COLL 6.2 Dealing

1. (R

   This section applies to an authorised fund manager, a depositary, an ICVC and any other director of an ICVC.

1. (1)

   During the initial offer period, units may only be issued at the initial price.

2. (2)

   The length of any initial offer should not be unreasonable when considered alongside the characteristics of the authorised fund.

3. (3)

   The authorised fund manager must, as soon as practicable after receiving the initial price from the purchaser and no later than the fourth business day following the end of the initial offer, pay the depositary in respect2 of any unit it has agreed to sell during the period of the initial offer:

   2
   1. (a)

      2in the case of a single-priced authorised fund, the initial price of that unit; or

   2. (b)

      2in the case of a dual-priced authorised fund, the initial price of that unit less, where relevant, an amount not exceeding the amount of any preliminary charge stated in the prospectus.

4. (4)

   The period of the initial offer comes to an end if the authorised fund manager reasonably believes the price that would reflect the current value of the scheme property would vary by more than 2% from the initial price.

1. (1)

   Units in an ICVC are issued or cancelled by the ACD making a record of the issue or cancellation and of the number of the units of each class concerned, and cannot be issued or cancelled in any other manner, unless COLL 3.2.6R (11) (Table: contents of the instrument constituting the fund8) applies.

   8
2. (2)

   The time of the issue or cancellation under (1) is the time when the record is made.

1. (1)

   The depositary7 must issue or cancel units in an AUT or ACS7 when instructed by the authorised fund manager.7

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2. (2)

   Any instructions given by the authorised fund manager7must state, for each class of unit to be issued or cancelled, the number to be issued or cancelled, expressed either as a number of units or as an amount in value (or as a combination of the two).

   7
3. (3)

   If the depositary7 is of the opinion that it is not in the interests of unitholders that any units should be issued or cancelled7 or that to do so would not be in accordance with the trust deed, contractual scheme deed7 or prospectus, it must notify the authorised fund manager7 of that fact and it is then relieved of the obligation to issue or cancel those units.

   777

3If an authorised fund has two or more classes of unit in issue, the authorised fund manager may treat any or all of those classes as one for the purpose of determining the number of units to be issued or cancelled by reference to a particular valuation point, if:

1. (1)

   the depositary gives its prior agreement; and

2. (2)

   the relevant classes:

   1. (a)

      have the same entitlement to participate in, and the same liability for charges, expenses and other payments that may be recovered from, the scheme property; or

   2. (b)

      differ only as to whether income is distributed or accumulated by periodic credit to capital, provided the price of the units in each class is calculated by reference to undivided shares in the scheme property.

1. (1)

   The authorised fund manager may require, on agreement with the depositary, or may permit, on the request of the investor, direct issues and cancellations of units by an ICVC or by the depositary of an AUT or ACS7.

   7
2. (2)

   If (1) applies:

   (a) the instrument constituting the fund8 must provide for this; and

   (b) the prospectus must provide details of the procedure to be followed which must be consistent with the rules in this section.

   8

1. (1)

   An authorised fund manager must ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders for that class.

2. (2)

   An authorised fund manager must not:

   1. (a)

      for an AUT or ACS7, when giving instructions to the depositary72 for the issue or cancellation of units; or

      27
   2. (b)

      for an ICVC, when arranging for the issue or cancellation of units;

   do, or omit to do, anything that2 would, or might, confer on itself2 or an associate a benefit or advantage at the expense of a unitholder or a potential unitholder.

3. (3)

   For the purpose of (1), the authorised fund manager may take into account instructions to redeem units at the following valuation point received before any time agreed with the depositary for such purpose.

1. (1)

   Any instruction for the issue or cancellation of units under COLL 6.2.5 R (Issue and cancellation of units by an ICVC) or COLL 6.2.6 R (Issue and cancellation of units in an AUT or ACS7) may be modified but only if the depositary agrees and has taken reasonable care to determine that:

   1. (a)

      the modification corrects an error in the instruction; and

   2. (b)

      the error is an isolated one.

2. (2)

   Any error in (1) must be corrected within the payment period applicable under COLL 6.2.13 R (Payment for units issued) or COLL 6.2.14 R (Payment for cancelled units).

1. (1)

   Where the authorised fund manager has not complied with COLL 6.2.8 R (1) (Controls over the issue and cancellation of units), it must correct the error as soon as possible and must reimburse the authorised fund any costs it may have incurred in correcting the position.

2. (2)

   The authorised fund manager need not reimburse the authorised fund when:

   1. (a)

      the amount under (1) is not, in the depositary's opinion, material to the authorised fund;

   2. (b)

      the authorised fund manager can demonstrate that it has effective controls in place over box management, including all of the areas that affect the figures which are included in the box management calculations; and

   3. (c)

      the requirements of COLL 6.2.10 R (Modification to number of units issued or cancelled) are complied with.

1. (1)

   The authorised fund manager must, by the close of business on the fourth business day following the issue of any units, arrange for payment to the depositary of an AUT or ACS7 or the ICVC of:2

   27
   1. (a)

      2in the case of a single-priced authorised fund, the price of the units and any payments required under 9COLL 6.3.8 R (Dilution); 10

   2. (b)

      2in the case of a dual-priced authorised fund, the issue price of the units9; or10

   3. (c)

      in the case of a regulated money market fund, the sum required pursuant to article 33 of the Money Market Funds Regulation.10

2. (2)

   The authorised fund manager must make the payment referred to in (1) in cash or cleared funds unless COLL 6.2.15 R (In specie issue and cancellation) applies.

3. (3)

   Where the authorised fund manager has not complied with (1), it must reimburse the authorised fund for any lost interest unless the amount involved is not, in the depositary's opinion, material to the authorised fund.

1. (1)

   On cancelling units the authorised fund manager must, before the expiry of the fourth business day following the cancellation of the units or, if later, as soon as practicable after delivery to the depositary of the AUT or ACS7 or the ICVC of such evidence of title to the units as it may reasonably require, require the depositary to pay:2

   7
   1. (a)

      2in the case of a single-priced authorised fund, the price of the units (less any deduction required under 9COLL 6.3.8 R); 10

   2. (b)

      2in the case of a dual-priced authorised fund, the cancellation price of the units9; or10

   3. (c)

      in the case of a regulated money market fund, the sum required pursuant to article 33 of the Money Market Funds Regulation,12

      10

   in accordance with (1A)12.

   7
2. (1A)

   The depositary must pay the amount in (1):12

   1. (a)

      to the authorised fund manager;12

   2. (b)

      where relevant, to the unitholder;12

   3. (c)

      for a relevant pension scheme, in accordance with the relevant provisions of the trust deed or contractual scheme deed; or12

   4. (d)

      where the amount relates to an eligible CIS amount that is a dormant asset arising from the conversion of units (see section 9(3)(a) of the Dormant Assets Act 2022), either:12

      1. (i)

         to the authorised fund manager (for onward payment to a dormant asset fund operator); or12

      2. (ii)

         where relevant, to the dormant asset fund operator.12

3. (2)

   If the authorised fund manager has not ensured that the scheme property includes or will include sufficient cash in the appropriate currency (or a sufficient facility to borrow without infringing any restriction in COLL 5 (Investment and borrowing powers)) within the period in (1), that period is extended, for any relevant currency, until the shortage is rectified.

4. (3)

   If (2) applies, the authorised fund manager must take reasonable steps to rectify the currency shortage as quickly as possible.

5. (4)

   This rule does not apply where COLL 6.2.15 R is in operation.

6. (5)

   Nothing in this section requires an ICVC, a depositary or an authorised fund manager to part with money or to transfer scheme property for a cancellation or redemption of units where any money due on the earlier issue or sale of those units has not been received.

The depositary may take into or pay out of scheme property assets other than cash2 as payment for the issue or cancellation of units2 but only if:

1. (1)

   it has taken reasonable care to ensure that the property concerned would not be likely to result in any material prejudice to the interests of unitholders; and

2. (2)

   the instrument constituting the fund8 so provides.

   8

1. (1)

   In accordance with COLL 4.2.5R (17) (Table: contents of the prospectus), the authorised fund manager must describe the arrangements for the sale and redemption of units in the prospectus.

2. (2)

   The authorised fund manager must, at all times during the dealing day, be willing to effect the sale of units in the authorised fund, in accordance with the conditions in the instrument constituting the fund8 and the prospectus unless:

   8
   1. (a)

      it has reasonable grounds to refuse such sale; or

   2. (b)

      the issue2 of units2 is prevented under COLL 6.2.18 R (Limited issue).

3. (3)

   Subject to COLL 6.2.19 R (Limited redemption) and COLL 6.2.21 R (Deferred redemption), the authorised fund manager must, at all times during the dealing day, on request of any qualifying unitholder, effect the redemption of units in accordance with the conditions in the instrument constituting the fund8 and the prospectus unless it has reasonable grounds to refuse such redemption.

   8
4. (4)

   On agreeing to a redemption of units in (3), the authorised fund manager must pay the unitholder the appropriate proceeds of redemption within the period specified in (5) unless the authorised fund manager has reasonable grounds for withholding all or any part of the proceeds.

5. (5)

   Except where (5A) applies the5 period in (4) expires at the close of business on the fourth business day following the later of:

   5
   1. (a)

      the valuation point at which the price for the redemption was determined; or

   2. (b)

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

6. (5A)

   5Where a non-UCITS retail scheme operating as a FAIF operates limited redemption arrangements, the period in (4) expires no later than the expiry of a period of 185 days from the date of receipt and acceptance of the instruction to redeem.

7. (6)

   Except where (7) applies, and subject to COLL 6.2.21 R (Deferred redemption), the authorised fund manager must sell or redeem units at a price determined no later than the end of the business day immediately following the receipt and acceptance of an instruction to do so, or at the next valuation point for the purposes of dealing in 2units if later9.

   2
8. (7)

   Where the authorised fund operates limited redemption arrangements, the authorised fund manager must sell or redeem units at a price2 determined no later than the expiry of a period of 185 days from the date of the receipt and acceptance of the instruction to sell or redeem.

9. (8)

   [deleted]2

   2
10. (9)

    [deleted]2

    2
11. (10)

    Paragraphs (4), (5) and COLL 6.3.5AR (2) (Sale and redemption prices for single-priced authorised funds)2 do not apply where the authorised fund manager of an AUT or ICVC7 is buying units2 as principal on an investment exchange (for an AUT in accordance with a power in the trust deed) and settlement will be made in accordance with the rules of that exchange.

    2
12. (11)

    Paragraph (4) does not apply where COLL 6.2.17AR (Transfers under the Dormant Assets Act 2022) applies.12

1. (1)

   12This rule applies where the authorised fund manager or the depositary of an authorised fund transfers to a dormant asset fund operator a dormant asset that is:

   1. (a)

      an amount owing by virtue of the conversion of one or more units into a right to payment (see section 9(3)(a) of the Dormant Assets Act 2022); or

   2. (b)

      eligible redemption proceeds.

2. (2)

   Before a transfer in (1) can be effected, the authorised fund manager must:

   1. (a)

      take reasonable steps to reunite the relevant eligible CIS amounts to be transferred with their owners (see section 23 of the Dormant Assets Act 2022); and

   2. (b)

      be satisfied that the eligible CIS amount is a dormant asset.

3. (3)

   Upon effecting a transfer in (1), the authorised fund manager (or, where relevant, the depositary) must ensure that such records as are specified in COLL 6.6.6R(6) (Maintenance of records) are retained.

1. (1)

   12This rule applies where the authorised fund manager or the depositary converts one or more units into a right to payment for transfer to a dormant asset fund operator in accordance with COLL 6.2.17AR and sections 8 to 10 of the Dormant Assets Act 2022

2. (2)

   On conversion of units into a right to payment the authorised fund manager or the depositary must:

   1. (a)

      effect a redemption of units; and

   2. (b)

      transfer the eligible CIS amount to a dormant asset fund operator.

1. (1)

   If an authorised fund limits the issue of any class of unit, the prospectus of an authorised fund must provide for the circumstances and conditions when units will be issued.

2. (2)

   Where (1) applies, the authorised fund manager may not provide for the further issue of units unless, at the time of the issue2, it2is satisfied on reasonable grounds that the proceeds of that subsequent issue can be invested without compromising the scheme's investment objective or materially prejudicing existing unitholders.

3. (3)

   Within a scheme, unit classes may operate different arrangements for the issue of units provided there is no prejudice to the interests of any unitholder.

1. (1)

   The instrument constituting the fund8 and the prospectus of a non-UCITS retail scheme2 operating as a FAIF, or5 that invests substantially in immovables2 or whose investment objective is to provide a specified level of return, may provide for limited redemption arrangements appropriate to its aims and objectives.

   8
2. (2)

   Where (1) applies, the scheme must provide for sales and5 redemptions at least once in every six months.

3. (3)

   Within a scheme, unit classes may operate different arrangements for sales and redemptions5 of units provided there is no prejudice to the interests of any unitholder.

   5
4. (4)

   5The scheme may provide for sales of units of any class to be executed at a greater frequency than redemptions of units of the same class.

1. (1)

   Subject to (1A), (3), and (4),10 the5 instrument constituting the fund8 and the prospectus of an authorised fund which has at least one valuation point on each business day10 may permit deferral of redemptions at a valuation point to the next valuation point where the requested redemptions exceed 10%, or some other reasonable proportion disclosed in the prospectus, of the authorised fund's value.

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2. (1A)

   5Subject to (3) the instrument constituting the fund8 and the prospectus of a non-UCITS retail scheme operating as a FAIF may permit deferral of redemptions at a valuation point to a following valuation point where the requested redemptions exceed 10%, or some other reasonable proportion disclosed in the prospectus, of the authorised fund's value.

   8
3. (2)

   Any deferral of redemptions under (1) or (1A)5 must be undertaken in accordance with the procedures explained in the prospectus which must ensure:

   1. (a)

      the consistent treatment of all unitholders who have sought to redeem units2 at any valuation point at which redemptions2are deferred; and

   2. (b)

      that all deals relating to an earlier valuation point are completed before those relating to a later valuation point are considered.

4. (3)

   5Any deferral under (1A) is subject to the limitations on payments to unitholders in COLL 6.2.16 R (5A).

5. (4)

   Any deferral under (1) in relation to an authorised fund that is a regulated money market fund must be consistent with the Money Market Funds Regulation, where relevant.10

1. (1)

   4The authorised fund manager of a property authorised investment fund must take reasonable steps to ensure that no body corporate holds more than 10% of the net asset value of that fund (the "maximum allowable").

2. (1A)

   11For the purposes of (1), a body corporate shall not be treated as holding more than the maximum allowable to the extent that:

   1. (a)

      the body corporate holds units in a unit trust scheme which holds shares in the property authorised investment fund; and

   2. (b)

      in their capacity as trustees of the unit trust scheme, the trustees are chargeable in the United Kingdom either to income tax or to corporation tax.

3. (2)

   Where the authorised fund manager of a property authorised investment fund becomes aware that a body corporate holds more than the maximum allowable, he must:

   1. (a)

      notify the body corporate of that event;

   2. (b)

      not pay any income distribution to the body corporate; and

   3. (c)

      redeem or cancel the body corporate's holding down to the maximum allowable within a reasonable time-frame.

4. (3)

   For the purpose of (2)(c), a reasonable time-frame means the time-frame which the authorised fund manager reasonably considers to be appropriate having regard to the interests of the unitholders as a whole.