(Attachment 1)

mm/dd/yy

Financial Services Agency, Japan

Confirmation List of ARFP Application Documents

Operator for a Japanese Passport Fund
Post Code
Address
Telephone Number
Name of the Company
Representative

Name of Fund
Issuing Date / Proposed Issuing Date

1

Contents
Regarding the "Application" for ARFP
Regarding a "Regulated CIS" to apply for ARFP
Regarding an "Operator" of a Regulated CIS to apply for ARFP
Regarding a "Custodian" of a Regulated CIS to apply for ARFP
Regarding an "Independent Oversight Entity" of a Regulated CIS to apply for ARFP
Regarding an "Annual Implementation Review" of the Passport Fund
Regarding "Financial Reporting and Auditing" of the Passport Fund
Regarding "Requirement of Offer in Home Economy" of the Passport Fund
Regarding "Permitted Investments" of the Passport Fund
Regarding "Restrictions on Portfolio Allocation" of the Passport Fund
Regargind "Limits on Exposures" of the Passport Fund
Regarding "Other Restrictions" of the Passport Fund2

Regarding the "Application" for ARFP
Annex 2 Part 2 Application process
Documents
Attached

MOC Clause to be Checked

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No.

3 Registering a Regulated CIS as a Passport Fund
(1)

Note
Part A

An Operator or a Regulated CIS may lodge an application to register a Regulated CIS or a sub fund of a Regulated CIS as a Passport Fund with the Home
Regulator.

(2) To be considered by the Home Regulator, the application must contain:(a) the general information to be decided by the Participants (Part A);-(b) any specific information required by the Home Regulator (Part B); and-(c) any fee charged by the Home Regulator.

-(3) The Home Regulator may register a CIS as a Passport Fund only if the Home Regulator is of the opinion that:(a) the CIS is a Regulated CIS or a sub fund of a Regulated CIS in the Home Economy;

Only when 3(4) issatisfied(b) the Operator of the CIS is an eligible entity ; and(c) the CIS is likely to be operated in compliance with:(4)-(i) the Home Economy Laws and Regulations; and-(ii) the Passport Rules including subsection 34(3) of the Passport Rules when that subsection is to apply.

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For subsection 3(3), the Operator of the CIS is an eligible entity only if at the time of application of each CIS, subject to any exemption or modification inaccordance with the Passport Rules;(a)the Operator and its related parties are responsible for the operation of financial asset CIS or have discretionary
management powers over others’ money with a total asset value of at least USD 500,000,000, excluding any assets
directly or indirectly invested in other financial asset CIS, or through other discretionary management arrangements,
operated by the Operator or its related parties so as to avoid double counting;(b) it has officers with the relevant qualifications (see section 6 of the Passport Rules);document under 3 (5)denominated in UnitedStates dollars

Part A

Annex 3 Part 6

Part A(c) it meets the financial resources test (see section 7 of the Passport Rules);Annex 3 Part 7

Part A(d) it meets the organisational arrangements test (see section 8 of the Passport Rules);Annex 3 Part 8Part A(e) it meets the track record test (see section 9 of the Passport Rules);Annex 3 Part 9Part A

Annex 3 Part 10

Part B

Registration number
and type based on the
Financial Instruments
and Exchange Act

Part A(f) it meets the good standing test (see section 10 of the Passport Rules); and(g)it has a principal place of business in the Home Economy and is regulated by the Home Regulator for the operation of aRegulated CIS that may be offered to the public generally in the Home Economy.

(5) To calculate total asset value under subsection 3(4)(a):Part A(a) the same methodology will be used as required under the Passport Rules for valuing assets of a Passport Fund; andif the financial asset CIS is not denominated in USD, it will be calculated using the average of the rates of currency
exchange against the USD on the first business day in the capital city of the Home Economy of the year in which an
application for registration is made and the first business day in the capital city of the Home Economy in each of thepreceding four years.
If the Home Regulator decides to register a Passport Fund under subsection 3(3), it will allocate the Passport Fund a unique(6)
registration code.
(b)

(7)

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A Regulated CIS or sub fund of a Regulated CIS becomes a Passport Fund on receiving a unique registration code undersubsection 3(6).

4 Applying for entry to a Host Economy(1) Before offering interests in a Host Economy as a Passport Fund, a Passport Fund must:draft application forms
for a Host Economy(a) apply to the Host Regulator for entry in accordance with subsection 4(2); and(b) complete the entry process that the Host Economy has implemented under subsection 4(3).

-(2) An application for entry to a Host Economy will contain:(a) the Passport Fund’s unique registration code;-(b) Part A of the Passport Fund’s registration application;
any document or information required by the Host Regulator, including in Part B of the Passport Fund’s registration(c) application, which is reasonably required under or is necessary to assess the Passport Fund’s compliance with the Host
Economy Laws and Regulations; and(d) any fee charged consistently with section 4 of Annex 1.

draft application forms
for a Host Economy-(3) There will be two entry processes a Participant can implement:(a) the streamlined authorisation process described in section 5; or-(b) the notification process described in section 6.

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Regarding a "Regulated CIS" to apply for ARFP
Annex 1: Host Economy Laws and Regulations
Documents
Attached

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No.

Note

2 Main areas in which Host Economy Laws and Regulations may apply（３） For the purposes of subsection 2(2), a qualified distributor is an entity or person as set out in the following table for the relevant economy as a Host Economy.

Host Economyof the Passport
Fund

Qualified distributor
A financial services licensee authorised for the services provided, or the licensee's authorised
representative.

Australia

Part A-Japan

contact information(Local distributors)-

An entity licensed under the Financial Investment Services and Capital Markets Act to engage in ‘Investment
Korea
brokerage business’ and ‘Investment trading business’ of Collective Investment Securities to General
Investors
A person registered as a provider of a relevant financial service under the Financial Service Providers
New Zealand(Registration and Disputes Resolution) Act 2008.
Exempt persons listed in section 23 of the Financial Advisers Act read with regulation 27(e) of the Financial
Singapore
Advisers Regulations.
Entities who have been granted licence type:• A (i.e. brokerage companies)• C* (i.e. mutual fund management, private fund management) and
Thailand• D licence (i.e. commercial banks)*Entities obtained licence type C must have in place proper operational system and received approval fromthe SEC before being recognised as qualified distributor.

contact information(Local distributors)

Annex 3 Part 2 Constituent documents
Documents
Attached

MOC Clause to be Checked
4 Constituent document for a Regulated CIS(2) For these rules, the constituent document of a Regulated CIS is the document shown in the following table:
Constituent document

Australia

The constitution of the registered scheme required by the Corporations Act 2001 (Cth).

Japan

The basic terms &The basic terms conditions of the investment trust (if it is an investment trust) or the certificate ofconditions of theincorporation (if it is an investment company) under the Investment Trusts and Investment Corporations Act. investment trust (if it isan investment trust)

Korea

Constitutional documents of Collective Investment Vehicles as required by the Financial Investment Services
and Capital Markets Act of Korea

New ZealandSingapore
Thailand-The governing document for the managed investment scheme required by the Financial Markets Conduct
Act 2013 of New Zealand.
The trust deed or any other document of incorporation required in respect of the collective investment
scheme to be authorised under the Securities and Futures Act of Singapore.
In case of a scheme established as a mutual fund, the commitment between the unit holders and the
securities company required under the Securities and Exchange Act of Thailand. In a case of a scheme
established as a trust, the trust deed as required by the Trust for Transactions in Capital Market Act.

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(3) For this section, the constituent document is compliant if the constituent document includes provisions that:(a) have the effect that:(i)each member of the Passport Fund is entitled to seek remedy against the Passport Fund, if it is a legal entity, and its
Operator, in the member’s choice of the Home Economy or a Host Economy of the Passport Fund, including throughcompensation, in relation to loss suffered by the member due to a breach of the Home Economy Laws andRegulations or breach of the Passport Rules by the Passport Fund, or its Operator unless:(A)

the member and the Passport Fund or Operator have agreed in writing that the member is not entitled to seek
remedy in that place in relation to the particular proceedings; and(B) the agreement is effected after the conduct that is or is to be subject to the proceedings has first occurred; ora specified person, on behalf of any member of a Passport Fund when it is in the best interests of members, isentitled to seek remedy against the Passport Fund, if it is a legal entity, or its Operator in the specified person’s(ii) choice of the Home Economy or a Host Economy of the Passport Fund, including through compensation, in relation
to loss suffered by the member due to a breach of the Home Economy Laws and Regulations or breach of the
Passport Rules by the Passport Fund or its Operator unless:the specified person and the Passport Fund or Operator have agreed in writing that the member is not entitled to
The basic terms &seek remedy in that place in relation to the particular proceedings; andconditions of the(B) the agreement is effected after the conduct that is or is to be subject to the proceedings has first occurred;investment trust (if it ishave the effect that the Passport Fund, if it is a legal entity, and its Operator agree that where a member of the Passport an investment trust)(A)(b) Fund has commenced proceedings against the Passport Fund or its Operator in a court in the member’s economy, thatcourt will be a convenient forum to hear the proceedings, unless:(i)a similar action has been commenced against the Passport Fund or its Operator in another economy and it would bereasonable for the member to participate in that action; orthe member and the Passport Fund or Operator have agreed in writing that the court will not be a convenient forum(ii) in relation to that particular proceeding and the agreement is effected after the conduct that is or is to be subject tothe proceedings has first occurred; andhave the effect that the Passport Fund, if it is a legal entity, and its Operator agree that the convenient forum for thePassport Fund or its Operator bringing an action against a member will be the member’s economy unless the member(c) and the Passport Fund or Operator have agreed in writing that the court will not be a convenient forum in relation to theparticular proceedings and the agreement is effected after the conduct that is or is to be subject to the proceedings has
first occurred.
(4) For this section, the member’s economy in relation to the Passport Fund is:
(a)

Note
Part A(1) The Operator of a Passport Fund must ensure that the Passport Fund has a compliant constituent document at all times.
Home
Economy of
the Passport

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the economy in which the member was located when they applied to be accepted as a member of a Passport Fund if that
economy is a Participant’s economy; or(b) in all other cases, the Home Economy.

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4Annex 3 Part 9 Dictionary
Documents
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No.

Note

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Note

56 Meaning of Regulated CIS and Operator
For these rules:(a) a Regulated CIS in a Participant listed in the table below is a scheme that:(i) was established in the Participant; and-(ii) has the legal character specified in the table below; and(b) its Operator is the entity shown in the table.
Home
Economy of
the Passport
Australia

Legal character of CIS

A CIS registered under the Corporations Act 2001

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Japan

A scheme under the Investment Trusts and Investment Corporations Act

Korea

A CIS under the Financial Investment Business and Capital Markets Act of Korea

New Zealand A managed investment scheme registered under the Financial Markets Conduct Act 2013 of New ZealandSingapore

A CIS authorised under the Securities and Futures Act of Singapore

ThailandA CIS under the Securities and Exchange Act of Thailand

The basic terms &conditions of theinvestment trust (if it is aninvestment trust)-

Regarding an "Operator" of a Regulated CIS to apply for ARFP
Annex 3 Part 3 The Operator of a Passport Fund
Documents
Attached

MOC Clause to be Checked
6 Qualifications of officers

Part A(1) The Operator of a Passport Fund must ensure that at all times it has officers with the relevant qualifications.
For this section, the Operator has officers with the relevant qualifications only if it has the following officers or employees with the qualifications orexperience indicated:a chief executive officer (or the equivalent) with at least 10 years’ relevant experience within the previous 15 years as an(a) officer or employee in an IOSCO financial services related business, with five of the 10 years in a managerial orsupervisory role;
the officer's biography
at least two executive directors (or the equivalent), which may include the chief executive officer, each with at least five(b) years’ relevant experience within the previous seven years as an officer or employee in a managerial or supervisory rolein an IOSCO financial services related business; andone or more officers or employees, who are when considered together responsible, whether jointly with others or not, for(c)making or supervising all the discretionary investment decisions of the Passport Fund, each with either:a bachelor degree, or equivalent, or higher qualification in a relevant discipline, together with at least three years’(i) experience within the previous five years as an officer or employee with responsibility for making or supervising
the officers or
discretionary investment decisions in an IOSCO financial services related business; or
employees' biography
at least five years’ experience within the previous seven years as an officer or employee with responsibility for(ii)making or supervising discretionary investment decisions in an IOSCO financial services related business.
For this section and section 9, a reference to supervising discretionary investment decisions includes monitoring and
If it applicable, pleaseevaluating on behalf of an entity the performance of another entity that makes discretionary investment decisions as a(3)
indicate that point indelegate of the first entity, and being significantly involved in decisions about whether the second entity should remain as athe officer's biographydelegate in light of its performance.
7 Financial resources of the Operator(2)(1) The Operator of a Passport Fund must at all times meet the financial resources test.
(2)

For this section, the Operator meets the financial resources test if its equity (converted at the relevant exchange rate, where
not denominated in USD) is greater than USD 1,000,000 plus additional capital amount.

document under 7(4)denominated in UnitedStated dollars(3) In calculating the Operator’s equity:(a) a guarantee or undertaking held by the Operator may be counted as if it were an asset if, and only if, it:(i) is unconditional;(ii) does not give rise to any liability for the Operator;

If it applicable, please(iii) is payable on demand; andindicate that point in
is provided by a body that is subject to prudential supervision by a financial supervisory authority in the place of its
the document(iv) incorporation which in the written opinion of the Home Regulator, is generally largely compliant with the guidelines of
the Basel Committee on Banking Supervision; andthe maximum amount of cover from time to time provided under an approved personal indemnity insurance policy may be(b)counted but only up to 80% of the additional capital amount.
(4) For this section:
additional capital amount means 0.001 × (total assets under management in USD converted at the relevant exchange rateminus USD 500,000,000) and is capped at USD 20,000,000 converted at the relevant exchange rate where the Operator’sequity is not denominated in USD.
If it applicable, pleaseapproved PI insurance policy means a professional indemnity insurance policy that has been approved for this section by theindicate that point inHome Regulator.
the document
equity of the Operator means the net equity being assets less liabilities after taking into account losses and includes any net
assets reflected in adjustments for valuation or translation, as it would appear on a balance sheet prepared in accordancewith the relevant accounting standards.
relevant accounting standards , for a Home Economy listed in the following table, has the meaning given in the following
table:
Home
Relevant accounting standards
Economy of
the Passport
The accounting standards made by the Australian Accounting Standards Board under section 334 of theAustralia
Corporations Act 2001 (Cth).
The accounting standards under the Financial Instruments and Exchange Act and related Cabinet OfficeJapan
Ordinance.
General accounting principles of financial investment under Article 32 of The Financial Investment Services
Korea
and Capital Market Act of Korea, and standards for accounting under Article 13 of the Act on External Auditof Stock Companies.
The accounting standards issued by the External Reporting Board under Part 2 of the Financial Reporting
New ZealandAct 2013.
The accounting standards made by the Accounting Standards Council under the Accounting Standards Act
Singapore(Cap. 2B) and the Recommended Accounting Practices (or its equivalent) issued by the Council of theInstitute of Singapore Chartered Accountants (or its successors).
The Accounting Guideline for Investment Management business issued by Association of Investment
ThailandManagement Companies and approved by the SEC Thailand.
relevant exchange rate means the average of the rates of currency exchange on the first business day in the capital city of
the Home Economy of the year in which calculation is made, and the first business day in the capital city of the Home
Economy in each of the preceding four years.

5total assets under management , in relation to an Operator, means the sum of the value of:(a) the assets of each CIS for the operations of which it is responsible; andIf it applicable, please
any other assets for which it performs discretionary investment management on behalf of another person, whether or notindicate that point inon a collective basis;the document
as those assets would appear on a balance sheet prepared in accordance with the relevant accounting standards for theentity if they were assets of the Operator.
(b)

8 Organisational arrangements of the Operator

Part A(1) The Operator of a Passport Fund must at all times meet the organisational arrangements test.
(2) For this section, the Operator of the Passport Fund meets the organisational arrangements test if it has:(a) a well-documented organisational structure that clearly assigns responsibilities and specifies reporting lines;

Related internal rules(e.g. organizational rules,
authority rules, risk
management rules,
conflicts of interest
management rules）(b) adequate internal control mechanisms including procedures and systems that ensure that:
assets are managed in accordance with the current constituent documents and disclosure documents of the
Passport Fund as well as the Home Economy Laws and Regulations and these rules;
records are kept to sufficiently explain the transactions of the Passport Fund, and all transactions in the interests of(ii)
the Passport Fund; andregisters of members are duly kept except for any part of the register of members that is kept by a person identified
in registers of the Operator as the person keeping a register in respect of particular interests identified in registers of(iii) the Operator where the keeping of that part of the register by the person is regulated or acceptable under the Home
Economy Laws and Regulations and, for interests held by a member who acquired them in a Host Economy, theperson keeping the register is regulated by or acceptable to the Passport Regulator of the Host Economy;an adequate risk monitoring and management process including a risk management framework for the Passport Fund(c)assets, based on the size, complexity and risk of the assets;(d) a compliance framework that ensures ongoing compliance with relevant laws and regulations; and(i)Related internal rules(e.g. organizationalrules, authority rules,
risk management
rules, conflicts ofinterest management
rules）(e) adequate procedures to manage conflicts of interest.
9 Track record of Operator

Part A(1) The Operator of a Passport Fund must at all times meet the track record test.
Track record—experience of the Operator(2) For this section, the Operator meets the track record test if the Home Regulator is satisfied that:(a)for the past five years the Operator has been responsible for the operation of financial asset CIS that have been
regulated in a way that enables interests in the CIS to be offered to the general public in:(i) a Participant; oran economy that has a regulatory framework applying to financial asset CIS that is broadly similar in effectiveness to(ii) that of the Home Economy in the opinion of the Home Regulator, having regard where relevant to the IOSCO
principles and IOSCO assessment methodology relating to CIS; and(b) if the Operator has undergone a relevant change of control in the past five years:
there has been substantial continuity among the officers and employees of the Operator responsible for making or
supervising discretionary investment decisions for financial asset CIS; andthe Operator has made decisions in relation to the operation of financial asset CIS without substantial influence by(ii)
any person who controls the Operator unless in exceptional circumstances.
(i)

Related documents

Related documents

Track record—experience of a related party of the Operator(3) For this section, an Operator is also taken to meet the track record test if the Home Regulator is satisfied that:(a)the Operator is able to rely on the experience and expertise of a related party in the operation of financial asset CIS
having regard to the degree of commonality between the Operator and the related party concerning:(i) decision-making processes;-(ii) business processes; and(iii) staff; and(b) the related party meets the track record test in accordance with subsection 9(2).

-(4) For this section, an Operator undergoes a relevant change of control if during the past five years:(a) another entity has commenced to control the Operator; or-(b) another entity has ceased to control the Operator.
10 Good standing of Operator

Part B(1) The Operator of a Passport Fund must at all times meet the good standing test.
(2) For this section, the Operator meets the good standing test if:
the Home Regulator has not notified the Operator that it is of the opinion that there is reason to believe that there is amaterial risk that a relevant party does not have the integrity or competence required to operate or be involved in the(a)operation of a Passport Fund honestly and competently, and to act in good faith in the interests of the members of the
Passport Fund; orwhere a notification has been issued to the Operator, the Home Regulator has revoked the notification or, if more than(b)one, all of them in writing.

Related documents(3) For this section, relevant party means any of the following:(a) the Operator;(b) an officer of the Operator;-(ｃ) an entity that controls the Operator; and(d) to the extent that the Home Regulator considers relevant, an officer of an entity that controls the Operator.

6

11 Delegation of functions by Operator

Part A

Subject to any limitations in the Home Economy Laws and Regulations, a function of the Operator of a Passport Fund may be delegated by the Operator or(1)
further sub-delegated only if the Operator:(a) remains responsible to members of the Passport Fund for the delegated function;(b)

has in place suitable processes to ensure that the delegate or sub-delegate employs an appropriate standard of carewhen performing the delegated function;(ｃ) has in place suitable processes to:(i)ensure that the activities of the delegate and any sub-delegate in relation to the delegated function are duly
monitored and controlled; and(ii) evaluate the performance of the delegate and any sub-delegate in relation to the delegated function;
has in place suitable processes to ensure that the Home Regulator is at all times able to access information about the(d) delegated or sub-delegated functions from the Operator, directly from a delegate or any person that was a delegate for areasonable time after they have ceased to be a delegate; andhas in place suitable processes to ensure that the performance of the function by the delegate and any sub-delegate can(e)be effectively monitored and reviewed to ensure compliance with these rules as if done by the Operator.

Related internal rules
and documents

Limitation on delegation of investment management function(2)

The Operator must ensure that the function of making investment decisions (the investment management function ) for thePassport Fund may only be delegated or sub-delegated to an entity (a qualifying delegate ) that is licensed, authorised orotherwise regulated to carry out or make investment decisions by a regulator that is a signatory to Appendix A of the IOSCO
Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.

The investment management business of every qualifying delegate must be regulated in the economy of a Participant or in an
Related internal rules
economy that has a regulatory framework applying to investment management functions for financial asset CIS that may be
and documents(3) offered to the general public in that economy that is broadly similar in effectiveness to that of the Home Economy in theopinion of the Home Regulator. This subsection does not apply to one or more delegations which together do not account for
more than 20% of the value of the Passport Fund’s assets.
If the Operator of a Passport Fund delegates the investment management function, the Operator must have in place suitableprocesses to ensure that at all times each of the qualifying delegates has one or more officers or employees who when(4)
considered together are responsible, whether jointly with others or not, in making or supervising all the investment decisionsof the Passport Fund, each with at least either:a bachelor degree, or equivalent, or higher qualification in a relevant discipline, together with at least three years’(a) experience within the previous five years as an officer or employee of an IOSCO financial services related business withresponsibility or joint responsibility, for making or supervising discretionary investment decisions; orRelated documents
at least five years’ experience within the previous seven years as an officer or employee of an IOSCO financial services(b)related business with responsibility or joint responsibility, for making or supervising discretionary investment decisions.

(5)

For this section, a reference to supervising discretionary investment decisions includes monitoring and evaluating on behalfof an entity, the performance of another entity that makes discretionary investment decisions as a delegate of the first entity,
and being significantly involved in decisions about whether the second entity should remain as a delegate in light of its
performance.

Related internal rules
and documents

Annex 3 Part 4 Accountability
Documents
Attached

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12 Reporting of breaches and changes

Part B

Reporting breaches and changes to Home Regulator(1)

The Operator of a Passport Fund must notify the Home Regulator in writing within seven days after it becomes aware that, without there being a breach of
the Passport Rules, a limit set in the following rules has been exceeded for a period of seven days without being remedied:(a) the rules in Division 6.3 (portfolio allocation); or

Related documents(b) the rules in Division 6.4 (limits on exposure); and(2)

The Operator of a Passport Fund must notify the Home Regulator in writing as soon as practicable and in any event within seven days after it becomesaware that a breach of these rules has occurred, or will occur in relation to the Passport Fund, and that breach:(a) might reasonably be regarded as significant including having regard to any other breaches; or(b)when considered on its own or together with any related breach, adversely affects the value of the assets of the Passport
Funds by more than 1%.

Related documents

Reporting breaches to Host Regulator
Subsection 12(4) applies to the Operator of a Passport Fund where the Host Economy Laws and Regulations of a particular
Host Economy (the relevant Host Economy) apply to the Passport Fund.
The Operator of a Passport Fund must notify the Home Regulator and the relevant Host Regulator as soon as practicable and in any event within seven(4) days after it becomes aware of a breach of the Host Economy Laws and Regulations of the relevant Host Economy in relation to the Passport Fund, andthat breach:(3)(a) might reasonably be regarded as significant including having regard to any other breaches; or(b)when considered on its own or together with any related breach, adversely affects as much of the value of the assets of
the Passport Funds as is attributable to members of the Passport Fund in the relevant Host Economy by more than 1%.

Related documents

Reporting other changes
If an event listed in the table below occurs, the event must be notified to the Home Regulator and each Host Regulator by the(5) entity listed in the table as soon as practicable and in any case not later than seven days after it became aware of the event
having occurred.

Related documents(6) In the table, an associate means a related party except for a person or entity under subsections 57(g) to 57(i) in relation to the definition for a related party.
Entity who must
notify of the event

Note

Event

The Operator ofInterests in a Passport Fund are permitted to be lawfully offered as a Passport Fund in a Host Economy.
the Passport Fund
The Operator of a Passport Fund has first disclosed to any person, other than an associate of the
The Operator of
Passport Fund or its Operator, or by way of a lawful disclosure on a confidential basis in relation to
the Passport Fund
incomplete negotiations relating to a transaction, that it intends to propose a change in the Operator.
The Operator of The Operator of a Passport Fund is changed in accordance with the Home Economy Laws andthe Passport Fund Regulations.
The Operator of a Passport Fund has first disclosed to any person, other than an associate of the
The Operator of Passport Fund or its Operator, or by way of a lawful disclosure on a confidential basis in relation to
the Passport Fund incomplete negotiations relating to a transaction, that it intends to propose the Passport Fund be woundup.
The Operator of A Passport Fund commences being wound up in accordance with the Home Economy Laws andthe Passport Fund Regulations.
The Operator of A Passport Fund completes being wound up in accordance with the Home Economy Laws andthe Passport Fund Regulations.
The Operator of a Passport Fund has first disclosed to any person, other than an associate of the
The Operator of
Passport Fund or its Operator, that it intends to apply for the deregistration of the Passport Fund as a
the Passport Fund
Passport Fund, or as a Regulated CIS.

7

Related documents

The Operator of The Operator of a Passport Fund applies for the deregistration of the Passport Fund as a Passport
the Passport Fund Fund, or as a Regulated CIS if the intention to apply has not been notified.
The Operator of
A Regulated CIS or a sub fund of a Regulated CIS is deregistered as a Passport Fund.
the Regulated CIS
The Operator of A Regulated CIS that has, in accordance with Part 8 of these rules, been deregistered as a Passport
the Regulated CIS Fund and will no longer be required to be operated in compliance with these rules.
The Operator of Redemption of interests in a Passport Fund in accordance with these rules is suspended or ceases to
the Passport Fund be suspended.

Regarding a "Custodian" of a Regulated CIS to apply for ARFP
Annex 3 Part 4 Accountability
Documents
Attached

MOC Clause to be Checked

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13 Custody of Passport Fund assets
Legal responsibility for holding Passport Fund assets(1)

For this section, the responsible holding party of the assets of a Passport Fund under the laws and regulations of the economy of a Participant is the entity
who is responsible for the safekeeping of the assets of the Passport Fund, as shown in the following table:
Home
Responsible holding party
Economy of
the Passport
Australia

The Operator of the Passport Fund.

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The trust company or a financial institution engaged in trust business designated by the Investment TrustsJapan
and Investment Corporations Act.
The trust business entity for the collective investment scheme under the Financial Investment Services andKorea
Capital Markets Act of Korea.
The supervisor of the registered managed investment scheme who is licensed under the Financial Markets
New ZealandSupervisors Act 2011.
Singapore

An approved trustee under the Securities and Futures Act of Singapore of an authorised scheme.

In case of a scheme established as a mutual fund, the mutual fund supervisor appointed for the mutual fundunder the Securities and Exchange Act of Thailand.
ThailandIn case of a scheme established as a trust, the entity approved by the Securities and Exchange Commission
under the Trust for Transactions in Capital Market to perform the custodial function of assets of theauthorised scheme.
The function of holding Passport Fund assets may, subject to any limitation in the Home Economy Laws and Regulations, be(2) delegated, or sub-delegated, only if the responsible holding party remains legally responsible for the safekeeping of Passport
Fund’s assets as if it held the assets itself.

Trust agreement-

Trust agreement andService agreement

Entities that hold Passport Fund assets(3) For this section, a custodian for a Passport Fund is an entity that holds assets of the Passport Fund.
(4) The responsible holding party of a Passport Fund must ensure that:(a) each custodian meets one of the following criteria:(i) the custodian is authorised in its place of business to carry on a business of holding assets on behalf of others; orthe asset holding activity of the custodian is subject to regulatory requirements in the Home Economy or the(ii)custodian’s place of business; andRegistration number
and type based on thetrust business act
Registration number andtype based on the
Financial Instruments andExchange Act(b) the Operator is not the custodian.
Assets must be accounted for
(5)

Note
Part AA custodian of the Passport Fund must ensure that the assets of the Passport Fund which it holds are properly accounted foras the Passport Fund’s assets and identifiable as such in the custodian’s records.

Trust agreement andService agreement

Assets must be held separately or in a permitted omnibus account(6) The custodian of a Passport Fund must hold the Passport Fund assets:(a) separately from assets that are not assets of the Passport Fund; or(b) in an omnibus account with the following characteristics:
it is managed in accordance with good custodial practice where the account is held and in accordance with(i)reasonable standards;(ii) it is reconciled each business day in the place where the account is held;

Related documents(iii) it does not also hold any assets of the custodian other than contingent amounts; and(iv) the custodian recovers any contingent amount as soon as practicable.
The custodian of a Passport Fund must ensure that there is separation between the functions of asset holding and(8) investment such that activities that relate to asset holding are being performed by persons who are separate from, and able
to act independently from, investment officers, including by ensuring that:no investment officer of the custodian is involved in or responsible for ensuring the holding of the assets of the Passport(a)Fund; andno investment officer of the custodian directly supervises any other officer of the custodian who is involved in or(b)
responsible for ensuring the holding of the assets of the Passport Fund; andeach officer of the custodian that is involved in or responsible for ensuring the holding the assets of the Passport Fund is(c)
independent from each investment officer of the custodian.
Subsection 13(4)(b) does not apply to a custodian in relation to the following assets held on trust for the members of the(10) Passport Fund, or, if the Passport Fund is body corporate, as an asset of the Passport Fund, if the Operator is subject toregulatory requirements in the Home Economy in relation to holding:deposits with an entity which is subject to prudential regulation by a financial supervisory authority in an economy where(a) the entity was incorporated that is in the written opinion of the Home Regulator generally largely compliant with theguidelines of the Basel Committee on Banking Supervision if:(i) the entity holds other assets of the Passport Fund under subsection 13(4); or;the Operator reasonably considers that holding the deposit taking facility by another person would raise
unreasonable operational difficulties or be impracticable;
assets held for operational purposes that it would not be reasonably practicable for an entity other than the Operator to(b)hold; ora derivative and any contractual right for the payment of any balance owing to the Operator in relation to dealings in(c)derivatives including margining those dealings through transactions in a deposit taking facility.
(ii)

8

Related documents

Regarding an "Independent Oversight Entity" of a Regulated CIS to apply for ARFP
Annex 3 Part 4 Accountability
Documents
Attached

MOC Clause to be Checked

Docs
No.

14 Independent oversight entity of a Passport Fund

Note
Part A(1) For these rules, the independent oversight entity of a Passport Fund in a Participant is the body shown in the following table:Home
Economy of
the Passport

Independent oversight entity
Each of the external directors of the Operator or,Australia

if there is a compliance committee of the registered scheme under the Corporations Act, the compliancecommittee.
Each external member of board of company auditors, audit committee, or audit and supervisory committee
designated by the Companies Act, orJapanthe trust company or a financial institution engaged in trust business designated by the Investment Trusts
and Investment Corporations Act.
The trust business entity for the collective investment scheme under the Financial Investment Business andKorea
Capital Markets Act of Korea
The supervisor of the registered managed investment scheme who is licensed under the Financial Markets
New ZealandSupervisors Act 2011.
Singapore

ThailandAn approved trustee under the Securities and Futures Act of Singapore of an authorised scheme.

document stating theindependent oversightentity's location, nameand contact-

In case of a scheme established as a mutual fund, the mutual fund supervisor appointed for the mutual fundunder the Securities and Exchange Act of Thailand.
In case of a scheme established as a trust, the entity approved by the Securities and Exchange Commission
under the Trust for Transactions in Capital Market Act to perform such oversight function over the trust.

(2) The independent oversight entity must:monitor the Operator for compliance with the constituent documents of the Passport Fund, the Home Economy Laws andRegulations relating to the operation of the Passport Fund and Divisions 6.2 to 6.5 of the Passport Rules; andif, in the reasonable opinion of the independent oversight entity, the Operator is required by section 12 of the Passport
Rules to report non-compliance with the constituent documents of the Passport Fund or the Home Economy Laws and(b) Regulations relating to the operation of the Passport Fund including the Passport Rules to a Passport Regulator but fails document stating theindependent oversight
to do so, notify its opinion including particulars of the non-compliance to the Passport Regulator as soon as practicable
entity's role
but no later than seven days after forming the opinion.
The independent oversight entity must exercise reasonable care and diligence in performing the functions listed in subsection(3)
14(2) considering the interests of the members of the Passport Fund.
(a)(4) The Operator must provide any assistance required by the independent oversight entity to perform its functions.

Regarding an "Annual Implementation Review" of the Passport FundAnnex 3 Part 4 Accountability
Documents
Attached

MOC Clause to be Checked

Docs
No.

Note

15 Annual implementation review
Annual implementation reviews must be conducted
The Operator of a Passport Fund must ensure that an implementation review of the operation of the Passport Fund that
(1) complies with this section is conducted in relation to each period for which it prepares, or is required to prepare, a financial
statement for the Passport Fund under the Passport Rules (the review period).

document stating theimplementation
If the Home Regulator has notified the Operator of a Passport Fund and each Host Regulator that this section does notreviewer's location,
apply, because the Home Regulator is satisfied non-application is appropriate having regard to actions taken or to be taken
name and contact(2) by the Home Regulator to check compliance during the review period or on an ongoing basis, and, if applicable, reports to be information
provided by the independent oversight entity during the review period or on an ongoing basis, then this section does not
apply to the Passport Fund or its Operator for the review period or until revoked as the case may be, as set out in the notice.

Part B

Part B

Requirements for the implementation reviewer(3)

Subject to subsection 15(4), the implementation review for a Passport Fund registered in the economy of a Participant listed in the following table must be
conducted by a reviewer that is an entity of the kind shown in the table:Home
Economy of
Entity that can conduct implementation reviews (the implementation reviewer )the Passport
Australia
A registered company auditor, audit firm or authorised audit company under the Corporations Act.
An external member of board of company auditors, audit committee, or audit and supervisory committee
document stating thedesignated by the Companies Act,
implementation
the trust company or a financial institution engaged in trust business designated by the Investment Trusts
reviewer's location,Japan
and Investment Corporations Act orname and contact

Part Aa Certified Public Accountant or an Auditing Corporation designated by the Certified Public Accountants Act. information
Korea

A trustee under the Financial Investment Services and Capital Markets Act of Korea.
A licensed auditor under the Auditor Regulation Act 2011 or

New Zealand the supervisor of the registered managed investment scheme who is licensed under the Financial Markets
Supervisors Act 2011.
Singapore

A public accountant who is registered or deemed to be registered under the Accountants Act of Singapore or-a trustee approved under the Securities and Futures Act.
An auditor as defined by the Securities and Exchange Commission or

Thailandthe mutual fund supervisor appointed for the mutual fund under the Securities and Exchange Act ofThailand.

(4) The implementation review must not be conducted by:Part A
document stating theimplementation reviewer's
location, name andcontact information(a) the Operator; or(b) a related party of the Operator.
Requirements applying where the review must be conducted
The Operator of a Passport Fund must ensure that an implementation reviewer is engaged for the Passport Fund for the
purposes of this section at all times.
The implementation review must be conducted independently in accordance with standards acceptable to the Home
(7)Regulator.
(6)9

Related documents

Report of the implementation review
The report of the implementation review must be addressed to the Operator, the independent oversight entity (where(8)
applicable), the Home Regulator and each Host Regulator.

Related documents(9) The report must state:whether any matter has come to the attention of the implementation reviewer that causes the reviewer to believe that, or(a) to believe that it is likely that, the Passport Fund was not operated in accordance with these rules during the review
period in all respects that may be material to the persons to whom it is addressed;
if so, particulars of each matter including details explaining the reasons why the reviewer has reason to believe that the(b) Passport Fund was not operated in accordance with, or was likely not to have been operated in accordance with, theserules during that period; and(ｃ) information on the basis for the statements made in (a) and (b) above.
The Operator of a Passport Fund must, within three months after the end of the review period, provide a copy of the report(10)to:(a) the Home Regulator;each Host Regulator for an economy where the Passport Fund had, during the review period, members who became(b)members of the Passport Fund following an application made in that economy
each Host Regulator of each economy in which interests in the Passport Fund were offered during the period from the(ｃ)beginning of the review period to the time the reports are provided to the Home Regulator; and--(d) the independent oversight entity for the Passport Fund.

Regarding "Financial Reporting and Auditing" of the Passport FundAnnex 3 Part 4 Accountability
Documents
Attached

MOC Clause to be Checked
16 Financial reporting and auditing(a) prepare reports containing financial statements for the Passport Fund; and(b) ensure that those financial statements are audited, and that an audit report is prepared; and-(ｃ) lodge those reports with the Home Regulator and each Host Regulator.
Note: In addition to complying with this section, the Operator of a Passport Fund may be required by the Host Economy Laws and Regulations to
prepare financial reports and ensure they are audited and an audit report is prepared in accordance with the Host Economy Laws andRegulations, and lodge those reports with the Host Regulator.
Financial statements of a Passport Fund
The Operator must, at least annually, in accordance with the prevailing practice for the preparation of audited financial(2) statements for Regulated CIS in the Home Economy, prepare a report containing the financial statements for the Passport
Fund for the period covered by the report (the review period ).
The financial statements of a Passport Fund must be prepared in accordance with the financial reporting requirements(3)
applying to the Passport Fund.
For this section, the financial reporting requirements applying to a Passport Fund registered in a Participant are those shown(4)
in the following table:Home
Financial reporting requirements
Economy of
the Passport
Requirements imposed under Chapter 2M of the Corporations Act 2001 and the accounting standards madeAustralia
by the Australian Accounting Standards Board under that Act.
The relevant accounting standards under the Financial Instruments and Exchange Act and related Cabinet
Japan
Office Ordinance.
The accounting standards under Article 240 of the Financial Investment Services and Capital Markets Act of
Korea
Korea.
New Zealand Requirements imposed under Part 7 of the Financial Markets Conduct Act 2013.

ThailandJapan-

document stating theauditor's location, nameand contact information

document stating theauditor's location, nameand contact information
Please fill in this column
the accounting standards
that impose the obligation(b) provide all reasonable assistance to the auditor in relation to the audit.

Australia-

The relevant accounting standards made by the Accounting Standards Council under the AccountingStandards Act (Cap. 2B) and the Recommended Accounting Practices (or its equivalent) issued by theCouncil of the Institute of Singapore Chartered Accountants (or its successors).
The Accounting Guidelines for Investment Management business issued by Association of Investment
Management Companies and approved by the SEC Thailand.

Audit of financial statements
The Operator of a Passport Fund must ensure that the financial statements of the Passport Fund are audited by a person(5) (the auditor) who is permitted to audit the financial statements of a Regulated CIS in the Home Economy of the Passport
Fund to satisfy the financial reporting requirements.
(6) The Operator must:ensure that the auditor prepares a report on the financial statements of the Passport Fund that states that the audit and(a) the report were completed in accordance with the audit requirements applying to audits of financial statements of the
Passport Fund in the following table; andEconomy of
the Passport
Fund

Home audit requirements
Requirements imposed under Chapter 2M of the Corporations Act 2001 (Cth) and the auditing standards
made by the Auditing and Assurance Standards Board under that Act.
The relevant home audit requirements under the Financial Instruments and Exchange Act and related
Cabinet Office Ordinance.

The accounting standards under Article 240 of the Financial Investment Services and Capital Markets Act of
Korea. The guidelines for accounting audit of collective investment property under Article 265(2) of
Enforcement Decree of the Financial Investment Services and Capital Markets Act of Korea.
New Zealand Requirements imposed under Part 7 of the Financial Markets Conduct Act 2013.

document stating theauditor's location, nameand contact information

Korea

Singapore

Singapore Standards on Auditing.

ThailandThai Standards on Auditing.

NotePart A(1) The Operator of a Passport Fund must, in accordance with this section:

Singapore

Docs
No.

-

Lodgement of reports(7) The Operator of a Passport Fund must, within three months after the end of the review period, lodge a copy of both:(a) the report containing those financial statements; and-(b) the audit report relating to those financial statements,
with:(a) the Home Regulator;each Host Regulator for an economy where the Passport Fund had, during the review period, members who became
members of the Passport Fund following an application made in the Host Regulator’s economy; andeach Host Regulator of each economy in which interests in the Passport Fund were offered during the period from the(ｃ)beginning of the review period to the time the reports are provided to the Home Regulator.
(b)

10

-

Regarding "Requirement of Offer in Home Economy" of the Passport FundAnnex 3 Part 5 Offers in Home Economy
MOC Clause to be CheckedDocuments
Attached

The Operator of a Passport Fund must not offer interests in the Passport Fund in a Host Economy as a Passport Fund unless:document stating
which case of 17(a),(b), (c) you choose

Docs
No.

17 Requirement of offer in Home Economy

NotePart A(a) all of the following are satisfied when the interests are offered:(i) there is an ongoing offer of interests in the Passport Fund in the Home Economy;
the offer of interest in the Passport Fund is subject to the Home Economy Laws and Regulations that would normally
apply to an offer of interests in a Regulated CIS to the general public; and(ii)(iii) the offer is bona fide and does not exclude general subscription by retail investors resident in the Home Economy; or

document stating
which case of 17(a),(b), (c) you choose(b) all of the following are satisfied when the interests are offered:(i) there is an ongoing offer of interests in a sub fund which forms part of the same Regulated CIS as the Passport Fund;(ii)

the offer of interest in that sub fund is subject to the Home Economy Laws and Regulations that would normally apply toan offer of interests in a Regulated CIS to the general public; and(iii) the offer is bona fide and does not exclude general subscription by retail investors resident in the Home Economy; or

document stating
which case of 17(a),(b), (c) you choose

both of the following were satisfied at the time the Operator seeks to be permitted to offer interests in the Passport Fund in the Participant as a Passport
(c)
Fund;
at least 30% of the value of interests in CISs for the operation of which the Operator is responsible are held by members(i) of those CISs who have provided an address in the Home Economy, unless the Operator is aware the person is not a
document stating
resident of the Home Economy; andwhich case of 17(a),the Operator has provided a disclosure document to the Home Regulator that meets the requirements for a disclosure(b), (c) you choose(ii) document for an offer of interests in the Passport Fund that would normally apply to an offer of interests in a Regulated
CIS that is a Passport Fund to the general public in the Home Economy.

Regarding "Permitted Investments" of the Passport FundAnnex 3 Part 6 Passport Fund Investments
Documents
Attached

MOC Clause to be Checked

Docs
No.

Note

Division 6.1 Operational goods and services
18 Part does not apply to operational goods and services

Part A

Goods and services acquired by a Passport Fund for operational reasons, rather than for investment purposes, are notconsidered assets of the Passport Fund for this Part. Nothing in this Part prevents a Passport Fund from acquiring and holding
goods or services for operational reasons.

Related documents

Division 6.2 Permitted investments
19 Permitted assets and arrangements
A Passport Fund must not acquire assets, or enter into a derivative or a securities lending arrangement, other than in(1)
accordance with this Part.
Unless otherwise provided for in this Part, a Passport Fund may only acquire assets, in addition to entering into derivatives or(2)
securities lending arrangements, of the following kinds:

Part AThe basic terms &conditions of theinvestment trust (if it isan investment trust)(a) currency;(b) deposits;(ｃ) depository receipts over gold;(ｄ) transferable securities; and(e) money market instruments.
20 Jurisdiction requirement for assets

Part A

A Passport Fund may hold an asset listed in section 19(2) only if it is issued in an IOSCO jurisdiction.

-

21 Requirements for deposits

Part A

A Passport Fund may make a deposit only with a deposit-taking institution that is regulated by a financial supervisory(1) authority in its place of incorporation which is in the written opinion of the Home Regulator is generally largely compliant withthe guidelines of the Basel Committee on Banking Supervision.
(2) A Passport Fund may make a deposit only if:-(a) the amount deposited can be withdrawn under the terms of the deposit on no more than 31 days’ notice; and(b) it is not subject to loss of interest or to penalty if the amount is withdrawn more than 12 months after it was deposited.
22 Meaning of depository receipts over gold

Part AFor these rules, a depository receipt over gold means an enforceable and documented obligation from an entity that is authorised
in its principal place of business to carry on banking business (the issuer), to make available a specified amount of gold at thedirection of the holder of the depository receipt over gold (the holder). Under a depository receipt over gold, where the issuer has
an obligation enforceable by the holder that the issuer will at all time until performance hold sufficient gold:-(a) of a specified amount that is allocated to the holder and that will be made available at the holder’s direction; or
which is sufficient in amount and available to enable performance of the obligation to the holder and any other obligations of(b)
the issuer in relation to gold held by the issuer.
23 Requirements for transferable securities(1)

Part AFor these rules, each of the following is a transferable security only if title to it can be transferred from one party to another orredeemed from the issuer:(a) a share or stock in a body corporate;(b) a bond or other form of debt security (other than a money market instrument);-(c) an interest in a CIS;(d) any interest in an asset covered by subsections 23(1)(a), 23(1)(b) or 23(1)(c); and(e)a right to be issued an asset covered by subsections 23(1)(a), 23(1)(b), 23(1)(c) or 23(1)(d) on payment of a specified
amount for that asset that is granted by the issuer of that asset.

11

(2)

A Passport Fund must not acquire a transferable security if liability could arise from holding it under the terms of the security,
whether on the basis that the security is partly paid or otherwise, other than in the case of:a partly-paid share or stock in a body corporate or interest in a CIS that is quoted on a financial market and in relation to(a) which no holders have an ongoing right to redeem their membership for payment of an amount reflecting the value of
their share, stock or interest; ora share or stock in a body corporate or interest in a CIS which is intended to be quoted on a financial market within seven(b) days of acquisition and in relation to which no holders have an ongoing right to redeem their membership for payment ofan amount reflecting the value of their share, stock or interest.

-(3) A Passport Fund must not acquire a transferrable security under subsection 23(2) unless:(a)the Passport Fund holds assets that the Operator of the Passport Fund reasonably believes will be available and able tobe converted into sufficient assets to meet the liability; and(b)in the case of a partly-paid share or stock in a body corporate or interest in a CIS that is quoted on a financial market, theOperator must reasonably believe that the share or stock in a body corporate or interest in a CIS can be reliably valued
and while held will be able to be closed out or sold for that value on any business day in the place in which the security is
acquired by the Passport Fund.

24 Requirements for money market instruments

Part A

A Passport Fund must not acquire a money market instrument unless the Operator reasonably believes the following conditions
are satisfied:(a) the instrument:(i) has maturity at issuance or a residual maturity of not more than 397 days; or(ii)

may be reasonably expected to undergo regular yield adjustments that are in line with money market conditions atleast once every 397 days; and-(b) on any business day in the place in which it is acquired by the Passport Fund, the instrument:(i) can be reliably valued; and(ii) can be closed out or sold for that value.
25 Requirements for derivatives

Part A(1) A Passport Fund may enter into a derivative only if:(a) the underlying asset or index from which the value of the derivative is determined is one or more of the following:(i) an asset that the Passport Fund may hold under subsection 19(1);(ii) a rate of interest;(iii) a rate of inflation that is calculated, endorsed or determined by a government or government agency; or-(iv) an eligible index;
the fair value of the derivative in the economy in which it is acquired by the Passport Fund can readily be determined, in(b)accordance with Division 7.2; andother than in exceptional circumstances, the derivative can be closed out or sold for that value, in that economy, on any(c) business day in the place of the relevant office of the counterparty or if the derivative is traded on a financial market,
when the financial market is open for trading of derivatives.
Meaning of ‘derivative’(2) For these rules, a derivative is an arrangement between an entity and another party (the counterparty for the derivative):(a) where the arrangement is not:(i) currency;(ii) a deposit;(iii) a loan of moneys or securities;(iv) a transferable security;(v) a money market instrument; or(vi) a depository receipt over gold; and-(b) under the arrangement:(i) one party must, or may be required to, provide consideration of a particular kind to the other on a future day;the consideration or, if arrangements of that kind are commonly sold or closed out before performance, the value of(ii) the arrangement on sale or close out, is ultimately determined by or modified by reference (wholly or in part) to avariable;(iii) no substantial part of the consideration provided by either party under the contract is the provision of services;(iv) the consideration is not the provision of goods that the fund is to use for operational purposes; and(v) no party will be under an obligation to deliver an asset that is not a permitted asset under subsection 19(2).
26 Requirements for embedded derivatives

Part A

A Passport Fund may acquire a transferable security or money market instrument that embeds a derivative only if the(1)
embedded derivative satisfies:-(a) section 25; and(b) section 27 where the counterparty risk of the embedded derivative is or may be transferred to the Passport Fund;
Meaning of ‘embeds a derivative’ and ‘embedded derivative’(2) For these rules, a transferable security or money market instrument in question embeds a derivative :(a) if it includes a component (the embedded derivative ) that:
results in some or all of the cash flows that would otherwise be payable under the transferable security or money
market instrument which functions as the host contract to be modified by reference (wholly or in part) to a variable(i)other than, for shares or stock of a body corporate, the discretion of the body corporate as to payment of dividends
or repayment of capital or amounts payable on its winding up;
has benefits and risks that are not closely related to economic characteristics of the transferable security or money(ii)
market instrument which functions as the host contract;
has a significant impact on the risks in holding, and the price of, the transferable security or money market instrument(iii)
in question; andis not transferable independently of the transferable security or money market instrument or is not treated by the(iv)
Passport Fund as a separate asset; or(b)

if it would be a derivative but for being a transferable security or a money market instrument, and the terms were
designed to meet the specific needs of a Passport Fund.

12-

27 Counterparties to derivatives(1)

Part A

A Passport Fund must not enter into a derivative that is to be cleared through a central clearing counterparty unless it is anassessed central clearing counterparty.

(2) A Passport Fund must not enter into a derivative that is not cleared through a central clearing counterparty unless:(a) the counterparty to the derivative:(i)Related internal rules
and documents

is subject to prudential supervision broadly under the guidelines of the Basel Committee on Banking Supervision by afinancial supervisory authority in a principal place of business of the counterparty; or(ii) is both:(A) regulated by a regulatory authority that is a member or associate member of IOSCO; andsubject to obligations in relation to holding financial resources and having adequate arrangements to manage
risk; and
where the counterparty to the derivative is a related party to the Operator and there are adequate arrangements in place(b)
to manage conflicts of interest.
(B)(3) For these rules, a central clearing counterparty to a derivative is an assessed central clearing counterparty if:(a) it is regulated as a central clearing counterparty in an economy that is:

Related internal rules
and documents(i) the economy of a Participant; or(ii) a member of the Organisation for Economic Cooperation or Development; or(b) all of the following conditions are satisfied:(i) it is regulated as a central clearing counterparty in an IOSCO jurisdiction;
the Operator of the Passport Fund believes on reasonable grounds, having regard to independent sources of(ii) information, that there is very low risk of the central clearing counterparty defaulting in any of its obligations over thesubsequent five year period; and(iii) the Operator of the Passport Fund has recorded in writing its reasons for holding that belief.
28 Counterparties and collateral for securities lending arrangements

Part AFor these rules, a securities lending arrangement is an arrangement under which an asset of the Passport Fund is(1) transferred to another party and there is an obligation on that party to transfer that asset, or an equivalent asset, back to the
Passport Fund.

Related internal rules
and documents(2) A Passport Fund may enter into a securities lending arrangement only if:(a) the counterparty to the transaction:(i)

is subject to prudential supervision broadly by a financial supervisory authority under the guidelines of the BaselCommittee on Banking Supervision in an economy where the counterparty has a principal place of business; or(ii) is both:(A) regulated by a regulatory authority that is a member or associate member of IOSCO; andsubject to obligations relating to holding financial resources and having adequate arrangements to manage risk;(B)and(b) there is an agreement between the Passport Fund and the counterparty to the transaction that provides that:the counterparty will provide to the Passport Fund collateral by way of a transfer of asset to the Passport Fund free(i) of any encumbrance, that exceeds the value of the asset transferred by the Passport Fund under the agreement;
andRelated internal rules
if the current value on any business day of the collateral provided to meet the requirement under subsection
and documents
28(2)(b)(i) where all the collateral was tendered in cash does not exceed the fair value of the asset transferred by the
Passport
Fund
under
the
agreement,
or
if
the
collateral
tenderedincludedmoneymarketinstruments,
is
less
than
(ii)
103% of the fair value of the asset on that business day, the counterparty must provide additional collateral to the
Passport Fund:no later than the close of business on the next business day (shortfall payment day) in the place of the relevant(A)
office of the counterparty for the shortfall amount below 100%; andif the collateral includes money market instruments, no later than the close of business on the business day in(B)the place of the relevant office of the counterparty after the shortfall payment day for the excess 3%.
(c)where the counterparty to the transaction is a related party to the Operator, there are adequate arrangements in place tomanage potential conflicts of interest; and(d)the Operator has assessed the risk of loss from the counterparty not meeting its obligations to the Passport Fund under
the arrangement or arrangements with the counterparty that include the arrangement, having regard to the counterparty,
the collateral, the terms of the arrangement and any other relevant matter, is very low and recorded this assessment inwriting.

(3) Any collateral relied on by the Passport Fund to satisfy subsection 28(2) must be:(a) cash; or(b) money market instruments:(i) that do not embed derivatives;(ii) that have been assessed by the Operator of the Passport Fund as having acceptable risk; andwhose fair value exceeds 103% of the amount of cash collateral that would otherwise be required to satisfy
subsection 28(2).
The Passport Fund must not sell, reinvest, or encumber securities lending collateral other than as permitted by this section or(4)
Related internal rules
following default in compliance by the counterparty to the securities lending arrangement.
and documents(5) The Passport Fund may reinvest securities lending collateral that is cash if:
(iii)

(6)

(a)

the reinvestment is in money market instruments that have been assessed by the Operator of the Passport Fund as
having acceptable risk; and(b)

the value of the assets that the Passport Fund will receive from the reinvestment excluding cash exceeds 103% of thefair value of the securities transferred under the securities lending arrangement less any cash collateral that will be held.

Collateral accepted in relation to a derivative or securities lending arrangement is to be treated as assets acquired by the
Passport Fund for the requirements under Division 6.3 whether the collateral is provided by way of transfer.

13

Regarding "Restrictions on Portfolio Allocation" of the Passport FundAnnex 3 Part 6 Passport Fund Investments
Documents
Attached

MOC Clause to be Checked

Docs
No.

Note

Division 6.3 Ristrictions on portfolio allocation
29 Exceeding limits in this Part

Part A

A Passport Fund must not acquire an asset or enter into a derivative or securities lending arrangement if it would result in a(1)limit in this Part being exceeded or exceeded to a greater extent.
A Passport Fund that exceeds a limit in this Part must cease to exceed the limit as soon as practicable but no later than(2)
three months from the date the limit was exceeded.
The period in subsection 29(2) may be extended for a period or further period of no more than one month by notice in writing(3) to the Operator by the independent oversight entity if the Operator satisfies the independent oversight entity that it is in thebest interests of the members of the Passport Fund for extension.
A Passport Fund does not breach a rule in this Part if it exceeds a limit otherwise than by the acquisition of an asset or the(4)entry into a derivative or securities lending arrangement and it complies with this section.

Related internal rules
and documents

Note: See also the reporting requirements under section 12.
30 Single entity limit

Part A(1) The value of a holding for the purpose of this section and sections 31 and 33 is the higher of:(a) the amount after considering any reduction in risk due to offsetting exposures; or(b) the value disregarding the offsetting effects of derivatives.
(2)

Subject to subsection 30(3) and section 33, no more than 5% of the value of the assets of a Passport Fund may be held inassets or arrangements that:(a) relate to the same entity, that is not an entity that:(i) is an assessed central clearing party; oris subject to prudential supervision by a financial supervisory authority in its place of incorporation which is in thewritten opinion of the Home Regulator to be generally compliant with the guidelines of the Basel Committee on(ii)
Banking Supervision in an economy where the counterparty has a principal place of business and in the reasonable
opinion of the Operator is of low risk; and(b) are of any one or more of the following types:(i) transferable securities other than:(A) interests in financial asset regulated CISs; and(B) risk-assessed government securities;(ii) money market instruments other than risk-assessed government securities;

Related internal rules
and documents(iii) derivatives;(iv) securities lending arrangements.
Subject to section 33, the single entity limit set out in subsection 30(2)may be raised to 10% in relation to assets or(3)
arrangements that:(a) have been assessed by the Operator as having an acceptable risk;
having considered a written opinion of a credit rating agency that is regulated in providing credit ratings in an IOSCO(b) jurisdiction and any other information of which it is aware under its risk assessment and risk management procedures,the Operator has no reason to doubt have an acceptable risk; or
excluding assets and arrangements referred to in subsection 30(3)(a) or 30(3)(b) do not, in aggregate, exceed 40% of(c)the value of the assets of the Passport Fund.
Subject to section 33, no more than 15% of the value of the assets of a Passport Fund may be held in assets or(4)arrangements that:
relate to the same entity that is subject to prudential supervision by a financial supervisory authority in its place ofincorporation which is in the written opinion of the Home Regulator generally compliant with the guidelines of the Basel(a)Committee on Banking Supervision in an economy where the counterparty has a principal place of business and in thereasonable opinion of the Operator is of low risk; and(b) are of any one or more of the types mentioned in subsection 30(2)(b).
(5) Subject to section 33, no more than 20% may be held in assets that:(a) relate to the same entity other than an assessed central clearing party; and(b) are of any one or more of the following types:(i) the types mentioned in subsection 30(2)(b);(ii) deposits.
(6) The limits under subsections 30(2) and 30(5) do not apply to deposits funded from:money received from the issue or sale of interests in the Passport Fund before the commencement of investment by the
Passport Fund;money received from the issue or sale of interests in the Passport Fund before the commencement of investment by the(b)
Passport Fund;money received from sales of assets of a Passport Fund to meet the redemption requests, where the Operator(c) reasonably believes that complying with any of those subsections would not be in the interests of the members of the
Passport Fund.
No more than 35% of the value of the assets of a Passport Fund may be held in assets that are risk-assessed government(7)
securities relating to the same government entity.
(a)14

Related internal rules
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(8)For this section, an asset or arrangement relates to an entity if the asset is of a type listed in the following table and has theconnection with the entity shown:This type of asset orItem…relates to an entity if:
arrangement…
transferable security(including those transferred1
it is issued or guaranteed by the entity
under a securities lending
arrangement)money market instrument(including those transferred
2 or which are collateral foran obligation to the
Passport Fund under aderivative the price or valueof which depends on the
3a price of a transferable
security or money market
instrument as the reference
asset that embeds such a3bderivative
derivative whosecounterparty is not an
4aassessed central clearing
counterparty; orasset that embeds such aderivative, if the
4bcounterparty risk is, or may
be, transferred to the Fund

it is issued or guaranteed by the entity

the reference asset is issued or guaranteed by the entity

5 securities lending arrangement

Related internal rules
and documents

the entity is the counterparty

the entity is the counterparty

6 deposit

is with the entity

Note: An asset may relate to more than one entity. It must be counted for purposes of the application of subsections (1) to (4) to each of those entities.
Meaning of ‘government securities’(9) For this section and section 31, an asset is a government security only if:(a) the asset is:(i) a transferable security other than an interest in a financial asset Regulated CIS; or(ii) a money market instrument; and-(b) the entity to which it relates is:(i) the government of an economy;(ii) a central bank; or(iii) a supranational organisation.
31 Group limit(1)Part A

Subject to subsection 30(6) and section 33, no more than 20% of the value of the assets of a Passport Fund may be held inassets that:(a) relate to the same group of entities; and(b) are of any one or more the following types:(i) the types mentioned in section 30(2)(b); and(ii) deposits.

Related internal rules
and documents(2) The limits under subsection 31(1) do not apply to deposits funded from:money received from the issue or sale of interests in the Passport Fund before the commencement of investment by the
Passport Fund;liquidation of investments in the process of winding up a Passport Fund, where the Operator reasonably believes that(b)complying with any of those subsections would not be in the interests of the members of the Passport Fund; ormoney received from sales of assets of a Passport Fund to meet the redemption requests, where the Operator(c) reasonably believes that complying with any of those subsections would not be in the interests of the members of the
Passport Fund.
(a)Meaning of ‘relate’ to the same group of entities(3) For this section:(a) two entities are linked if one entity is the controller of the other;(b) two entities are also linked if both entities are linked to a third entity; and-(c) a set of entities forms a group of entities if each entity in the set is linked to each other entity.

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(4) For this section, an asset relates to a group of entities if:(a) the asset is not a government security; and(b) the asset is of a type listed in the following table and has the connection with a group of entities shown:
Item

This type of asset…

transferable security(including those transferred1
under a securities lending
arrangement)money market instrument(including those transferred
2 or received as collaterals
under a securities lending
arrangement)
derivative the price or valueof which depends on theprice of a transferable
3a
security or money market
instrument as the reference
asset; orasset that embeds such a3bderivative
derivative whosecounterparty is not an
4aassessed central clearing
counterparty; orasset that embeds such aderivative, if the
4bcounterparty risk is, or may
be, transferred to the Fund…relates to the same group of entities if:
it is issued or guaranteed by an entity that is in the group of entities

it is issued or guaranteed by an entity that is in the group of entities

the reference asset is issued or guaranteed by an entity that is in the group of entities

5 securities lending arrangement
6 deposit

the counterparty is in the group of entities

the counterparty is in the group of entities
is with an entity that is in the group of entities

32 Valuation of derivatives and securities lending arrangements

Part A(1) For sections 30 and 31 the value of a derivative as it relates to an entity is assessed as follows:
if it relates to the entity in the manner described in item 3a and 3b of the tables in subsections 30(8) or 31(4), the value is(a) assessed in accordance with Appendix B to these rules and may be a negative value in case of a permitted short
exposure; or
if it relates to the entity in the manner described in item 4a and 4b of the tables in subsections 30(8) or 31(4), the value is(b)assessed as the maximum potential loss in accordance with Appendix A of these rules and may be determined:(i) after netting off any liability of the Passport Fund to the entity where:
the Passport Fund has a netting arrangement with its counterparty which creates a single legal obligation,
covering all included transactions, such that, in the event of the counterparty’s failure to perform owing to default,（A）bankruptcy, liquidation or any other similar circumstance, the Passport Fund would have a claim to receive or an
obligation to pay only the net sum of the transactions subject to the netting arrangement; andthe Operator is reasonably satisfied that the netting arrangement is legally effective under the law of thejurisdiction in which the counterparty is incorporated and, if a foreign branch of an entity is involved, also under（B）
the law of the jurisdiction in which the branch is located, the law that governs the individual included transactions
and the law that governs the netting agreement, andafter deducting the fair value of any collateral for an obligation of the Passport Fund under the arrangement, which isheldby the Passport Fund as an asset of the fund and without encumbrance that is in the form of legal title to the(ii)asset, and that is:

Related rules anddocuments（A） cash; or（B）money market instruments that have been assessed by the Operator of the Passport Fund as having acceptablerisk.

33 Application of certain restrictions to index funds and benchmark funds

Part A(1) This section applies to a Passport Fund that is an index fund or a benchmark fund.
If the assets of the Passport Fund or the underlying assets of the derivatives of the Passport Fund are constituents of the(2) index then the limitation on the exposure of the fund to the entity, or group of entities, to which the asset or assets relate
relative to the value of the assets of the Passport Fund is instead the lower of:(a) the percentage of the index that the asset or assets represent as constituents plus 2%; and25%, or, only for an index fund, 40% if the eligible index relates to an established market or market sector that is widely(b) used by investors including in economies other than the economy to which the market or market sector relates and noother exposure of the Passport Fund to another entity or group of entities exceeds 25%.
Subsection (2)(b) applies only if the Home Regulator has given written notice to the Operator that in the Home Regulator’sopinion there are exceptional market circumstances relevant to the fund and that the eligible index relates to an established(3)
market or market sector that is widely used by investors including in economies other than the economy to which the market
or market sector relates and has not revoked that notice by written notice to the Operator.

Related rules anddocuments

34 Restrictions on portfolio allocation—Financial Asset Regulated CISs

Part A(1) No more than 10% of the value of the assets of a Passport Fund may be held in:(a)interests in a single financial asset Regulated CIS other than a Passport Fund or sub fund of a financial asset Regulated
CIS other than a Passport Fund; anda derivative where the value is determined by or varied with respect to the price of the interests in a single financial asset(b) Regulated CIS other than a Passport Fund or, if the financial asset Regulated CIS other than a Passport Fund has sub
funds, a sub fund of the financial asset Regulated CIS other than a Passport Fund.
(2) No more than 30% of the value of the assets of a Passport Fund may be held in:(a)interests in financial asset Regulated CISs other than a Passport Fund and sub funds of financial asset Regulated CISs
other than Passport Funds; andderivatives where the value is determined by or varied with respect to the price of the interest in, a financial asset(b) Regulated CIS other than a Passport Fund or, if the financial asset Regulated CIS other than a Passport Fund has sub
funds, a sub-fund of a financial asset Regulated CIS other than a Passport Fund.
(3)

Subsections 34(1) and 34(2) do not apply to holdings of interests in a financial asset Regulated CIS or sub fund of a financial
asset Regulated CIS that is a Regulated CIS in the Home Economy, if:(a) the operator of the financial asset Regulated CIS is the Operator of the Passport Fund;the Passport Fund would comply with the requirements of sections 19 to 42 as if the assets, liabilities, derivatives andsecurities lending arrangement attributable to the interests held in each financial asset Regulated CIS or sub fund of a(b) financial asset Regulated CIS in which investment is permitted because of this subsection 34(3), were assets, liabilities,
derivatives or securities lending arrangements of the Passport Fund instead of the financial assets Regulated CIS or subfund; andthe financial assets Regulated CIS or sub fund does not hold more than 10% by value of its assets in a single financial(c)assets Regulated CIS or more than 30% by value of its assets in financial assets Regulated CISs.

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Related rules anddocuments

35 Restrictions on portfolio allocation—Limit on unquoted transferable securities

Part ANo more than 10% of the value of the assets of a Passport Fund may be held in unquoted transferable securities other thanfinancial asset Regulated CISs or derivatives where the value is determined by or varied with respect to the price of unquoted
transferable securities.

Related rules anddocuments

36 Restrictions on portfolio allocation—Limit on investments conferring significant management influence
A Passport Fund that is not an index fund or a benchmark fund must not hold a legal or equitable interest in votable(1) transferable securities accounting for more than 20% of the voting rights in that entity when added to any voting rights held by
any of the Passport Fund’s related parties of which it is aware or has reason to believe are held.
A Passport Fund that is an index fund or a benchmark fund must not hold a legal or equitable interest in votable transferable(2) securities such that the Passport Fund or its Operator, together with its related parties, exert significant influence on the
management of the business of the entity in which the votable transferable securities is held.

Part A

Related rules anddocuments(3) For this section, votable transferable securities of an entity means transferable securities that:(a) relate to the entity; and(b)carry voting rights in the entity that may be cast on a resolution at a meeting of members of the entity generally or thatare otherwise able to be voted in determining the directors of the entity.

Related rules anddocuments

37 Limit on share of transferable securities or money market instruments on issue

Part A(1) A Passport Fund must not hold more than 10% of the non-voting securities of an entity.
Related rules anddocuments(2) A Passport Fund must not hold more than 10% of the debt securities of an entity.
(3) A Passport Fund must not hold more than 10% of the money market instruments for which an entity is, or may be, liable.
38 Limit on depository receipts over gold

Part ANo more than 25% of the value of the assets of a Passport Fund may be held in depository receipts over gold including its
derivatives where the value of the derivatives is determined by or modified by reference to the price of depository receipts overgold.

Related rules anddocuments

Regargind "Limits on Exposures" of the Passport FundAnnex 3 Part 6 Passport Fund Investments
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Division 6.4 Limits on exposures
39 Derivatives and securities lending arrangements—global exposure limit

Part AThe global exposure of a Passport Fund to derivatives, securities referred to in subsection 23(1)(e), securities permitted(1) under subsection 23(2) under which liability could arise from holding of the securities under the terms of the securities as well
as securities lending arrangements must not be more than:(a) 100% of the value of the assets of a Passport Fund that:
Related rules anddocuments(i) is an index fund; and(ii)

uses derivatives traded on a financial market for the purposes of index replication, where derivatives are usedpredominantly to reflect the returns on the index; or(b) 20% of the value of the assets of the Passport Fund otherwise.
40 Netting and hedging arrangements

Part A(1) For these rules, a relevant netting arrangement is the netting of positions between:(a)derivatives with the same underlying assets or index (disregarding any difference in the maturity dates of thederivatives);(b) derivatives and the assets to which the derivative relates; or(c)derivatives and all of the assets that are components of the relevant underlying index to which the derivatives relate thatare held by the fund in the proportions that each of those assets are weighted in the index.

(2) For the rules, a relevant hedging arrangement is any holding of a derivative that the Operator of the Passport Fund:(a) reasonably expects will reduce either:(i) both of the following types of risks:
Related rules anddocuments(A) the general market risk for a class of assets held by the Passport Fund; and(B) specific risks arising from holding assets in that class; orthe risk of receiving application moneys or having to pay redemption in a currency that differs from that for which the(ii)
assets of the Passport Fund are or are likely to be required for the transactions of the Passport Fund;(b) concludes with the sole purpose of offsetting those risks; andreasonably expects does not provide an offsetting exposure that is greater than 105% of the exposure being offset at the(c)time of entering into the arrangement.
For these rules, the net exposure of a relevant netting or hedging arrangement is determined by calculating the net value of(3) the derivatives and assets to which the arrangements applies, using where applicable Appendix B to these rules and theexposures under any holding of the assets to which the arrangements applies.
The Operator of a Passport Fund must document the reasons on which any expectations referred to in subsections 40(2) are(4)
based.
41 Securities lending limit
No more than 50% of the value of the assets of a Passport Fund may be held in assets that have been transferred to the
Passport Fund under securities lending arrangements.

Part A
Related rules anddocuments

42 Derivative—covering exposures

Part AIf a Passport Fund enters into a derivative that gives rise, or may give rise, to a future commitment of the Passport Fund, the(1) Passport Fund must hold at all times assets that the Operator of the Passport Fund reasonably believes will be available andable to be converted into sufficient assets:(a)in the case of a derivative that will, or may, be cash-settled, to enter an offsetting derivative so as to eliminate theexposure or have the counterparty to the derivative agree to terminate it; or(b)in the case of a derivative that requires, or may require, physical delivery of the underlying asset, to be delivered as
required to meet the actual or potential delivery obligation.

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Related rules anddocuments

Regarding "Other Restrictions" of the Passport FundAnnex 3 Part 6 Passport Fund Investments
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Division 6.5 Other restrictions
43 Prohibition on provision of loans, guarantees and underwriting

Part A(1) A Passport Fund must not lend money.
(2) For subsection 43(1), a Passport Fund does not lend money if it holds a deposit as permitted under Division 6.2.
(3) A Passport Fund must not act as guarantor for another person or entity.
(4)

Related rules anddocuments

A Passport Fund must not underwrite securities by agreeing to acquire securities if they are not acquired by another person
under an offer or to ensure a certain amount is raised from an offer.

44 Borrowing

Part A(1) A Passport Fund must not borrow unless all of the following conditions are satisfied:(a)the total amount of borrowings of the Passport Fund does not exceed 10% of the value of the Passport Fund assets atthe time of borrowing;(b) the purpose of the borrowing is:(i) to enable payment of redemption requests that:(A) have been made; or(B) are reasonably expected to be made; or(ii) to enable payment of expenses properly payable by the Passport Fund other than:(A) fees payable from the Fund to an Operator; or(B) fees payable from the Fund to the independent oversight entity; or(C) expenses associated with making an additional investment; or(iii) to enable payment of dividends or distributions to members.
(c) there is a material risk that, without the borrowing, the Passport Fund will be unable to:Related rules anddocuments(i) meet redemption requests; or(d)(ii) pay expenses of the kind mentioned in subsection (1)(b)(ii) above;
the borrowing is in the form of a trade credit, loan or overdraft from a financial institution licensed or regulated in theinstitution’s principal place of business;(e) the Passport Fund intends to repay the amount:(i) in full in less than 31 days; and(ii) without relying on other borrowings or financed amount; andthe Operator of the Passport Fund has documented cash flow projections prepared on reasonable assumptions thatshow that the amount will be repaid within that period.
For the purposes of subsection 44(1)(a), any amount payable to the Passport Fund by the lender is not taken to reduce the(2)amount borrowed.
A Passport Fund must not enter into a securities lending arrangement for the purpose of acquiring any collateral provided to(3) the Passport Fund except to cover an unexpected shortfall of holdings in the collateral that is necessary to meet an obligation
to another person.
(f)

45 Short-selling prohibited

Part A(1) A Passport Fund must not sell or be under an obligation to transfer a Passport Fund asset unless, at the time of the sale:(a)the Passport Fund has a presently exercisable and unconditional right to give title to the asset to the buyer (atransferable title); or(b) the Passport Fund has an agreement to buy the asset to be sold that:(i) will enable the Passport Fund to acquire a transferable title to the asset before it is to be transferred; and(ii) is conditional only on:

Related rules anddocuments(A) payment of the consideration;(B) the exercise of an option on the part of the Passport Fund; or(C) receipt of the proper instrument of transfer or receipt of the title documents.
For subsection 45(1), a transferable title to an asset, or an agreement to buy an asset that meets the conditions in(2) subsection 45(1)(b), may only support one agreement to transfer the asset or equivalent asset including by way of sale orunder a securities lending arrangement.
46 Liability of members

Part A

A Passport Fund must ensure that no member of the Passport Fund has a monetary liability to the Passport Fund or creditor of
the Passport Fund in that person’s capacity as a member of the Passport Fund.

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Related rules anddocuments

47 Performance fees

Part A

A Passport Fund or its Operator must not permit a fee to be paid by the Passport Fund whether to an Operator or a delegate of
the Operator based on any returns of the Passport Fund or any increase in the value of any assets of the Passport Fund relative
to a measure, unless:taking into account the arrangements to manage risk of the Passport Fund, the basis for the fees charged has not resulted(a)and is not likely to result in:risks being taken by the Operator in relation to the Passport Fund that are excessive, having regard to information made(i) available to members or persons being offered an interest in the Passport Fund concerning the Passport Fund’sinvestment objectives and strategy and the risks that will apply to achieving it; or(ii) the Passport Fund’s investment objectives not being followed, to obtain or increase fees;

Related rules anddocuments

the calculation of the fees is verified by the Operator or its auditor as consistent with the agreed basis for the fee before(b) payment and can be verified from that time for at least five years by the independent oversight entity or the auditor of thefinancial statements of the Passport Fund; and(c)the independent oversight entity or the entity responsible for the compliance review has during the previous 13 months statedin writing to the Operator that it is not aware of any reasons to believe that the fees payable by the Passport Fund will resultin the Operator not complying with written policies and procedures for fees of the Operator for the Passport Fund designed toensure compliance with subsections 47(1)(a) and (b).

Annex 3 Part 7 Redemption and valuation for pricing
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Division 7.1 Redemption

Part A

48 Rights to redemptions—exchange traded Passport Funds(1) This section applies to a Passport Fund if:(a) it is an index fund or benchmark fund; and(b) it is traded on one or more relevant financial markets.
The Operator must take reasonable steps to ensure that each member of the Passport Fund is able to sell the member’s interests in(2) the fund on the relevant financial markets at a price that is not materially different from the net asset value per interest of the Passport
Fund.
Subject to this Division and any requirements of the economy in which the member is located, a member of the Passport Fund may
request a redemption of the members’ interests under section 49 if trading of the interests has been suspended on all the relevant(3)
financial markets for five consecutive days on which one or more of the financial markets is open for business (not counting days on
which the redemptions of interests in the Passport Fund are suspended under section 51).

-

(4) Subsection 48(3) does not apply to a Passport Fund if it became a Regulated CIS before 1 January 2015.
(5) For this section, a financial market is relevant to a Passport Fund if:(a) it is operated in a Participant; andunder the operating rules of the financial market, interests in the Passport Fund are admitted, and remain admitted, to trading(b)
status.

Part A

49 Rights to redemptions—other Passport Funds(1) This section applies to a Passport Fund other than one to which section 48 applies.
(2)

The terms &Subject to any requirements of the economy in which the member is located, a member of the Passport Fund may at any time request conditions of thea redemption of the member's interests under section 50.

(3) Subsection (2) does not apply if the Operator has suspended redemptions in accordance with section 51.

investment trust (if it isan investment trust)Part A

50 Processing redemption requests
When the Operator of a Passport Fund receives a request for redemption under sections 48 or 49, the Operator must, within the(1)redemption period, process the redemption request and pay the member at a price per interest (the redemption price) that is:(a)the valuation entity’s estimation of the net asset value per interest of the Passport Fund, taking into account any redemption feesor transaction costs associated with redemption that have been disclosed to the member before the request; and(b)calculated using a valuation of the assets of the Passport Fund that is conducted after the request for redemption is received fromthe member.

The redemption period for requests for redemption must not exceed 15 days after the request is received by the Operator, unless the(2) Operator has notified any member in writing that it will be a shorter period, in which case the shorter period applies as the maximum,
or if there is a suspension permitted under section 51 or redemption is deferred under section 52.
(3)

If a notification by the Operator under subsection 50(2) is in effect, the Operator may not increase the redemption period without
reasonable notice to members.

In the case of a request under section 48, the Operator may not charge a redemption fee that is more than reasonably proportionate to(4) the fee charged to any person who is entitled, under an arrangement with the Operator, to redeem interests other than under section
48.

(5)

The Operator must give the member the option of having the redemption price paid out in the currency in which the member paid for
its interests in the Passport Fund, at the exchange rate available to the Operator at the time of the redemption, subject to any
reasonable costs based on a reasonable estimate of costs for any foreign currency exchange that the Operator considers necessary
for the purpose.

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The terms &conditions of theinvestment trust (if it isan investment trust)Part A

51 Suspension of redemptions
Operator of a Passport Fund must suspend or restrict redemptions in certain circumstances(1)

The Operator of a Passport Fund must suspend redemptions in the Passport Fund if it is directed to do so by the Home Regulator inwriting and the direction has not been revoked in writing.

(2)

The Operator of a Passport Fund must suspend redemptions in the Passport Fund if the Passport Fund is in the process of being
wound up. This does not prevent an interim or final distribution on a pro rata basis during the winding up the fund.

(3) The Operator of a Passport Fund must suspend redemptions in the Passport Fund during a period when:(a) the Operator considers that a suspension is in the best interests of members;(b) the Operator considers that a suspension is fair as between members; andThe terms &conditions of theinvestment trust (if it isan investment trust)(c) either:(i) the Operator considers that:(A) a proportion of the assets of the Passport Fund are not able to be reliably valued;

(ii)

(B)

that proportion is such that, in the reasonable opinion of the Operator, there is a material risk that the redemption pricewill contain an error; and(C)the error in the redemption price is likely to affect the decision of members of the Passport Fund about whether or not toredeem their interests; orthe Operator reasonably expects that more than 20% of the value of the assets of the Passport Fund could not be realised at
or above the fair value of the assets within the period for satisfying redemption requests; and(d) the Home Regulator has not directed the Operator in writing not to suspend redemptions or to cease suspension of redemptions.
Other Passport Funds must not otherwise suspend or restrict redemptions(4)

The Operator of a Passport Fund must not suspend redemptions in circumstances other than those set out in subsections 51(1),51(2), and 51(3).

The terms &conditions of theinvestment trust (if it isan investment trust)

Note: Funds to which section 48 applies (exchange-trade Passport Funds) are only required to provide redemptions in the circumstances set out in that section.

Part A

52 Deferral of redemptions(1) This section applies in relation to a Passport Fund if, on a dealing day:(a) the redemption request is due for redemption; and(b) any deferred redemption requests under subsections 52(5) and 52(6);together, amount to more than 10% by value of the interests in the Passport Fund.
(2)

The Operator does not contravene this Part if it limits the interests that will be redeemed on the day to a proportion of the interests in
the Passport Fund (the daily limit) that is at least 10% by value of the interests in accordance with this section.

(3)

The Operator must divide the requests into priority groups based on the days on which they were received, giving higher priority torequests received on earlier days.

(4) The Operator must process the requests by priority group.
(5)

If redeeming all the requests in a priority group would take the interests redeemed on that day beyond the daily limit, the Operator
must:

The terms &conditions of theinvestment trust (if it isan investment trust)(a) redeem the same proportion of each request in the priority group; and(b)treat each request in the priority group as a deferred redemption request for the remainder of the interests requested, to be dealt
with on the next dealing day.

(6)

If the daily limit is filled before a priority group is reached, the Operator must treat the whole of each request in that priority group as adeferred redemption request , to be dealt with on the next dealing day.

(7)

For this section: dealing day , in relation to a Passport Fund, means a day on which the members of the Fund have a right to redeem
their interests in the Fund including following a deferral under this section.

Division 7.2 Valuation of assets

Part A

53 Valuation of Passport Fund assets(1) For this section, the valuation entity for a Passport Fund registered in a Participant is the entity shown in the following table:
Home Economyof the Passport
Fund
Australia(2)

Valuation entity
The Operator

Japan

The Operator

Korea

The Operator

New Zealand

The Operator

Singapore

The manager of the collective investment scheme authorised by the Monetary Authority of Singapore under the
Securities and Futures Act

ThailandThe Operator-

When calculating the value of the assets of the Passport Fund for pricing, the valuation entity must ensure that the valuation is
calculated in accordance with this section.
Related internal rules(3) The value of an asset of the Passport Fund is its market value.
(4)

The value of a derivative that is not regularly traded on a financial market must not be calculated in a way that relies solely on avaluation provided by the counterparty to the derivative.

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