LR 15.4 Continuing obligations

An investment company must comply with LR 9 (continuing obligations) subject to the modifications and additional conditions set out in LR 15.4.3 G to LR 15.4.17 R.

The FSA may dispense with the provisions of the Model Code to allow, during a close period:

1. (1)

   dealings by persons discharging managerial responsibilities in an investment company;

2. (2)

   purchases by the investment company of its own securities; and

3. (3)

   sales of treasury shares for cash or transfers (except for sales and transfers by an investment company of treasury shares in the circumstances set out in LR 12.6.2 R);

if the FSA is satisfied that all inside information which the directors and the company may have in periods leading up to an announcement of results has previously been notified to a RIS.

An investment company must notify any change in its taxation status to a RIS as soon as possible.

An investment company must notify a RIS of the following:

1. (1)

   within two business days of the end of each calendar month, a list of all investments in other listed investment companies and listed investment trusts, as at the last business day of that month, which themselves do not have stated investment policies to invest no more than 15% of their total assets in other listed investment companies or listed investment trusts; and

2. (2)

   within two business days of the end of each quarter, a list of all investments with a value greater than 5% of the company's total assets and at least the 10 largest investments as at the last business day of that quarter.

In addition to the requirements of LR 9.8 (Annual report and accounts) an investment company must include in its annual report and accounts:

1. (1)

   a statement, set out in a prominent position, as to whether in the opinion of the directors the continuing appointment of the investment manager on the terms agreed is in the interests of shareholders as a whole, together with a statement of the reasons for this view;

2. (2)

   a summary of the principal contents of any agreements between the investment company and each of the investment managers, including but not limited to any provisions relating to compensation payable in the event of termination of the agreement;

3. (3)

   the name of the investment managers together with an indication of the terms and duration of their appointment, the basis for their remuneration and any arrangements relating to the termination of their appointment; and

4. (4)

   a list of all investments with a value greater than 5% of the investment company's investment portfolio, and at least the 10 largest investments.

The list described in LR 15.4.12R (4) should include, with comparative figures where relevant:

1. (1)

   the value of each investment; and

2. (2)

   for each investment which is not quoted on a stock exchange the following information:

   1. (a)

      a brief description of the business;

   2. (b)

      the proportion of capital owned or intended to be owned;

   3. (c)

      the cost of the investment and aggregate market value, if any, at the latest practicable date;

   4. (d)

      a director's valuation at the latest practicable date, if different from the value in paragraph (c) or if there is no market value;

   5. (e)

      the earnings per share for the latest audited financial year;

   6. (f)

      the dividend per share received in the most recent financial year, including any abnormal dividends or other payments;

   7. (g)

      dividend cover or underlying earnings for the latest audited financial year;

   8. (h)

      the net assets attributable to the investment as at the date of the latest audited balance sheet; and

   9. (i)

      an analysis of any provision for diminution in value of investments, naming the investments against which provision has been made and stating in respect of each investment:

      1. (i)

         the cost;

      2. (ii)

         any provision made;

      3. (iii)

         the book value; and

      4. (iv)

         the reason for the provision.

In addition to the requirements in LR 9 (Continuing obligations) for half-yearly reports and preliminary statements of annual results an investment company must include information showing the split between:

1. (1)

   dividend and interest received; and

2. (2)

   other forms of income (including income of associated companies).

For an investment company,

1. (1)

   LR 9.8.8 R does not apply in respect of the Combined Code; and

2. (2)

   LR 9.8.6R (6) does not apply in respect of principles B.1 to B.2 and provisions B.1.1 to B.1.6 and B.2.1 to B.2.4 of the Combined Code except to the extent that they relate specifically to non-executive directors.

LR 11 (Related party transactions) applies to an investment company.

In addition to the definition in LR 11.1.4 R a related party includes any investment manager of the investment company or investment trust.

1. (1)

   An overseas investment company with a primary listing is not required to have a registrar situated in the United Kingdom if it has a transfer agent in the United Kingdom that has authority to remit transfers to the overseas registrar.

2. (2)

   Any change in transfer agent must be notified to a RIS as soon as possible.

An investment trust must comply with LR 9 (Continuing obligations) subject to the modifications and additional conditions set out in LR 15.4.20 R to LR 15.4.25 R.

An investment trust must comply with:

1. (1)

   LR 15.2.5 R to LR 15.2.9 R;

2. (2)

   LR 15.4.4 R to LR 15.4.9 R; and

3. (3)

   LR 15.4.11 R to LR 15.4.15 R.

In addition to the requirement set out in LR 15.4.12 R, an investment trust must include in its annual report and accounts:

1. (1)

   an analysis of the investment portfolio by broad industrial or commercial sector;

2. (2)

   an analysis of the investment portfolio between equity shares, convertible securities, fixed income securities and other investments;

3. (3)

   an analysis of income between dividends, interest and other forms of income;

4. (4)

   an analysis, where material to an appreciation of the investment trust's financial position, of realised and unrealised profits and losses as between investments quoted on a stock exchange and those that are not quoted on a stock exchange; and

5. (5)

   either:

   1. (a)

      a statement confirming that:

      1. (i)

         HM Revenue and Customs has approved it as an investment trust for the purpose of section 842 of the Income and Corporation Taxes Act 1988, specifying the last accounting period in respect of which such approval has been given; and

      2. (ii)

         the investment trust has subsequently directed its affairs so as to continue to be so approved; or

   2. (b)

      a statement, in the case of a newly listed investment trust confirming that:

      1. (i)

         the investment trust has announced that it will direct its affairs so as to enable it to seek approval from the HM Revenue and Customs; and

      2. (ii)

         it has subsequently directed its affairs so as to enable it to be so approved.

1. (1)

   Unless authorised by the shareholders, an investment company that is closed-ended may not issue further shares of the same class as existing shares for cash at a price below the net asset value per share of those shares unless they are first offered pro rata to existing holders of shares of that class.

2. (2)

   When calculating the net asset value per share treasury shares held by the company should not to be taken into account.

LR 10 (Significant transactions) applies to:

1. (1)

   investment trusts; and

2. (2)

   closed-ended investment companies;

excluding any transaction that falls within the stated investment policies of the investment trust or closed-ended investment company.

LR 15.4.16 R to LR 15.4.17 R apply to an investment trust.