Content Options

COLL 1.1 Applications and purpose

Application

COLL 1.1.1 G
  1. (1)

    This sourcebook, except for COLL 9 (Recognised schemes), applies to:

    1. (a)

      investment companies with variable capital (ICVCs);

    2. (b)

      ACDs, other directors and depositaries of ICVCs;

      3
    3. (c)

      managers and trustees of authorised unit trust schemes (AUTs); 3

      4
    4. (cA)

      authorised fund managers, depositaries and nominated partners of authorised contractual schemes (ACSs); and4

    5. (d)

      to the extent indicated, UK UCITS management companies operating EEA UCITS schemes.3

  2. (2)

    COLL 9 applies to operators of schemes that are recognised schemes and to those seeking to secure recognised status for such schemes.

  3. (3)

    COLL 11.5 (Auditors) also applies to auditors of master UCITS and feeder UCITS which are UCITS schemes.3

  4. (4)

    This sourcebook also applies to EEA UCITS management companies of UCITS schemes to the extent required by the UCITS Directive.3

COLL 1.1.1A R

1This sourcebook does not apply to an incoming ECA provider acting as such.

EEA territorial scope: compatibility with European law

COLL 1.1.1B R
  1. (1)

    3The territorial scope of this sourcebook is modified to the extent necessary to be compatible with European law.

  2. (2)

    This rule overrides every other rule in this sourcebook.

EEA UCITS management companies of UCITS schemes

COLL 1.1.1C G

3An EEA UCITS management company that is providing collective portfolio management services for a UCITS scheme from a branch in the United Kingdom, or under the freedom to provide cross border services, is advised that where it operates a UCITS scheme as its designated management company, it meets the Glossary definition of an "ACD" of an ICVC or a "manager" of an AUT or an authorised contractual scheme manager of an ACS,4 which in either case is a UCITS scheme. Such firms should be aware that provisions in this sourcebook that apply to an ACD,4 a manager or an authorised fund manager4 of a UCITS scheme accordingly apply to them, unless otherwise indicated: see COLL 12.3 (EEA UCITS management companies) for further details.

4

Purpose

COLL 1.1.2 G
  1. (1)

    The general purpose of this sourcebook is to contribute to the FCA meeting its statutory objectives of the protection of consumers. It provides a regime of product regulation for authorised funds, which sets appropriate standards of protection for investors by specifying a number of features of those products and how they are to be operated.

  2. (2)

    In addition, this sourcebook implements part of the requirements of the UCITS Directive to meet EU law 2 obligations relevant to authorised funds and management companies,3 with other requirements implemented in other parts of the Handbook.

    2

UCITS management company and product passport

COLL 1.1.2A G

3 COLL 12 provides for the application of COLL in relation to the management company passport under the UCITS Directive. It explains how the passporting regime applies to both UK UCITS management companies and EEA UCITS management companies when providing collective portfolio management services on a cross-border basis. It also explains how the product passport (for UCITS) operates and how UCITS schemes may be marketed in other EEA States.

The Collective Investment Schemes Information Guide

COLL 1.1.3 G

The Collective Investment Schemes Information Guide COLLG provides some general background material on the regulatory structure surrounding scheme regulation in the UK.

COLL 1.2 Types of authorised fund

Types of authorised fund

COLL 1.2.1 R

An application for an authorisation order must propose that the scheme be one of the following types:

  1. (1)

    a UCITS scheme;

  2. (2)

    a non-UCITS retail scheme, including:3

    33
    1. (a)

      a non-UCITS retail scheme operating as a fund of alternative investment funds (FAIF); and3

    2. (b)

      a non-UCITS retail scheme which is an umbrella with sub-funds operating as:3

      1. (i)

        FAIFs;3

      2. (ii)

        standard non-UCITS retail schemes; or3

      3. (iii)

        a mixture of (i) and (ii); or3

  3. (3)

    a qualified investor scheme.

Umbrella schemes

COLL 1.2.1A G

2Any authorised fund, except for an ACS that is a limited partnership scheme,4 may be structured as an umbrella with separate sub-funds.

[Note: article 1(2) second paragraph of the UCITS Directive]

Types of authorised fund - explanation

COLL 1.2.2 G
  1. (1)

    UCITS schemes have to comply with the conditions necessary in order to enjoy the rights available under the UCITS Directive. Such schemes must in particular comply with:

    1. (a)

      COLL 3.2.8 R (UCITS obligations); and

    2. (b)

      the investment and borrowing powers rules for UCITS schemes set out in COLL 5.2 to COLL 5.5 .

  2. (2)
    1. (a)

      5Non-UCITS retail schemes are schemes that do not comply with all the conditions set out in the UCITS Directive.

    2. (b)

      5A non-UCITS retail scheme is an AIF and must be managed by an AIFM.

    3. (c)

      5Under article 43 of AIFMD, where an AIF can be marketed to retail clients, Member States may impose stricter requirements on the AIFM or the AIF than the requirements that apply to an AIFmarketed only to professional clients.

    4. (d)

      5This sourcebook contains the stricter requirements for a non-UCITS retail scheme.

    5. (e)

      5A full-scope UK AIFM must also comply with the requirements in FUND and any other applicable provisions of AIFMD.

    6. (f)

      5Non-UCITS retail schemes could become UCITS schemes, provided they are changed, so as to comply with the conditions set out in the UCITS Directive.

    7. (g)

      5Non-UCITS retail schemes operating as FAIFs have wider powers to invest in collective investment schemes than other non-UCITS retail schemes.

    1
  3. (2A)

    A non-UCITS retail scheme may also be structured as an umbrella with sub-funds operating as:3

    1. (a)

      FAIFs;3

    2. (b)

      standard non-UCITS retail schemes; or3

    3. (c)

      a mixture of (a) and (b).3

      In these cases, rules relating to investment powers and borrowing limits apply to each sub-fund as they would to a scheme.3

  4. (3)
    1. (a)

      5Qualified investor schemes may only be promoted to:

      1. (i)

        5professional clients; and

      2. (ii)

        5retail clients who are sophisticated investors,

      5on the same terms as non-mainstream pooled investments.

    2. (b)

      5A qualified investor scheme is an AIF and must be managed by an AIFM.

    3. (c)

      5Under article 43 of AIFMD, where an AIF can be marketed to retail clients, Member States may impose stricter requirements on the AIFM or the AIF than the requirements that apply to an AIFmarketed only to professional clients.

    4. (d)

      5This sourcebook contains the stricter requirements for a qualified investor scheme.

    5. (e)

      5A full-scope UK AIFM must also comply with the requirements in FUND and any other applicable provisions of AIFMD.

    6. (f)

      5Qualified investor schemes could change to become non-UCITS retail schemes or UCITS schemes.

  5. (4)

    The changes referred to in (2) and (3) require approval by the FCA and further information on that process is provided in4COLLG 3A.1.6 G4 (Notification of changes to unit trusts (sections 251 and 252A4)) and 4COLLG 4A.1.3 G4 (Notification of changes to ICVCs (Regulations 21 and 22A4)).

    44

UCITS schemes

COLL 1.2.3 R

2A UCITS scheme is deemed to be established in the United Kingdom, irrespective of whether it has been established under the laws of England and Wales, Scotland or Northern Ireland.

[Note: article 4 of the UCITS Directive]

Master UCITS

COLL 1.2.4 R

2A master UCITS that has two or more feeder UCITS as its only Unitholders satisfies the requirement that a UCITS scheme must invest capital raised from the public.

[Note: article 58(4) of the UCITS Directive]

Pension feeder funds

COLL 1.2.5 G
  1. (1)

    5Except for (2), all provisions of the Handbook that apply:

    1. (a)

      to a feeder UCITS are also applicable to a pension feeder fund that is constituted as a UCITS scheme; and

    2. (b)

      to a feeder NURS are also applicable to a pension feeder fund that is constituted as a non-UCITS retail scheme.

  2. (2)

    A pension feeder fund may not invest in units of an EEA UCITS scheme unless that scheme is a recognised scheme under section 264 of the Act (see COLL 5.6.27R and COLL 5.8.2AR).