Page 76 - Profile's Unit Trusts & Collective Investments - September 2025

Chapter 4 The CIS industry

Trustees and custodians
Under the Unit Trusts Control Act, all unit trusts had trustees. CISCA, however, makes
provision for collective investment schemes which, from a legal point of view, are not
trusts, but other legal entities. As only a trust can have a trustee, the custodian plays the
same role where the collective investment scheme is structured as, say, a company rather than a trust.

buying, selling and switching. Now smaller asset management companies are able to outsource
this function to one of several companies operating in this area.
Trustees and custodians
The importance of the role of the trustee is highlighted by the fact that an entire section of CISCA is
devoted to the appointment, necessary qualifications and duties of the trustee or custodian.
In terms of the Act, a trustee can principally be a public company, a bank, or an insurance company.
Trustees must be registered with the Registrar, and must maintain capital and reserves amounting
to not less than R10m. The Registrar must be satisfied that the company or institution is one of good
standing, and is equipped to carry out the duties of a trustee.
The trustee must be independent, and cannot be a subsidiary or holding company of the
CIS manager.
An important function of the trustee is to ensure the separation of portfolio assets from those of
the manager. The trustee or custodian acts as caretaker of all cash and securities, holding these
on behalf of investors. Another important function of the trustee is to ensure that the CIS is run in
accordance with the deed of the scheme and in terms of the requirements of the Act.
Other specific responsibilities of the trustee include:
R Ensuring that participatory interests are priced correctly on sale and repurchase
R Ensuring that cash flows and portfolio assets are transferred timeously whenever transactions
take place
R Verifying that income accruals are dealt with correctly
R Preparing an annual report regarding the correct administration of the fund, ascertaining
reasons for any non-compliance, and setting out steps to be taken to rectify any non-
compliance
R Making sure that the legal entitlement of investors to portfolio assets is assured
R Ensuring that appropriate internal controls are in place to keep track of the nature and value of
all portfolio assets

The deed
CISCA “deed” definition The deed (which was called the trust deed under the
CISCA defines the deed as the Unit Trusts Control Act) is the central defining document
agreement between a manager and a in terms of which a collective investment scheme is
trustee or custodian, or the document of established. It defines the operating parameters of the
incorporation whereby a collective investment scheme fund, setting out what the scheme will invest in, how
is established and in terms of which it is administered. much it will charge for its services, and on what basis it
will repurchase participatory interests from investors.
Schedule 1 (Section 97) of CISCA sets out the matters which must be provided for in the deed of
a collective investment scheme:
R The investment policy which will be followed by the CIS manager
R Exactly how the assets of the portfolio are to be valued
R How frequently the CIS manager will calculate selling and repurchase prices, what time of day
the calculations will be done (referred to as the valuation point)
R How non-listed assets are to be valued for the purpose of determining market values at the
valuation point

74 Profile’s Unit Trusts & Collective Investments September 2025