1This chapter applies to a closed-ended investment fund with, or applying for a listing of equity shares in the closed-ended investment funds category.

1To be listed, an applicant must comply with:

1. (1)

   the following provisions of UKLR 5 (Equity shares (commercial companies): requirements for admission to listing), modified so that references to the equity shares (commercial companies) category are to the closed-ended investment funds category:

   1. (a)

      UKLR 5.4.1R(1);

   2. (b)

      UKLR 5.4.2R to UKLR 5.4.4G;

   3. (c)

      UKLR 5.4.7R;

   4. (d)

      UKLR 5.5.1R to UKLR 5.5.4G; and

   5. (e)

      UKLR 5.6.1R; and

2. (2)

   UKLR 11.2.3R to UKLR 11.2.15R.

1The FCA will not admit shares of an applicant incorporated in a third country that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FCA is satisfied that the absence of the listing is not due to the need to protect investors.

1An applicant must invest and manage its assets in a way which is consistent with its object of spreading investment risk.

1. (1)

   1An applicant and its subsidiary undertakings must not conduct any trading activity which is significant in the context of its group as a whole.

2. (2)

   This rule does not prevent the businesses forming part of the investment portfolio of the applicant from conducting trading activities themselves.

1. (1)

   1No more than 10%, in aggregate, of the value of the total assets of an applicant at admission may be invested in other listed closed-ended investment funds.

2. (2)

   The restriction in (1) does not apply to investments in closed-ended investment funds which themselves have published investment policies to invest no more than 15% of their total assets in other listed closed-ended investment funds.

1. (1)

   1If an applicant principally invests its funds in another company or fund that invests in a portfolio of investments (a ‘master fund’), the applicant must ensure that:

   1. (a)

      the master fund’s investment policies are consistent with the applicant’s published investment policy and provide for spreading investment risk; and

   2. (b)

      the master fund in fact invests and manages its investments in a way that is consistent with the applicant’s published investment policy and spreads investment risk.

2. (2)

   Paragraph (1) applies whether the applicant invests its funds in the master fund directly or indirectly through other intermediaries.

3. (3)

   Where the applicant invests in the master fund through a chain of intermediaries between the applicant and the master fund, the applicant must ensure that each intermediary in the chain complies with paragraphs (1)(a) and (b).

1An applicant must have a published investment policy that contains information about the policies which the closed-ended investment fund will follow relating to asset allocation, risk diversification, and gearing, and that includes maximum exposures.

1The board of directors or equivalent body of the applicant must be able to act independently:

1. (1)

   of any investment manager appointed to manage investments of the applicant; and

2. (2)

   if the applicant (either directly or through other intermediaries) has an investment policy of principally investing its funds in another company or fund that invests in a portfolio of investments (a ‘master fund’), of the master fund and of any investment manager of the master fund.

1 UKLR 11.2.10R(2) does not apply if the company or fund which invests its funds in another company or fund is a subsidiary undertaking of the applicant.

1For the purposes of UKLR 11.2.10R:

1. (1)

   the chair of the board or equivalent body of the applicant must be independent; and

2. (2)

   a majority of the board or equivalent body of the applicant must be independent (the chair may be included within that majority).

1For the purposes of UKLR 11.2.10R and UKLR 11.2.12R, the following are not independent:

1. (1)

   directors, employees, partners, officers or professional advisers of or to:

   1. (a)

      an investment manager of the applicant;

   2. (b)

      a master fund or investment manager referred to in UKLR 11.2.10R(2); or

   3. (c)

      any other company in the same group as the investment manager of the applicant; or

2. (2)

   (subject to UKLR 11.2.14R) directors, employees or professional advisers of or to other investment companies or funds that are:

   1. (a)

      managed by the same investment manager as the investment manager to the applicant; or

   2. (b)

      managed by any other company in the same group as the investment manager to the applicant.

1. (1)

   1This rule applies where a closed-ended investment fund has an external AIFM which has delegated portfolio management to another investment manager who is not in the same group as the external AIFM.

2. (2)

   Where this rule applies, the fact that a director of the closed-ended investment fund is also the director of another investment company or fund that is managed by the same external AIFM (or another company in the same group as the external AIFM) does not prevent that director from being regarded as independent for the purposes of UKLR 11.2.10R and UKLR 11.2.12R.

1A person referred to in UKLR 11.2.13R(1) or (2) who is a director of the applicant must be subject to annual re-election by the applicant’s shareholders, unless they are independent in accordance with UKLR 11.2.14R.

1The board of directors or equivalent body of the applicant must be in a position to effectively monitor and manage the performance of its key service providers, including any investment manager of the applicant.

1An application for the listing of securities of a multi-class fund or umbrella fund must provide details of the various classes or designations of securities intended to be issued by the applicant.

A closed-ended investment fund must comply with all of the requirements of UKLR 6 (Equity shares (commercial companies): continuing obligations) and UKLR 9 (Equity shares (commercial companies): further issuances, dealing in own securities and treasury shares) subject to the modifications and additional requirements set out in this section.

1 UKLR 6 and UKLR 9 are modified so that references to the equity shares (commercial companies) category are to the closed-ended investment funds category.

1 UKLR 6.2.31R to UKLR 6.2.33G do not apply to a close-ended investment fund.

1A closed-ended investment fund must, at all times, have a published investment policy which complies with UKLR 11.2.8R.

1A closed-ended investment fund must, at all times, invest and manage its assets:

1. (1)

   in a way which is consistent with its object of spreading investment risk; and

2. (2)

   in accordance with its published investment policy.

1A closed-ended investment fund must comply with UKLR 11.2.4R at all times.

1A closed-ended investment fund must, when making an acquisition of a constituent investment, observe the principles relating to cross-holdings in UKLR 11.2.6R.

1If a closed-ended investment fund principally invests its funds in the manner set out in UKLR 11.2.7R, the closed-ended investment fund must ensure that UKLR 11.2.7R is complied with at all times.

1 UKLR 11.2.10R to UKLR 11.2.15R apply at all times to a closed-ended investment fund.

1The board of directors or equivalent body of the issuer must effectively monitor and manage the performance of its key service providers, including any investment manager appointed by the issuer, on an ongoing basis.

1Unless UKLR 11.4.15R applies, a closed-ended investment fund must:

1. (1)

   submit any proposed material change to its published investment policy to the FCA for approval; and

2. (2)

   having obtained the FCA’s approval, obtain the prior approval of its shareholders to any material change to its published investment policy.

1A closed-ended investment fund is not required to seek the FCA’s approval for a material change to its published investment policy if:

1. (1)

   the change is proposed to enable the winding up of the closed-ended investment fund; and

2. (2)

   the winding up:

   1. (a)

      is in accordance with the constitution of the closed-ended investment fund; and

   2. (b)

      will be submitted for approval by the shareholders of the closed-ended investment fund at the same time as the proposed material change to the investment policy.

1An existing listed class of equity shares may not be converted into a new class or an unlisted class unless prior approval has been given by the shareholders of that existing class.

1. (1)

   1Unless authorised by its shareholders, a closed-ended investment fund may not issue further shares of the same class as existing shares (including issues of treasury 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 closed-ended investment fund should not be taken into account.

1A closed-ended investment fund is not required to comply with UKLR 6.2.25R.

1A closed-ended investment fund is not required to comply with UKLR 6.2.3R to UKLR 6.2.10R.

1. (1)

   1A closed-ended investment fund is not required to comply with UKLR 6.2.35R in so far as it relates to UKLR 6.2.8R and UKLR 6.2.9R.

2. (2)

   A closed-ended investment fund is not required to comply with UKLR 6.2.36R.

1A closed-ended investment fund is not required to comply with UKLR 6.6.1R(13) or UKLR 6.6.6R(8).

1When making a statement required by UKLR 6.6.6R(9) in its annual financial report, a closed-ended investment fund need not set out the following matters if they are inapplicable to the closed-ended investment fund and its statement sets out the reasons why those matters are inapplicable:

1. (1)

   whether the closed-ended investment fund has met the board diversity target in UKLR 6.6.6R(9)(a)(ii); and

2. (2)

   matters set out in UKLR 6.6.6R(9)(b) to the extent that they relate to the board diversity target in UKLR 6.6.6R(9)(a)(ii).

1When including numerical data required by UKLR 6.6.6R(10) in its annual financial report, a closed-ended investment fund need not include the fields in the first row of each of the tables in UKLR 6 Annex 1, and the corresponding data for those fields, that are inapplicable to the closed-ended investment fund, if it sets out in a statement accompanying the numerical data the reasons why those fields are inapplicable.

1Where the provisions of this chapter require a shareholder vote to be taken, that vote must be decided by a resolution of the holders of the closed-ended investment fund’s equity shares that have been admitted to the closed-ended investment funds category.

1A closed-ended investment fund must comply with UKLR 7 (Equity shares (commercial companies): significant transactions and reverse takeovers), except in relation to transactions that are executed in accordance with the scope of its published investment policy.

1 UKLR 8 (Equity shares (commercial companies): related party transactions) applies to a closed-ended investment fund, subject to the modifications and additional requirements set out in this section.

1In addition to the definition in UKLR 8.1.11R, a related party includes any investment manager of the closed-ended investment fund and any member of such investment manager’s group.

1. (1)

   1The requirements in UKLR 8.2.1R(1) to (4) and UKLR 8.2.2R to UKLR 8.2.8R apply where a closed-ended investment fund enters into a relevant related party transaction where any percentage ratio is greater than 0.25%.

2. (2)

   1The requirements in UKLR 8.2.7R(2)(a) and (b) apply if any percentage ratio for aggregated relevant related party transactions is greater than 0.25%.

1If a closed-ended investment fund enters into a relevant related party transaction where any percentage ratio is 5% or more (or which is uncapped), the closed-ended investment fund must:

1. (1)

   comply with the requirements of UKLR 8.2.1R(1) to (4) and UKLR 8.2.2R to UKLR 8.2.3R for the relevant related party transaction, except that the notification is not required to include the information required by:

   1. (a)

      UKLR 8.2.2R(4); or

   2. (b)

      UKLR 8.2.2R(5);

2. (2)

   send a circular to its shareholders and obtain their prior approval in a general meeting for the transaction; and

3. (3)

   ensure that any agreement effecting the transaction is conditional on that approval being obtained.

1. (1)

   1The requirement to aggregate transactions or arrangements in UKLR 8.2.7R(1) applies to relevant related party transactions for the purposes of UKLR 11.5.5R, except that any transactions or arrangements which have been approved by shareholders are not required to be aggregated.

2. (2)

   If under this rule aggregation of relevant related party transactions results in a requirement for shareholder approval, that approval is required only for the latest relevant related party transaction.

1. (1)

   1UKLR 8.2.1R to UKLR 8.2.8R and UKLR 11.5.4R to UKLR 11.5.6R do not apply to an arrangement between a closed-ended investment fund and its investment manager or any member of that investment manager’s group where the arrangement is such that each invests in or provides finance to an entity or asset and the investment or provision of finance is either:

   1. (a)

      made at the same time and on substantially the same economic and financial terms;

   2. (b)

      referred to in the closed-ended investment fund’s published investment policy; or

   3. (c)

      made in accordance with a pre-existing agreement between the closed-ended investment fund and its investment manager.

2. (2)

   For the purposes of paragraph (1)(c), a pre-existing agreement is an agreement which was entered into at the time the investment manager was appointed.

1If, after obtaining shareholder approval but before completion, there is a material change to the terms of a transaction subject to UKLR 11.5.5R, the closed-ended investment fund must comply again separately with UKLR 11.5.5R in relation to the transaction.

1. (1)

   1If a closed-ended investment fund becomes aware of a matter described in (2) after the publication of a circular that seeks shareholder approval for a transaction expressly requiring a vote by UKLR 11.5.5R, but before the date of a general meeting, it must, as soon as practicable:

   1. (a)

      advise the FCA of the matters of which it has become aware; and

   2. (b)

      send a supplementary circular to holders of its listed equity shares, providing an explanation of the matters referred to in (2).

2. (2)

   The matters referred to in (1) are:

   1. (a)

      a material change affecting any matter the closed-ended investment fund is required to have disclosed in a circular; or

   2. (b)

      a material new matter which the closed-ended investment fund would have been required to disclose in the circular if it had arisen at the time of its publication.

3. (3)

   The closed-ended investment fund must have regard to UKLR 10.3.1R(3) when considering the materiality of any change or new matter under (2).

1As set out in UKLR 4.2.1R, a closed-ended investment fund must appoint a sponsor on each occasion it:

1. (1)

   is required to submit to the FCA a reverse takeover circular or a relevant related party transaction circular required by UKLR 11.5.5R; or

2. (2)

   is required by UKLR 8.2.1R(3), including as modified by UKLR 11.5.4R, to provide a listed issuer with a confirmation that the terms of a proposed transaction or arrangement with a related party are fair and reasonable.

1A closed-ended investment fund must comply with UKLR 10, subject to the modifications and additional requirements set out in this section.

1A closed-ended investment fund is not required to comply with UKLR 10.6.16R (Election of independent directors).

1A closed-ended investment fund must not circulate or publish a circular required by UKLR 11.5.5R unless it has been approved by the FCA.

1. (1)

   1UKLR 10.2.2R to UKLR 10.2.7R apply to a circular required by UKLR11.5.5R, subject to the modification in (2).

2. (2)

   UKLR 10.2.2R(2) is modified so that the words ‘for a reverse takeover circular,’ are deleted.

1The requirements in UKLR 10.4 (Reverse takeover circulars) apply to a circular required by UKLR 11.5.5R in the same way as they apply to a reverse takeover circular, except that UKLR 10.4.1R(5) does not apply.

1A relevant related party transaction circular required by UKLR 11.5.5R must also include (to the extent not already disclosed under UKLR 10.4 as applied by UKLR 11.6.5R):

1. (1)

   in all cases the following information referred to in the PR Regulation relating to the closed-ended investment fund:

   Paragraph of Annex 1 of the PR Regulation:

   1. (a)

      Annex 1 item 4.1 – Issuer name;

   2. (b)

      Annex 1 item 4.4 – Issuer address;

   3. (c)

      Annex 1 item 16.1 – Major shareholders;

   4. (d)

      Annex 1 item 18.7.1 – Significant changes in the issuer’s financial position;

   5. (e)

      Annex 1 item 20.1 – Material contracts (if it is information which shareholders of the closed-ended investment fund would reasonably require to make a properly informed assessment of how to vote); and

   6. (f)

      Annex 1 item 21.1 – Documents available;

2. (2)

   for a transaction or arrangement where the related party is (or was within the 12 months before the transaction or arrangement), a director or shadow director, or an associate of a director or shadow director, of the closed-ended investment fund (or of any other company which is its subsidiary undertaking or parent undertaking or a fellow subsidiary undertaking) the following information referred to in the PR Regulation relating to that director:

   Paragraph of Annex 1 of the PR Regulation:

   1. (a)

      Annex 1 item 14.2 – Service contracts;

   2. (b)

      Annex 1 item 15.2 – Shareholdings and stock options; and

   3. (c)

      Annex 1 item 17.1 – Related party transactions;

3. (3)

   full particulars of the transaction or arrangement, including the name of the related party concerned and of the nature and extent of the interest of the party in the transaction or arrangement, and also a statement that the reason the shareholders are being asked to vote on the transaction or arrangement is because it is with a related party;

4. (4)

   a statement by the board that the transaction or arrangement is fair and reasonable as far as the shareholders of the closed-ended investment fund are concerned and that the directors have been so advised by a sponsor;

5. (5)

   if applicable, a statement that the related party will not vote on the relevant resolution, and that the related party has undertaken to take all reasonable steps to ensure that its associates will not vote on the relevant resolution, at the meeting;

6. (6)

   if UKLR 11.5.6R applies, details of each of the transactions or arrangements being aggregated; and

7. (7)

   if a statement or report attributed to a person as an expert is included in a circular (other than a statement or report incorporated by reference from a prospectus or listing particulars), a statement that it is included, in the form and context in which it is included, with the consent of that person.

1For the purposes of the statement by the board referred to in UKLR 11.6.6R(4):

1. (1)

   any director who is, or an associate of whom is, the related party, or who is a director of the related party, should not have taken part in the board’s consideration of the matter; and

2. (2)

   the statement should specify that such persons have not taken part in the board’s consideration of the matter.

1For the purpose of advising the directors under UKLR 11.6.6R(4), a sponsor may take into account but not rely on commercial assessments of the directors.

1A closed-ended investment fund must notify any change in its taxation status to a RIS as soon as possible.

In addition to the requirements in UKLR 6.6 (Annual financial report), a closed-ended investment fund must include in its annual financial report:

1. (1)

   a statement (including a quantitative analysis) explaining how it has invested its assets with a view to spreading investment risk in accordance with its published investment policy;

2. (2)

   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 its shareholders as a whole, together with a statement of the reasons for this view;

3. (3)

   the names of the fund’s investment managers and a summary of the principal contents of any agreements between the closed-ended investment fund and each of the investment managers, including but not limited to:

   1. (a)

      an indication of the terms and duration of their appointment;

   2. (b)

      the basis for their remuneration; and

   3. (c)

      any arrangements relating to the termination of their appointment, including compensation payable in the event of termination;

4. (4)

   the full text of its current published investment policy; and

5. (5)

   a comprehensive and meaningful analysis of its portfolio.

In addition to the requirements in UKLR 6 (Equity shares (commercial companies): continuing obligations), half-yearly reports and, if applicable, preliminary statements of annual results 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).

A closed-ended investment fund that, as at the end of its financial year, has invested more than 20% of its assets in property must include in its annual financial report a summary of the valuation of its portfolio, carried out in accordance with UKLR 11.7.5R.

1A valuation required by UKLR 11.7.4R must:

1. (1)

   either:

   1. (a)

      be made in accordance with the Appraisal and Valuation Standards (6th edition) issued by the Royal Institution of Chartered Surveyors; or

   2. (b)

      where the valuation does not comply in all applicable respects with the Appraisal and Valuation Standards (6th edition) issued by the Royal Institution of Chartered Surveyors, include a statement which sets out a full explanation of such non-compliance; and

2. (2)

   be carried out by an external valuer as defined in the Appraisal and Valuation Standards (6th edition) issued by the Royal Institution of Chartered Surveyors.

1The summary described in UKLR 11.7.4R must include:

1. (1)

   the total value of properties held at the year end;

2. (2)

   totals of the cost of properties acquired;

3. (3)

   the net book value of properties disposed of during the year; and

4. (4)

   an indication of the geographical location and type of properties held at the year end.

1. (1)

   1This rule applies to a closed-ended investment fund that has no executive directors.

2. (2)

   A closed-ended investment fund’s statement required by UKLR 6.6.6R(6) need not include details about Principles P, Q and R and Provisions 32 to 41 of the UK Corporate Governance Code, except to the extent that those principles or provisions relate specifically to non-executive directors.

1A closed-ended investment fund must notify to a RIS within 5 business days of the end of each quarter a list of all investments in other listed closed-ended investment funds, as at the last business day of that quarter, which themselves do not have stated investment policies to invest no more than 15% of their total assets in other listed closed-ended investment funds.