CIS 1.2 Arrangement of this sourcebook and definitions

Some of this sourcebook relates only to ICVCs and some only to AUTs. However, parts of this sourcebook cover both ICVCs and AUTs (in particular in CIS 3, CIS 4, CIS 5 and CIS 9). Accordingly, some of the defined terms included relate equally to both ICVCs and AUTs (together called "authorised funds"). Other key examples of these terms are:

1. (1)

   "authorised fund manager": covers both the ACD of an ICVC and the manager of an AUT. (The term "ACD" is used only in relation to an ICVC and the term "manager" is used only in relation to an AUT);

2. (2)

   "depositary": where used in relation to an authorised fund, covers both the depositary of an ICVC and the trustee of an AUT;

3. (3)

   "holder": covers both a "shareholder" of an ICVC and a "Unitholder" of an "AUT";

4. (4)

   "unit": according to the context, can cover both a "share" in an "ICVC", a "unit" in an AUT and the rights or interests of participants in other types of collective investment scheme;

5. (5)

   "prospectus": covers the prospectus of an ICVC and the "scheme particulars" of an AUT, but there is no objection to the use of the latter term as an alternative to "prospectus".

CIS 2 (Constitution) sets out provisions on the contents of the documents required to form authorised funds, and other matters relating to their constitutional features, such as classes of shares (in ICVCs) and units (in AUTs) and the types of authorised fund (for example, UCITS schemes) that may be established.2

CIS 3 (Prospectus) includes requirements on the preparation, content, availability of, and changes to, an authorised fund'sprospectus.

CIS 4 (Single-pricing and dealing) covers the valuation and pricing of authorised funds that are single-priced. In addition, it includes rules on the sale and redemption of units in such funds. CIS 7 Annex 1 G and Appendix CIS G are also relevant to this chapter.

CIS 5 and CIS 5A (Investment and borrowing powers) require authorised funds to comply with the rules on investments to ensure funds operate under the principles of risk spreading. The chapter is split in two because of the implementation of the UCITS Amending Directive relating to investment powers and the transitional provisions that Directive allows. Transitional provision 14 provides precise details on the operation but generally speaking:

1. (1)

   UCITS qualifying schemes existing on or before 13 February 2002 and which now qualify as UCITS schemes may operate under the rules in CIS 5A and may switch to operate under CIS 5 at any time before 13 February 2007, at which time they must operate under CIS 5; and

2. (2)

   UCITS qualifying schemes authorised after 13 February 2002 but before 13 February 2004 may operate under the rules in CIS 5A or CIS 5 but must operate under the rules in CIS 5 by 13 February 2004.2

CIS 6 (Title, transfer and plan registers) includes requirements relating to the register of Unitholders in an AUT. (Provisions concerning the register of an ICVC are in the OEIC regulations.) It also deals with plan registers of ICVCs and AUTs.

CIS 7 (Powers and duties) apportions responsibilities between the directors (including the ACD) and depositary of an ICVC and the manager and trustee of an AUT, to the extent that these are not covered in other chapters.

CIS 8 (Charges and expenses) lays down conditions concerning charges when investors buy or sellunits and payments that can be made out of the scheme property.

CIS 9 (Income) deals with the calculation and distribution of income.

CIS 10 (Reports and accounts) concerns the content and publication of annual and half-yearly reports and accounts of authorised funds.

CIS 11 (Meetings of holders, amendments to the scheme and service of notices) deals with a variety of matters relating to meetings of holders and includes requirements concerning the conditions under which the instrument constituting the scheme may be changed and how the scheme property of an authorised fund may become the property of another scheme (a scheme of arrangement). It also provides for the use of electronic media in respect of any notice, document or information that is required by CIS to be sent to any person.

CIS 12 (Special provisions for certain categories of scheme) provides some special rules for certain categories of authorised fund, in particular for umbrella schemes.

CIS 13 (Suspension and resumption of dealings) includes requirements for the suspension of dealings in the units of authorised funds.

CIS 14 (Termination of schemes) includes requirements relating to the winding-up of authorised funds and the termination of a sub-fund of an ICVC.

CIS 15 (Dual-pricing and dealing) sets out rules and guidance on the valuation and pricing of units in a dual-priced AUT. CIS 7 Annex 1 G and Appendix CIS G are also relevant to this chapter.

CIS 16 (Application and notification) outlines the application and notification procedures for authorised funds and schemes from other countries or territories which may be recognised by the FSA for marketing in the United Kingdom.

CIS 17 (Recognised schemes) sets out the information that the FSA requires so as to consider whether schemes under sections 264, 270 and 272 of the Act should be permitted to market in the United Kingdom.1

CIS 18 (Fees) sets4 out the application and periodic fees payable for the authorisation or recognition of regulated schemes.1

There are a number of other parts of the FSA's Handbook that are relevant to those having a responsibility in relation to authorised funds. These include:

1. (1)

   PRIN (The Principles for Businesses);

2. (2)

   SYSC (Senior management arrangements, systems and controls);

3. (3)

   APER (The Statements of principle and Code of Practice for approved persons) ;

4. (4)

   COB (The Conduct of Business sourcebook);

5. (5)

   SUP (The Supervision manual);

6. (6)

   DEC (the Decision making manual); and

7. (7)

   CASS (The Client Assets sourcebook).3

ENF 16 sets out the FSA's policies and procedures concerning the use of its enforcement powers in relation to ICVCs, AUTs and recognised schemes.

ML is also relevant in particular when considering CIS 4.4.3 R, CIS 7.10 and CIS 15.4.3 R.

Due regard should be given to compliance with the Joint Money Laundering Steering Group Guidance Notes for the Financial Sector in determining compliance with the Money Laundering Regulations.

Establishing, operating or winding up a collective investment scheme is a regulated activity. No person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is an authorised person (or an exempt person). This prohibition is also known as the general prohibition. Guidance for persons considering carrying on regulated activities in the United Kingdom can be found in AUTH. AUTH 3 (Applications for Part IV permission) gives guidance on how to apply to the FSA for a Part IV permission. This authorisation is different to the authorisation of a scheme under Part XVII of the Act, guidance on which is provided in this sourcebook.2