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Bay Capital Family Office - Conflicts of Interest Policy

Date of Compilation: 1 April 2024

Table of Contents

  1. Brief Definitions
  2. Purpose of the Policy
  3. Identifying Conflicts of Interest
  4. Avoiding and Mitigating Conflicts of Interest
  5. Disclosing Conflicts of Interest
  6. Compliance Measures
  7. Consequences of Non-Compliance
  8. Financial Interest Permitted/ Not Permitted
  9. Employee Trading
  10. Policy Adoption
  11. Annexure A: Definitions

1. Brief Definitions

1.1 Conflict of Interest

A conflict of interest arises when a provider or representative has an actual or potential interest that may, in rendering financial services to a client:

  • Compromise the objective performance of their obligations to the client.
  • Prevent the provision of unbiased and fair financial services to the client.
  • Hinder acting in the client’s best interests.
    • This includes financial interests, ownership interests, or relationships with third parties.

1.2 Financial Interest

Financial interest includes any cash, voucher, gift, service, advantage, benefit, travel, hospitality, training, sponsorship, or incentive, but excludes:

  • Ownership interests.
  • Training on products, legal matters, or general financial information (not exclusive to a select group, excluding travel/accommodation costs).
  • Qualifying enterprise development contributions by a measured entity.

1.3 Immaterial Financial Interest

An immaterial financial interest is a financial interest with a monetary value not exceeding R1000 per calendar year from the same third party, received by:

  • A sole proprietor.
  • A representative for personal benefit.
  • A provider aggregating such interests for its benefit or its representatives.
    • Gifts and entertainment are recorded in the Gifts and Entertainment Register.

1.4 Ownership Interest

An ownership interest refers to:

  • Equity or proprietary interest purchased at fair value, excluding nominee holdings.
  • Dividends, profit shares, or similar benefits derived from such interests

1.5 Third Party

A third party includes:

  • Product suppliers or other providers.
  • Associates of product suppliers or providers.
  • Distribution channels.
  • Any person providing a financial interest to a provider or representative under an agreement.

1.6 Associate

An associate is:

  • For a natural person: A spouse, life partner, child, parent, or person legally responsible for their care; or a commercial partner.
  • For a juristic person: Subsidiaries, holding companies, or entities controlled by the same governing body; or trusts controlled by the person.

1.7 Distribution Channel

A distribution channel is an arrangement:

  • Between a product supplier and provider(s) to support financial service delivery.
  • Between providers to enhance relationships with product suppliers.
  • Between product suppliers to facilitate provider relationships.

2. Purpose of the Conflicts of Interest Policy

Every Financial Service Provider (“FSP”) must adopt, maintain and implement a Conflict-of-Interest Management Policy which complies with the provisions of the Financial Advisory and Intermediary Services Act, 37 of 2002. A conflict of interest arises when an actual or potential interest may influence you to not act fairly, independently and objectively towards your client.

Bay Capital Family Office and its representatives are committed towards acting within the best interests of our clients and to avoid all conflict of interests in relation to the provision of financial services. Where we are unable to avoid a conflict of interest, we will take all necessary precautions to ensure that any actual or potential conflict of interest is mitigated and adequately disclosed to our clients. In order to ensure the continued demonstration of our commitment, we have adopted a Conflict of Interest Management policy to provide for the effective management of any actual or potential conflicts of interest that may arise wholly or partially, in relation to the provision of financial services.

Application & Responsibility

This policy aims to:

  • Establish controls to identify conflicts of interest.
  • Provide measures to avoid or mitigate conflicts.
  • Ensure proper disclosure of conflicts.
  • Facilitate compliance through processes and internal controls.
  • Outline consequences for non-compliance.

3. Identifying Conflicts of Interest

3.1 Individual Identification

Representatives, employees, and the governing body are primarily responsible for identifying

conflicts of interest. When rendering financial services, representatives must consider:

  • Does any situation influence the objective performance of my obligations to the client?
  • Does any situation prevent me from providing unbiased and fair financial services?
  • Does any situation hinder acting in the client’s best interests?

If all answers are “no,” no conflict exists. If any answer is “yes,” further questions apply:

  • Is the situation due to a relationship with a third party?
  • Is it caused by a financial or ownership interest?

A “yes” to either indicates an actual or potential conflict.

3.2 Further Guidance

A conflict of interest may:

  • Influence “objective performance” (services free from personal bias).
  • Prevent “unbiased and fair” services (without prejudice or unequal treatment).

Bay Capital may only receive or offer financial interests such as:

  • Commission or fees authorised under the Long-term Insurance Act, Short-term Insurance Act, or Medical Schemes Act.
  • Fees agreed in writing with a client, cancellable at the client’s discretion.
  • Fees for services to a third party, commensurate with the service provided.
  • Immaterial financial interests (within legal limits).
  • Financial interests paid at fair value.

Bay Capital will not offer financial interests to representatives for:

  • Prioritising business quantity over service quality.
  • Favouring specific product suppliers or products when alternatives are available.

3.3 Internal Controls

To identify conflicts, Bay Capital implements:

  • Annual reviews of third-party contracts to assess impacts on objective performance,
  • fairness, and client interests.
  • Annual reviews of relationships involving ownership interests.
  • Quarterly conflict of interest declarations by personnel.
  • Maintenance of lists of associates and ownership interests reviewed annually.
  • A Gift Register for gifts valued at R500 or more.
  • Immediate written disclosure of conflicts to the governing body and Compliance Officer.

4. Avoiding and Mitigating Conflicts of Interest

Upon identifying a conflict, the governing body will:

  • Convene to evaluate the conflict openly.
  • Disclose all relevant information to the governing body and Compliance Officer.
  • Vote to determine if the conflict is avoidable, considering:
    • Negative impacts on clients if unavoidable.
    • Effects on the financial services industry’s integrity.

If Avoidable:

  • Remove the cause of the conflict promptly.
  • Minimise immediate negative impacts on clients.
  • Record reasons for avoidability in the Compliance Manual.
  • Prevent similar conflicts in the future.

If Unavoidable:

  • Implement mitigation measures.
  • Record reasons for unavoidability in the
  • Compliance Manual.
  • Continuously reassess the conflict’s status.
  • Notify representatives of the conflict and its reasons.
  • Disclose the conflict to clients in writing during service delivery.
  • Report the conflict’s status in compliance reports to the FSCA.

AVOIDANCE

  • Removing the underlying cause or situation that results in the actual or potential conflict of interest as soon as reasonably possible.
  • Any immediate negative impact or prejudice towards clients pending the removal of the actual or potential conflict of interest will be kept to a minimum.
  • The reasons why the actual or potential conflict of interest was determined to be avoidable must be recorded.

UNAVOIDABLE CONFFLICT / MITIGATION

  • Measures will be implemented to mitigate the actual or potential conflict as far as reasonably possible.
  • The reasons why the actual or potential conflict of interest was determined to be unavoidable must be recorded.
  • Control measures must be implemented to reduce the negative effect on the client.
  • The status of whether the actual or potential conflicts of interest is still deemed to be unavoidable shall be reassessed on a continuous basis.
  • All representatives will be notified of any actual or potential conflicts of interest as well as the reasons for its unavoidability.

5. Disclosing Conflicts of Interest

Disclosure is integral to managing conflicts. Bay Capital ensures:

  • Written disclosure to clients at the earliest opportunity, via appropriate media.
  • Details of the conflict, including:
    • Nature of third-party relationships causing the conflict.
    • Measures to avoid or mitigate the conflict.
    • Ownership or financial interests (excluding immaterial ones).
  • Reference to this policy and how to access it.

6. Compliance Measures

The governing body oversees compliance, with ongoing monitoring by the Compliance Officer.

Measures include:

  • Storing the policy in the Compliance Manual.
  • Ensuring personnel understand their duties through training.
  • Requiring quarterly conflict declarations.
  • Directing concerns to the Compliance Officer.
  • Maintaining and annually reviewing lists of associates and ownership interests.
  • Recording gifts valued at R500 or more in the Gift Register.
  • Ensuring client disclosures are made.
  • Regular policy reviews by the Compliance Officer.
  • Publishing the policy on appropriate media for public access.
  • Annual policy reviews by the governing body

7. Consequences of Non-Compliance

Where there is reason to believe that an employee or representative has failed to disclose an actual or potential conflict of interest via the proper communication channels, we will proceed to investigate and take any appropriate steps deems necessary to limit any financial prejudice that may be suffered by Bay Capital Family Office, our clients or any other third party.

Appropriate disciplinary steps and corrective actions against such employee or representative will be taken where necessary. Any failure by an employee to comply with the Conflict-of-Interest Management Policy will be considered serious form of misconduct and a dismissible offence.

8.1 Permitted Financial Interest

Bay Capital Family Office and its representatives may only receive or offer the following “financial interest” from or to a “third party” (please refer to definitions in the Annexure to this policy):

Commission:
Authorised under the Long-term Insurance Act, Short-term Insurance Act or under the Medical Schemes Act

Fees: 
Authorised under the Long-term Insurance Act, the Short-term Insurance Act or the Medical Schemes Act

Fees:
for the rendering of a financial service in respect of which commission or fees referred to above is not paid, if:

  • the amount, frequency, payment method and recipient of those fees and details of the services that are to be provided by the provider or its representatives in exchange for the fees are specifically agreed to by a client in writing; and
  • those fees may be stopped at the discretion of that client

Fees or remuneration
For the rendering of a service to a third party

These fees may only receive or offer these financial interests if –

  • those financial interests are reasonably commensurate with the service being rendered, taking into account the nature of the service and the resources, skills and competencies reasonably required to perform it;
  • the payment of those financial interests does not result in Bay Capital Family Office or representative being remunerated more than once for performing a similar service;
  • any actual or potential conflicts between the interests of clients and the interests of the person receiving the financial interests are effectively mitigated; and
  • the payment of those financial interests does not impede the delivery of fair outcomes to clients

An immaterial financial interest:
Immaterial financial interest from/to third parties not exceeding a total of R1 000, per calendar year per third party. 

Gifts must be declared and included in the Gift Register.

A financial interest, not referred to above:
For which a consideration, fair value or remuneration that is reasonably commensurate to the value of the financial interest, is paid by Bay Capital Family Office or representative at the time of receipt thereof.

8.2 Financial Interest Not Permitted

Bay Capital Family Office may not offer any financial interest to its representatives:

  • that is determined with reference to the quantity of business without also giving due regard to the delivery of fair outcomes for clients; or
  • for giving preference to a specific product supplier, where a representative may recommend more than one product supplier to a client; or
  • for giving preference to a specific product of a product supplier, where a representative may recommend more than one product of that product supplier to a client.

Bay Capital Family Office must be able to demonstrate that the determination and entitlement to the financial interest, that may not be offered to representatives as determined by quantity of business secured without also giving due regard to the delivery of fair outcomes for clients, takes into account measurable indicators relating to the:

  • achievement of minimum service level standards in respect of clients;
  • delivery of fair outcomes for clients;
  • quality of the representative’s compliance with this Act

as agreed between Bay Capital Family Office and the representative, and that sufficient weight is attached to such indicators to materially mitigate the risk of the representative giving preference to the quantity of business secured for the provider over the fair treatment of clients

9. Employee Trading

Employees must adhere to high ethical standards, minimising conflicts, misuse of confidential

information, or market abuse.

9.1 Possible Conflicts

  • Errors: Profits or losses from erroneous holdings or dealing errors under discretionary management.
  • Personal Account Dealing: Employees holding similar or opposing assets to clients, risking client prejudice (e.g., front-running, trading to influence prices, or receiving gifts to sway decisions).
  • Neglect: Excessive focus on personal dealing, neglecting client portfolios.
  • Insider Information: Using non-public, price-sensitive information for personal or third-party gain.
  • Financial Promotions: Risk of misleading promotions driven by revenue motives.
  • Fee Disclosure: Failure to fully disclose costs or commissions.
  • Rebates: Undisclosed financial benefits from rebate agreements.
  • Segregation of Functions: Individuals performing multiple transaction roles, compromising controls.
  • Best Execution: Inducements affecting broker selection, impacting execution quality.
  • Gifts/Inducements: Influence from gifts or benefits, risking reputational or regulatory breaches.

9.2 Mitigation and Monitoring

  • Daily embargo lists prevent employees from trading stocks traded for clients that day.
  • Quarterly submission of employee trades to the Compliance Officer for review against embargo lists.
  • Rebate agreements, if any, are disclosed in investment proposals.
  • Segregation of key functions to maintain control integrity.
  • Gifts valued at R500, or more are recorded in the Gift Register to monitor influence risks.
  • Compliance with FAIS and the Bribery Act 2010 principles.

10. Policy Adoption

By signing this document, I authorise the organisation’s approval and adoption of the processes and procedures outlined herein.

Richard van Rensburg
Capacity: Director
Date: 30 September 2024

Version

Publishing Date: 30 September 2024
Last Review Date: 30 September 2024
Frequency of Review: Annual

Next Review Date: 30 September 2025

11. ANNEXURE A: Definitions

Conflict of Interest

Conflict of Interest means any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client –

  • a) influence the objective performance of his, her or its obligations to that client; or
  • b) prevent a provider or representative from rendering an unbiased and fair financial service to that client, or from acting in the interest of that client, including but not limited to –
    • a financial interest;
    • an ownership interest;
    • any relationship with a third party.

Financial Interest

Financial Interest means any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration, other than –

  • a) an ownership interest;
  • b) training, that is not exclusively available to a selected group of providers or representatives, on:
    • products and legal matters relating to those products;
    • general financial and industry information; specialised technological systems of a third party necessary for the rendering of a financial service, but excluding travel and accommodation associated with that training.
  • c) a qualifying enterprise development contribution to a qualifying beneficiary by a provider that is a measured entity.

Immaterial Financial Interest

Immaterial Financial Interest means any financial interest with a determinable monetary value, the aggregate of which does not exceed R1 000 in any calendar year from the same third party in that calendar year received by:

  • a) a provider who is a sole proprietor; or
  • b) a representative for that representative’s direct benefit;
  • c) a provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives.

Ownership Interest

Ownership Interest means

  • a) any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition, other than equity or a proprietary interest held as an approved nominee on behalf of another person, and
  • b) includes any dividend, profit share or similar benefit derived from that equity or ownership interest.

Third Party

Third Party means

  • a) a product supplier;
  • b) another provider;
  • c) an associate of a product supplier or a provider;
  • d) a distribution channel;
  • e) any person who in terms of an agreement or arrangement with a person referred to above provides a financial interest to a provider or its representatives.

Associate

Associate means

  • a) in relation to a natural person:
    • a person who is recognised in law or the tenets of religion as the spouse, life partner, or civil union partner of that person
    • a child of that person, including a stepchild, adopted child and a child born out of wedlock
    • a parent or stepparent of that person
    • a person in respect of which that person is recognised in law or appointed by a Court as the person legally responsible for managing the affairs of or meeting the daily care needs of the first mentioned person
    • a person who is a spouse, life partner or civil union partner of a person referred to above
    • a person who is in a commercial partnership with that person
  • b) in relation to a juristic person:
    • which is a company, means any subsidiary or holding company of that company, any other subsidiary of that holding company and any other company of which that holding company is a subsidiary
    • which is a close corporation registered under the Close Corporations Act, means any member thereof as defined in section1 of that Act
    • which is not a company or a closed corporation, means another juristic person which would have been a subsidiary or holding company of the first-mentioned juristic person:
    • had such first-mentioned juristic person been a company, or
    • in the case where that other person, too, is not a company, had both the first-mentioned juristic person and that other person been a company
    • means any person in accordance with whose directions or instructions the board of director of or, in the case where such juristic person is not a company, the governing body of such juristic person is accustomed to act.
  • c) in relation to any person:
    • means any juristic person of which the board of directors or, in the case where such juristic person is not a company, of which the governing body is accustomed to act in accordance with the directions or instructions of the person first-mentioned in this paragraph
    • includes any trust controlled or administered by that person

Distribution Channel

Distribution Channel means

  • a) any arrangement between a product supplier of any of its associates and one or more providers or any of its associates in terms of which arrangement any support or service is provided to the provider or providers in rendering a financial service to a client
  • b) any arrangement between two or more providers or any of their associates, which arrangement facilitates, supports or enhances a relationship between the provider or providers and a product supplier
  • c) any arrangement between two or more product suppliers or any of their associates, which arrangement facilitates, supports or enhances a relationship between a provider or providers and a product supplier

List of Associates

Richard Van Rensburg – Director
Eran Brill – Director

Ownership interests in third parties held by the FSP

N/A

Ownership interests held by third parties in the FSP

N/A