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Satrix S&P Namibia Bond ETF to Change From a Reinvesting Portfolio to a Distributing Portfolio
SATRIX COLLECTIVE INVESTMENT SCHEME IN SECURITIES 2
SATRIX S&P NAMIBIA BOND ETF
JSE Code: STXNAM
NSX code: SXNNAM
ISIN: ZAE000318275
("Satrix Nam")
A portfolio in the Satrix Collective Investment Scheme in Securities
2, registered as such in terms of the Collective Investment Schemes
Control Act, 45 of 2002
Satrix S&P Namibia Bond ETF To Change From A Reinvesting Portfolio
To A Distributing Portfolio
1. Introduction
Satrix S&P Namibia Bond unitholders ("Unitholders") are referred to
the FSCA Conduct Standard 1 of 2020 (CIS) ("Conduct Standard") issued
by the Financial Sector Conduct Authority ("FSCA") on 19 May 2020.
The Conduct Standard is applicable to portfolios comprising collective
investment schemes registered in terms of the Collective Investment
Schemes Control Act, 2002 (Act No. 45 of 2002) ("CISCA").
The Conduct Standard is intended to set minimum requirements for net
asset valuation calculation and pricing for collective investment
scheme portfolios registered in terms of CISCA and are therefore
applicable to the STXNAM portfolio.
In terms of the Conduct Standard, and as further set out below, the
STXNAM portfolio distribution method which currently allows for the
re-investing of all coupons received, will now be adjusted to one in
which all coupons received are paid out in cash to Unitholders.
2. Background on the STXNAM
The STXNAM portfolio tracks the S&P Namibia Sovereign Bond 1+ Year Top
10 Index (the "Index"), an index designed to track the performance of
the 10 largest Namibian bonds publicly issued by the Namibian
government for the domestic market.
Coupons and interest from the underlying bonds are reinvested
quarterly. The STXNAM portfolio declares a notional (deemed)
distribution to unitholders quarterly. The value of this quarterly
deemed distribution equates to the cumulative value of coupons earned
and reinvested in the preceding quarter by the STXNAM portfolio, into
constituents securities of the Index. Such coupons and interest in
respect of the distribution does not incur dividends tax as it is not
considered a dividend however unitholders will be liable for income
tax at their marginal rate of tax on the coupons and interest declared
and deemed to have been received.
The STXNAM portfolio is considered to be a reinvesting portfolio as
all income, which as stated above primarily consists of coupons and
interest, is declared to Unitholders on declaration date and then is
reinvested by Satrix on behalf of Unitholders into constituent
securities of the Index in the exact proportions as per the Index.
3. Rationale for the change in distribution methodology
The Thirty-Eight Supplement to the Offering Circular and Pre-listing
Statement Methodology issued in terms of the STXNAM Portfolio on 14
February 2023 stipulates the re-investment of distributions declared
in terms of the STXNAM portfolio.
As such, the Thirty-Eight Supplement Methodology is therefore not in
compliance with paragraph 10.1 ("Conduct Standard Distribution
Methodology") which reads as follows:
"All income received and accrued by a portfolio or class after
deducting permissible costs must be distributed to investors so that
it is taxed in the hands of the investor and that the nature of the
income is preserved in the process."
The Conduct Standard Distribution Methodology therefore gives rise to
distributions, which must be distributed to investors and not re-
invested.
Hence, as a result of the Conduct Standard Distribution Methodology,
distributions declared by the STXNAM portfolio shall be distributed in
cash to Unitholders on a quarterly basis and not reinvested in the
portfolio.
4. Financial effect on Unitholders
The change from the Thirty-Eight Supplement Distribution Methodology
to the Conduct Standard Distribution Methodology will have no financial
effect on Unitholders. Unitholders will realise the same economic
outcome and subject to the same tax principles.
5. Application of JSE Listings Requirement and amendment of the
Thirty Eight Supplement
Paragraph 19.20(a) of the Listings Requirements of JSE Limited reads
as follows:
"An issuer is required to comply with the following continuing
obligations once its securities have been listed:
(a) in the event that the issuer makes any changes to the placing
document or pricing supplement that affect the terms and conditions of
the securities or the guarantee, other than changes which are of a
formal, minor or technical nature or are made to correct a manifest
error or to comply with mandatory provisions of the law, the applicant
issuer must obtain approval from holders of securities, holding not
less than 66.67% of the value of a specific class of securities;"
Hence as the change in distribution methodology is necessitated by the
Conduct Standard which is considered to be a change to comply with
mandatory provisions of the law, no approval from Unitholders is
required to implement the STXNAM portfolio distribution method.
The Thirty Eight Supplement has been amended to reflect the change in
distribution methodology as set out in the Conduct Standard.
13 January 2025
JSE Sponsor
Vunani Sponsor
NSX Sponsor
Cirrus Securities
Date: 13-01-2025 04:40:00
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