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), section 261Q of the Act (Alteration of contractual schemes and changes of operator or depositary)5 and section 251 of the Act (Alteration of schemes and changes of manager or trustee) require the prior approval of the FCA 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 fund 6 . This should be kept in mind when considering any proposed change.

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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;

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   3. (c)

      an increase in the preliminary charge where units are purchased through a group savings plan; or1

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   4. (d)

      1a change in the pricing arrangements for units of the scheme so as to cause a single-priced authorised fund to become a dual-priced authorised fund, or vice versa.

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

4. (4)

   [deleted]7

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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.

1. (1)

   3The authorised fund manager of the feeder UCITS or feeder NURS4 should assess the change to the master UCITS or qualifying master scheme4 in terms of its impact on the feeder UCITS or feeder NURS4. For example, a change to the investment objective and policy of the master UCITS or qualifying master scheme4 that alters its risk profile would constitute a fundamental change for the feeder UCITS or feeder NURS4. In order for the feeder UCITS or feeder NURS4 to continue investing in the master UCITS or qualifying master scheme4, the authorised fund manager of the feeder UCITS or feeder NURS4 should obtain the approval of unitholders by way of an extraordinary resolution, or else make a proposal to invest in a different master UCITS or qualifying master scheme. For a feeder UCITS this should be done4 in accordance with COLL 11.2.2 R (Application for approval of an investment in a master UCITS).

2. (2)

   Not all changes affecting the master UCITS or qualifying master scheme4 will have the same significance for the feeder UCITS or feeder NURS4 and its unitholders. For example, a change to how the prices of the units in the master UCITS or qualifying master scheme4 are published might not be a significant change for the feeder UCITS or feeder NURS4 if the prices of its own units continue to be published in the same way.

3. (3)

   Where the authorised fund manager of the feeder UCITS or feeder NURS4 receives insufficient notice of the intended change to the master UCITS or qualifying master scheme4 to be able to seek the prior approval of unitholders to any fundamental change or to inform them at least 60 days in advance of any significant change, it should nevertheless use reasonable endeavours to inform them of the change as soon as possible so that they can make an informed judgement about the merits of continuing to invest in the feeder UCITS or feeder NURS4.