Related provisions for LR 15.4.26

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LR 15.4.1RRP
A closed-ended investment fund must comply with all of the requirements of LR 9 (Continuing obligations) subject to the modifications and additional requirements set out in this section.
LR 15.4.1ARRP
1A closed-ended investment fund must, at all times, have a published investment policy which complies with LR 15.2.7 R.
LR 15.4.1BGRP
1A closed-ended investment fund should have regard to the guidance in LR 15.2.8 G at all times.
LR 15.4.2RRP
A closed-ended investment fund must, at all times, invest and manage its assets: (1) in a way which is consistent with its object of spreading investment risk; and(2) in accordance with its published investment policy.
LR 15.4.3ARRP
1A closed-ended investment fund must comply with LR 15.2.3A R at all times.
LR 15.4.4AGRP
1A closed-ended investment fund should have regard to the guidance in LR 15.2.4A G at all times.
LR 15.4.5RRP
A closed-ended investment fund must, when making an acquisition of a constituent investment, observe the principles relating to cross-holdings in LR 15.2.5 R.
LR 15.4.6RRP
If a closed-ended investment fund principally invests its funds in the manner set out in LR 15.2.6 R1, the closed-ended investment fund must ensure that LR 15.2.6 R is complied with at all times.1
LR 15.4.6AGRP
1LR 15.2.6 R and LR 15.4.6 R are not intended to require the closed-ended investment fund to be able to control or direct the master fund or intermediary (as the case may be). But if the closed-ended investment fund becomes aware that the master fund or intermediary (as the case may be) is not investing or managing its investments in accordance with that rule it will need to immediately consider withdrawal of its funds from the master fund or intermediary (as the case may be)
LR 15.4.7RRP
LR 15.2.11 R to LR 15.2.13A R1 apply at all times to a closed-ended investment fund.1
LR 15.4.8RRP
A closed-ended investment fund must obtain the prior approval of its shareholders1 to any material change to its published investment policy. 1
LR 15.4.9GRP
In considering what is a material change to the published investment policy, the closed-ended investment fund should have regard to the cumulative effect of all the changes since its shareholders 1last had the opportunity to vote on the investment policy or, if they have never voted, since the admission to listing.1
LR 15.4.11RRP
(1) Unless authorised by its shareholders1, 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.1(2) When calculating the net asset value per share, treasury shares held by the closed-ended investment fund should not be taken into account.
LR 15.4.11AGRP
2A closed-ended investment fund must comply with LR 5.2.7A R
COLL 6.2.2GRP
(1) This section helps in achieving the statutory objective of securing an appropriate degree of protection for consumers. In accordance with Principle 6, this section is also concerned with ensuring the authorised fund manager pays due regard to its clients' interests and treats them fairly.(2) An authorised fund manager of an AUT, ACS or ICVC7 is responsible for arranging for the issue and the cancellation of units for the authorised fund. An authorised fund manager of an AUT,
COLL 6.2.3RRP
(1) During the initial offer period, units may only be issued at the initial price.(2) The length of any initial offer should not be unreasonable when considered alongside the characteristics of the authorised fund.(3) The authorised fund manager must, as soon as practicable after receiving the initial price from the purchaser and no later than the fourth business day following the end of the initial offer, pay the depositary in respect2 of any unit it has agreed to sell during
COLL 6.2.6ARRP
3If an authorised fund has two or more classes of unit in issue, the authorised fund manager may treat any or all of those classes as one for the purpose of determining the number of units to be issued or cancelled by reference to a particular valuation point, if:(1) the depositary gives its prior agreement; and(2) the relevant classes:(a) have the same entitlement to participate in, and the same liability for charges, expenses and other payments that may be recovered from, the
COLL 6.2.9GRP
(1) As the authorised fund manager normally controls the issue, cancellation, sale and redemption of an authorised fund'sunits, it occupies a position that could, without appropriate systems and controls, involve a conflict of interest between itself and its clients.(2) SYSC 3.1.1 R (Systems and controls) requires that a firm take reasonable care to establish and maintain such systems and controls as are appropriate to its business and Principle 8 requires a firm to manage conflicts
COLL 6.2.11RRP
(1) Where the authorised fund manager has not complied with COLL 6.2.8 R (1) (Controls over the issue and cancellation of units), it must correct the error as soon as possible and must reimburse the authorised fund any costs it may have incurred in correcting the position.(2) The authorised fund manager need not reimburse the authorised fund when:(a) the amount under (1) is not, in the depositary's opinion, material to the authorised fund;(b) the authorised fund manager can demonstrate
COLL 6.2.13RRP
(1) The authorised fund manager must, by the close of business on the fourth business day following the issue of any units, arrange for payment to the depositary of an AUT or ACS7 or the ICVC of:227(a) 2in the case of a single-priced authorised fund, the price of the units and any payments required under COLL 6.3.7 R (SDRT provision) and COLL 6.3.8 R (Dilution); or(b) 2in the case of a dual-priced authorised fund, the issue price of the units and any payment required under COLL
COLL 6.2.14RRP
(1) On cancellingunits the authorised fund manager must, before the expiry of the fourth business day following the cancellation of the units or, if later, as soon as practicable after delivery to the depositary of the AUT or ACS7 or the ICVC of such evidence of title to the units as it may reasonably require, require the depositary to pay:27(a) 2in the case of a single-priced authorised fund, the price of the units (less any deduction required under COLL 6.3.7 R and COLL 6.3.8
COLL 6.2.16RRP
(1) In accordance with COLL 4.2.5R (17) (Table: contents of the prospectus), the authorised fund manager must describe the arrangements for the sale and redemption of units in the prospectus.(2) The authorised fund manager must, at all times during the dealing day, be willing to effect the sale of units in the authorised fund, in accordance with the conditions in the instrument constituting the scheme and the prospectus unless:(a) it has reasonable grounds to refuse such sale;
COLL 6.2.17GRP
(1) The prospectus of an authorised fund that does not operate on the basis of historic prices may allow the authorised fund manager to identify a point in time in advance of a valuation point (a cut-off point) after which it will not accept instructions to sell or redeemunits2 at that valuation point. In order to protect customers' interests, the cut-off point should be no earlier than the close of business on the business day before the valuation point it relates to. If there
COLL 6.2.18RRP
(1) If an authorised fund limits the issue of any class of unit, the prospectus of an authorised fund must provide for the circumstances and conditions when units will be issued.(2) Where (1) applies, the authorised fund manager may not provide for the further issue of units unless, at the time of the issue2, it2is satisfied on reasonable grounds that the proceeds of that subsequent issue can be invested without compromising the scheme's investment objective or materially prejudicing
COLL 6.2.21RRP
(1) Subject to (1A) and (3) the5instrument constituting the scheme and the prospectus of an authorised fund which has at least one valuation point on each business day, may permit deferral of redemptions at a valuation point to the next valuation point where the requested redemptions exceed 10%, or some other reasonable proportion disclosed in the prospectus, of the authorised fund's value.5(1A) 5Subject to (3) the instrument constituting the scheme and the prospectus of a non-UCITS
COLL 6.2.23RRP
(1) 4The authorised fund manager of a property authorised investment fund must take reasonable steps to ensure that no body corporate holds more than 10% of the net asset value of that fund (the "maximum allowable").(2) Where the authorised fund manager of a property authorised investment fund becomes aware that a body corporate holds more than the maximum allowable, he must:(a) notify the body corporate of that event; (b) not pay any income distribution to the body corporate;
COLL 6.2.24GRP
4Reasonable steps to monitor the maximum allowable include:(1) regularly reviewing the register; and(2) taking reasonable steps to ensure that unitholders are kept informed of the requirement that no body corporate may hold more than 10% of the net asset value of a property authorised investment fund.
COLL 5.4.1RRP
1This section applies to an ICVC, the depositary of an authorised fund and an authorised fund manager in any case where the authorised fund is a UCITS scheme or a non-UCITS retail scheme.
COLL 5.4.2GRP
(1) This section covers techniques relating to transferable securities and approved money-market instruments which are used for the purpose of efficient portfolio management. It3 permits the generation of additional income for the benefit of the authorised fund, and hence for its investors, by entry into stock lending transactions for the account of the authorised fund.(2) The specific method of stock lending permitted in this section is in fact not a transaction which is a loan
COLL 5.4.3RRP
An authorised fund may only enter into a stock lending arrangement or repo contract in accordance with the rules in this section if1 it reasonably appears to the ICVC or authorised fund manager of an AUT or ACS4 to be appropriate to do so with a view to generating additional income for the authorised fund with an acceptable degree of risk.114
COLL 5.4.4RRP
(1) An ICVC, or the depositary at the request of the ICVC, or the depositary of an AUT or ACS4 at the request of the authorised fund manager4, may enter into a repo contract, or a1stock lending arrangement of the kind described in section 263B of the Taxation of Chargeable Gains Act 1992 (without extension by section 263C), but only if:44(a) all the terms of the agreement under which securities are to be reacquired by the depositary for the account of the ICVC, AUT or ACS4 are
COLL 5.4.6RRP
(1) Collateral is adequate for the purposes of this section only if it is:(a) transferred to the depositary or its agent;(b) at least equal in value, at the time of the transfer to the depositary, to the value of the securities transferred by the depositary; and(c) in the form of one or more of:(i) cash; or(ii) [deleted]11(iii) a certificate of deposit; or(iv) a letter of credit; or(v) a readily realisable security; or11(vi) 1commercial paper with no embedded derivative content;
COLL 5.5.3RRP
(1) Cash and near cash must not be retained in the scheme property except to the extent that this may reasonably be regarded as necessary in order to enable:(a) the pursuit of the scheme's investment objectives; or(b) redemption of units; or(c) efficient management of the authorised fund in accordance with its investment objectives; or(d) other purposes which may reasonably be regarded as ancillary to the investment objectives of the authorised fund.(2) During the period of the
COLL 5.5.4RRP
(1) The ICVC or depositary of an AUT or ACS4 (on the instructions of the authorised fund manager4) may, in accordance with this rule and COLL 5.5.5 R (Borrowing limits), borrow money for the use of the authorised fund on terms that the borrowing is to be repayable out of the scheme property.44(2) Paragraph (1) is subject to the obligation of the authorised fund to comply with any restriction in the instrument constituting the scheme.(3) The ICVC or depositary of an AUT or ACS4
COLL 5.5.5RRP
(1) The authorised fund manager must ensure that the authorised fund's borrowing does not, on any day, exceed 10% of the value of the scheme property.(2) This rule does not apply to "back to back" borrowing under COLL 5.3.5 R (2)(Borrowing).(3) In this rule, borrowing includes, as well as borrowing in a conventional manner, any other arrangement (including a combination of derivatives) designed to achieve a temporary injection of money into the scheme property in the expectation
COLL 5.5.6RRP
(1) None of the money in the scheme property of an authorised fund may be lent and, for the purposes of this prohibition, money is lent by an authorised fund if it is paid to a person ("the payee") on the basis that it should be repaid, whether or not by the payee.(2) Acquiring a debenture is not lending for the purposes of (1); nor is the placing of money on deposit or in a current account.(3) Paragraph (1) does not prevent an ICVC from providing an officer of the ICVC with funds
COLL 5.5.7RRP
(1) The scheme property of an authorised fund other than money must not be lent by way of deposit or otherwise.(2) Transactions permitted by COLL 5.4 (Stock lending) are not to be regarded as lending for the purposes of (1).(3) The scheme property must not be mortgaged.(4) Where transactions in derivatives or forward transactions are used for the account of the authorised fund in accordance with any of the rules in this chapter, nothing in this rule prevents the ICVC or the depositary
COLL 5.5.8RRP
(1) Any power in this chapter to invest in transferable securities may be used for the purpose of entering into transactions to which this rule applies, subject to compliance with any restriction in the instrument constituting the scheme.(2) This rule applies to any agreement or understanding which:(a) is an underwriting or sub-underwriting agreement; or(b) contemplates that securities will or may be issued or subscribed for or acquired for the account of the authorised fund.(3)
COLL 5.5.9RRP
(1) An ICVC or a depositary for the account of an authorised fund must not provide any guarantee or indemnity in respect of the obligation of any person.(2) None of the scheme property of an authorised fund may be used to discharge any obligation arising under a guarantee or indemnity with respect to the obligation of any person.(3) Paragraphs (1) and (2) do not apply to:(a) any indemnity or guarantee given for margin requirements where the derivatives or forward transactions
COLL 6.7.3GRP
(1) This section assists in securing the statutory objective of protecting consumers through requirements which govern the payments out of scheme property and charges imposed on investors when buying or selling units.(2) The requirements clarify the nature of permitted charges and payments and ensure the disclosure for unitholders of any increases in charges and payments to the authorised fund manager.(3) The prospectus should make adequate provision for payments from an authorised
COLL 6.7.4RRP
(1) The only payments which may be recovered from the scheme property of an authorised fund are those in respect of: (a) remunerating the parties operating the authorised fund;(b) the administration of the authorised fund; or(c) the investment or safekeeping of the scheme property.(2) No payment under this rule can be made from scheme property if it is unfair to (or materially prejudices the interests of) any class of unitholders or potential unitholders.(3) Paragraphs (1) and
COLL 6.7.6GRP
(1) For the authorised fund manager's periodic charge or for payments out of scheme property to the investment adviser, the prospectus may permit a payment based on a comparison of one or more aspects of the scheme property or price in comparison with fluctuations in the value or price of property of any description or index or other factor designated for the purpose (a "performance fee").(2) Any performance fee should be specified in the appropriate manner in the prospectus and
COLL 6.7.8GRP
(1) To introduce a new charge for the sale or redemption of units, or any new category of remuneration for its services or increase the rate stated in the prospectus, the authorised fund manager will need to comply with COLL 4.2.5 R (Table: contents of prospectus) and COLL 4.3 (Approvals and notifications).(2) A redemption charge may be expressed in terms of amount or percentage. It may also be expressed as diminishing over the time during which the unitholder has held the units
COLL 6.7.10RRP
(1) The authorised fund manager must determine whether a payment is to be made from the income property or capital property of an authorised fund, and in doing so the authorised fund manager must:(a) pay due regard to whether the nature of the cost is income related or capital related and the objective of the scheme; and(b) agree the treatment of any payment with the depositary.(2) Where, for any class of units5 for any annual accounting period, the amount of the income property
COLL 6.7.11GRP
(1) Any payment as a result of effecting transactions for the authorised fund should be made from the capital property of the scheme.(2) Other than the payments in (1), all other payments should be made from income property in the first instance but may be transferred to the capital account in accordance with COLL 6.7.10 R (1) (Allocation of payments to income or capital).(3) For payments transferred to the capital property of the scheme in accordance with (2), the prospectus
COLL 6.7.12RRP
2(1) No payment may be made from scheme property to any person, other than a payment to the authorised fund manager permitted by the rules in COLL, for the acquisition or promotion of the sale of units in an authorised fund.2(2) 2Paragraph (1) does3 not apply to the costs an authorised fund incurs3 preparing and printing the simplified prospectus, key investor information document6, key features document or key features illustration3, provided the prospectus states, in accordance
COLL 6.7.15RRP
(1) Where the property of an authorised fund is transferred to a second authorised fund (or to the depositary for the account of the authorised fund) in consideration of the issue of units in the second authorised fund to unitholders in the first scheme, (2) applies.(2) The ICVC or the depositary of the ICVC, ACS or8AUT as the successor in title to the property transferred, may pay out of the scheme property any liability arising after the transfer which, had it arisen before
COLL 4.5.2GRP
In order to provide the unitholders with regular and relevant information about the progress of the authorised fund, the authorised fund manager must:(1) prepare a short report and a long report half-yearly and annually; (2) send the short report to all unitholders; and(3) make the long report available to unitholders on request.
COLL 4.5.7RRP
(1) An annual long report on an authorised fund, other than a scheme which is an umbrella, must contain:(a) the accounts for the annual accounting period which must be prepared in accordance with the requirements of the IMA SORP;3(b) the report of the authorised fund manager in accordance with COLL 4.5.9 R (Authorised fund manager's report);(c) the comparative table in accordance with COLL 4.5.10 R (Comparative table);(d) the report of the depositary in accordance with COLL 4.5.11
COLL 4.5.8RRP
(1) A half-yearly long report on an authorised fund, other than for a scheme which is an umbrella, must contain:(a) the accounts for the half-yearly accounting period which must be prepared in accordance with the requirements of the IMA SORP; and3(b) the report of the authorised fund manager in accordance with COLL 4.5.9 R (Authorised fund manager's report).(2) A half-yearly long report on a scheme which is an umbrella must be prepared for the umbrella as a whole and2 must contain:(a)
COLL 4.5.9RRP
The matters set out in (1) to (13)2 must be included in any authorised fund manager's report, except where otherwise indicated:2(1) the names and addresses of :(a) the authorised fund manager;(b) the depositary;(c) the registrar;(d) any investment adviser;(e) the auditor; and(f) for a scheme which invests in immovables, the standing independent valuer;(2) (for an ICVC), the names of any directors other than the ACD;(3) a statement of the authorised status of the scheme;(4) (for
COLL 4.5.10RRP
The comparative table required by COLL 4.5.7R (1)(c) (Contents of the annual long report) must set out:(1) a performance record over the last five calendar years, or if the authorised fund has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing:(a) the highest and the lowest price of a unit of each class in issue during each of those years; and(b) the net income distributed (or, for accumulation units, allocated)
COLL 4.5.11RRP
(1) The depositary must make an annual report to unitholders which must be included in the annual report.(2) The annual report must contain:(a) a description, which may be in summary form, of the duties of the depositary under COLL 6.6.4 (General duties of the depositary) and in respect of the safekeeping of the scheme property; and(b) a statement whether, in any material respect:(i) the issue, sale, redemption and cancellation, and calculation of the price of the units and the
COLL 4.5.12RRP
The authorised fund manager must ensure that the report of the auditor to the unitholders includes the following statements:33(1) whether, in the auditor's opinion, the accounts have been properly prepared in accordance with the IMA SORP, the rules in this sourcebook, and the instrument constituting the scheme;(2) whether, in the auditor's opinion, the accounts give a true and fair view of the net revenue3and the net capital 3gains or losses on3the scheme property of the authorised
COLL 4.5.14RRP
(1) The authorised fund manager must, within four months after the end of each annual accounting period and two months after the end of each half-yearly accounting period respectively, make available and publish the long reports2 prepared in accordance with COLL 4.5.7R (1) to (3)2 (Contents of the annual long report) and COLL 4.5.8R (1) to (2)2 (Contents of the half-yearly long report).22(2) The reports referred to in (1) must:(a) be supplied free of charge to any person on request2;2(b)
COLL 6.3.2GRP
(1) In accordance with Principle 6, this section is intended to ensure that the authorised fund manager pays due regard to its clients' interests and treats them fairly.(2) An authorised fund manager is responsible for valuing the scheme property of the authorised fund it manages and for calculating the price of units in the authorised fund. This section protects clients by:(a) setting out rules and guidance1 to ensure the prices1 of units in both a single-priced authorised fund
COLL 6.3.3RRP
1(1) To determine the price of units the authorised fund manager must carry out a fair and accurate valuation of all the scheme property in accordance with the instrument constituting the scheme and the prospectus.1(2) 1For a dual-priced authorised fund, each valuation of the scheme property must consist of two parts, carried out on an issue basis and a cancellation basis respectively.
COLL 6.3.4RRP
(1) An authorised fund must not have fewer than two regular valuation points in any month and if there are only two valuation points in any month, the regular valuation points must be at least two weeks apart.(2) The prospectus of a scheme must contain information about its regular valuation points for the purposes of dealing in units in accordance with COLL 4.2.5R (16) (Table: contents of the prospectus).(3) Where a scheme operates limited redemption arrangements, (1) does not
COLL 6.3.5RRP
(1) An authorised fund manager must ensure that the1price of a unit of any class is calculated:1(a) 1by reference to the net value of the scheme property; and(b) 1in accordance with the provisions of both the instrument constituting the scheme and the prospectus.(2) Any unit price calculated in accordance with (1) must be expressed in a form that is accurate to at least four significant figures.(3) 1For each class of units in a single-priced authorised fund, a single price must
COLL 6.3.5ARRP
1The authorised fund manager of a single-priced authorised fund must not: (1) sell a unit for more than the price of a unit of the relevant class at the relevant valuation point, to which may be added any preliminary charge permitted and any payments required under COLL 6.3.7 R and COLL 6.3.8 R; or(2) redeem a unit for less than the price of a unit of the relevant class at the relevant valuation point, less any redemption charge permitted and any deductions under COLL 6.3.7 R
COLL 6.3.5BRRP
(1) 1The authorised fund manager of a dual-priced authorised fund must not:(a) sell a unit for more than the maximum sale price of a unit of the relevant class at the relevant valuation point, to which may be added any payment required under COLL 6.3.7 R; or (b) redeem a unit for less than the cancellation price of a unit of the relevant class at the relevant valuation point, less any redemption charge permitted and any deduction under COLL 6.3.7 R.(2) The maximum sale price of
COLL 6.3.6GRP

Table: This table belongs to COLL 6.3.2 G (2) (a) and COLL 6.3.3 R (Valuation)1.

Valuation and pricing

1

The valuation of scheme property

(1)

Where possible, investments should be valued using a reputable source. The reliability of the source of prices should be kept under regular review.

(2)

For some or all of the investments comprising the scheme property, different prices may quoted according to whether they are being bought (offer prices) or sold (bid prices). The valuation of a single-priced authorised fund should reflect the mid-market value of such investments. In the case of a dual-priced authorised fund, the issue basis of the valuation will be carried out by reference to the offer prices of investments and the cancellation basis by reference to the bid prices of those same investments. The prospectus should explain how investments will be valued for which a single price is quoted for both buying and selling.1

1

3(2A)

Schemes investing in approved money-market instruments5should value such instruments on an amortised cost basis on condition that:5

55

[Note:CESR's UCITS eligible assets guidelines with respect to article 4(2) of the UCITS eligible assets Directive]

(2B)

Short-term money market funds may value approved money-market instruments on an amortised cost basis.7

[Note: paragraph 21 of CESR's guidelines on a common definition of European money market funds]7

(3)

Any part of the scheme property of an authorised fund that is not an investment should be valued at a fair value, but for immovables this is subject to COLL 5.6.20 R (3) (f) (Standing independent valuer and valuation).

(4)

For the purposes of (2) and (3), any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable on acquiring or disposing of the investment or other part of the scheme property should, in the case of a single-priced authorised fund,2 be excluded from the value of an investment or other part of the scheme property. In the case of a dual-priced authorised fund, any such payments should be added to the issue basis of the valuation, or subtracted from the cancellation basis of the valuation, as appropriate. Alternatively, the prospectus of a dual-priced authorised fund may prescribe any other method of calculating unitprices that ensures an equivalent treatment of the effect of these payments.2

(5)

Where the authorised fund manager has reasonable grounds to believe that:

it should value an investment at a price which, in its opinion, reflects a fair and reasonable price for that investment (the fair value price);

(6)

The circumstances which may give rise to a fair value price being used include:

  • no recent trade in the security concerned; or
  • the occurrence of a significant event since the most recent closure of the market where the price of the security is taken.
In (b), a significant event is one that means the most recent price of a security or a basket of securities is materially different to the price that it is reasonably believed would exist at the valuation point had the relevant market been open.

(7)

In determining whether to use such a fair value price , the authorised fund manager should include in his consideration:

4(7A)

Where the authorised fund manager, the depositary or the standing independent valuer have reasonable grounds to believe that the most recent valuation of an immovable does not reflect the current value of that immovable, the authorised fund manager should consult and agree with the standing independent valuer a fair and reasonable value for the immovable.

(8)

The authorised fund manager should document the basis of valuation (including any fair value pricing policy) and, where appropriate, the basis of any methodology and ensure that the procedures are applied consistently and fairly.

(9)

Where a unit price is determined using properly applied fair value prices in accordance with policies in (8), subsequent information that indicates the price should have been different from that calculated will not normally give rise to an instance of incorrect pricing.

2

The pricing controls of the authorised fund manager

(1)

An authorised fund manager needs to be able to demonstrate that it has effective controls over its calculations of unit prices.

(2)

The controls referred to in (1) should ensure that:

  • asset prices are accurate and up to date;
  • investment 1transactions are accurately and promptly reflected in valuations;
  • the components of the valuation (including stock, cash, and units in issue1), are regularly reconciled to their source or prime records and any reconciling items resolved promptly and debtors reviewed for recoverability;
  • the sources of prices not obtained from the main pricing source are recorded and regularly reviewed;
  • compliance with the investment and borrowing powers is regularly reviewed;
  • dividends are accounted for as soon as securities1 are quoted ex-dividend (unless it is prudent to account for them on receipt):
  • fixed interest dividends, interest and expenses are accrued at each valuation point1;
  • tax positions are regularly reviewed and adjusted, if necessary;
  • reasonable tolerances are set for movements in the key elements of a valuation and movements outside these tolerances are investigated;5
  • the fund manager regularly reviews the portfolio valuation for accuracy5; and5
  • the valuation of OTC derivatives is accurate and up to date and in compliance with the methods agreed with the depositary.5

(3)

In exercising its pricing controls, the authorised fund manager may exercise reasonable discretion in determining the appropriate frequency of the operation of the controls and may choose a longer interval, if appropriate, given the level of activity on the authorised fund1or the materiality of any effect on the price.

(4)

Evidence of the exercise of the pricing controls should be retained.

(5)

Evidence of persistent or repetitive errors in relation to these matters, and in particular any evidence of a pattern of errors working in an authorised fund manager's favour, will make demonstrating effective controls more difficult.

(6)

Where the pricing1function is delegated to a third party, COLL 6.6.15 R (1) (Committees and delegation) will apply.

3

The depositary's review of the authorised fund manager's systems and controls

(1)

This section provides details of the types of checks a depositary should carry out to be satisfied that the authorised fund manager adopts systems and controls which are appropriate to ensure that prices of units are calculated in accordance with this section and to ensure that the likelihood of incorrect prices will be minimised. These checks also apply where an authorised fund manager has delegated all or some of its pricing1 functions to one or more third parties5.

5

(2)

A depositary should thoroughly review an authorised fund manager's systems and controls to confirm that they are satisfactory. The depositary's review should include an analysis of the controls in place to determine the extent to which reliance can be placed on them.

(3)

A review should be performed when the depositary is appointed and thereafter as it feels appropriate given its knowledge of the robustness and the stability of the systems and controls and their operation.

(4)

A review should be carried out more frequently where a depositary knows or suspects that an authorised fund manager's systems and controls are weak or are otherwise unsatisfactory.

(5)

Additionally, a depositary should from time to time review other aspects of the valuation of the scheme property of each authorised fund for which it is responsible, verifying, on a sample basis, if necessary, the assets, liabilities, accruals, units in issue1, securities prices (and in particular the prices of OTC derivatives,5unapproved securities and the basis for the valuation of unquoted securities) and any other relevant matters, for example an accumulation factor or a currency conversion factor.

(6)

A depositary should ensure that any issues, which are identified in any such review, are properly followed up and resolved.

4

The recording and reporting of instances of incorrect pricing

(1)

An authorised fund manager should record each instance where the price of a unit is incorrect as soon as the error is discovered, and report the fact to the depositary together with details of the action taken, or to be taken, to avoid repetition as soon as practicable.

(2)

In accordance with COLL 6.6.11 G (Duty to inform the FCA), the depositary should report any breach of the rules in COLL 6.3 immediately to the FCA. However, notification should relate to instances which the depositary considers material only.

(3)

A depositary should also report to the FCA immediately any instance of incorrect pricing1where the error is 0.5% or more of the price of a unit, where a depositary believes that reimbursement or payment is inappropriate and should not be paid by an authorised fund manager.

(4)

In accordance with SUP 16.6.8 R, a depositary should also make a return to the FCA on a quarterly basis which summarises the number of instances of incorrect pricing1 during a particular period.

5

The rectification of pricing breaches

(1)

COLL 6.6.3 R (1) (Functions of the authorised fund manager) places a duty on the authorised fund manager to take action to reimburse affected unitholders, former unitholders, and the scheme itself, for instances of incorrect pricing1, except if it appears to the depositary that the breach is of minimal significance.

(2)

A depositary may consider that the instance of incorrect pricing1is of minimal significance if:

(3)

In determining (2), if the instance of incorrect pricing1 is due to one or more factors or exists over a period of time, each price should be considered separately.

(4)

If a depositary deems it appropriate, it may, in spite of the circumstances outlined in (2), require a payment from the authorised fund manager or from the authorised fund to the unitholders, former unitholders, the authorised fund or the authorised fund manager (where appropriate).

(5)

The depositary should satisfy itself that any payments required following an instance of incorrect pricing1 are accurately and promptly calculated and paid.

(6)

If a depositary considers that reimbursement or payment is inappropriate, it should report the matter to the FCA, together with its recommendation and justification. The depositary should take into account the need to avoid prejudice to the rights of unitholders, or the rights of unitholders in a class of units.

(7)

It may not be practicable, or in some cases legally permissible, for the authorised fund manager to obtain reimbursement from unitholders, where the unitholders have benefited from the incorrect price.

(8)

In all cases where reimbursement or payment is required, amounts due to be reimbursed to unitholders for individual sums which are reasonably considered by the authorised fund manager and depositary to be immaterial, need not normally be paid.
COLL 6.3.13RRP
3The authorised fund manager of a qualifying money market fund or a short-term money market fund valuing scheme property on an amortised cost basis7 must: (1) carry out a valuation of the scheme property on a mark to market basis at least once every week and at the same valuation point used to value the scheme property on an amortised cost basis; and(2) ensure that the value of the scheme property when valued on a mark to market basis does not differ by more than 0.5% from the
COLL 6.3.14GRP
3The authorised fund manager should advise the depositary when the mark to market value of a qualifying money market fund or a short-term money market fund valuing scheme property on an amortised cost basis 7varies from its amortised cost value by 0.1%, 0.2% and 0.3% respectively. The authorised fund manager of a qualifying money market fund or short-term money market fund7 should agree procedures with the depositary designed to stabilise the value of the scheme in these even
COLL 5.2.5RRP
(1) In this chapter, the value of the scheme property of a UCITS schememeans the net value determined in accordance with COLL 6.3 (Valuation and pricing), after deducting any outstanding borrowings, whether immediately due to be repaid or not.(2) When valuing the scheme property for the purposes of this chapter:(a) the time as at which the valuation is being carried out ("the relevant time") is treated as if it were a valuation point, but the valuation and the relevant time do
COLL 5.2.7CRRP
7A unit in a closed end fund shall be taken to be a transferable security for the purposes of investment by a UCITS scheme, provided it fulfils the criteria for transferable securities set out in COLL 5.2.7A R, and either:(1) where the closed end fund is constituted as an investment company or a unit trust:(a) it is subject to corporate governance mechanisms applied to companies; and(b) where another person carries out asset management activity on its behalf, that person is subject
COLL 5.2.7DGRP
(1) 7An authorised fund manager should not invest the scheme property of a UCITS scheme in units of a closed end fund for the purpose of circumventing the investment limits set down in this section.(2) When required to assess whether the corporate governance mechanisms of a closed end fund in contractual form are equivalent to those applied to companies, the authorised fund manager should consider whether the contract on which the closed end fund is based provides its investors
COLL 5.2.7IGRP
(1) 7The authorised fund manager should assess the liquidity of a money-market instrument in accordance with CESR's UCITS eligible assets guidelines with respect to article 4(1) of the UCITS eligible assets Directive.(2) Where an approved money-market instrument forms part of the scheme property of a qualifying money market fund, short-term money market fund or money market fund,12 the authorised fund manager should adequately monitor that the instrument continues to be of high
COLL 5.2.9ARRP
12The ability to hold up to 10% of the scheme property in ineligible assets under COLL 5.2.8 R (4) is subject to the following limitations:(1) for a qualifying money market fund, the 10% restriction is limited to high quality money market instruments with a maturity or residual maturity of not more than 397 days, or regular yield adjustments consistent with such a maturity, and with a weighted average maturity of no more than 60 days;(2) for a short-term money market fund or a
COLL 5.2.12RRP
(1) This rule applies to government and public securities ("such securities").(2) Where no more than 35% in value of the scheme property is invested in such securities issued by any one body, there is no limit on the amount which may be invested in such securities or in any one issue.(3) An authorised fund may invest more than 35% in value of the scheme property in such securities issued by any one body provided that:(a) the authorised fund manager has before any such investment
COLL 5.2.16RRP
(1) Where:(a) an investment or disposal is made under COLL 5.2.15 R; and(b) there is a charge in respect of such investment or disposal;the authorised fund manager of the UCITS scheme making the investment or disposal must pay the UCITS scheme the amounts referred to in (2) or (3) within four business days following the date of the agreement to invest or dispose. (2) When an investment is made, the amount referred to in (1) is either:14(a) any amount by which the consideration
COLL 5.2.20BGRP
(1) 7An index based on derivatives on commodities or an index on property may be regarded as a financial index of the type referred to in COLL 5.2.20R (2)(f) provided it satisfies the criteria for financial indices set out in COLL 5.2.20A R.(2) If the composition of an index is not sufficiently diversified in order to avoid undue concentration, its underlying assets should be combined with the other assets of the UCITS scheme when assessing compliance with the requirements on
COLL 5.2.30RRP
(1) In relation to a UCITS scheme which is an umbrella, the provisions in COLL 5.2 to COLL 5.5 apply to each sub-fund as they would for an authorised fund, except the following rules which apply at the level of the umbrella only:(a) COLL 5.2.27 R (Significant influence for ICVCs);(b) COLL 5.2.28 R (Significant influence for authorised fund managers of AUTs or ACSs17); and17(c) COLL 5.2.29 R (Concentration).(2) A sub-fund may invest in or dispose of units of14 another sub-fund
FEES 6.3.2GRP
The calculation of levies will also take into account previous levies, where funds raised in anticipation of meeting liabilities prove either more or less than the amount actually required.
FEES 6.3.4ARRP
8The FSCS may at any time impose a MERS levy provided that the FSCS has reasonable grounds for believing that the funds available to it to meet relevant expenses are or will be insufficient, taking into account relevant expenses incurred or expected to be incurred in the 12 months following the date of the levy.
FEES 6.3.12RRP
Any funds received by the FSCS by way of levy or otherwise for the purposes of the compensation scheme are to be managed as the FSCS considers appropriate, and in doing this the FSCS must act prudently.
FEES 6.3.13RRP
Interest earned by the FSCS in the management of funds held to the credit of a class must be credited to that class8, and must be set off against the management expenses or compensation costs2allocated to that class.822228
FEES 6.3.14RRP
The FSCS must keep accounts which include:88(1) the funds held to the credit of each class; and228(2) the liabilities of that class.822
FEES 6.3.21RRP
If the FSCS has more funds (whether from levies, recoveries or otherwise)8 to the credit of a class82 than the FSCS believes will be required to meet levies on that class82 for the next 12 months, it may refund the surplus to members or former members of the class82 on any reasonable basis.28228
INSPRU 1.5.25GRP
Where the surplus arising from business is shared between policyholders and shareholders in different ways for different blocks of business, it may be necessary to maintain a separate fund to ensure that policyholders are, and will be, treated fairly. For example, if a proprietary company writes some business on a with-profits basis, this should be written in a with-profits fund separate from any business where the surplus arising from that business is wholly owned by shareho
INSPRU 1.5.26GRP
Where a firm merges separate funds for different types of business, it will need to ensure that the merger will not result in policyholders being treated unfairly. When considering merging the funds, the firm should consider the impact on its PPFM (see COBS 20.32) and on its obligations to notify the appropriate regulator (see SUP 15.3). In particular, a firm would need to consider how any inherited estate would be managed and how the fund would be run in future, such that policyholders
INSPRU 1.5.27RRP
A firm may not transfer assets out of a long-term insurance fund unless:(1) the assets represent an established surplus; and(2) no more than three months have passed since the determination of that surplus.
INSPRU 1.5.29GRP
INSPRU 1.1.27 R and INSPRU 1.1.28 R provide further constraints on the transfer of assets out of a with-profits fund. INSPRU 1.1.27 R requires a firm to have admissible assets in each of its with-profits funds to cover the technical provisions and other long-term insurance liabilities relating to all the business in that fund. INSPRU 1.1.28 R requires a realistic basis life firm to ensure that the realistic value of assets for each of its with-profits funds is at least equal to
INSPRU 1.5.32GRP
The purposes of the long-term insurance business include the payment of claims, expenses and liabilities arising from that business, the acquisition of lawful access to fixed assets to be used in that business and the investment of assets. The payment of liabilities may include repaying a loan but only where that loan was incurred for the purpose of the long-term insurance business. The purchase or investment of assets may include an exchange at fair market value of assets (including
INSPRU 1.5.33RRP
If the FCA or PRA10 imposes a financial penalty on a long-term insurer, the firm must not pay that financial penalty from a long-term insurance fund.10
INSPRU 1.5.35GRP
INSPRU 3.1.57 R requires a firm to cover, as closely as possible, its property-linked liabilities by the property to which those liabilities are linked. In order to comply with this rule, a firm should identify the assets it holds to cover property-linked liabilities and should not apply those assets (as long as they are needed to cover the property-linked liabilities) for any purpose other than to meet those liabilities.
LR 15.5.2RRP
A closed-ended investment fund must comply with LR 10 (Significant transactions) and LR 5.63, except in relation to transactions that are executed in accordance with the scope of its published investment policy.
LR 15.5.3GRP
LR 11 (Related party transactions) applies to a closed-ended investment fund.
LR 15.5.4RRP
In addition to the definition in LR 11.1.4 R a related party includes any investment manager of the closed-ended investment fund and any member of such investment manager's group.4
LR 15.5.5RRP
112(1) LR 11.1.7 R to LR 11.1.11 R do not apply to an arrangement between a closed-ended investment fund and its investment manager or any member of that investment manager's group4 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:2(a) made at the same time and on substantially the same economic and financial terms; or2(b) referred to in the closed-ended investment fund's published
LR 15.6.1RRP
A closed-ended investment fund must notify any change in its taxation status to a RIS as soon as possible.
LR 15.6.2RRP
In addition to the requirements in LR 9.8 (Annual financial report), a closed-ended investment fund must include in its annual financial report:(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) a statement, set out in a prominent position, as to whether in the opinion of the directors, the continuing appointment of the investment manager
LR 15.6.3RRP
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 LR 15.6.4 R.
LR 15.6.6RRP
(1) This rule applies to a closed-ended investment fund that has no executive directors.(2) A closed-ended investment fund's statement required by LR 9.8.6R (6) need not include details about the following principles and provisions of the UK Corporate Governance Code3 except to the extent that those principles or provisions relate specifically to non-executive directors:3(a) Principle D.12 (including Code Provisions D.1.12 to D.1.5):2 and222(b) Principle D.22 (including Code Provisions
LR 15.6.8RRP
A closed-ended investment fund must notify to 1a RIS within five business days of the end of each quarter a list of all investments in other listedclosed-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 listedclosed-ended investment funds.11
LR 15.2.5RRP
(1) No more than 10%, in aggregate, of the value of the total assets of an applicant1 at admission may be invested in other listed5closed-ended investment funds.15(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 listed5closed-ended investment funds.5
LR 15.2.6RRP
1(1) If 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; and1(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
LR 15.2.7RRP
An 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.
LR 15.2.11RRP
The board of directors or equivalent body of the applicant must be able to act independently:11(1) of any investment manager appointed to manage investments of the applicant; and11(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.11
LR 15.2.11ARRP
1LR 15.2.11R (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.
LR 15.2.12ARRP
1For the purposes of LR 15.2.11 R and LR 15.2.12-A R, the following are not independent:33(1) directors, employees, partners, officers or professional advisers of or to:(a) an investment manager of the applicant; or(b) a master fund or investment manager referred to in LR 15.2.11R (2); or(c) any other company in the same group as the investment manager of the applicant; or(2) directors, employees or professional advisers of or to other investment companies or funds that are:(a)
COLL 8.1.2GRP
(1) This chapter assists in achieving the statutory objective of protecting consumers by providing an appropriate degree of protection in respect of authorised funds that are only intended for investors that are, in general, prepared to accept a higher degree of risk in their investments or have a higher degree of experience and expertise than investors in retail schemes.(2) This section ceases to apply where a qualified investor scheme has converted to be authorised as a UCITS
COLL 8.1.4GRP
(1) Qualified investor schemes are authorised funds which may only be sold to sophisticated investors. Therefore, the authorised fund manager of an AUT or an ICVC3 must take reasonable care to ensure that subscription in relation to the units of this type of scheme should only be in relation to the client types set out in COLL 8 Annex 1R1.111(1A) 3The authorised contractual scheme manager of an ACS must take reasonable care to ensure that subscription in relation to the units
COLL 8.1.5GRP
Details of the application procedures in respect of qualified investor schemes are contained in COLL 2.1 (Authorised fund applications). COLLG provides details on how notifications may be made to the FCA.
COLL 8.3.4RRP

This table belongs to COLL 8.3.2 R.

1

Document status

A statement that this document is the prospectus of the authorised fund valid as at a particular date which shall be the date of the document.

2

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is either an ICVC, ACS11 or an AUT;

(3)

that the scheme is a qualified investor scheme;

(4)

where relevant, that the unitholders in an ICVC are not liable for the debts of the authorised fund;

(5)

where relevant, the address of the ICVC's head office and the address in the United Kingdom for service on the ICVC of documents required or authorised to be served on it;

(6)

the effective date of the authorisation order made by the FCA and, if the duration of the authorised fund is not unlimited, when it will or may terminate;

(7)

the base currency for the authorised fund;

(8)

where relevant, the maximum and minimum sizes of the ICVC's capital;

11

(9)

the circumstances in which the authorised fund may be wound up under the rules in COLL and a summary of the procedure for, and the rights of unitholders under, such a winding up; and11

11

(10)11

for an ACS that is a limited partnership scheme, the address of the proposed principal place of business of the limited partnership scheme.

3

Investment objectives and policy

(1)

Sufficient information to enable a unitholder to ascertain:

(a)

the investment objectives of the authorised fund;

(b)

the authorised fund's investment policy for achieving those investment objectives, including:

(i)

the general nature of the portfolio and any intended specialisation;

(ii)

the policy for the spreading of risk in the scheme property; and

(iii)

the policy in relation to the exercise of borrowing powers;

(c)

a description of any restrictions in the assets in which investment may be made; and

(d)

the extent (if any) to which that investment policy does not envisage remaining fully invested at all times.

(2)

For investment in immovables :

(a)

the countries or territories of immovables in which the authorised fund may invest;

(b)

the policy of the authorised fund manager in relation to insurance of immovables forming part of the scheme property; and

(c)

the policy of the authorised fund manager in relation to the granting of options over immovables in the scheme property and the purchase of options on immovables.

(3)

If intended, whether the scheme property may consist of units in collective investment schemes ("second schemes") which are managed by or operated by the authorised fund manager or by one of its associates and a statement as:

(a)

to the basis of the maximum amount of the charges in respect of transactions in a second scheme; and

(b)

the extent to which any such charges will be reimbursed to the scheme.

(4)

If intended, whether the scheme may enter into stock lending transactions and, if so, what procedures will operate and what collateral will be required.

(5)

Where a scheme is a feeder scheme which (in respect of investment in units in a single collective investment scheme) is dedicated to units in a collective investment scheme, details of the master scheme and the minimum (and, if relevant, maximum) investment that the feeder scheme may make in it;8

(6)

Where the scheme is a money market fund or a short-term money market fund, a statement identifying it as such a fund and a statement that the scheme's investment objectives and policies will meet the conditions in the definition of money market fund or short-term money market fund, as appropriate.9

4

Distributions and accounting dates

Relevant details of accounting and distribution dates and a description of the procedures:

(1)

for determining and applying income (including how any distributable income is paid); and

(2)

relating to unclaimed distributions.

5

The characteristics of units in the authorised fund

Information as to:

(1)

the names of the classes of units in issue or available for issue and the rights attached to them in so far as they vary from the rights attached to other classes;

(2)

how unitholders may exercise their voting rights and what these are; and

(3)

the circumstances where a mandatory redemption, cancellation or conversion of units from one class to another may be required.11

115A

Issue of units in ACSs: eligible investors

(1)

A statement that units may not be issued to a person other than to a person who:

(a)

is a:

(i)

professional ACS investor; or

(ii)

large ACS investor; or

(iii)

person who already holds units in the scheme; and

(b)

falls within one or more of the categories set out in COLL 8 Annex 1 R(Qualified Investor Schemes: eligible investors).

(2)

A statement that the authorised contractual scheme manager of an ACS must redeemunits as soon as practicable after becoming aware that those units are vested in anyone (whether as a result of subscription or transfer of units) other than a person meeting the criteria in (1).

115B

Transfer of units in ACSs

(1)

A statement whether the transfer of units in the ACSscheme is either:

(a)

prohibited; or

(b)

allowed;

by the instrument constituting the scheme and prospectus.

(2)

A statement that where transfer of units is allowed by the instrument constituting the scheme and prospectus in accordance with (1)(b), units may only be transferred in accordance with the conditions specified by FCArules, including that units may not be transferred to a person other than a person that:

(a)

is a:

(i)

professional ACS investor; or

(ii)

large ACS investor; or

(iii)

person who already holds units in the scheme; and

(b)

falls within one or more of the categories set out in COLL 8 Annex 1 R (Qualified Investor Schemes: eligible investors).

(3)

For a co-ownership scheme which is an umbrella, a statement in accordance with (1)(a) or (1)(b) and, where appropriate, a statement in accordance with (2), must also be made for the sub-funds. Where individual sub-funds have differing policies in relation to transfer of units, separate statements are required.

6

The authorised fund manager

The following particulars of the authorised fund manager:

(1)

its name and the nature of its corporate form;

(2)

the country or territory of its incorporation;

(3)

the date of its incorporation and if the duration of its corporate status is limited, when that status will or may cease;

(4)

if it is a subsidiary, the name of its ultimate holding company and the country or territory in which that holding company is incorporated;

(5)

the address of its registered office, its head office, and, if different, the address of its principal place of business in the United Kingdom;

(6)

the amount of its issued share capital and how much of it is paid up;

(7)

for an ICVC, a summary of the material provisions of the contract between the ICVC and the authorised fund manager which may be relevant to unitholders including provisions (if any) relating to termination, compensation on termination and indemnity; and

(8)

for an AUT, the names of the directors of the authorised fund manager.11

11

7

Directors of an ICVC, other than the ACD

Other than for the ACD:

(1)

the names and positions in the ICVC of the directors; and

(2)

the manner, amount and calculation of the remuneration of the directors.

8

The depositary

The following particulars of the depositary:

(1)

its name and the nature of its corporate form;

(2)

the country or territory of its incorporation;

(3)

the address of its registered office and the address of its head office if that is different from the address of its registered office; and

(4)

if neither its registered office nor its head office is in the United Kingdom, the address of its principal place of business in the United Kingdom.

9

The investment adviser

If an investment adviser is retained in connection with the business of the authorised fund, its name and whether or not it is authorised by the FCA.

10

The auditor

The name of the auditor of the authorised fund.

11

The register of Unitholders

Details of the address in the United Kingdom where the register of unitholders is kept and can be inspected by unitholders.

12

Payments out of the scheme property

The payments that may be made out of the scheme property to any person whether by way of remuneration for services, or reimbursement of expense and for each category of remuneration or expense, the following should be specified:

(1)

the current rates or amounts of such remuneration;

(2)

how the remuneration will be calculated and accrue and when it will be paid;

(3)

if notice has been given to unitholders of the authorised fund manager's intention to:

(a)

introduce a new category of remuneration for its services; or

(b)

increase the basis of any current charge; or

(c)

change the basis of the treatment of a payment from the capital property set out in COLL 8.5.13 R (2) (Payments);

particulars of that introduction or increase and when it will take place;

(4)

the types of any other charges and expenses that may be taken out of the scheme property; and

(5)

if, in accordance with COLL 8.5.13 R (2), all or part of the remuneration or expense are to be treated as a capital charge:

(a)

that fact; and

(b)

the basis of the charge which may be so treated

13

Dealing

Details of:

(1)

the dealing days and times in the dealing day on which the authorised fund manager will receive requests for the sale and redemption of units;

(2)

the procedures for effecting:

(a)

the issue and cancellation of units;

(b)

the sale and redemption of units; and

(c)

the settlement of transactions;

(3)

the steps required to be taken by a unitholder in redeeming units before he can receive the proceeds including any relevant notice periods and the circumstances and periods where a deferral of payment as provided in COLL 8.5.11 R (3) (Sale and redemption) may be applied;

(4)

the circumstances in which the redemption of units may be suspended;

(5)

the days and times in the day on which recalculation of the price will commence;

(6)

details of the minimum number or value of each type of unit in the authorised fund which:

(a)

any one person may hold; and

(b)

may be the subject of any one transaction of sale or redemption;

(7)

the circumstances in which the authorised fund manager may arrange for, and the procedure for, a redemption of units in specie;

(8)

the circumstances in which the further issue of units in any particular class may be limited and the procedures relating to this:66

(9)

the circumstances in which direct issue or cancellation of units by the ICVC or the depositary of an AUT or ACS11 (as appropriate) may occur and the relevant procedures for such issues and cancellations; and66

11

(10)

6whether a unitholder may effect transfer of title to units on the authority of an electronic communication and if so the conditions that must be satisfied in order to effect a transfer.6

14

Valuation of scheme property

Details as to:

(1)

how frequently and at what times of the day the scheme property will be regularly valued to determine the price at which units in the scheme may be purchased from or redeemed by the authorised fund manager and a description of any circumstance where the scheme property may be specially valued;

(2)

in relation to each purpose for which the scheme property must be valued, the basis on which it will be valued; and

(3)

how the price of units of each class will be determined, including whether a forward price or historic price basis is to be applied.

15

Sale and redemption charges

If the authorised fund manager makes any charges on sale or redemption of units, details of the charging structure and how notice will be provided to unitholders of any increase.

15A5

Property Authorised Investment Funds

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 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.

16

General information

Details as to:

(1)

when annual and half- yearly reports will be published; and

(2)

the address at which copies of the instrument constituting the scheme, any amending instrument and the most recent annual reports may be inspected and from which copies may be obtained.

17

Information on the umbrella

In the case of a scheme which is an umbrella, the following information:

(1)

that a unitholder may exchange units in one sub-fund for units in another sub-fund and that such an exchange is treated as a redemption and sale;

(2)

what charges may be made on exchanging units in one sub-fund for units in other sub-funds;

(3)

the policy for allocating between sub-funds any assets of, or costs, charges and expenses payable out of, the scheme property which are not attributable to any particular sub-fund;

(4)

in respect of each sub-fund, the currency in which the scheme property allocated to it will be valued and the price of units calculated and payments made, if this currency is not the base currency of the umbrella; and

(5)

for an ICVC or a co-ownership scheme,11 that:10

10

10(a)

for an ICVC,11 its sub-funds are segregated portfolios of assets and, accordingly, 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;

11

11(aa)

for a co-ownership scheme, the property subject to a sub-fund is beneficially owned by the participants in that sub-fund as tenants in common (or, in Scotland, is the common property of the participants in that sub-fund) and must not be used to discharge any liabilities of, or meet any claims against, any person other than the participants in that sub-fund; and

10(b)

for an ICVC or a co-ownership scheme,11 while the provisions of the OEIC Regulations, and section 261P (Segregated liability in relation to umbrella co-ownership schemes) of the Act in the case of co-ownership schemes,11 provide for segregated liability between sub-funds, the concept of segregated liability is relatively new. Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not yet known how those foreign courts will react to regulations 11A and 11B of the OEIC Regulations or, as the case may be, section 261P of the Act.11

11

18

Application of the prospectus contents to an umbrella

For a scheme which is an umbrella, information required must be stated:

(1)

in relation to each sub-fund where the information for any sub-fund differs from that for any other; and

(2)

for the umbrella as a whole, but only where the information is relevant to the umbrella as a whole.

318A

Investment in overseas4 property through an intermediate holding vehicle3

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

1118B

Information on authorised contractual schemes

A statement that:

(1)

a unitholder in a co-ownership scheme 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 he holds;

(2)

a unitholder in a limited partnership scheme is not liable for the debts or obligations of the limited partnership scheme beyond the amount of the scheme property which is available to the authorised contractual scheme manager to meet such debts or obligations, provided that the unitholder does not take part in the management of the partnership business;

(3)

the exercise of rights conferred on limited partners by FCArules does not constitute taking part in the management of the partnership business; and

(4)

the scheme property of a co-ownership scheme is beneficially owned by the participants as tenants in common (or, in Scotland, is the common property of the participants).

19

Additional information

Any other material information which is within the knowledge of the directors11 of an ICVC or the authorised fund manager11 of an AUT or ACS11, or which the directors or authorised fund manager11 would have obtained by the making of reasonable enquiries which investors and their professional advisers would reasonably require, and reasonably expect to find in the prospectus, for the purpose of making an informed judgement about the merits of investing in the authorised fund and the extent and characteristics of the risks accepted by so participating.

111111
COLL 8.3.5ARRP
(1) An annual report, other than for a scheme which is an umbrella, must contain:(a) the accounts for the annual accounting period prepared in accordance with the requirements of the IMA SORP;7(b) the report of the authorised fund manager in accordance with COLL 8.3.5C R (Authorised fund manager's report);(c) the report of the depositary in accordance with COLL 8.3.5D R (Report of the depositary); and (d) the report of the auditor in accordance with COLL 4.5.12 R (Report of the
COLL 8.3.5BRRP
(1) A half-yearly report on an authorised fund or sub-fund must contain:(a) the accounts for the half-yearly accounting period which must be prepared in accordance with the requirements of the IMA SORP; and7(b) the report of the authorised fund manager in accordance with COLL 8.3.5C R.(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.
COLL 8.3.5CRRP
The report of the authorised fund manager must include:(1) a review of the investment activities during the period to which the report relates;(2) particulars of any fundamental or significant change to the authorised fund made since the date of the last report; and(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
COLL 8.3.5DRRP
(1) The depositary must make an annual report to unitholders which must be included in the annual report.(2) The depositary's report must contain:(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(b) a statement whether in any material respect:(i) the issue, sale, redemption and cancellation and calculation of the price of the units and the
COLL 4.3.2GRP
(1) The diagram in COLL 4.3.3 G explains how an authorised fund manager should treat changes it is proposing to a scheme and provides an overview of the rules and guidance in this section.(2) Regulation 21 of the OEIC Regulations (The Authority's approval for certain changes in respect of a company), section 261Q of the Act (Alteration of contractual schemes and changes of operator or depositary)5 and section 251 of the Act (Alteration of schemes and changes of manager or trustee)
COLL 4.3.5GRP
(1) Any change may be fundamental depending on its degree of materiality and effect on the scheme and its unitholders. Consequently an authorised fund manager will need to determine whether in each case a particular change is fundamental in nature or not.(2) For the purpose of COLL 4.3.4R (2)(a) to COLL 4.3.4R (2)(c) a fundamental change to a scheme is likely to include:(a) any proposal for a scheme of arrangement referred to in COLL 7.6.2 R (Schemes of arrangement: requirements);(b)
COLL 4.3.7GRP
(1) Changes may be significant depending in each case on their degree of materiality and effect on the scheme and its unitholders. Consequently the authorised fund manager will need to determine whether in each case a particular change is significant in nature or not.(2) For the purpose of COLL 4.3.6 R a significant change is likely to include:(a) a change in the method of price publication;(b) a change in any operational policy such as dilution policy or allocation of payments
COLL 4.3.9GRP
(1) The circumstances causing a notifiable change may or may not be within the control of the authorised fund manager.(2) For the purpose of COLL 4.3.8 R (Notifiable changes) a notifiable change might include:(a) a change of named investment manager where the authorised fund has been marketed on the basis of that individual's involvement;(b) a significant political event which impacts on the authorised fund or its operation;(c) a change to the time of the valuation point;(d) the
COLL 3.3.2GRP
(1) The instrument constituting the scheme may provide for different classes of unit to be issued in an authorised fund and, for a scheme which is an umbrella, provide that classes of units may be issued for each sub-fund.(2) In order to be satisfied that COLL 3.2.2 R (Relationship between the instrument constituting the schemeand the rules) is complied with, the FCA will take into account the principles in (a) to (c) when considering proposals for unit classes:(a) a unit class
COLL 3.3.5RRP
(1) If any class of units in an authorised fund has different rights from another class of units in that fund, the instrument constituting the scheme must provide how the proportion of the value of the scheme property and the proportion of income available for allocation attributable to each such class must be calculated.(2) For an authorised fund which is not an umbrella, the instrument constituting the scheme must not provide for any class of units in respect of which:(a) the
COLL 3.3.9RRP
If there is any arrangement intended to result in a particular capital or income return from a holding of units in an authorised fund, or any investment objective of giving protection to the capital value of, or income return from, such a holding:(1) that arrangement or protection must not be such as to cause the possibility of a conflict of interest as between:(a) unitholders and the authorised fund manager or depositary; or(b) unitholders intended and not intended to benefit
COLL 6.8.1RRP
(1) This section applies to an authorised fund manager.(2) COLL 6.8.4 R (1) (Unclaimed, de minimis and joint unitholder distributions) also applies to the depositary of an authorised fund.(3) Except in the case of COLL 6.8.2 R (1) (Accounting periods) and COLL 6.8.3 R (1) (Income allocation and distribution), COLL 6.8 applies as if each sub-fund were a separate authorised fund.
COLL 6.8.2RRP
(1) An authorised fund must have:(a) an annual accounting period;33(b) a half-yearly accounting period; and(c) an accounting reference date.(2) A half-yearly accounting period begins when3 an annual accounting period begins3 and ends on:13(a) the day which is six months before the last day of that annual accounting period; or(b) some other reasonable date as set out in the prospectus of the scheme.1(3) The first annual accounting period of a scheme must begin:(a) on the first
COLL 6.8.3RRP
(1) An authorised fund must have an annual income allocation date, which must be within four months of the end of the relevant annual accounting period.33(2) An authorised fund may have interim income allocation dates and one or more interim accounting periods for each of those dates2 and, if it does, the interim income allocation date must be within four months of the end of the relevant interim accounting period(s).22(3) An authorised fund must have a distribution account to
COLL 5.1.1RRP
(1) Subject to 1(A),3COLL 5.1 to COLL 5.5 apply to the authorised fund manager and the depositary of an authorised fund, and to an ICVC, which is or ever has been a UCITS scheme.(1A) The only sections of COLL 5 that apply to the authorised fund manager and the depositary of a feeder UCITS, and to an ICVC which is a feeder UCITS, are COLL 5.3 and COLL 5.8, although particular rules in COLL 5.1, COLL 5.2 and COLL 5.5 are incorporated by reference.3(2) Subject to 2(A),1COLL 5.1,
COLL 5.1.2GRP
(1) This chapter helps in achieving the statutory objective of protecting consumers by laying down minimum standards for the investments that may be held by an authorised fund. In particular:(a) the proportion of transferable securities and derivatives that may be held by an authorised fund is restricted if those transferable securities and derivatives are not listed on an eligible market; the intention of this is to restrict investment in transferable securities or derivatives
COLL 5.1.3RRP
(1) Where a rule in this chapter allows a transaction to be entered into or an investment to be retained only if possible obligations arising out of the transaction or out of the retention would not cause the breach of any limits in this chapter, it must be assumed that the maximum possible liability of the authorised fund under any other of those rules has also to be provided for.(2) Where a rule in this chapter permits a transaction to be entered into or an investment to be
SUP 16.6.2GRP

Applicable provisions of this section (see SUP 16.6.1 G)

Category of firm

Applicable provisions

Bank

4

SUP 16.6.4 R - SUP 16.6.5 R

Trustee of an AUT

Depositary of an ICVC

SUP 16.6.6 R - SUP 16.6.9 G

OPS firm

SUP 16.6.6 R - SUP 16.6.8 R
SUP 16.6.6RRP
A firm within a category listed in the left-hand column of SUP 16.6.7 R must submit compliance reports in accordance with SUP 16.6.7 R.
SUP 16.6.8RRP
(1) The report from a trustee of an AUT to the FCA13 must state, in relation to the manager of each AUT for which it is a trustee, the number of times during the quarter in which facts came to the firm's knowledge from which it appeared, or might have appeared, that the manager had failed (materially or otherwise) to: 13(a) give correct instructions to the trustee to create or cancel units in the AUT when the manager should have done so, and the error: (i) resulted in the creation