COLL 11 Annex 2 Contents of the internal conduct of business rules

R

This table belongs to the rule on the conclusion and prescribed content of the internal conduct of business rules (COLL 11.3.2R (2)).

(1)

Provisions related to conflicts of interest

(a)

The internal conduct of business rules referred to in COLL 11.3.2R (2) must include appropriate measures to mitigate conflicts of interest that may arise between:

(i)

the feeder UCITS and the master UCITS; or

(ii)

the feeder UCITS and other Unitholders of the master UCITS;

to the extent that these are not sufficiently addressed by the measures applied by the management company in order to meet the requirements of the provisions listed in (b).

(b)

The provisions referred to in (a) are:

(i)

SYSC 10.1.4 R (Types of conflicts);

(ii)

SYSC 10.1.6 R (Record of conflicts);

(iii)

SYSC 10.1.10 R (Conflicts policy);

(iv)

SYSC 10.1.11 R (Contents of policy);

(v)

SYSC 10.1.17 R (Additional requirements for a management company);

(vi)

SYSC 10.1.19 R (Structure and organisation of a management company);

(vii)

SYSC 10.1.20 R (Avoidance of conflicts of interest for a management company);

(viii)

SYSC 10.1.21 R (Disclosure of conflicts for a management company); and

(ix)

COLL 6.6A.6 R (Strategies for the exercise of voting rights);

or the equivalent provisions implementing articles 12(1)(b) and 14(1)(d) of the UCITS Directive and Chapter III of the UCITS implementing Directive.

[Note: article 15 of the UCITS implementing Directive No 2]

(2)

Provisions related to the basis of investment and divestment by the feeder UCITS:

(a)

a statement of which classes of units of the master UCITS are available for investment by the feeder UCITS;

(b)

the charges and expenses to be borne by the feeder UCITS and details of any rebate or retrocession of charges or expenses by the master UCITS; and

(c)

where applicable, the terms on which any initial or subsequent transfer of assets in kind may be made from the feeder UCITS to the master UCITS.

[Note: article 16 of the UCITS implementing Directive No 2]

(3)

Provisions related to standard dealing arrangements:

(a)

co-ordination of the frequency and timing of the net asset value calculation process and the publication of prices of units;

(b)

co-ordination of transmission of dealing orders by the feeder UCITS, including, where applicable, the role of transfer agents or any other third party;

(c)

where applicable, any arrangements necessary to take account of the fact that units of the master UCITS or the feeder UCITS are listed or traded on a secondary market;

(d)

where necessary, appropriate measures to ensure compliance with the requirements in COLL 11.3.6 R (Avoidance of opportunities for market timing);

(e)

where the units of the feeder UCITS and the master UCITS are denominated in different currencies, the basis for conversion of dealing orders;

(f)

settlement cycles and payment details for purchases or subscriptions and repurchases or redemptions of units of the master UCITS including, where agreed between the parties, the terms on which the master UCITS may settle redemption requests by a transfer of assets in kind to the feeder UCITS, notably where a master UCITS is wound up, merges with another UCITS scheme or EEA UCITS scheme or divides into two or more such schemes; and

(g)

where the instrument constituting the fund1 and prospectus of the master UCITS give it certain rights or powers in relation to Unitholders, and the master UCITS chooses to limit or forego the exercise of all or any such rights and powers in relation to the feeder UCITS, a statement of the terms on which it does so.

1

[Note: article 17 of the UCITS implementing Directive No 2]

(4)

Provisions related to events affecting dealing arrangements:

(a)

the manner and timing of notification by either the master UCITS or the feeder UCITS of the temporary suspension and resumption of repurchase, redemption, purchase or subscription of its units; and

(b)

the arrangements for notifying and resolving pricing errors in the master UCITS.

[Note: article 18 of the UCITS implementing Directive No 2]

(5)

Provisions related to the standard arrangements for the audit report:

(a)

where the feeder UCITS and the master UCITS have the same accounting years, the co-ordination of the production of their periodic reports; and

(b)

where the feeder UCITS and the master UCITS have different accounting years, arrangements for the feeder UCITS to obtain any necessary information from the master UCITS to enable it to produce its periodic reports on time and which ensure that the auditor of the master UCITS is in a position to produce an ad hoc report on the closing date of the accounting year of the feeder UCITS in accordance with COLL 11.5.4 R (Preparation of the audit report).

[Note: article 19 of the UCITS implementing Directive No 2]