CIS 2.2 The instrument constituting the scheme

1. (1)

   CIS 2.2.2 RCIS 2.2.4 R apply to the directors of an ICVC.

2. (2)

   CIS 2.2.5 RCIS 2.2.8 R apply to managers and trustees of an AUT.

1. (1)

   The instrument of incorporation must not include any provision which is unfairly prejudicial to the interests of shareholders generally or to the holders of any class of shares, except to the extent that (2) applies.1

2. (2)

   If, subject to compliance with a condition imposed by law or regulation of any part of the United Kingdom, any income property of the ICVC may be allocated or paid to a shareholder without deduction of United Kingdom tax, the instrument of incorporation must provide:

   1. (a)

      that, if the condition is never, or ceases to be, fulfilled, the relevant shares of that shareholder must be:

      1. (i)

         redeemed or cancelled; or

      2. (ii)

         converted into or exchanged for shares where the income allocated or paid is subject to deduction of UK tax; and

   2. (b)

      the procedure for that redemption or cancellation, conversion or exchange.

3. (3)

   The instrument of incorporation must provide that the person designated for the purposes of paragraph (4) of schedule 4 (Share transfers) to the OEIC regulations must be the person who, for the time being, is the ACD of the ICVC.

4. (4)

   The instrument of incorporation must provide that the ICVC may (without prejudice to the requirements of regulation 21 of the OEIC regulations (Alterations)), by a resolution passed by a simple majority of the votes validly cast for and against the resolution at a general meeting of shareholders, remove a director before his period of office expires, despite anything else in the ICVC's instrument of incorporation or in any agreement between the ICVC and the director.

5. (5)

   Nothing in (4):

   1. (a)

      deprives a person of any compensation or damages payable to him for terminating his appointment as director or of any appointment which terminates with it; or

   2. (b)

      restricts the effect of any provision in the instrument of incorporation relating to a notice to be given to the ICVC or to the shareholders of the intention to move a resolution to remove a director or relating to the director's rights to make representations.

6. (6)

   The instrument of incorporation must contain a statement that, subject to any restrictions in the rules in this sourcebook or in the instrument of incorporation, the ICVC has the power to invest in any securities market or deal on any derivatives market:

   1. (a)

      which is an eligible securities or derivatives market for that ICVC under CIS 5 or CIS 5A (Investment and borrowing powers); or1

   2. (b)

      to the extent that power to do so is conferred by CIS 5 or CIS 5A (Investment and borrowing powers), irrespective of any issue of eligibility.1

7. (7)

   The instrument of incorporation must not contain a provision preventing its shares being marketed in the United Kingdom.2

Any power conferred on any ICVC by these rules is subject to any express restriction contained in the ICVC's instrument of incorporation.

An AUT must be constituted by a trust deed made between the manager and the trustee.

The trust deed of an AUT must contain at least:

1. (1)

   Name of AUT: a statement of the name of the AUT which must not be inconsistent with the AUT's authorised status under (2) and any restricted economic or geographic objectives;

2. (2)

   Authorised status

   1. (a)

      a statement:

      1. (i)

         in all cases, of the type to which the AUT belongs under CIS 2.1.4 R (Types of authorised fund);1

      2. (ii)

         for a feeder fund, of the name and authorised status of the regulated collective investment scheme (or a sub-fund of such a scheme) or the eligible investment trust into which the feeder fund is to invest;

      3. (iii)

         for a fund of funds scheme, identifying the types of scheme in which the fund of funds scheme may invest; and1

      4. (iv)

         for an AUT that is an umbrella scheme, identifying the type to which each sub-fund would belong if the sub-fund were itself the subject of a separate authorisation order; 1

3. (3)

   Governing law: a statement that the trust deed is made under and governed by the law of England and Wales, or the law of Scotland or the law of Northern Ireland;

4. (4)

   Trust deed to be binding and authoritative: a statement that the trust deed:

   1. (a)

      is binding on each Unitholder as if he had been a party to it and that he is bound by its provisions; and

   2. (b)

      authorises and requires the trustee and the manager to do the things required or permitted of them by its terms;

5. (5)

   Base currency: a statement of the base currency of the AUT;

6. (6)

   Investment powers in eligible markets: except in the case of a feeder fund, a statement that, subject to any restriction in the rules in this sourcebook or the trust deed, the AUT has the power to invest in any securities market or deal on any derivatives market:

   1. (a)

      which is an eligible securities or derivatives market for that AUT under CIS 5 or CIS 5A (Investment and borrowing powers); or1

   2. (b)

      to the extent that power to do so is conferred by CIS 5 or CIS 5A (Investment and borrowing powers), irrespective of any issue of eligibility; 1

7. (7)

   Declaration of trust: a declaration that, subject to the provisions of the trust deed and all rules made under section 247 of the Act and for the time being in force:

   1. (a)

      the scheme property (other than sums standing to the credit of the distribution account) is held by the trustee on trust for the Unitholders according to the number of units held by each Unitholder or, in the case where income units and accumulation units are both in issue, according to the number of undivided shares in the scheme property represented by the units held by each Unitholder; and

   2. (b)

      the sums standing to the credit of the distribution account are held by the trustee on trust to distribute or apply them in accordance with CIS 9 (Income);

8. (8)

   Unitholder's liability to pay a provision that a Unitholder is not liable to make any further payment after he has paid the price of his units (or, in the case of a dual-priced AUT, purchase price) and that no further liability can be imposed on him in respect of the units which he holds; and

9. (9)

   Single-priced AUTs : for a single-priced AUT:

   1. (a)

      a provision that there must be only a single price for any unit, determined by reference to any particular valuation point;

   2. (b)

      provisions additional to, but subject to the requirements of, CIS 4.8 (Valuation) stating how the value of the scheme property of the AUT is to be determined; and

   3. (c)

      if provisions in (a) and (b) do not take effect when the trust deed or (where appropriate) supplemental trust deed takes effect, a statement of the time from which those provisions are to take effect or how it will be determined.

10. (10)

    The trust deed must not contain a provision preventing its units being marketed in the United Kingdom.2

1. (1)

   A trust deed must not contain any provision that conflicts with any rule in this sourcebook.

2. (2)

   Any power conferred, by the rules in this sourcebook, on the manager, on the trustee, or on them together is subject to any express prohibition contained in the trust deed.

3. (3)

   CIS 5 or CIS 5A (Investment and borrowing powers) has effect in relation to any AUT which is subject to any restriction imposed by the trust deed.1