1This chapter applies to:

1. (1)

   an authorised fund manager of an AUT, ACS2 or an ICVC;

2. (2)

   any other director of an ICVC;

3. (3)

   an ICVC; and

4. (4)

   a depositary2 of an AUT, ACS or2ICVC;

   2

where such AUT, ACS2 or ICVC is a UCITS scheme that is a feeder UCITS or a master UCITS in accordance with COLL 11.1.2 R (Table of application).

1. (1)

   An application for approval of an investment in a master UCITS under section 283A of the Act must be accompanied by the following documents:

   1. (a)

      the instrument constituting the fund1 of the feeder UCITS and of the master UCITS;

      1
   2. (b)

      the prospectus and the key investor information referred to in COLL 4.7.2 R (Key investor information) of the feeder UCITS and of the master UCITS;

   3. (c)

      the master-feeder agreement or the internal conduct of business rules in accordance with COLL 11.3.2R (2) (Master-feeder agreement and internal conduct of business rules);

   4. (d)

      where applicable, the information to be provided to unitholders in accordance with COLL 4.8.3 R (Information to be provided to Unitholders);

   5. (e)

      if the master UCITS and the feeder UCITS have different depositaries, the information-sharing agreement in accordance with COLL 11.4.1R (2) (Information-sharing agreement between depositaries); and

   6. (f)

      if the master UCITS and the feeder UCITS have different auditors, the information-sharing agreement in accordance with COLL 11.5.1 R (Information-sharing agreement between auditors).

2. (2)

   Where the master UCITS is an EEA UCITS scheme, the application for approval must also be accompanied by an attestation from a person acceptable to the FCA2 that the master UCITS:

   1. (a)

      is an EEA UCITS scheme or a sub-fund of it; and

   2. (b)

      fulfils the conditions set out in article 58(3)(b) and (c) of the UCITS Directive.

3. (3)

   The documents referred to in (1) and (2) must be provided in English.

The authorised fund manager of a UCITS scheme that is a master UCITS must provide the management company of its feeder UCITS with all documents and information necessary for the latter to meet its regulatory obligations under the provisions of COLL applicable in respect of a UCITS scheme under this chapter4.

4The authorised fund manager of a UCITS scheme that is a feeder UCITS of a master UCITS which is an EEA UCITS scheme must make a binding arrangement with the management company of the master UCITS to obtain all documents and information necessary to meet its regulatory obligations under the Act.

[Note: article 60(1) first paragraph first sentence of the UCITS Directive]

1. (1)

   The authorised fund manager of a UCITS scheme that is a feeder UCITS must enter into a master-feeder agreement which, at a minimum, complies with COLL 11 Annex 1 R.

2. (2)

   Where a master UCITS and a feeder UCITS are managed by the same management company, the master-feeder agreement may be replaced by internal conduct of business rules which, at a minimum, comply with COLL 11 Annex 2 R.

3. (3)

   The authorised fund manager of a feeder UCITS must not invest in units of the master UCITS in excess of the limit applicable under COLL 5.2.11 R (9) (Spread: general) (20%) until the period of 30 calendar days referred to in COLL 4.8.3 R (1) (Information to be provided to Unitholders) has elapsed and the following have become effective:

   1. (a)

      the master-feeder agreement, or, if applicable under (2), the internal conduct of business rules;

   2. (b)

      the information-sharing agreement of the depositaries in accordance with COLL 11.4.1R (2) (Information-sharing agreement between depositaries); and

   3. (c)

      the information-sharing agreement of the auditors in accordance with COLL 11.5.1 R (Information-sharing agreement between auditors).

4. (4)

   An authorised fund manager of a feeder UCITS must make a copy of the master-feeder agreement or, where applicable, the internal conduct of business rules, available to unitholders free of charge on their request.

1. (1)

   Where the feeder UCITS and the master UCITS are UCITS schemes, the master-feeder agreement must provide that the law of a specified part of the United Kingdom applies to the agreement and that both parties agree to the exclusive jurisdiction of the courts of that part of the United Kingdom.

2. (2)

   Where the master UCITS is established in an EEA State, the master-feeder agreement must provide that the applicable law shall be UK law,4

   and that both parties agree to the exclusive jurisdiction of the courts of the UK4.

1. (1)

   4Where paragraph (2) applies a master-feeder agreement that is effective prior to IP completion day5 need not comply with COLL 11.3.5R(2).

2. (2)

   This paragraph applies where the applicable law of the master-feeder agreement was:

   1. (a)

      UK law before IP completion day5, and remains so; or

   2. (b)

      the law of the EEA State in which the master UCITS was established before IP completion day5, and remains so.

1. (1)

   The authorised fund managers of a master UCITS and its feeder UCITS must take appropriate measures to co-ordinate the timing of their net asset value calculation and publication, including the publication of dealingprices, in order to avoid market timing in their units, preventing arbitrage opportunities.

2. (2)

   Where 4the master UCITS4is an EEA UCITS scheme managed by an EEA UCITS management company, the authorised fund manager must co-ordinate with that management company.

1. (1)

   An authorised fund manager of a feeder UCITS must monitor effectively the activity of the master UCITS.

2. (2)

   In performing this obligation, the authorised fund manager of the feeder UCITS may rely on information and documents received from the master UCITS, or where applicable, the master UCITS'management company, depositary or auditor, unless there is a reason for doubting their accuracy.

Where, in connection with an investment in the units of the master UCITS, a distribution fee, commission or other monetary benefit is received by:

1. (1)

   a feeder UCITS; or

2. (2)

   an authorised fund manager of a feeder UCITS; or

3. (3)

   any person acting on behalf of (1) or (2);

   that fee, commission or other monetary benefit must be paid into the scheme property of the feeder UCITS.

The authorised fund manager of a master UCITS must immediately inform the FCA of the identity of each feeder UCITS which invests in its units.

1. (1)

   An authorised fund manager of a master UCITS must not impose any preliminary charge or redemption charge on the feeder UCITS for the issue, sale, redemption or cancellation of units in the master UCITS.

2. (2)

   Where the authorised fund manager of a master UCITS requires any addition to or deduction from the consideration paid on the acquisition or disposal of units by a feeder UCITS which is, or is like, a dilution levy made in accordance with COLL 6.3.8 R (Dilution)3, it is to be treated as part of the price of the units and not as part of any charge.

An authorised fund manager of a master UCITS must ensure the timely availability of all information that is required in accordance with its obligations under the regulatory system, the general law and the instrument constituting the fund,2 to:

1. (1)

   the feeder UCITS (or where applicable its management company);

2. (2)

   the FCA4;

3. (3)

   the depositary of the feeder UCITS; and

4. (4)

   the auditor of the feeder UCITS.

The authorised fund manager of a UCITS scheme that operates, or intends to operate, as a master UCITS must:

1. (1)

   not enter into a master-feeder agreement or, where applicable, internal conduct of business rules in accordance with COLL 11.3.2R (2) unless it is satisfied on reasonable grounds that the arrangements with the feeder UCITS will not unfairly prejudice the interests of any other unitholder or class of unitholders in the master UCITS;

2. (2)

   consider, in relation to:

   1. (a)

      each item of information it makes available to the feeder UCITS or its management company; and

   2. (b)

      each matter notified by the depositary of the master UCITS in accordance with COLL 11.4.3 R (Notification of irregularities);

      whether it would unfairly prejudice the interests of those unitholders in the master UCITS other than the feeder UCITS by not making that information available to them, or by not informing them of that matter at the same time in an appropriate manner; and

3. (3)

   in relation to any matter within (2)(b) where it does not notify other unitholders at the same time:

   1. (a)

      record the grounds for determining that the interests of those unitholders are not unfairly prejudiced by its decision; and

   2. (b)

      inform all unitholders of that matter in an appropriate manner and timescale.

1. (1)

   An authorised fund manager of a feeder UCITS is responsible for communicating to the depositary of the scheme any information about the master UCITS which is required for the completion of the depositary's regulatory obligations.

2. (2)

   Where a master UCITS and its feeder UCITS have different depositaries, the depositaries must enter into an information-sharing agreement in order to ensure fulfilment of their respective duties.

1. (1)

   The information-sharing agreement referred to in COLL 11.4.1R (2) must include:

   1. (a)

      identification of the documents and categories of information which are to be routinely shared between both depositaries, and whether that information or those documents are provided by one depositary to the other or made available on request;

   2. (b)

      the manner and timing, including any applicable deadlines, of the transmission of information by the depositary of the master UCITS to the depositary of the feeder UCITS;

   3. (c)

      the co-ordination of the involvement of both depositaries, to the extent appropriate in view of their respective duties under national law, in relation to operational matters, including:

      1. (i)

         the procedure for calculating the net asset value of each scheme, including any measures appropriate to protect against the activities of market timing in accordance with COLL 11.3.6 R (Avoidance of opportunities for market timing);

      2. (ii)

         the processing of instructions by the feeder UCITS to purchase, subscribe or request the repurchase or redemption of units in the master UCITS, and the settlement of those transactions, including any arrangement to transfer assets in kind;

   4. (d)

      the co-ordination of accounting year-end procedures;

   5. (e)

      what details the depositary of the master UCITS must provide to the depositary of the feeder UCITS of breaches by the master UCITS of the law and the instrument constituting the fund2 and how and when those details will be provided;

      2
   6. (f)

      the procedure for handling ad hoc requests for assistance from one depositary to the other; and

   7. (g)

      identification of particular contingent events which ought to be notified by one depositary to the other on an ad hoc basis, and how and when this will be done.

2. (2)

   Where a master-feeder agreement exists in accordance with COLL 11.3.2R (1) (Master-feeder agreement and internal conduct of business rules), the information-sharing agreement between the depositaries must provide that UK law applies to that agreement, and both depositaries agree to the exclusive jurisdiction of the UK courts in relation to that agreement.3

3. (3)

   Where the master-feeder agreement has been replaced by internal conduct of business rules in accordance with COLL 11.3.2R (2) (Master-feeder agreement and internal conduct of business rules), the information-sharing agreement between the depositaries must provide that UK law applies to that agreement, and both depositaries agree to the exclusive jurisdiction of the UK courts in relation to that agreement.3

1. (1)

   3Where paragraph (2) applies, an information-sharing agreement between the depositaries that is effective prior to IP completion day4 need not comply with COLL 11.4.2R.

2. (2)

   This paragraph applies where the applicable law of the information sharing agreement between the depositaries was:

   1. (a)

      UK law before IP completion day4, and remains so; or

   2. (b)

      the law of a given EEA State before IP completion day4, and remains so.

1. (1)

   Where a depositary of a master UCITS detects any irregularities with regards to the scheme which may have a negative impact on the relevant feeder UCITS, the depositary must immediately inform:

   1. (a)

      the FCA;

   2. (b)

      the feeder UCITS or, where applicable, its management company; and

   3. (c)

      the depositary of the feeder UCITS.

2. (2)

   The irregularities referred to in (1) include, but are not limited to:

   1. (a)

      errors in the valuation of the scheme property performed in accordance with COLL 6.3.3 R (Valuation);

   2. (b)

      errors in transactions for or settlement of the sale, issue, repurchase or redemption of units in the scheme undertaken by the feeder UCITS;

   3. (c)

      errors in the payment or capitalisation of income arising from the scheme property, or in the calculation of any related withholding tax;

   4. (d)

      breaches of the investment objectives, policy or strategy of the scheme as described in the instrument constituting the fund,2 the prospectus or the key investor information; and

      2
   5. (e)

      breaches of investment and borrowing limits set out in COLL, the instrument constituting the fund,2 the prospectus or the key investor information.

      2

Where a master UCITS and a feeder UCITS have different auditors, those auditors must enter into an information-sharing agreement in order to ensure the fulfilment of their respective duties, including the arrangements taken to comply with COLL 11.5.3 R and COLL 11.5.4 R (Preparation of the audit report).

1. (1)

   The information-sharing agreement referred to in COLL 11.5.1 R must include:

   1. (a)

      identification of the documents and categories of information which are to be routinely shared between both auditors;

   2. (b)

      whether the information or documents referred to in (a) are to be provided by one auditor to the other or made available on request;

   3. (c)

      the manner and timing, including any applicable deadlines, of the transmission of information by the auditor of the master UCITS to the auditor of the feeder UCITS;

   4. (d)

      the co-ordination of the involvement of each auditor in the accounting year-end procedures for their respective scheme;

   5. (e)

      identification of matters that must be treated as irregularities and disclosed in the audit report for the master UCITS for the purposes of COLL 11.5.3R (2);

   6. (f)

      the manner and timing for handling ad hoc requests for assistance from one auditor to the other, including a request for further information on irregularities disclosed in the audit report for the master UCITS; and

   7. (g)

      provisions regarding the preparation of the audit reports referred to in COLL 11.5.3 R and COLL 4.5.12 R (Report of the auditor) and the manner and timing for the provision of the audit report for the master UCITS (and drafts of it) to the auditor of the feeder UCITS.

2. (2)

   Where the feeder UCITS and the master UCITS have different accounting year-end dates, the information-sharing agreement must include the manner and timing by which the auditor of the master UCITS is to make the ad hoc report as required by COLL 11.5.4 R and to provide it (and drafts of it) to the auditor of the feeder UCITS.

3. (3)

   Where a master-feeder agreement exists in accordance with COLL 11.3.2R (1) (Master-feeder agreement and internal conduct of business rules), the information-sharing agreement between the auditors must provide that UK law applies to that agreement, and both auditors agree to the exclusive jurisdiction of the UK courts in relation to that agreement.2

4. (4)

   Where the master-feeder agreement has been replaced by internal conduct of business rules in accordance with COLL 11.3.2R (2) (Master-feeder agreement and internal conduct of business rules), the information-sharing agreement between the auditors must provide that UK law applies to that agreement, and both auditors agree to the exclusive jurisdiction of the UK courts in relation to that agreement.2

1. (1)

   2An information-sharing agreement between the auditors that is effective prior to IP completion day3 need not comply with COLL 11.5.2R.

2. (2)

   This paragraph applies where the applicable law of the information-sharing agreement between the auditors was:

   1. (a)

      United Kingdom law before IP completion day3, and remains so; or

   2. (b)

      the law of a given EEA State before IP completion day3, and remains so.

When preparing its audit report, the auditor of a feeder UCITS must:

1. (1)

   take into account the audit report of the master UCITS; and

2. (2)

   report on any irregularities revealed in the audit report of the master UCITS and their impact on the feeder UCITS.

Where a master UCITS and one or more of its feeder UCITS have different accounting years, the auditor of the master UCITS must make an ad hoc report on the closing date of the accounting year of each feeder UCITS.

The authorised fund managers of a master UCITS and a feeder UCITS must ensure that the terms on which auditors of their respective schemes are appointed require each auditor to comply with the rules in this section.

1. (1)

   The commencement of winding up of a UCITS scheme that is a master UCITS must take place no sooner than 3 months after a notification is made to its unitholders and the FCA3 informing it3 of the binding decision to wind up the master UCITS.

2. (2)

   Paragraph (1) is without prejudice to any provision of the insolvency legislation in force in the United Kingdom regarding the compulsory liquidation of AUTs, ACSs1 or ICVCs.

Where the authorised fund manager of a UCITS scheme that is a feeder UCITS is notified that its master UCITS is to be wound up, it must submit to the FCA the following:

1. (1)

   where the authorised fund manager of the feeder UCITS intends to invest at least 85% in value of the scheme property in units of another master UCITS:

   1. (a)

      its application for approval under section 283A of the Act for that investment;

   2. (b)

      where applicable, its notice under section 251 (Alteration of schemes and changes of manager or trustee) of the Act, section 261Q of the Act (Alteration of contractual schemes and changes of operator or depositary)1 or regulation 21 (The Authority's approval for certain changes in respect of a company) of the OEIC Regulations of any proposed amendments to its instrument constituting the fund;2

      2
   3. (c)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) (Provision and filing of the prospectus) and COLL 4.7.7 R (1) (Revision and filing of key investor information); and

   4. (d)

      the other documents required in accordance with COLL 11.2.2 R (Application for approval of an investment in a master UCITS);

2. (2)

   where the authorised fund manager of the feeder UCITS intends to convert it into a UCITS scheme that is not a feeder UCITS:

   1. (a)

      its application for approval under section 252A or section 261S1 of the Act or regulation 22A of the OEIC Regulations of the proposed amendments to its instrument constituting the fund;2 and

      2
   2. (b)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1); and

3. (3)

   where the authorised fund manager of the feeder UCITS intends to wind up the scheme, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of a proposal to that effect.

1. (1)

   The information in COLL 11.6.3 R must be submitted no later than two months after the date on which the master UCITS has informed the authorised fund manager of the feeder UCITS of the binding decision to be wound up.

2. (2)

   By way of derogation from (1), where the master UCITS has informed the authorised fund manager of the feeder UCITS of the binding decision to be wound up more than five months before the date at which the winding up will start, the authorised fund manager must submit the information to the FCA at the latest three months before the day the winding up will start.

Where the authorised fund manager of a UCITS scheme that is a feeder UCITS is notified that the master UCITS is to merge with another UCITS scheme or EEA UCITS scheme or divide into two or more such schemes, it must submit to the FCA the following:

1. (1)

   where the authorised fund manager of the feeder UCITS intends it to continue to be a feeder UCITS of the same master UCITS:

   1. (a)

      its application under section 283A of the Act, for approval;

   2. (b)

      where applicable, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of any proposed amendments to the instrument constituting the fund;2 and

      2
   3. (c)

      where applicable, the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1);

2. (2)

   where the authorised fund manager of the feeder UCITS intends it to become a feeder UCITS of another master UCITS resulting from the proposed merger or division of the master UCITS, or intends the feeder UCITS to invest at least 85% in value of the scheme property in units of another master UCITS not resulting from the merger or division:

   1. (a)

      its application under section 283A of the Act for approval of that investment;

   2. (b)

      where applicable, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of any proposed amendments to the instrument constituting the fund;2

      2
   3. (c)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1);

   4. (d)

      the other documents required in accordance with COLL 11.2.2 R;

3. (3)

   where the authorised fund manager of the feeder UCITS intends it to convert into a UCITS scheme that is not a feeder UCITS:

   1. (a)

      its application for approval under section 252A or section 261S1 of the Act or regulation 22A of the OEIC Regulations of the proposed amendments to the instrument constituting the fund;2 and

      2
   2. (b)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1); and

4. (4)

   where the authorised fund manager of the feeder UCITS intends to wind up the scheme, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of a proposal to that effect.

1. (1)

   For the purposes of COLL 11.6.5R (1), a feeder UCITS will be considered as continuing to be a feeder UCITS of the same master UCITS where:

   1. (a)

      the master UCITS is the receiving UCITS in a proposed UCITS merger; or

   2. (b)

      the master UCITS is to continue materially unchanged as one of the resulting UCITS schemes or EEA UCITS schemes in a proposed division.

2. (2)

   For the purposes of COLL 11.6.5R (2), a feeder UCITS will be considered as becoming a feeder UCITS of another master UCITS resulting from the merger or division of the master UCITS where:

   1. (a)

      the master UCITS is the merging UCITS and, as a result of the UCITS merger, the feeder UCITS becomes a unitholder of the receiving UCITS; or

   2. (b)

      the feeder UCITS as a result of the division becomes a unitholder of a UCITS scheme or EEA UCITS scheme that is materially different to the master UCITS.

1. (1)

   The information in COLL 11.6.5 R must be submitted to the FCA no later than one month after the date on which the authorised fund manager of the feeder UCITS has received the information of the planned merger or division in accordance with regulation 13(6) of the UCITS Regulations 2011.

2. (2)

   By way of derogation from (1), where the master UCITS provides the information referred to in, or comparable with, COLL 7.7.10 R (Information to be given to Unitholders) to the authorised fund manager of the feeder UCITS more than four months before the proposed effective date of the merger or division of the master UCITS, the authorised fund manager must submit the information to the FCA at least three months before the proposed effective date.

1. (1)

   Where:

   1. (a)

      the authorised fund manager of a feeder UCITS has submitted the documents required under COLL 11.6.5R (2) and (3); and

   2. (b)

      does not receive the necessary approvals from the FCA by the business day preceding the last day on which the authorised fund manager of the feeder UCITS can request repurchase or redemption of its units in the master UCITS;

      the authorised fund manager of the feeder UCITS must exercise the right to repurchase or redeem its units in the master UCITS under regulation 12(4) of the UCITS Regulations 2011.

2. (2)

   The authorised fund manager of the feeder UCITS must also exercise the right in (1) to ensure that the right of its own unitholders to request repurchase or redemption in the feeder UCITS in accordance with COLL 4.8.3 R (1)(d) (Information to be provided to Unitholders) is not affected.

3. (3)

   Before exercising the right in (1), the authorised fund manager of the feeder UCITS must consider any available alternative solutions which may help to avoid or reduce transaction costs or other negative impacts for its own unitholders.

4. (4)

   Where the authorised fund manager of the feeder UCITS requests repurchase or redemption in accordance with (1), it must receive one of the following:

   1. (a)

      the repurchase or redemption proceeds in cash; or

   2. (b)

      some or all of the repurchase or redemption proceeds as a transfer in kind, where the authorised fund manager of the feeder UCITS so wishes and where its instrument constituting the fund2 and the master-feeder agreement provide for it.

      2
5. (5)

   Where (4)(b) applies, the authorised fund manager of the feeder UCITS may realise any part of the transferred assets for cash at any time.

Where:

1. (1)

   the FCA approves an application under sections 283A (Master-feeder structures), 252A or 261S1 (Proposal to convert to a non-feeder UCITS) of the Act or regulation 22A of the OEIC Regulations that arises as a result of the winding-up, merger or division of the master UCITS (other than an application pursuant to COLL 11.6.5R (1)); and

   1
2. (2)

   the authorised fund manager of the feeder UCITS holds or receives cash in accordance with COLL 11.6.9R (4) or as a result of a winding-up;

the authorised fund manager may not re-invest that cash, except for the purpose of efficient cash management, before the date on which the feeder UCITS invests in units of the master UCITS in accordance with COLL 11.3.2R (3) (Master-feeder agreement and internal conduct of business rules) or in accordance with its new investment objectives and policy.

Where the authorised fund manager of a feeder UCITS has submitted the documents required under COLL 11.6.3R (1), COLL 11.6.3R (2), COLL 11.6.5R (1), COLL 11.6.5R (2) or COLL 11.6.5R (3) and has received written notice of any required approvals from the FCA, it must:

1. (1)

   inform the master UCITS of those approvals; and

2. (2)

   in the case of the required approvals received in respect of documents submitted under COLL 11.6.3 R (1) and COLL 11.6.5 R (2), take the necessary measures to comply with the requirements of COLL 4.8.3 R as soon as possible.

Where the authorised fund manager of a feeder UCITS gives notice to the FCA under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations that it intends to wind up the scheme, it must inform:

1. (1)

   the unitholders of the feeder UCITS; and

2. (2)

   where notice is given under COLL 11.6.5R (4) (Application for approval by a feeder UCITS where a master UCITS merges or divides), the authorised fund manager of the master UCITS;

of its intention without undue delay.