1. (1)

   1This chapter applies to:

   1. (a)

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

   2. (b)

      any other director of an ICVC;

   3. (c)

      the depositary of an AUT, ACS or an ICVC; and

   4. (d)

      an ICVC,

      which is a long-term asset fund.

2. (2)

   Where this chapter refers to rules in any other chapter of this sourcebook, those rules and any relevant guidance should be applied as if they referred to long-term asset funds.

1. (1)

   1Subject to (3), the authorised fund manager of a long-term asset fund must take reasonable care to ensure that ownership of units in that scheme is recorded in the register only for a person to whom such units may be promoted without contravening the rules in COBS 4.12A (Promotion of restricted mass market investments)3.

   2
2. (2)

   In addition to (1), the authorised contractual scheme manager of a long-term asset fund which is an ACS must take reasonable care to ensure that ownership of units in that scheme is only recorded in the register for a person that meets the criteria set out in COLL 15 Annex 1R (ACS Long-term asset funds: eligible investors).

3. (3)

   The authorised fund manager will be regarded as complying with (1) and (2) to the extent that it can show that it was reasonable for it to rely on relevant information provided by another person.

4. (4)

   3Where:

   1. (a)

      the scheme is intended only for limited protection LTAF investors or the scheme has a limited protection LTAF class; and

   2. (b)

      COLL 15.5.-10BR to COLL 15.5.-10EG, COLL 15.5.-12BR, COLL 15.7.-12BR, and COLL 15.8.15EG to COLL 15.8.15PR have not been applied in relation to the scheme or the limited protection LTAF class,

   the authorised fund manager must also take reasonable care to ensure that ownership of units in the scheme or class is recorded in the register only for a person who is a limited protection LTAF investor.

1This section applies to:

1. (1)

   the authorised fund manager of an AUT, ACS or an ICVC;

2. (2)

   any other director of an ICVC;

3. (3)

   the depositary of an AUT, ACS or an ICVC; and

4. (4)

   an ICVC,

   which is a long-term asset fund.

1The authorised fund manager of a long-term asset fund must be a full-scope UK AIFM.

1. (1)

   1The authorised fund manager of a long-term asset fund must, having regard to the investment objectives, policy and strategy of the LTAF:

   1. (a)

      possess the knowledge, skills and experience necessary to understand the activities of the LTAF and, in particular, the risks involved in those activities and the assets which the LTAF holds (or is to hold) in the scheme property; and

   2. (b)

      employ sufficient personnel with the skills, knowledge and expertise necessary for discharging the responsibilities allocated to them.

2. (2)

   The authorised fund manager may not rely on a delegation or outsourcing arrangement to satisfy (1).

1The authorised fund manager of a long-term asset fund must at all times be able to demonstrate to the FCA that it complies with COLL 15.2.4R.

[Note: Article 22 of the AIFMD level 2 regulation.]

1. (1)

   1The authorised fund manager of a long-term asset fund must appoint an external valuer to perform the valuation function for the LTAF, but this is subject to (2) and (5).

2. (2)

   The authorised fund manager need not appoint an external valuer under (1) if:

   1. (a)

      the authorised fund manager possesses the knowledge, skills and experience necessary to be able to carry out a proper and independent valuation of the assets and types of assets which the long-term asset fund holds or is to hold (see FUND 3.9.4R); and

   2. (b)

      the depositary of the long-term asset fund, having made an assessment of the matters in (a), has determined that the authorised fund manager has the resources and procedures for carrying out a valuation of those assets in accordance with the applicable law, the instrument constituting the fund and FUND 3.9 (Valuation).

3. (3)

   1The depositary must:

   1. (a)

      review its determination under (2)(b):

      1. (i)

         regularly, and in any event at least annually; and

      2. (ii)

         whenever the depositary becomes aware of any circumstances which could affect the determination;

   2. (b)

      for a period of six years, keep a written record of its determination under (2)(b) and any review under (3)(a), and the reasons for the assessment; and

   3. (c)

      provide the FCA with a copy of the written record on request.

4. (4)

   Where the authorised fund manager performs the valuation function itself in accordance with (2), the authorised fund manager may appoint, as applicable:

   1. (a)

      for the purpose of valuing immovables in accordance with COLL 15.6.18R (Investment in property), an appropriate valuer;

   2. (b)

      for the purpose of valuing immovables in accordance with COLL 15.6.22R (Standing independent valuer and valuation), a standing independent valuer;

   3. (c)

      for the purpose of valuing an asset other than an immovable or property, a delegate appointed in accordance with FUND 3.10 (Delegation) and the relevant provisions of section 8 (Delegation of AIFM functions) of Chapter III of the AIFMD level 2 regulation.

5. (5)

   The authorised fund manager need not appoint an external valuer under (1) if:

   1. (a)

      the scheme property of the long-term asset fund is constituted solely of units or shares in other collective investment schemes or AIFs; and

   2. (b)

      an external valuer performs the valuation function of each such collective investment scheme or AIF.

[Note: FUND 3.9 (Valuation), FUND 3.10 (Delegation), FUND 3.11.25R (Depositary functions: oversight), article 19(5) of AIFMD, and articles 67 to 74 (Valuation) and article 94(4) (Duties regarding the valuation of shares/units) of the AIFMD level 2 regulation.]

1The governing body of the authorised fund manager of a long-term asset fund must:

1. (1)

   possess the collective knowledge, skills and experience to be able to understand the authorised fund manager’s activities, in particular, the main risks involved in those activities and the assets in which the long-term asset fund is invested;

2. (2)

   have members that commit sufficient time to properly perform their functions in the authorised fund manager; and

3. (3)

   have members that act with honesty, integrity and independence of mind.

[Note: Article 21 of the AIFMD level 2 regulation.]

1This section applies to an authorised fund manager of a long-term asset fund.

1A long-term asset fund may issue such classes of unit as are set out in the instrument constituting the fund, provided the rights of any class are not unfairly prejudicial as against the interests of the unitholders of any other class of units in that scheme.

1. (1)

   1The authorised fund manager must ensure that the name of the scheme, a sub-fund or a class of unit is not undesirable or misleading.

2. (2)

   The authorised fund manager of a long-term asset fund must include the term ‘long-term asset fund’ or ‘LTAF’ in the name of the scheme and in relation to any sub-fund which is also a long-term asset fund.

1. (1)

   The statements and provisions required by COLL 15.3.6R must be included in the instrument constituting the fund of a long-term asset fund.

2. (2)

   The instrument constituting the fund must not contain any provision that conflicts with any applicable rule.

1 Units whose issue may be limited can only be issued if permitted by the instrument constituting the fund, under the conditions set out in the prospectus and provided that this will not materially prejudice any existing unitholders in the scheme.

1This section applies to:

1. (1)

   the authorised fund manager of an AUT, ACS or an ICVC; and

2. (2)

   an ICVC,

   which is a long-term asset fund.

1. (1)

   1An authorised fund manager must ensure that a prospectus of a long-term asset fund is drawn up which contains:

   1. (a)

      the information specified in COLL 15.4.5R (Table: contents of long-term asset fund prospectus);

   2. (b)

      the information for investors required by FUND 3.2.2R and FUND 3.2.3R (Prior disclosure of information to investors); and

   3. (c)

      the information for investors required by FUND 3.2.5R and FUND 3.2.6R (Periodic disclosure), unless the up-to-date information has been published in the scheme’s most recent annual report or half-yearly report.

2. (2)

   An authorised fund manager must:

   1. (a)

      revise the prospectus immediately upon the occurrence of any materially significant change in the information required to be stated within it;

   2. (b)

      include the date of any revision in a prominent manner in the revised prospectus;

   3. (c)

      send a copy of the original and any revised prospectus to the FCA; and

   4. (d)

      review the prospectus periodically and revise it to take account of any significant change or new matter.

3. (3)

   The prospectus must not contain any provision which is unfairly prejudicial to the interests of unitholders generally or to the unitholders of any class of units.

4. (4)

   The authorised fund manager must ensure that the prospectus does not contain any provision that conflicts with any applicable rule.

5. (5)

   An ICVC or the authorised fund manager of an AUT or ACS must offer a copy of the scheme’s most recent prospectus free of charge to any person eligible to invest in a long-term asset fund, prior to the purchase of any units.

1The authorised fund manager must ensure that the prospectus does not contain any untrue or misleading statement or omit any matter required by the rules in this sourcebook to be included in it.

1This section applies to:

1. (1)

   the authorised fund manager of an AUT, ACS or an ICVC; and

2. (2)

   an ICVC,

   which is a long-term asset fund.

1. (1)

   1The authorised fund manager must prepare a report in respect of each annual accounting period, half-yearly accounting period and quarterly reporting period.

2. (2)

   Where the first annual accounting period of a scheme is less than 12 months, a half-yearly report need not be prepared.

3. (3)

   The authorised fund manager must:

   1. (a)

      publish the annual report not more than four months after the end of each relevant annual accounting period;

   2. (b)

      publish the half-yearly report not more than two months after the end of each relevant half-yearly accounting period; and

   3. (c)

      publish the quarterly report not more than 20 business days after the end of each relevant quarterly reporting period,

      and in each case provide a copy free of charge on request to any unitholder.

4. (4)

   The authorised fund manager must provide free of charge, on the request of any person eligible to invest in the scheme, a copy of the latest:

   1. (a)

      annual report and (if more recent) half-yearly report; and

   2. (b)

      quarterly report,

      before the conclusion of any sale to such a person.

5. (5)

   The authorised fund manager must provide a copy of each annual, half-yearly and quarterly report to the FCA.

6. (6)

   For a scheme which is an umbrella, any annual report provided under (3) or (4) may be a report prepared under COLL 15.5.3R(3), but the authorised fund manager must nevertheless provide free of charge the report prepared under COLL 15.5.3R(2) if a unitholder or any other person eligible to invest in the scheme requests it.

1. (1)

   1An annual report, other than for a scheme which is an umbrella, must contain:

   1. (a)

      the accounts for the annual accounting period prepared in accordance with the requirements of the SORP6;

   2. (b)

      the report of the authorised fund manager in accordance with COLL 15.5.6R (Authorised fund manager’s report);

   3. (c)

      comparative information in accordance with COLL 4.5.10R (1A) and (2A) (Comparative information);

   4. (d)

      the report of the depositary in accordance with COLL 15.5.7R (Report of the depositary); 2

   5. (e)

      the report of the auditor in accordance with COLL 4.5.12R (Report of the auditor);5

      2
   6. (f)

      subject to COLL 15.5.3R(1)(g),5 its public TCFD product report or an adequately contextualised and prominent cross-reference and hyperlink to5 the report’s location on the firm’s website, in accordance with ESG 2.3.1R;

      52
   7. (g)

      where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and to the report’s location on the firm’s website, in accordance with ESG 5.5.5R; and6

      5
   8. (h)

      6where applicable, the amounts paid as donations for Sharia compliance purposes and the registered charities which received these payments.

2. (2)

   An annual report on a scheme which is an umbrella must be prepared for the umbrella as a whole and must contain:

   1. (a)

      for each sub-fund:

      1. (i)

         the accounts required by (1)(a);

      2. (ii)

         the report of the authorised fund manager in accordance with COLL 15.5.6R; 2

      3. (iii)

         comparative information in accordance with COLL 4.5.10R(1A) and (2A);5

         2
      4. (iv)

         subject to COLL 15.5.3R(2)(v), 5its public TCFD product report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on firm’s website, in accordance with ESG 2.3.1R;2

         5
      5. (v)

         where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 5.5.5R; and6

         5
      6. (vi)

         6where applicable, the amounts paid as donations for Sharia compliance purposes and the registered charities which received these payments;

   2. (b)

      the report of the depositary in accordance with COLL 15.5.7R; and

   3. (c)

      the report of the auditor in accordance with COLL 4.5.12R.

3. (3)

   The authorised fund manager of a scheme which is an umbrella may, in addition to complying with (2), prepare a further annual report for any one or more individual sub-funds of the umbrella, in which case it must contain:

   1. (a)

      for the sub-fund:

      1. (i)

         the accounts required by (1)(a);

      2. (ii)

         the report of the authorised fund manager in accordance with COLL 15.5.6R; and

      3. (iii)

         comparative information in accordance with COLL 4.5.10R(1A) and (2A);

   2. (b)

      the report of the depositary in accordance with COLL 15.5.7R; and

   3. (c)

      the report of the auditor in accordance with COLL 4.5.12R.

4. (4)

   The directors of an ICVC or the authorised fund manager of an AUT or ACS must ensure that the accounts referred to in (1)(a), (2)(a) and (3)(a) give a true and fair view of the net revenue and the net capital gains or losses on the scheme property of the authorised fund or sub-fund for the relevant annual accounting period, and of the financial position of the authorised fund or sub-fund as at the end of that period.

5. (5)

   An annual report of a long-term asset fund must also contain a statement setting out a description of the assessment of value required by COLL 15.7.17R including:

   1. (a)

      a separate discussion and conclusion for the matters covered in each paragraph of COLL 6.6.21R, and for each other matter that formed part of the assessment, covering the considerations taken into account in the assessment, a summary of its findings and the steps undertaken as part of or as a consequence of the assessment;

   2. (b)

      an explanation for any case in which benefits from economies of scale that were identified in the assessment have not been passed on to unitholders;

   3. (c)

      an explanation for any case in which unitholders hold units in a class for which the payments out of scheme property in relation to that class as set out in the prospectus (in this rule, “charges”) are higher than those applying to other classes of the same scheme with substantially similar rights;

   4. (d)

      the conclusion of the authorised fund manager’s assessment of whether the charges are justified in the context of the overall value delivered to the unitholders in the scheme; and

   5. (e)

      if the assessment has identified that the charges are not justified in the context of the overall value delivered to the unitholders, a clear explanation of what action has been or will be taken to address the situation.

6. (6)

   An annual report of a long-term asset fund must also contain a statement setting out a description of the assessment required by COLL 15.7.20R (Assessment of investment valuations, due diligence, conflicts of interest and liquidity management), including:

   1. (a)

      a separate discussion and conclusion for each of the matters specified in COLL 15.7.21R (Table: minimum considerations – assessment of investment valuations, due diligence, conflicts of interest and liquidity management) and for each other matter that formed part of the assessment;

   2. (b)

      a summary of the assessment’s findings and the steps undertaken as part of or as a consequence of the assessment; and

   3. (c)

      the conclusion of the authorised fund manager’s assessment of how it managed the LTAF in the best interests of the scheme, its investors and the integrity of the market.

1. (1)

   1A half-yearly report on an authorised fund or sub-fund must contain:

   1. (a)

      the accounts for the half-yearly accounting period which must be prepared in accordance with the requirements of the SORP6;2

   2. (b)

      the report of the authorised fund manager in accordance with COLL 15.5.6R;5

      2
   3. (c)

      subject to COLL 15.5.5R(1)(d)5 its public TCFD product report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 2.3.1R, where the half-yearly report most closely follows the reporting deadline of 30 June, under ESG 2.1.1R(1); and5

      2
   4. (d)

      where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 5.5.5R, where the half-yearly report is the report that most closely follows the date on which Part B of the public product-level sustainability report was published. 5

2. (2)

   For a scheme which is an umbrella, the authorised fund manager may choose whether the half-yearly report is prepared for the umbrella as a whole, or for each individual sub-fund, or both.

1The report of the authorised fund manager must include:

1. (1)

   a review of the investment activities during the period to which the report relates;

2. (2)

   a portfolio statement prepared in accordance with the requirements of the SORP6;

3. (3)

   in the case of an umbrella which has more than one sub-fund, particulars in the form of a table showing, as at the end of the period to which the report relates:

   1. (a)

      for each sub-fund, the number of units in that sub-fund that were held by a second sub-fund of that umbrella; and

   2. (b)

      the value of each such holding;

      or, alternatively, a statement that there were no such holdings as at the end of that period;

4. (4)

   particulars of any fundamental or significant change to the authorised fund made since the date of the last report;

5. (5)

   in relation to each scheme or sub-fund which is a long-term asset fund:

   1. (a)

      the amount of any remuneration, charge, payment or expense paid out of the scheme property during the period to which the report relates;

   2. (b)

      the person to whom that amount was paid;

   3. (c)

      what that remuneration, charge, payment or expense was for; and

   4. (d)

      how the remuneration, charge, payment or expense was calculated; and

6. (6)

   any other information which would enable unitholders to make an informed judgement on the development of the activities of the authorised fund during the period and the results of those activities as at the end of the period.

1. (1)

   1The depositary must make an annual report to unitholders which must be included in the annual report.

2. (2)

   The depositary’s report must contain:

   1. (a)

      a description, which may be in summary form, of the duties of the depositary under COLL 15.7.6R and COLL 15.7.7R (Duties of the depositary) and in respect of the safekeeping of the scheme property;

   2. (b)

      in relation to its oversight and monitoring obligations:

      1. (i)

         a description of the reasonable steps the depositary has taken to ensure that the LTAF has been managed in accordance with each of the matters specified in COLL 15.7.6R(2)(e) (Duties of the depositary); and

      2. (ii)

         where an external valuer has not been appointed, a statement setting out the depositary’s determination of the matters in COLL 15.2.6R(2)(a) (Appointment of external valuer or authorised fund manager with knowledge, skills and experience of valuing long-term assets); and

   3. (c)

      a statement as to whether in any material respect:

      1. (i)

         the issue, sale, redemption and cancellation and calculation of the price of the units and the application of the authorised fund’s revenue, have not been carried out in accordance with the rules in this sourcebook and, where applicable, the OEIC Regulations and the instrument constituting the fund; and

      2. (ii)

         the investment and borrowing powers and restrictions applicable to the authorised fund have been exceeded.

1The annual reports in COLL 15.5.3R(1) and (2) and the half-yearly reports in COLL 15.5.5R(1) must:

1. (1)

   in the case of an ICVC, if there is:

   1. (a)

      more than one director, be approved by the board of directors and signed on their behalf by the ACD and at least one other director; or

   2. (b)

      no director other than the ACD, be signed by the ACD;

2. (2)

   in the case of an AUT or ACS, if the authorised fund manager has:

   1. (a)

      more than one director, be signed by at least two directors of the authorised fund manager; or

   2. (b)

      only one director, be signed by the director of the authorised fund manager.

1. (1)

   1A quarterly report must contain details of any transactions executed by, or for or on behalf of, the long-term asset fund in the relevant quarterly reporting period which have resulted in assets being held in the LTAF’sscheme property, including:

   1. (a)

      the date of each transaction;

   2. (b)

      details of the asset and type of asset which was the subject of the transaction; and

   3. (c)

      an explanation of how the transaction is consistent with the LTAF’s investment objectives, investment policy and investment strategy.

2. (2)

   A quarterly reporting period for a long-term asset fund must be determined in accordance with (a) to (c).

   1. (a)

      Each quarterly reporting period must be three months long.

   2. (b)

      There must be four consecutive quarterly reporting periods in each annual accounting period.

   3. (c)

      The first quarterly reporting period in each annual accounting period must begin when the annual accounting period begins.

1. (1)

   3COLL 15.5.-10BR to COLL 15.5.-10EG apply in relation to an alteration or change where the scheme has an LTAF retail class and:

   1. (a)

      the proposed alteration or change affects only unitholders in an LTAF retail class; or

   2. (b)

      the proposed alteration or change affects unitholders in an LTAF retail class and unitholders in a limited protection LTAF class.

2. (2)

   COLL 15.5.10R to COLL 15.5.11G may be applied in relation to an alteration or change where:

   1. (a)
      1. (i)

         the scheme has an LTAF retail class; and

      2. (ii)

         the proposed alteration or change relates only to a limited protection LTAF class; or

   2. (b)

      the scheme has no LTAF retail class.

1. (1)
   1. (a)

      3The authorised fund manager must, by way of an extraordinary resolution, obtain prior approval from the unitholders for any proposed change to the scheme which, in accordance with (1)(b), is a fundamental change.

   2. (b)

      A fundamental change is a change or event which:

      1. (i)

         changes the purposes or nature of the scheme;

      2. (ii)

         may materially prejudice a unitholder;

      3. (iii)

         alters the risk profile of the scheme; or

      4. (iv)

         introduces any new type of payment out of the scheme property.

2. (2)
   1. (a)

      The authorised fund manager must give prior written notice to unitholders in respect of any proposed change to the operation of a scheme that, in accordance with (2)(b), constitutes a significant change.

   2. (b)

      A significant change is a change or event which is not fundamental in accordance with (1) but which:

      1. (i)

         affects a unitholder’s ability to exercise their rights in relation to their investment;

      2. (ii)

         would reasonably be expected to cause the unitholder to reconsider their participation in the scheme;

      3. (iii)

         results in any increased payments out of the scheme property to an authorised fund manager or any other director of an ICVC or an associate of either; or

      4. (iv)

         materially increases other types of payment out of scheme property.

3. (3)
   1. (a)

      The authorised fund manager must inform unitholders in an appropriate manner and timescale of any notifiable changes that are reasonably likely to affect, or have affected, the operation of the scheme.

   2. (b)

      A notifiable change is a change or event, other than a fundamental change under (1) or a significant change under (2), which a unitholder must be made aware of unless the authorised fund manager concludes that the change is insignificant.

4. (4)

   Alterations affecting only a particular sub-fund or class of units may be approved in accordance with (1), (2) or (3) for the particular sub-fund or class of units, with the consent of, or, as the case may be, notice to, the relevant unitholders.

1. (1)

   3Where the authorised fund manager of a feeder LTAF is notified of any change in respect of its qualifying master LTAF which has the effect of a change to the feeder LTAF, the authorised fund manager must:

   1. (a)

      classify it as a fundamental change, significant change or a notifiable change to the feeder LTAF in accordance with COLL 15.5.-10BR; and

   2. (b)
      1. (i)

         for a fundamental change, obtain approval from the unitholders by way of an extraordinary resolution;

      2. (ii)

         for a significant change, give written notice to unitholders of that change; or

      3. (iii)

         for a notifiable change, comply with COLL 15.5.-10BR(3).

2. (2)

   The actions required by (1)(b)(i) and (1)(b)(ii) must be carried out as soon as reasonably practicable after the authorised fund manager of the feeder LTAF has been informed of the relevant change to the qualifying master LTAF.

1. (1)

   1Any proposed change which would be reasonably considered to be a fundamental change to the scheme requires the prior sanction of an extraordinary resolution of the unitholders.

2. (2)

   Any proposed change to the scheme which is not within (1) but which would be reasonably considered to be significant, requires the giving of reasonable notice to unitholders to become effective.

3. (3)

   Alterations affecting only a particular sub-fund or class of units may be approved in accordance with (1) or (2) for the particular sub-fund or class of units, with the consent of, or, as the case may be, notice to, the relevant unitholders.

4. (4)

   This rule and COLL 15.5.12R (Meetings) will apply (unless the context requires otherwise) to alterations concerning unitholders of a particular sub-fund or class of units rather than the scheme or sub-fund as a whole.

1. (1)

   3COLL 15.5.-12BR applies in relation to a meeting of unitholders where the scheme has an LTAF retail class and either:

   1. (a)

      the meeting is only for unitholders with units in an LTAF retail class; or

   2. (b)

      the meeting is for unitholders with units in an LTAF retail class and a limited protection LTAF class.

2. (2)

   COLL 15.5.12R may be applied in relation to a meeting of unitholders where:

   1. (a)
      1. (i)

         the scheme has an LTAF retail class; and

      2. (ii)

         the meeting is only for unitholders in a limited protection LTAF class; or

   2. (b)

      the scheme has no LTAF retail class.

1. (1)

   3The provisions of COLL 4.4 (Meetings of unitholders and service of notices) apply to an authorised fund manager, any other director of an ICVC and a depositary of a long-term asset fund.

2. (2)

   The authorised fund manager must record and keep minutes for 6 years of all proceedings to which COLL 15.5.-10BR (Alterations to the scheme and notices to unitholders: schemes with unitholders who are not limited protection LTAF investors) and this rule are relevant.

1. (1)

   1Details of the procedures for the convening and conducting of meetings and resolutions must be set out in the instrument constituting the fund and be reasonable and fair as between all relevant parties.

2. (2)

   The authorised fund manager must record and keep minutes for six years of all proceedings to which COLL 15.5.10R (Alterations to the scheme and notices to unitholders) and this rule are relevant.

3. (3)

   The provisions in COLL 4.4.12R (Notices to unitholders), COLL 4.4.13R (Other notices) and COLL 4.4.14G (References to writing and electronic documents) apply in relation to long-term asset funds.

1This section applies to:

1. (1)

   the authorised fund manager of an AUT, ACS or an ICVC;

2. (2)

   the depositary of an AUT, ACS or an ICVC; and

3. (3)

   an ICVC,

   which is a long-term asset fund.

1. (1)

   1Where this section refers to a second scheme, and the second scheme is a feeder scheme, which (in respect of investment in units in collective investment schemes) is dedicated3 to units in a single collective investment scheme, the reference in this section to the second scheme must be read as if it were a reference to the feeder scheme’s master scheme.

2. (2)

   Where this section refers to a second scheme, and the second scheme is a master scheme to which (in respect of investment in units in collective investment schemes) the relevant long-term asset fund is dedicated, the reference in this section to the second scheme must be read as if it were a reference to any scheme into which that master scheme invests.

1An authorised fund manager must ensure that, taking account of the investment objectives, policy and strategy of the long-term asset fund as stated in its most recently published prospectus, the scheme property of the long-term asset fund aims to provide a prudent spread of risk.

1. (1)

   1The scheme property of a long-term asset fund may, subject to the rules in this chapter, comprise any assets or investments to which it is dedicated3.

2. (2)

   The instrument constituting the fund and the prospectus may further restrict:

   1. (a)

      the kinds of assets in which the scheme property may be invested;

   2. (b)

      the types of transactions permitted and any relevant limits; and

   3. (c)

      the borrowing powers of the scheme.

1The investment strategy of a long-term asset fund must be to invest mainly in long-term illiquid assets.

1The scheme property of a long-term asset fund must, except where otherwise provided by the rules in this chapter, consist only of one or more of the following to which it is dedicated3:

1. (1)

   any specified investment:

   1. (a)

      within articles 74 to 86 of the Regulated Activities Order;

   2. (b)

      within article 89 (Rights to or interests in investments) of the Regulated Activities Order where the right or interest relates to a specified investment within (a);

2. (2)

   (to the extent not within (a))3 an interest in a loan, provided that the loan was not originated to:

   1. (a)

      a natural person;

   2. (b)

      the authorised fund manager of the long-term asset fund;

   3. (c)

      the depositary of the long-term asset fund;

   4. (d)

      an affiliated company of the person in (b) or (c); or

   5. (e)

      a person who intends to use, or uses, the credit for the purpose of investing in a derivative, cryptoasset derivative, an unregulated transferable cryptoasset, precious metals or a commodity contract within (5);

3. (3)

   an interest in an immovable under COLL 15.6.18R (Investment in property);

4. (4)

   precious metals; or

5. (5)

   a commodity contract traded on an RIE or a recognised overseas investment exchange.

   [Note: Full-scope UK AIFMs are subject to specific requirements relating to conflicts of interest (see articles 30 to 36 in the AIFMD level 2 regulation and SYSC 10.1.23R to SYSC 10.1.26R (Additional requirements for an AIFM)).]

   [Note 2: In relation to (2), a borrower who receives money by way of deposit from a person who is not a bank may (if the borrower is acting by way of business) be carrying on the regulated activity of accepting deposits, but an exclusion in the Regulated Activities Order may be available. See also article 2 of the Business Order.]

1. (1)

   1Subject to (2)and (3) (where applicable)3, a long-term asset fund may invest in units in a scheme (a ‘second scheme3’) only if the second scheme is:

   1. (a)

      a regulated collective investment scheme; or

   2. (b)

      a scheme not within (a) where the authorised fund manager has taken reasonable care to determine that:

      1. (i)

         it is the subject of an independent annual audit conducted in accordance with international standards on auditing;

      2. (ii)

         the calculation of the net asset value of each of the second schemes and the maintenance of their accounting records is segregated from the investment management function; and

      3. (iii)

         it (and any master scheme to whose units it is dedicated3) is prohibited from investing in the long-term asset fund, or, if there is no such prohibition, the authorised fund manager is satisfied, on reasonable grounds and after making all reasonable enquiries, that no such investment will be made by either the second scheme or any fund in which the second scheme invests.

2. (2)

   A long-term asset fund must not invest more than 20% in value of the scheme property in units in second schemes which are unregulated schemes, qualified investor schemes or long-term asset funds unless the authorised fund manager has carried out appropriate due diligence on each of the second schemes and has taken reasonable care to determine that, after making all reasonable enquiries and on reasonable grounds, the second scheme complies with relevant legal and regulatory requirements.

3. (3)

   The authorised fund manager of a long-term asset fund with more than 20% in value of the scheme property invested in one or more second schemes which are unregulated schemes, qualified investor schemes or long-term asset funds must carry out appropriate due diligence on those schemes on an ongoing basis.

1Where the second scheme in COLL 15.6.9R is an umbrella, the provisions apply to each sub-fund as if it were a separate scheme.

1. (1)

   1An authorised fund manager must take reasonable care to determine the following when entering into any transaction in derivatives or any commodity contract which may result in any asset becoming part of the scheme property:

   1. (a)

      if it is an asset in which the scheme property could be invested, that the transaction:

      1. (i)

         can be readily closed out; or

      2. (ii)

         would at the expected time of delivery relate to an asset which could be included in the scheme property under the rules in this chapter; or

   2. (b)

      in any other case, that the transaction can be readily closed out.

2. (2)

   An authorised fund manager may acquire an asset within (1) if its determination has proved incorrect and if it determines that acquisition is in the interests of the unitholders, provided it has the consent of the depositary.

3. (3)

   Any asset within (1) acquired in accordance with (2) may form part of the scheme property despite any other rule in this chapter until the position can be rectified.

1. (1)

   1A transaction in derivatives or a forward transaction may be entered into only if the maximum exposure, in terms of the principal or notional principal created by the transaction to which the scheme is or may be committed by another person, is covered globally under (2).

2. (2)

   Exposure is globally covered if adequate cover from within the scheme property is available to meet the scheme’s total exposure taking into account any reasonably foreseeable market movement.

3. (3)

   The total exposure relating to derivatives held in a long-term asset fund may not exceed the net value of the scheme property.

4. (4)

   No element of cover may be used more than once.

1A transaction in an OTC derivative must be capable of valuation which it will only be if the authorised fund manager having taken reasonable care determines that, throughout the life of the derivative (if the transaction is entered into), it will be able to value the investment concerned with reasonable accuracy:

1. (1)

   on the basis of the pricing model; or

2. (2)

   on some other reliable basis reflecting an up-to-date market value,

   which has been agreed between the authorised fund manager and the depositary.

1. (1)

   1An authorised fund manager must, as frequently as necessary to ensure compliance with COLL 15.6.13R(2) and COLL 15.6.13R(4), re-calculate the amount of cover required in respect of derivatives and forward transactions in existence under this chapter.

2. (2)

   Derivatives and forward transactions may be retained in the scheme property only so long as they remain covered globally under COLL 15.6.13R.

3. (3)

   An authorised fund manager must use a risk management process enabling it to monitor and measure as frequently as appropriate the risk of a scheme’s derivatives positions and their contribution to the overall risk profile of the scheme.

1. (1)

   1The ICVC, or the depositary at the request of the ICVC, or the depositary of an AUT or ACS at the request of the authorised fund manager, may enter into a repo contract or a stock lending arrangement within section 263B of the Taxation of Chargeable Gains Act 1992 (without extension by section 263C).

2. (2)

   The depositary must ensure that the value of any collateral for the stock lending arrangement is at all times at least equal to the value of the securities transferred by the depositary.

3. (3)

   In the case of the expiry of validity of any collateral, the duty in (2) is satisfied if the depositary or the authorised fund manager, as appropriate, takes reasonable care to determine that sufficient collateral will be transferred by close of business on the day of expiry.

1. (1)

   1The ICVC or depositary of an AUT or ACS (on the instructions of the authorised fund manager) may borrow money for the use of the authorised fund on terms that the borrowing is to be repayable out of the scheme property.

2. (2)

   The authorised fund manager must ensure that the authorised fund’s borrowing does not, on any day, exceed 30% of the net value of the scheme property and must take reasonable care to ensure that arrangements are in place that will enable borrowings to be closed out to ensure such compliance.

3. (3)

   In this rule “borrowing” also includes any arrangement (including a combination of derivatives) designed to achieve a temporary injection of money into the scheme property in the expectation that the sum will be repaid.

4. (4)

   Where the limit in (2) is breached, the authorised fund manager must take action in accordance with the principles set out in COLL 15.7.3R(3) to COLL 15.7.3R(5) (Duties of the authorised fund manager: investment and borrowing powers) to deal with that breach.

1. (1)

   1Any investment in land or a building held within the scheme property of a long-term asset fund must be in an immovable within (2).

2. (2)

   For an immovable:

   1. (a)

      it must be situated in a country or territory identified in the prospectus;

   2. (b)

      the authorised fund manager must have taken reasonable care to determine that the title to the interest in the immovable is a good marketable title; and

   3. (c)

      the authorised fund manager of an AUT or ACS or the ICVC must have received a report from an appropriate valuer that:

      1. (i)

         contains a valuation of the interest in the immovable (with and without any relevant existing mortgage); and

      2. (ii)

         states that in the appropriate valuer’s opinion the interest in the immovable would, if acquired by the scheme, be capable of being disposed of reasonably quickly2 at that valuation2;

   4. (d)

      unless (c) is satisfied, the authorised fund manager of an AUT or ACS or the ICVC must have received a report from an appropriate valuer valuing the interest in the immovable and stating that:

      1. (i)

         the immovable is adjacent to or in the vicinity of another immovable included in the scheme property; and

      2. (ii)

         in the opinion of the appropriate valuer, the total value of the interests in both immovables would at least equal the sum of the price payable for the interest in the immovable and the existing value of the interest in the other immovable; and

   5. (e)

      it must not be bought:

      1. (i)

         if it becomes apparent to the authorised fund manager that the report in either (c) or (d) could no longer reasonably be relied upon; or

      2. (ii)

         at a price more than 105% of the valuation relevant to the interest for that immovable in the report in either (c) or (d).

3. (3)

   Any contents of any building may be regarded as part of the relevant immovable.

4. (4)

   An appropriate valuer must be a person who:

   1. (a)

      has knowledge of and experience in the valuation of immovables of the relevant kind in the relevant area;

   2. (b)

      is qualified to be a standing independent valuer of an authorised fund or is considered by the scheme’s standing independent valuer to hold an equivalent qualification;

   3. (c)

      is independent of the ICVC, the depositary and each of the directors of the ICVC or of the authorised fund manager and depositary of the AUT or ACS; and

   4. (d)

      has not been engaged, and whose associates have not been engaged, in relation to the finding of the immovable for the scheme or the finding of the scheme for the immovable.

1. (1)

   1An overseas immovable may be held by a scheme through an intermediate holding vehicle whose purpose is to enable the holding of immovables by the scheme or a series of such intermediate holding vehicles, provided that the interests of unitholders are adequately protected. Any investment in an intermediate holding vehicle for the purpose of holding an overseas immovable shall be treated for the purposes of this section as if it were a direct investment in that immovable.

2. (2)

   An intermediate holding vehicle must be wholly owned by the scheme or another intermediate holding vehicle or series of intermediate holding vehicles wholly owned by the scheme, unless and to the extent that local legislation or regulation relating to the intermediate holding vehicle holding the immovable requires a proportion of local ownership.

1The following limits apply in respect of immovables held as part of the scheme property:

1. (1)

   the amount secured by mortgages over any immovable must not exceed 100% of the latest valuation by an appropriate valuer under COLL 15.6.18R(2)(c) or COLL 15.6.18R(2)(d) or COLL 15.6.22R, as appropriate;

2. (2)

   no option may be granted to a person to buy or obtain an interest in any immovable comprised in the scheme property if this might unduly prejudice the ability to provide redemption; and

3. (3)

   the total of all premiums paid for options to purchase immovables must not exceed 10% of the scheme value in any 12-month period, calculated at the date of the granting of the option.

1. (1)

   1 In relation to the appointment of a valuer the authorised fund manager must:

   1. (a)

      at the outset appoint the standing independent valuer with the approval of the depositary and likewise upon any vacancy; and

   2. (b)

      ensure that any immovables in the scheme property are valued by an appropriate valuer (standing independent valuer) appointed by the authorised fund manager.

2. (2)

   1The following apply in relation to the functions of the standing independent valuer:

   1. (a)

      the authorised fund manager must ensure that the standing independent valuer appointed under (1), procures the valuation of all the immovables held within the scheme property, on the basis of a full valuation with physical inspection (including, where the immovable is or includes a building, internal inspection) at least once a year;

   2. (b)

      for the purposes of (a), any inspection in relation to adjacent properties of a similar nature and value may be limited to that of only one such representative property;

   3. (c)

      the authorised fund manager must ensure that the standing independent valuer values the immovables, on the basis of a review of the last full valuation, at least once a month;

   4. (d)

      if either the authorised fund manager or the depositary becomes aware of any matter which appears likely to:

      1. (i)

         affect the outcome of a valuation of an immovable; or

      2. (ii)

         cause the valuer to decide to value under (a), instead of under (c),

         it must immediately inform the standing independent valuer of that matter;

   5. (e)

      the authorised fund manager must use its best endeavours to ensure that any other affected person reports to the standing independent valuer immediately upon that person becoming aware of any matter within (d); and

   6. (f)

      any valuation by the standing independent valuer must be undertaken in accordance with UKVPS 3 and 2.3 of UKVPGA 2 of the RICS Valuation – Global Standards 2017 UK national supplement 2018 (the RICS Red Book) or, in the case of overseas immovables, on an appropriate basis but subject to any provisions of the instrument constituting the fund.

3. (3)

   In relation to immovables:

   1. (a)

      any valuation under this rule has effect, until the next valuation under this rule, for the purposes of the value of immovables; and

   2. (b)

      an agreement to transfer an immovable or an interest in an immovable is to be disregarded for the purpose of the valuation of the scheme property unless it reasonably appears to the authorised fund manager to be legally enforceable.

1This section applies to:

1. (1)

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

2. (2)

   any other director of an ICVC;

3. (3)

   the depositary of an AUT, ACS or an ICVC; and

4. (4)

   an ICVC,

   which is a long-term asset fund.

1. (1)

   1The authorised fund manager must manage the scheme in accordance with:

   1. (a)

      the instrument constituting the fund;

   2. (b)

      the applicable rules;

   3. (c)

      the most recently published prospectus; and

   4. (d)

      for an ICVC, the OEIC Regulations.

2. (2)

   1The authorised fund manager must carry out such functions as are necessary to ensure compliance with the rules that impose obligations on the authorised fund manager or ICVC, as appropriate.

3. (3)

   The authorised fund manager must:

   1. (a)

      make decisions as to the constituents of the scheme property in accordance with the investment objectives and policy of the scheme;

   2. (b)

      instruct the depositary how rights attaching to the ownership of scheme property are to be exercised;

   3. (c)

      take action immediately to rectify any breach of the pricing methodology set out in the prospectus, which must (unless the authorised fund manager determines on reasonable grounds that the breach is of minimal significance) extend to payment of money:

      1. (i)

         by the authorised fund manager to unitholders and former unitholders;

      2. (ii)

         by the ACD to the ICVC;

      3. (iii)

         by the ICVC to the ACD;

      4. (iv)

         by the authorised fund manager of the AUT or ACS to the depositary; or

      5. (v)

         by the depositary (for the account of the AUT or ACS) to the authorised fund manager;

   4. (d)

      ensure where relevant that the ICVC complies with the relevant obligations imposed by, and when appropriate exercises the relevant powers provided under, the OEIC Regulations;

   5. (e)

      maintain such records as are necessary to enable the authorised fund manager or the ICVC, as appropriate, to comply with and demonstrate compliance with the rules in this sourcebook and also in the case of an ICVC, the OEIC Regulations; and

   6. (f)

      maintain for a period of six years a daily record of the units held, acquired or disposed of by the authorised fund manager including the classes of such units, and of the balance of any acquisitions and disposals.

1. (1)

   1An authorised fund manager may give instructions to deal in the scheme property.

2. (2)

   An authorised fund manager must avoid the scheme property being used or invested contrary to any provision in COLL 15.6 (Investment and borrowing powers).

3. (3)

   An authorised fund manager must immediately on becoming aware of any breach of COLL 15.6 take action, at its own expense, to rectify that breach.

4. (4)

   An authorised fund manager must take the action in (3) immediately, except in circumstances where doing so would not be in the best interests of unitholders, in which case the action must be taken as soon as such circumstances cease to apply.

5. (5)

   An authorised fund manager must not postpone taking action in accordance with (3) unless the depositary has given its consent.

1Where reasonable grounds exist for an ACD of an ICVC, or an authorised contractual scheme manager of a co-ownership scheme which is an umbrella, to consider that a foreign law contract entered into by the ICVC or authorised contractual scheme manager on behalf of the co-ownership scheme may have become inconsistent with the principle of limited recourse stated in the instrument constituting the fund of the ICVC or co-ownership scheme (see COLL 15.3.6R(3)(5) and COLL 15.3.6R(3)(6)), the ACD or authorised contractual scheme manager of the co-ownership scheme must:

1. (1)

   promptly investigate whether there is an inconsistency; and

2. (2)

   if the inconsistency still appears to exist, take appropriate steps to remedy that inconsistency.

1. (1)

   1The depositary is responsible for the safekeeping of all the scheme property.

2. (2)

   The depositary must:

   1. (a)

      take all steps to ensure that transactions properly entered into for the account of the scheme are completed;

   2. (b)

      take all steps to ensure that instructions properly given by the authorised fund manager in respect of the exercise of rights related to scheme property are carried out;

   3. (c)

      ensure that any resulting benefit of a derivatives or forward transaction is received by itself in respect of the scheme;

   4. (d)

      hold and deal with any income received in respect of the scheme property in accordance with COLL 15.8.18R (Income);

   5. (e)

      take reasonable care to ensure that the scheme is managed by the authorised fund manager in accordance with:

      1. (i)

         the investment objectives, policy and strategy set out in the LTAF’s most recent prospectus;

      2. (ii)

         COLL 15.6 (Investment and borrowing powers);

      3. (iii)

         COLL 15.8.2R (Valuation, pricing and dealing);

      4. (iv)

         COLL 15.8.18 (Income); and

      5. (v)

         any provision of the instrument constituting the fund or the prospectus that relates to the provisions in (ii) to (iv);

   6. (f)

      where applicable, comply with its obligations under COLL 15.2.6R (Appointment of external valuer or authorised fund manager with knowledge, skills and experience of valuing long-term assets);

   7. (g)

      keep records so as to comply with the rules in this sourcebook and so as to demonstrate such compliance; and

   8. (h)

      be responsible for any other duties as set out in the instrument constituting the fund.

3. (3)

   If a relevant ICVC ceases to have any directors, the depositary may act in accordance with COLL 6.5.6R (ICVC without a director).

4. (4)

   This rule applies to the depositary of a long-term asset fund to the extent the provisions are consistent with the requirements of the AIFMD level 2 regulation.

   [Note: Articles 88 to 90 of the AIFMD level 2 regulation make provision relating to custody and safekeeping of scheme property. The AIFMD level 2 regulation applies to the depositary of a long-term asset fund because an LTAF must be managed by a full-scope UK AIFM.]

1The depositary must also:

1. (1)

   ensure that any scheme property in registered form is as soon as reasonably practicable registered in its name or that of its nominee or delegate, as appropriate; and

2. (2)

   take into its custody or control all documents of title of the scheme property other than in respect of derivatives or forward transactions.

1. (1)

   1The authorised fund manager and the depositary must ensure that any transaction in respect of the scheme property undertaken with an affected person is on terms at least as favourable to the scheme as any comparable arrangement on normal commercial terms negotiated at arm’s length with an independent third party.

2. (2)

   Paragraph (1) is subject to any provision in the instrument constituting the fund and the prospectus imposing a prohibition in relation to any type of transaction.

[Note: See articles 30 to 36 of the AIFMD level 2 regulation.]

1. (1)

   2COLL 15.7.-12BR applies in respect of any scheme which is sold, promoted or otherwise made available to retail clients who are not limited protection LTAF investors.

2. (2)

   COLL 15.7.12R may be applied to a scheme which is intended only for limited protection LTAF investors.

1. (1)
   1. (a)

      2Either:

      1. (i)

         the manager or the trustee (as nominated in the trust deed); or

      2. (ii)

         the authorised contractual scheme manager or the depositary of the ACS (as nominated in the contractual scheme deed),

      must establish and maintain a register of unitholders as a document in accordance with this rule.

   2. (b)

      The manager or trustee or the authorised contractual scheme manager or depositary, in accordance with their duties under (1)(a), must exercise all due diligence and take all reasonable steps to ensure the information contained on the register is at all times complete and up to date.

   3. (c)

      The register must contain:

      1. (i)

         the name and address of each unitholder (for joint unitholders, no more than four need to be registered);

      2. (ii)

         the number of units of each class held by each unitholder;

      3. (iii)

         the date on which the unitholder was registered for units standing in their name; and

      4. (iv)

         the number of units of each class currently in issue.

   4. (d)

      No notice of any trust (express, implied or constructive) which may be entered in the register is binding on the manager or trustee, or the authorised contractual scheme manager or depositary.

   5. (e)

      The register is conclusive evidence of the persons entitled to the units entered in it.

   6. (f)

      The person responsible for the register in (1)(a) must:

      1. (i)

         take reasonable steps to alter the register on receiving written notice of a change of name or address of any unitholder;

      2. (ii)

         make the register available for inspection free of charge in the United Kingdom by or on behalf of any unitholder (including the manager or authorised contractual scheme manager), during office hours;

      3. (iii)

         supply free of charge to any unitholder, or their authorised representative, a copy of the entries on the register relating to that unitholder on request;

      4. (iv)

         where a unitholder defaults on paying for the issue or sale of units, make an alteration or deletion in the register to compensate for the default after which the manager or authorised contractual scheme manager becomes entitled to those units (until those units are either cancelled or re-sold and paid for); and

      5. (v)

         carry out any conversion of units allowed for by (4) below after consultation with the manager or trustee or the authorised contractual scheme manager or depositary, as appropriate.

2. (2)
   1. (a)

      Subject to (2)(c), if no person is entered in the register as the unitholder of a unit, the authorised fund manager of the AUT or ACS must be treated as the unitholder of each such unit which is in issue.

   2. (b)

      Where units are transferred to the authorised fund manager, the units need not be cancelled and the authorised fund manager need not be entered on the register as the new unitholder.

   3. (c)

      In the case of a limited partnership scheme, unregistered units may be held by the authorised contractual scheme manager, as the agent for the scheme, provided the authorised contractual scheme manager is not entered in the register as the new unitholder.

3. (3)
   1. (a)

      Every unitholder of an AUT is entitled to transfer units held on the register by an instrument of transfer in any form that the person responsible for the register may approve, but that person is under no duty to accept a transfer unless it is permitted by the trust deed or prospectus.

   2. (b)

      Provided:

      1. (i)

         the requirements in COLL 15.8.7R (Transfer of units in an ACS) are satisfied; and

      2. (ii)

         transfers of units are allowed by the contractual scheme deed and prospectus in accordance with the conditions specified by rules,

      every unitholder of an ACS is entitled to transfer units held on the register by an instrument of transfer in any form that the person responsible for the register may approve, but that person is under no duty to accept a transfer unless it is permitted by the contractual scheme deed and prospectus.

   3. (c)

      Every instrument of transfer of units of an AUT or ACS must be signed by, or on behalf of, the unitholder transferring the units (or, for a body corporate, sealed by that body corporate or signed by one of its officers (or in Scotland, two of its officers)) authorised to sign it and, unless the transferee is the authorised fund manager, the transferor must be treated as the unitholder until the name of the transferee has been entered in the register.

   4. (d)

      In the case of an AUT or ACS, every instrument of transfer (stamped as necessary) must be left for registration, with the person responsible for the register, accompanied by:

      1. (i)

         any necessary documents that may be required by legislation; and

      2. (ii)

         any other evidence reasonably required by the person responsible for the register.

   5. (e)

      In the case of an AUT or ACS, the details of an instrument of transfer must be kept for a period of 6 years from the date of its registration.

   6. (f)

      In the case of an AUT or ACS, on registration of an instrument of transfer, a record of the transferor and the transferee and the date of transfer must be made on the register.

4. (4)

   Where there is more than one class of units offered for issue or sale, the unitholder has a right to convert from one to the other, provided that doing so would not contravene any provision in the prospectus.

[Note: See also COLL 15.8.7R (Transfer of units in an ACS) and the related guidance in COLL 15.8.8G in relation to transfers of units in an ACS.]

1. (1)

   1The authorised fund manager or the depositary of an AUT or ACS (in accordance with their responsibilities as set out in the instrument constituting the fund) must maintain a register of unitholders as a document in accordance with this rule.

2. (2)

   The register must contain:

   1. (a)

      the name and address of each unitholder (for joint unitholders no more than four need to be registered);

   2. (b)

      the number of units (including fractions of a unit) of each class held by each unitholder; and

   3. (c)

      the date on which the unitholder was registered in the register for those units.

3. (3)

   The authorised fund manager or the depositary of an AUT or ACS (as appropriate) must take all reasonable steps and exercise all due diligence to ensure the register is kept complete and up to date.

4. (4)

   Where relevant, the authorised fund manager must immediately notify the depositary of an AUT or ACS of any information it receives which may affect the accuracy of any entry in the register.

5. (5)

   In the case of a limited partnership scheme, unregistered units may be held by the authorised contractual scheme manager as the agent for the scheme provided the authorised contractual scheme manager is not entered in the register as the new unitholder.

1Subject to any legal requirements which apply to the valuation of investments held or to be held in the scheme property of a long-term asset fund, the authorised fund manager of a long-term asset fund which carries on the valuation function itself must follow good market practice to value the investments held or to be held in the scheme property.

[Note: See FUND 3.9 (Valuation) and articles 67 to 71 of the AIFMD level 2 regulation.]

1Subject to any applicable legal requirements, the authorised fund manager of a long-term asset fund must use good market practice to:

1. (1)

   establish, implement and apply written policies and procedures on due diligence; and

2. (2)

   implement effective arrangements for ensuring that investment decisions on behalf of the long-term asset fund are carried out in compliance with the objectives, investment strategy and, where applicable, the risk limits of the scheme.

[Note: See articles 18 to 20 of the AIFMD level 2 regulation.]

1 COLL 15.7.17R to COLL 15.7.24R apply to an authorised fund manager of an AUT, ACS or ICVC.

1. (1)

   1An authorised fund manager must conduct an assessment at least annually for each scheme it manages of whether the payments out of scheme property set out in the prospectus are justified in the context of the overall value delivered to unitholders.

2. (2)

   In carrying out the assessment required by (1), the AFM must, separately for each class of units in a scheme, consider at least the matters set out in COLL 6.6.21R (Table: minimum considerations – assessment of value).

1Failure by an AFM to take sufficient steps to address any instance where a scheme’s charges are not justified in the context of the overall value delivered to unitholders may be relied on as tending to establish contravention of COBS 2.1.1R or COBS 2.1.4R as applicable.

1. (1)

   1An authorised fund manager of a long-term asset fund must conduct an assessment at least annually of how it has managed the LTAF in the best interests of the LTAF, the LTAF’s investors and the integrity of the market (see COBS 2.1.4R (AIFMs’ best interests rules)).

2. (2)

   In carrying out the assessment required by (1), the authorised fund manager must consider at least the matters set out in COLL 15.7.21R (Table: minimum considerations – valuation of investments, due diligence, conflicts of interest and liquidity management assessment).