1A firm may communicate an invitation or inducement to participate in an unregulated collective investment scheme without breaching the restriction on promotion in section 238 of the Act if the promotion falls within an exemption in the table in (4), as explained further in the Notes.
Where the left-hand column in the table in (4) refers to promotion to a category of person, this means that the invitation or inducement:
is directed at recipients in a way that may reasonably be regarded as designed to reduce, so far as possible, the risk of participation in the collective investment scheme by persons who are not in that category.
A firm may rely on more than one exemption in relation to the same invitation or inducement.
Promotion of an unregulated collective investment scheme which is:
Category 1 person
A. that collective investment scheme; or
Category 2 person
(1) A person:
Category 3 person
A person who is eligible to participate in a scheme constituted under:
(1) the Church Funds Investment Measure 1958;
(2) section 24 of the Charities Act 1993; 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),
1. A collective investment scheme the instrument constituting which:
A. restricts the property of the scheme, apart from cash and near cash, to:
(2) (in any case), any property, provided that the scheme takes the form of:
(ii) 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
2. Any collective investment scheme provided that the participation of eligible employees is to facilitate their co-investment:
Category 5 person
Category 6 person
An exempt person (other than a person exempted only by section 39 of the Act (Exemption of appointed representatives)) if the financial promotion relates to a regulated activity in respect of which the person is exempt from the general prohibition.
Category 7 person
Category 8 person
(1) in relation to whom the firm 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;
Any collective investment scheme covered by the assessment.
The following Notes explain certain words and phrases used in the table above.
The property of a collective investment scheme is 'substantially similar' to that of another collective investment scheme if in both cases the objective is to invest in the same one of the following sectors:
collectable items of a particular description (such as works of art, antique vehicles, etc);
artistic productions (such as films, television, opera, theatre or music);
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
that agreement has been obtained without any contravention of section 238 or 240 of the Act, or of any rule in COBS applying to the firm or (as far as the firm is reasonably aware) any other authorised person.
they are in the same group; or
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.
Firms may use the client categorisation regime that applies to business other than MiFID or equivalent third country business. [This is the case even if the firm will be within the scope of MiFID when it makes the promotion.]
Status: You are viewing the version of the handbook as on 2011-04-29.