DISCRETIONARY MANDATE

Transcription

1 DISCRETIONARY MANDATE (in terms of subsection 5.1 of the Code of Conduct for Discretionary FSPs) Made and entered into by and between JVN ASSET MANAGEMENT (PTY) LTD CIPC Registration Number: 2015/070817/07 FSP Number: (hereinafter referred to as the Provider) And (hereinafter referred to as the Client)

2 Page 2 of INTRODUCTION 1.1. The Provider warrants that it is the holder of the Category II FSP License and is authorised to render intermediary services of a discretionary nature in respect of investment products residing under the financial product subcategories indicated in paragraph 1.2 hereunder The Provider is authorised to invest in any of the following financial product subcategories: Category II (*tick whichever is applicable) Long-term Insurance: Subcategory B Long-term Insurance: Subcategory B2 2.2 Long-term Insurance: Subcategory C 2.3 Retail Pension Benefits 2.4 Pension Fund Benefits 2.5 Securities and Instruments: Shares 2.6 Securities and Instruments: Money Market Instruments 2.7 Securities and Instruments: Debentures and Securitised Debt 2.8 Securities and Instruments: Warrants, certificates and other instruments acknowledging debt 2.9 Securities and Instruments: Bonds 2.10 Securities and Instruments: Derivative instruments excluding warrants 2.11 Participatory interests in one or more collective investment schemes 2.12 Long-term Deposits 2.13 Short-term Deposits Intermediary Services 1.3. Prior to entering into this Mandate the Client provided the Provider, which obtained from it, information with regards to the Client s financial circumstances, needs and objectives and such other information necessary to enable the Provider to render suitable intermediary services to the Client in terms hereof.

3 Page 3 of AUTHORIZATION 2.1. The Client hereby authorises the Provider to manage the Client s investments either on a full discretionary or limited discretionary basis, as set out in the schedule that is attached to its Mandate This mandate and attached schedules authorises the Provider, as the Client s duly authorised agent, to purchase, sell and enter into any transaction on the Client s behalf and in respect of the following investments: 3. INVESTMENT OBJECTIVES 3.1. The Client s investment objectives are specified in the schedule that is attached to this Mandate The Client s risk profile is determined considering the Client s current set of information and circumstances and the Client acknowledges that these circumstances and information may change over time The Client warrants the on-going accuracy and correctness of the Client s investment objectives and any other information that has been provided to the Provider in order to conclude this Mandate For clients wishing to trade in derivatives, they must complete the attached schedule to this mandate. 4. RISK DISCLOSURE 4.1. The Provider uses its discretion to invest on the Client s behalf with great care and diligence. However, the Client acknowledges that there is risk associated with investing in the financial products involved. The value of the investments and income may rise as well as fall, and there is risk that the Client may suffer financial losses The Client acknowledges that it has been made aware by the Provider of risks pertaining to the investments which may result in financial loss to it and acknowledges that it accepts such risks and the Provider or its staff will not be liable or responsible for any financial losses The Client hereby irrevocably indemnifies the Provider and holds it harmless against all and any claims of whatsoever nature that might be made against it howsoever arising from its management of the investments including but not limited to any loss or damage which might be suffered by the Client in consequence of any depreciation in the value of the investments from whatsoever cause arising When investing in foreign investment products, it is important to be aware of the following risks: Obtaining access to investment performance information may be more difficult than South African based investments; Investments are exposed to different tax regimes which may change without warning and which may influence investment returns; Exchange control measures may change in the country of investment and it may influence investment returns;

4 Page 4 of Exchange control measures may change in the country of investment and it may influence accessibility to the invested capital; The value of the Rand has deteriorated over the last number of years. However, it is important to understand that should the Rand exchange rate strengthen against the exchange rate of the foreign currencies in which the Client s funds are invested, it may create loss of capital or reduced returns when the money is returned to South Africa in Rand Subject to its discretionary authorization, the Provider may invest in wrap funds on behalf of the Client in terms of this Mandate and is thus required by the registrar to make certain disclosures regarding wrap funds and how they differ from funds of funds: A fund of funds is a collective investment scheme fund that is not allowed to invest more than 50% of the value of the fund in any one collective investment scheme fund. The Collective Investment Scheme Act guarantees the repurchase of participatory interests in a fund of funds by the management company A wrap fund is a basket of different collective investment schemes wrapped as a single investment portfolio. The underlying combination of collective investments schemes is selected to optimally target the risk/return requirement and investment objectives of the client. In fact it s a number of separate investments in which the investor has direct ownership and could be better described as an account. These underlying investments are selected in line with the investment requirements of the Client. There is no joint ownership among investors and individual ownership of the participatory interests in the collective investment schemes can be transparently demonstrated at all times. A wrap fund investment is administered and facilitated by a linked investment service provider (LISP) i.e. an Administrative FSP. A wrap fund has no limit concerning the collective investment schemes that it may include in its portfolio. The Administrative FSP has service level agreements in place with the management company of each collective investment scheme according to which the repurchase of participatory interests in collective investment schemes comprising wrap funds are guaranteed. The costs and other information applicable to wrap funds set out in the documentation of the administrator of the wrap funds Any jurisdiction restrictions in respect of the client s portfolio are specified in the schedule that is attached to this Mandate. 5. REGISTRATION OF INVESTMENTS 5.1. All investments managed by the Provider in terms of this Mandate shall, at the Provider s election, be registered from time to time in the name of: The Client, or A Nominee company as the custodian thereof for the benefit of the Client, or A Nominee company of a member of the relevant stock or securities exchange, or In the case of a discretionary LISP, the independent custodian 5.2. The Client warrants and undertakes that all investments entrusted and/or delivered by it, or under its authority, to the Provider in terms of or for the purpose of this Mandate, are not and will not be subject to any lien, charge or other encumbrance or impediment to transfer and that the same shall remain free to any such lien, charge, encumbrance or impediment whilst subject to the Provider s authority pursuant to this Mandate.

5 Page 5 of TREATMENT OF FUNDS 6.1. The Provider shall forthwith deposit all funds received from the Client for the purpose of managing the investments as defined in the Mandate, directly into the bank account of the investment company or their nominee company where such funds are to be placed for the future management of the investment The Provider shall, forthwith on receipt thereof, deposit all cash moneys, including interest, dividends, proceeds of disposal and cash received in connection with the investments which are to be paid out to the Client into the Client s nominated bank account as they accrue and fall due. The nominated bank account is held at Bank bearing the name with account number 7. VOTING ON BEHALF OF CLIENTS 7.1. The Provider may vote on behalf of Client in respect of a ballot conducted by collective investment scheme in so far as the ballot relates to the investments managed by the Provider on behalf of the Client. 8. INFORMATION TO BE DISCLOSED BY SERVICE PROVIDER 8.1. The Client confirms that the Provider shall not be required to provide the Client with any information other than that which a product provider, such as a collective investment scheme or other listed insurance company, is required by law to disclose to the Client. 9. PROHIBITION AGAINST SELLING OR BUYING CERTAIN INVESTMENTS 9.1. The Provider shall not directly or indirectly: Sell any financial products owned by the Provider to the Client Buy for its own account any investments owned by the Client 10. DECLARATION REGARDING FUNDS & INVESTMENT The Client warrants, declares and undertakes that all investments entrusted and/or delivered by it, or under its authority, to the Provider in terms or for the purposes of this Mandate are derived from legitimate sources and do not constitute the proceeds of unlawful activities either as defined in the Prevention of Organized Crime Act No. 121 of 1998, as amended, or at all The Client further warrants that, where required, all funds entrusted to the Provider in terms or for the purpose of this Mandate are duly declared in terms of the Income Tax Act of 1962 and that the Client has obtained all necessary approvals from the South Africa Reserve Bank for foreign funds, assets or investments owned by the Client. 11. REPORTING The Provider shall furnish the Client with quarterly reports concerning the Client s investments The Provider may furnish the Client with electronic reports provided that the Client can access the reports The reports shall contain such information as is reasonably necessary to enable the Client to: Produce a set of financial statements;

6 Page 6 of Determine the composition of the financial products comprising the investments and any changes therein over the period to which such report relates; Determine the market value of such financial products and any changes therein during the period to which such report relates The Provider shall, on request in a comprehensible and timely manner, provide to the Client any reasonable information regarding the investments, market practices and the risks inherent in the different markets and products. 12. REMUNERATION In consideration for the management by the Provider of the investments, the Client shall make payment to the Provider of a minimum administration fee of R150 per month. This administration fee is paid in arrears at the end of each month The Provider may recover the remuneration referred to above on a monthly basis from the investment of Client The Provider will receive the following commission/ incentives, fee reductions or rebates from a LISP, collective investment scheme for placing the Client s funds with them: 20% In the event of the Provider being remunerated by the Life Assurance or Investment Companies, this fact will be disclosed to the Client and the parties may elect to negotiate a different fee structure. 13. DISPUTES If any dispute or difference arises as to the validity, interpretation, effect or rights and obligations of either party under this Mandate, either party shall have the right to require that such dispute or difference be referred for a decision to arbitration before a single arbitrator The arbitration shall be held in an informal manner at Ferndale, Randburg and the identity of the arbitrator shall be mutually agreed upon between parties within a period of 5 (five) days from the date that the arbitration is called for or, failing such mutual agreement within 5 (five) days, as nominated by the Chairman for the time being of the Johannesburg Bar Council or the President of the Johannesburg Law Society (or its successor). The arbitrator shall be an attorney or advocate of 10 (ten) years standing or more with experience and knowledge of Insurance law and with no interest in the proceedings The parties agree to keep the arbitration, its matter and evidence heard during arbitration confidential and not to disclose it to any other person The decision of the arbitrator shall be final and binding upon the parties and not subject to appeal The arbitrator shall include in his award an order as to the costs of the arbitration and who shall bear them The arbitrator shall at his sole discretion decide on the formulation of the dispute for arbitration but shall at all times be guided by the requirements of the Financial Advisory and Intermediary Services Act 2002 and all applicable ancillary legislation The inclusion of this arbitration clause shall not prevent a party from applying to court for urgent relief in the appropriate circumstances The parties agree that all the terms of this Mandate are material.

7 Page 7 of TERMINATION OF MANDATE The Provider or the Client shall be entitled to terminate the Mandate by furnishing, the one to the other, not less than thirty (30) calendar days written notice of such termination The Provider shall not initiate any market transactions in respect of any investments on behalf of the Client after receipt of notice of termination by the Client of this Mandate unless specifically instructed otherwise by the Client Upon receipt from the Client of any such notice of termination of this Mandate, all outstanding fees owing to the Provider in terms arising of or arising from the Mandate shall forthwith thereupon be and become due, owing and payable. In this regard the Client irrevocably authorises and empowers the Provider to deduct such fees either from the cash standing to the credit of the investments portfolio or from the sale of any securities or financial instruments forming part of the investments if such cash balance is sufficient to enable payment of such fees to be made Notwithstanding any other provision in this Mandate, the Provider s appointment shall immediately cease without prejudice to the rights and obligations of the Provider and the Client if its status as an authorised financial services provider is finally withdrawn in terms of the FAIS Act or any other provision of applicable legislation. 15. EFFECTIVE DATE This Agreement will become of force and effect on 16. ADMINISTRATION ARRANGEMENTS The Client shall apply for the investment products and portfolios on the applicable initial investment application forms Any amendment of any provision of this Mandate shall be in writing and shall be by means of a supplementary or new agreement between the Provider and the Client The Provider may make use of the services of its staff and/or that of another authorised financial services provider to execute certain administrative functions in the course of rendering intermediary services to the Client The parties choose as their respective domicilium citandi et executandi: The Provider at: Unit 1D, E and 1F Surrey Square Office Park 330 Surrey Avenue Ferndale, Randburg The Provider s address and facsimile number: admin@jvnassetmanagement.co.za,

8 Page 8 of 16 The Client at: The Client s address and facsimile number: Signed for and on behalf of the Provider Signature: At: Witness Signature: Witness Signature: Name: Date: Name: Name: Signed by the Client Signature: At: Witness Signature: Witness Signature: Name: Date: Name: Name:

9 Page 9 of 16 SCHEDULE FULL DISCRETION This schedule delegates authority to the Provider to effect transactions in your name without limitation. If you wish for transactions to be entered into on your behalf to be limited or conditional in any way, this form should not be used. Refer to the limited discretion schedule. I hereby authorise the Provider to manage my investments at this sole and full discretion in order to achieve my investment objectives as indicated below. This means that the Mandate is an unlimited Mandate for the Provider to exercise its full discretion with regards to the process of managing my investments and the Provider shall not need to obtain further authority or consent from me to effect any transactions in terms of the Mandate to which this is attached. The Provider may reinvest in terms of this schedule any amounts that have accrued to me in the form of interests, dividends and the proceeds of disposals. I hereby authorised the Provider to manage my portfolio in respect of: Local jurisdiction only Off-shore jurisdiction only Both local and off-shore jurisdictions

10 Page 10 of 16 The Client s investment objectives are specified as follows: Long Term (5 years or longer) Capital Growth Income Generation Medium Term (2 to 5 years) Capital Growth Income Generation Short Term (3 months to 2 years) Capital Growth Income Generation Risk Preference * Very Conservative Conservative Moderate Aggressive Very Aggressive (*initial applicable selection) *Risk preference is determined considering the current set of information and circumstances of the Client but may change over time. Signed by the Client Client Signature: At: Name Date

11 Page 11 of 16 SCHEDULE LIMITED DISCRETION This schedule delegates limited authority to the Provider to effect transactions in your name. If you wish for transactions to be entered into on your behalf, not to be limited or conditional in any way, this form should not be used. Refer to the full discretion schedule. I hereby restrict the Provider s discretion in the management on my behalf. The Provider s right to purchase and sell investments on my behalf may only be exercised by the Provider: (*initial applicable selection) On my instruction and prior consent On the instruction of my investment advisor, who is a financial services provider licensed in terms of section 8 of the FAIS Act. Upon me receiving advice in respect of such investments from the Provider, and to which I have consented I hereby authorised the Provider to manage my portfolio in respect of: Local jurisdiction only Off-shore jurisdiction only Both local and off-shore jurisdictions Unless instructed otherwise, all cash accruals received in respect of the investments including dividends and interest, shall be: (*delete whichever is not applicable) Reinvested as and when they fall due and shall form part of the investments Paid out to the client into the indicated bank account

12 Page 12 of 16 The Client s investment objectives are specified as follows: Long Term (5 years or longer) Capital Growth Income Generation Medium Term (2 to 5 years) Capital Growth Income Generation Short Term (3 months to 2 years) Capital Growth Income Generation Risk Preference * Very Conservative Conservative Moderate Aggressive Very Aggressive (*initial applicable selection) *Risk preference is determined considering the current set of information and circumstances of the Client but may change over time. Signed by the Client Client Signature: At: Name Date

13 Page 13 of 16 Contract For Difference product details, structure and features. JVN Asset Management trades in CFDs for their managed account clients who request this. In a nutshell a CFD (Contract For Difference) is an unlisted instrument that is an agreement between a buyer and a seller to exchange the difference in value of a particular underlying asset (like a share) for the period between when the contract is opened and when it is closed. The difference in value is determined by reference to the underlying asset. CFDs are unlisted and counterparty risk is not guaranteed by an exchange. It is therefore very important that the Client deals with a big financial institution like Nedbank. CFDs are called derivatives because they derive their value from the performance of an underlying asset. The Client doesn t buy the assets himself/herself, but enters into a legally binding contract to buy or sell the assets at a predetermined price. CFDs, Futures and options are classic examples of derivative instruments. CFDs are unlisted and cost effecting alternatives to trading shares directly on the JSE. When the Client trades in CFDs there are just two positions he/she can take: long or short (See Glossary of terms at the end of the document). When the Client buys long, he/she is buying a security expecting the price of the underlying shares to rise. Assuming it does so, the Client will be able to sell or close his/her position for more than the contract price. When the Client sells short, he/she is actually selling borrowed shares, expecting the price to fall. If the price does fall, the Client can buy back the shares for less than the contract cost. The Client returns the shares and profit from the difference. CFDs will be traded on the.. trading platform. Risk: At the outset it must be noted that trading in CFDs is more risky than share trading and should only be attempted by individuals who are already familiar with the share market and are comfortable with the concept of gearing. Gearing can increase profits, but it can also increase losses. Stop-loss techniques and predetermined exit strategies are an integral part of CFD trading and should be studied before trading as they can assist in limiting losses in volatile market conditions. It is important to note that the liability for a holder of either a long or short CFD position is not limited to the initial margin deposited. If the market moves against a position then the holder of that position may be called upon to pay additional funds on short notice to maintain the position. Margin: The margin is like a deposit of a percentage of a position the Client is taking. The margin required by Nedbank will be a minimum of 15% of the position or exposure, but a higher margin may be required. The size of the margin required depends on the volatility of the price movements in the share and the Client s own risk profile, determined by Nedbank, based on the Client s other investments with us. Profits and losses are calculated every day and the margin is adjusted daily. If the share price of the underlying share moved in Client s favour (up if Client is on long and down if Client is on short), the Client will receive margin money back into his/her CFD account. If the share price of the underlying share moved against the Client (down if the Client is on long or up if the Client is on short), margin money will be deducted from the Client s CFD account. If the cash in the Client s CFD account is insufficient to cover the daily margin requirement, the Client must deposit enough money immediately else his/her position can be closed without notice. Financing Cost: Unlike Single Stock Futures (SSFs) where the financing cost until expiry of the SSF is included in the price of the SSF, with CFDs the financing costs must be paid daily because there is no expiry date. The financing cost is calculated daily on the value of the Client s exposure and the Client receives interest on the margin he/she deposited with JVN Asset Management. In essence the Client borrows money from JVN Asset Management to pay for the share and pay interest on that and the Client receives interest on the margin he/she deposits with JVN Asset Management.

14 Page 14 of 16 Features of CFDs: Transparent Trading: All CFDs have an underlying share and is traded in the same manner as trading shares. The client pays the exact price for the underlying share as it is traded on the JSE, there are no SSF prices etc. Price Transparency: CFD prices mirror the underlying share prices exactly, but the dividends and interest are not reflected in the price of a CFD. These cash flows are paid on a daily basis when the position is opened. Contract Expiry: CFDs do not expire, so the Client can save on roll-over costs. The only method of getting out of a CFD contract would be to close the CFD position. CFDs may expire and de-list due to lack of liquidity and or the underlying share has been de-listed. Corporate Actions: Dividends are granted to the holder of a long position. Dividend Withholding Tax (DWT) will be deducted from the dividend and paid to SARS. Cash corporate actions will reflect on the clients account. Non cash corporate actions will simply adjust the position of the CFD. Advantages of trading CFDs versus trading shares: Leverage/Gearing: CFDs allow the client full exposure to the underlying share with less capital layout. It requires a small amount of capital layout called the initial margin. At 15% margin, gearing is nearly 7 times. Open short positions: CFDs allow the trader to go short the market when it feels the share price is going to fall in future. This allows the trader to profit when the market falls. Pairs Trading: Pairs of stock is a method used if the trader feels one share will outperform the other. The trader may feel Anglos will outperform Billiton and thus buys Anglos and sells Billiton short. Trading costs can be a lot cheaper than for trading shares. Glossary of terms: Contract For Difference (CFD): An agreement between buyer and seller to exchange the difference in value of a particular instrument between when the contract is opened and when it is closed. The difference is determined by reference to an underlying a stock, Index, FX rate or commodity. Mark to market: The daily process whereby the value of a CFD position is compared to the previous day s close and the daily profit or loss is calculated. The change in the MTM each day (either up or down) has a cash value and is referred to as variation margin. Variation margin profits are added to the trading balance and variation margin losses are deducted. Mark to market price: Price used by Nedbank to complete the mark to market process. The price is based on the closing price of the underlying instrument. Long: Hold a positive number of contracts. A long position is profitable on any CFD if the belief is that the underlying instruments price will increase in value. A long CFD position implies that the holder wants the price of the underlying instrument to increase.

15 Page 15 of 16 Short: Hold a negative number of contracts. A short position is profitable on any CFD if the belief is the underlying instruments price will decrease in value. Selling short is the term for selling CFDs that the trader does not possess, intending to buy them at the lower price at a later date. It is the opposite of going long (buying a CFD). Opening a position: A trade, whether buying or selling, that increases the absolute quantity held after the trade. Thus any trade that moves further away from 0, whether positive or negative. Closing a position: A trade, whether buying or selling, that decreases the absolute quantity held after the trade. Thus any trade that moves closer to 0, whether positive or negative. Initial Margin: Every trader in the CFD market is required to put up an initial Margin (deposit) for each contract they trade. This applies to both buyers and sellers. This initial margin is returned when the contract is closed out. Initial margins protect the parties against non-payment of losses by the other party. The amount is normally set at a level designed to cover reasonably foreseeable losses on a position between the close of business on one day and the next. The amount of Initial Margin for each contract varies according to the price volatility of the underlying instrument and is based on the initial margin as published by SAFEX from time to time, but set by Nedbank. Intra-day variation margin: The sum of the profit or loss of each CFD in a portfolio at any point in time during the day (intraday). Over the counter (OTC) Trading in some context other than on a formal exchange such as the JSE Ltd. Also refers to instruments that trade via a dealer network or directly with a larger corporate as opposed to on a centralized exchange. Leverage/gearing: Is the use of given resources in such a way that the potential profit or loss is magnified.

16 Page 16 of 16 I with ID/Passport Number Hereby agree that I have read the following document and that I fully understand the contents of this document. I further agree the following: 1. There are no guarantees 2. I am investing money I can afford to put at risk 3. I understand this is seen as a high risk investment 4. I understand the capital is leveraged 5. I have been informed that Levi A. Nkosi is under supervision 6. I have been explained and understand the fee structure of said investment 7. The fee structure has been explained to me and is set out in the following manner: 8. All trades will have Value Added Tax added to it 9. I will be taxed for the capital gains and dividends in the capacity of which I have signed the contract 10. The liquidity constraints have been explained to me 11. The lock-in period (should one exist) has been explained to me 12. Levi A. Nkosi is a Director and a representative, under supervision of JVN Asset Management. The agreement will be between JVN Asset Management and you the client. JVN Asset Management facilitates, through the discretionary license of the key individual for Levi A. Nkosi to offer the discretionary service to you the Client, using the trading systems of.. The KI will monitor and supervise the representatives on an ongoing basis. Signed at on this day of Client Signature