Related provisions for GENPRU 1.2.27

1.

Share capital

This must be fully paid and may include:

(1)

ordinary share capital; or

(2)

preference share capital (excluding preference shares redeemable by shareholders within two years).

2.

Capital other than share capital (for example, the capital of a sole trader, partnership or limited liability partnership)

The capital of a sole trader is the net balance on the firm's capital account and current account. The capital of a partnership is the capital made up of the partners':

(1)

capital account, that is the account:

(a)

into which capital contributed by the partners is paid; and

(b)

from which, under the terms of the partnership agreement, an amount representing capital may be withdrawn by a partner only if:

(i) he ceases to be a partner and an equal amount is transferred to another such account by his former partners or any person replacing him as their partner; or

(ii) the partnership is otherwise dissolved or wound up; and

(2)

current accounts according to the most recent financial statement.

For the purpose of the calculation of capital resources, in respect of a defined benefit occupational pension scheme:

(1)

a firm must derecognise any defined benefit asset;

(2)

a firm may substitute for a defined benefit liability the firm'sdeficit reduction amount, provided that the election is applied consistently in respect of any one financial year.

3.

Reserves (Note 1)

These are, subject to Note 1, the audited accumulated profits retained by the firm (after deduction of tax, dividends and proprietors' or partners' drawings) and other reserves created by appropriations of share premiums and similar realised appropriations. Reserves also include gifts of capital, for example, from a parent undertaking.

For the purposes of calculating capital resources, a firm must make the following adjustments to its reserves, where appropriate:

(1)

a firm must deduct any unrealised gains or, where applicable, add back in any unrealised losses on debt instruments held, or formerly held,3 in the available-for-sale financial assets category;

(2)

a firm must deduct any unrealised gains or, where applicable, add back in any unrealised losses on cash flow hedges of financial instruments measured at cost or amortised cost;

(3)

in respect of a defined benefit occupational pension scheme:

(a)

a firm must derecognise any defined benefit asset;

(b)

a firm may substitute for a defined benefit liability the firm'sdeficit reduction amount, provided that the election is applied consistently in respect of any one financial year.

4.

Interim net profits (Note 1)

If a firm seeks to include interim net profits in the calculation of its capital resources, the profits have, subject to Note 1, to be verified by the firm's external auditor, net of tax, anticipated dividends or proprietors' drawings and other appropriations.

5.

Revaluation reserves

6.

General/ collective provisions (Note 1)

These are provisions that a firm carrying on home financing1or home finance administration1holds against potential losses that have not yet been identified but which experience indicates are present in the firm's portfolio of assets. Such provisions must be freely available to meet these unidentified losses wherever they arise. Subject to Note 1, general/collective provisions must be verified by external auditors and disclosed in the firm's annual report and accounts.

7.

Subordinated loans

Subordinated loans must be included in capital on the basis of the provisions in this chapter that apply to subordinated loans.

Note:

1

Reserves must be audited and interim net profits, general and collective provisions must be verified by the firm's external auditor unless the firm is exempt from the provisions of Part VII of the Companies Act 1985 (section 249A (Exemptions from audit)) or, where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit))2 relating to the audit of accounts. 2

Name of scheme

1

A statement of:

(1)

the name of the authorised fund; and

(2)

whether the authorised fund is a UCITS scheme or a non-UCITS retail scheme.

Investment powers in eligible markets

2

A statement that, subject to any restriction in the rules in this sourcebook or the instrument constituting the scheme, the scheme has the power to invest in any eligible securities market or deal on any eligible derivatives market to the extent that power to do so is conferred by COLL 5 (Investment and borrowing powers).

Unitholder's liability to pay

3

A provision that a unitholder is not liable to make any further payment after he has paid the price of his units and that no further liability can be imposed on him in respect of the units which he holds.

Base currency

4

A statement of the base currency of the scheme.

Valuation and pricing

5

A statement setting out the basis for the valuation and pricing of the scheme.

Duration of the scheme

6

If the scheme is to be wound up after a particular period expires, a statement to that effect.

Object of the scheme

7

A statement:

(1)

as to the object of the scheme, in particular the types of investments and assets in which it and each sub-fund (where applicable) may invest; and

(2)

that the object of the scheme is to invest in property of that kind with the aim of spreading investment risk and giving unitholders the benefits of the results of the management of that property.

27A

Where the authorised fund is a qualifying money market fund, a statement to that effect and a statement that the authorised fund's investment objectives and policies will meet the conditions specified in the definition of qualifying money market fund.

5Property Authorised Investment Funds

57B

For a property authorised investment fund, a statement that:

(1)

it is a property authorised investment fund;

(2)

no body corporate may seek to obtain or intentionally maintain a holding of more than 10% of the net asset value of the fund; and

(3)

in the event that the authorised fund manager reasonably considers that a body corporate holds more than 10% of the net asset value of the fund, the authorised fund manager is entitled to delay any redemption or cancellation of units in accordance with 18 if the authorised fund manager reasonably considers such action to be:

(a) necessary in order to enable an orderly reduction of the holding to below 10%; and

(b) in the interests of the unitholders as a whole.

8Funds of alternative investment funds

87C

For a non-UCITS retail scheme operating as a FAIF, a statement that it is a fund of alternative investment funds.9

9Feeder UCITS

97D

For a feeder UCITS, a statement that it is a feeder UCITS and as such will permanently invest at least 85% in value of the scheme property in units of a single master UCITS.

Government and public securities: investment in one issuer

8

Where relevant, for a UCITS scheme, a statement in accordance with COLL 5.2.12 R (Spread: government and public securities) as to the individual states or bodies in which over 35% of the value of the scheme may be invested in government and public securities.

Classes of unit

9

A statement:

(1)

specifying the classes of unit that may be issued, and for a scheme which is an umbrella, the classes that may be issued in respect of each sub-fund; and

(2)

if the rights of any class of unit differ, a statement describing those differences in relation to the differing classes.

Authorised fund manager's charges and expenses

10

A statement setting out the basis on which the authorised fund manager may make a charge and recover expenses out of the scheme property.

Issue or cancellation directly through the ICVC or trustee

11

Where relevant, a statement authorising the issue or cancellation of units to take place through the ICVC or trustee directly.

In specie issue and cancellation

12

Where relevant, a statement authorising payment for the issue or cancellation of units to be made by the transfer of assets other than cash.

Restrictions on sale and redemption

13

Where relevant, the restrictions which will apply in relation to the sale and redemption of units under COLL 6.2.16 R (Sale and redemption).

Voting at meetings

14

The manner in which votes may be given at a meeting of unitholders under COLL 4.4.8 R (Voting rights).

Certificates

15

A statement:

(1)

authorising the issue of bearer certificates if any, and how such holders are to identify themselves; and

(2)

authorising the person responsible for the register to charge for issuing any document recording, or for amending, an entry on the register, other than on the issue or sale of units.

Income

16

A statement setting out the basis for the distribution or re-investment of income.

Income equalisation

17

Where relevant, a provision for income equalisation.

Redemption or cancellation of units on breach of law or rules

18

A statement that where any holding of units by a unitholder is (or is reasonably considered by the authorised fund manager to be) an infringement of any law, governmental regulation or rule, those units must be redeemed or cancelled.

ICVCs: larger and smaller denomination shares

19

A statement of the proportion of a larger denomination share represented by a smaller denomination share for any relevant unit class.

ICVCs: resolution to remove a director

20

A statement that the ICVC may (without prejudice to the requirements of regulation 21 of the OEIC Regulations (The Authority's approval for certain changes in respect of a company), by a resolution passed by a simple majority of the votes validly cast for and against the resolution at a general meeting of unitholders, remove a director before his period of office expires, despite anything else in the ICVC's instrument of incorporation or in any agreement between the ICVC and that director.

ICVCs: unit transfers

21

A statement that the person designated for the purposes of paragraph 4 of Schedule 4 to the OEIC Regulations (Share transfers) is the person who, for the time being, is the ACD of the ICVC.1

ICVCs: Charges and expenses

22

A statement that charges or expenses of the ICVC may be taken out of the scheme property.10

10ICVCs: Umbrella schemes - principle of limited recourse

1022A

For an ICVC which is an umbrella, a statement that the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any such purpose.

AUTs: governing law for a trust deed

23

A statement that the trust deed is made under and governed by the law of England and Wales, Wales or Scotland or Northern Ireland.

AUTs: trust deed to be binding and authoritative

24

A statement that the trust deed:

(1)

is binding on each unitholder as if it had been a party to it and that it is bound by its provisions; and

(2)

authorises and requires the trustee and the manager to do the things required or permitted of them by its terms.

AUTs: declaration of trust

25

A declaration that, subject to the provisions of the trust deed and all rules made under section 247 of the Act (Trust scheme rules) and for the time being in force:

(1)

the scheme property (other than sums standing to the credit of the distribution account) is held by the trustee on trust for the unitholders according to the number of units held by each unitholder or, where relevant, according to the number of undivided shares in the scheme property represented by the units held by each unitholder; and

(2)

the sums standing to the credit of the distribution account are held by the trustee on trust to distribute or apply them in accordance with COLL 6.8 (Income: accounting, allocation and distribution).

AUTs: trustee's remuneration

26

Where relevant, a statement authorising payments to the trustee by way of remuneration for its services to be paid (in whole or in part) out of the scheme property.

AUTs: responsibility for the register

27

A statement identifying the person responsible under the rules for the maintenance of the register.

3Investment in overseas4 property through an intermediate holding vehicle

328

3If investment in an overseas4 immovable is to be made through an intermediate holding vehicle or a series of intermediate holding vehicles, a statement that the purpose of that intermediate holding vehicle or series of intermediate holding vehicles will be to enable the holding of overseas4 immovables by the scheme.