LEGAL CASE STUDY
Assume XXX Investments is the investment manager of the assets of two legal entities only.
These entities are:
A unit trust. This is a co-named arrangement where the Management Company is XYZ. This means that XXX is the investment manager but not the Management Company. However, XXX initiated the launch of this unit trust via XYZ.
The XXX Umbrella Pension Fund. The Fund owns the assets directly.
XXX is considering consolidating all their investments into the unit trust portfolio. In other words the XXX Umbrella Pension
Fund will own units in the unit trust instead of the investments directly. With the view of transferring the pension assets, XXX
needs to make sure the agreements protects their business interests. Some of the concerns include that:
1. Could XYZ fire XXX as the investment managers and retain the assets?
2. Could XYZ solicit XXX’s clients to move to another provider?
3. Could XXX move into a different co-named arrangement / own MANCO as and when they decide?
4. Will XYZ be required to notify XXX if they consider selling their business / adding a new majority shareholder?
This is not an exhaustive list by any means but is just an indication of some of the items that come to mind.
XXX’s main concern is ensuring that those assets and clients remain under XXX’s control and not XYZ. Legally, we
understand that they belong to the CIS but from a business and control perspective we need to retain them.
A) Explore some of the options XXX could employ to protect these business interests.
B) Are there any restrictions or implications for transferring pension fund assets into a unit trust?