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Rules of Practice 1994 (S.R. 1994, No. 229)
Requested:  27 Apr 2017
Consolidated as at:  17 Mar 2006

71. Investments by controlled fund operators

(1) A controlled fund operator must not –

(a) invest money for investment other than –

(i) with an approved institution; or

(ii) in a first mortgage or second mortgage; or

(iii) in a loan to a short-term money market dealer in accordance with the conditions specified in section 5(1)(h) of the Trustee Act 1898; or

(b) pledge or charge money for investment or securities held by the controlled fund operator.

(2) Subrule (1)(a) does not apply to –

(a) money invested by a controlled fund operator and secured by mortgage securities before 31 December 1994; or

(b) money invested in substitution for any money referred to in paragraph (a).

(3) A controlled fund operator may take or acquire additional collateral security in respect of a loan that is secured by a first mortgage or second mortgage.
(4) A controlled fund operator must not accept money for investment unless, at or before the time the money is accepted, the investor is given a notice in writing signed –

(a) by or on behalf of the firm; or

(b) if the firm is not the controlled fund operator, by or on behalf of the controlled fund operator.

(5) A notice is to specify –

(a) the amount or identity of the money; and

(b) the nature of the securities in which the money may be invested; and

(c) how the rate of interest payable to the investor is to be determined and any condition under which the interest is payable; and

(d) the expenses to be paid by the investor; and

(e) the conditions under which the investor is entitled –

(i) to redeem the money; or

(ii) in the case of a contributory mortgage, to a transfer of the security in which the money is invested; or

(iii) in the case of any other security, to a transfer of a security equivalent in value to the money.


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