Related provisions for SUP 6.2.4

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APER 4.6.1AGRP
4The Statement of Principle 6 (see APER 2.1A.3 P) is in the following terms: "An approved person performing an accountable significant-influence function must exercise due skill, care and diligence in managing the business of the firm for which he is responsible in his accountable function." References in APER 4.6 to a significant-influence function are to an accountable significant-influence function to which Statement of Principle 6 applies.
APER 4.6.4ERP
Behaviour of the type referred to in APER 4.6.3 E includes, but is not limited to:(1) permitting transactions without a sufficient understanding of the risks involved;(2) permitting expansion of the business without reasonably assessing the potential risks of that expansion;(3) inadequately monitoring highly profitable transactions or business practices or unusual transactions or business practices;(4) accepting implausible or unsatisfactory explanations from subordinates without
APER 4.6.6ERP
Failing to take reasonable steps to maintain an appropriate level of understanding about an issue or part of the business that he has delegated to an individual or individuals (whether in-house or outside contractors) falls within APER 4.6.2 E (see APER 4.6.14 G).
APER 4.6.7ERP
Behaviour of the type referred to in APER 4.6.6 E includes but is not limited to:(1) disregarding an issue or part of the business once it has been delegated;(2) failing to require adequate reports once the resolution of an issue or management of part of the business has been delegated;(3) accepting implausible or unsatisfactory explanations from delegates without testing their veracity.
APER 4.6.8ERP
Failing to supervise and monitor adequately the individual or individuals (whether in-house or outside contractors) to whom responsibility for dealing with an issue or authority for dealing with a part of the business has been delegated falls within APER 4.6.2 E.
APER 4.6.9ERP
Behaviour of the type referred to in APER 4.6.8 E includes, but is not limited to:(1) failing to take personal action where progress is unreasonably slow, or where implausible or unsatisfactory explanations are provided;(2) failing to review the performance of an outside contractor in connection with the delegated issue or business.
APER 4.6.11GRP
An approved person performing a significant influence function will not always manage the business on a day-to-day basis himself. The extent to which he does so will depend on a number of factors, including the nature, scale and complexity of the business and his position within it. The larger and more complex the business, the greater the need for clear and effective delegation and reporting lines. The appropriate regulator4 will look to the approved person performing a significant-influence function4
APER 4.6.12GRP
(1) It is important for the approved person performing a significant influence function to understand the business for which he is responsible (APER 4.6.4 E). An approved person performing a significant influence function is unlikely to be an expert in all aspects of a complex financial services business. However, he should understand and inform himself about the business sufficiently to understand the risks of its trading, credit or other business activities.(2) It is important
APER 4.6.13GRP
(1) An approved person performing a significant influence function may delegate the investigation, resolution or management of an issue or authority for dealing with a part of the business to individuals who report to him or to others.(2) The approved person performing a significant influence function should have reasonable grounds for believing that the delegate has the competence, knowledge, skill and time to deal with the issue. For instance, if the compliance department only
APER 4.6.14GRP
Although an approved person performing a significant influence function may delegate the resolution of an issue, or authority for dealing with a part of the business, he cannot delegate responsibility for it. It is his responsibility to ensure that he receives reports on progress and questions those reports where appropriate. For instance, if progress appears to be slow or if the issue is not being resolved satisfactorily, then the approved person performing a significant influence
SYSC 4.2.1RRP
The senior personnel of a common platform firm, a management company3, a full-scope UK AIFM,5 or of the UK branch of a non-EEA bank1must be of sufficiently good repute and sufficiently experienced as to ensure the sound and prudent management of the firm.[Note: article 9(1) of MiFID, article 7(1)(b) of the UCITS Directive3 article 8(1)(c) of AIFMD5, article 11(1) second paragraph of the Banking Consolidation Directive and article 13(1) of the CRD4]
SYSC 4.2.2RRP
A common platform firm, a management company, a full-scope UK AIFM53 and the UK branch of a non-EEA bank1must ensure that its management is undertaken by at least two persons meeting the requirements laid down in SYSC 4.2.1 R and, for a full-scope UK AIFM, SYSC 4.2.7 R5.[Note: article 9(4) first paragraph of MiFID, article 7(1)(b) of the UCITS Directive3, article 8(1)(c) of AIFMD5and article 13(1) of CRD]66
SYSC 4.2.4GRP
At least two independent minds should be applied to the formulation and implementation of the policies of a common platform firm, a management company3, a full-scope UK AIFM5 and the UK branch of a non-EEA bank1. Where a firm1 nominates just two individuals to direct its business, the appropriate regulator will not regard them as both effectively directing the business where one of them makes some, albeit significant, decisions relating to only a few aspects of the business.
SYSC 4.2.5GRP
Where there are more than two individuals directing the business of a common platform firm, a management company3, a full-scope UK AIFM5 or the UK branch of a non-EEA bank,1 the appropriate regulator does not regard it as necessary for all of these individuals to be involved in all decisions relating to the determination of strategy and general direction. However, at least two individuals should be involved in all such decisions. Both individuals' judgement should be engaged
SYSC 4.2.6RRP
If a common platform firm, (other than a credit institution or AIFM investment firm5) or the UK branch of a non-EEA bank1, is:1(1) a natural person; or(2) a legal person managed by a single natural person; it must have alternative arrangements in place which ensure sound and prudent management of the firm.[Note: article 9(4) second paragraph of MiFID]
LR 9.2.2ARRP
9(1) 9A listed company must carry on an independent business as its main activity at all times.(2) 9Where a listed company has a controlling shareholder, it must have in place at all times: (a) a written and legally binding agreement which is intended to ensure that the controlling shareholder complies with the independence provisions set out in LR 6.1.4D R; and(b) a constitution that allows the election and re-election of independent directors to be conducted in accordance with
DTR 4.1.8RRP
The management report must contain:(1) a fair review of the issuer's business; and(2) a description of the principal risks and uncertainties facing the issuer.
DTR 4.1.10GRP
In DTR 4.1.9 R (2), key performance indicators are factors by reference to which the development, performance or position of the issuer's business can be measured effectively.
DTR 4.1.11RRP
The management report required by DTR 4.1.8 R must also give an indication of:(1) any important events that have occurred since the end of the financial year;(2) the issuer's likely future development;(3) activities in the field of research and development;(4) the information concerning acquisitions of own shares prescribed by Article 22 (2) of Directive 77/91/EEC;(5) the existence of branches of the issuer; and(6) in relation to the issuer's use of financial instruments and where
DTR 4.1.12RRP
(1) Responsibility statements must be made by the persons responsible within the issuer.(2) The name and function of any person who makes a responsibility statement must be clearly indicated in the responsibility statement.(3) For each person making a responsibility statement, the statement must set out that to the best of his or her knowledge:(a) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the
REC 4.2.2GRP
UK recognised bodies are likely to develop and adapt their businesses in response to customer demand and new market opportunities. Where such developments involve changes to the way the UK recognised body operates, they are likely to involve changes to the way it satisfies the1 recognised body requirements.22
REC 4.2.3GRP
The FCA3 expects a UK recognised body to take its own steps to assure itself that it will continue to satisfy the1 recognised body requirements2 when considering any changes to its business or operations. 3
REC 3.24.1RRP
1When a UK RIE becomes aware of a transfer of ownership of the UK RIE which gives rise to a change in the persons who are in a position to exercise significant influence over the management of the UK RIE or (in the case of a UK RIE that is also an RAP) over the management of the RAP,2 whether directly or indirectly, it must immediately notify the FCA3of that event, and: 3(1) give the name of the person(s) concerned; and(2) give details of the transfer.[Note: Article 38(2)(b) of
REC 3.24.2GRP
The FCA3may regard a person who falls within any of the cases in section 301(B)(2) of the Act as being in a position to exercise significant influence. 3
SYSC 4.1.1RRP
3(1) A firm must have robust governance arrangements, which include a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks it is or might be exposed to, and internal control mechanisms, including sound administrative and accounting procedures and effective control and safeguard arrangements for information processing systems.8(2) [deleted]1313[Note: article 74
SYSC 4.1.2CRRP
10A management company, a full-scope UK AIFM and an incoming EEA AIFMbranch14 must have, and employ effectively, the resources and procedures that are necessary for the proper performance of its business activities.[Note: articles 12(1)(a) and 14(1)(c) of the UCITS Directive and article 12(1)(c) of AIFMD14]
SYSC 4.1.8DGRP
16When designing its arrangements, a firm should take into account insolvency law to ensure that the insolvency of the firm does not prejudice the operation of arrangements that the firm has put in place.
SYSC 2.1.1RRP
A firm must take reasonable care to maintain a clear and appropriate apportionment of significant responsibilities among its directors and senior managers in such a way that:(1) it is clear who has which of those responsibilities; and(2) the business and affairs of the firm can be adequately monitored and controlled by the directors, relevant senior managers and governing body of the firm.
SYSC 2.1.4RRP

Allocation of functions

This table belongs to SYSC 2.1.3 R

1: Firm type

2: Allocation of both functions must be to the following individual, if any (see Note):

3: Allocation to one or more individuals selected from this column is compulsory if there is no allocation to an individual in column 2, but is otherwise optional and additional:

(1) A firm which is a body corporate and is a member of a group, other than a firm in row (2)

(1) the firm's chief executive (and all of them jointly, if more than one); or

the firm's and its group's:

(1) directors; and(2) senior managers

(2) a director or senior manager responsible for the overall management of:

(a) the group; or(b) a group division within which some or all of the firm's regulated activities fall

(2) An incoming EEA firm or incoming Treaty firm (note: only the function in SYSC 2.1.3 R (2) must be allocated)

(not applicable)

the firm's and its group's:

(1) directors; and (2) senior managers

(3) Any other firm

the firm's chief executive (and all of them jointly, if more than one)

the firm's and its group's:

(1) directors; and (2) senior manager's

Note: Column 2 does not require the involvement of the chief executive or other executive director or senior manager in an aspect of corporate governance if that would be contrary to generally accepted principles of good corporate governance.
SYSC 2.1.6GRP

Frequently asked questions about allocation of functions in SYSC 2.1.3 R

This table belongs to SYSC 2.1.5 G

Question

Answer

1

Does an individual to whom a function is allocated under SYSC 2.1.3 R need to be an approved person?

An individual to whom a function is allocated under SYSC 2.1.3 R will be performing the apportionment and oversight function (CF 8, see SUP 10A.7.1 R15) and an application must be made under section 59 of the Act for approval of the individual before the function is performed. There are exceptions from this inSUP 10A.115 (Approved persons - Application).

15155

2

If the allocation is to more than one individual, can they perform the functions, or aspects of the functions, separately?

If the functions are allocated to joint chief executives under SYSC 2.1.4 R, column 2, they are expected to act jointly. If the functions are allocated to an individual under SYSC 2.1.4 R, column 2, in addition to individuals under SYSC 2.1.4 R, column 3, the former may normally be expected to perform a leading role in relation to the functions that reflects his position. Otherwise, yes.

3

What is meant by "appropriately allocate" in this context?

The allocation of functions should be compatible with delivering compliance with Principle 3, SYSC 2.1.1 R and SYSC 3.1.1 R. The appropriate regulator considers that allocation to one or two individuals is likely to be appropriate for most firms.

4

If a committee of management governs a firm or group, can the functions be allocated to every member of that committee?

Yes, as long as the allocation remains appropriate (see Question 3).If the firm also has an individual as chief executive, then the functions must be allocated to that individual as well under SYSC 2.1.4 R, column 2 (see Question 7).

5

Does the definition of chief executive include the possessor of equivalent responsibilities with another title, such as a managing director or managing partner?

Yes.

6

Is it possible for a firm to have more than one individual as its chief executive?

Although unusual, some firm may wish the responsibility of a chief executive to be held jointly by more than one individual. In that case, each of them will be a chief executive and the functions must be allocated to all of them under SYSC 2.1.4 R, column 2 (see also Questions 2 and 7).

7

If a firm has an individual as chief executive, must the functions be allocated to that individual?

Normally, yes, under SYSC 2.1.4 R, column 2.

But if the firm is a body corporate and a member of a group, the functions may, instead of to the firm's chief executive, be allocated to a director or senior manager from the group responsible for the overall management of the group or of a relevant group division, so long as this is appropriate (see Question 3). Such individuals may nevertheless require approval under section 59 (see Question 1).

If the firm chooses to allocate the functions to a director or senior manager responsible for the overall management of a relevant group division, the appropriate regulator would expect that individual to be of a seniority equivalent to or greater than a chief executive of the firm for the allocation to be appropriate.

See also Question 14.

8

If a firm has a chief executive, can the functions be allocated to other individuals in addition to the chief executive?

Yes. SYSC 2.1.4 R, column 3, permits a firm to allocate the functions, additionally, to the firm's (or where applicable the group's) directors and senior managers as long as this is appropriate (see Question 3).

9

What if a firm does not have a chief executive?

Normally, the functions must be allocated to one or more individuals selected from the firm's (or where applicable the group's) directors and senior managers under SYSC 2.1.4 R, column 3.

But if the firm:

(1) is a body corporate and a member of a group; and

(2) the group has a director or senior manager responsible for the overall management of the group or of a relevant group division;

then the functions must be allocated to that individual (together, optionally, with individuals from column 3 if appropriate) under SYSC 2.1.4 R, column 2.2

10

What do you mean by "group division within which some or all of the firm's regulated activities fall"?

A "division" in this context should be interpreted by reference to geographical operations, product lines or any other method by which the group's business is divided.

If the firm's regulated activities fall within more than one division and the firm does not wish to allocate the functions to its chief executive, the allocation must, under SYSC 2.1.4 R, be to:

(1) a director or senior manager responsible for the overall management of the group; or

(2) a director or senior manager responsible for the overall management of one of those divisions;

together, optionally, with individuals from column 3 if appropriate. (See also Questions 7 and 9.)

11

How does the requirement to allocate the functions in SYSC 2.1.3R apply to an overseas firm which is not an incoming EEA firm, incoming Treaty firm or UCITS qualifier?

The firm must appropriately allocate those functions to one or more individuals, in accordance with SYSC 2.1.4 R, but:

(1) The responsibilities that must be apportioned and the systems and controls that must be overseen are those relating to activities carried on from a UK establishment with certain exceptions (see SYSC 1 Annex 1.1.7 R)6. Note that SYSC 1 Annex 1.1.10 R6 does not extend the territorial scope of SYSC 2 for an overseas firm.

(2) The chief executive of an overseas firm is the person responsible for the conduct of the firm's business within the United Kingdom (see the definition of "chief executive"). This might, for example, be the manager of the firm's UK establishment, or it might be the chief executive of the firm as a whole, if he has that responsibility.

The apportionment and oversight function applies to such a firm, unless it falls within a particular exception from the approved persons regime (see Question 1).

66

12

How does the requirement to allocate the functions in SYSC 2.1.3R apply to an incoming EEA firm or incoming Treaty firm?

SYSC 1 Annex 1.1.1R6and SYSC 1 Annex 1.1.8 R6restrict the application of SYSC 2.1.3 R for such a firm. Accordingly:

(1) Such a firm is not required to allocate the function of dealing with apportionment in SYSC 2.1.3 R (1).

(2) Such a firm is required to allocate the function of oversight in SYSC 2.1.3 R (2). However, the systems and controls that must be overseen are those relating to matters which the appropriate regulator, as Host State regulator, is entitled to regulate (there is guidance on this in SUP 13A Annex 2 G3). Those are primarily, but not exclusively, the systems and controls relating to the conduct of the firm's activities carried on from its UK branch.

(3) Such a firm need not allocate the function of oversight to its chief executive; it must allocate it to one or more directors and senior managers of the firm or the firm's group under SYSC 2.1.4 R, row (2).

(4) An incoming EEA firm which has provision only for cross border services is not required to allocate either function if it does not carry on regulated activities in the United Kingdom; for example if they fall within the overseas persons exclusions in article 72 of the Regulated Activities Order.

See also Questions 1 and 15.1

663

13

What about a firm that is a partnership or a limited liability partnership?

The appropriate regulator envisages that most if not all partners or members will be either directors or senior managers, but this will depend on the constitution of the partnership (particularly in the case of a limited partnership) or limited liability partnership. A partnership or limited liability partnership may also have a chief executive (see Question 5). A limited liability partnership is a body corporate and, if a member of a group, will fall within SYSC 2.1.4 R, row (1) or (2).

14

What if generally accepted principles of good corporate governance recommend that the chief executive should not be involved in an aspect of corporate governance?

The Note to SYSC 2.1.4 R provides that the chief executive or other executive director or senior manager need not be involved in such circumstances. For example, the UK Corporate Governance Code7 recommends that the board of a listed company should establish an audit committee of non-executive directors to be responsible for oversight of the audit. That aspect of the oversight function may therefore be allocated to the members of such a committee without involving the chief executive. Such individuals may require approval under section 59 in relation to that function (see Question 1).

7

15

What about electronic commerce activities carried on from an establishment in another EEA State with or for a person in the United Kingdom?4

4

SYSC does not apply to an incoming ECA provider acting as such.1

4
MAR 8.2.1RRP
A benchmark submitter must establish and maintain adequate and effective organisational and governance arrangements for the process of making benchmark submissions.
MAR 8.2.7RRP
A benchmark submitter must maintain and operate effective organisational and administrative arrangements to enable it to identify and manage any conflicts of interest that may arise from the process of making benchmark submissions.
MAR 8.3.1RRP
A benchmark administrator must establish and maintain effective organisational and governance arrangements to enable it to carry out the activity of administering a specified benchmark.
MAR 8.3.3RRP
A benchmark administrator must maintain and operate effective organisational and administrative arrangements to enable it to identify and manage any conflicts of interest that may arise from the process of administering a specified benchmark.
SYSC 1.2.1GRP
The purposes of SYSC are:(1) to encourage firms' directors and senior managers to take appropriate practical responsibility for their firms' arrangements on matters likely to be of interest to the appropriate regulator because they impinge on the appropriate regulator's functions under the Act;(2) to increase certainty by amplifying Principle 3, under which a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management
SYSC 8.1.7RRP
A common platform firm must exercise due skill and care and diligence when entering into, managing or terminating any arrangement for the outsourcing to a service provider of critical or important operational functions or of any relevant services and activities.[Note: article 14(2) first paragraph of the MiFID implementing Directive]
SYSC 8.1.12GRP
As SUP 15.3.8 G explains, a firm should notify the appropriate regulator when it intends to rely on a third party for the performance of operational functions which are critical or important for the performance of relevant services and activities on a continuous and satisfactory basis.[Note: recital 20 of theMiFID implementing Directive]2
BIPRU 12.4.8ERP
(1) A firm should ensure that the results of its stress tests are:(a) reviewed by its senior managers;(b) reported to that firm'sgoverning body, specifically highlighting any vulnerabilities identified and proposing appropriate remedial action;(c) reflected in the processes, strategies and systems established in accordance with BIPRU 12.3.4R;(d) used to develop effective contingency funding plans;(e) integrated into that firm's business planning process and day-to-day risk management;
BIPRU 12.4.15GRP
A firm should ensure that its contingency funding plan takes into account the terms and conditions of any central bank liquidity facilities to which it has access, including both facilities that form part of normal liquidity management operations and emergency liquidity assistance on a secured basis. Where a firm includes in its contingency funding plan the use of central bank liquidity facilities it should consider the nature of those facilities, collateral eligibility, haircuts
REC 2.3.15GRP
4For the purposes of calculating the risk-based approach, the FCA5 would normally expect the UK RIE to provide the FCA5 with an annual financial risk assessment that identifies the risks to its business. As a financial risk assessment is likely to form an integral part of the UK RIE's management process and decision-making culture, the FCA5 would normally expect it to be approved by the UK RIE'sgoverning body.555
REC 2.3.20GRP
4The FCA5 would expect to consider the financial risk assessment, any proposal with respect to an operational risk buffer and, if applicable, the consolidated balance sheet, in formulating its guidance on the amount of eligible financial resources it considers to be sufficient for the UK RIE to hold in order to meet the recognition requirements. In formulating its guidance, the FCA5 would, where relevant, consider whether or not the financial risk assessment makes adequate provision
SYSC 12.1.11RRP
Where this section applies with respect to a financial conglomerate, the risk management processes referred to in SYSC 12.1.8R (2) must include:(1) sound governance and management processes, which must include the approval and periodic review by the appropriate managing bodies within the financial conglomerate of the strategies and policies of the financial conglomerate in respect of all the risks assumed by the financial conglomerate, such review and approval being carried out
SYSC 12.1.20GRP
In some cases the management of the systems and controls used to address the risks described in SYSC 12.1.8R (1) may be organised on a group-wide basis. If the firm is not carrying out those functions itself, it should delegate them to the group members that are carrying them out. However, this does not relieve the firm of responsibility for complying with its obligations under SYSC 12.1.8R (1). A firm cannot absolve itself of such a responsibility by claiming that any breach
BIPRU 7.10.49RRP
As techniques and best practices evolve, a firm must avail itself of these advances.
BIPRU 7.10.81GRP
In assessing whether the VaR model is implemented with integrity as described in BIPRU 7.10.58R (Stress testing), the appropriate regulator will consider in particular the information technology systems used to run the model and associated calculations. The assessment may include:(1) feeder systems; risk aggregation systems; time series databases; the VaR model system; stress testing system; the backtesting system including profit and loss cleaning systems where appropriate; data
COLL 5.2.27RRP
(1) An ICVC must not acquire transferable securities issued by a body corporate and carrying rights to vote (whether or not on substantially all matters) at a general meeting of that body corporate if:(a) immediately before the acquisition, the aggregate of any such securities held by the ICVC gives the ICVC power to influence significantly the conduct of business of that body corporate; or(b) the acquisition gives the ICVC that power.(2) For the purpose of (1), an ICVC is to
COLL 5.2.28RRP
(1) An authorised fund manager17 must not acquire, or cause to be acquired for an AUT or ACS17 of which it is the authorised fund manager17, transferable securities issued by a body corporate and carrying rights to vote (whether or not on substantially all matters) at a general meeting of the body corporate if:1717(a) immediately before the acquisition, the aggregate of any such securities held for that AUT or ACS17, taken together with any such securities already held for other
SUP 12.7.2GRP
A firm's notice under SUP 12.7.1 R should give details of the appointed representative and the regulated activities which the firm is, or intends to, carry on through the appointed representative, including:(1) the name of the firm's new appointed representative (if the appointed representative is a body corporate, this is its registered name);(2) any trading name under which the firm's new appointed representative carries on a regulated activity in that capacity;(3) a description
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 :

12

(a)

who 12is a:

(i)

professional ACS investor; or

(ii)

large ACS investor; or

(iii)

person who already holds units in the scheme; and

(b)

to whom units in a qualified investor scheme may be promoted under COBS 4.12.4 R.12

12

(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 fund13 and prospectus.

13

(2)

A statement that where transfer of units is allowed by the instrument constituting the fund13 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 :

1312

(a)

who 12is a:

(i)

professional ACS investor; or

(ii)

large ACS investor; or

(iii)

person who already holds units in the scheme; and

(b)

to whom units in a qualified investor scheme may be promoted under COBS 4.12.4 R.12

12

(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 fund,13 any amending instrument and the most recent annual reports may be inspected and from which copies may be obtained.

13

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