By Berna Oluka
The South African Reserve Bank replaced CPIX as the official inflation indicator with CPI with effect from 1 January 2009. A number of collective investment schemes in securities (“CIS”) use CPIX as a benchmark in investment policies, for the calculation of certain charges and in the names of portfolios. As the structure of CPI is different to that of CPIX, the Registrar of Collective Investment Schemes (“the Registrar”) deemed it appropriate to replace the use of CPIX with CPI in respect of CIS.
Therefore, in order to accommodate the change from CPIX to CPI, the Registrar recently published a general notice 337 under CISCA in Government Gazette 32114 of 17 April 2009, suspending any provision in a deed of a manager providing for:
a) the use of CPIX as a benchmark in an investment policy or an indicator for calculating any charge or performance fee or any combination of the two; and
b) any obligation that a manager must give investors at least three months’ written notice of a change in any charge which may result in an increase or the introduction of an additional charge.
The suspension of the above provisions is subject to the substitution of the term “CPIX” in any deed with the term “CPI excluding Owners’ Rent”, provided that in the name of a portfolio, only “CPI” may be used.
This notice has the effect that all managers of CIS must take immediate steps to amend their deeds in accordance with the above requirement and must inform investors of the contents of this notice.
Please click here to view a copy of the notice.