المادة 20: Power of the Authority to Remove and Replace Fund Manager

Article 20: Power of the Authority to Remove and Replace Fund Manager

a. The Authority shall have the power to remove a fund manager in relation to a particular investment fund and to take any action it deems appropriate to appoint a replacement fund manager for that investment fund or to take any other measures it deems necessary in the event of:

1) the fund manager ceasing to carry out managing investments and operating funds activity or managing investments activity without notification to the Authority under the Capital Market Institutions Regulations;

2) the cancellation, withdrawal or suspension by the Authority of the fund manager’s authorisation(s) to carry out managing investments and operating funds activity or managing investments activity under the Capital Market Institutions Regulations;

3) a request by the fund manager to the Authority to cancel its relevant authorisation to carry out managing investments and operating funds activity or managing investments activity;

4) the Authority believing that the fund manager has failed, in a manner which the Authority considers material, to comply with the Capital Market Law or its Implementing Regulations;

5) the death, incapacity or resignation of a portfolio manager who manages the assets of the investment fund, if no other registered person employed by the fund manager can manage the assets of the relevant investment fund or the assets of the funds managed by the portfolio manager;

6) the issuance of a special fund resolution by unitholders of a close ended fund requesting the Authority of removal of the fund manager; or

7) any other event determined by the Authority on reasonable grounds to be of sufficient material.

b. Notice of any event described in Subparagraph (5) of Paragraph (a) of this Article must be provided by the fund manager to the Authority within (2) days from the date of its occurrence.

c. For removal of the fund manager in accordance with the cases stipulated in Subparagraphs (1), (2), (3), (4), (5) and (7) of Paragraph (a) of this Article, the Authority shall directs the fund manager to call for a unitholders meeting within (15) days, in order to appoint the custodian or any other party, through an ordinary fund resolution, to find and negotiate with a replacement fund manager and specify the time limit for finding and negotiation.

d. For removal of the fund manager in accordance with the case stipulated in Subparagraph

(6) of Paragraph (a) of this Article, the fund manager must issue an ordinary fund resolution at the same meeting in which unitholders voted on the request to remove the fund manager, in order to appoint the custodian or any other party, to find and negotiate with a replacement fund manager and specify the time limit for finding and negotiation.

e. When any of the two cases stipulated in Paragraphs (c) and (d) of this Article occurs, the fund manager must notify the Authority of the results of the unitholders meeting within two days of its convening date.

f. The fund manager must cooperate and provide the custodian or the party assigned to find and negotiate any documents required by it for the purpose of appointing a replacement fund manager within (10) days from the date of the request, and both parties must maintain the confidentiality of the information.

g. The fund manager must, upon approval of the replacement fund manager to manage the fund and transfer of the fund management to it, send a written consent of the replacement fund manager to the Authority as soon as it is received.

h. If the Authority exercises any of its powers pursuant to Paragraph (a) of this Article, the relevant fund manager shall co-operate fully in order to help facilitate a smooth transfer of responsibilities to the replacement fund manager during the initial (60) days period after the appointment of the replacement fund manager. The fund manager shall where necessary and applicable and at the discretion of the Authority, novate all of the contracts relating to the relevant investment fund to which it is a party to the replacement fund manager.

i. The removed Fund Manager must not charge management fees or any other fees starting from the date of the Authority’s decision to remove the Fund Manager. .j. In case a replacement fund manager has not been appointed within the time limit for finding and negotiation with a replacement fund manager referred to in Paragraphs (c) and (d) of this Article, unitholders are entitled to request the liquidation of the fund through a special fund resolution.