Content Options

COLL 11.6 Winding up, merger and division of master UCITS

Explanation

COLL 11.6.1 G
  1. (1)

    Section 258A(1) and (2) and section 261Z(1) and (2)1 (Winding up or merger of master UCITS) of the Act, in implementation of article 60 of the UCITS Directive, provide1 that where a master UCITS is wound up, for whatever reason, the FCA is to direct the manager and trustee of any AUT or the authorised contractual scheme manager and depositary of any ACS1 which is a feeder UCITS of the master UCITS to wind up the scheme, unless one of the following conditions is satisfied:

    1
    1. (a)

      the FCA approves under section 283A (Master-feeder structures) of the Act the investment by the feeder UCITS of at least 85% in value of the scheme property in units of another master UCITS; or

    2. (b)

      the FCA approves under section 252A or section 261S1 (Proposal to convert to a non-feeder UCITS) of the Act an amendment of the trust deed or contractual scheme deed1 of the feeder UCITS which would enable it to convert into a UCITS scheme which is not a feeder UCITS.

  2. (2)

    Section 258A(3) and (4) and section 261Z(3) and (4)1 of the Act further provide1that where a master UCITS merges with another UCITS or is divided into two or more UCITS, the FCA is to direct the manager and trustee of any AUT or the authorised contractual scheme manager and depositary of any ACS1 which is a feeder UCITS of the master UCITS to wind up the scheme, unless one of the following conditions is satisfied:

    1
    1. (a)

      the FCA approves under section 283A of the Act the investment by the feeder UCITS of at least 85% in value of the scheme property in units of:

      1. (i)

        the master UCITS which results from the merger;

      2. (ii)

        one of the UCITS resulting from the division; or

      3. (iii)

        another UCITS or master UCITS; or

    2. (b)

      the FCA approves under section 252A or section 261S1 of the Act an amendment of the trust deed or contractual scheme deed1 of the feeder UCITS which would enable it to convert into a UCITS scheme which is not a feeder UCITS.

  3. (3)

    The OEIC Regulations (see regulations 33A and 33B respectively) contain corresponding provisions for feeder UCITS which are structured as ICVCs.

Winding up and liquidation of master UCITS: Time limit within which a master UCITS is to be wound up pursuant to FCA direction

COLL 11.6.2 R
  1. (1)

    The commencement of winding up of a UCITS scheme that is a master UCITS must take place no sooner than 3 months after a notification is made to its Unitholders and, where applicable, the competent authorities of the feeder UCITSHome State, informing them of the binding decision to wind up the master UCITS.

  2. (2)

    Paragraph (1) is without prejudice to any provision of the insolvency legislation in force in the United Kingdom regarding the compulsory liquidation of AUTs, ACSs1 or ICVCs.

[Note: article 60(4) last sentence of the UCITS Directive]

Application for approval by a feeder UCITS where a master UCITS is wound up

COLL 11.6.3 R

Where the authorised fund manager of a UCITS scheme that is a feeder UCITS is notified that its master UCITS is to be wound up, it must submit to the FCA the following:

  1. (1)

    where the authorised fund manager of the feeder UCITS intends to invest at least 85% in value of the scheme property in units of another master UCITS:

    1. (a)

      its application for approval under section 283A of the Act for that investment;

    2. (b)

      where applicable, its notice under section 251 (Alteration of schemes and changes of manager or trustee) of the Act, section 261Q of the Act (Alteration of contractual schemes and changes of operator or depositary)1 or regulation 21 (The Authority's approval for certain changes in respect of a company) of the OEIC Regulations of any proposed amendments to its instrument constituting the fund;2

      2
    3. (c)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) (Provision and filing of the prospectus) and COLL 4.7.7 R (1) (Revision and filing of key investor information); and

    4. (d)

      the other documents required in accordance with COLL 11.2.2 R (Application for approval of an investment in a master UCITS);

  2. (2)

    where the authorised fund manager of the feeder UCITS intends to convert it into a UCITS scheme that is not a feeder UCITS:

    1. (a)

      its application for approval under section 252A or section 261S1 of the Act or regulation 22A of the OEIC Regulations of the proposed amendments to its instrument constituting the fund;2 and

      2
    2. (b)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1); and

  3. (3)

    where the authorised fund manager of the feeder UCITS intends to wind up the scheme, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of a proposal to that effect.

[Note: article 20(1) of the UCITS implementing Directive No 2]

Timing of applications for approval: winding up of a master UCITS

COLL 11.6.4 R
  1. (1)

    The information in COLL 11.6.3 R must be submitted no later than two months after the date on which the master UCITS has informed the authorised fund manager of the feeder UCITS of the binding decision to be wound up.

  2. (2)

    By way of derogation from (1), where the master UCITS has informed the authorised fund manager of the feeder UCITS of the binding decision to be wound up more than five months before the date at which the winding up will start, the authorised fund manager must submit the information to the FCA at the latest three months before the day the winding up will start.

[Note: article 20(1) first sentence and article 20(2) of the UCITS implementing Directive No 2]

Application for approval by a feeder UCITS where a master UCITS merges or divides

COLL 11.6.5 R

Where the authorised fund manager of a UCITS scheme that is a feeder UCITS is notified that the master UCITS is to merge with another UCITS scheme or EEA UCITS scheme or divide into two or more such schemes, it must submit to the FCA the following:

  1. (1)

    where the authorised fund manager of the feeder UCITS intends it to continue to be a feeder UCITS of the same master UCITS:

    1. (a)

      its application under section 283A of the Act, for approval;

    2. (b)

      where applicable, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of any proposed amendments to the instrument constituting the fund;2 and

      2
    3. (c)

      where applicable, the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1);

  2. (2)

    where the authorised fund manager of the feeder UCITS intends it to become a feeder UCITS of another master UCITS resulting from the proposed merger or division of the master UCITS, or intends the feeder UCITS to invest at least 85% in value of the scheme property in units of another master UCITS not resulting from the merger or division:

    1. (a)

      its application under section 283A of the Act for approval of that investment;

    2. (b)

      where applicable, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of any proposed amendments to the instrument constituting the fund;2

      2
    3. (c)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1);

    4. (d)

      the other documents required in accordance with COLL 11.2.2 R;

  3. (3)

    where the authorised fund manager of the feeder UCITS intends it to convert into a UCITS scheme that is not a feeder UCITS:

    1. (a)

      its application for approval under section 252A or section 261S1 of the Act or regulation 22A of the OEIC Regulations of the proposed amendments to the instrument constituting the fund;2 and

      2
    2. (b)

      the amendments to its prospectus and its key investor information in accordance with COLL 4.2.3 R (1)(b) and COLL 4.7.7 R (1); and

  4. (4)

    where the authorised fund manager of the feeder UCITS intends to wind up the scheme, a notice under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations of a proposal to that effect.

[Note: article 22(1) of the UCITS implementing Directive No 2]

Interpretation of COLL 11.6.5R

COLL 11.6.6 R
  1. (1)

    For the purposes of COLL 11.6.5R (1), a feeder UCITS will be considered as continuing to be a feeder UCITS of the same master UCITS where:

    1. (a)

      the master UCITS is the receiving UCITS in a proposed UCITS merger; or

    2. (b)

      the master UCITS is to continue materially unchanged as one of the resulting UCITS schemes or EEA UCITS schemes in a proposed division.

  2. (2)

    For the purposes of COLL 11.6.5R (2), a feeder UCITS will be considered as becoming a feeder UCITS of another master UCITS resulting from the merger or division of the master UCITS where:

    1. (a)

      the master UCITS is the merging UCITS and, as a result of the UCITS merger, the feeder UCITS becomes a Unitholder of the receiving UCITS; or

    2. (b)

      the feeder UCITS as a result of the division becomes a Unitholder of a UCITS scheme or EEA UCITS scheme that is materially different to the master UCITS.

[Note: article 22(2) of the UCITS implementing Directive No 2]

Timing of applications for approval: merger or division of a master UCITS

COLL 11.6.7 R
  1. (1)

    The information in COLL 11.6.5 R must be submitted to the FCA no later than one month after the date on which the authorised fund manager of the feeder UCITS has received the information of the planned merger or division in accordance with regulation 13(6) of the UCITS Regulations 2011.

  2. (2)

    By way of derogation from (1), where the master UCITS provides the information referred to in, or comparable with, COLL 7.7.10 R (Information to be given to Unitholders) to the authorised fund manager of the feeder UCITS more than four months before the proposed effective date of the merger or division of the master UCITS, the authorised fund manager must submit the information to the FCA at least three months before the proposed effective date.

[Note: article 22(1) first sentence and article 22(3) of the UCITS implementing Directive No 2]

Repurchase or redemption of units in a master UCITS

COLL 11.6.8 G

Regulation 12(4) (Right of redemption) of the UCITS Regulations 2011 provides that where a master UCITS merges with another scheme, the master UCITS must enable its feeder UCITS to repurchase or redeem all the units of the master UCITS in which they have invested before the consequences of the merger become effective, unless the FCA approves the continued investment by the feeder UCITS in a master UCITS resulting from the merger.

COLL 11.6.9 R
  1. (1)

    Where:

    1. (a)

      the authorised fund manager of a feeder UCITS has submitted the documents required under COLL 11.6.5R (2) and (3); and

    2. (b)

      does not receive the necessary approvals from the FCA by the business day preceding the last day on which the authorised fund manager of the feeder UCITS can request repurchase or redemption of its units in the master UCITS;

      the authorised fund manager of the feeder UCITS must exercise the right to repurchase or redeem its units in the master UCITS under regulation 12(4) of the UCITS Regulations 2011.

  2. (2)

    The authorised fund manager of the feeder UCITS must also exercise the right in (1) to ensure that the right of its own Unitholders to request repurchase or redemption in the feeder UCITS in accordance with COLL 4.8.3 R (1)(d) (Information to be provided to Unitholders) is not affected.

  3. (3)

    Before exercising the right in (1), the authorised fund manager of the feeder UCITS must consider any available alternative solutions which may help to avoid or reduce transaction costs or other negative impacts for its own Unitholders.

  4. (4)

    Where the authorised fund manager of the feeder UCITS requests repurchase or redemption in accordance with (1), it must receive one of the following:

    1. (a)

      the repurchase or redemption proceeds in cash; or

    2. (b)

      some or all of the repurchase or redemption proceeds as a transfer in kind, where the authorised fund manager of the feeder UCITS so wishes and where its instrument constituting the fund2 and the master-feeder agreement provide for it.

      2
  5. (5)

    Where (4)(b) applies, the authorised fund manager of the feeder UCITS may realise any part of the transferred assets for cash at any time.

[Note: articles 23(4) and 23(5) of the UCITS implementing Directive No 2]

Conditions on reinvestment of cash

COLL 11.6.10 R

Where:

  1. (1)

    the FCA approves an application under sections 283A (Master-feeder structures), 252A or 261S1 (Proposal to convert to a non-feeder UCITS) of the Act or regulation 22A of the OEIC Regulations that arises as a result of the winding-up, merger or division of the master UCITS (other than an application pursuant to COLL 11.6.5R (1)); and

    1
  2. (2)

    the authorised fund manager of the feeder UCITS holds or receives cash in accordance with COLL 11.6.9R (4) or as a result of a winding-up;

the authorised fund manager may not re-invest that cash, except for the purpose of efficient cash management, before the date on which the feeder UCITS invests in units of the master UCITS in accordance with COLL 11.3.2R (3) (Master-feeder agreement and internal conduct of business rules) or in accordance with its new investment objectives and policy.

[Note: article 23(6) of the UCITS implementing Directive No 2]

COLL 11.6.11 G

COLL 11.6.10 R gives effect to sections 283A(4), 252A(8) and 261S(8)1 of the Act and regulation 22A(4) of the OEIC Regulations which require the FCA to impose certain conditions when approving the re-investment of cash received from a master UCITS which has been wound up.

1

Requirements following approval by the FCA

COLL 11.6.12 R

Where the authorised fund manager of a feeder UCITS has submitted the documents required under COLL 11.6.3R (1), COLL 11.6.3R (2), COLL 11.6.5R (1), COLL 11.6.5R (2) or COLL 11.6.5R (3) and has received written notice of any required approvals from the FCA, it must:

  1. (1)

    inform the master UCITS of those approvals; and

  2. (2)

    in the case of the required approvals received in respect of documents submitted under COLL 11.6.3 R (1) and COLL 11.6.5 R (2), take the necessary measures to comply with the requirements of COLL 4.8.3 R as soon as possible.

[Note: articles 21(2), 21(3), 23(2) and 23(3) of the UCITS implementing Directive No 2]

Notification by feeder UCITS of intention to be wound up

COLL 11.6.13 R

Where the authorised fund manager of a feeder UCITS gives notice to the FCA under section 251 or section 261Q1 of the Act or regulation 21 of the OEIC Regulations that it intends to wind up the scheme, it must inform:

  1. (1)

    the Unitholders of the feeder UCITS; and

  2. (2)

    where notice is given under COLL 11.6.5R (4) (Application for approval by a feeder UCITS where a master UCITS merges or divides), the authorised fund manager of the master UCITS;

of its intention without undue delay.

[Note: articles 20(3) and 22(4) of the UCITS implementing Directive No 2]