Suspension of dealings and termination of authorised funds

Part

COLL Collective Investment Schemes

Chapter

Suspension of dealings and termination of authorised funds

Printed on: 14/10/2024

Rulebook at: 06/06/2008

COLL 7

Suspension of dealings and termination of authorised funds

COLL 7.1

Introduction

01/12/2004

Application

COLL 7.1.1

This chapter applies to an ICVC, an ACD, any other director of a ICVC, a depositary of an ICVC, a manager of an AUT and a trustee of an AUT, where such AUT or ICVC is a UCITS scheme or a non-UCITS retail scheme in accordance with COLL 7.1.2 R (Table of application).

01/04/2004

Table of application

COLL 7.1.2

This table belongs to COLL 7.1.1 R.

Rule

ICVC

ACD

Any other directors of an ICVC

Depositary of an ICVC

Manager

Trustee

7.1.1

7.1.3

7.2.1

7.3.1

7.3.2

7.3.3

7.3.4

7.3.5

7.3.6

7.3.7

7.3.8

7.3.9

7.3.10

7.3.11

7.3.12

7.3.13 (1)

7.3.13 (2)

7.4

7.5

7.6

Note: x means "applies"

01/04/2004

Purpose

COLL 7.1.3

(1) This chapter helps to achieve the regulatory objective of protecting investors by ensuring they do not buy or redeem units at a price that cannot be calculated accurately. For instance, due to unforeseen circumstances, it may be impossible to value, or to dispose of and obtain payment for, all or some of the scheme property of an authorised fund or sub-fund. COLL 7.2.1 R (Requirement) sets out the circumstances in which an authorised fund manager must or may suspend dealings in units and the manner in which a suspension takes effect.

(2) This chapter also helps with the regulatory objective of protecting consumers, by providing a cost effective and fair means of winding up authorised funds and terminating sub-funds of ICVCs and AUTs. EG 14 (Collective investment schemes) deals with the FSA's powers to revoke the authorisation of authorised funds otherwise than by consent.

28/08/2007

COLL 7.2

Suspension and restart of dealings

01/12/2004

Requirement

COLL 7.2.1

(1) The authorised fund manager may, with the prior agreement of the depositary, and must without delay, if the depositary so requires, suspend the issue, cancellation, sale and redemption of units in an authorised fund (referred to in this chapter as "dealings in units"), where due to exceptional circumstances it is in the interest of all the unitholders in the authorised fund.

(2) On suspension, the authorised fund manager, or the depositary if it has required the authorised fund manager to suspend dealings in units, must:

(a) immediately inform the FSA, stating the reason for its action; and

(b) as soon as practicable give written confirmation of the suspension and the reasons for it to:

(i) the FSA; and

(ii) the Home State regulator in each EEA State in which the authorised fund manager holds itself out as willing to sell or redeem units of the authorised fund concerned.

(3) During a suspension, none of the obligations in COLL 6.2 (Dealing) and COLL 6.3 (Valuation and pricing) apply.

(4) The suspension of dealings in units must cease as soon as practicable after the exceptional circumstances referred to in (1) have ceased and, in any event, within 28 days of the commencement of the suspension.

(5) The authorised fund manager must inform the FSA of the proposed restart of dealings in units and immediately after the restart must confirm this by giving notice to the FSA and the authorities mentioned in (2)(b)(ii).

(6) The authorised fund manager may agree, during the suspension, to deal in units at a price calculated by reference to the first valuation point after restart of dealings in units, subject to (8).

(7) This rule applies to a sub-fund as it applies to an authorised fund, and:

(a) references to the units of the class or classes relate to that sub-fund and to the scheme property attributable to the sub-fund; and

(b) this rule can only apply to one or more classes of units without being applied to other classes, if it is in the interest of all the unitholders.

(8) If an authorised fund operates limited redemption arrangements, and the event in (1) has affected a valuation point, the authorised fund manager must declare an additional valuation point as soon as possible after the restart of dealings in units.

01/04/2004

COLL 7.3

Winding up a solvent ICVC and terminating a sub-fund of an ICVC

01/12/2004

Explanation of COLL 7.3

COLL 7.3.1

(1) The winding up of an ICVC may be carried out under this section instead of by the court provided the ICVC is solvent and the steps required under regulation 21 the OEIC Regulations (The Authority's approval for certain changes in respect of a company) are fulfilled. This section lays down the procedures to be followed and the obligations of the ACD and any other directors of the ICVC.

(2) The termination of a sub-fund under this section will be subject to the conditions set out in regulation 21 of the OEIC Regulations. Termination can only commence once the proposed alterations to the ICVC's instrument of incorporation and prospectus have been notified to the FSA and permitted to take effect. On termination, the assets of the sub-fund will normally be realised, and the unitholders in the sub-fund will receive their respective share of the proceeds net of liabilities and the expenses of the termination.

(3) A sub-fund or ICVC may also be terminated or wound up in connection with a scheme of arrangement. Unitholders will become entitled to receive units in another regulated collective investment scheme in exchange for their units.

01/04/2004

Special meanings for termination of a sub-fund of an ICVC

COLL 7.3.2

In this section, where a sub-fund of an ICVC is being terminated, references to:

(1) units, are references to units of the class or classes related to the sub-fund to be terminated;

(2) a resolution, or extraordinary resolution, are references to such a resolution passed at a meeting of unitholders of units of the class or classes referred to in (1);

(3) scheme property, are references to the scheme property allocated or attributable to the sub-fund to be terminated; and

(4) liabilities, are references to liabilities of the ICVC allocated or attributable to the sub-fund to be terminated.

01/04/2004

Guidance on winding up or termination

COLL 7.3.3

This table belongs to COLL 7.3.3 G

Summary of the main steps in winding up a solvent ICVC or terminating a sub-fund under FSA rules , assuming FSA approval.
Notes: N = Notice to be given to the FSA under regulation 21 of OEIC Regulations
E = commencement of winding up or termination
W/U = winding up
FAP = final accounting period (COLL 7.3.8 R(4))

Step number

Explanation

When

COLL rule (unless stated otherwise)

Commence preparation of solvency statement

N-28 days

7.3.5 (2)

Send audited solvency statement to the FSA with copy to depositary

By N + 21 days

7.3.5 (4) and (5)

Receive the FSA approval

N + one month

Regulation 21 of OEIC Regulations

Normal business ceases; publish notices

7.3.6

Realise proceeds, wind up, instruct depositary accordingly

ASAP after E

7.3.7

Prepare final account or termination account & have account audited

On completion of W/U or termination

7.3.8

Send final account or termination account and auditor's report to the FSA & unitholders

Within 2 months of FAP

7.3.8(6)

Request FSA to revoke relevant authorisation order

On completion of W/U

7.3.7(9)

01/04/2004

When an ICVC is to be wound up or a sub-fund terminated

COLL 7.3.4

(1) An ICVC must not be wound up except under this section or as an unregistered company under Part V of the Insolvency Act 1986.

(2) An ICVC must not be wound up under this section if there is a vacancy in the position of ACD.

(3) An ICVC must not be wound up or a sub-fund terminated under this section:

(a) unless and until effect may be given, under regulation 21 of the OEIC Regulations, to proposals to wind up the affairs of the ICVC or to proposals to make the alterations to the ICVC's instrument of incorporation and prospectus that will be required if a sub-fund is terminated; and

(b) unless a statement has been prepared and sent or delivered to the FSA under COLL 7.3.5 R (Solvency statement) and received by the FSA prior to satisfaction of the condition in (a).

(4) Subject to (3) and the subsequent provisions of this section, the appropriate steps to wind up an ICVC or terminate a sub-fund under this section must be taken:

(a) if an extraordinary resolution to that effect is passed; or

(b) when the period (if any) fixed for the duration of the ICVC or the sub-fund by the instrument of incorporation expires or any event occurs, for which the instrument of incorporation provides that the ICVC or the sub-fund is to be wound up; or

(c) on the date stated in any agreement by the FSA in response to a request from the directors for the winding up of the ICVC or a request for the termination of the sub-fund.

01/04/2004

Solvency statement

COLL 7.3.5

(1) Before notice is given to the FSA under regulation 21 of the OEIC Regulations of the proposals referred to in COLL 7.3.4 R (3), the directors must make a full enquiry into the ICVC's affairs to determine whether the ICVC will be able to meet all its liabilities.

(2) The ACD must then, based on the results of this enquiry, prepare a statement either:

(a) confirming that the ICVC will be able to meet all its liabilities within twelve months of the date of the statement; or

(b) stating that such confirmation cannot be given.

(3) This solvency statement must:

(a) relate to the ICVC's affairs at a date no more than 28 days before the date on which notice is given to the FSA ;

(b) if there is more than one director, be approved by the board of directors and signed on their behalf by the ACD; and

(c) if it contains the confirmation under (2)(a), be signed by at least one other director or, if there is no director other than the ACD, be signed by the ACD.

(4) A statement which contains the confirmation under (2)(a) must annex a statement signed by the auditor appointed under Schedule 5 to the OEIC Regulations (Auditors) to the effect that, in his opinion, the enquiry required by (1) has been properly made and is fairly reflected by the confirmation.

(5) The solvency statement must be sent or delivered to the FSA and the depositary no later than 21 days after notice is given to the FSA in accordance with regulation 21 of the OEIC Regulations.

01/04/2004

Consequences of commencement of winding up or termination

COLL 7.3.6

(1) Winding up or termination must commence once the conditions referred to in COLL 7.3.4 R (3) are both satisfied or, if later, once the events in COLL 7.3.4 R (4) have occurred.

(2) Once winding up or termination has commenced:

(a) COLL 6.2 (Dealing), COLL 6.3 (Valuation and pricing) and COLL 5 (Investment and borrowing powers) cease to apply to the ICVC or to the units and scheme property in the case of a sub-fund;

(b) the ICVC must cease to issue and cancel units ;

(d) no transfer of a unit may be registered and no other change to the register of unitholders may be made without the sanction of the directors;

(e) where winding up an ICVC, the ICVC must cease to carry on its business, except for its beneficial winding up; and

(f) the corporate status and corporate powers of the ICVC and (subject to the preceding provisions of this rule) the powers of the directors continue until the ICVC is dissolved.

(3) The ACD must as soon as practicable after winding up or termination has commenced:

(a) if the ACD has not previously notified unitholders of the proposal to wind up the ICVC or terminate the sub-fund, give written notice of the commencement of the winding up or termination to the unitholders; and

(b) if winding up an ICVC that has its head office situated in Northern Ireland, publish notice of the commencement of the winding up in the Belfast Gazette.

06/04/2006

Manner of winding up or termination

COLL 7.3.7

(1) Paragraphs (2) to (9) of this rule apply to winding up an ICVC and termination of a sub-fund, paragraph (10) only applies to the winding up of an ICVC and paragraphs (11) to (15) only apply to the termination of a sub-fund of an ICVC.

(2) The ACD must, as soon as practicable after winding up or termination has commenced, cause the scheme property to be realised and the liabilities of the ICVC or the sub-fund to be met out of the proceeds.

(3) The ACD must instruct the depositary how such proceeds (until utilised to meet liabilities or make distributions to unitholders) must be held and those instructions must be prepared with a view to the prudent protection of creditors and unitholders against loss.

(4) Where sufficient liquid funds are available after making adequate provision for the expenses of the winding up or termination and the discharge of the ICVC's or the sub-fund's remaining liabilities, the ACD may arrange for the depositary to make one or more interim distributions to the unitholders proportionately to the right of their respective units to participate in scheme property at the commencement of the winding up or termination.

(5) On or before the date on which the final account is sent to unitholders in accordance with COLL 7.3.8 R (Final account and termination account), the ACD must arrange for the depositary to make a final distribution to the unitholders, in the same proportions as provided by (4), of the balance remaining (net of a provision for any further expenses of the ICVC or sub-fund).

(6) Paragraphs (2) to (5) are subject to the terms of any scheme of arrangement sanctioned by an extraordinary resolution passed on or before the commencement of the winding up or termination.

(7) Where the ICVC and one or more unitholders (other than the ACD) agree, the requirement in (2) to realise the scheme property does not apply to that part of the scheme property which is proportionate to the right to participate in scheme property of that or those unitholders

(8) In the case of (7), the ACD must cause the ICVC to distribute that part of the scheme property in specie to that or those unitholders in proportion to their respective rights to participate, this distribution being effected after making adjustments and retaining such provision as appears to the ACD appropriate to ensure that those unitholders bear the proportion of the liabilities and the expenses of the distribution attributable to their units.

(9) The depositary must notify the FSA once the winding up of the ICVC or the termination of a sub-fund (including compliance with COLL 7.3.8 R is complete and at the same time the ACD or the depositary must request the FSA to revoke the relevant authorisation order.

(10) Where any sum of money stands to the account of the ICVC at the date of its dissolution, the ACD must arrange for the depositary to pay or lodge that sum within one month after that date in accordance with regulation 33(4) or (5) of the OEIC Regulations (Dissolution in other circumstances).

(11) Where any sums (including unclaimed distributions) remain standing to the account of the scheme property following tender of payment (whether to a creditor or a unitholder), the ACD must instruct the depositary to retain the sums ('tendered sums') in an account ('unclaimed payments account') separate from any other part of the scheme property.

(12) The depositary must, if instructed by the ACD, make a payment out of the unclaimed payments account for the purpose of settling a claim for a tendered sum.

(13) Any costs and reasonable expenses of the ACD for investigating a claim and any costs and expenses incurred by the depositary in making a payment out of the unclaimed payments account may be reimbursed from the payment.

(14) The person entitled to any tendered sum is not entitled to any interest in respect of the unclaimed payments account and any interest arising in respect of the unclaimed payments account must be allocated between the continuing sub-funds of the ICVC in a manner which is fair to the unitholders of the ICVC generally.

(15) Amounts standing to the credit of an unclaimed payments account must be excluded from the value of the scheme property and must not be subject to any distribution under this rule, but upon a dissolution of the ICVC under regulation 33 of the OEIC Regulations, the depositary must cease to hold those amounts as part of that account and they will become subject to the provisions of (10).

01/04/2004

Final account and termination account

COLL 7.3.8

(1) Once the ICVC's affairs are fully wound up or termination of the sub-fund has been completed (including distribution or provision for distribution in accordance with COLL 7.3.7 R (5), the ACD must prepare an account of the winding up or termination showing:

(a) how it has been conducted; and

(b) how the scheme property has been disposed of.

(2) The account in (1) must be, if there is:

(a) more than one director, approved by the board of directors and be signed on their behalf by the ACD and at least one other director; or

(b) no director other than the ACD, signed by the ACD.

(3) Once signed, this account is the "final account" for the purposes of the winding up of an ICVC and the "termination account" for the purposes of the termination of a sub-fund.

(4) The final account must state the date on which the ICVC's affairs were fully wound up and the date stated must be regarded as the final day of the accounting period of the ICVC then running ('final accounting period').

(5) The ACD must ensure that the ICVC's auditor makes a report in respect of the final account or termination account, which states the auditor's opinion whether the final account or termination account has been properly prepared for the purpose of (1).

(6) Within two months of the date of the completion of the winding up of the ICVC or termination of the sub-fund, the ACD must send a copy of the final account or termination account and the auditor's report on it to the FSA and to each person who was a unitholder (or the first named of joint unitholders) immediately before its end.

01/04/2004

Duty to ascertain liabilities

COLL 7.3.9

(1) The ACD must use all reasonable endeavours to ensure that all the liabilities of the ICVC are discharged before the completion of the winding up or termination.

(2) The duty in (1) relates to all liabilities of which the ACD:

(a) is, or becomes, aware before the completion of the winding up or termination; or

(b) would have become aware before the completion of the winding up or termination had it used all reasonable endeavours to ascertain the liabilities.

(3) If the ACD rejects any claim against the ICVC in whole or part or against the ICVC in respect of a liability in whole or part, the ACD must immediately send to the claimant written notice of its reasons for doing so.

01/04/2004

Reports and accounts

COLL 7.3.10

(1) The ACD need not (as would be required under COLL 4.5.13 R (Provision of short report)) send to each unitholder a copy of any short report relating to an annual accounting period or half-yearly accounting period which began after commencement of winding up or termination, if the directors of the ICVC, after consulting the FSA, have reasonably determined that this is not required in the interest of unitholders.

(2) Where (1) applies, a copy of the short or long report must be supplied free of charge to any unitholder upon request.

01/04/2004

Liabilities of the ACD

COLL 7.3.11

(1) Except to the extent that the ACD can show that it has complied with COLL 7.3.9 R (Duty to ascertain liabilities), the ACD:

(a) is personally liable to meet any liability of an ICVC, of which it is the ACD, wound up under this section (whether or not the ICVC has been dissolved); and

(b) must keep the ICVC indemnified against any liability allocated or attributable to a sub-fund that has been terminated under these rules

that was not discharged before the completion of the winding up or termination.

(2) Where winding up an ICVC, if the proceeds of the realisation of the assets attributable, or allocated to a particular sub-fund of an umbrella ICVC are insufficient to meet the liabilities attributable or allocated to that sub-fund, the ACD must pay to the ICVC, for the account of that sub-fund the amount of the deficit, unless and to the extent that the ACD can show that the deficit did not arise as a result of any failure by the ACD to comply with the rules in COLL.

(3) The liabilities of the ACD under this rule create a debt (in England and Wales in the nature of a specialty) accruing due from it on the completion of the winding up or termination and payable upon the demand of the creditor in question (including the ICVC in the circumstances described in (2)).

(4) The obligations of the ACD under this rule do not affect any other obligation of the ACD under these rules or the general law.

01/04/2004

Additional provisions applicable to umbrella companies

COLL 7.3.12

(1) Liabilities of an ICVC which is an umbrella attributable, or allocated, to a particular sub-fund must be met first out of the scheme property attributable or allocated to such sub-fund.

(2) If the liabilities to be met out of a particular sub-fund of an umbrella ICVC are greater than the proceeds of the realisation of the scheme property attributable or allocated to that sub-fund, the deficit must be met out of the scheme property attributable or allocated to the solvent sub-funds of that umbrella ICVC in which the proceeds of realisation exceed liabilities and divided between those sub-funds in a manner that is fair to the unitholders in those solvent sub-funds.

(3) Paragraph (2) applies in respect of any deficit arising as a result of additional liabilities accruing to a sub-fund through the operation of (2).

(4) In calculating the amount of liabilities for the purpose of (2), account must be taken of any payments received or to be received from the ACD under COLL 7.3.11 R (Liabilities of the ACD).

01/04/2004

Miscellaneous

COLL 7.3.13

(1) If:

(a) during the course, or as a result, of the enquiry referred to in COLL 7.3.5 R (1) (Solvency statement), the directors become of the opinion that it will not be possible to provide the confirmation referred to in (2)(a) of that rule; or

(b) after winding up or termination has commenced, the ACD becomes of the opinion that the ICVC will be unable to meet all its liabilities within twelve months of the date of the statement provided under (a) of COLL 7.3.5 R (2);

the directors must immediately present a petition or cause the ICVC to present a petition for the winding up of the ICVC as an unregistered ICVC under Part V of the Insolvency Act 1986.

(2) If, after the commencement of a winding up under this chapter and before notice of completion of the winding up has been sent to the FSA, there is a vacancy in the position of ACD, the directors of the ICVC must immediately present or cause the ICVC to present or, if there are no directors, the depositary must immediately present, a petition for the winding up of the ICVC as an unregistered ICVC under Part V of the Insolvency Act 1986.

01/04/2004

COLL 7.4

Winding up an AUT and terminating a sub-fund of an AUT

01/12/2004

Explanation of COLL 7.4

COLL 7.4.1

(1) This section deals with the circumstances and manner in which an AUT is to be wound up or a sub-fund of an AUT is to be terminated. Under section 256 of the Act (Requests for revocation of authorisation order), the manager or trustee of an AUT may request the FSA to revoke the authorisation order in respect of that AUT. Section 257 of the Act (Directions) gives the FSA the power to make certain directions.

(2) The termination of a sub-fund under this section will be subject to section 251 of the Act (Alteration of schemes and changes of manager or trustee). Termination can only commence once the proposed alterations to the trust deed and prospectus have been notified to the FSA in writing and permitted to take effect. On termination, the assets of the sub-fund will normally be realised, and the unitholders in the sub-fund will receive their respective share of the proceeds net of liabilities and the expenses of the termination.

(3) An AUT or a sub-fund of an AUT may also be wound up or terminated in connection with a scheme of arrangement. Unitholders will become entitled to receive units in another regulated collective investment scheme in exchange for their units.

01/04/2004

Special meanings for termination of a sub-fund of an AUT

COLL 7.4.2

In this section, where a sub-fund of an AUT is being terminated, references to:

(1) units, are references to units of the class or classes related to the sub-fund to be terminated;

(2) a resolution or extraordinary resolution, are references to such a resolution passed at a meeting of unitholders of units of the class or classes referred to in (1);

(3) scheme property, are references to the scheme property allocated or attributable to the sub-fund to be terminated; and

(4) liabilities, are references to liabilities of the AUT allocated or attributable to the sub-fund to be terminated.

01/04/2004

When an AUT is to be wound up or a sub-fund terminated

COLL 7.4.3

(1) Upon the happening of any of the events or dates referred to in paragraph (2) and not otherwise:

(a) COLL 6.2 (Dealing), COLL 6.3 (Valuation and pricing) and COLL 5 (Investment and borrowing powers) cease to apply to the AUT;

(b) the trustee must cease to issue and cancel units ;

(d) the manager must cease to arrange the issue or cancellation of units under COLL 6.2.7 R (Issue and cancellation of units through an authorised fund manager); and

(e) the trustee must proceed to wind up the AUT or terminate the sub-fund in accordance with COLL 7.4.4 R.

(2) The events referred to in (1) are:

(a) the authorisation order of the AUT is revoked;

(b) alterations to the AUT's trust deed and prospectus that will be required if the sub-fund is terminated taking effect in accordance with section 251 of the Act;

(c) the passing of an extraordinary resolution winding up the AUT or terminating the sub-fund, provided FSA's prior consent to the resolution has been obtained by the manager or trustee;

(d) in response to a request to the FSA by the manager or the trustee for the revocation of the authorisation order, the FSA has agreed, subject to there being no material change in any relevant factor, that, on the conclusion of the winding up of the AUT, the FSA will agree to that request;

(e) the expiration of any period specified in the trust deed as the period at the end of which the AUT is to be wound up or the sub-fund is to terminate;

(f) the effective date of a duly approved scheme of arrangement, which is to result in the AUT or sub-fund that is subject to the scheme of arrangement being left with no property; or

(g) the date on which a relevant pension scheme is notified in writing by the Occupational Pensions Schemes Regulatory Authority that the scheme is no longer registered under the Welfare and Pensions Reform Act 1999 as a stakeholder pension scheme.

(3) This rule is without prejudice to COLL 7.2.1 R(Requirement) and to any order or direction made under section 257 or 258 of the Act.

01/04/2004

Manner of winding up or termination

COLL 7.4.4

(1) Where COLL 7.4.3 R (2) (f) applies, the trustee must wind up the AUT or terminate the sub-fund in accordance with the approved scheme of arrangement.

(2) In any other case falling within COLL 7.4.3 R:

(a) once the AUT falls to be wound up or sub-fund terminated, the trustee must realise the scheme property;

(b) after paying out or retaining adequate provision for all liabilities payable and for the costs of the winding up or termination, the trustee must distribute the proceeds of that realisation to the unitholders and the manager proportionately to their respective interests in the AUT or sub-fund as at the date, or the date of the relevant event referred to in COLL 7.4.3 R; and

(c) any unclaimed net proceeds or other cash (including unclaimed distribution payments) held by the trustee after one year from the date on which they became payable must be paid by the trustee into court (or, in Scotland, as the court may direct), subject to the trustee having a right to retain any expenses properly incurred by him relating to that payment.

(3) For an AUT which is a relevant pension scheme, payments must not be made to unitholders in the AUT, the realisation proceeds having to be paid by the trustee in accordance with the trust deed.

(4) Where the trustee and one or more unitholders agree, the requirement in (2) to realise the scheme property does not apply to that part of the property proportionate to the entitlement of that or those unitholders.

(5) The trustee may distribute the part of the scheme property referred to in (4) in the form of property, after making adjustments or retaining provisions as appears appropriate to the trustee for ensuring that, that or those unitholders bear a proportional share of the liabilities and costs.

(6) On completion of the winding up in respect of the events referred to in COLL 7.4.3 R (2)(c), COLL 7.4.3 R (2)(d) or COLL 7.4.3 R (2)(e) , the trustee must notify the FSA in writing and at the same time the manager or trustee must request the FSA to revoke the relevant authorisation order.

01/04/2004

Accounting and reports during winding up or termination

COLL 7.4.5

(1) For any annual or half-yearly accounting period which began after commencement of the winding up or termination, the trustee (after consulting the manager (if appropriate) and the FSA) may direct that COLL 4.5.13 R (Provision of short report) may be dispensed with, provided that it has taken reasonable care to determine that the report is not required in the interests of the unitholders.

(2) Where (1) applies, a copy of the short and long report must be supplied free of charge to any unitholder upon request.

(3) The period in question in (2) must be reported on together with the following period in the next report prepared for the purposes of this rule.

(4) At the conclusion of the winding up or termination, the accounting period then running is regarded as the final annual accounting period.

(5) Within two months after the end of the final annual accounting period or the termination of the sub-fund, the annual reports of the manager and trustee must be published and sent to the FSA and to each person who was a unitholder or the first named of joint unitholders immediately before its end.

01/04/2004

COLL 7.5

Schemes or sub-funds that are not commercially viable

01/12/2004

Explanation of this section

COLL 7.5.1

(1) The FSA expects that the majority of requests it will receive for the winding up of an authorised fund (under regulation 21(1) of the OEIC Regulations or under section 256 of the Act) or termination of a sub-fund will be from authorised fund managers and depositaries who consider that the AUT, ICVC or sub-fund in question is no longer commercially viable.

(2) It is in consumers' interests to minimise, as far as possible, the period between which the FSA receives such requests and responds to them. To assist the FSA in arriving at a quick decision, based on all the relevant factors, it would be helpful for the FSA to receive the information listed at COLL 7.5.2 G. Further information, however, may be requested by the FSA after receipt of the information, depending on the individual circumstances of the case.

01/04/2004

Information to be provided to the FSA

COLL 7.5.2

The information referred to in COLL 7.5.1 G is listed below:

(1) the name of the authorised fund or sub-fund;

(2) the size of the authorised fund or sub-fund;

(3) the number of unitholders;

(4) whether dealing in units has been suspended;

(5) why the request is being made;

(6) what consideration has been given to the authorised fund or sub-fund entering into a scheme of arrangement with another regulated collective investment scheme and the reasons why a scheme of arrangement is not feasible;

(7)

(a) whether unitholders have been informed of the intention to seek termination, winding up or revocation; and

(b) if not, when they will be informed;

(8) details of any proposed preferential switching rights offered or to be offered to unitholders;

(9) details of any proposed rebate of charges to be made to unitholders who recently purchased units;

(10) where the costs of winding up or termination will fall;

(11) the depositary's:

(a) statement whether having taken reasonable care it is certain that a scheme of arrangement is not feasible and explaining what steps have been considered that would result in the authorised fund or sub-fund not needing to wind up or terminate (for example, appointing a replacement authorised fund manager); and

(b) confirmation that it will not or does not expect to qualify a report made in accordance with COLL 4.5.11 R (Report of the depositary);

(12) the preferred date for the FSA's determination to revoke authorisation or the date for the commencement of the winding up or termination; and

(13) any additional information or material considered to be relevant to the FSA's decision under sections 251 and 256 of the Act or regulation 21 of the OEIC Regulations (as appropriate).

01/04/2004

COLL 7.6

Schemes of arrangement

01/12/2004

Schemes of arrangement: explanation

COLL 7.6.1

(1) A proposal that an authorised fund should be involved in a scheme of arrangement is subject to written notice to and approval by the FSA under section 251 of the Act (Alteration of schemes and changes of manager or trustee) or regulation 21 of the OEIC Regulations (The Authority's approval for certain changes in respect of a company). Effect cannot be given to such a change except in accordance with that section or regulation.

(2) The issue of units in exchange for assets as part of an approved scheme of arrangement is subject to:

(a) COLL 6.2.5 R and COLL 6.2.6 R (Issue and cancellation of units);

(b) COLL 6.2.15 R (In specie issue and redemption); and

01/04/2004

Schemes of arrangement: requirements

COLL 7.6.2

(1) If a scheme of arrangement is entered into in relation to an authorised fund ("transferor fund") or a sub-fund of a scheme which is an umbrella ("transferor sub-fund"), an authorised fund manager must ensure that the unitholders of the transferor fund or sub-fund do not become unitholders of units in a collective investment scheme other than a regulated collective investment scheme.

(2) For a UCITS scheme or a sub-fund of a UCITS scheme, (1) applies as if the reference to a regulated collective investment scheme also excludes any recognised scheme other than a scheme recognised under section 264 of the Act (Schemes constituted in other EEA States).

(3) Where, for the purpose of a scheme of arrangement, it is proposed that scheme property of an authorised fund should become the property of another regulated collective investment scheme or sub-fund of a regulated collective investment scheme, the proposal must not be implemented without the sanction of an extraordinary resolution of the unitholders in the authorised fund, unless (4) applies.

(4) Where, for the purposes of a scheme of arrangement, it is proposed that scheme property attributable to a sub-fund of an umbrella should become the property of another regulated collective investment scheme or of another sub-fund of a regulated collective investment scheme (whether or not of that umbrella), the proposal must not be implemented without the sanction of:

(a) an extraordinary resolution of the unitholders in the sub-fund of that umbrella; and

(b) (unless implementation of the scheme of arrangement is not likely to result in any material prejudice to the interests of the unitholders in any other sub-fund of that umbrella) an extraordinary resolution of the unitholders of units in that umbrella.

(5) If it is proposed that an authorised fund or sub-fund of an umbrella should receive property (other than its first property) as a result of a scheme of arrangement (or an arrangement equivalent to a scheme of arrangement) which is entered into by some other collective investment scheme or sub-fund, or by a body corporate, the proposal must not be implemented without the sanction of an extraordinary resolution of the unitholders in the authorised fund or (as the case may be) of the class or classes of units related to the sub-fund unless (6) applies.

(6) This paragraph (6) applies if the directors of the ICVC or the manager and trustee of the AUT agree that the receipt of the property concerned for the account of the ICVC or AUT :

(a) is not likely to result in any material prejudice to the interests of the unitholders of the authorised fund;

(b) is consistent with the objectives of the authorised fund or sub-fund; and

01/04/2004