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COLL 15.1 Introduction

Application

COLL 15.1.1R
  1. (1)

    1This chapter applies to:

    1. (a)

      an authorised fund manager of an AUT, ACS or an ICVC;

    2. (b)

      any other director of an ICVC;

    3. (c)

      the depositary of an AUT, ACS or an ICVC; and

    4. (d)

      an ICVC,

      which is a long-term asset fund.

  2. (2)

    Where this chapter refers to rules in any other chapter of this sourcebook, those rules and any relevant guidance should be applied as if they referred to long-term asset funds.

Purpose

COLL 15.1.2G
  1. (1)

    1This chapter assists in achieving the statutory objective of securing an appropriate degree of protection for consumers in respect of authorised funds that are only intended for investors that are, in general, prepared to accept a higher degree of risk in their investments or have a higher degree of experience and expertise than investors in a UCITS scheme or a non-UCITS retail scheme.

  2. (2)

    A long-term asset fund is essentially a type of scheme where different types of permitted asset may be included as part of the scheme property, depending on the investment objectives and policy of that scheme and within any restrictions in the rules. The FCA expects the investment strategy of an LTAF to be to invest at least 50% of the scheme property of an LTAF in assets that are illiquid and need to be held over the longer term.

  3. (3)

    In comparison to qualified investor schemes, long-term asset funds have greater flexibility in their investment powers. Therefore, to assist the FCA in achieving the statutory objective of securing an appropriate degree of protection for consumers, this chapter balances this additional flexibility by placing other requirements on the authorised fund managers and depositaries of LTAFs.

  4. (4)

    This chapter ceases to apply where a long-term asset fund has converted to be authorised as a UCITS scheme, a non-UCITS retail scheme or a qualified investor scheme.

Long-term asset funds: eligible investors

COLL 15.1.3R
  1. (1)

    1Subject to (3), the authorised fund manager of a long-term asset fund must take reasonable care to ensure that ownership of units in that scheme is recorded in the register only for a person to whom such units may be promoted without contravening the rules in COBS 4.12A (Promotion of restricted mass market investments)3.

    2
  2. (2)

    In addition to (1), the authorised contractual scheme manager of a long-term asset fund which is an ACS must take reasonable care to ensure that ownership of units in that scheme is only recorded in the register for a person that meets the criteria set out in COLL 15 Annex 1R (ACS Long-term asset funds: eligible investors).

  3. (3)

    The authorised fund manager will be regarded as complying with (1) and (2) to the extent that it can show that it was reasonable for it to rely on relevant information provided by another person.

  4. (4)

    3Where:

    1. (a)

      the scheme is intended only for limited protection LTAF investors or the scheme has a limited protection LTAF class; and

    2. (b)

      COLL 15.5.-10BR to COLL 15.5.-10EG, COLL 15.5.-12BR, COLL 15.7.-12BR, and COLL 15.8.15EG to COLL 15.8.15PR have not been applied in relation to the scheme or the limited protection LTAF class,

    the authorised fund manager must also take reasonable care to ensure that ownership of units in the scheme or class is recorded in the register only for a person who is a limited protection LTAF investor.

Long-term asset funds - explanation

COLL 15.1.4G
  1. (1)

    1Long-term asset funds are authorised funds which are subject to a restriction on promotion. They are3 intended only for professional clients and for retail clients who are sophisticated investors,3 certified high net worth investors, and those retail clients to whom long-term asset funds may be promoted without contravening the rules in COBS 4.12A (Promotion of restricted mass market investments)3.

    2
  2. (2)

    The authorised contractual scheme manager of a long-term asset fund which is an ACS must take reasonable care to ensure that it accepts subscription to units in the LTAF only from a person to whom such units may be promoted without contravening the rules in COBS 4.12A (Promotion of restricted mass market investments)3 and who also meets the criteria in COLL 15 Annex 1R.

    2
  3. (3)
    1. (a)

      3Some of the rules in COLL 15 relating to:

      1. (i)

        alterations to schemes, notices to unitholders and change events for feeder LTAFs (see COLL 15.5.-10BR to COLL 15.5.-10DR);

      2. (ii)

        unitholder meetings (see COLL 15.5.-12BR);

      3. (iii)

        the register (see COLL 15.7.-12BR); and

      4. (iv)

        payments (COLL 15.8.15CR to COLL 15.8.15PR),

      apply where the scheme or (where applicable) a particular class of unit is made available to retail clients who are not limited protection LTAF investors (an LTAF retail class).

    2. (b)

      These rules may also be applied to a scheme or class that is intended only for limited protection LTAF investors. Where the rules are not applied in relation to such a scheme or a class, the authorised fund manager is required under COLL 15.1.3R(4) to take reasonable care to ensure that ownership of units in the scheme or class is recorded in the register only for a person who is a limited protection LTAF investor.

Application and notification procedures

COLL 15.1.5G

1Details of the application procedures in respect of long-term asset funds are contained in COLL 2.1 (Authorised fund applications). Further information is available on the FCA website at www.fca.org.uk/firms/authorised-recognised-funds/apply-fund-authorisation.