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Status: You are viewing the version of the handbook as on 2005-06-30.

CIS 7.9 The trustee

Oversight by the trustee of the manager

CIS 7.9.1R
  1. (1)

    The trustee must take reasonable care to ensure:

    1. (a)

      except in relation to CIS 5 or CIS 5A (Investment and borrowing powers), and subject to (4) and (5), that the AUT is managed by the manager in accordance with CIS 7.8.1 R (Management duties); and

    2. (b)

      in relation to CIS 5 or CIS 5A (Investment and borrowing powers), that decisions about the constituents of the scheme property do not cause an infringement of CIS 5 or CIS 5A as appropriate.2

  2. (2)

    The trustee must take reasonable care to ensure on a continuing basis that:

    1. (a)

      the manager is adopting procedures and methods which are appropriate to ensure that:

      1. (i)

        the price of a unit of a single-priced AUT is calculated for each valuation point in accordance with CIS 4; and

      2. (ii)

        the prices at which units of a dual-priced AUT are sold and redeemed are within the limits for the time being prescribed by CIS 15.4.4 R (Sale price parameters) and CIS 15.4.9 R (Redemption price parameters); and

    2. (b)

      the manager makes and retains sufficient records to show compliance with CIS 4 or CIS 15 as the case may be.

  3. (3)

    If the trustee taking reasonable care is at any time not certain of any matter specified in (2), it must inform the FSA.

  4. (4)

    The trustee:

    1. (a)

      must take reasonable care to ensure that:

      1. (i)

        the manager considers whether or not to exercise the power provided by CIS 4.6.3 R (1)(c) and (d) (Dilution levy and SDRT provision) or, for dual-priced AUTs, CIS 15.6.3 R (1)(SDRT provision) and the amount or rate of any SDRT provision that is imposed; and

      2. (ii)

        in that consideration the manager has, so far as the trustee is aware, taken account of all factors that are material and relevant to the manager's decision; and

    2. (b)

      subject to (a), has no duty in respect of the manager's exercise of discretion referred to in (a).1

  5. (5)

    The trustee of a single-priced AUT:

    1. (a)

      must also take reasonable care to ensure that:

      1. (i)

        the manager considers whether or not to exercise the power provided by CIS 4.6.3 R (1)(a) or (b) (Dilution levy and SDRT provision) or CIS 4.6.4 R (Dilution adjustment) (as the case may be) and, if applicable, the amount or rate of any dilution levy or dilution adjustment that is imposed; and

      2. (ii)

        in that consideration the manager has, so far as the trustee is aware, taken account of all factors that are material and relevant to the manager's decision; and

      3. (iii)

        when the manager considers whether or not to exercise the power under CIS 4.6.4 R (Dilution adjustment), the manager has, so far as the trustee is aware, acted in accordance with the restrictions imposed by that rule; and

    2. (b)

      subject to (a), has no duty in respect of the manager's exercise of discretion referred to in (a).1

Valuation and pricing : for AUTs

CIS 7.9.2G

For the purposes of CIS 7.9.1 R(1)(a) and CIS 7.9.1 R(2), CIS 7 Annex 1 G contains guidance on the valuation and pricing of authorised funds, including:

  1. (1)

    pricing controls and the valuation of the scheme property;

  2. (2)

    a trustee's review of the manager's controls and systems;

  3. (3)

    the recording and reporting of incorrect pricing; and

  4. (4)

    procedures to be adopted following incorrect prices, including action that should be taken to rectify any breach.

Duty to inform the FSA : for AUTs

CIS 7.9.3R
  1. (1)

    The trustee must inform the FSA immediately upon becoming aware of any circumstance as a result of which there is no longer certainty that:

    1. (a)

      except in relation to CIS 5 or CIS 5A (Investment and borrowing powers), the AUT is managed by the manager in accordance with CIS 7.8.1 R (1) (Management duties); and2

    2. (b)

      decisions about the constituents of the scheme property do not cause an infringement of CIS 5 or CIS 5A;

    unless the trustee has taken reasonable care to determine that the circumstance in question is not, and is not likely to become, materially significant.2

  2. (2)

    If the trustee becomes aware of a circumstance which it needs to investigate in order to ascertain whether its duty to inform under (1) arises, then:

    1. (a)

      the trustee must inform the FSA of that circumstance immediately after it determines the circumstance is, or is likely to become, materially significant, or if no such determination is made within 90 days of so becoming aware, then the depositary must inform the FSA immediately after the end of the 90 days; or

    2. (b)

      the FSA need not be notified where the trustee determines the circumstance is not, or is not likely to become, materially significant.

  3. (3)

    The trustee must not retire voluntarily unless, before its retirement, it has ensured that the new trustee has been informed of any circumstance of which the retiring trustee has informed the FSA in accordance with (1) or (2) or which is being investigated for the purpose of (2).

Control by the trustee over the scheme property

CIS 7.9.4R
  1. (1)

    The trustee must take all steps and complete all documents which are necessary to secure that transactions for the account of the AUT properly entered into by the manager in accordance with its powers under the rules in this sourcebook are completed.

  2. (2)

    The trustee must take into its custody or under its control all the capital property of the AUT and hold it in trust for the Unitholders in accordance with the rules in this sourcebook and the trust deed.

  3. (3)

    The trustee is responsible for the collection of any income due to be paid for the account of the AUT and for claiming any repayment of tax, and must hold any income received in trust for the Unitholders in accordance with the rules in this sourcebook and the trust deed.

  4. (4)

    The trustee must make and retain such records as are necessary:

    1. (a)

      to enable it to comply with the rules in this sourcebook; and

    2. (b)

      to demonstrate that such compliance by it has been achieved.

Exercise of the rights in respect of the scheme property

CIS 7.9.5R
  1. (1)

    The trustee must take all steps and execute all such documents as are necessary to secure that instructions properly given to it by the manager as to the exercise of rights (including voting rights) attaching to the ownership of scheme property are carried out.

  2. (2)

    The trustee may exercise (or not exercise) any right of voting conferred by any of the scheme property which is:

    1. (a)

      units in any other collective investment scheme managed or otherwise operated by the manager or by an associate of the manager; or

    2. (b)

      shares in an approved investment trust which form part of the scheme property of a feeder fund managed or otherwise operated by the manager or by an associate of the manager;

    but in either case, only after consultation with the manager.

  3. (3)

    The trustee must, upon the written request of the manager, from time to time execute and deliver or cause to be executed or delivered to the manager or its nominees such powers of attorney or proxies as the manager may reasonably require, in such name or names as the manager may request, authorising such attorneys and proxies to vote, consent or otherwise act in respect of all or any part of the scheme property not included in (2).

  4. (4)

    The trustee must, without undue delay, forward to the manager all notices of meetings, reports, circulars, proxy solicitations and other documents of a like nature received by it as registered holder of any investment.

  5. (5)

    In this rule (CIS 7.9.5 R):

    1. (a)

      "voting" includes giving any consent to or approval of any arrangement, scheme or resolution or any alteration in or abandonment of any rights attaching to any part of the scheme property; and

    2. (b)

      "right" includes a requisition or joining in a requisition to convene any meeting or a right to give notice of any resolution or to circulate any statement or to consent to any short notice of any meeting.