SC provides guidance for management companies and trustees to meet compliance and internal control requirements

The Securities Commission (SC) today released a guide to assist management companies and trustees in establishing effective internal controls within their respective organisations.

The guide, entitled “Guide on Areas of Compliance and Internal Controls for Management Companies and Trustees”, is a set of best practices to complement the latest Guidelines on Unit Trust Funds (issued on 1 April 2003), and would be an important tool for management companies and trustees to fulfil their responsibilities within the new disclosure-based regulatory (DBR) environment.

The guide has been designed in line with DBR’s objective of promoting market integrity and investor protection. Towards this end, the guide identifies key areas of compliance and internal controls which management companies and trustees should focus their attention on in preparing the compliance and operational manuals to mitigate risks relating to the unit trust business.

Twenty-one areas of compliance and internal controls are listed in the guide, which includes separation and delegation of functions, segregation of duties, compliance and internal audit functions, risk management, valuation, investment management, safekeeping of assets, conflict of interest as well as disclosure and reporting.

However, the guide is not an exhaustive list and it remains the responsibility of the management company and the trustee to ensure that all potential areas of risks are properly identified and addressed.

The management company and the trustee should constantly review and work towards developing their compliance and internal controls structure as well as the roles and functions of the compliance personnel to suit the organisation’s internal and external environment.

The guide is available online here