COLL 8.5 Powers and responsibilities

This section applies to an ICVC which is a qualified investor scheme and the authorised fund manager any other directors of an ICVC and the depositary of a qualified investor scheme.

1. (1)

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

   1. (a)

      the instrument constituting the scheme;

   2. (b)

      the rules in this sourcebook;

   3. (c)

      the most recently published prospectus; and

   4. (d)

      for an ICVC, the OEIC Regulations.

2. (2)

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

3. (3)

   The authorised fund manager must:

   1. (a)

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

   2. (b)

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

   3. (c)

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

      1. (i)

         by the authorised fund manager to unitholders and former unitholders;

      2. (ii)

         by the ACD to the ICVC;

      3. (iii)

         by the ICVC to the ACD;

      4. (iv)

         by the manager to the trustee; or

      5. (v)

         by the trustee (for the account of the AUT) to the manager;

   4. (d)

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

   5. (e)

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

   6. (f)

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

1. (1)

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

2. (2)

   An authorised fund manager must avoid the scheme property being used or invested contrary to any provision in COLL 8.4 (Investment and borrowing powers).

3. (3)

   An authorised fund manager must immediately on becoming aware of any breach of COLL 8.4 take action, at its own expense, to rectify that breach.

4. (4)

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

5. (5)

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

1. (1)

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

2. (2)

   The depositary must:

   1. (a)

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

   2. (b)

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

   3. (c)

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

   4. (d)

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

   5. (e)

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

   6. (f)

      hold and deal with any income received in respect of the scheme property in accordance with COLL 8.5.15 R (Income);

   7. (g)

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

      1. (i)

         COLL 8.4 (Investment and borrowing powers);

      2. (ii)

         COLL 8.5.9 R (Valuation, pricing and dealing); and

      3. (iii)

         COLL 8.5.15 R (Income);

   8. (h)

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

   9. (i)

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

3. (3)

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

1. (1)

   The authorised fund manager (or in addition any other director in the case of an ICVC) may delegate any function to any person.

2. (2)

   The depositary has the power to delegate any function to anyone, including in the case of an ICVC a director, to assist the depositary to perform its functions, save that it must not retain the services of the authorised fund manager or, in the case of an ICVC, any other director to perform any part of its functions of safe custody of the scheme property.

3. (3)

   Subject to any provisions of the OEIC Regulations, the delegator in (1) and (2) will not be responsible under the rules in COLL for any act or omission of the delegate provided that the delegator can show:

   1. (a)

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

   2. (b)

      that the delegate was and remained competent to provide that assistance; and

   3. (c)

      that the delegator took reasonable care to ensure that the assistance was provided in a competent manner.

1. (1)

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

2. (2)

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

1. (1)

   The manager or the trustee (in accordance with their responsibilities as set out in the instrument constituting the scheme) must maintain a register of unitholders as a document in accordance with this rule.

2. (2)

   The register must contain:

   1. (a)

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

   2. (b)

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

   3. (c)

      the date on which the Unitholder was registered in the register for the units standing in his name.

3. (3)

   The manager or the trustee (as appropriate) must take all reasonable steps and exercise all due diligence to ensure the register is kept complete and up to date.

4. (4)

   Where relevant, the manager must immediately notify the trustee of any information he receives which may affect the accuracy of any entry in the register.

1. (1)

   The value of the scheme property is the net value of the scheme property after deducting any outstanding borrowings (including any capital outstanding on a mortgage of an immovable).

2. (2)

   Any part of the scheme property which is not an investment (save an immovable) must be valued at fair value.

3. (3)

   For the purposes of (2), any charges that were paid, or would be payable, on acquiring or disposing of the asset must be excluded from the value of that asset.

4. (4)

   The value of the scheme property of an authorised fund must, save as otherwise provided in this section, be determined in accordance with the provisions of the instrument constituting the scheme

   and the prospectus, as appropriate.

5. (5)

   The scheme must have a valuation point on each dealing day.

6. (6)

   The authorised fund manager must prepare a valuation in accordance with (4) for each relevant type of unit at each relevant valuation point.

7. (7)

   The price of a unit must be calculated on the basis of the valuation in (6) in a manner that is fair and reasonable as between unitholders.

8. (8)

   Immediately after completing a valuation under (6), the authorised fund manager must notify the depositary of:

   1. (a)

      the price in the relevant currency of each type of unit as determined for the relevant valuation point; and

   2. (b)

      the basis of any adjustment applied in relation to that valuation point.

9. (9)

   The authorised fund manager must publish in an appropriate manner the priceof any type of unit based on the notification to the depositary in (8)(a).

10. (10)

    The authorised fund manager must also provide on request to any unitholder at any time an estimated price for any type of unit in the scheme.

11. (11)

    The period of any initial offer and how it should end must be set out in the prospectus and must not be of unreasonable length.

1. (1)

   The authorised fund manager must:

   1. (a)

      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 of that class; and

   2. (b)

      not do, or omit anything that would, or might confer on itself a benefit or advantage at the expense of a unitholder or potential unitholder.

2. (2)

   For the purposes of (1) the authorised fund manager may take into account sales and redemptions after the valuation point, provided it has systems and controls to ensure compliance with (1).

3. (3)

   The authorised fund manager must arrange for the issue and cancellation of units and pay money or assets to or from the depositary for the account of the scheme as required by the prospectus.

4. (4)

   The authorised fund manager must keep a record of issues and cancellations made under this rule.

5. (5)

   The authorised fund manager may arrange for the ICVC, or instruct the trustee to issue or cancel units where the authorised fund manager would otherwise be obliged to sell or redeem the units in the manner set out in the prospectus.

6. (6)

   Where the authorised fund manager has not complied with (1), it must correct the error as soon as possible and must reimburse the scheme any costs it may have incurred in correcting the position, subject to any reasonable minimum level for such reimbursement as set out in the prospectus.

1. (1)

   The authorised fund manager must, at all times during the dealing day, be willing to effect the sale of units to any eligible investor (within any conditions in the instrument constituting the scheme and the prospectus which must be fair and reasonable as between all unitholders and potential unitholders) for whom the authorised fund manager does not have reasonable grounds to refuse such sale.

2. (2)

   The authorised fund manager must, at all times during the dealing day, effect a redemption on the request of any eligible unitholder (within any conditions in the instrument constituting the scheme and the prospectus) of units owned by that unitholder, unless the authorised fund manager has reasonable grounds to refuse such redemption.

3. (3)

   On agreeing to a redemption of units within (2), the authorised fund manager must pay the full proceeds of the redemption to the unitholder within any reasonable period specified in the instrument constituting the scheme or the prospectus, unless it has reasonable grounds for withholding payment.

4. (4)

   Payment of proceeds on redemption must be made by the authorised fund manager in any manner provided for in the prospectus which must be fair and reasonable as between redeeming unitholders and continuing unitholders.

1. (1)

   An ICVC must not incur any expense in respect of the use of any movable or immovable property unless the scheme is dedicated to such investment or such property is necessary for the direct pursuit of its business.

2. (2)

   Payments out of the scheme property may be made from capital property rather than from income, provided the basis for this is set out in the prospectus.

1. (1)

   A qualified investor scheme must have:

   1. (a)

      an annual accounting period;

   2. (b)

      a half-yearly accounting period; and

   3. (c)

      an accounting reference date;

   the details of which must be set out in the prospectus.

2. (1A)

   COLL 6.8.2 R (2) to (Accounting periods) also apply to the half-yearly accounting period and annual accounting period of a qualified investor scheme.1

3. (2)

   A qualified investor scheme must have an annual income allocation date, which must be within four months of the accounting reference date.

4. (3)

   A qualified investor scheme may have an interim income allocation date and interim accounting periods and if it does, the interim income allocation date must be within a reasonable period of the end of the relevant interim accounting period as set out in the prospectus.

5. (4)

   A qualified investor scheme must have a distribution account where the income property is transferred at the end of the relevant accounting period.

6. (5)

   If income is allocated and distributed during an accounting period:

   1. (a)

      with effect from the end of the relevant accounting period, the amount of income allocated to unit classes that accumulate income becomes part of the capital property and requires an adjustment to the proportion of the value of the scheme property to which they relate if other classes units are in issue during the period;

   2. (b)

      the adjustment in (a) must ensure the price remains unchanged despite the transfer of income; and

   3. (c)

      the amount of any interim distribution may not be more than the amount which, in the opinion of the authorised fund manager, would be available for allocation if the interim accounting period and all previous interim accounting periods in the same annual accounting period, taken together, were an annual accounting period.