Law Summary

SECTION 1: Plan Rules

• Legal Principle/Provision: Establishes the requirements for creating a UIT Fund through a written trust agreement known as the "Plan."
• Key Definitions Introduced:
  • UIT Fund: A collective investment scheme established under a trust agreement.
  • NAVPu: Net Asset Value per unit.
• Important Requirements/Procedures:
  • Each UIT Fund must have an approved Plan by the trustee's Board of Directors and submitted to the Bangko Sentral for processing.
  • A processing fee of PHP 10,000 is charged for new UIT Fund Plan approvals.
• Timeframes/Deadlines:
  • Amendments to the Plan must be submitted to Bangko Sentral within ten (10) business days of Board approval.
• Penalties/Liabilities:
  • Late submissions are categorized under "Category A-3" for monetary penalties.

• Each Plan must include:

• Fund title and classification.
• Operational methods and investment objectives.
• Risk disclosures and investment powers.
• NAVPu valuation methodology.
• Terms for unit admission/redemption.
• Annual external audit requirements.
• Fund termination rights and conditions.
• Trustee liability disclaimers.
• Detailed fee structures for fund operations and other charges.

SECTION 2: Minimum Disclosure Requirements

• Legal Principle/Provision: Outlines the required disclosures concerning UIT Fund investments and participant information.
• Key Definitions Introduced:
  • Investment Outlets: The securities or assets in which the UIT Fund invests.
• Important Requirements/Procedures:
  • Trustees must provide a quarterly updated list of investment outlets.
  • Marketing materials must clearly state fund classifications, risk profiles, and other essential details.
  • A Client Suitability Assessment (CSA) must be conducted prior to participation.
• Timeframes/Deadlines:
  • Clients must be profiled every three (3) years to keep their suitability assessment updated.
• Penalties/Liabilities:
  • Participants are advised that losses are their responsibility unless due to trustee's gross negligence.

• Marketing materials must include:

• Clear identification of fund risks and classifications.
• Administrative details including fees and cut-off times.
• A balanced assessment of potential gains and losses.
• Requirement for clients to seek independent advice if necessary.

SECTION 3: General Provisions

• Legal Principle/Provision: This section addresses the implementation and training for UIT Fund marketing personnel.
• Key Definitions Introduced:
  • Trust Entities: Legal entities managing UIT Funds.
• Important Requirements/Procedures:
  • Trust Entities must publish NAVPu weekly in national newspapers.
  • Marketing personnel must undergo standardized training as per regulatory guidelines.
• Timeframes/Deadlines:
  • The Circular takes effect fifteen (15) days post-publication.
• Penalties/Liabilities:
  • Non-compliance with the training program may affect the credibility of the Trust Entity and its personnel.

• Trust Entity requirements include:

• Publication of NAVPu with the fund name and classification.
• Regular updates on performance and investment results.

Key Takeaways

• The BSP Circular 593 establishes comprehensive regulations for UIT Funds, focusing on the governance of trust agreements, disclosure requirements, and ensuring participant protection.
• Significant emphasis is placed on risk disclosures, participant profiling, and the requirement for trustee accountability.
• Clear processes for plan approval, client assessments, and external audits are mandatory to ensure transparency and compliance with regulatory standards.
• The Circular aims to enhance investor education and mitigate risks associated with UIT Fund investments by mandating detailed disclosures and structured procedures for trustees.