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SEC Supervision


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.



                       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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