Related provisions for PERG 9.5.4

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SUP 10A.17.2GRP
If the firm or its advisers have further questions, they should contact the FCA's Contact Centre (see SUP 10A.12.6 G).
SUP 11.9.3DGRP
(1) 3The notification in SUP 11.9.1AR (1)(b) and SUP 11.9.1BR (1)(b) should contain a list of all persons with whom the firm is aware that it has close links, at the time the notification is made, and, for each such person, state:(a) its name;(b) the nature of the close links;(c) if the close links are with a body corporate, its country of incorporation, address and registered number; and(d) if the close links are with an individual, their date and place of birth.(2) The firm
PRIN 1.2.6GRP
If the person with or for whom the firm is carrying on an activity is acting through an agent, the ability of the firm to treat the agent as its client under COBS 2.4.3 R3 (Agent as client) will not be available. For example, if a general insurer is effecting a general insurance contract through a general insurance broker who is acting as agent for a disclosed policyholder, the policyholder will be a client of the firm and the firm must comply with the Principles accordingly.
PR 5.5.3RRP
(1) This rule applies to a prospectus relating to:(a) equity shares;(b) warrants or options to subscribe for equity shares, that are issued by the issuer of the equity shares; and(c) other transferable securities that have similar characteristics to transferable securities referred to in paragraphs (a) or (b).(2) Each of the following persons are responsible for the prospectus:(a) the issuer of the transferable securities;(b) if the issuer is a body corporate:(i) each person who
SYSC 4.2.3GRP
In the case of a body corporate, the persons referred to in SYSC 4.2.2 R should either be executive directors or persons granted executive powers by, and reporting immediately to, the governing body. In the case of a partnership, they should be active partners.
PERG 8.21.17GRP
Article 69 is somewhat1 similar to article 59 in the conditions it imposes (see PERG 8.21.12 G). There1 are two main differences between article 69 and article 59.1(1) Article 69 does not apply to unsolicited real time financial promotions.(2) The requirement in article 59 that the financial promotion be accompanied by accounts or a report is replaced in article 69. It is replaced by a requirement that shares or debentures or alternative debentures3 of the company or another body
SUP 11.5.1RRP

Information to be submitted by the firm (see SUP 11.4.7 R (2)(a))

(1)

The name of the firm;

(2)

the name of the controller or proposed controller and, if it is a body corporate and is not an authorised person, the names of its directors and its controllers;

(3)

a description of the proposed event including the shareholding and voting power of the person concerned, both before and after the change in control; and5

(4)

any other information of which the appropriate regulator7 would reasonably expect notice.5

7
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
PERG 9.11.1GRP

Table There are some frequently asked questions about the application of the definition of an open-ended investment company in the following table. This table belongs to PERG 9.2.4 G (Introduction).

Question

Answer

1

Can a body corporate be both open-ended and closed-ended at the same time?

In the FCA's view, the answer to this question is 'no'. The fact that the investment condition is applied to BC (rather than to particular shares in, or securities of, BC) means that a body corporate is either an open-ended investment company as defined in section 236 of the Act or it is not. Where BC is an open-ended investment company, all of its securities would be treated as units of a collective investment scheme for the purpose of the Act. A body corporate formed in another jurisdiction may, however, be regarded as open-ended under the laws of that jurisdiction but not come within the definition of an open-ended investment company in section 236 (and vice versa).

2

Can an open-ended investment company become closed-ended (or a closed-ended body become open-ended)?

In the FCA's view, the answer to this question is 'yes'. A body corporate may change from open-ended to closed-ended (and vice versa) if, taking an overall view, circumstances change so that a hypothetical reasonable investor would consider that the investment condition is no longer met (or vice versa). This might happen where, for example, an open-ended investment company stops its policy of redeeming shares or securities at regular intervals (so removing the expectation that a reasonable investor would be able to realise his investment within a period appearing to him to be reasonable). See also PERG 9.7.5 G.

3

Does the liquidation of a body corporate affect the assessment of whether or not the body is an open-ended investment company?

The FCA considers that the possibility that a body corporate that would otherwise be regarded as closed-ended may be wound up has no effect at all on the nature of the body corporate before the winding up. The fact that, on a winding up, the shares or securities of any investor in the body corporate may be converted into cash or money on the winding up (and so 'realised') would not, in the FCA's view, affect the outcome of applying the expectation test to the body corporate when looked at as a whole. The answer to Question 4 explains that investment in a closed-ended fixed term company shortly before its winding up does not, in the FCA view, change the closed-ended nature of the company. For companies with no fixed term, the theoretical possibility of a winding up at some uncertain future point is not, in the FCA's view, a matter that would generally carry weight with a reasonable investor in assessing whether he could expect to be able to realise his investment within a reasonable period.

4

Does a fixed term closed-ended investment company become an open-ended investment company simply because the fixed term will expire?

In the FCA's view, the answer to this is 'no'. The termination of the body corporate is an event that has always been contemplated (and it will appear in the company's constitution). Even as the date of the expiry of the fixed term approaches, there is nothing about the body corporate itself that changes so as to cause a fundamental reassessment of its nature as something other than closed-ended. Addressing this very point in parliamentary debate, the Economic Secretary to the Treasury stated that the "aim and effect [of the definition] is to cover companies that look, to a reasonable investor, like open-ended investment companies". The Minister added that "A reasonable investor's overall expectations of potential investment in a company when its status with respect to the definition is being judged will determine whether it meets the definition. The matter is therefore, definitional rather than one of proximity to liquidation". (Hansard HC, 5 June 2000 col 124).

5

In what circumstances will a body corporate that issues a mixture of redeemable and non-redeemable shares or securities be an open-ended investment company?

In the FCA's view, the existence of non-redeemable shares or securities will not, of itself, rule out the possibility of a body corporate falling within the definition of an open-ended investment company. All the relevant circumstances will need to be considered (see PERG 9.6.4 G, PERG 9.2.8.8G and PERG 9.8.9 G). So the following points need to be taken into account.

  • The precise terms of the issue of all the shares or securities will be relevant to the question whether the investment condition is met, as will any arrangements that may exist to allow the investor to realise his investment by other means.
  • The proportions of the different share classes will be relevant to the impression the reasonable investor forms of the body corporate. A body corporate that issues only a minimal amount of redeemable shares or securities will not, in theFCA's view, be an open-ended investment company. A body corporate that issues a minimal amount of non-redeemable shares or securities will be likely to be an open-ended investment company. A body corporate that falls within the definition of an open-ended investment company is likely to have (and to be marketed as having) mainly redeemable shares or securities. However, whether or not the body corporate does fall within the definition in any particular case will be subject to any contrary indications there may be in its constitutional documents or otherwise.
  • Where shares or securities are only redeemable after the end of a stated period, this factor will make it more likely that the body corporate is open-ended than if the shares or securities are never redeemable.

6

Does "realised on a basis calculated wholly or mainly by reference to..." in section 236(3)(b) apply to an investor buying investment trust company shares traded on a recognised investment exchange because of usual market practice that the shares trade at a discount to asset value?

In the FCA's view, the answer is 'no' (for the reasons set out in PERG 9.9.4 G to PERG 9.9.6 G).

7

Does the practice of UK investment trust companies buying back shares result in them becoming open-ended investment companies?

In the FCA's view, it does not, because its actions will comply with company law: see section 236(4) of the Act and PERG 9.6.5 G.

8

Would a body corporate holding out redemption or repurchase of its shares or securities every six months be an open-ended investment company?

In the FCA's view a period of six months would generally be too long to be a reasonable period for a liquid securities fund. A shorter period affording more scope for an investor to take advantage of any profits caused by fluctuations in the market would be more likely to be a reasonable period for the purpose of the realisation of the investment (in the context of the 'expectation' test, see PERG 9.8 and, in particular, PERG 9.8.9 G which sets out the kind of factors that may need to be considered in applying the test).

9

Would an initial period during which it is not possible to realise investment in a body corporate mean that the body corporate could not satisfy the investment condition?

In the FCA's view, the answer to that question is 'no'. In applying the investment condition, the body corporate must be considered as a whole (see PERG 9.6.3 G). At the time that the shares or securities in a body corporate are issued, a reasonable investor may expect that he will be able to realise his investment within a reasonable period notwithstanding that there will first be a short-term delay before he can do so. Whether or not the 'expectation test' is satisfied will depend on all the circumstances (see PERG 9.8.9 G).
SUP 15.5.1RRP
A firm must give the appropriate regulator10 reasonable advance notice of a change in:10(1) the firm's name (which is the registered name if the firm is a body corporate); (2) any business name under which the firm carries on a regulated activity or ancillary activity either from an establishment in the United Kingdom or with or for clients in the United Kingdom.
DTR 6.3.3BRRP
(1) 4An issuer or person to which this rule applies must provide an annual written confirmation to the FCA that all regulated information disseminated by an RIS not specified in DTR 6.3.3A R (1) to DTR 6.3.3A R (3) in the previous financial year was disseminated in accordance with the minimum standards contained in DTR 6.3.4 R to DTR 6.3.8 R.(2) The confirmation required by DTR 6.3.3B R (1) must:(a) be provided by:(i) in the case of an issuer, the audit committee or the body referred
COLL 8.2.6RRP

This table belongs to COLL 8.2.5 R

1

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is a qualified investor scheme; and

(3)

in the case of an ICVC, whether the head office of the company is situated in England and Wales or Wales or Scotland or Northern Ireland.

3Property Authorised Investment Funds

1A

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 that 10% of the net asset value of the fund; and

(3)

in the event that the authorised fund manager reasonably considers that a body corporate holds more than 10% of the net asset value of the fund, the authorised fund manager is entitled to delay any redemption or cancellation of units in accordance with 6A 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.

2

Constitution

The following statements:

(1)

the scheme property of the scheme is entrusted to a depositary for safekeeping (subject to any exception permitted by the rules);

(2)

if relevant, the duration of the scheme is limited and, if so, for how long;

(3)

charges and expenses of the scheme may be taken out of scheme property;

(4)

for an ICVC:

(a)

what the maximum and minimum sizes of the scheme's capital are; and

(b)

the unitholders are not liable for the debts of the company;5

6

5(4A)

for an ICVC which is an umbrella, a statement that the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any such purpose;6

6(4B)

for a co-ownership scheme which is an umbrella, 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;

6(4C)

for a limited partnership scheme, that the scheme prohibits pooling as is mentioned in section 235(3)(a) of the Act in relation to separate parts of the scheme property, with the effect that the scheme cannot be an umbrella;

(5)

for an AUT:

(a)

the trust deed:

(i)

is made under and governed by the law of England and Wales, or the law of Scotland or the law of Northern Ireland;

(ii)

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

(iii)

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

(b)

subject to the provisions of the trust deed and all the rules made under section 247 of the Act (Trust scheme rules):

(i)

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

(ii)

the sums standing to the credit of any distribution account are held by the trustee on trust to distribute or apply in accordance with COLL 8.5.15 R (Income);

(c)

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

(d)

payments to the trustee by way of remuneration are authorised to be paid (in whole or in part) out of the scheme property; and6

6

(6)6

for an ACS:

(a)

the contractual scheme deed:

(i)

is made under and governed by the law of England and Wales, or the law of Scotland or the law of Northern Ireland;

(ii)

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

(iii)

authorises and requires the depositary and the authorised contractual scheme manager to do the things required or permitted of them by its terms; and

(iv)

states that units may not be issued to a person other than a person7:

(A)

who 7is a:

(i)

professional ACS investor;

(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;7

7

(v)

states 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 (iv)(A) and (B);

(vi)

states that for a co-ownership scheme:

(A)

the scheme property is beneficially owned by the participants as tenants in common (or, in Scotland, is the common property of the participants);

(B)

the arrangements constituting the scheme are intended to constitute a co-ownership scheme as defined in section 235A(2) of the Act; and

(C)

the operator and depositary are required to wind up the scheme if directed to do so by the FCA in exercise of its power under section 261X (Directions) or section 261Z (Winding up or merger of master UCITS) of the Act;

(vii)

states:

(A)

whether the transfer of units in the ACS scheme or, for a co-ownership scheme which is an umbrella (sub-funds of which pursue differing policies in relation to transfer of units), in each particular sub-fund, is either:

(i)

prohibited; or

(ii)

allowed;

(B)

where transfer of units is allowed by the scheme or, where appropriate the sub-fund, in accordance with (A)(ii), 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 :

7

(i)

who 7is a:

(1)

professional ACS investor; or

(2)

large ACS investor; or

(3)

person who already holds units in the scheme; and

(ii)

to whom units in a qualified investor scheme may be promoted under COBS 4.12.4 R; and7

7

(viii)

states that for a limited partnership scheme, the scheme is not dissolved on any person ceasing to be a limited partner or nominated partner provided that there remains at least one limited partner;

(b)

subject to the provisions of the contractual scheme deed and all the rules made under section 261I of the Act (Contractual scheme rules) and for the time being in force:

(i)

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

(ii)

the sums standing to the credit of any distribution account are held by the depositary to distribute or apply them in accordance with COLL 8.5.15 R(Income); and

(c)

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;

(d)

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;

(e)

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

(f)

the limited partners, other than the nominated partner, are to be the participants in the scheme; and

(g)

the operator of a co-ownership scheme is authorised to:

(i)

acquire, manage and dispose of the scheme property; and

(ii)

enter into contracts which are binding on unitholders for the purposes of, or in connection with, the acquisition, management or disposal of scheme property.

3

Investment objectives

A statement of the object of the scheme, in particular the types of investments and assets in which it and each sub-fund (where applicable) may invest and that the object of the scheme is to invest in property of that kind with the aim of spreading investment risk.

4

Units in the scheme

A statement of:

(1)

the classes of units which the scheme may issue, indicating, for a scheme which is an umbrella, which class or classes may be issued in respect of each sub-fund; and

(2)

the rights attaching to units of each class (including any provisions for the expression in two denominations of such rights).

5

Limitation on issue of and redemption of units

Details as to:

(1)

the provisions relating to any restrictions on the right to redeem units in any class; and

(2)

the circumstances in which the issue of the units of any particular class may be limited.

6

Income and distribution

Details of the person responsible for the calculation, transfer, allocation and distribution of income for any class of unit in issue during the accounting period.

3Redemption or cancellation of units on breach of law or rules

6A

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

7

Base currency

A statement of the base currency of the scheme.

8

Meetings

Details of the procedures for the convening of meetings and the procedures relating to resolutions, voting and the voting rights for unitholders.

9

Powers and duties of the authorised fund manager and depositary

Where relevant, details of any function to be undertaken by the authorised fund manager and depositary which the rules in COLL require to be stated in the instrument constituting the fund.8

8

10

Termination and suspension

Details of:

(1)

the grounds under which the authorised fund manager may initiate a suspension of the scheme and any associated procedures; and

(2)

the methodology for determining the rights of unitholders to participate in the scheme property on winding up.

110A

Investment in overseas2 property through an intermediate holding vehicle1

If investment in an overseas2 immovable is to be made through an intermediate holding vehicle or a series of intermediate holding vehicles, a statement that the purpose of that intermediate holding vehicle or series of intermediate holding vehicles will be to enable the holding of overseas2 immovables by the scheme.1

11

Other relevant matters

Details of those matters which enable the scheme, authorised fund manager or depositary to obtain any privilege or power conferred by the rules in COLL which is not otherwise provided for in the instrument constituting the fund.8

8
SUP 15.6.7GRP
Firms are reminded that section 398 of the Act (Misleading the FCA or PRA:9 residual cases) makes it an offence for a firm knowingly or recklessly to provide the appropriate regulator9 with information which is false or misleading in a material particular in purported compliance with the appropriate regulator's9rules or any other requirement imposed by or under the Act. An offence by a body corporate, partnership or unincorporated association may be attributed to an officer or
COLL 6.4.6RRP
(1) Every unitholder of an AUT1 is entitled to transfer units held on the register by an instrument of transfer in any form that the person responsible for the register may approve, but that person is under no duty to accept a transfer unless:(a) it is permitted by the trust deed or prospectus; and(b) the transfer is excluded by Schedule 19 of the Finance Act 1999 from a charge to stamp duty reserve tax, or there has been paid to the trustee, for the account of the AUT, an amount
PERG 2.5.5GRP
For persons who are MiFID2investment firms, the activities that must be caught by the Regulated Activities Order are those that are caught by MiFID2. To achieve this result, some of the exclusions in the Order (that will apply to persons who are not caught by MiFID2) have been made unavailable to MiFID2investment firms when they provide or perform investment services and activities. A "MiFID investment firm", for these purposes, includes credit institutions to which MiFID applies
SUP 10A.1.24GRP
2In accordance with section 59(7C) of the Act this chapter does not apply to an internally managed corporate AIF.
SUP 12.5.6ARRP
(1) 4A firm must ensure that, if appointing an appointed representative (other than an introducer appointed representative), to carry on any of the following regulated activities, its written contract prohibits the appointed representative from carrying on any of the specified activities as an appointed representative for another firm:4(a) any designated investment business for retail clients7: the prohibition must cover all designated investment business for retail clients7;477(b)