COLL 4.3 Approvals and notifications

1. (1)

   The diagram in COLL 4.3.3 G explains how an authorised fund manager should treat changes it is proposing to a scheme and provides an overview of the rules and guidance in this section.

2. (2)

   Regulation 21 of the OEIC Regulations (The Authority's approval for certain changes in respect of a company) and section 251 of the Act (Alteration of schemes and changes of manager or trustee) require the prior approval of the FSA for certain proposed changes to an authorised fund, including a change of the authorised fund manager or depositary or a change to the instrument constituting the scheme . This should be kept in mind when considering any proposed change.

This diagram belongs to COLL 4.3.2 G.

1. (1)

   Any change may be fundamental depending on its degree of materiality and effect on the scheme and its unitholders. Consequently an authorised fund manager will need to determine whether in each case a particular change is fundamental in nature or not.

2. (2)

   For the purpose of COLL 4.3.4R (2)(a) to COLL 4.3.4R (2)(c) a fundamental change to a scheme is likely to include:

   1. (a)

      any proposal for a scheme of arrangement referred to in COLL 7.6.2 R (Schemes of arrangement: requirements);

   2. (b)

      a change in the investment policy to achieve capital growth from investment in one country rather than another;

   3. (c)

      a change in the investment objective or policy to achieve capital growth through investment in fixed interest rather than equity investments;

   4. (d)

      a change in the investment policy to allow the authorised fund to invest in derivatives as an investment strategy which increases its volatility;

   5. (e)

      a change to the characteristics of a scheme to distribute income annually rather than monthly; or

   6. (f)

      the introduction of limited redemption arrangements.

1. (1)

   Changes may be significant depending in each case on their degree of materiality and effect on the scheme and its unitholders. Consequently the authorised fund manager will need to determine whether in each case a particular change is significant in nature or not.

2. (2)

   For the purpose of COLL 4.3.6 R a significant change is likely to include:

   1. (a)

      a change in the method of price publication;

   2. (b)

      a change in any operational policy such as dilution policy or allocation of payments policy; or

   3. (c)

      an increase in the preliminary charge where units are purchased through a group savings plan.

3. (3)

   Where the directors of an ICVC elect to discontinue holding annual general meetings under paragraph 37A of the OEIC Regulations, they are required to give 60 days' written notice to shareholders. For the purpose of COLL 4.3.6 R this should be treated as a significant change to the operation of the scheme.2

1. (1)

   The circumstances causing a notifiable change may or may not be within the control of the authorised fund manager.

2. (2)

   For the purpose of COLL 4.3.8 R (Notifiable changes) a notifiable change might include:

   1. (a)

      a change of named investment manager where the authorised fund has been marketed on the basis of that individual's involvement;

   2. (b)

      a significant political event which impacts on the authorised fund or its operation;

   3. (c)

      a change to the time of the valuation point;

   4. (d)

      the introduction of limited issue arrangements; or

   5. (e)

      a change of the depositary or a change in the name of the authorised fund.

3. (3)

   The appropriate manner and timescale of notification would depend on the nature of the change or event. Consequently the authorised fund manager will need to assess each change or event individually.

4. (4)

   An appropriate manner of notification could include:

   1. (a)

      sending an immediate notification to the unitholder;

   2. (b)

      publishing the information on a website; or

   3. (c)

      the information being included in the next long report of the scheme.