charter, investment strategy and investment objectives approved by the General Meeting of Investors;
31.2.3 To act in an honest and fair manner and for the best interest of the Fund and Investors;
31.2.4 To safely protect and separately manage assets of each fund under its management; to ensure segregation of duties, separation of organization and operation of fund management activities from those of other business activities of the Fund Management Company;
31.2.5 To perform net asset valuation of the Fund in accordance with the provision of the Fund Charter. The Fund Management Company may engage a third party to provide
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such services or other fund administrative services for the Fund provided that this engagement has been approved by the General Meeting of Investors;
31.2.6 To compensate for any losses suffered by the Fund or Investors from the failure of the Fund Management Company to comply with its obligations stipulated under the Fund Charter;
31.2.7 To ensure that any authorisation to a third party and any changes in the organisational structure, management of the Fund Management Company shall not cause an adverse impact to the interests of the Fund and Investors. To supervise and ensure that execution of such authorisation shall be done promptly and compliant with the Fund Charter and the prevailing laws. The Fund Management Company shall be responsible for any losses and damages suffered by the Fund and Investors from its failure to do so.
31.2.8 In case the Supervisory Bank finds out and advises the Fund Management Company that a transaction of the Fund’s assets is incompliant with the Fund Charter, the prevailing laws or that such transaction is beyond the authority of the Fund Management Company, the Fund Management Company must as soon as practicable, cancel such transaction, buy or sell the Fund’s assets in order to restore the assets of the Fund to its original status. Such restoration must be made within three (3) months from the occurrence date of the incompliant transactions and all costs or losses incurred therefrom shall be borne by the Fund Management Company.
31.2.9 To establish a system of internal control, risk management, anti-money laundering, code of conduct to prevent any potential conflict of interests within the Company, between the Company and the Fund and in transactions with Related Person(s);
31.2.10 To execute transaction orders of the Fund prior to orders of the Company. The Company must allocate assets fairly and reasonably in investment of the Fund’s assets and those of others.
31.2.11 To provide complete and truthful information to Investors;
31.2.12 To implement regimes on accounting, auditing, statistics and financial obligations in accordance with the provision of the prevailing law.
31.2.13 To disclose information to the public in accordance with the Fund Charter and the prevailing laws.
31.2.14 To keep and file all documents evidencing accurately all orders and daily transactions of the Fund, other investors and the Fund Management Company, including documents pertaining to:
(a) Fund distribution agreement;
(b) Sell transactions;
(c) Other transactions
ARTICLE 32: TERMINATION OF FUND MANAGEMENT COMPANY’S RIGHTS AND
OBLIGATIONS TO THE FUND
32.1 Fund Management Company’s rights and obligations to the Fund will be terminated in the following events:
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32.1.1 Fund Management Company propose to terminate its rights and obligations to the Fund in accordance with the provisions of the Fund Charter and such proposal is approved by the General Meeting of Investors;
32.1.2 At the request of the Supervisory Bank or the Fund Representative Board and approved by the General Meeting of Investors;
32.1.3 The Fund Management Company’s fund management licence is revoked by the SSC pursuant to the prevailing laws;
32.1.4 The Fund Management Company goes bankrupt or terminates its operation;
32.1.5 The Fund Management Company is merged or acquired by other company;
32.1.6 At the expiry of the operation term or early termination of the Fund;
32.2 In the events as stipulated in Article 32.1, the rights and obligations of the Fund Management Company to the Fund are transferred to other fund management company in accordance with the provisions of prevailing laws.
ARTICLE 33: RESTRICTIONS APPLICABLE FUND MANAGEMENT COMPANY
33.1 The Fund Management Company must not a Related Person to the Supervisory Bank or those of any funds under management of the Fund Management Company.
33.2 Related parties of the Fund Management Company, fund manager, staff of Fund Management Company are allowed to subscribe for fund certificates of public funds, stocks of public securities investment companies which the company will manage during initial public offering period. With regard to fund certificates of funds which are under management of the Company, it will be subject to the applicable law.
33.3 All securities transactions by the chairman, members of the Board of Management, the Fund’s managers and employees of the Fund Management Company must be reported to and managed centrally by the Fund Management Company under the supervision of the compliance/auditing department;
33.4 Fund Management Company, Related Person(s) to the Company, the Fund’s managers shall not be a party to any transaction of the Fund’s assets, unless such transaction is performed via the Stock Exchange or Securities Trading Centers;
33.5 Except for the case regulated in Article 33.4, other transactions of assets between the Fund and the Fund Management Company, Related Person(s) to the Company and the Fund’s managers shall be performed in accordance with the following principles:
(a) Transacted assets must not be real estate or unlisted securities;
(b) Transactions must be agreed in writing by the Supervisory Bank and the Fund
Representative Board;
(c) Transactions must ensure fairness and prevent possible detriments to the rights
and interests of the Fund and Investors. The Fund Management Company shall be
responsible to compensate for any losses and damages suffered from such
transactions. Information relating to these transactions such as timing, value of the
transactions, parties to the transactions and other important information must be
fully reported to the Fund Representative Board, the SSC and publicly disclosed to
Investors;
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33.6 When the Fund Management Company proceed transactions relating to the Fund’s assets, the chairman, members of the Board of Management, the Fund’s managers and employees of the Fund Management Company are not allowed to require, ask or receive, in their name or on behalf of the Fund Management Company, any compensations, benefits or interests for performing such transactions, except for fees and bonuses clearly prescribed in the Prospectus and the Fund Charter.
33.7 In case the Fund Management Company or Related Person(s) to the Company have any transactions for the benefit of the Fund in regard to the Fund’s assets, the allocation of assets and interests must be made fairly and reasonably. The parties must not use the assets of the Fund directly or indirectly to obtain benefits for themselves, except for the direct benefits for their participation in the transactions, or not have any other purpose other than for such transactions and the investment of the Fund.
33.8 The Fund Management Company must not use capital of the Company, assets of the Fund to invest into assets or securities of other funds under its management, unless such transaction is carried out via the Stock Exchange, or Securities Trading Centers.
33.9 The Fund Management Company must not open securities transaction account for the Fund at a securities company, which is a Related Person to the Fund Management Company.
33.10 The Fund Management Company must not use the assets of the Fund to make a loan or mortgage. The Fund Management Company must not use the assets of the Fund, any entrusted assets to pay for its own liabilities or those of Related Person(s) or any other parties.
33.11 The Fund Management Company must not to disclose information about Investors except with Investors' prior approval or pursuant to a request from a competent state authority.
33.12 The Fund Management Company must not to take any acts, which will result in misunderstanding by Investors about securities price.
33.13 Founding shareholder of the Fund Management Company is not permitted to transfer its shares in three (3) years from the date of issuance of the licence for establishment and operation.
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CHAPTER VII SUPERVISORY BANK
ARTICLE 34: SELECTION CRITERIA FOR SUPERVISORY BANK
The selected Supervisory Bank must satisfy the following conditions:-
34.1 Having obtained supervisory/custodian license granted by the SSC.
34.2 The Supervisory Bank, members of the board of management, board of directors, direct services administrators and staff of the Bank discharging the duties of supervision of the operation of the Fund must not be Related Person(s) or have ownership, lending or borrowing relationship with the Fund Management Company or vice versa.
34.3 Having sufficient ability to provide supervisory/custodial services.
34.4 Agreeing to fulfill its commitments to the Fund as stated in Appendices 2 and 3 of this Fund Charter.
ARTICLE 35: RIGHTS AND OBLIGATIONS OF SUPERVISORY BANK
35.1 Supervisory Bank has the rights:-
35.1.1 To be entitled to service fees as stipulated in the Fund Charter and the Prospectus in accordance with the prevailing laws;
35.1.2 To attend the General Meeting of Investors in accordance with the Fund Charter;
35.2 Supervisory Bank shall have the obligations:-
35.2.1 To supervise the Fund Management Company in order to ensure that its management of the Fund is compliant with the Fund Charter and the prevailing laws;
35.2.2 The Supervisory Bank must proceed the registration of Fund Unit(s)’s ownership for Investors; to help Investors to exercise their rights attached to Fund Unit(s);
35.2.3 To manage the assets of Funds and the Fund Management Company separately from assets of other funds, the Fund Management Company or those of the Supervisory Bank;
35.2.4 To act on behalf of the Fund to effect payments, receive interests, dividends, remit/ transfer money in regard to transactions of the Fund’s assets at the orders of the Fund/ the Fund Management Company;
35.2.5 To verify any reports prepared by the Fund Management Company or a third party in accordance with the Fund Charter and the Supervisory Agreement;
35.2.6 To supervise the compliance with reporting regime and disclosure of information by the Fund Management Companies in accordance with the provisions of the prevailing laws;
35.2.7 To report to the State Securities Commission if it discovers that the Fund Management Company or Related Person(s) is in breach of the Fund Charter or the prevailing laws;
35.2.8 To periodically conduct inspections jointly with the Fund Management Company of accounting books, financial statements, and trading operation of the Fund.
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ARTICLE 36: TERMINATION OF SUPERVISORY BANK’S RIGHTS AND OBLIGATIONS TO
THE FUND
36.1 Supervisory Bank’s rights and obligations to the Fund will be terminated in the following events:
36.1.1 Supervisory Bank proposes to terminate its rights and obligations to the Fund in accordance with the provisions of the Fund Charter and such proposal is approved by the General Meeting of Investors;
36.1.2 At the request of the Fund Management Company or the Fund Representative Board and approved by the General Meeting of Investors;
36.1.3 Its supervisory/ custodian services license is revoked by the SSC pursuant to the prevailing laws;
36.1.4 The Supervisory Bank goes bankrupt or terminates its operation;
36.2 In cases as stipulated in Article 36.1, the rights and obligations of the Supervisory Bank to the Fund are transferred to other supervisory bank in accordance with the prevailing laws.
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CHAPTER VIII AUDITING, ACCOUNTING AND REPORTING REGIME
ARTICLE 37: SELECTION AND CHANGE CRITERIA FOR AUDITOR
37.1. The selected Auditor must satisfy the following conditions:
37.1.1 having obtained auditing licence by the Ministry of Finance;
37.1.2 having approved the SSC for providing auditing services to the Fund;
37.1.3 not being a Related Person to the Fund Management Company or the Supervisory Bank;
37.2. The services provided by Auditor to the Fund will be terminated in the following events:
37.2.1 Its license(s) is revoked by the Ministry of Finance or the SSC pursuant to the
prevailing laws;
37.2.2 It goes bankrupt or terminates its operation;
ARTICLE 38: FISCAL YEAR
Fiscal year of the Fund shall be 12 months starting the 1st of January and ending 31st of
December. The first fiscal year starts on the date it is officially granted establishment license by
the SSC and ends on 31st December of the same year.
ARTICLE 39: ACCOUNTING REGIME
The Fund applies the prevailing Vietnamese Accounting System and follows other regulations
related to fund accounting promulgated by relevant state authorities.
ARTICLE 40: FINANCIAL STATEMENT
The Fund Management Company must prepare periodical and annual financial statements of the
Fund and send a copy of such statements to all Investors and the Fund Representative Board.
The annual financial statements must be verified by Auditor.
ARTICLE 41: OTHER REPORTS
41.1 The Fund Management Company shall prepare operating reports on the Fund and submit
to the Fund Representative Board annually or at the request of the Fund Representative
Board.
41.2 The Fund Management Company shall prepare periodical reports on the Fund and
submit to the SSC in accordance with the prevailing laws.
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CHAPTER IX VALUATION METHODS OF NET ASSET VALUE
ARTICLE 42: DETERMINATION OF NET ASSET VALUE OF THE FUND
42.1 The valuation of net assets of the Fund shall be conducted by the Fund Management
Company or other service providers appointed and approved by the General Meeting of
Investors from time to time. Such valuation shall be verified by the Supervisory Bank for
full compliance with the prevailing laws and the Fund Charter.
42.2 Net Assets Value of the Fund shall be determined on a weekly basis and publicly
disclosed to all Investors after verified by the Supervising Bank and shall be valid until
new notice of the same.
ARTICLE 43: POLICY ON ASSET VALUATION OF THE FUND
43.1. Valuation Date
Net Asset Value of the Fund will be valuated weekly on the Valuation Date. NAV of the
Fund and unit price will be declared in the next working day following the Valuation
Date.
Determination of the Fund’s NAV shall be responsibility of MVFM and verified by the
Supervisory Bank in compliance with the Prevailing Laws and the Fund Charter.
43.2. Valuation principles
Net Asset Value of the fund is determined by aggregating the value of securities and
other assets of the funds deducting the liabilities of the Fund includes liabilities in
respect of the amount of any unpaid dividends payable or to become payable on or
before the relevant Valuation Date
(NAV) = total assets – total liabilities
In which:
o Total assets: are total assets of the Fund which is listed in Article 43.3 below
o Total liabilities: are total expenses of the fund which is listed in Chapter XII plus
any unpaid dividends payable or to become payable on or before the Valuation
Date
Net asset value of Fund Unit: P = NAV ,
N In which:-
o P: Unit price
o N: Number of Fund Units being circulated
43.3. Valuation Method:
43.3.1 Listed equities: The value of equities listed on the Stock Exchange shall be the closing
price of the nearest transaction date before Valuation Date.
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The value of equities listed in Securities Exchange or Securities Trading Center, which are not actively traded for a period of under 2 weeks, shall be determined on the basis of average offer price from 3 prestigious securities companies. The value of equities listed in Securities Exchange or Securities Trading Center, which are not actively traded for a period of over 2 weeks, shall be determined based on book value.
43.3.2 OTC equities
Price of OTC equities will be provided by at least three (3) prestigious securities
companies. The selected securities companies must be independent from MVFM and
have traded those equities.
If the above method is not fully satisfied or not available, the book value will be applied.
43.3.3 Bonds
Price of Bond will be provided by an independent and trust worthy valuation third party.
If the above method is not available bonds shall be valued at amortised cost plus
accrual interest.
43.3.4 Debts, Bank Deposits and Cash:
Their value shall be valued at their nominal amount unless it appears likely that such
nominal amount will not be obtainable.
43.3.5 Dividend, coupon interest, bank interest shall be valued at book value including
principal and accumulated interest
CHAPTER X ADDITIONAL PUBLIC OFFERING
ARTICLE 44: ADDITIONAL PUBLIC OFFERING
44.1 After one (1) year of profit, the Fund may increase its Charter Capital by raising capitals
from its existing Investors and new Investors through an additional fund offering to
existing investors and the issuance of transferable buy options
44.2 Such additional fund offering to raise capital must be in accordance with related prevailing
laws.
44.3 The plan of additional fund offering and the investment of the capital raised must be
approved by the General Meeting of investors .
32
33
CHAPTER XI TERMINATION OF THE FUND
ARTICLE 45: CONDITIONS FOR TERMINATION OF THE FUND
45.1 The Fund will be terminated in the following events:
45.1.1 at the expiry of the operation term of the Fund as stipulated in the Fund Charter and Fund
establishment certificate while extension permit is not granted. In this case, the Fund’s
assets may be switched to other funds under management of the Fund Management
Company upon the approval of the General Meeting of Investors and Fund Units will also
be converted to corresponding values of such new funds.
45.1.2 At the decision of the General Meeting of Investors to terminate the Fund prior to its
expiry.
45.1.2.1. At the proposal of the Fund management Company to terminate the fund
management contract, on the occasion of the dissolution or bankruptcy of the
Fund Management company, or the license of the Fund Management company is
withdrawn by the State securities Commission while an alternative replacing fund
management company is not established in 3 months
45.1.2.2. At the proposal of the Supervisory Bank to terminate the Supervisory Agreement,
on the occasion of the dissolution or bankruptcy of the Supervisory Bank, or the
custodian licence of the Supervisory Bank is withdrawn by the State securities
Commission while an alternative replacing supervisory bank is not established in 3
months
45.1.2.3. The General Meeting of Investors decides to transfer the the Fund’s Assets to
other funds managed by the Fund Management Company
45.1.2.4. Other force majeur events.
45.2 At least three (3) months prior to the termination, the Fund Representative Board shall call
a meeting of the General Meeting of Investors to pass a plan on termination of the Fund
or shall consult the Investors in writing on termination plan for approval by the General
Meeting of Investors. The Fund termination plan must be agreed upon by the related party
at the possibly soonest and be approved by the State Securities Commission.
45.3 The Fund Management Company and the Supervisory Bank shall be responsible to
complete liquidation of assets of the Fund and to distribute assets of the Fund to Investors
in accordance with the plan passed by the General Meeting of Investors.
ARTICLE 46: LIQUIDATION OF THE FUND’S ASSETS
.46.1 Proceeds received from the liquidation of the Fund’s Assets and residual assets on
termination shall be paid in the following priority order:
(a) Payment of debts payable to the Fund Management Company or the Supervisory
Bank, payment of other debts payable and expenses of the termination of the
Fund ;
34
(b) Discharge of financial obligations to the State;
(c) Payment of other amounts payable by the Fund under prevailing laws (if any);
(d) Remaining proceeds shall be used to pay Investors according to their capital
contribution ratio.
46.2 Within a time-limit of five (5) days from the date of completion of termination of the Fund,
the Fund Management Company and the Supervisory Bank must report to the State
Securities Commission on the results of the termination.
35
CHAPTER XII ISSUING CHARGES, OPERATION COSTS AND DIVIDEND(S)
ARTICLE 47: ISSUING CHARGE
Issuing charge is equal to 3% of the Fund’s Unit price (Unit price at the Fund Offering Period is
VND10, 000). The Offering price of MAFPF1 is VND10, 300 per Fund Unit.
ARTICLE 48: MANAGEMENT FEE
Management fee is at the rate of 2% per annum of MAFPF1’s NAV, payable monthly by MAFPF1
to MVFM for providing fund management services. Management fee is fixed throughout the term
of the fund management services provided by MVFM to the Fund.
Management fee = 2% x NAV at the last Valuation Date of the month / 12 months.
ARTICLE 49: SUPERVISORY FEE, REGISTRAR FEE AND SETTLEMENT FEE:
49.1 Supervisory fee
Supervisory fee is payable monthly by MAFPF1 to the Supervisory Bank for providing
supervisory bank services.
Monthly indicated supervisory fee = 0.065 % per annum x NAV at the last Valuation
Date of the month / 12 months.
49.2 Registrar fee and Settlement fee:
Registrar fee and settlement fee shall be payable by MAFPF1 to the Supervisory Bank for
providing registrar services, settlement, conversions and transfers of Fund Units and
entering these transactions into the Register of Investors. The fee rate and payment
method shall be specified in the Supervisory Agreement.
ARTICLE 50: PERFORMANCE-RELATED BONUS
MVFM is entitled to an annual performance-related bonus payable by MAFPF1 if the
performance of the Fund at the end of any particular financial year is in excess of the specified
investment criteria. Performance-related bonus is thus not applicable to all years of operation of
the Fund
Please refer to appendix 4 – Method in determining Performance-related bonus
ARTICLE 51: OTHER FEES AND CHARGES PAYABLE BY MAFPF1
Including:
51.1 Brokerage and transaction fees related to the transactions of the Fund’s assets;
51.2 Expense related to fund administration and valuation of the fund assets;
51.3 Auditing fee and Legal consultancy fee;
51.4 Expenses related to amendment of the Fund Charter as approved by the General Meeting
of Investors or under the provisions of the Prevailing Laws;
36
51.5 Expenses related to offering including, but not limited to, expense for composition of the
Fund’s prospectus, amendment of the Fund Charter, submission of application to the
state regulators and other relevant costs;
51.6 Expenses related to listing of the Fund on the Stock Exchange including, but not limited
to, submission of application to the Stock Exchange;
51.7 Expenses related to the organization, meeting and operation of the General Meeting of
Investors and the Fund Representative Board;
51.8 Interest payable for the Fund’s loans in accordance with the Fund Charter and the
Prevailing Laws;
51.9 Tax, fees related to the Fund’s operation in accordance with the Prevailing Laws;
51.10 Any other reasonable fees approved by the Fund Representative Board.
Total fees listed in this Article 51 shall not exceed 1% of the Fund’s NAV per annum. ARTICLE 52: FUND DIVIDEND DISTRIBUTION
52.1 Dividend (inconsiderable since the initial objective of the Fund is capital growth) can be
distributed annually to the Investors at the recommendation of MVFM and approved by
the General Meeting of Investors. Only the Investors named on the Investors Register
on the last registration record date will receive the distribution income.
52.2 Method of distribution
52.2.1 Dividend shall be determined based on actual investment income of the fund. Dividends
must be paid on the basis that once paid, the Fund is still able to cover all liabilities due.
52.2.2 The Supervisory Bank shall prepare a list of deposited and non-deposited Investors
who are entitled to Dividend(s) payable by the Fund, notice on the amount of Dividends
per Fund Unit, time and method of payment within 30 days prior to the payment date.
Notices on payment of Dividends must be sent to the Non deposited Investors at least
15 days prior to the payment date. Each of such notices shall include the relevant
Investor’s name, address, number of Fund Units held, dividend declared, receivable
dividend amount, time and method of payment;
52.2.3 Any Investor, who transfers his Fund Units after the record date, is still entitled to
receive Dividend(s) payable for such period.
52.2.4 Investors shall be responsible for declaration and settlement of Income tax and other tax
(if any) levied on Dividend(s). The Fund shall have the right to withhold such income
before any payment made, subject to the tax payment method registered with the Fund
by Investors.
37
CHAPTER XIII SOLVING CONFLICT OF INTERESTS
ARTICLE 53: CONTROL POSSIBLE CONFLICT OF INTERESTS BETWEEN THE FUND AND OTHER FUNDS
The Fund Management Company shall ensure that:
53.1 Separate management of the Fund from other funds, by:
(a) segregation of investment strategy, objectives of each fund under its management;
(b) Not using the Fund’s assets to invest in other funds or vice versa;
(c) Segregation of assets of the Fund Management Company to the Fund’s assets and
assets of other funds under its management.
53.2 Transaction between the Fund/ the Fund Management Company and Related Person(s)
must be in compliance with the Fund Charter and the prevailing laws.
53.3 All personal transactions of the Board of Directors, chairman of the Fund Management
Company, members of the Board of Management, Supervisors and employees of the
Fund Management Company must be reported to and monitored in accordance with the
Fund Charter and the prevailing laws.
53.4 Setting up an adequate system of internal control, risk management, and supervision and
prevention of conflicts of interest within the Fund Management Company and in the
transaction with Related Person(s).
38
CHAPTER XIV INFORMATION DISCLOSURE AND AMENDMENT OF THE FUND CHARTER
ARTICLE 54: INFORMATION DISCLOSURE
The provision on information disclosure of the Fund must follow relevant regulations of the
prevailing laws.
54.1 The Fund Management Company shall make a periodic disclosure of information about
annual financial statements of the Fund within ten (10) days from the date of the audited
financial statements.
54.2 The Fund Management Company shall make a periodic disclosure of information about the
Fund in the following circumstances:
(a) Changes in the net asset value of the Fund on a weekly, monthly, quarterly and
annual basis;
(b) Assets of the Fund on a monthly, quarterly and annual basis;
(c) Status and results of investment activities of the Fund on a monthly, quarterly and
annual basis.
54.3 The Fund Management Company must report to the Stock Exchange within twenty four
(24) hours of the occurrence of one of the following events concerning the Fund:
(a) There is a resolution of the General Meeting of Investors;
(b) There is a decision to make an additional public offering;
(c) The granting of Fund Establishment Certificate to the Fund
(d) There is a decision to change the Charter Capital of the Fund;
(e) Revocation of a certificate of acceptance of an additional public offering;
(f) There is a decision to suspend the annulment of Fund offering
(g) Amendment, supplement of the Fund Charter, Prospectus
54.4 The Fund Management Company must disclose information concerning the Fund at the
request of the State Securities Commission on the occurrence of one of the following
events:
(a) There is a rumour which affects an offer of or the price of certificates of the Fund;
(b) There is an abnormal change in the price and volume of transactions of MAFPF1
Certificate(s).
54.5 The Fund Management Company must disclose information related to internal trading
and trading of related persons in accordance with the regulations on disclosure of
information issued by the Ho Chi Minh Stock Exchange (HOSE)
39
ARTICLE 55: AMENDMENT/ SUPPLEMENT OF THE FUND CHARTER
The Fund Charter shall only be amended or supplemented by approval of the General Meeting of
Investors in accordance with the provisions of the Fund Charter and related regulations of
applicable laws.
ARTICLE 56: REGISTRATION OF THE FUND CHARTER
The Fund Charter or its amendment/ supplement shall be registered with the SSC once approved
by the General Meeting of Investors in accordance with the provisions of the Fund Charter and
related regulations of applicable laws.
ARTICLE 57: IMPLEMENTATION PROVISION
57.1 The Fund Charter shall take effect on the date it is approved by the General Meeting of
Investors and registered with the SSC.
57.2 This document and the attached appendices constitute the Fund Charter:-
o Appendix 1: Commitment by The Fund Management Company
o Appendix 2: Commitment by The Supervisory Bank
o Appendix 3: Joint Commitment by The Fund Management Company and The
Supervisory Bank
o Appendix 4: Method in determining Performance-related bonus
40
APPENDIX 1 COMMITMENT BY THE FUND MANAGEMENT COMPANY TO THE FUND
Fund Management Company : Manulife Vietnam Fund Management Company Limited (MVFM )
Business Registration No.: 410400017 granted by the Department of Planning and
Investment on 10 June 2005 Fund Management License No: 04/UBCK-GPHDQLD granted by the State securities
Commission on 14 June 2005 Manulife Vietnam Fund Management Company, in respect of Manulife Progressive Fund MAFPF1, warrantees undertakes the followings: 1. To perform fund management in full compliance with the Fund Charter and prevailing laws; 2. To perform management of the Fund in an effective, honest, devoted manner and in
consistence with the investment objective of the Fund, with prioritization of legitimate rights and interests of the Investors;
3. To ensure the existence of an Supervisory Bank for the Fund at all times;
4. To pay charges to the Supervisory Bank and other service providers as stipulated in the
Fund Charter. 5. Regularly providing the Supervisory Bank with following information:
i. Operation report and financial statement of the Fund Management Company, Investor Registrar and the quantity of Fund Units owned by the Investors;
ii. Reports related to the Fund or the assets, portfolios of the Fund iii. Valuation of the Net Asset Value of the Fund/Net Asset Value per Fund unit iv. Information related to the Fund management and other related obligations
6. To provide Investors, without charge or with reasonable charge, with copy of the Fund
Charter (and appendices), Prospectus (and appendices) upon request; 7. Not to invest into securities or assets in which the Fund Management Company or Related
Persons have interest or are in relation to such interest, unless permitted by laws; 8. Not to use its position in the management of the Fund to gain direct or indirect benefits for
itself or Related Persons or to harm the Investors’ interest; 9. To perform the valuation and accounting function in an honest, precise and timely manner;
10. To provide Investors, without charge or with reasonable charge, with copy of annual report
and other reports of the Fund upon request; 11. To provide Investors, without charge or with reasonable charge, with copy of the annual
statement of the Supervisory Bank on performance of the Fund Management Company upon request;
12. To ensure that any and all information made public by the Fund Management Company or
its representatives is complete, honest and accurate, without omission of events that affect the interests of the Investors or content of the information made public, and information to be made public as required by law and without causing misunderstanding of the Investors.
41
13. To provide independent auditors with all the information necessary for their effective and timely auditing;
14. To report in timely manner to the State Securities Commission on any inconsistency in the
reconciliation of the assets/liabilities between the Fund Management Company and the Supervisory Bank.
15. To convene General Meeting of Investors in accordance with the prevailing laws
On behalf of Fund Management Company Gilbert Pak Acting General Director
42
APPENDIX 2 COMMITMENT BY THE SUPERVISORY BANK TO THE FUND
Supervisory Bank : Hong Kong and Shanghai Banking Corporation Limited (HSBC) Operation license: Registration 15/NH-GP granted by the State Bank of Vietnam on 22 March
1995 Custodian license : Registration No 05/GPHDLK granted by the State Securities Commission on
13 July 2000 Hong Kong and Shanghai Banking Corporation Limited (HSBC) in respect of Manulife Progressive Fund MAFPF1, warrantees undertakes the followings: 1. To perform supervisory function in full compliance with the Fund Charter and prevailing laws; 2. To ensure the existence of an fund management company for the Fund at all times; 3. To perform superviory function to the Fund in an effective, honest, prudent manner;
4. To perform the custody, settlement, preservation and supervision of all assets , securities of
the Fund on behalf of the investors; Implementing the reconciliation of assets/liabilities of the Fund with the Fund Management Company at least one a month and reporting to the State Securities Commission on the occasion of the inconsistency in the assets/liabilities status between the Fund Management Company and the Supervisory Bank
5. To separate the assets of the Fund from those of the Supervisory Bank, the Fund Management Company, other funds, and of the other clients of the Supervisory Bank.
6. To supervise the Fund portfolios, valuation of the Fund assets, determination of the net asset value and the net asset value per fund unit of the Fund as regulated by the prevailing laws and the Fund Charter.
7. To establish, keep and update the Investor Register of the Fund as regulated by the Fund Charter.
8. To ensure the supervisory function be implemented so that the Fund Management Company should not use its position in the management of the Fund to gain direct or indirect profits for the Fund Management company and related persons damaging the benefits of the investors.
9. To carry out the registry and keep track of all transactions, profits, dividends and incomes received or distributed by the Fund.
10. To ensure that the Fund be audited annually by an independent auditor On behalf of the Supervisory Bank
43
APPENDIX 3 JOINT COMMITMENT BY THE FUND MANAGEMENT COMPANY AND THE SUPERVISORY
TO THE FUND
Fund Management Company : Manulife Vietnam Fund Management Company Limited
(MVFM ) Business Registration No.: 410400017 granted by the Department of Planning and
Investment on 10 June 2005 Fund Management License No: 04/UBCK-GPHDQLD granted by the State securities
Commission on 14 June 2005 Custodian license : Registration No 05/GPHDLK granted by the State Securities Commission on
13 July 2000 and Supervisory Bank : Hong Kong and Shanghai Banking Corporation Limited (HSBC) Operation license : Registration 15/NH-GP granted by the National Bank on 22 March 1995
a. Jointly commit to safeguard the Investors’ interests; b. Jointly commit to comply with laws and the Fund Charter throughout the period of the Fund;
c. Jointly commit to exercise proxy voting right in relation to the ownership of equities owned
by the Fund in line with the will and interest of the Investors, in General Shareholders Meeting of the issuer of such equities.
d. Jointly commit not to receive any compensation, profit or interest from performing
transactions of the Fund’s Assets or other asset transactions unless clearly stipulated in the Fund Charter or Prospectus.
On behalf of the Fund Management Company On behalf of the Supervisory Bank
44
APPENDIX 4 POLICY ON DETERMINING PERFORMANCE-RELATED BONUS
1. Performance related bonus (PRB) = 20% of (ending year NAV - NAV p)
NAVp is NAV using for comparison and being calculated by:
NAV p = Beginning year NAV*(100% + Benchmark return +1%)
Where, Benchmark return is the percentage reflecting the growth of the Vietnam
Index in that fiscal year. With regard to the first year and the last year of the Fund
operation, the Benchmark return will be calculated based on the Vietnam Index on
the date of fund establishment and the date of fund end.
The NAV p for the end of any particular financial year will be adjusted proportionally for any period of more or less than 12 months. The beginning year NAV, for the purpose of calculatlion of NAV p, will be the higher of:
(a) Fund’s Charter Capital, (b) NAV p of the immediately preceding financial year and, (c) The net asset value of the fund as at the close of business on the last
valuation day in the immediately preceding financial year. The ending year NAV will be the net asset value of the Fund as at the close of business on the last valuation day in the current financial year plus any dividend paid during the year. Example:
Fund’s Charter Capital: VND250 billion.
NAV at the beginning of the year (NAV beginning) is VND250 billion. During the year,
the Fund paid VND10 billion in dividends. The VN Index increased by 25%.
In the first year
Case 1: None of PRB
NAV at year end (net of all fees payable) is VND310 billion (VND300 billion plus VND10
billion in paid dividend).
NAV p = Beginning year NAV*(100% + Benchmark return +1%)
= VND 250 billion x (100% + 25% + 1%) = VND 315 billion
Because NAV ending year < NAVp, performance-related bonus is not applicable.
Case 2: PRB is applicable
Suppose due to effective investment NAV at end of year (net of all fees payable)
reaches VND350 billion (VND340 billion plus VND10 billion in paid dividend).
NAV p = Beginning year NAV*(100% + Benchmark return +1%)
= VND 250 billion x (100% + 25% + 1%) = VND 315 billion
Because NAV ending year > NAV p, performance-related bonus is applicable
45
Performance-related bonus = 20% of (ending year NAV - comparable NAV p)
= 20% * (350 billions-315 billions) = 7 billions In the second year:
Suppose NAV at the end of year 2nd (net of all fees payable) reaches VND370 billion, no
dividend payout. VN index return in the second year is 5%.
Case 1b: PRB is applicable
NAV beginning year 2 will be VND 315 billion, the higher of:
� Fund’s Charter Capital: VND250 billion
� NAV p year 1: VND 315 billion and
� NAV at the close of business at ending year 1: VND300 billion
NAV p of year 2 = Beginning year 2 NAV*(100% + Benchmark return +1%)
= VND 315 billion x (100% + 5% + 1%) = VND 333.9 billions
Performance-related bonus = 20% of (ending NAV year 2 - NAV p)
= 20% * (370 billions - 333.9 billions) = 7.22 billions
NAV after deduction of performance bonus of year 2 will be
NAV= (370 billions – 7.22 billions) = 362.78 billions
Case 2b: PRB is applicable
NAV beginning year 2 will be VND 340 billion, the higher of:
� Fund’s Charter Capital: VND250 billion
� NAV p year 1: VND 315 billions and
� NAV at the close of business at ending year 1: VND 340 billions
NAV p of year 2 = Beginning year 2 NAV*(100% + Benchmark return +1%)
= VND 340 billion x (100% + 5% + 1%) = VND 360.4 billions
Performance-related bonus = 20% of (ending NAV year 2 - NAV p)
= 20% * (370 billions – 360.4 billions) = 1.92 billions.
NAV after deduction of performance bonus of year 2 will be
NAV= (370 billions – 1.92 billions) = 368.08 billions
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