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CIS 11.5 Schemes of arrangement

Schemes of arrangement: explanation

CIS 11.5.1G
  1. (1)

    Under section 251 of the Act (Alteration of schemesand changes of manager or trustee) or regulation 21 of the OEIC regulations (The Authority's approval for certain changes in respect of a company), written notice of certain types of proposed change must be given to the FSA. Effect cannot be given to such a change except in accordance with that section or regulation.

  2. (2)

    One of the types of proposal that is subject to section 251 or regulation 21 is a proposal that an ICVC or AUT should be involved in a scheme of arrangement.

  3. (3)

    The issue of units in exchange for assets is subject to:

    1. (a)

      CIS 4.3.3 R (Issue and cancellation of shares by an ICVC);

    2. (b)

      CIS 4.3.4 R (Issue and cancellation of units in an AUT);

    3. (c)

      CIS 11.5.2 R (Scheme of arrangement: requirements); and

    4. (d)

      CIS 15.3.5 R (Issue by trustee).

Schemes of arrangement: requirements

CIS 11.5.2R
  1. (1)

    A scheme of arrangement must not result in holders of units in an authorised fund becoming holders of units in any body other than a regulated collective investment scheme.

  2. (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 excluded any recognised scheme other than a scheme recognised under section 264 of the Act (Schemes constituted in other EEA States).

  3. (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 holders of units in the authorised fund, unless (4) applies.

  4. (4)

    Where, for the purposes of a scheme of arrangement, it is proposed that scheme property attributable to a sub-fund of an umbrella scheme 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 scheme), the proposal must not be implemented without the sanction of:

    1. (a)

      an extraordinary resolution of the holders of units in the sub-fund of that umbrella scheme; and

    2. (b)

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

  5. (5)

    If it is proposed that an authorised fund or sub-fund of an umbrella scheme 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 holders of units 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. (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:

    1. (a)

      is not likely to result in any material prejudice to the interests of the holders of units in the authorised fund; and

    2. (b)

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

    3. (c)

      could be effected without any breach of a rule in CIS 5 (Investment and borrowing powers).