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Supervision Objectives
The
Provident Fund Act B.E 2530 specifies that a fund management company, hereby called "management
company"
must hold a private fund management license. The main responsibility of a management company
is to generate returns to members of provident fund. Furthermore, a management
company has to facilitate the process of fund registration, modification
of rules and procedures and assist in communication with the Securities
and Exchange Commission (SEC).
However, a management company must not be the
employer of employees who are members of the fund.
The
supervision can be seperated into two parts, management company
supervision and fund supervision. As for management company
supervision, the SEC requires management company to demostrate its
readiness in managing provident fund, both in terms of staff
and operation to increase confidence of members and
prevent damages that may occur to the asset of the fund. As for
fund supervision, the SEC, acting as provident fund registrar will
consider application for registration, with particular attention
on the fair treatment of members.
1.
Management Company Supervision
1.1 Licensing
A
management company must hold a private fund management license approved
by
the Ministry of Finance. A management company must fullfill
all requirements mentioned in the Ministerial Regulations No. 15
(B.E. 2543), which are:
 Management company
must be a commercial bank, finance company, securities company,
mutual fund management company, life assurance company or newly
established limited company or public limited company to undertake
securities business in the category of private fund management.
Management company must have a strong financial background, no
adverse track records and readiness in human resource and
operational systems such as investment decision making, compliance
with fund's investment policy and regulations, allocation of securities,
conflict of interest, insider trading, internal check & balance
and disclosure. Furthermore, a fund manager of management
company must be approved by the SEC.
 Ministerial Regulations No. 15
(B.E. 2543)
1.2
Conduct of Business
A
management company must conduct investment strategy with care by using their
utmost fiduciary duty, knowledge and readiness of staffs and
operation systems. Furthermore, the SEC regulations also require
the
conformity to fund's investment policy and restictions agreed upon
with fund committee. A management company should know its customers,
their investment objectives, investment experience, expected returns and
level of risk exposure in order to create the most suitable investment
policy.
Notification
of the SEC - Management
of Funds
1.3
Investment Regulations
A management company must comply with the SEC investment regulations such as
types of assets and securities, investment limit and conflict of
interest transaction. Furthermore, a management company will
have to comply with foreign investment regulations as well if the
company engages in foreign investment activities.
Investment
Regulations 1.4
Segregation of Assets
A management company must segregate accounts and assets
of the fund from its own. The fund's assets must
be kept with a custodian approved by the SEC. The responsibilities
of custodian includes safekeeping of financial assets, arranging
of
settlement of any purchases and sales of financial assets, collecting
of
information on and income from financial assets, ensuring the accuracy
and completeness
of assets and providing regular report on all their activities
to the management company.
List of Custodians
1.5
Asset Valuation
A management company has to calculate the Net Asset
Value (NAV) of the fund on the mark to market basis. As
a result of the implementation of unitization system, a management
company has to calculate unit price at least once a week and update
the number of units held by each member based on the SEC regulations
when contributions are made to the fund from employee and employer. Furthermore, NAV calculated by a management
company must be endorsed by a NAV Verifier because NAV is crucial in calculating provident fund units at the time of contribution
remittance and the calculation of benefit payouts. Therefore,
the NAV Verifier must be approved by the SEC and operates under
the SEC regulations.
Valuation
Unitization
NAV
Verifier
1.6
Disclosure
A
management company must disclose to fund committee an information relates to fund management
in order to evaluate the management company's
performance periodically. The information disclosure must
follow the regulations of the SEC.
Disclosure
of Information to Fund Committee
1.7 Fund Manager
Fund
manager is an authorized person by a management
company to undertake investment decisions according to the investment policy
as agreed with fund committee. The person must be registered with the SEC,
possess CFA or CISA level 1 or higher, and have attended and passed the Fund
Manager Course arranged by the Association of Investment Management Companies
(AIMC). In addition, the manager shall have no prohibited characteristics as
specified by SEC Act.
1.8
Investor Contact
Investor
Contact is an autorized person by a management company to contact
and provide information about fund management, regulations, rights
of investors, responsibilities of management company and recommend an
investment policy that is suitable for the customer’s investment objectives.
2.
Supervision of the Fund
A
registered Provident Fund shall be a juristic person and considered
as a separate entity from the employer. The fund will be managed
by a fund committee, whose key responsibilities are to coordinate
with external parties and supervise the management of the fund.
Furthermore, there are several
rules in the fund articles applying to fund members.
2.1
Fund Committee
By law, a fund committee has the duties to supervise
the fund in general and have an authority to appoint a fund manager.
However, the law does not specify in details the responsibilities
of a fund committee. As a result, the SEC has establish a
code of best practice, which specifies fiduciary duty of the fund
committee. Furthermore, a fund committee has to regularly
monitor performance of a management company as well.
Duties and
Responsibilities of Fund Committee
Code of Best
Practice
2.2
Fund Registration
A
management company under authorization of fund committee is responsible
for filing a request for provident fund registration with the SEC.
The established fund shall be
a juristic person and considered as a separate entity from the employer.
An employer will have a choice to establish a single fund,
consisting of one employer whose fund size is relatively large or
join a pooled fund with other employers whose fund size ranges from small-to medium-sized.
Therefore, a pooled fund consists of fund committee and rules
which apply to all companies under the fund, and fund committee
of each individual employer and rules which apply to a specific
company.
2.3
Fund Articles
Fund Article is a governing rule of the
fund which applies to fund committee and fund members. Therefore,
the article is required to contain necessary details according to
the Provident
Fund Act B.E. 2530.
Fund Articles
2.4
Fund Administration
A
management company is required to have an effective operation system
such as collecting contribution amount from employer and paying benefits to resigned
members. In addition, a sufficient internal control and data security
is also required to ensure correctness and completeness of the membership
management system under the regulations of the SEC.
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