Conflict of Interest Policy
Conflict of interest means any situation in which a Financial Services Provider or its representative has an actual or potential interest that may impact it‘s rendering of a financial service to an investor:
- Influence the objective performance of his, her or its obligations to that investor; or
- Prevent a provider or representative from rendering an unbiased and fair financial service to that invest or, or from acting in the interest of that investor, including but not limited to –
- a financial interest;
- an ownership interest;
- any relationship with a third party
Financial interest means any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration , other than –
- An ownership interest;
- Training, that is not exclusively available to a selected group of providers or representatives, on-
Products and legal matters relating to those products; General financial and industry information;
Specialised technological systems of a third party necessary for the rendering financial service; but excluding travel and accommodations associated with that training
Ownership interest: means-
- Any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition, other than equity or a proprietary interest held as an approved nominee on behalf of another person; and
- Includes any dividend, profit share or similar benefit derived from that equity or ownership interest.
Third party: means –
- a product supplier;
- another provider;
- an associate of a product supplier or a provider;
- a distribution channel;
- any person who in terms of an agreement or arrangement with a person referred to above provides a financial interest to a provider or its representatives.
Associate: means –
- in relation to a natural person, means –
- a person who is recognised in law or the tenets of religion as the spouse, life partner, or civil union partner of that person;
- a child of that person, including a stepchild, adopted child and a child born out of wedlock;
- a parent or stepparent of that person;
- a person in respect of which that person is recognised in law or appointed by a court as the person legally responsible for managing the affairs of or meeting the daily care needs of the first mentioned person
- a person who is the spouse, life partner or civil union partner of a person referred to in 2, 3 and 4 above.
- a person who is in a commercial partnership with that person.
- in relation to a juristic person,
- which is a company, means any subsidiary or holding company of that company, any other subsidiary of that holding company and any other company of which that holding company is a subsidiary.
- which is a closed corporation registered under the Close Corporations Act, means any member thereof as defined in section 1 of that Act.
- which is not a company or a closed corporation, means another juristic person which would have been a subsidiary or holding company of the first-mentioned juristic person:
- had such first –mentioned juristic person been a company; or
- in the case where that other person, too, is not a company, had both the first-mentioned juristic person and that other juristic person been a company
- means any person in accordance with whose directions or instructions the board of directors of or, in the case where such juristic person is not a company, the governing body of such juristic person is accustomed to act.
- in relation to any person,
- means any juristic person of which the board of directors or, in the case where such juristic person is not a company, of which the governing body is accustomed to act in accordance with the directions or instructions of the person first-mentioned in this paragraph; and
- includes any trust controlled or administered by that person.
All employees or persons associated with the 12J VENTURE CAPITAL COMPANY are responsible for familiarising themselves, complying with and supporting the Conflict of Interest Policy and to render financial services honestly, fairly, with due skill, care and diligence, and in the interests of investors and the promotion of integrity in the financial services industry .
Failure to comply will lead to disciplinary action or dismissal.
The purpose of this policy is to ensure compliance with Section 3A(2)(b)(i)(aa) of the General Code of Conduct requirements that Financial Services Providers need to implement a Conflict of Interest Management Policy to ensure that conflicts of interest are managed appropriately within the business.
IDENTIFICATION AND ASSESSMENT
The Board of Directors, Key individual and Compliance Officer should assess the materiality of the actual or potential conflict of interest and act with due care and diligence when confronted with a situation that may give rise to an actual or potential conflict of interest.
The materiality of an interest will depend on the circumstances of each case and it will be a matter of judgment for the director, to be determined having regard both to what is material to the company and what is material to the director.
Where a conflict of interest exists, ‘material’ can be interpreted to mean the matter has a capacity to influence the vote of a particular director on the decision to be made.
The material personal interest need not be the subject of a conflict of interest at the time it is disclosed.
Furthermore, the interest need not necessarily be of a financial or monetary nature.
The common law imposes fiduciary duties on directors which prevent directors from using their position to personal advantage. These fiduciary duties overlap with the statutory duties imposed on directors under the Companies Act.
The courts have classified these fiduciary duties as the obligation to act bona fide in the best interests of the company; exercise powers for a proper purpose; retain discretion; and avoid conflicts of interest.
A conflict of interest arises where a director has interest(s) that conflict with the interests of the company or where the director has interests that may reasonably be perceived to conflict with the interests of the company. It is a personal statutory obligation on each director to disclose conflicts.
AVOIDANCE AND MITIGATION
Once an actual or potential conflict of interest has been identified, the following measures will be followed in order to determine whether the conflict of interest is avoidable.
- The Board of Directors will convene and review the actual or potential conflict of interest in an open and honest forum.
- All information pertaining to the actual or potential conflict of interest must be disclosed to all interested parties, Key Individual and Compliance Officer.
- If the Board of Directors have determined that the actual or potential conflict of interest is avoidable, the following processes must be adhered to:
- The Board must approve, by a majority vote, the removal of the underlying cause of the actual or potential conflict of interest.
- The underlying cause of the actual or potential conflict of interest must be removed as soon as reasonably possible.
- Any negative impact to investors resulting from the removal of the actual or potential conflict of interest must be kept to a minimum.
- The reason(s) why the actual or potential conflict of interest was determined to be avoidable must be recorded.
- All determinations and interventions pertaining to the avoidance of the conflict of interest must be documented and kept on the compliance file.
- Any similar situation that may give rise to actual or potential conflicts of interests must be avoided in the future.
- If the Board of Directors should determine that the actual or potential conflict of interest is unavoidable:
- The Board of Directors will convene in an open and honest forum to review an appropriate mitigation process in order to mitigate the actual or potential conflict of interest.
- All information and reason pertaining to why the actual or potential conflict of interest cannot be avoided must be recorded and disclosed to all interested parties, Key Individual and Compliance Officer.
- The mitigation process will include the adoption of the measures:
- The actual or potential conflict of interest must remain only for as long as it is absolutely necessary given the unavoidability of the actual or potential conflict of interest.
- Alternative arrangements to a proposed transaction, contract or arrangement that is the subject of the conflict of interest must be investigated on a continuous basis.
- The rendering of financial services must at all times be conducted with the best interest of the Investor in mind (far as this is possible, given the unavoidability of the actual or potential conflict of interest).
- All employees must be made aware of the actual or potential conflict of interest, and the reasons for its unavoidability.
- Full disclosure of the actual or potential conflict of interest must be made to the Investor at the earliest reasonable opportunity.
The Board of Directors must make appropriate disclosures to third parties including investors, as part of its arrangement to manage conflicts of interest. It is acknowledged that while disclosure alone will often not be enough, disclosure must be treated as an integral part of managing conflicts of interest. The Board of Directors is therefore committed to ensure that investors are timeously informed regarding any conflicts of interest that may compromise the provision of financial services.
It is furthermore acknowledged that, whilst a clearly identified conflict of interest will not necessarily cause the provision of financial advice to an investor to be significantly compromised, it should nonetheless be disclosed to the investor. The investor must be afforded the opportunity to decide for him/herself whether the conflict of interest is significant and to what extent he/she will rely on the advice or intermediary service.
Full disclosure of identified conflicts of interest must be made to all Key Individual, Employees, Compliance Officer and investors in writing within 30 days.
To comply with Section 3A(2)(b)(i)(cc) of the General Code of Conduct the annexure section needs to be completed (at least annually), and where necessary, updated to ensure processes remain adequate to identify, assess, evaluate and successfully control conflict of interest.