This chapter applies to:

1. (1)

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

2. (2)

   any other director of an ICVC;

3. (3)

   a depositary of an AUT, ACS2 or an ICVC; and

4. (4)

   an ICVC,

where such AUT, ACS2 or ICVC is a UCITS scheme or a non-UCITS retail scheme.

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 cancelunits in an AUT or ACS7 when instructed by the authorised fund manager.7

   77
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 redeemunits 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 cancellingunits 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 redeemunits 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 redeemunits 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, unitclasses 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 and5redemptions 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 the5instrument 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.

   58
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 redeemunits2 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.

1. (1) 8

   Subject to (3) and (4), this12 section applies to an authorised fund manager, a depositary, an ICVC and any other director of an ICVC.

2. (2)

   [deleted]13

3. (3)

   The following rules and guidance do not apply to an authorised fund manager, a depositary, an ICVC, or any other director of an ICVC where the authorised fund is a regulated money market fund: 12

   1. (a)

      COLL 6.3.3R;12

   2. (b)

      COLL 6.3.3DR;12

   3. (c)

      COLL 6.3.4R(1) and (3) to (6D);12

   4. (d)

      COLL 6.3.5R; and12

   5. (e)

      COLL 6.3.5AR to COLL 6.3.5CG.12

4. (4)

   Where an authorised fund is a regulated money market fund, COLL 6.3.6G applies to the authorised fund manager and depositary of that authorised fund to the extent it is consistent with the requirements of the Money Market Funds Regulation.12

1. (1)

   To determine the price of units the authorised fund manager must carry out a fair and accurate valuation of all the scheme property in accordance with the instrument constituting the fund9 and the prospectus.1

   9
2. (2)

   1For a dual-priced authorised fund, each valuation of the scheme property must consist of two parts, carried out on an issue basis and a cancellation basis respectively.

1. (1)

   8An authorised fund manager of a UCITS scheme13must ensure the employment of the accounting policies and procedures referred to in SYSC 4.1.9 R (Accounting policies), so as to ensure the protection of unitholders.

2. (2)

   Accounting for the scheme shall be carried out in such a way that all assets and liabilities of the scheme can be directly identified at all times.

3. (3)

   If the scheme is an umbrella, separate accounts must be maintained for each sub-fund.

8An authorised fund manager of a UCITS scheme13must have accounting policies and procedures established, implemented and maintained, in accordance with the accounting rules of the United Kingdom13, so as to ensure that the calculation of the net asset value of each scheme it manages is accurately effected, on the basis of the accounting, and that subscription and redemption orders can be properly executed at that net asset value.

8An authorised fund manager of a UCITS scheme13must establish appropriate procedures to ensure the proper and accurate valuation of the assets and liabilities of each scheme it manages.

14An authorised fund manager may only agree a fair and reasonable price for an immovable to reflect a rapid sale if the prospectus states that it may do so, in accordance with COLL 4.2.5R(3)(pa)(ii).

1. (1)

   An authorised fund must not have fewer than two regular valuation points in any month and if there are only two valuation points in any month, the regular valuation points must be at least two weeks apart.

2. (2)

   The prospectus of a scheme must contain information about its regular valuation points for the purposes of dealing in units in accordance with COLL 4.2.5R (16) (Table: contents of the prospectus).

3. (3)

   Where a scheme operates limited redemption arrangements, (1) does not apply and the valuation points must be stated in the prospectus but must not be set more than six months apart.

4. (4)

   Where a scheme operates limited redemption arrangements, it must be valued and prices published in the manner set out in COLL 6.3.11 R (Publication of prices) at least once in every month.

5. (5)

   In (4), a valuation point for the purpose of publishing prices only, does not make it a valuation point for the purpose of (2) unless it is disclosed as such in the prospectus.

6. (6)

   Higher volatility funds must have at least one valuation point every business day except where the scheme is a non-UCITS retail scheme operating as a FAIF.6

7. (6A)

   3Qualifying money market funds must have at least one valuation point every business day at which the valuation is carried out on an amortised cost basis.

8. (6B)

   [deleted]12

   7
9. (6C)

   [deleted]12

   7
10. (6D)

    [deleted]12

    7
11. (7)

    No valuation points are required during the period of any initial offer.

12. (8)

    The authorised fund manager may determine to have an additional valuation point for an authorised fund,10 in which case it1must inform the depositary.

1. (1)

   An authorised fund manager must ensure that the1price of a unit of any class is calculated:1

   1. (a)

      1by reference to the net value of the scheme property; and

   2. (b)

      1in accordance with the provisions of both the instrument constituting the fund9 and the prospectus.

      9
2. (2)

   Any unit price calculated in accordance with (1) must be expressed in a form that is accurate to at least four significant figures.

3. (3)

   1For each class of units in a single-priced authorised fund, a single price must be calculated at which units are to be issued and cancelled.

1The authorised fund manager of a single-priced authorised fund must not:

1. (1)

   sell a unit for more than the price of a unit of the relevant class at the relevant valuation point, to which may be added any preliminary charge permitted and any payment made under 10COLL 6.3.8 R; or

2. (2)

   redeem a unit for less than the price of a unit of the relevant class at the relevant valuation point, less any redemption charge permitted and any deduction under 10COLL 6.3.8 R.

1. (1)

   1The authorised fund manager of a dual-priced authorised fund must not:

   1. (a)

      sell a unit for more than the maximum sale price of a unit of the relevant class at the relevant valuation point10; or

   2. (b)

      redeem a unit for less than the cancellation price of a unit of the relevant class at the relevant valuation point, less any redemption charge permitted10.

2. (2)

   The maximum sale price of units under (1)(a) is the total of:

   1. (a)

      the issue price; and

   2. (b)

      the current preliminary charge.

3. (3)

   The sale price of units under (1)(a) must not be less than the relevant redemption price under (1)(b).

4. (4)

   The redemption price under (1)(b) must not exceed the relevant issue price of the relevant units.

5. (5)

   Subject to COLL 6.7.9 R (Charges for the exchange of units in an umbrella), in the case of an umbrella:

   1. (a)

      the maximum price at which units in one sub-fund that is a dual-priced authorised fund may be acquired in exchange for units in another sub-fund must not exceed the relevant maximum sale price (less any preliminary charge) of the new units; and

   2. (b)

      the minimum price at which the old units in a sub-fund that is a dual-priced authorised fund may be taken in exchange must not be less than the equivalent cancellation price.

1. (1)

   11Where an authorised fund manager (AFM):

   1. (a)

      accepts instructions to sell and redeemunits as principal; and

   2. (b)

      is able to execute a sale instruction by sellingunits it has redeemed at the same valuation point, without placing its own capital at risk,

   subject to (2), the AFM must not retain for its own account, or the account of any of its associates, the difference between the price at which a unit was redeemed (before deduction of any redemption charge) and the price at which the same unit was sold (after deduction of any preliminary charge). Any such difference must be allocated in a way that is fair to unitholders.

2. (2)

   In calculating the profit arising under (1), the AFM may offset any loss it incurs at the same valuation point, calculated in accordance with (3) below, when dealing as principal in relation to:

   1. (a)

      a unitissued at that valuation point to fulfil a sale instruction that cannot be matched against any redeemedunit or any other unit of that class held by the manager as principal; and

   2. (b)

      a unitredeemed and cancelled at that valuation point.

3. (3)

   The amount of the loss referred to in (2) is:

   1. (a)

      for unitsissued in accordance with (2)(a), the difference between the issue price of a unit and the sale price of that unit, less any preliminary charge;

   2. (b)

      for unitscancelled in accordance with (2)(b), the difference between the cancellation price of a unit and the redemption price of that unit, before any redemption charge is applied.

4. (4)

   Where any loss arising under (2) is greater than any profit arising under (1), that loss cannot be offset against any profit arising at a subsequent valuation point.

5. (5)

   This rule applies to the redemption and sale of units of different classes at the same valuation point, if those classes are treated as one for the purpose of COLL 6.2.6AR.

1. (1)

   Subject to (1A), when12 arranging to sell, redeem, issue or cancel units, or when units are issued or cancelled under COLL 6.2.7 R (1) (Issues and cancellations through an authorised fund manager), an authorised fund manager is permitted to:

   1. (a)

      require the payment of a dilution levy; or

   2. (b)

      make a dilution adjustment; or

   3. (c)

      neither require a dilution levy nor make a dilution adjustment;

   in accordance with its statements in the prospectus required by COLL 4.2.5R (18) (Table: contents of the prospectus).

2. (1A)

   When arranging to sell, redeem, issue or cancel units, or when units are issued or cancelled under COLL 6.2.7R(1) (Issues and cancellations through an authorised fund manager), an authorised fund manager of a regulated money market fund may only require payment of a dilution levy or make a dilution adjustment to the extent it is permissible under the Money Market Funds Regulation.12

3. (2)

   An authorised fund manager operating either a dilution levy or a dilution adjustment, must operate that measure in a fair manner to reduce dilution and solely for that purpose.

4. (3)

   A dilution levy becomes due at the same time as payment or transfer of property becomes due for the issue, sale, redemption or cancellation and any such payment in respect of a dilution levy must be paid to the depositary to become part of scheme property as soon as practicable after receipt.

5. (4)

   A dilution adjustment may be made as part of the calculation of the unit price for the purpose of reducing dilution in the scheme or to recover any amount which it had already paid or reasonably expects to pay in the future in relation to the issue or cancellation of units.

6. (5)

   Where the authorised fund manager decides to make or not to make a dilution adjustment, it must not do so for the purpose of creating a profit or avoiding a loss for the account of an affected person.

7. (6)

   As soon as practicable after a valuation point, the authorised fund manager must provide the depositary with the amount or rate of any dilution adjustment made to the price or any dilution levy applied.

1. (1)

   Subject to (7), for12 the sale and redemption of units, all deals must be at a forward price10.

2. (2)

   [deleted]10

   1
3. (3)

   [deleted]10

4. (4)

   [deleted]10

5. (5)

   [deleted]10

6. (6)

   [deleted]10

7. (7)

   Deals for the sale and redemption of units in a regulated money market fund need not be at a forward price where the circumstances in article 34(2) of the Money Market Funds Regulation apply.12

Where the authorised fund manager is prepared to deal1 in units, or is willing to issue or cancel1units, under COLL 6.2.7, it must make the dealing1prices public in an appropriate manner.

3The authorised fund manager of a qualifying money market fund12valuing scheme property on an amortised cost basis7 must:

1. (1)

   carry out a valuation of the scheme property on a mark to market basis at least once every week and at the same valuation point used to value the scheme property on an amortised cost basis; and

2. (2)

   ensure that the value of the scheme property when valued on a mark to market basis does not differ by more than 0.5% from the value of the scheme property when valued on an amortised cost basis.

1. (1)

   This section applies to an authorised fund manager and a depositary of an AUT or ACS.1

   1
2. (2)

   COLL 6.4.9 (Plan registers) also applies to the ACD, any other director and the depositary of an ICVC.

1. (1)

   Either:1

   1
   1. (a)

      the manager or the trustee (as nominated in the trust deed); or1

   2. (b)

      the authorised contractual scheme manager or the depositary of the ACS (as nominated in the contractual scheme deed);1

   must establish and maintain a register of unitholders as a document in accordance with this section.1

2. (2)

   The manager or trustee or the authorised fund manager or depositary1 in accordance with their duties under (1) 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. (3)

   The register must contain:

   1. (a)

      the name and address of each unitholder (for joint unitholders, no more than four need to be registered)3;

   2. (b)

      the number of units of each class held by each unitholder3;

   3. (c)

      the date on which the unitholder was registered for units standing in his name3; and

   4. (d)

      the number of units of each class currently in issue3.

4. (4)

   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 fund manager or depositary1, but this does not affect their obligations under COLL 6.4.9 R (1) (Plan registers).

5. (5)

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

6. (6)

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

   1. (a)

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

   2. (b)

      in relation to a change of name in (a) where a certificate has been issued, either endorse the existing certificate or issue a new one;

   3. (c)

      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 fund manager1), during office hours3;

   4. (d)

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

   5. (e)

      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 fund manager1 becomes entitled to those units (until those units are either cancelled or re-sold and paid for); and

   6. (f)

      carry out any conversion of units allowed for by COLL 6.4.8 R (Conversion of units) after consultation with the manager or trustee or the authorised fund manager or depositary1, as appropriate.

1. (1)

   Subject to (3), if1 no person is entered in the register as the unitholder of a unit, the authorised fund manager1 must be treated as the unitholder of each such unit which is in issue3.

   11
2. (2)

   Where units are transferred to the authorised fund manager1, they need not be cancelled and the authorised fund manager1 need not be entered on the register as the new unitholder.

   11
3. (3)

   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.1

1. (1)

   Every unitholder of an AUT1 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.3

2. (1A)

   Provided:1

   1. (a)

      the requirements in COLL 6.4.6A R (Transfer of units in an ACS) are satisfied; and

   2. (b)

      transfers of units are allowed by the contractual scheme deed and prospectus in accordance with the conditions specified by FCA rules;1

   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.1

3. (2)

   Every instrument of transfer of units of an AUT or ACS1 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 manager1, the transferor must be treated as the unitholder until the name of the transferee has been entered in the register.

4. (3)

   In the case of an AUT or ACS, every1 instrument of transfer (stamped as necessary) must be left for registration, with the person responsible for the register, accompanied by:

   1
   1. (a)

      any necessary documents that may be required by legislation; and

   2. (b)

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

5. (4)

   In the case of an AUT or ACS, the1 details of instruments of transfer must be kept for a period of six years from the date of its registration.

   1
6. (5)

   In the case of an AUT or ACS, on1 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.

   1

1. (1)

   1Where transfer of units in an ACS is allowed by its contractual scheme deed and prospectus in accordance with the conditions specified by FCArules, the authorised contractual scheme manager of the ACS must take reasonable care to ensure that units are only transferred if the conditions specified by the FCA under (2) are met.

2. (2)

   The FCA specifies that for the purposes of (1), and for the purposes of COLL 3.2.6 R(27G) (ACSs: UCITS and NURS transfer of units) and COLL 4.2.5 R(5B) (ACSs: UCITS and NURS transfer of units), units in an ACS may only be transferred to a person that is a:

   1. (a)

      professional ACS investor; or

   2. (b)

      large ACS investor; or

   3. (c)

      person who already holds units in the scheme.

1. (1)

   Following the sale of units or as a result of COLL 6.4.6 R (Transfer of units by act of parties: AUTs and ACSs1) a document recording title to those units may be issued in such a form as the trust deed or contractual scheme deed1 permits.

2. (2)

   The person responsible for the register must issue any document in (1) or provide relevant information in a timely manner where the procedures for redeeming units require the unitholder to surrender that document.

3. (3)

   [deleted]3

   122
4. (4)

   Bearer certificates may not be issued for AUTs or 3ACSs.1

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.

1. (1)

   The ACD and any other directors of an ICVC or the person responsible for the register of an AUT or an ACS1 may arrange for a plan register to be established and maintained.

2. (2)

   Where payments are made out of scheme property to establish and maintain a plan register, plan investors must be treated as unitholders for the purposes of COLL 4.3 to COLL 4.5 and COLL 6.4.4 R (Register: general requirements and contents).

This section applies in accordance with COLL 6.5.2 R (Table of application).

1. (1)

   The directors (or director) of an ICVC must take all practicable steps to ensure the ICVC has at all times as its ACD a person who is qualified to act as ACD.

2. (2)

   If the ICVC ceases to have any director, the depositary must exercise its powers, under the OEIC Regulations, to appoint a person to be an ACD of the ICVC.

3. (3)

   For an ICVC that holds annual general meetings under the OEIC Regulations, the1 appointment of an ACD (other than the first ACD), under (1) or (2), must terminate at the close of the next annual general meeting following the date of the appointment or (if later) upon the expiration of 12 months from the date the appointment takes effect, unless the appointment has been approved by a resolution of the unitholders before the close of that annual general meeting or expiration of that 12 month period (as the case may be).

   1
4. (4)

   An ACD must not voluntarily terminate its appointment as ACD unless the termination is effective at the same time as the commencement of the appointment of a successor ACD.

5. (5)
   1. (a)

      In the event of:

      1. (i)

         any person becoming or ceasing to be a director;

      2. (ii)

         the appointment of an ACD being terminated;

      3. (iii)

         a new ACD being appointed; or

      4. (iv)

         a corporate director (including the ACD) becoming aware of any change of its controller;

      the FCA must immediately be notified in accordance with (b).

   2. (b)

      In the case of:

      1. (i)

         (a)(i), by the ACD;

      2. (ii)

         (a)(ii), by the ACD whose appointment is being terminated;

      3. (iii)

         (a)(iii), by the new ACD; and

      4. (iv)

         (a)(iv), by the corporate director concerned.

1. (1)

   The appointment of an ACD terminates immediately upon it ceasing to be a director.

2. (2)

   The appointment of an ACD terminates if a notice of termination of that appointment, the terms of which have been approved by a resolution of the board of directors of the ICVC, is given to the ACD.

3. (3)

   If there is no director other than the ACD, the appointment of the ACD terminates if a notice of termination of that appointment is given by the depositary to the ACD and to the ICVC, following any of the following events:

   1. (a)

      the calling of a meeting to consider a resolution for winding up the ACD;

   2. (b)

      an application being made to dissolve the ACD or to strike it off the Register of Companies;

   3. (c)

      the presentation of a petition for the winding up of the ACD;

   4. (d)

      the making of, or any proposals for the making of, a composition or arrangement with any one or more of the ACD's creditors;

   5. (e)

      the appointment of a receiver to the ACD (whether an administrative receiver or a receiver appointed over particular property);

   6. (f)

      anything equivalent to (a) to (e) above occurring in respect of the ACD in a jurisdiction outside the United Kingdom.

4. (4)

   Any termination under (2) or (3) takes effect when the notice is given, or on any subsequent time for its effect stated in the notice, or, if later, the time at which the termination is permitted to take effect under regulation 21 of the OEIC Regulations (The Authority's approval for certain changes in respect of a company).

5. (5)

   The depositary must (unless the termination takes effect at the same time as the appointment of a successor ACD) ensure that the unitholders are informed of the termination of the appointment of an ACD.

6. (6)

   The depositary is entitled to be reimbursed out of the scheme property for its out of pocket expenses in complying with (5).

1. (1)

   Any directors of an ICVC other than the ACD must exercise reasonable care to ensure that the ACD undertakes the responsibilities allocated under COLL 6.6.3 R (1) (Functions of the authorised fund manager) in a competent manner and the ACD must give those directors the information and explanations they consider necessary for this purpose.

2. (2)

   A director of an ICVC must not appoint an alternate director.

3. (3)

   When there is no person acting as ACD, the directors of an ICVC have the functions of an ACD under COLL 6.6.3 R (1) , but this does not affect the powers of the directors under COLL 6.6.15 R (Committees and delegation).

4. (4)

   When (3) applies, the directors must retain the services of one or more authorised persons to assist them in performing the functions referred to in COLL 6.6.3 R (1) and COLL 6.6.3 R (2) .

If the ICVC ceases to have any directors, the depositary may:

1. (1)

   retain the services of an authorised person to carry out the functions referred to in COLL 6.6.3 R (3)(a) and (b); or

2. (2)

   manage the scheme property itself on behalf of the ICVC until a director is appointed or the winding up of the ICVC is commenced provided it is not prohibited from doing so by any law or rule.

1. (1)

   The authorised fund manager3 of an AUT3 or ACS3 is subject to removal by written notice by the depositary3 upon any of the following events:

   33
   1. (a)

      the calling of a meeting to consider a resolution for winding up the authorised fund manager3;

      3
   2. (b)

      an application being made to dissolve the authorised fund manager3 or to strike it off the Register of Companies;

      3
   3. (c)

      the presentation of a petition for the winding up of the authorised fund manager3;

      3
   4. (d)

      the making of, or any proposals for the making of, a composition or arrangement with any one or more of the authorised fund manager's3 creditors;

      3
   5. (e)

      the appointment of a receiver to the authorised fund manager3 (whether an administrative receiver or a receiver appointed over particular property);

      3
   6. (f)

      anything equivalent to (a) to (e) above occurring in respect of the authorised fund manager3 in a jurisdiction outside the United Kingdom;

      3
   7. (g)

      the depositary3 forming the reasonable opinion, and stating in writing, that a change of authorised fund manager3 is desirable in the interest of unitholders;

      33
   8. (h)

      a resolution of unitholders being passed to remove the authorised fund manager3; or

      3
   9. (i)

      the unitholders of three quarters in value of all of 2the units then in issue2(excluding units held or treated as held by the authorised fund manager3 or by any associate of the authorised fund manager3) making a request in writing to the depositary3 that the authorised fund manager3 should be removed.

      23333
2. (2)

   On receipt of a notice by the depositary3 under (1), the authorised fund manager3 of the AUT or ACS3 ceases to be the authorised fund manager3; and the depositary3 must by deed appoint another person eligible under the Act to be the authorised fund manager3 of the AUT or ACS3 upon and subject to that other entering into such deed or deeds as the depositary3 may require.

   333333
3. (3)

   If the name of the AUT or ACS3 contains a reference to the name of the former authorised fund manager3, the former authorised fund manager3 is entitled to require the new authorised fund manager3 and the depositary3 immediately on receipt of a notice under (1) to propose a change in the name of the AUT or ACS.3

   3333

1. (1)

   The authorised fund manager of an AUT or ACS3 has the right to retire in favour of another person eligible under the Act and approved in writing by the depositary3 upon:

   33
   1. (a)

      the retiring authorised fund manager3 appointing that person by deed as authorised fund manager3 in its place and assigning to that person all its rights and duties as such a authorised fund manager3; and

      333
   2. (b)

      the new authorised fund manager3 entering into such deeds as the depositary3 reasonably considers necessary or desirable to be entered into by that person in order to secure the due performance of its duties as the authorised fund manager3 of the AUT or ACS3.

      333
2. (2)

   Upon retirement, the retiring authorised fund manager3:

   3
   1. (a)

      subject to (3), is released from all further obligations under the rules in this sourcebook and under the trust deed or contractual scheme deed3; and

   2. (b)

      may retain any consideration paid to it in connection with the change without having to account for it to any unitholder.

3. (3)

   Sub-paragraph (2)(a) does not affect the rights of the depositary3 or any other person in respect of any act or omission on the part of the retiring authorised fund manager3 before his retirement.

   33

1. (1)

   Upon the removal or retirement of the authorised fund manager3, the removed or retiring authorised fund manager of an AUT or ACS:3

   33
   1. (a)

      is entitled to be recorded in the register for those units continued to be held or treated as held by it as principal3; and

   2. (b)

      may require the depositary3 to issue to it a certificate for those units (if not previously issued).

      3
2. (2)

   Paragraph (1) is subject to any restriction in the prospectus relating to the permitted categories of unitholders.

   3

1. (1)

   The depositary of an authorised fund may not retire voluntarily except upon the appointment of a new depositary.

2. (2)

   The depositary of an authorised fund must not retire voluntarily unless, before its retirement, it has ensured that the new depositary has been informed of any circumstance of which the retiring depositary has informed the FCA.

3. (3)

   When the depositary of an authorised fund wishes to retire or ceases to be an authorised person, the authorised fundmanager may, subject to section 251 of the Act (Alteration of schemes and changes of manager or trustee), section 261Q of the Act (Alteration of contractual schemes and changes of operator or depositary)3 or regulation 21 of the OEIC Regulations (The Authority's approval for certain changes in respect of a company) appoint another person eligible to be the depositary in its place.

1. (1)

   Subject to (2), this section applies in accordance with COLL 6.6.2 R (Table of application).16

2. (2)

   Where a scheme is a regulated money market fund, COLL 6.6.3R and COLL 6.6.14R apply to the authorised fund manager and depositary of that scheme to the extent the provisions are consistent with the requirements of the Money Market Funds Regulation.16

1. (1)

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

   1. (a)

      the instrument constituting the fund;11

      11
   2. (b)

      the 13applicable rules13;

   3. (c)

      the most recently published prospectus; 16

   4. (d)

      for an ICVC, the OEIC Regulations; and16

   5. (e)

      where applicable, the Money Market Funds Regulation.16

2. (2)

   The authorised fund manager must take such steps as necessary to ensure compliance with the rules13that impose obligations upon the ICVC.

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 in writing how rights attaching to the ownership of the scheme property are to be exercised, but not where COLL 6.6.13 R (2) (Exercise of rights in respect of the scheme property) applies; and

   3. (c)

      take action immediately to rectify any breach of COLL 6.3 and, where the breach relates to the incorrect pricing of units or to the late payment in respect of the issue of units, the rectification must, (unless the depositary otherwise directs under (4)), extend to the reimbursement or payment, or arranging the reimbursement or 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 to the depositary of the AUT or ACS;10 or

         10
      5. (v)

         by the depositary10 (for the account of the AUT or ACS) to the authorised fund manager.10

         1010
4. (4)

   Rectification under (3)(c) need not, unless the depositary so directs, extend to any such reimbursement or payment where it appears to the depositary such breach, is of minimal significance.

1. (1)

   10The authorised contractual scheme manager of an authorised contractual scheme which is a UCITS scheme or a non-UCITS retail scheme must take reasonable care to ensure that ownership of units in the scheme is only recorded in the register for a:

   1. (a)

      professional ACS investor; or

   2. (b)

      large ACS investor; or

   3. (c)

      person who already holds units in the scheme.

2. (2)

   The authorised contractual scheme manager of an authorised contractual scheme must take reasonable care to ensure that rights or interests in units in the scheme are not acquired by any person from or through an intermediate unitholder, unless that person meets the criteria within (1)(a) to (c).

3. (3)

   The authorised contractual scheme 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.

10The authorised contractual scheme manager of an authorised contractual scheme must redeemunits in the scheme as soon as practicable after becoming aware that those units are vested in anyone (whether as a result of subscription or transfer of units) other than a person meeting the criteria in COLL 6.6.3AR (1)(a) to (c).

18The authorised fund manager of a FIIA must establish, implement and maintain an adequate liquidity management contingency plan for exceptional circumstances which sets out:

1. (1)

   how the authorised fund manager will respond to a liquidity risk crystallising;

2. (2)

   the range of liquidity tools and arrangements which it may deploy in such exceptional circumstances, any operational challenges associated with the use of such tools and the likely consequences for investors;

3. (3)

   the procedures for working with the depositary in the event the authorised fund manager must deploy these tools and arrangements;

4. (4)

   how the authorised fund manager will work with its delegates, such as third-party administrators, and other relevant third parties including intermediate unitholders, to:

   1. (a)

      deploy the liquidity management tools and arrangements;

   2. (b)

      communicate their use in a timely way to unitholders; and

   3. (c)

      implement any other part of this contingency plan;

5. (5)

   any operational challenges likely to arise from working with relevant third parties identified at (4); and

6. (6)

   communication arrangements for internal and external concerned parties (including the FCA, investors and the media where necessary).

1. (1)

   18The authorised fund manager of a FIIA must obtain written confirmation from any relevant third party identified in the contingency plan under COLL 6.6.3CR(4) that the third party will be able to undertake the matters specified in (2) as soon as is reasonably practicable.

2. (2)

   The matters specified for the purpose of (1) are that the relevant third party will, where necessary, be able to:

   1. (a)

      deploy any liquidity management tools and arrangements on which the authorised fund manager plans to rely as part of its contingency plan;

   2. (b)

      in a timely way, communicate the authorised fund manager’s use of any such tools and arrangements to unitholders; and

   3. (c)

      carry out any other part of the contingency plan which the authorised fund manager has identified as requiring action by that third party.

18The authorised fund manager of a FIIA must provide the depositary on an ongoing basis with all relevant information it needs to comply with its obligations under COLL 6.6.4BR.

1. (1)

   The depositary of an authorised fund must take reasonable care to ensure that the scheme is managed by the authorised fund manager in accordance with:

   1. (a)

      COLL 5 (Investment and borrowing powers);

   2. (b)

      COLL 6.2 (Dealing);

   3. (c)

      COLL 6.3 (Valuation and pricing);

   4. (d)

      COLL 6.8 (Income: accounting, allocation and distribution); 16

   5. (e)

      any provision of the instrument constituting the fund11 or prospectus that relates to the provisions referred to in (a) to (d); and16

      11
   6. (e)

      where applicable, the provisions of the Money Market Funds Regulation relating to investment and borrowing powers, dealing, valuation and pricing, and income.16

2. (2)

   The depositary must, in so far as not required under (1)(c), take reasonable care to ensure on a continuing basis that:

   1. (a)

      the authorised fund manager is adopting appropriate procedures to ensure that the price of a unit is calculated for each valuation point in accordance with COLL 6.3 or, where applicable, the Money Market Funds Regulation16; and

   2. (b)

      the authorised fund manager has maintained sufficient records to show compliance with COLL 6.3 .

3. (3)

   The depositary, when acting in its capacity as depositary, must act solely in the interests of the unitholders.

4. (4)

   The depositary:

   1. (a)

      must also take reasonable care to ensure that;

      1. (i)

         the authorised fund manager considers whether or not to exercise the power provided by 13COLL 6.3.8 R (Dilution) 13and, if applicable, the rate or amount of any 13dilution levy or dilution adjustment that is imposed;

      2. (ii)

         the authorised fund manager has in relation to (i), taken account of all factors that are material and relevant to the authorised fund manager's decision; and

      3. (iii)

         when the authorised fund manager considers whether or not to exercise the power under COLL 6.3.8 R, the authorised fund manager has acted in accordance with the restrictions imposed by that rule; and

   2. (b)

      has no duty in respect of the authorised fund manager's exercise of the discretion referred to in (a).

5. (5)

   [deleted]12

   8
6. (6)

   [deleted]12

   8
7. (7)

   [deleted]12

18The depositary of a FIIA must:

1. (1)

   regularly make its own assessment of the liquidity profile of the FIIA and the liquidity risks presented by the scheme property of a FIIA;

2. (2)

   take reasonable care to oversee the authorised fund manager’s liquidity management systems and procedures on an ongoing basis, using the assessment it has made under (1), to ensure the FIIA is managed in accordance with the following COLL rules and, in the case of a FIIA managed by a full-scope UK AIFM, the following FUND rules and provisions in the AIFMD level 2 regulation:

   1. (a)

      COLL 4.2.5R(3)(pa);

   2. (b)

      COLL 6.6.3CR and COLL 6.6.3ER;

   3. (c)

      FUND 3.2.2R(8);

   4. (d)

      FUND 3.2.5R;

   5. (e)

      FUND 3.6.3R;

   6. (f)

      article 44(1) and (2)(c) of the AIFMD level 2 regulation;

   7. (g)

      articles 46 to 49 of the AIFMD level 2 regulation; and

   8. (h)

      article 108 of the AIFMD level 2 regulation; and

3. (3)

   establish an escalation procedure when instances of potential non-compliance with the rules and provisions set out in paragraph (2) are identified, the details of which must be made available to the FCA upon request.

18The depositary of a FIIA managed by a small authorised UK AIFM must not delegate its functions under COLL 6.6.4BR to one or more third parties, except in relation to supporting administrative or technical tasks that are linked to these functions.

1. (1)

   The duties and powers of the authorised fund manager, the directors of an ICVC and the depositary under the rules in this sourcebook and under the instrument constituting the fund11 are in addition to the powers and duties under the general law.

   11
2. (2)

   Paragraph (1) applies only in so far as the relevant general law is not qualified by the rules in this sourcebook, the16instrument constituting the fund, the OEIC Regulations, or the Money Market Funds Regulation16.

   1111

9Where reasonable grounds exist for an ACD of an ICVC or an authorised contractual scheme manager of a co-ownership scheme10 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 scheme10 may have become inconsistent with the principle of limited recourse stated in the instrument constituting the fund11 of the ICVC or co-ownership scheme10 (see COLL 3.2.6 R (22A) (ICVCs: Umbrella schemes - principle of limited recourse) and COLL 3.2.6 R(22B) (Co-ownership schemes: Umbrella schemes - principle of limited recourse)10) the ACD or authorised contractual scheme manager of the co-ownership scheme10 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)

   Subject to (5) and (6), the 22authorised fund manager must make and retain for six years such records as enable:

   1. (a)

      the scheme and the authorised fund manager to comply with the rules in this sourcebook and the OEIC Regulations; and

   2. (b)

      it to demonstrate at any time that such compliance has been achieved.

2. (2)

   Subject to (5) and (6), the 22authorised fund manager must make and retain for six years a daily record of the units in the scheme 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.

3. (3)

   Where relevant, an authorised fund manager must make and retain for a period of six years a daily record of:

   1. (a)

      how it calculates and estimates dilution; and

   2. (b)

      its policy and method for determining the amount of any dilution levy or dilution adjustment.

4. (4)

   The authorised fund manager must on the request of the depositary immediately supply it with such information concerning the management and administration of the authorised fund as the depositary may reasonably require.

5. (5)

   Where the authorised fund manager or the depositary transfers an eligible CIS amount which is a dormant asset or unwanted asset money to a dormant asset fund operator, the authorised fund manager must retain the relevant records specified in (6) for a period of six years from the date on which:22

   1. (a)

      (in relation to the transfer of a dormant asset) the person to whom those records relate made a repayment claim; or22

   2. (b)

      (in relation to unwanted asset money) the person confirmed their wish for the unwanted asset money to be transferred.22

6. (6)
   1. (a)

      Whenever an eligible CIS amount is transferred to a dormant asset fund operator, the records to be retained under (5) include:22

      1. (i)

         the full names of each relevant unitholder; and22

      2. (ii)

         the name of the scheme to which the converted units relate, including, where the scheme is a sub-fund, the name of its umbrella.22

   2. (b)

      Where the eligible CIS amount falls within section 9(3)(a) of the Dormant Assets Act 2022 (an amount owing by virtue of the conversion of one or more units into a right to payment), the records must also include:22

      1. (i)

         the number and class of units converted;22

      2. (ii)

         the date on which the units were converted and the price per unit;22

      3. (ii)

         a record of any interest due, fees and charges that would have been paid and any other adjustments (such as a dilution levy) in respect of the converted units that would affect the amount of a repayment claim; and22

      4. (iv)

         for the period beginning with the date of the conversion of units and ending with the date on which a person establishes a repayment claim in respect of the units:22

         1. (A)

            in the case of a class of units which pays income, a record of the distribution rate per unit for each distribution of income paid;22

         2. (B)

            in the case of any sub-division or consolidation of units, or any mandatory conversion of units from one class to another class of the same authorised fund or sub-fund, a record of the basis of calculation for the action; and22

         3. (C)

            in the case of the cancellation of all units in the authorised fund or sub-fund under a scheme of arrangement by which new units are issued in another authorised fund or sub-fund in exchange, a record of the basis of calculation for the exchange.22

   3. (c)

      Where the transfer is of eligible redemption proceeds, an eligible distribution of income or orphan monies, the records must include:22

      1. (i)

         a note of whether the transfer relates to eligible redemption proceeds, an eligible distribution of income or orphan monies;22

      2. (ii)

         where the transfer is of eligible redemption proceeds, the date on which the units were redeemed;22

      3. (iii)

         where the transfer is of an eligible distribution of income:22

         1. (A)

            the distribution date, and the number and class of units to which the transfer relates; and22

         2. (B)

            the distribution rate per unit for each distribution paid;22

      4. (iv)

         the value of the relevant eligible CIS amount transferred; and22

      5. (v)

         a record of the interest due, fees and charges that would have been paid and any other adjustments that would affect the amount of the repayment claim in respect of the transferred eligible CIS amount.22

   4. (d)

      Where the transfer is of unwanted asset money, the records must include:22

      1. (i)

         a note that the transfer relates to unwanted asset money;22

      2. (ii)

         the value of the unwanted asset money transferred;22

      3. (iii)

         details of the unitholder’s confirmation that they wish the unwanted asset money to be transferred to a dormant asset fund operator; and22

      4. (iv)

         details of the declaration required by section 21(2)(a)(ii) of the Dormant Assets Act 2022.22

The ACD must immediately notify the FCA in writing if the ICVC's capital falls below the minimum or exceeds the maximum stated in the instrument of incorporation.

1. (1)

   The authorised fund manager10 of an AUT or ACS10 must, upon any vacancy for the position of auditor for an AUT or ACS10, with the approval of the depositary,10 appoint as auditor for the AUT or ACS10 a person qualified for appointment as auditor of an authorised person.

   1010
2. (2)

   The audit fees of the auditor are determined by the authorised fund manager10 with the approval of the depositary10.

   1010
3. (3)

   The authorised fund manager of an AUT or ACS10 may, with the approval of the depositary10, at any time, remove the auditor of an AUT or ACS10; this power exists notwithstanding anything in any agreement between the persons concerned.

   1010

The manager of an AUT must prepare and supply to the trustee the returns required to be submitted by the trustee to HM Revenue and Customs1.

1. (1)

   The authorised fund manager may give instructions to deal in the property of the scheme.

2. (2)

   The authorised fundmanager must obtain the consent of the depositary for the acquisition or disposal of immovable property.

3. (3)

   Where the depositary is of the opinion that a deal in property is not within the rules in this sourcebook and the instrument constituting the fund11, the depositary may require the authorised fund manager to cancel the transaction or make a corresponding disposal or acquisition to secure restoration of the previous situation and to meet any resulting loss or expense.

   11
4. (4)

   Where the depositary is of the opinion that:

   1. (a)

      an acquisition of property necessarily involves documents evidencing title being kept in the custody of a person other than the depositary; and

   2. (b)

      the depositary cannot reasonably be expected to accept the responsibility which would otherwise be placed upon it if it were to permit custody by that other person;

   the authorised fund manager must, if the depositary so requests, either cancel the transaction or make a corresponding disposal.

1. (1)

   The depositary of an authorised fund is responsible for the safekeeping of all of the scheme property (other than tangible movable property) entrusted to it and must:

   1. (a)

      take all steps and complete all documents needed to ensure completion of transactions properly entered into for the account of the scheme;

   2. (b)

      ensure that scheme property in registered form is, as soon as practicable, registered in the name of the depositary, its nominee, or (in the case of a non-UCITS retail scheme managed by a small authorised UK AIFM)19 a person retained by it under COLL 6.6.15R(4)19 (Committees and delegation);

   3. (c)

      take into its custody12 or under its control documents of title to the scheme property other than for transactions in derivatives or forward transactions; and

   4. (d)

      ensure that any transaction in derivatives or a forward transaction is entered into so as to ensure that any resulting benefit is received by the depositary.

2. (2)

   The depositary is responsible for the collection of income due to be paid for the account of the authorised fund.

3. (3)

   The depositary must keep for six years such records as are necessary:

   1. (a)

      to enable it to comply with the rules in this sourcebook; and

   2. (b)

      to demonstrate that it has achieved such compliance.

4. (4)

   19Where the authorised fund is a UCITS scheme, this rule applies to the scheme’s depositary to the extent the provisions are consistent with the requirements of the UCITS level 2 regulation.

5. (5)

   19Where the authorised fund is a non-UCITS retail scheme managed by a full-scope UK AIFM, this rule applies to the scheme’s depositary to the extent the provisions are consistent with the requirements of the AIFMD level 2 regulation.

19[Note: Articles 12 to 14 of the UCITS level 2 regulation and 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 does not apply to the depositary of a non-UCITS retail scheme managed by a small authorised UK AIFM.]

1. (1)

   The depositary must take all necessary steps to ensure that instructions given to it by the authorised fund manager for the exercise of rights attaching to the ownership of scheme property are carried out.

2. (2)

   Where the scheme property of an authorised fund contains units in any other scheme managed or otherwise operated by the authorised fund manager10 of the AUT or ACS10 or, as the case may be, by any director of the ICVC or by any associate of either, the depositary must exercise any voting rights associated with those units in accordance with what he reasonably believes to be the interests of the unitholders in the authorised fund.

   10

1. (1)

   The authorised fundmanager must avoid the scheme property being used or invested contrary to COLL 5, or any provision in the instrument constituting the fund11 or the prospectus as referred to in COLL 5.2.4 R (Investment powers:general), 16COLL 5.6.4 R (Investment powers: general) and, where the scheme is a regulated money market fund, the Money Market Funds Regulation16, except to the extent permitted by (3)(b).

   112
2. (2)

   The authorised fund manager must, immediately upon becoming aware of any breach of a provision listed in (1), take action, at its own expense, to rectify that breach, unless the breach occurred as the result of any of the circumstances within (3).

3. (3)

   The authorised fund manager must restore compliance with COLL 5 as soon as reasonably practicable having regard to the interests of the unitholders and, in any event, within the period specified in (5) or, when applicable, (6) where:

   1. (a)

      the scheme property is:

      1. (i)

         used or invested contrary to COLL 5 (other than a provision excusing a failure to comply on a temporary basis); and

      2. (ii)

         the contravention is beyond the control of both the authorised fund manager and the depositary; or

   2. (b)

      there is a transaction ("subsequent transaction") deriving from a right (such as the right to convert stock or subscribe to a rights issue) attributable to an investment ('original investment') of the scheme if:

      1. (i)

         the subsequent transaction, but for this rule would constitute a breach of COLL 5; and

      2. (ii)

         at the time of the acquisition of the original investment, it was reasonable for the authorised fund manager, to expect that a breach would not be caused by the subsequent transaction; and

      in this rule the reference to the exercise of a right includes the taking effect of a right without any action by or on behalf of the depositary or the authorised fund manager.

4. (4)

   Immediately upon the depositary becoming aware of any breach of any provision listed in (1), it must ensure that the authorised fund manager complies with (2).

5. (5)

   The maximum period for restoration of compliance under (3) starts at the date of discovery of the relevant circumstance and lasts, subject to any extension under (6):

   1. (a)

      for six months; or

   2. (b)

      where the transaction in question was a transaction in derivatives or a forward transaction under COLL 5.2.20 R (Permitted transactions (derivatives and forwards)) or COLL 5.6.13R (Permitted transactions (derivatives and forwards)), until the close of business five business days later; or

   3. (c)

      where the transaction relates to an immovable, for two years.

6. (6)

   The period specified at (5)(b) is extended where:

   1. (a)

      the transaction involved a delivery of a commodity, from five to twenty business days;

   2. (b)

      the reason for the contravention in (3)(a) is the inability of the authorised fund manager to close out a transaction because of a limit in the number or value of transactions imposed by an eligible derivatives market, until five business days after:

      1. (i)

         the inability resulting from any such limit is removed; or

      2. (ii)

         it becomes, to the knowledge of the authorised fund manager, reasonably practicable and reasonably prudent for the transaction to be closed out in some other way.

1. (1)

   The directors of an ICVC may delegate to any one or more of their number any of the directors' powers or duties but remain responsible for the acts or omissions of any such directors.

2. (1A)

   The directors of an ICVC have the power to retain the services of anyone to assist in the performance of their functions, subject to the duty of the ACD to comply with COLL 6.6.15A R.8

3. (2)

   [deleted]8

4. (3)

   [deleted]8

   8
5. (4)

   The depositary of a non-UCITS retail scheme managed by a small authorised UK AIFM12 may delegate any function to any person save:

   1. (a)

      the ICVC or any director of the ICVC or the authorised fund manager of a scheme, to assist the depositary to perform:

      1. (i)

         any function of oversight in respect of the scheme, its directors or the authorised fund manager as the case may be; or

      2. (ii)

         any function of custody or control of the schemeproperty;

   2. (b)

      an associate of the ICVC or of any of the directors of the ICVC or of the authorised fund manager of the scheme (as the case may be) to assist the depositary to perform any function in (a)(i); or

   3. (c)

      a nominee company or anyone else to assist it to perform the function of being a custodian of documents evidencing title to scheme property of the scheme unless the arrangements with the custodian prohibit the custodian from releasing the documents into the possession of a third party without the consent of the depositary.

6. (5)

   Where a depositary retains services under (4):

   1. (a)

      if it retains the services of a director of the ICVC, or an associate of such a director or its own associate, or the authorised fund manager of a scheme or that authorised fund manager'sassociate,7 then its liability for those services shall remain unaffected; and

      7
   2. (b)

      in any other case, it will not be held responsible by virtue of the rules in COLL for any act or omission of the person so retained if it can show that:

      1. (i)

         it was reasonable for it to obtain assistance to perform the function in question;

      2. (ii)

         the person retained was and remained competent to provide assistance in the performance of the function in question; and

      3. (iii)

         it had taken reasonable care to ensure that the assistance in question was provided by the person retained in a competent manner.

7. (6)

   Where COLL 6.5.5 R (4) (Other directors) applies, the directors have, in respect of the functions of the ACD under COLL 6.6.3 R (Functions of the authorised fund manager), the same rights and responsibilities as for an ACD under this rule and COLL 6.6.15A R.8

1. (1)

   8This rule applies to:

   1. (a)

      an authorised fund manager17of an AUT, ACS10 or an ICVC where such AUT, ACS10 or ICVC is a UCITS scheme13; and17

   2. (aa)

      13a small authorised UK AIFM that is the authorised fund manager of an AUT, ACS or an ICVC that is a non-UCITS retail scheme.17

   3. (b)

      [deleted]17

2. (2)

   The authorised fund manager has the power to retain the services of any person to assist it in the performance of its functions, provided that:

   1. (a)

      a mandate in relation to managing investments of the scheme is not given to:

      1. (i)

         the depositary; or

      2. (ii)

         any other person whose interests may conflict with those of the authorised fund manager or unitholders; or

      3. (iii)

         an authorised person operating from an establishment in the United Kingdom unless such person has a Part 4A permission to manage investments; or

      4. (iv)

         any other person operating from an establishment in a country other than the United Kingdom unless such person:

         1. (A)

            is authorised or registered in such country for the purpose of asset management; and

         2. (B)

            is subject to prudential supervision in such country;

            and in addition if that person is not an a UK firm17, co-operation is ensured between the FCA and the overseas regulator of that person;

   2. (b)

      the authorised fund manager ensures that at all times it can monitor effectively the relevant activities of any person so retained;

   3. (c)

      the mandate permits the authorised fund manager to:

      1. (i)

         give further instructions to the person so retained; and

      2. (ii)

         withdraw the mandate with immediate effect when this is in the interests of the unitholders;

   4. (d)

      the mandate does not prevent effective supervision of the authorised fund manager and it must not prevent the authorised fund manager from acting, or the scheme from being managed, in the best interests of the unitholders; and

   5. (e)

      having regard to the nature of the functions to be carried out under the mandate, the person to whom the mandate is given must be qualified and capable of undertaking those functions.

3. (3)

   Subject to the provisions of the OEIC Regulations and COLL 6.6.15 R (1) and (1A), where services are retained under (2), the responsibility which the authorised fund manager had in respect of such services prior to that retention of services will remain unaffected.

1. (1)

   The authorised fund manager, any other director of an ICVC and the depositary must take reasonable care to ensure that a transaction within (a) to (f) is not carried out on behalf of the scheme:

   1. (a)

      putting cash on deposit with an affected person unless that person is an eligible institution or an approved bank and the arm's length requirement in (2) is satisfied;

   2. (b)

      lending money by an affected person to, or for the account of, the scheme, unless the affected person is an eligible institution or an approved bank, and the arm's length requirement in (2) is satisfied;

   3. (c)

      the dealing in property by an affected person, to, or with, the scheme (or the depositary for the account of the scheme), unless (3) applies;

   4. (d)

      the vesting of property (other than cash) by an affected person in the scheme or the depositary for the account of the scheme against the issue of units in the scheme, unless:

      1. (i)

         (3) applies; or

      2. (ii)

         the purpose of the vesting is that the whole or part of the property of a body corporate or a collective investment scheme becomes the first property of the scheme and the unitholders of shares or units in the body corporate or collective investment scheme become the first unitholders in the scheme;

   5. (e)

      the acquisition of scheme property by an affected person from the scheme (or the depositary acting for the account of the scheme), unless COLL 6.2.15 R (In specie issue and cancellation) applies, or unless (3) applies; and

   6. (f)

      transactions within COLL 5.4 (Stock lending) by an affected person with, or in relation to, the scheme unless the arm's length requirement in (2) is satisfied.

2. (2)

   Any transaction in (1)(a),(b) or (f) must be at least as favourable to the scheme as any comparable arrangement on normal commercial terms negotiated at arm's length between the affected person and an independent party.

3. (3)

   There is no breach of (1)(c), (d) or (e) if the transaction meets the requirements of (4) (best execution on-exchange), (5) (independent valuation) or (6) (arm's length transaction).

4. (4)

   There is best execution on-exchange for the purposes of (3) if:

   1. (a)

      the property is an approved security or an approved derivative;

   2. (b)

      the transaction is effected under the rules of the relevant exchange with or through a person who is bound by those rules;

   3. (c)

      there is evidence in writing of the effecting of the transaction and of its terms; and

   4. (d)

      the authorised fund manager has taken all reasonable steps to ensure that the transaction is effected on the terms which are the best available for the scheme.

5. (5)

   There is independent valuation for the purposes of (3) if:

   1. (a)

      the value of the property is certified in writing for the purpose of the transaction by a person approved by the depositary as:

      1. (i)

         independent of any affected person; and

      2. (ii)

         qualified to value property of the relevant kind; and

   2. (b)

      the depositary is of the opinion that the terms of the transaction are not likely to result in any material prejudice to unitholders.

6. (6)

   There is an arm's length transaction for the purposes of (3) if:

   1. (a)

      paragraph (4)(a) is not satisfied;

   2. (b)

      it is not reasonably practicable to obtain an independent valuation under (5); and

   3. (c)

      the depositary has reliable evidence that the transaction is or will be on terms which satisfy the arm's length requirement in (2).