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

CIS 8.2 Application

CIS 8.2.1G

This section (CIS 8.2) relates to some of the charges that may be made by authorised fund managers and to increases in them. In CIS 8.5 there are additional rules relating to charges which apply only in relation to AUTs or single-priced AUTs.

Preliminary charge: ICVCs and single-priced AUTs

CIS 8.2.2R
  1. (1)

    In the case of an ICVC or a single-priced AUT, the authorised fund manager must not make any charge or levy in connection with the issue or sale of units except a preliminary charge under this rule (CIS 8.2.2 R) and a dilution levy and SDRT provision under CIS 4.6.3 R.

  2. (2)

    In the case of a single-priced AUT, a preliminary charge must not be made unless:

    1. (a)

      it is permitted by the trust deed; and

    2. (b)

      it is expressed either as a fixed amount or calculated as a percentage of the price.

  3. (3)

    The preliminary charge must not exceed the amount or rate stated in the current prospectus in respect of a unit of any class.

Payments by an ICVC to an ACD

CIS 8.2.3R

No payment may be made or benefit given to the ACD (in any capacity) out of the scheme property, whether by way of remuneration for its services, reimbursement of expenses or otherwise, unless the prospectus specifies each type of payment or benefit that may be made or given, each type of expense that may be so reimbursed and, in the case of each category of remuneration (or remuneration related to a class of share), specifies:

  1. (1)

    how it will be calculated and accrue and when it will be paid; and

  2. (2)

    the maximum and current rates or amount of such remuneration.

Increases in remuneration of an ACD

CIS 8.2.4R

In the case of an ICVC, the ACD must not introduce a new category of remuneration for its services or make any increase in the current rate or amount of its remuneration payable out of the scheme property up to or towards any maximum stated in the prospectus, unless it has complied with CIS 8.2.6 R (Notice of an increase - ICVCs and single-priced AUTs).

Increase in preliminary charge of an authorised fund manager: ICVCs and single-priced AUTs

CIS 8.2.5R

In the case of an ICVC or a single-priced AUT, the authorised fund manager must not introduce a preliminary charge, or increase within any maximum stated (in the case of an ICVC) in the prospectus or (in the case of a single-priced AUT) in the trust deed, the current amount or rate of preliminary charge, unless it has complied with CIS 8.2.6 R (Notice of an increase: ICVCs single-priced AUTs).

Notice of an increase: ICVCs and single-priced AUTs

CIS 8.2.6R

In the case of an ICVC or a single-priced AUT, not less than 90 days before the introduction or increase of any payment under CIS 8.2.4 R or CIS 8.2.5 R, or of any remuneration under CIS 3.5.2 R(13)(2),(3) (within the maximum level stated in the prospectus), the authorised fund manager must:

  1. (1)

    give written notice of that introduction or increase and of the date of its commencement:

    1. (a)

      to all the persons who ought reasonably to be known to it to have made an arrangement for the purchase of units at regular intervals; and

    2. (b)

      (in the case of remuneration of the ACD or the depositary or any third party or any affected person payable out of the scheme property) to all shareholders; and1

  2. (2)

    revise the prospectus to reflect the introduction or new current rate or amount of remuneration or preliminary charge (or, in the case of an ICVC, other remuneration) and the date of its commencement, and make the revised prospectus available.

Redemption charge: ICVCs

CIS 8.2.7R
  1. (1)

    The ACD must not make a redemption charge, except in accordance with (2), (3) and (4)

  2. (2)

    A redemption charge must not exceed the amount or rate of redemption charge stated in the prospectus current at the date when the relevant shares were sold by the ACD or issued through the ACD under CIS 4.5.3 R (Issues and cancellations through the authorised fund manager) and, if there was no such statement, the redemption or cancellation of such shares must not be subject to any redemption charge.

  3. (3)

    The ACD must not introduce a redemption charge or change the rate or method of calculation of a current redemption charge which is adverse to shareholders unless, not less than 90 days before the introduction or change, the ACD has:

    1. (a)

      given written notice of that introduction or change and of the date of its commencement to all the persons who ought reasonably to be known to the ACD to have made an arrangement for the purchase of shares at regular intervals; and

    2. (b)

      revised the prospectus to reflect the introduction or change and the date of its commencement and made the revised prospectus available.

  4. (4)

    If a prospectus contains a statement relating to the amount, or the calculation of the amount, of a redemption charge, it must also contain a statement as to the determination of the order in which shares, which have been acquired at different times by a shareholder, are to be taken to be redeemed or cancelled for the purpose of the imposition of the redemption charge.

Charges for an exchange of units in an umbrella scheme: ICVCs and single-priced AUTs

CIS 8.2.8R
  1. (1)

    In the case of an umbrella scheme which is an ICVC, the ACD may make a charge on an exchange of shares in one sub-fund for shares in another sub-fund, but the charge must not exceed the aggregate of:

    1. (a)

      any excess of the current preliminary charge payable on the shares being acquired over the preliminary charge actually paid on the original acquisition of the shares being redeemed; and

    2. (b)

      the amount of any fee payable on switching stated in the prospectus.

  2. (2)

    The ACD must not make a charge in excess of the fee referred to in (1)(b), unless the prospectus contains a statement as to the determination of the order in which shares which have been acquired at different times by a shareholder are to be taken to be redeemed or cancelled in so far as necessary for calculating the maximum charge for an exchange of shares in one sub-fund for shares in another sub-fund.

  3. (3)

    For an umbrella scheme which is a single-priced AUT, the manager must not make any charge on an exchange of units:

    1. (a)

      if the exchange is the first to be made by the Unitholder during any annual accounting period;

    2. (b)

      in the case of a second or subsequent exchange, unless:

      1. (i)

        such a charge is authorised by the trust deed; and

      2. (ii)

        the amount of the charge is within the maximum for charging on such an exchange stated in the most recently published prospectus.