Qualified investor schemes

Part

COLL Collective Investment Schemes

Chapter

Qualified investor schemes

Printed on: 06/11/2024

Rulebook at: 31/12/2012

COLL 8

Qualified investor schemes

COLL 8.1

Introduction

01/12/2004

COLL 8.1.1

(1) This chapter applies to:

(a) an authorised fund manager of an AUT or an ICVC;

(b) any other director of an ICVC;

(d) an ICVC,

which is a qualified investor scheme.

(2) Where this chapter refers to rules in any other chapter of this sourcebook, those rules and any relevant guidance should be applied as if they referred to qualified investor schemes.

01/04/2004

Purpose

COLL 8.1.2

(1) This chapter assists in achieving the regulatory objective of protecting consumers by providing an appropriate degree of protection in respect of authorised funds that are only intended for investors that are, in general, prepared to accept a higher degree of risk in their investments or have a higher degree of experience and expertise than investors in retail schemes.

(2) This section ceases to apply where a qualified investor scheme has converted to be authorised as a UCITS scheme or a non-UCITS retail scheme.

01/04/2004

Qualified investor schemes: eligible investors

COLL 8.1.3

(1) The authorised fund manager of a qualified investor scheme must take reasonable care to ensure that ownership of units in that scheme is only recorded in the register for a person that falls into one or more of the categories set out in COLL 8 Annex 1(Qualified Investor Scheme: eligible investors).

(2) The authorised fund manager will be regarded as complying with (1) to the extent that it can show that it was reasonable for it to rely on relevant information provided by another person.

01/11/2007

Qualified investor schemes - explanation

COLL 8.1.4

(1) Qualified investor schemes are authorised funds which may only be sold to sophisticated investors. Therefore, the authorised fund manager must take reasonable care to ensure that subscription in relation to the units of this type of scheme should only be in relation to the client types set out in COLL 8 Annex 1R.

(2) Accordingly, qualified investor schemes have a more relaxed set of rules governing their operation and in particular their investment powers than for retail schemes. A qualified investor scheme is essentially a mixed asset type of scheme where different types of permitted asset may be included as part of the scheme property, depending on the investment objectives and policy of that scheme and within any restrictions in the rules.

01/11/2007

Application and notification procedures

COLL 8.1.5

Details of the application procedures in respect of qualified investor schemes are contained in COLL 2.1 (Authorised fund applications). COLLG provides details on how notifications may be made to the FSA .

01/04/2004

COLL 8.2

Constitution

01/12/2004

Application

COLL 8.2.1

This section applies to an authorised fund manager in respect of a qualified investor scheme.

01/04/2004

Classes of unit

COLL 8.2.2

A qualified investor scheme may issue such classes of unit as are set out in the instrument constituting the scheme, provided the rights of any class are not unfairly prejudicial as against the interests of the unitholders of any other class of units in that scheme.

01/04/2004

Names of schemes, sub-funds, and classes of units

COLL 8.2.3

(1) The authorised fund manager must ensure that the name of the scheme, a sub-fund or a class of unit is not undesirable or misleading.

(2) An authorised fund or a sub-fund may only be named or marketed as a 'money market fund' if it is:

(a) a short-term money market fund; or

(b) a money market fund.

[Note: Box 1, paragraph 2 of CESR's guidelines on a common definition of European money market funds]

01/07/2011

Undesirable and misleading names

COLL 8.2.4

COLL 6.9.6 G (Undesirable or misleading names) contains guidance as to names which may be undesirable or misleading.

01/04/2004

Instrument constituting the scheme

COLL 8.2.5

The statements and provisions required by COLL 8.2.6 R must be included in the instrument constituting the scheme of a qualified investor scheme.

01/04/2004

Table: contents of the instrument constituting the scheme

COLL 8.2.6

This table belongs to COLL 8.2.5 R

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.

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 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.

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; and

(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;

(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.

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.

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).

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.

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.

Redemption or cancellation of units on breach of law or rules

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.

Base currency

A statement of the base currency of the scheme.

Meetings

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

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 scheme.

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.

10A

Investment in overseas property through an intermediate holding vehicle

If investment in an overseas 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 overseas immovables by the scheme.

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 scheme.

21/12/2011

Limited issue

COLL 8.2.7

Units whose issue may be limited can only be issued if permitted by the instrument constituting the scheme, under the conditions set out in the prospectus and provided that this will not materially prejudice any existing unitholders in the scheme.

01/04/2004

COLL 8.3

Investor relations

01/12/2004

Application

COLL 8.3.1

This section applies to an ICVC which is a qualified investor scheme and the authorised fund manager of a qualified investor scheme.

01/04/2004

Drawing up and availability of prospectus

COLL 8.3.2

(1) An authorised fund manager must ensure that a prospectus of a qualified investor scheme is drawn up which contains the information, specified in COLL 8.3.4 R (Table: contents of qualified investor scheme prospectus), and the authorised fund manager must:

(a) revise the prospectus immediately upon the occurrence of any materially significant change in the information required to be stated within it;

(b) include the date of any revision in a prominent manner in the revised prospectus;

(d) review the prospectus periodically and revise it to take account of any significant change or new matter.

(2) The prospectus must not contain any provision which is unfairly prejudicial to the interests of unitholders generally or to the unitholders of any class of units.

(3) An ICVC or the manager of an AUT must offer a copy of the scheme's most recent prospectus free of charge to any person eligible to invest in a qualified investor scheme prior to the purchase of any units.

06/04/2006

False or misleading prospectus

COLL 8.3.3

The authorised fund manager must ensure that the prospectus does not contain any untrue or misleading statement or omit any matter required by the rules in this sourcebook to be included in it.

01/04/2004

Table: contents of qualified investor scheme prospectus

COLL 8.3.4

This table belongs to COLL 8.3.2 R.

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.

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is either an ICVC 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 FSA 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; and

(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.

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;

(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.

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.

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.

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 manager.

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.

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.

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 FSA.

The auditor

The name of the auditor of the authorised fund.

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.

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.

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:

(9)

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

(10)

whether 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.

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 or historic price basis is to be applied.

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.

15A

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.

General information

Details as to:

(1)

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

(2)

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

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, that:

(a)

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; and

(b)

while the provisions of the OEIC Regulations 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.

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.

18A

Investment in overseas property through an intermediate holding vehicle

If investment in an overseas 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 overseas immovables by the scheme.

Additional information

Any other material information which is within the knowledge of the directors of an ICVC or the manager of an AUT, or which the directors or manager 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.

21/12/2011

Report and accounts

COLL 8.3.5

(1) The authorised fund manager must prepare a report in respect of each annual accounting period and half-yearly accounting period.

(2) [deleted]

(2A) Where the first annual accounting period of a scheme is less than 12 months, a half-yearly report need not be prepared.

(3) The authorised fund manager must within a reasonable time after the end of each relevant accounting period, publish the annual report and half-yearly report and provide a copy free of charge on request to any unitholder.

(4) [deleted]

(5) The authorised fund manager must provide free of charge on the request of any person eligible to invest in the scheme a copy of the latest annual or half-yearly report before the conclusion of any sale to such person.

(6) The authorised fund manager must provide a copy of each annual and half-yearly report to the FSA .

(7) For a scheme which is an umbrella, any annual report provided under (3) or (5) may be a report prepared under COLL 8.3.5AR (3), but the authorised fund manager must nevertheless provide free of charge the report prepared under COLL 8.3.5AR (2) if a unitholder or any other person eligible to invest in the scheme requests it.

06/08/2006

Contents of the annual report

COLL 8.3.5A

(1) An annual report, other than for a scheme which is an umbrella, must contain:

(a) the accounts for the annual accounting period prepared in accordance with the requirements of the IMA SORP;

(b) the report of the authorised fund manager in accordance with COLL 8.3.5C R (Authorised fund manager's report);

(d) the report of the auditor in accordance with COLL 4.5.12 R (Report of the auditor).

(2) An annual report on a scheme which is an umbrella must be prepared for the umbrella as a whole and must contain:

(a) for each sub-fund, the accounts required by (1)(a) and the report of the authorised fund manager in accordance with COLL 8.3.5C R;

(b) an aggregation of the accounts required by (a);

(d) the report of the auditor in accordance with COLL 4.5.12 R.

(3) The authorised fund manager of a scheme which is an umbrella may, in addition to complying with (2), prepare a further annual report for any one or more individual sub-funds of the umbrella, in which case it must contain:

(a) for the sub-fund, the accounts required by (1)(a) and the report of the authorised fund manager in accordance with COLL 8.3.5C R;

(b) the report of the depositary in accordance with COLL 8.3.5D R; and

(4) The directors of an ICVC or the manager of an AUT must ensure that the accounts referred to in (1)(a), (2)(a) and (3)(a) give a true and fair view of the net revenueand the net capitalgains orlosses on the scheme property of the authorised fund or sub-fund for the relevant annual accounting period, and of the financial position of the authorised fund or sub-fund as at the end of that period.

06/03/2010

Contents of the half-yearly report

COLL 8.3.5B

(1) A half-yearly report on an authorised fund or sub-fund must contain:

(a) the accounts for the half-yearly accounting period which must be prepared in accordance with the requirements of the IMA SORP; and

(b) the report of the authorised fund manager in accordance with COLL 8.3.5C R.

(2) For a scheme which is an umbrella, the authorised fund manager may choose whether the half-yearly report is prepared for the umbrella as a whole, or for each individual sub-fund, or both.

06/03/2010

Authorised fund manager's report

COLL 8.3.5C

The report of the authorised fund manager must include:

(1) a review of the investment activities during the period to which the report relates;

(2) particulars of any fundamental or significant change to the authorised fund made since the date of the last report; and

(3) any other information which would enable unitholders to make an informed judgement on the development of the activities of the authorised fund during the period and the results of those activities as at the end of the period.

06/04/2006

Report of the depositary

COLL 8.3.5D

(1) The depositary must make an annual report to unitholders which must be included in the annual report.

(2) The depositary's report must contain:

(a) a description, which may be in summary form, of the duties of the depositary under COLL 8.5.4 R (Duties of the depositary) and in respect of the safekeeping of the scheme property; and

(b) a statement whether in any material respect:

(i) the issue, sale, redemption and cancellation and calculation of the price of the units and the application of the authorised fund'srevenue, have not been carried out in accordance with the rules in this sourcebook and, where applicable, the OEIC Regulations and the instrument constituting the scheme; and

(ii) the investment and borrowing powers and restrictions applicable to the authorised fund have been exceeded.

06/03/2010

Signing of annual and half-yearly reports

COLL 8.3.5E

The annual reports in COLL 8.3.5AR (1) and (2) and the half-yearly reports in COLL 8.3.5BR (1) must:

(1) in the case of an ICVC, if there is:

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

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

(2) in the case of an AUT, if the authorised fund manager has:

(a) more than one director, be signed by at least two directors of the authorised fund manager; or

(b) only one director, be signed by the director of the authorised fund manager.

06/03/2010

Alterations to the scheme and notices to unitholders

COLL 8.3.6

(1) Any proposed change which would be reasonably considered to be a fundamental change to the scheme requires the prior sanction of an ordinary resolution of the unitholders.

(2) Any proposed change to the scheme which is not within (1) but which would be reasonably considered to be significant, requires the giving of reasonable notice to unitholders to become effective.

(3) Alterations affecting only a particular sub-fund or class of units may be approved in accordance with (1) or (2) for the particular sub-fund or class of units, with the consent of, or, as the case may be, notice to, the relevant unitholders.

(4) This rule and COLL 8.3.8 R (Meetings) will apply (unless the context requires otherwise) to alterations concerning unitholders of a particular sub-fund or class of units rather than the scheme or sub-fund as a whole.

01/04/2004

Alterations to the scheme and notices to unitholders: guidance

COLL 8.3.7

Although account should be taken of the guidance on fundamental changes (COLL 4.3.5 G (Guidance on fundamental changes)) and significant changes (COLL 4.3.7 G (Guidance on significant changes)) the impact of any change to the scheme should be assessed individually based on the nature of the scheme and its investor profile.

01/04/2004

Meetings

COLL 8.3.8

(1) Details of the procedures for the convening and conducting of meetings and resolutions must be set out in the instrument constituting the scheme and be reasonable and fair as between all relevant parties.

(2) The authorised fund manager must record and keep minutes for six years of all proceedings to which COLL 8.3.6 R (Alterations to the scheme and notices to unitholders) and this rule are relevant.

(3) The provisions in COLL 4.4.12 R (Notices to unitholders), COLL 4.4.13 R (Other notices) and COLL 4.4.14 G (References to writing and electronic documents) apply in relation to qualified investor schemes.

01/04/2004

COLL 8.4

Investment and borrowing powers

01/12/2004

Application

COLL 8.4.1

This section applies to an ICVC which is a qualified investor scheme and an authorised fund manager and a depositary of a qualified investor scheme.

01/04/2004

COLL 8.4.1A

(1) Where this section refers to a second scheme, and the second scheme is a feeder scheme, which (in respect of investment in units in collective investment schemes) is dedicated to units in a single collective investment scheme, the reference in this section to the second scheme must be read as if it were a reference to any scheme into which the feeder scheme's master scheme invests.

(2) Where this section refers to a second scheme, and the second scheme is a master scheme to which (in respect of investment in units in collective investment schemes) the relevant qualified investor scheme is dedicated, the reference in this section to the second scheme must be read as if it were a reference to any scheme into which that master scheme invests.

06/03/2010

Spread of risk

COLL 8.4.2

An authorised fund manager must take reasonable steps to ensure that the scheme property of a qualified investor scheme provides a spread of risk, taking into account the investment objectives and policy of the scheme as stated in the most recently published prospectus, and in particular, any investment objective as regards return to the unitholders (whether through capital appreciation or income or both).

01/04/2004

Investment powers: general

COLL 8.4.3

(1) The scheme property of a qualified investor scheme may, subject to the rules in this chapter, comprise any assets or investments to which it is dedicated.

(2) The instrument constituting the scheme and the prospectus may further restrict:

(a) the kinds of assets in which the scheme property may be invested;

(b) the types of transactions permitted and any relevant limits; and

01/04/2004

Qualified investor schemes: general

COLL 8.4.4

The scheme property of a qualified investor scheme must, except where otherwise provided by the rules in this chapter, consist only of one or more of the following to which it is dedicated:

(1) any specified investment:

(a) within articles 74 to 86 of the Regulated Activities Order; and

(b) within article 89 (Rights to or interests in investments) of the Regulated Activities Order where the right or interest relates to a specified investment within (a);

(2) an interest in an immovable under COLL 8.4.11 R (Investment in property);

(3) precious metals; or

(4) a commodity contract traded on an RIE or a recognised overseas investment exchange.

06/05/2007

Money market funds

COLL 8.4.4A

The authorised fund manager of a qualified investor scheme which operates as a money market fund or short-term money market fund must satisfy the conditions in COLL 5.9.3 R (Investment conditions: short-term money market funds) and COLL 5.9.5 R (Investment conditions: money market funds) respectively.

[Note: box 2 and box 3 of CESR's guidelines on a common definition of European money market funds]

01/07/2011

COLL 8.4.4B

Approved money market instruments held within a qualified investor scheme which is a short-term money market fund or money market fund must also satisfy the criteria in COLL 5.2.7F R to COLL 5.2.7H R (Approved money-market instruments).

01/07/2011

Investment in collective investment schemes

COLL 8.4.5

(1) A qualified investor scheme may invest in units in a scheme (a 'second scheme') only if the second scheme is:

(a) a regulated collective investment scheme; or

(b) a scheme not within (a) where the authorised fund manager has taken reasonable care to determine that:

(i) it is the subject of an independent annual audit conducted in accordance with international standards on auditing;

(ii) the calculation of the net asset value of each of the second schemes and the maintenance of their accounting records is segregated from the investment management function;

(iii) (unless it is a master scheme to whose units the relevant qualified investor scheme is dedicated) it is prohibited from investing more than 15% of its value in units of schemes or, if there is no such prohibition, the qualified investor scheme's authorised fund manager is satisfied, on reasonable grounds and after making all reasonable enquiries, that no such investment will be made; and

(iv) it operates in accordance with the principle of risk spreading as described in COLL 8.4.2 R.

(2) A qualified investor scheme must not invest more than 20% in value of the scheme property in units in second schemes which are unregulated schemes or qualified investor schemes unless the authorised fund manager has carried out appropriate due diligence on each of the second schemes and has taken reasonable care to determine that, after making all reasonable enquiries and on reasonable grounds, the second scheme complies with relevant legal and regulatory requirements.

(3) The authorised fund manager of a qualified investor scheme with more than 20% in value of the scheme property invested in one or more second schemes which are unregulated schemes or qualified investor schemes must carry out appropriate due diligence on those schemes on an ongoing basis.

06/03/2010

Investment in a collective investment scheme that is an umbrella

COLL 8.4.5A

Where the second scheme in COLL 8.4.5 R is an umbrella, the provisions apply to each sub-fund as if it were a separate scheme.

06/04/2006

COLL 8.4.5B

(1) The guidance at COLL 5.7.11 G applies to an authorised fund manager of a qualified investor scheme carrying out due diligence for the purpose of COLL 8.4.5 R, as if that guidance related to COLL 8.4.5 R.

(2) Where COLL 5.7.11G (10) refers to COLL 6.3 (Valuation and pricing), that reference should be read as if it were a reference to COLL 8.5.9 R (Valuation, pricing and dealing).

(3) In addition to the guidance at COLL 5.7.11 G the authorised fund manager should, as part of its due diligence process, consider whether the property of each of the second schemes is held in safekeeping by a third party, which is subject to prudential regulation and independent of the investment manager of the second scheme and, if not, what controls over the property of the second scheme are in place to protect investors.

06/03/2010

Delivery of property under a transaction in derivatives or a commodities contract

COLL 8.4.6

(1) An authorised fund manager must take reasonable care to determine the following when entering into any transaction in derivatives or any commodity contract which may result in any asset becoming part of the scheme property:

(a) if it is an asset in which the scheme property could be invested, that the transaction:

(i) can be readily closed out; or

(ii) would at the expected time of delivery relate to an asset which could be included in the scheme property under the rules in this chapter; or

(b) in any other case that the transaction can be readily closed out.

(2) An authorised fund manager may acquire an asset within (1) if its determination has proved incorrect and if it determines that acquisition is in the interests of the unitholders, provided it has the consent of the depositary.

(3) Any asset within (1) acquired in accordance with (2) may form part of the scheme property despite any other rule in this chapter until the position can be rectified.

01/04/2004

Cover for transactions in derivatives and forward transactions

COLL 8.4.7

(1) A transaction in derivatives or a forward transaction may be entered into only if the maximum exposure, in terms of the principal or notional principal created by the transaction to which the scheme is or may be committed by another person, is covered globally under (2).

(2) Exposure is globally covered if adequate cover from within the scheme property is available to meet the scheme's total exposure taking into account any reasonably foreseeable market movement.

(3) The total exposure relating to derivatives held in a qualified investor scheme may not exceed the net value of the scheme property.

(4) No element of cover may be used more than once.

01/04/2004

Valuation of an OTC derivative

COLL 8.4.7A

A transaction in an OTC derivative must be capable of valuation which it will only be if the authorised fund manager having taken reasonable care determines that, throughout the life of the derivative (if the transaction is entered into), it will be able to value the investment concerned with reasonable accuracy:

(1) on the basis of the pricing model; or

(2) on some other reliable basis reflecting an up-to-date market value;

which has been agreed between the authorised fund manager and the depositary.

06/04/2006

Continuing nature of limits and requirements

COLL 8.4.8

(1) An authorised fund manager must, as frequently as necessary to ensure compliance with COLL 8.4.7 R (2) and COLL 8.4.7 R (4), re-calculate the amount of cover required in respect of derivatives and forwards positions in existence under this chapter.

(2) Derivatives and forwards positions may be retained in the scheme property only so long as they remain covered globally under COLL 8.4.7 R.

(3) An authorised fund manager must use a risk management process enabling it to monitor and measure as frequently as appropriate the risk of a scheme's derivatives positions and their contribution to the overall risk profile of the scheme.

01/04/2004

Permitted stock lending

COLL 8.4.9

(1) The ICVC, or the depositary at the request of the ICVC, or the trustee at the request of the manager, may enter into a repo contract or a stock lending arrangement within section 263B of the Taxation of Chargeable Gains Act 1992 (without extension by section 263C).

(2) The depositary must ensure that the value of any collateral, for the stock lending arrangement is at all times at least equal to the value of the securities transferred by the depositary.

(3) In the case of the expiry of validity of any collateral, the duty in (2) is satisfied if the depositary or the authorised fund manager, as appropriate, takes reasonable care to determine that sufficient collateral will be transferred by close of business on the day of expiry.

06/03/2007

General power to borrow

COLL 8.4.10

(1) The ICVC or trustee (on the instructions of the manager) may borrow money for the use of the authorised fund on terms that the borrowing is to be repayable out of the scheme property.

(2) The authorised fund manager must ensure that the authorised fund's borrowing does not, on any day, exceed 100 % of the net value of the scheme property and must take reasonable care to ensure that arrangements are in place that will enable borrowings to be closed out to ensure such compliance.

(3) In this rule "borrowing" also includes any arrangement (including a combination of derivatives) designed to achieve a temporary injection of money into the scheme property in the expectation that the sum will be repaid.

(4) Where the limit in (2) is breached, the authorised fund manager must take action in accordance with the principles set out in COLL 8.5.3 R (3) to COLL 8.5.3 R (5) (Duties of the authorised fund manager: investment and borrowing powers) to deal with that breach.

01/04/2004

Investment in property

COLL 8.4.11

(1) Any investment in land or a building held within the scheme property of a qualified investor scheme must be in an immovable within (2).

(2) For an immovable :

(a) it must be situated in a country or territory identified in the prospectus;

(b) the authorised fund manager must have taken reasonable care to determine that the title to the interest in the immovable is a good marketable title; and

(i) contains a valuation of the interest in the immovable (with and without any relevant existing mortgage); and

(ii) states that in the appropriate valuer's opinion the interest in the immovable would if acquired by the scheme, be capable of being disposed of reasonably expeditiously at that valuation;

(d) unless (c) is satisfied, the manager or the ICVC must have received a report from an appropriate valuer valuing the interest in the immovable and stating that:

(i) the immovable is adjacent to or in the vicinity of another immovable included in the scheme property; and

(ii) in the opinion of the appropriate valuer, the total value of the interests in both immovables would at least equal the sum of the price payable for the interest in the immovable and the existing value of the interest in the other immovable; and

(e) it must not be bought:

(i) if it becomes apparent to the authorised fund manager that the report in either (c) or (d) could no longer reasonably be relied upon; or

(ii) at a price more than 105% of the valuation relevant to the interest for that immovable in the report in either (c) or (d).

(3) Any contents of any building may be regarded as part of the relevant immovable.

(4) An appropriate valuer must be a person who:

(a) has knowledge of and experience in the valuation of immovables of the relevant kind in the relevant area;

(b) is qualified to be a standing independent valuer of an authorised fund or is considered by the scheme's standing independent valuer to hold an equivalent qualification;

(c) is independent of the ICVC, the depositary and each of the directors of the ICVC or of the manager and trustee of the AUT; and

(d) has not engaged himself or any of his associates in relation to the finding of the immovable for the scheme or the finding of the scheme for the immovable.

01/04/2004

Investment in overseas property through an intermediate holding vehicle

COLL 8.4.11A

(1) An overseas immovable may be held by a scheme through an intermediate holding vehicle whose purpose is to enable the holding of immovables by the scheme or a series of such intermediate holding vehicles, provided that the interests of unitholders are adequately protected. Any investment in an intermediate holding vehicle for the purpose of holding an overseas immovable shall be treated for the purposes of this section as if it were a direct investment in that immovable.

(2) An intermediate holding vehicle must be wholly owned by the scheme or another intermediate holding vehicle or series of intermediate holding vehicles wholly owned by the scheme, unless and to the extent that local legislation or regulation relating to the intermediate holding vehicle holding the immovable requires a proportion of local ownership.

06/05/2008

COLL 8.4.11B

(1) The authorised fund manager may transfer capital and income between an intermediate holding vehicle and the scheme by the use of inter-company debt if the purpose of this is for investment in immovables and repatriation of income generated by such investment. In using inter-company debt, the authorised fund manager should ensure the following:

(a) a record of inter-company debt is kept in order to provide an accurate audit trail; and

(b) interest paid out on the debt instruments is equivalent to the net rental income earned from the immovables after deduction of the intermediate holding vehicle's reasonable running costs (including tax).

(2) An intermediate holding vehicle should undertake the purchase, sale and management of immovables on behalf the scheme in accordance with the scheme's investment objectives and policy.

(3) Wherever reasonably practicable, an intermediate holding vehicle should have the same auditor and accounting reference date as the scheme.

(4) The accounts of any intermediate holding vehicle should be consolidated into the annual and interim reports of the scheme.

(5) The authorised fund manager should provide sufficient information to enable the depositary to fulfil its duties under COLL in relation to the immovables held through an intermediate holding vehicle.

14/12/2007

Investment limits for immovables

COLL 8.4.12

The following limits apply in respect of immovables held as part of the scheme property:

(1) the amount secured by mortgages over any immovable must not exceed 100% of the latest valuation by an appropriate valuer under COLL 8.4.11 R (2)(c) or COLL 8.4.11 R (2)(d) or COLL 8.4.13 R, as appropriate;

(2) no option may be granted to a person to buy or obtain an interest in any immovable comprised in the scheme property if this might unduly prejudice the ability to provide redemption; and

(3) the total of all premiums paid for options to purchase immovables must not exceed 10% of the scheme value in any 12 month period, calculated at the date of the granting of the option.

01/04/2004

Standing independent valuer and valuation

COLL 8.4.13

(1) In relation to the appointment of a valuer the authorised fund manager must:

(a) at the outset appoint the standing independent valuer with the approval of the depositary and likewise upon any vacancy; and

(b) ensure that any immovables in the scheme property are valued by an appropriate valuer (standing independent valuer) appointed by the authorised fund manager.

(2) The following apply in relation to the functions of the standing independent valuer:

(a) the authorised fund manager must ensure that the standing independent valuer appointed under (1), procures the valuation of all the immovables held within the scheme property, on the basis of a full valuation with physical inspection (including, where the immovable is or includes a building, internal inspection) at least once a year;

(b) for the purposes of (a), any inspection in relation to adjacent properties of a similar nature and value may be limited to that of only one such representative property;

(c) the authorised fund manager must ensure that the standing independent valuer values the immovables, on the basis of a review of the last full valuation, at least once a month;

(d) if either the authorised fund manager or the depositary becomes aware of any matter which appears likely to:

(i) affect the outcome of a valuation of an immovable; or

(ii) cause the valuer to decide to value under (a), instead of under (c),

it must immediately inform the standing independent valuer of that matter;

(e) the authorised fund manager must use its best endeavours to ensure that any other affected person reports to the standing independent valuer immediately upon that person becoming aware of any matter within (d); and

(f) any valuation by the standing independent valuer must be undertaken in accordance with UKPS 2.3 of the RICS Valuation Standards (The Red Book) (6th edition published January 2008), or in the case of overseas immovables on an appropriate basis,but is subject to any provisions of the instrument constituting the scheme.

(3) In relation to immovables:

(a) any valuation under this rule has effect, until the next valuation under this rule, for the purposes of the value of immovables; and

(b) an agreement to transfer an immovable or an interest in an immovable is to be disregarded for the purpose of the valuation of the scheme property unless it reasonably appears to the authorised fund manager to be legally enforceable.

06/10/2008

COLL 8.4.14

In considering whether a valuation of overseas immovables by the standing independent valuer is made on an appropriate basis for the purpose of COLL 8.4.13R (2)(f), the authorised fund manager should consider whether that valuation was made in accordance with internationally accepted valuation principles, procedures and definitions as set out in the International Valuation Standards published by the International Valuation Standards Committee.

06/10/2008

COLL 8.5

Powers and responsibilities

01/12/2004

Application

COLL 8.5.1

This section applies to an ICVC which is a qualified investor scheme and the authorised fund manager any other directors of an ICVC and the depositary of a qualified investor scheme.

01/04/2004

Functions of the authorised fund manager

COLL 8.5.2

(1) The authorised fund manager must manage the scheme in accordance with:

(a) the instrument constituting the scheme;
(b) the rules in this sourcebook;
(c) the most recently published prospectus; and
(d) for an ICVC, the OEIC Regulations.

(2) The authorised fund manager must carry out such functions as are necessary to ensure compliance with the rules in this sourcebook that impose obligations on the authorised fund manager or ICVC, as appropriate.
(3) The authorised fund manager must:

(a) make decisions as to the constituents of the scheme property in accordance with the investment objectives and policy of the scheme;
(b) instruct the depositary how rights attaching to the ownership of scheme property are to be exercised;
(c) take action immediately to rectify any breach of the pricing methodology set out in the prospectus, which must (unless the authorised fund manager determines on reasonable grounds that the breach is of minimal significance) extend to payment of money:

(i) by the authorised fund manager to unitholders and former unitholders;
(ii) by the ACD to the ICVC;
(iii) by the ICVC to the ACD;
(iv) by the manager to the trustee; or
(v) by the trustee (for the account of the AUT) to the manager;

(d) ensure where relevant that the ICVC complies with the relevant obligations imposed by, and when appropriate, exercises the relevant powers provided under, the OEIC Regulations;
(e) maintain such records as are necessary to enable the authorised fund manager or the ICVC, as appropriate, to comply with and demonstrate compliance with the rules in this sourcebook and also in the case of an ICVC, the OEIC Regulations; and
(f) maintain for a period of six years a daily record of the units held, acquired or disposed of by the authorised fund manager including the classes of such units, and of the balance of any acquisitions and disposals.

01/04/2004

Duties of the authorised fund manager: investment and borrowing powers

COLL 8.5.3

(1) An authorised fund manager may give instructions to deal in the scheme property.

(2) An authorised fund manager must avoid the scheme property being used or invested contrary to any provision in COLL 8.4 (Investment and borrowing powers).

(3) An authorised fund manager must immediately on becoming aware of any breach of COLL 8.4 take action, at its own expense, to rectify that breach.

(4) An authorised fund manager must take the action in (3) immediately, except in circumstances where doing so would not be in the best interests of unitholders, in which case the action must be taken as soon as such circumstances cease to apply.

(5) An authorised fund manager must not postpone taking action in accordance with (3) unless the depositary has given its consent.

01/04/2004

Duties of the ACD: umbrella schemes

COLL 8.5.3A

Where reasonable grounds exist for an ACD of an ICVC which is an umbrella to consider that a foreign law contract entered into by the ICVC may have become inconsistent with the principle of limited recourse stated in the instrument of incorporation of the ICVC (see COLL 8.2.6 R(2)(4A)) the ACD must:

(1) promptly investigate whether there is an inconsistency; and

(2) if the inconsistency still appears to exist, take appropriate steps to remedy that inconsistency.

21/12/2011

COLL 8.5.3B

In deciding what steps are appropriate to remedy the inconsistency, the ACD should have regard to the best interests of the unitholders. Appropriate steps to remedy the inconsistency may include:

(1) where possible, renegotiating the foreign law contract in a way that remedies the inconsistency; or

(2) causing the ICVC to exit the foreign law contract.

21/12/2011

Duties of the depositary

COLL 8.5.4

(1) The depositary is responsible for the safekeeping of all the scheme property.

(2) The depositary must:

(a) take all steps to ensure that transactions properly entered into for the account of the scheme are completed;

(b) take all steps to ensure that instructions properly given by the authorised fund manager in respect of the exercise of rights related to scheme property are carried out;

(c) ensure that any scheme property in registered form is as soon as reasonably practicable registered in its name or that of its nominee or delegate, as appropriate;

(d) take into its custody or control all documents of title of the scheme property other than in respect of derivatives or forward transactions;

(e) ensure that any resulting benefit of a derivatives or forward transaction is received by itself in respect of the scheme;

(f) hold and deal with any income received in respect of the scheme property in accordance with COLL 8.5.15 R (Income);

(g) take reasonable care to ensure that the scheme is managed by the authorised fund manager in accordance with:

(i) COLL 8.4 (Investment and borrowing powers);

(ii) COLL 8.5.9 R (Valuation, pricing and dealing); and

(iii) COLL 8.5.15 R (Income);

(h) keep records so as to comply with the rules in this sourcebook and so as to demonstrate such compliance; and

(i) be responsible for any other duties as set out in the instrument constituting the scheme.

(3) If a relevant ICVC ceases to have any directors, the depositary may act in accordance with COLL 6.5.6 R(ICVC without a director).

01/04/2004

Delegation

COLL 8.5.5

(1) The authorised fund manager (or in addition any other director in the case of an ICVC) may delegate any function to any person.

(2) The depositary has the power to delegate any function to anyone, including in the case of an ICVC a director, to assist the depositary to perform its functions, save that it must not retain the services of the authorised fund manager or, in the case of an ICVC, any other director to perform any part of its functions of safe custody of the scheme property.

(3) Subject to any provisions of the OEIC Regulations, the delegator in (1) and (2) will not be responsible under the rules in COLL for any act or omission of the delegate provided that the delegator can show:

(a) that it was reasonable for the delegator to obtain assistance to perform the function in question;

(b) that the delegate was and remained competent to provide that assistance; and

01/04/2004

Delegation and responsibility for regulatory obligations

COLL 8.5.6

Directors of an ICVC, authorised fund managers and depositaries should also have regard to SYSC 8 (Outsourcing). SYSC 8.1.6 R states that a firm remains fully responsible for discharging all of its obligations under the regulatory system if it outsources crucial or important operational functions or any relevant services and activities.

01/04/2009

Conflicts of interest

COLL 8.5.7

(1) The authorised fund manager and the depositary must ensure that any transaction in respect of the scheme property undertaken with an affected person is on terms at least as favourable to the scheme as any comparable arrangement on normal commercial terms negotiated at arm's length with an independent third party.

(2) Paragraph (1) is subject to any provision in the instrument constituting the scheme and the prospectus imposing a prohibition in relation to any type of transaction.

01/04/2004

The register of unitholders: AUTs

COLL 8.5.8

(1) The manager or the trustee (in accordance with their responsibilities as set out in the instrument constituting the scheme ) must maintain a register of unitholders as a document in accordance with this rule.

(2) The register must contain:

(a) the name and address of each unitholder (for joint unitholders no more than four need to be registered);

(b) the number of units (including fractions of a unit) of each class held by each unitholder; and

(3) The manager or the trustee (as appropriate) must take all reasonable steps and exercise all due diligence to ensure the register is kept complete and up to date.

(4) Where relevant, the manager must immediately notify the trustee of any information he receives which may affect the accuracy of any entry in the register.

01/04/2004

Valuation, pricing and dealing

COLL 8.5.9

(1) The value of the scheme property is the net value of the scheme property after deducting any outstanding borrowings (including any capital outstanding on a mortgage of an immovable).

(2) Any part of the scheme property which is not an investment (save an immovable) must be valued at fair value.

(3) For the purposes of (2), any charges that were paid, or would be payable, on acquiring or disposing of the asset must be excluded from the value of that asset.

(4) The value of the scheme property of an authorised fund must, save as otherwise provided in this section, be determined in accordance with the provisions of the instrument constituting the scheme and the prospectus, as appropriate.

(4A) Where a scheme operates as a short-term money market fund, the value of the scheme property must be determined either on an amortised cost or mark to market basis.

(4B) Where a scheme operates as a money market fund, the value of the scheme property must be determined on a mark to market basis.

(5) Subject to (5A), the scheme must have a valuation point on each dealing day.

(5A) Where a scheme operates as a money market fund or a short-term money market fund which is marketed solely through employee savings schemes or to a specific category of investors that are subject to redemption restrictions, the scheme may have at least one valuation point every week.

(6) The authorised fund manager must prepare a valuation in accordance with (4) for each relevant type of unit at each relevant valuation point.

(7) The price of a unit must be calculated on the basis of the valuation in (6) in a manner that is fair and reasonable as between unitholders.

(8) [deleted]

(9) The authorised fund manager must publish in an appropriate manner the price of any type of unit based on the valuation carried out in accordance with (6).

(10) The authorised fund manager must also provide on request to any unitholder at any time an estimated price for any type of unit in the scheme.

(11) The period of any initial offer and how it should end must be set out in the prospectus and must not be of unreasonable length.

01/07/2011

Maintaining the value of a short-term money market fund

COLL 8.5.9A

The authorised fund manager of a short-term money market fund which values scheme property on an amortised cost basis must:

(1) carry out a valuation of the scheme property on a mark to market basis at least once a week and at the same valuation point used to value the scheme property on an amortised cost basis; and

(2) ensure that the value of the scheme property when valued on a mark to market basis, does not differ by more than 0.5% from the value of the scheme property when valued on an amortised cost basis.

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

01/07/2011

COLL 8.5.9B

The authorised fund manager should advise the depositary when the mark to market value of a short-term money market fund valuing scheme property on an amortised cost basis varies from its amortised cost value by 0.1%, 0.2% and 0.3% respectively. The authorised fund manager of a short-term money market fund should agree procedures with the depositary designed to stabilise the value of the scheme in these events.

01/07/2011

Issues and cancellations of units

COLL 8.5.10

(1) The authorised fund manager must:

(a) ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders of that class; and

(b) not do, or omit anything that would, or might confer on itself a benefit or advantage at the expense of a unitholder or potential unitholder.

(2) For the purposes of (1) the authorised fund manager may take into account sales and redemptions after the valuation point, provided it has systems and controls to ensure compliance with (1).

(3) The authorised fund manager must arrange for the issue and cancellation of units and pay money or assets to or from the depositary for the account of the scheme as required by the prospectus.

(4) The authorised fund manager must keep a record of issues and cancellations made under this rule.

(5) The authorised fund manager may arrange for the ICVC, or instruct the trustee to issue or cancel units where the authorised fund manager would otherwise be obliged to sell or redeem the units in the manner set out in the prospectus.

(6) Where the authorised fund manager has not complied with (1), it must correct the error as soon as possible and must reimburse the scheme any costs it may have incurred in correcting the position, subject to any reasonable minimum level for such reimbursement as set out in the prospectus.

01/04/2004

Issue and cancellation of units in multiple classes

COLL 8.5.10A

If a qualified investor scheme has two or more classes of unit in issue, the authorised fund manager may treat any or all of those classes as one for the purpose of determining the number of units to be issued or cancelled by reference to a particular valuation point, if:

(1) the depositary gives its prior agreement; and

(2) the relevant classes:

(a) have the same entitlement to participate in, and the same liability for charges, expenses and other payments that may be recovered from, the scheme property; or

(b) differ only as to whether income is distributed or accumulated by periodic credit to capital, provided the price of the units in each class is calculated by reference to undivided shares in the scheme property.

06/03/2007

Sale and redemption

COLL 8.5.11

(1) The authorised fund manager must, at all times during the dealing day, be willing to effect the sale of units to any eligible investor (within any conditions in the instrument constituting the scheme and the prospectus which must be fair and reasonable as between all unitholders and potential unitholders) for whom the authorised fund manager does not have reasonable grounds to refuse such sale.

(2) The authorised fund manager must, at all times during the dealing day, effect a redemption on the request of any eligible unitholder (within any conditions in the instrument constituting the scheme and the prospectus) of units owned by that unitholder, unless the authorised fund manager has reasonable grounds to refuse such redemption.

(3) On agreeing to a redemption of units within (2), the authorised fund manager must pay the full proceeds of the redemption to the unitholder within any reasonable period specified in the instrument constituting the scheme or the prospectus, unless it has reasonable grounds for withholding payment.

(4) Payment of proceeds on redemption must be made by the authorised fund manager in any manner provided for in the prospectus which must be fair and reasonable as between redeeming unitholders and continuing unitholders.

01/04/2004

Limited redemption periods

COLL 8.5.12

The maximum period between dealing days for a qualified investor scheme will depend on the reasonable expectations of the target investor group and the particular investment objectives and policy of the scheme. For instance, for a scheme aiming to invest in large property developments, the expectation would be that it is reasonable to have a much longer period between dealing days for liquidity reasons than for a scheme investing predominantly in listed securities.

01/04/2004

Property Authorised Investment Funds

COLL 8.5.12A

(1) The authorised fund manager of a property authorised investment fund must take reasonable steps to ensure that no body corporate holds more than 10% of the net asset value of that fund (the "maximum allowable").

(2) Where the authorised fund manager of a property authorised investment fund becomes aware that a body corporate holds more than the maximum allowable, he must:

(a) notify the body corporate of that event;

(b) not pay any income distribution to the body corporate; and

(3) For the purpose of (2)(c), a reasonable time-frame means the time-frame which the authorised fund manager reasonably considers to be appropriate having regard to the interests of the unitholders as a whole.

06/06/2008

COLL 8.5.12B

Reasonable steps to monitor the maximum allowable include:

(1) regularly reviewing the register; and

(2) taking reasonable steps to ensure that unitholders are kept informed of the requirement that no body corporate may hold more than 10% of the net asset value of a property authorised investment fund.

06/06/2008

Payments

COLL 8.5.13

(1) An ICVC must not incur any expense in respect of the use of any movable or immovable property unless the scheme is dedicated to such investment or such property is necessary for the direct pursuit of its business.

(2) Payments out of the scheme property may be made from capital property rather than from income, provided the basis for this is set out in the prospectus.

01/04/2004

Exemption from liability to account for profits

COLL 8.5.14

An affected person is not liable to account to another affected person or to the unitholders of the scheme for any profits or benefits it makes or receives that are made or derived from or in connection with:

(1) dealings in the units of a scheme; or

(2) any transaction in scheme property; or

(3) the supply of services to the scheme;

where disclosure of the non-accountability has been made in the prospectus of the scheme.

01/04/2004

Income

COLL 8.5.15

(1) A qualified investor scheme must have:

(a) an annual accounting period;

(b) a half-yearly accounting period; and

the details of which must be set out in the prospectus.

(1A) COLL 6.8.2 R (2) to COLL 6.8.2 R (7) (Accounting periods) also apply to the half-yearly accounting period and annual accounting period of a qualified investor scheme.

(2) A qualified investor scheme must have an annual income allocation date, which must be within four months of the accounting reference date.

(3) A qualified investor scheme may have an interim income allocation date and interim accounting periods and if it does, the interim income allocation date must be within a reasonable period of the end of the relevant interim accounting period as set out in the prospectus.

(3A) COLL 6.8.3 R (3) (Income allocation and distribution) to COLL 6.8.3A G (Allocation of income to difference classes of unit) also apply to a qualified investor scheme.

(4) [deleted]

(5) [deleted]

(a) [deleted]

(b) [deleted]

06/03/2010

COLL 8.6

Termination, suspension, and schemes of arrangement

01/12/2004

Application

COLL 8.6.1

This section applies to:

(1) an authorised fund manager, the directors, and the depositary of a qualified investor scheme; and

(2) an ICVC which is a qualified investor scheme.

01/04/2004

Termination

COLL 8.6.2

For a qualified investor scheme the provisions in COLL 7.3 to COLL 7.5 will apply as appropriate as if COLL 7 applied to qualified investor schemes.

01/04/2004

Suspension

COLL 8.6.3

(1) The authorised fund manager may, with the prior agreement of the depositary, and must without delay, if the depositary so requires, within any parameters which are fair and reasonable in respect of all the unitholders in the scheme and which are set out in the prospectus, temporarilysuspend dealings in units of the scheme, a sub-fund or a class.

(2) Any suspension within (1) must only be where the authorised fund manager has determined on reasonable grounds that there is good and sufficient reason in the interests of unitholders or potential unitholders and the authorised fund manager must have regard to the interests of all the unitholders in the scheme in reaching such an opinion.

(3) At the commencement of suspension under (1), the authorised fund manager must immediately inform the FSA of the suspension and the reasons for it.

(3A) The authorised fund manager must ensure that a notification of the suspension is made to unitholders of the authorised fund as soon as practicable after suspension commences.

(3B) The authorised fund manager and the depositary must ensure that the suspension only continues for as long as it is justified having regard to the interests of the unitholders.

(4) The suspension of dealings in units must cease, as soon as (2) no longer applies.

(4A) The authorised fund manager and the depositary must formally review the suspension at least every 28 days and inform the FSA of the results of this review and any change to the information provided in (3).

(5) The authorised fund manager must inform the FSA immediately of the resumption of dealings.

06/01/2009

Schemes of arrangement

COLL 8.6.5

In relation to an ICVC or an AUT which is a qualified investor scheme, the provisions in COLL 7.6 (Schemes of arrangement) will apply as appropriate to the authorised fund manager, any other directors of the ICVC and the depositary as if COLL 7.6 applied to a qualified investor scheme and did not exclude unitholders becoming unitholders in another qualified investor scheme.

01/04/2004

COLL 8 Annex 1

Qualified Investor Schemes: eligible investors

06/08/2009

This Annex belongs to COLL 8.1.3R

For the purposes of the on qualified investor schemes: eligible investors (COLL 8.1.3R) a must only record ownership of in the register of a in accordance with the following table:rule firm units qualified investor scheme

Issue or transfer of units to:

Issue or transfer of units (see Note 1) in a qualified investor scheme which is:

Category 1 person
A person:
(1) who is already a participant in an unregulated collective investment scheme or a qualified investor scheme; or
(2) who has been, in the last 30 months, a participant in an unregulated collective investment scheme or a qualified investor scheme.

(1) that collective investment scheme; or
(2) any other collective investment scheme whose underlying property and risk profile are both 'substantially similar' (see Note 2) to those of that collective investment scheme; or
(3) a collective investment scheme which is intended to absorb or take over the assets of that collective investment scheme; or
(4) a collective investment scheme, units in which are being offered by its operator as an alternative to cash on the liquidation of that collective investment scheme.

Category 2 person
A person:
(1) for whom the authorised fund manager or an associate has taken reasonable steps to ensure that investment in the collective investment scheme is suitable; and
(2) who is an 'established' or 'newly accepted' client of the authorised fund manager or of an associate (see Notes 3 & 4).

that collective investment scheme.

Category 3 person
A person who is eligible to participate in a scheme constituted under:
(1) the Church Funds Investment Measure 1958;
(2) section 96 of the Charities Act 2011; or
(3) section 25 of the Charities Act (Northern Ireland) 1964.

any such collective investment scheme

Category 4 person
An eligible employee, that is, a person who is:
(1) an officer;
(2) an employee;
(3) a former officer or employee; or
(4) a member of the immediate family of any of (1)-(3);
of an employer which is (or is in the same group as) the firm, or which has accepted responsibility for the activities of the firm in carrying out the designated investment business in question.

(1) A collective investment scheme of which the instrument constituting the scheme:
(a) restricts the scheme property, apart from cash and near cash, to:
(i) (where the employer is a company) shares in and debentures of the company or any other connected company (see Note 5);
(ii) (in any case), any property, provided that the scheme takes the form of a trust which the firm reasonably believes not to contain any risk that any eligible employee may be liable to make any further payments (other than charges) for investment transactions earlier entered into, which the eligible employee was not aware of at the time he entered into them; and
(b) (in a case falling within A(1) above) restricts participation in the scheme to eligible employees, the employer and any connected company.
(2) Any collective investment scheme provided that the participation of eligible employees is to facilitate their co-investment:
(a) with one or more companies in the same group as their employer (which may include the employer); and/or
(b) with one or more clients of such a company.

Category 5 person
An exempt person (other than a person exempted only by section 39 of the Act (Exemption of appointed representatives)) if the issue or transfer of units relates to a regulated activity in respect of which the person is exempt from the general prohibition.

Any collective investment scheme.

Category 6 person
An eligible counterparty or a professional client.

Any collective investment scheme in relation to which the client is categorised as a professional client or eligible counterparty.

Category 7 person
A person:
(1) in relation to whom the authorised fund manager or an associate has undertaken an adequate assessment of his expertise, experience and knowledge and that assessment gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the person is capable of making his own investment decisions and understanding the risks involved;
(2) to whom the authorised fund manager or an associate has given a clear written warning of the protections he may lose; and
(3) who has stated in writing, in a separate document from the contract, that he is aware of the consequences of losing such protections.

Any collective investment scheme covered by the assessment.

The following Notes explain certain words and phrases used in the table above.

Note 1

Issue or transfer of units to a category of person includes any nominee company acting for such a person.

Note 2

The risk profile of a scheme will be substantially similar to that of another scheme only if there is such similarity in relation to both liquidity and volatility.

Note 3

A person is an 'established client' of another person if he has been and remains an actual client of that person in relation to designated investment business done with or through that other person.

Note 4

A person is a 'newly accepted' client of a firm if:

(1)

a written agreement relating to designated investment business exists between the client and the firm (or, if the client is normally resident outside the United Kingdom, an oral or written agreement); and

(2)

that agreement has been obtained without any contravention of any rule in COBS applying to the firm or (as far as the firm is reasonably aware) any other authorised person.

Note 5

A company is 'connected' with another company if:

(1)

they are in the same group; or

(2)

one company is entitled either alone or with another company in the same group, to exercise or control the exercise of a majority of the voting rights attributable to the share capital, which are exercisable in all circumstances at any general meeting of the other company or of its holding company.

01/07/2012