1. (1)

   3This chapter applies in relation to ICVCs and single-priced AUTs. Accordingly, in this chapter:

   1. (a)

      references to "authorised funds" and to "units" relate only to ICVCs and single-priced AUTs and to shares or units in them;

   2. (b)

      references to "authorised fund manager" or to "depositary" relate only to the ACD or depositary of an ICVC or to the manager or trustee of a single-priced AUT; and

   3. (c)

      references to an "AUT", "manager" or "trustee" relate only to a "single-priced AUT", or to its manager or trustee.

2. (2)

   This section (CIS 4.1) applies to ICVCs, their directors (including the ACD) and depositaries, and to the managers and trustees of single-priced AUTs.

3. (3)
   1. (a)

      If, and to the extent that, the authorised fund manager and the depositary so agree, income units and accumulation units are to be treated, for the purposes in (b) as belonging to the same class of units.

   2. (b)

      The purposes to which (a) can apply are:

      1. (i)

         ascertaining the number of units to be issued or cancelled for the authorised fund manager to comply with CIS 4.3.9 R (2) (Issue of units to meet authorised fund manager's obligation to sell) and CIS 4.3.10 R (2)(Cancellation and payment for cancelled units); or

      2. (ii)

         compliance with requirements of this chapter relating to information to be given by the authorised fund manager to the depositary.

   3. (c)

      Paragraphs (a) and (b) do not apply to the income units and accumulation units of an ICVC unless the rights attached to those classes provide for their prices to be calculated by reference to undivided shares (whatever called) in a manner similar to that resulting from CIS 2.6.1 R (Units and classes of units in AUTS).2

This section (CIS 4.2) applies to authorised fund managers and CIS 4.2.4 R (1) (Issue of units : initial offer) also applies to any directors of an ICVC additional to the ACD.

1. (1)

   The period of the initial offer must not exceed 21 days and an initial offer must, subject to CIS 4.2.5 R (Compulsory termination of initial offer), be kept open for the period of the initial offer.

2. (2)

   Where an initial offer is of units in a sub-fund, CIS 4.2.4 R and CIS 4.2.5 R apply as if references in those rules to a unit were to a unit in that sub-fund.

1. (1)

   The price to be paid for a unit of any class issued during the period of the initial offer must be the initial price of a unit of that class, as determined by the directors of the ICVC or the manager of the AUT. The price must be notified in writing to the depositary before the start of the period of the initial offer.

2. (2)

   For the purpose of (1), a unit is treated as issued during the period of the initial offer if the authorised fund manager had agreed to its sale or received an order for it to be sold before the close of the period, and it was issued only afterwards.

3. (3)

   The authorised fund manager must, by the close of business on the fourth business day after receiving the price from the purchaser, pay the depositary the price of any unit it agreed to sell during the period of the initial offer, unless payment by the authorised fund manager is due earlier under CIS 4.3.7 R (Payments for units issued). The authorised fund manager may retain for its own account any preliminary charge it makes under CIS 8.2.2 R (Preliminary charge: ICVCs and single-priced AUTs).

4. (4)

   During the period of the initial offer, the authorised fund manager must not agree to cause units to be issued under CIS 4.5 (Issues and cancellations through the authorised fund manager and in specie cancellations) at a price other than the initial price.

5. (5)

   The initial price of a unit must, subject to CIS 12.5.2 R (Base currency), be expressed in the base currency of the authorised fund (or, for a currency class share, in the currency of designation of that class). However, during the period of the initial offer, the authorised fund manager may agree to sell units, or cause units to be issued under CIS 4.5.3 R (Issues and cancellations through the authorised fund manager) in any other currency.

6. (6)

   Nothing in this rule affects the powers of the authorised fund manager to require a payment of SDRT provision under CIS 4.6.3 R (Dilution levy and SDRT provision).

7. (7)

   Where the initial offer is made in a country outside the United Kingdom, an amount may be added to the initial price of units offered in that country which is sufficient to cover additional duty or taxation leviable in that country and the cost of remitting money to the United Kingdom.

1. (1)

   The period of the initial offer comes to an end immediately if:

   1. (a)

      the authorised fund manager does not carry out a valuation immediately, but after having taken reasonable care, it ascertains that, if the current price of a unit were to be calculated by reference to an immediate valuation, it would be likely to vary from the unit's initial price by 2% or more of the initial price; or

   2. (b)

      the authorised fund manager carries out a valuation immediately after it has ascertained the circumstances mentioned in (a) and the valuation shows there is a variation of 2% or more.

2. (2)

   If the period of the initial offer comes to an end under (1), the authorised fund manager must immediately refrain from:

   1. (a)

      agreeing to sell units at the initial price; and

      1. (i)

         in the case of an ICVC, arranging for the ICVC to issue shares at the initial price, except to fulfil an existing obligation of the ACD to sell shares at the initial price or to fulfil an order for shares at the initial price which the ACD received before the initial offer came to an end; or

      2. (ii)

         in the case of an AUT, instructing the trustee to issue units at the initial price, unless to fulfil an existing obligation of the manager to sell units at the initial price or to fulfil an order for units at the initial price which the manager received before the initial offer came to an end.

3. (3)

   The current price of a unit for the purpose of (1):

   1. (a)

      must be calculated on the basis that the number of units of each relevant class in existence immediately before the valuation is the number for which the initial price has been paid, or for which assets have been transferred to the depositary in exchange (or treated for the purpose of the valuation as having been paid or exchanged), before the valuation; and

   2. (b)

      must not include any dilution adjustment.1

This section (CIS 4.3) applies in relation to the issue, cancellation and pricing of units of an authorised fund after the close of any initial offer of units at a fixed price. However, the rules in CIS 4.3.3 R to CIS 4.3.7 R and CIS 4.3.12 R also apply to the initial issue of units under CIS 4.2.4 R.

1. (1)

   This rule (CIS 4.3.3 R) applies to ICVCs and to ACDs and depositaries of ICVCs.

2. (2)

   Shares in an ICVC are issued or cancelled by the ACD making a record for the ICVC of the issue or cancellation and of the number of the shares of each class concerned. Shares must not be issued or cancelled in any other manner.

3. (3)

   The time of the issue or cancellation under (2) is the time when the record is made.

4. (4)

   References in these rules to arrangements for the ICVC to issue or cancel shares means arrangements for making a record of the issue or cancellation.

5. (5)

   The ACD may arrange for the ICVC to issueshares in exchange for assets other than money if the depositary has taken reasonable care to determine that acquiring the assets in exchange for the issue of shares is not likely to result in any material prejudice to the interests of shareholders or potential shareholders. For this purpose the depositary must take account of any payment that would have been required under CIS 4.6.3 R (Dilution levy and SDRT provision) had the shares been issued for cash.

6. (6)

   An issue under (5) must not be made in breach of CIS 11.5.2 R (Schemes of arrangement: requirements).

1. (1)

   This rule (CIS 4.3.4 R) applies to managers and trustees.

2. (2)

   Where the manager wishes new units to be issued or wishes units to be cancelled and, in either case, complies with CIS 4.3.11 R (4) and CIS 4.3.11 R (5) (Price of a unit), it may instruct the trustee to issue or cancel units. Any instructions given by the manager must state, for each class of unit to be issued or cancelled, the number to be issued or cancelled, expressed either as a number of units or as an amount in value (or as a combination of the two).

3. (3)

   The trustee must issue or cancel units on receipt of, and in accordance with, instructions given by the manager under (2) and must not issue or cancel units otherwise, but this is subject to (4) and CIS 4.3.5 R (2).

4. (4)

   The trustee may issue units in exchange for assets other than money, but its obligation to comply with an instruction to issue units in such a case arises only:

   1. (a)

      if it has taken reasonable care to determine that (taking account of any payment that would have been required under CIS 4.6.3 R (Dilution levy and SDRT provision) if the units had been issued for cash) the acquisition of the assets in exchange for the number of units to be issued is not likely to result in any material prejudice to the interests of Unitholders or potential Unitholders;

   2. (b)

      in a case governed by CIS 11.5.2 R (5) (Schemes of arrangement: requirements) if the resolution concerned in relation to the AUT of which it is the trustee has been duly carried or is not required.

5. (5)

   The manager may, at any time during the period of an initial offer, instruct the trustee to issue units. Furthermore, as soon as the period of the initial offer has come to an end, the manager must instruct the trustee to issue any units which were sold, or treated as sold, during that period and which it has not already instructed the trustee to issue.

1. (1)

   This rule (CIS 4.3.5 R) applies to managers and trustees of AUTs.

2. (2)

   If, on receiving instructions to issue or cancel units, the trustee is of the opinion that (in the case of an issue) the issue would be in breach of a restriction on issue relating to a class of limited issue shares or limited issue units or that it is not in the interests of Unitholders that:2

   1. (a)

      units should be issued; or

   2. (b)

      units should be cancelled; or

   3. (c)

      units should be issued or cancelled in the number requested by the manager;

   the trustee must give notice to the manager that it refuses to issue or, as the case may be, cancel, all, or a specified number of, the units.

3. (3)

   On giving such a notice, the trustee is relieved of the obligation to issue or cancel the number of units to which the notice relates.

1. (1)

   This rule (CIS 4.3.6 R) applies to managers and trustees of AUTs.

2. (2)

   Any instruction or notification given (or report supplied) under this chapter by the manager to the trustee:

   1. (a)

      must be in writing or in such other form as enables the recipient to know or record the time of receipt and to preserve a legible copy of it; and

   2. (b)

      must be recorded by the manager at the time when it is given or supplied.

3. (3)

   Instructions or notifications are given within any period under this chapter if they are received by the trustee within that period, and instructions or notifications received by the trustee after the expiry of any period are treated as given after that expiry.

4. (4)

   This rule also applies, with the substitution of "manager" for "trustee" and "trustee" for "manager", to any instruction or notification given by the trustee to the manager.

1. (1)

   This rule (CIS 4.3.7 R) applies to authorised fund managers.

2. (2)

   This rule applies to a unit issued during the period of the initial offer (and for this purpose the time of issue is not governed by CIS 4.2.4 R(2) (Issue of units: initial offer)).

3. (3)

   The authorised fund manager must, by the close of business on the fourth business day following the issue of any units:

   1. (a)

      pay to the depositary, in cash or cleared funds, the price of the units and any payment required under CIS 4.6.3 R (Dilution levy and SDRT provision) to the extent that either remains unpaid; or

   2. (b)

      for an exchange under CIS 4.3.3 R (5) or CIS 4.3.4 R (4), ensure transfer to the depositary of the assets to be taken in exchange.

4. (4)

   For an exchange under CIS 4.3.3 R (5) or CIS 4.3.4 R (4), the authorised fund manager must ensure the beneficial interest in the assets is transferred to the ICVC or to the trustee with effect from the issue of the units, even if the legal ownership is not then transferred.

1. (1)

   This rule (CIS 4.3.9 R) applies to authorised fund managers.

2. (2)

   If, at any valuation point, the authorised fund manager has any outstanding obligation to sell units of any class, it must arrange for the ICVC or instruct the trustee before the earlier of:

   1. (a)

      the expiry of two hours since the valuation point; or

   2. (b)

      the next valuation point;

   to issueunits of that class in such number (expressed either as a number of units or as an amount in value (or as a combination of the two)) as will at least enable the authorised fund manager to fulfil the obligation immediately whether from the units so issued or from other units of that class which it owned immediately before the valuation point (or notified point if there is one).

3. (3)

   If the authorised fund manager wishes regularly to have a notified point, it may notify the depositary of its intention, indicating the period of time not exceeding two hours after the valuation point at which it wishes the notified point to occur. Any change in the period is ineffective unless agreed by the depositary.

1. (1)

   Paragraphs (2) and (3) and (7) to (9) apply to authorised fund managers; (4) applies only to ICVCs and their depositaries and ACDs; (5) and (6) apply only to managers and trustees of AUTs.

2. (2)

   The authorised fund manager must not arrange for the ICVC, or instruct the trustee, to cancel units of any class if, or to the extent that, by so doing the authorised fund manager would be prevented from immediately fulfilling any outstanding obligation to issue units which had been assumed before the relevant valuation point (or notified point if there is one).

3. (3)

   For the purpose of (2), the authorised fund manager must take account of all units sold or redeemed by reference to the relevant valuation point (or notified point if there is one).

4. (4)

   On cancelling shares the ACD must, within the period specified in (7), require the depositary to pay the price of the shares (less any deduction required under CIS 4.6.3 R (Dilution levy and SDRT provision)) to, or to the order of, the shareholder or the ACD (as the case may be).

5. (5)

   Where instructions are given to cancel units in an AUT at a time which is less than two hours after the last valuation point and the trustee has received but not yet executed instructions previously given, the later instructions must enable the trustee to execute both or all sets of instructions simultaneously.

6. (6)

   On cancelling units in an AUT, the trustee must within the period specified in (7) pay the price of the units (less any deduction required under CIS 4.6.3 R (Dilution levy and SDRT provision):

   1. (a)

      (except where (b) applies) to, or to the order of, the Unitholder or the manager (as the case may be); or

   2. (b)

      in the case of a relevant pension scheme, in accordance with the relevant provisions of the trust deed.

7. (7)

   The period for payment expires at the close of business on the fourth business day following the cancellation of the units or, if later, as soon as practicable after delivery to the trustee or the ICVC of such evidence of title to the units as it may reasonably require.

8. (8)

   If the authorised fund manager has not ensured that the scheme property includes or will include sufficient cash in the appropriate currency (or a sufficient facility to borrow without infringing any applicable restriction in CIS 5A.15.3 R (General power to borrow) or CIS 5A.15.4 R (Borrowing limits) or CIS 5.5 within the period in (7)), that period is extended, for any relevant currency, until the shortage is rectified.2

9. (9)

   Paragraphs (4) and (6) do not apply where units are cancelled following a cancellation for property transferred or sold under CIS 4.5.4 R (In specie redemption).

1. (1)

   Paragraphs (2) to (3) apply to authorised fund managers; (4) and (5) apply only to ICVCs and their depositaries and ACDs; (6) and (7) apply only to managers and trustees.

2. (2)

   The price of a unit of any class must, subject to (3), be calculated as follows:

   1. (a)

      take the proportion, attributable to the units of the class in question, of the value of the scheme property (excluding, in the case of an ICVC, the distribution account and the unclaimed payments account), by reference to the most recent valuation of the scheme property;

   2. (b)

      compute the number of units of the relevant class in issue immediately before the valuation in (a);

   3. (c)

      divide the total at (a) by the number of units at (b);

   4. (d)

      if the authorised fund manager makes a determination under CIS 4.6.4 R (Dilution adjustment), increase or decrease the resulting amount by an adjustment (the "dilution adjustment") made for the purpose of reducing dilution; and

   5. (e)

      Except for smaller denomination shares, express the price in a form that is accurate to at least four significant figures.1

3. (3)

   If a method of calculation other than that at (2) is used, the authorised fund manager must be sure it is bound to produce the same result.

4. (4)

   Where an issue or cancellation of shares is made at a time which is less than two hours after the last valuation point and before the next valuation point, it must be made by reference to the price of the relevant class of shares calculated (or being calculated) for the last valuation point.

5. (5)

   Any issue or cancellation of shares to be made more than two hours after the last valuation point must be made by reference to the price of the relevant class of shares next to be calculated and made only after the next valuation point has been reached.

6. (6)

   Where the manager gives instructions to the trustee to create or cancel units and those instructions are given less than two hours after the last valuation point and before the next valuation point, the instructions must be given by reference to the price of the relevant class of units calculated (or being calculated) for the last valuation point.

7. (7)

   Where the manager gives instructions to the trustee to create or cancel units and those instructions are given more than two hours after the last valuation point:

   1. (a)

      the instructions must be given by reference to the price of the relevant class of units next to be calculated, and

   2. (b)

      the trustee must not issue or cancel the units before the next valuation point has been reached.

1. (1)

   This rule applies to authorised fund managers and depositaries.

2. (2)

   The number of units issued or cancelled may be modified by the authorised fund manager (in the case of shares) making a record for the ICVC of the modification or (in the case of units in an AUT) changing an instruction to issue or cancel units which has been complied with, provided that:

   1. (a)

      the authorised fund manager ensures that any appropriate consequential payment between the authorised fund manager and the depositary is made; and

   2. (b)

      the requirements of (3) are satisfied.

3. (3)

   The authorised fund manager may only make a modification under (2) with the agreement of the depositary and the depositary may not agree unless it has taken reasonable care to determine:

   1. (a)

      that the purpose of the modification is to rectify the consequences of an error relating to the number of units held by the authorised fund manager, or issued or cancelled in connection with the sale or redemption of units by the authorised fund manager; and

   2. (b)

      that in view of the quality of the authorised fund manager's control systems the circumstance that resulted in the error in question is an isolated one which is unlikely to recur.

4. (4)

   A modification under (2) is of no effect unless the corrected number of units is calculated by the end of the business day next following the valuation point for the issue or cancellation in question or, if the depositary agrees, within the payment period applicable to that issue or cancellation under CIS 4.3.7 R (3) (Payment for units issued) or CIS 4.3.10 R (7) (Cancellation and payment for cancelled units).

1. (1)

   This section (CIS 4.4) applies to authorised fund managers. CIS 4.4.5 R (4) (Payment on redemption) also applies to ICVCs and depositaries.

2. (2)

   This section (CIS 4.4) applies to the sale and redemption of units after the close of any initial offer. However, the following rules also apply to the sale of a unit during an initial offer:

   1. (a)

      CIS 4.4.3 R (1), (2) and (3) (other than the provision in (2)(a) relating to a sale at a forward price); and

   2. (b)

      CIS 4.4.8 R (but as if CIS 4.4.8 R (2) related to the initial price).

1. (1)

   The authorised fund manager must, at all times during the dealing day, be willing to sellunits in the authorised fund and, subject to (2), must, at the request in writing of any person, agree to sell to that person units of at least one class or, in the case of an umbrella scheme, one class for each of its sub-funds.

2. (2)

   The authorised fund manager's obligation to sell units under (1) does not apply:

   1. (a)

      if it has not received payment for the units of an amount complying with (4) or (if the sale was at a forward price of a stated number of shares) if it has not received payment of an amount it estimated to be required; or

   2. (b)

      if the number or value of the units sought to be purchased is less than any number or value stated in the prospectus as the minimum number or value of units, or units of the class concerned, that may be purchased or held; or

   3. (c)

      for a property scheme if the authorised fund manager, having taken reasonable care, determines that the number or value of units sought to be purchased would lead to any one person (or any one person and any other person who appears to the authorised fund to be acting in concert with that person) holding more than any number or value stated in the prospectus as the maximum number or value to be purchased or held; or

   4. (d)

      if it has reasonable grounds for refusing to sell units to the person concerned; and3

   5. (e)

      for an AUT, if the sale would be in breach of a provision in the trust deed of any of the types described in paragraphs (j) (Limited categories of Unitholder), (m) (Relevant pension schemes) or (n) (Relevant charitable schemes) of CIS 2.2.7 G (Provisions that may be included in the trust deed).

3. (3)

   Paragraph (1) does not apply to units of any class:

   1. (a)

      if no units of that class are in issue; or

   2. (b)

      if the sale of units of that class:

      1. (i)

         is prohibited by the rules in CIS 13 (Suspension and resumption of dealings); or2

      2. (ii)

         would breach a restriction on sale applicable to a class of limited issue shares or limited issue units.2

4. (4)

   The authorised fund manager must not sell a unit for more than the price of a unit of the relevant class notified, or to be notified, to the depositary for the last valuation point (or, for a sale at a forward price, to be notified for the next valuation point) to which may be added any preliminary charge permitted under CIS 8.2.2 R (Preliminary charge: ICVCs and single-priced AUTs) and any payment required under CIS 4.6.3 R (Dilution levy and SDRT provision).

5. (5)

   Units must be sold in the base currency, or, for a currency class share, in the currency of designation of that class, unless the person concerned requests and the authorised fund manager agrees that the units should be sold in another currency.

1. (1)

   The authorised fund manager must at all times during the dealing day be willing to redeem units in the authorised fund; and, accordingly, must at the request in writing of any holder agree to redeem units owned by that holder for the amount to be paid under CIS 4.4.6 R (Proceeds of redemption).

2. (2)

   Paragraph (1) does not apply:

   1. (a)

      if the number or value of the units sought to be redeemed is:

      1. (i)

         less than the entirety of the holder's holding of units of the class concerned, and

      2. (ii)

         less than any number or value stated in the prospectus as the minimum number or value of units, or units of the class concerned, that may be redeemed;

   2. (b)

      if the number or value of the units sought to be redeemed would result in the holder holding less than any number or value stated in the prospectus as the minimum number of units, or units of the class concerned, that may be held;

   3. (c)

      if the ICVC or the manager ensures that the holder is able to sell his units on an investment exchange at a price not significantly different from the price at which they would have been redeemed;

   4. (d)

      where units are redeemed in return for property transferred or sold under CIS 4.5.4 R (In specie redemption);

   5. (e)

      during the period of the initial offer; or

   6. (f)

      if redemption of the units of the class concerned is prohibited by the rules in CIS 13 (Suspension and termination).

1. (1)

   On agreeing to redeem units, the authorised fund manager must, within the period specified in (2):

   1. (a)

      (except where (b) applies) pay the holder the appropriate proceeds of redemption under CIS 4.4.6 R (less, where applicable, the cost of remitting the sum abroad); or

   2. (b)

      if a manager of a relevant pension scheme, pay or arrange for the payment of the proceeds of redemption in compliance with the trust deed (including, where applicable, any time limit in it for payment which is shorter than the period specified in (2)).

2. (2)

   The period expires at the close of business on the fourth business day following the later of:

   1. (a)

      the valuation point immediately after the authorised fund manager received the request to redeem; or

   2. (b)

      the time when the authorised fund manager has all duly executed instruments and authorisations to effect (or enable the authorised fund manager to effect) transfer of title to the units.

3. (3)

   Neither this rule nor CIS 4.4.6 R (Proceeds of redemption) applies where the authorised fund manager is not redeeming units in accordance with this chapter but is buying them as principal on an investment exchange (in the case of an AUT, in accordance with a power in the trust deed) and settlement will be in accordance with the rules of that exchange.

4. (4)

   Nothing in this rule or CIS 4.3.10 R(5) and (6) (Cancellation and payment for cancelled units) requires an ICVC, a depositary or an authorised fund manager to part with money for a cancellation or redemption of units where any money due on the earlier issue or sale of those units has not been received by the person entitled to it under this chapter.

The amount to be paid by the authorised fund manager as the proceeds of redemption of a unit must not be less than the price of a unit of the relevant class notified or to be notified to the depositary at the last valuation point (or, for a redemption at a forward price, to be notified in respect of the next valuation point) less any redemption charge permitted under CIS 8.2.7 R (Redemption charge: ICVCs) or CIS 8.5.2 R (Redemption charge: single-priced AUTs) and any deduction required under CIS 4.6.3 R (Dilution levy and SDRT provision).

1. (1)

   Immediately after completing a valuation under CIS 4.8 (Valuation) (whether regular or otherwise) the authorised fund manager must notify the depositary of:

   1. (a)

      the price, in the base currency (or, in the case of a currency class share, the currency of designation) of a unit of each class in issue as determined for the relevant valuation point; and

   2. (b)
      1. (i)

         the amount or rate of any dilution levy which applies to any issue or cancellation of units made by reference to that valuation; or

      2. (ii)

         the amount or rate of any dilution adjustment taken into account in calculating that price and whether it was an addition or deduction.1

2. (2)

   Each notification under (1) must include a statement of the number of units of each class in issue owned by the authorised fund manager at the valuation point (or notified point if there is one).

3. (3)

   As soon as practicable after each notification under (1), the authorised fund manager must notify the depositary of the transactions, or types of transaction, for which an SDRT provision is applied and the amounts or rates of those SDRT provisions.

1. (1)

   Where the authorised fund manager holds itself out as willing:

   1. (a)

      to sell or redeem units of any class; or

   2. (b)

      to issue or cancel units of any class under CIS 4.5.3 R (Issues and cancellations through the authorised fund manager);

   it must make public the prices of units of each of those classes

2. (2)

   The prices made public under (1) are to be the price or prices last notified to the depositary under CIS 4.4.7 R or, in the case of publication in a newspaper, last notified before the relevant newspaper ceased to accept material for publication in the relevant edition.

3. (3)

   The prices to be made public under (1) must be published in at least one national newspaper in the United Kingdom, except for any class of units marketed predominantly outside the United Kingdom.

4. (4)

   Where the authorised fund manager holds itself out as willing to sell and redeem units (or, as the case may be, to issue or cancel units under CIS 4.5.3 R) in any other EEA State, it must also comply with (1) in the manner provided for by the law of that EEA State.

5. (5)

   Paragraphs (1) to (4) do not apply to units in relation to which the authorised fund manager is excused from dealing with the public.

This section (CIS 4.5) applies to authorised fund managers. CIS 4.5.3 R (6) and CIS 4.5.4 R (4) also apply to ICVCs and depositaries.

1. (1)

   At the request of any person, the authorised fund manager is obliged to arrange for the ICVC, or instruct the trustee, to issue units to that person where the authorised fund manager would otherwise be obliged to sell them under CIS 4.4.3 R (Authorised fund manager's obligation to sell).

2. (2)

   At the request of any holder, the authorised fund manager is obliged to arrange for the ICVC, or instruct the trustee, to cancel units held by that holder where the authorised fund manager would otherwise be obliged to redeem them under CIS 4.4.4 R (Authorised fund manager's obligation to redeem).

3. (3)

   The price of a unit issued or cancelled under this rule (CIS 4.5.3 R) must be the price of a unit of the relevant class notified to the depositary at the next valuation point after the request referred to in (1) or (2), except for an issue to which CIS 4.2.4 R (Issue of units: initial offer) applies, when it must be the initial price.

4. (4)
   1. (a)

      In the case of an issue, the authorised fund manager may require to be paid, in addition to the price under (3):

      1. (i)

         for the account of the authorised fund manager, any preliminary charge permitted under CIS 8.2.2 R (Preliminary charge: ICVCs and single-priced AUTs);

      2. (ii)

         for the account of the authorised fund, any payment required under CIS 4.6.3 R (Dilution levy and SDRT provision).

   2. (b)

      In the case of a cancellation, the authorised fund manager may require to be deducted from the proceeds:

      1. (i)

         for the account of the authorised fund manager, any redemption charge permitted under CIS 8.2.7 R (Redemption charge: ICVCs) or CIS 8.5.2 R (Redemption charge: single-priced AUTs);

      2. (ii)

         for the account of the authorised fund, any deduction required under CIS 4.6.3 R (Dilution levy and SDRT provision).

5. (5)

   The authorised fund manager must pay the depositary in accordance with CIS 4.3.7 R (Payments for units issued) the price of any units issued under this rule (CIS 4.5.3 R) and any payment required under (4)(a)(ii) whether or not the authorised fund manager has received payment from the investor. However, the authorised fund manager may defer arranging for the ICVC, or instructing the trustee, to issue the units until full payment for them has been received.

6. (6)

   Nothing in this rule (CIS 4.5.3 R) requires an ICVC, a depositary or an authorised fund manager to part with money for a cancellation of units in the circumstances described in CIS 4.4.5 R(4) (Payment on redemption).

7. (7)

   Paragraph (1) does not apply if the issue would breach a restriction on issue applicable to a class of limited issue shares or limited issue units.1

1. (1)

   Whenever a holder requests the redemption or cancellation of units, the authorised fund manager may arrange for the cancellation of those units and that, instead of payment in cash to the holder of the price for the units, schemeproperty selected in accordance with (c) and (d) is transferred to the holder, or, if required by the holder, the net proceeds of the sale of that property is paid to him, provided that:

   1. (a)

      the prospectus contains a statement describing the circumstances in which the authorised fund manager is permitted to arrange for, and describing the procedures for, a cancellation of units in the manner described above;

   2. (b)

      the authorised fund manager gives the holder written notice before the proceeds of the redemption or cancellation would otherwise become payable in cash, that instead of such payment the depositary will transfer scheme property (or the net proceeds of the sale of the relevant scheme property) to the holder;

   3. (c)

      the scheme property to be transferred (or sold) is selected by the authorised fund manager in consultation with the depositary and the selection is made with a view to achieving no more advantage or disadvantage to the holder requesting cancellation of his units than to the continuing holders; and

   4. (d)

      the scheme property to be transferred, or the proceeds of the sale of the relevant scheme property, is subject to the retention by the depositary of scheme property (including cash) of a value or amount equivalent to any deductions permitted by CIS 4.5.3 R (4)(b) (Issues and cancellations through the authorised fund manager) and the depositary accounts for any such deduction in the manner provided by that rule.

2. (2)

   This rule (CIS 4.5.4 R) does not enable the authorised fund manager, when acting as a principal, to cancel units other than for payment in cash.

3. (3)

   This rule does not enable units in a relevant pension scheme to be redeemed other than in accordance with that scheme.

4. (4)

   Nothing in this rule requires an ICVC, a depositary or an authorised fund manager to transfer scheme property, or the proceeds of the sale of scheme property, in respect of the cancellation of units in the circumstances described in CIS 4.4.5 R (4) (Payment on redemption).

This section (CIS 4.6) applies to authorised fund managers.

1. (1)

   The authorised fund manager may, in accordance with the prospectus, have the power to require any one or more of:

   1. (a)

      the payment of a dilution levy in respect of the issue or sale of units or any class of units;

   2. (b)

      the deduction of a dilution levy in respect of the redemption or the cancellation of units or any class of units;

   3. (c)

      the payment of an SDRT provision in respect of the issue or sale of units or any class of units;

   4. (d)

      the deduction of an SDRT provision in respect of the redemption or cancellation of units or of any class of units, other than a cancellation of units under CIS 4.5.4 R (In specie redemptions) resulting in a transfer of such part of each description of asset in the scheme property as is proportionate to, or as nearly as practicable proportionate to, the holder's share in the scheme property of the AUT or (as the case may be) share in the ICVC.

2. (2)

   Any such payment or deduction becomes due at the same time as payment or transfer of property becomes due in respect of the issue, sale, redemption or cancellation.

3. (3)

   A dilution levy or SDRT provision may be imposed only in a manner that is, so far as practicable, fair to all holders and potential holders. However:

   1. (a)

      the imposition of a dilution levy (or a higher dilution levy) or SDRT provision (or a higher SDRT provision) in respect of large deals in a manner described in the prospectus current at the time of the deal; or

   2. (b)

      the exclusion from an SDRT provision of any transaction in units where the units are so held that their redemption or cancellation is specifically excluded from a charge to stamp duty reserve tax;

   is not unfair.

4. (4)

   If the authorised fund manager receives a dilution levy or SDRT provision in respect of any unit sold or to be sold by it, it must, immediately upon receipt of that dilution levy or SDRT provision, pay it to the depositary to become part of the scheme property, except to the extent that it has already been, or will be, paid by the authorised fund to the depositary on the issue of that unit.

5. (5)

   If the authorised fund manager deducts a dilution levy or SDRT provision from the proceeds of a unit it redeemed, it must immediately pay it to the depositary to become part of the scheme property, except to the extent that it has already been, or will be, deducted from the depositary's payment to the authorised fund manager on cancellation of that unit.1

1. (1)

   1The authorised fund manager may, in accordance with the prospectus, have the power to make a dilution adjustment but may only exercise this power:

   1. (a)

      for the purpose of reducing dilution in the fund; or

   2. (b)

      to recover any amount which it has already paid or reasonably expects to pay in the future in relation to the issue or cancellation of units (see CIS 4.6.2 G (7) (Purpose)).

2. (2)

   Where the authorised fund manager decides not to make an adjustment, this decision must not be made for the purpose of creating a profit or avoiding a loss for the account of the authorised fund manager.

3. (3)

   When by reference to any valuation point:

   1. (a)

      the aggregate value of the units of all classes of the authorised fund or sub-fund issued exceeds the aggregate value of units of all classes cancelled:

      1. (i)

         any adjustment must be upwards; and

      2. (ii)

         the dilution adjustment must not exceed the authorised fund manager's reasonable estimate of the difference between what the price would have been had the dilution adjustment not been taken into account and what the price would have been if the scheme property had been valued on the best available market offer basis plus dealing costs; or

   2. (b)

      the aggregate value of the units of all classes of the authorised fund or sub-fund cancelled exceeds the aggregate value of units of all classes issued:

      1. (i)

         any adjustment must be downwards; and

      2. (ii)

         the dilution adjustment must not exceed the authorised fund manager's reasonable estimate of the difference between what the price would have been had the dilution adjustment not been taken into account and what the price would have been if the scheme property had been valued on the best available market bid basis less dealing costs.

This section (CIS 4.7) applies to authorised fund managers.

1. (1)

   For the sale and redemption of units, the authorised fund manager must, subject to this rule (CIS 4.7.4 R), operate on the basis of forward or historic prices, but its power to choose, or its duty to operate on one basis only, is governed by CIS 4.7.5.

2. (2)

   If the prices for the sale and redemption of units in any sub-fund of an umbrella scheme are on a forward basis, the prices for the sale and redemption of units related to all sub-funds of that umbrella scheme must be on a forward basis; but this paragraph (2) does not apply merely because of a requirement to price on a forward basis temporarily under Part 2 or Part 3 of CIS 4.7.5.

3. (3)

   Prices are to be on a forward basis only for the issue and redemption of units in an authorised fund which is a geared futures and options scheme, a property scheme, a warrant scheme or an umbrella scheme that includes a sub-fund which, if it were the subject of a separate authorisation order, would be an authorised fund of one of those categories.

4. (4)

   CIS 4.7.5 does not apply during the period of initial offer at a fixed price. In CIS 4.7.5:

   1. (a)

      "F Only" means that any price agreed on must be a forward price;

   2. (b)

      "H" means that any price agreed on must be an historic price unless the authorised fund manager is required by the table to deal at a forward price; and

   3. (c)

      "General dealing" means in relation to all sales and redemptions agreed on during the remainder of the relevant dealing period (except those that are agreed upon individual deviations); and an "individual deviation" is a decision, in relation to a particular transaction, covered by Part 3 of CIS 4.7.5.

This section (CIS 4.8) applies to authorised fund managers.

1. (1)

   An investment included in the scheme property for which different prices are quoted according to whether it is being bought or sold must be valued at its mid-market price.

2. (2)

   Any part of the scheme property of an authorised fund that is not an investment must be valued at a fair value, but, for property schemes, this is subject to CIS 12.3.2 R (Functions of the standing independent valuer) and CIS 12.3.3 R (Special rules for pricing).

3. (3)

   For the purposes of (1) and (2), any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable, on acquiring or disposing of the investment or other part of the scheme property, must be excluded from the value of an investment or other part of the scheme property.1

4. (4)

   The value of the scheme property of an authorised fund must be determined in accordance with the relevant provisions of the instrument constituting the scheme, except to the extent that this rule (CIS 4.8.3 R) or CIS 5.2.5 R (Valuation) or CIS 5A.2.5 RCIS 12.3 (Property schemes) applies.2

5. (5)

   To determine the price at which units of any class in an authorised fund may be issued, cancelled, sold or redeemed, the authorised fund manager must carry out a valuation of the scheme property or of the scheme property attributable to a sub-fund at each valuation point for the authorised fund or the sub-fund (as the case may be).

1. (1)

   There must be at least two valuation points in each calendar month and if there are only two valuation points in any calendar month they must be two weeks or more apart.

2. (2)

   Paragraph (1) does not apply to geared futures and options schemes or to warrant schemes or to a sub-fund which is permitted to invest entirely in warrants and there must be at least one valuation point for them on each business day.

3. (3)

   The frequency of regular valuation points must be specified in the prospectus.

4. (4)

   Despite (1) and (2), no valuation points are required during the period of any initial offer.

The authorised fund manager must inform the depositary if the authorised fund manager determines to have an additional valuation point for the authorised fund or any sub-fund, but this does not prevent the authorised fund manager carrying out a valuation at a time that is not a valuation point.

1. (1)

   This rule (CIS 4.8.7 R) applies when an authorised fund manager is operating on the basis of historic prices and decides to carry out an additional valuation for the purpose of paragraph (9) (Market movement) of CIS 4.7.5 (Forward or historic pricing).

2. (2)

   When the rule applies:

   1. (a)

      the valuation must be at an additional valuation point and the authorised fund manager must inform the depositary of that valuation point;

   2. (b)

      the valuation may be made by reference to fluctuations in an index of property whose composition is reflected by the scheme property, if the authorised fund manager having taken reasonable care determines, and the depositary agrees, that an adequate valuation may be obtained in that way.