Securities Exchange Regulator Of Cambodia Approves Reporting Forms For Fund Management Companies
In a significant development aimed at bolstering industry performance and stability, the Securities and Exchange Regulator of Cambodia (SERC) officially approved the adoption of the Guideline on Reporting Forms for Fund Management Companies (FMCs) on January 22, 2024.
The guideline on reporting forms states that the objective of this step is to enhance awareness and ensure that FMCs fulfil their reporting, notification, and permission request obligations in a structured and efficient manner, aligning with the Prakas on Obligations of Reporting, Notifying and Requesting for Approval of Fund Manager adopted on December 30, 2022.
H.E. Sou Socheat, Director-General of SERC, told B2B Cambodia that the adoption of the new guideline is another step in the development of the Cambodian collective investment scheme market and its securities sector.
“It will strengthen our supervision to promote transparency and market order, as well as how we treat and support our regulated entities,” he said, noting the guideline provides a clear instruction form to fund management companies to help them comply with all laws and regulations.
He added, “As a regulator, we always work our best to protect our regulated persons and investors.”
Purpose Of The Guideline On Reporting Forms For Fund Management Companies In Cambodia
The SERC told B2B Cambodia that the guideline will provide clear structured reporting forms for FMCs to submit essential information to the regulator, including monthly reports, semi-annual reports, and annual reports.
The adoption of these reporting forms is expected to help FMCs streamline reporting obligations, which in turn will provide benefits including ensuring adherence to SERC regulatory requirements, promoting transparency, simplifying data submission processes, and aiding regulatory oversight, ultimately fostering a more accountable and compliant business environment.
The SERC added that the reporting requirements with the new regulation also require companies to report on financial soundness, the status of business activities as a FMC, internal controls, compliance with regulations, and risk management.
What Is A Collective Investment Scheme In Cambodia?
According to BlackRock, collective investment schemes are commonly referred to as 'investment funds', 'mutual funds', or simply 'funds'. These schemes invest in various assets such as bonds, equities, or cash. The pool of assets owned by the fund is known as a portfolio, which is professionally managed by a fund manager.
In Cambodia, the SERC describes a collective investment scheme as a pooling of money or cash equivalents through the issuance of fund units or electronic systems, including crowdfunding, as approved by the regulator. Once a fund has been established, an FMC is responsible for overseeing its operations and investing in approved collective investment scheme projects as determined by the SERC.
The primary objective of these investments is to generate financial benefits for investors, along with other advantages such as rights or interests in property.
The SERC informed B2B Cambodia that the number of licensed FMCs has steadily increased in recent years since the adoption of the Prakas on Licensing and Supervising of Collective Investment Scheme (CIS) business in 2018.
“FMCs and CIS promote diversification of investment portfolios, reduce individual risk, and enhance market liquidity,” stated the SERC.
According to the SERC’s website, licensed companies operating with collective investment schemes in Cambodia include 14 fund management companies, eight trustee companies, three fund distributions, and three fund administrators.
Prioritising Investor Protection
The SERC cites investor protection as a top priority for the regulator, with robust laws and regulations established to promote efficiency, transparency and accountability in the Kingdom’s securities market, and to foster greater investor trust.
Before issuing licences or approvals, the SERC carefully reviews all applications against stringent requirements, including on financial stability, human resources and business operating systems.
Sub-decree No. 24 ANKR.BK on “Rehabilitation and Liquidation in the Securities Sector” (February 26, 2018), outlines the procedures for these processes and offers a structured approach to rescuing struggling entities or, when necessary, dissolving them in a transparent and responsible manner.
“The SERC actively monitors the business operations and financial health of companies in the sector with prompt action taken through rehabilitation or liquidation proceedings in the event of a financial crisis,” the regulator affirmed.