1. (1)

   This chapter applies to:

   1. (a)

      an authorised fund manager of an AUT or an ICVC;

   2. (b)

      any other director of an ICVC;

   3. (c)

      a depositary of an AUT or an ICVC; and

   4. (d)

      an ICVC,

   which is a qualified investor scheme.

2. (2)

   Where this chapter refers to rules in any other chapter of this sourcebook, those rules and any relevant guidance should be applied as if they referred to qualified investor schemes.

1. (1)

   The authorised fund manager of a qualified investor scheme must take reasonable care to ensure that ownership of units in that scheme is only recorded in the register for the categories of person to whom it can be promoted under COB 3 Annex 5 (Permitted promotion of unregulated collective investment schemes and qualified investor schemes).

2. (2)

   The authorised fund manager will be regarded as complying with (1) to the extent that it can show that it was reasonable for it to rely on relevant information provided by another person.

This section applies to an authorised fund manager in respect of a qualified investor scheme.

A qualified investor scheme may issue such classes of unit as are set out in the instrument constituting the scheme, provided the rights of any class are not unfairly prejudicial as against the interests of the unitholders of any other class of units in that scheme.

The authorised fund manager must ensure that the name of the scheme, a sub-fund or a class of unit is not undesirable or misleading.

The statements and provisions required by COLL 8.2.6 R must be included in the instrument constituting the scheme of a qualified investor scheme.

Units whose issue may be limited can only be issued if permitted by the instrument constituting the scheme, under the conditions set out in the prospectus and provided that this will not materially prejudice any existing unitholders in the scheme.

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

1. (1)

   An authorised fund manager must ensure that a prospectus of a qualified investor scheme is drawn up which contains the information, specified in COLL 8.3.4 R (Table: contents of qualified investor scheme prospectus), and the authorised fund manager must:

   1. (a)

      revise the prospectus immediately upon the occurrence of any materially significant change in the information required to be stated within it;

   2. (b)

      include the date of any revision in a prominent manner in the revised prospectus;2

      2
   3. (c)

      send a copy of the original and any revised prospectus to the FSA; and2

      2
   4. (d)

      review the prospectus periodically and revise it to take account of any significant change or new matter.2

2. (2)

   The prospectus must not contain any provision which is unfairly prejudicial to the interests of unitholders generally or to the unitholders of any class of units.

3. (3)

   An ICVC or the manager of an AUT must offer a copy of the scheme's most recent prospectus free of charge to any person eligible to invest in a qualified investor scheme prior to the purchase of any units.

The authorised fund manager must ensure that the prospectus does not contain any untrue or misleading statement or omit any matter required by the rules in this sourcebook to be included in it.

1. (1)

   The authorised fund manager must prepare a report in respect of each annual accounting period and half-yearly accounting period.

2. (2)

   [deleted]1

3. (2A)

   Where the first annual accounting period of a scheme is less than 12 months, a half-yearly report need not be prepared.2

4. (3)

   The authorised fund manager must within a reasonable time after the end of each relevant accounting period, publish the annual report and half-yearly report and provide a copy free of charge on request to any unitholder.

5. (4)

   [deleted]2

   2
6. (5)

   The authorised fund manager must provide free of charge on the request of any person eligible to invest in the scheme2 a copy of the latest annual or half-yearly report before the conclusion of any sale to such person2.

   22
7. (6)

   The authorised fund manager must provide a copy of each annual and half-yearly report to the FSA.

8. (7)

   For a scheme which is an umbrella, any annual report provided under (3) or (5) may be a report prepared under COLL 8.3.5AR (3), but the authorised fund manager must nevertheless provide free of charge the report prepared under COLL 8.3.5AR (2) if a unitholder or any other person eligible to invest in the scheme requests it.2

1. (1)

   An annual report, other than for a scheme which is an umbrella, must contain:

   1. (a)

      the full accounts for the annual accounting period prepared in accordance with the requirements of the IMA SORP;

   2. (b)

      the report of the authorised fund manager in accordance with COLL 8.3.5C R (Authorised fund manager's report);

   3. (c)

      the report of the depositary in accordance with COLL 8.3.5D R (Report of the depositary); and

   4. (d)

      the report of the auditor in accordance with COLL 4.5.12 R (Report of the auditor).

2. (2)

   An annual report on a scheme which is an umbrella must be prepared for the umbrella as a whole and must contain:

   1. (a)

      for each sub-fund, the full accounts required by (1)(a) and the report of the authorised fund manager in accordance with COLL 8.3.5C R;

   2. (b)

      an aggregation of the accounts required by (a);

   3. (c)

      the report of the depositary in accordance with COLL 8.3.5D R; and

   4. (d)

      the report of the auditor in accordance with COLL 4.5.12 R.

3. (3)

   The authorised fund manager of a scheme which is an umbrella may, in addition to complying with (2), prepare a further annual report for any one or more individual sub-funds of the umbrella, in which case it must contain:

   1. (a)

      for the sub-fund, the full accounts required by (1)(a) and the report of the authorised fund manager in accordance with COLL 8.3.5C R;

   2. (b)

      the report of the depositary in accordance with COLL 8.3.5D R; and

   3. (c)

      the report of the auditor in accordance with COLL 4.5.12 R.

4. (4)

   The directors of an ICVC or the manager of an AUT must ensure that the accounts referred to in (1)(a), (2)(a) and (3)(a) give a true and fair view of the net income and the net gains and losses on the scheme property of the authorised fund or sub-fund for the relevant annual accounting period, and of the financial position of the authorised fund or sub-fund as at the end of that period.

1. (1)

   A half-yearly report on an authorised fund or sub-fund must contain:

   1. (a)

      the full accounts for the half-yearly accounting period which must be prepared in accordance with the requirements of the IMA SORP; and

   2. (b)

      the report of the authorised fund manager in accordance with COLL 8.3.5C R.

2. (2)

   For a scheme which is an umbrella, the authorised fund manager may choose whether the half-yearly report is prepared for the umbrella as a whole, or for each individual sub-fund, or both.

The report of the authorised fund manager must include:

1. (1)

   a review of the investment activities during the period to which the report relates;

2. (2)

   particulars of any fundamental or significant change to the authorised fund made since the date of the last report; and

3. (3)

   any other information which would enable unitholders to make an informed judgement on the development of the activities of the authorised fund during the period and the results of those activities as at the end of the period.

1. (1)

   The depositary must make an annual report to unitholders which must be included in the annual report.

2. (2)

   The depositary's report must contain:

   1. (a)

      a description, which may be in summary form, of the duties of the depositary under COLL 8.5.4 R (Duties of the depositary) and in respect of the safekeeping of the scheme property; and

   2. (b)

      a statement whether in any material respect:

      1. (i)

         the issue, sale, redemption and cancellation and calculation of the price of the units and the application of the authorised fund's income, have not been carried out in accordance with the rules in this sourcebook and, where applicable, the OEIC Regulations and the instrument constituting the scheme; and

      2. (ii)

         the investment and borrowing powers and restrictions applicable to the authorised fund have been exceeded.

1. (1)

   Any proposed change which would be reasonably considered to be a fundamental change to the scheme requires the prior sanction of an ordinary resolution of the unitholders.

2. (2)

   Any proposed change to the scheme which is not within (1) but which would be reasonably considered to be significant, requires the giving of reasonable notice to Unitholders to become effective.

3. (3)

   Alterations affecting only a particular sub-fund or class of units may be approved in accordance with (1) or (2) for the particular sub-fund or class of units, with the consent of, or, as the case may be, notice to, the relevant unitholders.

4. (4)

   This rule and COLL 8.3.8 R (Meetings) will apply (unless the context requires otherwise) to alterations concerning unitholders of a particular sub-fund or class of units rather than the scheme or sub-fund as a whole.

1. (1)

   Details of the procedures for the convening and conducting of meetings and resolutions must be set out in the instrument constituting the scheme and be reasonable and fair as between all relevant parties.

2. (2)

   The authorised fund manager must record and keep minutes for six years of all proceedings to which COLL 8.3.6 R (Alterations to the scheme and notices to Unitholders) and this rule are relevant.

3. (3)

   The provisions in COLL 4.4.12 R (Notices to Unitholders), COLL 4.4.13 R (Other notices) and COLL 4.4.14 G (References to writing and electronic documents) apply in relation to qualified investor schemes.

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

An authorised fund manager must take reasonable steps to ensure that the scheme property of a qualified investor scheme provides a spread of risk, taking into account the investment objectives and policy of the scheme as stated in the most recently published prospectus, and in particular, any investment objective as regards return to the unitholders (whether through capital appreciation or income or both).

1. (1)

   The scheme property of a qualified investor scheme may, subject to the rules in this chapter, comprise any assets or investments to which it is dedicated.

2. (2)

   The instrument constituting the scheme and the prospectus may further restrict:

   1. (a)

      the kinds of assets in which the scheme property may be invested;

   2. (b)

      the types of transactions permitted and any relevant limits; and

   3. (c)

      the borrowing powers of the scheme.

The scheme property of a qualified investor scheme must, except where otherwise provided by the rules in this chapter, consist only of one or more of the following to which it is dedicated:

1. (1)

   any specified investment:

   1. (a)

      within articles 74 to 86 of the Regulated Activities Order; and

   2. (b)

      within article 89 (Rights to or interests in investments) of the Regulated Activities Order where the right or interest relates to a specified investment within (a);

2. (2)

   an interest in an approved immovable under COLL 8.4.11 R (Investment in property), provided the country or territory in which the land or building is situated is identified in the prospectus;

3. (3)

   precious metals; or

4. (4)

   a commodity contract traded on an RIE or a recognised overseas investment exchange.

A qualified investor scheme may invest in units in a scheme (a second scheme) only if the second scheme is:

1. (1)

   a regulated collective investment scheme; or

2. (2)

   a scheme not within (1) where the authorised fund manager has taken reasonable care to determine that:

   1. (a)

      it is the subject of an independent annual audit conducted in accordance with international accounting standards;

   2. (b)

      it has its value verified by a person independent from its operator in relation to each day on which dealing in that scheme'sunits may take place;

   3. (c)

      there are mechanisms in place to enable Unitholders to redeem their units within a reasonable time;

   4. (d)

      it is prohibited from having more than 15% of its value in units of schemes; and

   5. (e)

      it operates in accordance with the principle of risk spreading.

Where the second scheme in COLL 8.4.5 R is an umbrella, the provisions apply to each sub-fund as if it were a separate scheme.

1. (1)

   An authorised fund manager must take reasonable care to determine the following when entering into any transaction in derivatives or any commodity contract which may result in any asset becoming part of the scheme property:

   1. (a)

      if it is an asset in which the scheme property could be invested, that the transaction:

      1. (i)

         can be readily closed out; or

      2. (ii)

         would at the expected time of delivery relate to an asset which could be included in the scheme property under the rules in this chapter; or

   2. (b)

      in any other case that the transaction can be readily closed out.

2. (2)

   An authorised fund manager may acquire an asset within (1) if its determination has proved incorrect and if it determines that acquisition is in the interests of the unitholders, provided it has the consent of the depositary.

3. (3)

   Any asset within (1) acquired in accordance with (2) may form part of the scheme property despite any other rule in this chapter until the position can be rectified.

1. (1)

   A transaction in derivatives or a forward transaction may be entered into only if the maximum exposure, in terms of the principal or notional principal created by the transaction to which the scheme is or may be committed by another person, is covered globally under (2).

2. (2)

   Exposure is globally covered if adequate cover from within the scheme property is available to meet the scheme's total exposure taking into account any reasonably foreseeable market movement.

3. (3)

   The total exposure relating to derivatives held in a qualified investor scheme may not exceed the net value of the scheme property.

4. (4)

   No element of cover may be used more than once.

A transaction in an OTC derivative must be capable of valuation which it will only be if the authorised fund manager having taken reasonable care determines that, throughout the life of the derivative (if the transaction is entered into), it will be able to value the investment concerned with reasonable accuracy:

1. (1)

   on the basis of the pricing model; or

2. (2)

   on some other reliable basis reflecting an up-to-date market value;

which has been agreed between the authorised fund manager and the depositary.

1. (1)

   An authorised fund manager must, as frequently as necessary to ensure compliance with COLL 8.4.7 R (2) and COLL 8.4.7 R (4), re-calculate the amount of cover required in respect of derivatives and forwards positions in existence under this chapter.

2. (2)

   Derivatives and forwards positions may be retained in the scheme property only so long as they remain covered globally under COLL 8.4.7 R.

3. (3)

   An authorised fund manager must use a risk management process enabling it to monitor and measure as frequently as appropriate the risk of a scheme'sderivatives positions and their contribution to the overall risk profile of the scheme.

1. (1)

   The ICVC, or the depositary at the request of the ICVC, or the trustee at the request of the manager, may enter into a stock lending arrangement within section 263B of the Taxation of Chargeable Gains Act 1992 (without extension by section 263C).

2. (2)

   The depositary must ensure that the value of any collateral, for the stock lending arrangement is at all times at least equal to the value of the securities transferred by the depositary.

3. (3)

   In the case of the expiry of validity of any collateral, the duty in (2) is satisfied if the depositary or the authorised fund manager, as appropriate, takes reasonable care to determine that sufficient collateral will be transferred by close of business on the day of expiry.

1. (1)

   The ICVC or trustee (on the instructions of the manager) may borrow money for the use of the authorised fund on terms that the borrowing is to be repayable out of the scheme property.

2. (2)

   The authorised fund manager must ensure that the authorised fund's borrowing does not, on any day, exceed 100 % of the net value of the scheme property and must take reasonable care to ensure that arrangements are in place that will enable borrowings to be closed out to ensure such compliance.

3. (3)

   In this rule "borrowing" also includes any arrangement (including a combination of derivatives) designed to achieve a temporary injection of money into the scheme property in the expectation that the sum will be repaid.

4. (4)

   Where the limit in (2) is breached, the authorised fund manager must take action in accordance with the principles set out in COLL 8.5.3 R (3) to COLL 8.5.3 R (5) (Duties of the authorised fund manager: investment and borrowing powers) to deal with that breach.

1. (1)

   Any investment in land or a building held within the scheme property of a qualified investor scheme must be in an immovable within (2).

2. (2)

   For an immovable :

   1. (a)

      it must be situated in a country or territory identified in the prospectus;

   2. (b)

      the authorised fund manager must have taken reasonable care to determine that the title to the interest in the immovable is a good marketable title; and

   3. (c)

      the manager or the ICVC must have received a report from the appropriate valuer that:

      1. (i)

         contains a valuation of the interest in the immovable (with and without any relevant existing mortgage); and

      2. (ii)

         states that in the appropriate valuer's opinion the interest in the immovable would if acquired by the scheme, be capable of being disposed of reasonably expeditiously at that valuation;

   4. (d)

      unless (c) is satisfied, the manager or the ICVC must have received a report from an appropriate valuer valuing the interest in the immovable and stating that:

      1. (i)

         the immovable is adjacent to or in the vicinity of another immovable included in the scheme property; and

      2. (ii)

         in the opinion of the appropriate valuer, the total value of the interests in both immovables would at least equal the sum of the price payable for the interest in the immovable and the existing value of the interest in the other immovable; and

   5. (e)

      it must not be bought:

      1. (i)

         if it becomes apparent to the authorised fund manager that the report in either (c) or (d) could no longer reasonably be relied upon; or

      2. (ii)

         at a price more than 105% of the valuation relevant to the interest for that immovable in the report in either (c) or (d).

3. (3)

   Any contents of any building may be regarded as part of the relevant immovable.

4. (4)

   An appropriate valuer must be a person who:

   1. (a)

      has knowledge of and experience in the valuation of immovables of the relevant kind in the relevant area;

   2. (b)

      is qualified to be a standing independent valuer of an authorised fund or is considered by the scheme'sstanding independent valuer to hold an equivalent qualification;

   3. (c)

      is independent of the ICVC, the depositary and each of the directors of the ICVC or of the manager and trustee of the AUT; and

   4. (d)

      has not engaged himself or any of his associates in relation to the finding of the immovable for the scheme or the finding of the scheme for the immovable.

The following limits apply in respect of immovables held as part of the scheme property:

1. (1)

   the amount secured by mortgages over any immovable must not exceed 100% of the latest valuation by an appropriate valuer under COLL 8.4.11 R (2)(c) or COLL 8.4.11 R (2)(d) or COLL 8.4.13 R, as appropriate;

2. (2)

   no option may be granted to a person to buy or obtain an interest in any immovable comprised in the scheme property if this might unduly prejudice the ability to provide redemption; and

3. (3)

   the total of all premiums paid for options to purchase immovables must not exceed 10% of the scheme value in any 12 month period, calculated at the date of the granting of the option.

1. (1)

   In relation to the appointment of a valuer the authorised fund manager must:

   1. (a)

      at the outset appoint the standing independent valuer with the approval of the depositary and likewise upon any vacancy; and

   2. (b)

      ensure that any immovables in the scheme property are valued by an appropriate valuer (standing independent valuer) appointed by the authorised fund manager.

2. (2)

   The following apply in relation to the functions of the standing independent valuer:

   1. (a)

      the authorised fund manager must ensure that the standing independent valuer appointed under (1), procures the valuation of all the immovables held within the scheme property, on the basis of a full valuation with physical inspection (including, where the immovable is or includes a building, internal inspection) at least once a year;

   2. (b)

      for the purposes of (a), any inspection in relation to adjacent properties of a similar nature and value may be limited to that of only one such representative property;

   3. (c)

      the authorised fund manager must ensure that the standing independent valuer values the immovables, on the basis of a review of the last full valuation, at least once a month;

   4. (d)

      if either the authorised fund manager or the depositary becomes aware of any matter which appears likely to:

      1. (i)

         affect the outcome of a valuation of an immovable; or

      2. (ii)

         cause the valuer to decide to value under (a), instead of under (c),

      it must immediately inform the standing independent valuer of that matter;

   5. (e)

      the authorised fund manager must use its best endeavours to ensure that any other affected person reports to the standing independent valuer immediately upon that person becoming aware of any matter within (d); and

   6. (f)

      any valuation by the standing independent valuer must be on the basis of an 'Open Market value' as defined in the Royal Institute of Chartered Surveyors' Appraisal and Valuation Standards (Fifth Edition) ("Red Book")but is subject to any provisions of the instrument constituting the scheme.

3. (3)

   In relation to immovables:

   1. (a)

      any valuation under this rule has effect, until the next valuation under this rule, for the purposes of the value of immovables; and

   2. (b)

      an agreement to transfer an immovable or an interest in an immovable is to be disregarded for the purpose of the valuation of the scheme property unless it reasonably appears to the authorised fund manager to be legally enforceable.

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.

This section applies to:

1. (1)

   an authorised fund manager, the directors, and the depositary of a qualified investor scheme; and

2. (2)

   an ICVC which is a qualified investor scheme.

For a qualified investor scheme the provisions in COLL 7.3 to COLL 7.5 will apply as appropriate as if COLL 7 applied to qualified investor schemes.

1. (1)

   The authorised fund manager may within any parameters which are fair and reasonable in respect of all the unitholders in the scheme and which are set out in the prospectus, suspend dealings in units of the scheme, a sub-fund or a class.

2. (2)

   Any suspension within (1) must only be where the authorised fund manager has determined on reasonable grounds that there is good and sufficient reason in the interests of unitholders or potential unitholders and the authorised fund manager must have regard to the interests of all the unitholders in the scheme in reaching such an opinion.

3. (3)

   At the commencement of suspension under (1), the authorised fund manager must immediately inform the FSA of the suspension and the reasons for it.

4. (4)

   The suspension of dealings in units must cease within 28 days of its commencement or, if earlier, as soon as (2) no longer applies.

5. (5)

   The authorised fund manager must inform the FSA immediately of the resumption of dealings.

In relation to an ICVC or an AUT which is a qualified investor scheme, the provisions in COLL 7.6 (Schemes of arrangement) will apply as appropriate to the authorised fund manager, any other directors of the ICVC and the depositary as if COLL 7.6 applied to a qualified investor scheme and did not exclude unitholders becoming unitholders in another qualified investor scheme.