1This chapter applies to the following issuers with, or applying for, a listing of their securities:

1. (1)

   an investment company;

2. (2)

   an investment trust;

3. (3)

   an overseasinvestment company seeking a primary listing;

4. (4)

   a property investment company;

5. (5)

   an authorised property unit trust;

6. (6)

   an open-ended investment company which is a recognised scheme;

7. (7)

   an open-ended investment company which is an unrecognised scheme; and

8. (8)

   an issuer of securities falling within paragraph 1 of Schedule 11A to the Act (Transferable securities).

To be listed, an applicant must comply with the following:

1. (1)

   those responsible for managing the investments must have adequate experience;

2. (2)

   there must be an adequate spread of investment risk;

3. (3)

   the applicant must be a passive investor and must not control or seek to control, or be actively involved in the management of, any companies or businesses in which it invests; and

4. (4)

   the applicant must not, to a significant extent, be a dealer in investments.

An investment company must either:

1. (1)

   satisfy the conditions set out in LR 6.1.3 R (Audited accounts for three years) and LR 6.1.4 R (Nature and duration of business activities); or

2. (2)

   satisfy the FSA that its directors and investment managers have sufficient and satisfactory experience in the management of investments of the type in which the company proposes to invest.

LR 6.1.16 R (Working capital) does not apply to an investment company.

The board of directors or equivalent body of an investment company must be able to demonstrate that it will act independently of any investment managers of the investment company.

In complying with LR 15.2.6 R:

1. (1)

   a majority of the board or equivalent body must not be:

   1. (a)

      directors, employees or professional advisers to other investment companies that are:

      1. (i)

         managed by any such investment managers; or

      2. (ii)

         managed by any other company in the same group as any such investment managers; or

   2. (b)

      directors, employees, partners, officers, or professional advisers to any such investment manager or any other company in the same group as any such investment manager;

2. (2)

   no more than one director, partner, employee, or professional adviser to each such investment manager or any other company in the same group as any such investment manager may be a director of the investment company; and

3. (3)

   a director as described in paragraph (2) must be subject to annual re-election by shareholders.

In complying with LR 15.2.8 G the chairman of the board must not be:

1. (1)

   a director, employee, officer, partner or professional adviser to any investment manager of the investment company; or

2. (2)

   a director, employee, officer, partner, or professional adviser to any other company in the same group as any investment manager of the investment company; or

3. (3)

   a director of any other investment company managed by any of the same investment managers; or

4. (4)

   a director of any other company in the same group as any of the same investment managers.

1. (1)

   No more than 10%, in aggregate, of the value of the total assets of the issuer at the time of admission may be invested in other listedinvestment companies or listedinvestment trusts.

2. (2)

   The restriction set out in paragraph (1) does not apply to investments in investment company or investment trusts which themselves have stated investment policies to invest no more than 15% of their total assets in other listedinvestment companies or listedinvestment trusts.

The distribution of surpluses, as dividend, arising from the realisation of investments must be prohibited and a provision to this effect must be contained in the issuer'sconstitution.

An open-ended investment company that:

1. (1)

   is an unrecognised scheme; and

2. (2)

   is treated as a closed-endedinvestment company;

must comply with the requirements for listing, the continuing obligations that are applicable to investment companies and the requirements set out in LR 15.3.2 G, LR 15.7.4 R and LR 15.7.10 G.

To be listed, an investment trust must comply with LR 2 and LR 6 with the following modifications and additional conditions:

1. (1)

   the requirements set out in LR 15.2.2 R to LR 15.2.9 R;

2. (2)

   LR 15.2.10R (1); and

3. (3)

   LR 15.2.11 R.

An application for listing for a new applicant, must set out which of the categories in LR 15.1.1 R applies to the issuer.

An application for the listing of securities of a multi-class fund or umbrella fund must provide details of the various classes or designations of securities intended to be issued by the issuer.

A multi-class or umbrella fund which is open-ended and which seeks to create a new class of security without increasing its share capital for which listing has previously been granted must provide the FSA with the details of the new class and no further application for listing is required.

An existing listedclass may not be converted into a new class or an unlisted class unless approval has been given by the shareholders of that existing class.

1. (1)

   This rule applies to:

   1. (a)

      open-ended investment companies; and

   2. (b)

      authorised property unit trusts.

2. (2)

   A new applicant may apply to list such equity securities as it requires for future issues.

An investment company must comply with LR 9 (continuing obligations) subject to the modifications and additional conditions set out in LR 15.4.3 G to LR 15.4.17 R.

The FSA may dispense with the provisions of the Model Code to allow, during a close period:

1. (1)

   dealings by persons discharging managerial responsibilities in an investment company;

2. (2)

   purchases by the investment company of its own securities; and

3. (3)

   sales of treasury shares for cash or transfers (except for sales and transfers by an investment company of treasury shares in the circumstances set out in LR 12.6.2 R);

if the FSA is satisfied that all inside information which the directors and the company may have in periods leading up to an announcement of results has previously been notified to a RIS.

An investment company must notify any change in its taxation status to a RIS as soon as possible.

An investment company must notify a RIS of the following:

1. (1)

   within two business days of the end of each calendar month, a list of all investments in other listedinvestment companies and listedinvestment trusts, as at the last business day of that month, which themselves do not have stated investment policies to invest no more than 15% of their total assets in other listedinvestment companies or listedinvestment trusts; and

2. (2)

   within two business days of the end of each quarter, a list of all investments with a value greater than 5% of the company's total assets and at least the 10 largest investments as at the last business day of that quarter.

In addition to the requirements of LR 9.8 (Annual report and accounts) an investment company must include in its annual report and accounts:

1. (1)

   a statement, set out in a prominent position, as to whether in the opinion of the directors the continuing appointment of the investment manager on the terms agreed is in the interests of shareholders as a whole, together with a statement of the reasons for this view;

2. (2)

   a summary of the principal contents of any agreements between the investment company and each of the investment managers, including but not limited to any provisions relating to compensation payable in the event of termination of the agreement;

3. (3)

   the name of the investment managers together with an indication of the terms and duration of their appointment, the basis for their remuneration and any arrangements relating to the termination of their appointment; and

4. (4)

   a list of all investments with a value greater than 5% of the investment company's investment portfolio, and at least the 10 largest investments.

The list described in LR 15.4.12R (4) should include, with comparative figures where relevant:

1. (1)

   the value of each investment; and

2. (2)

   for each investment which is not quoted on a stock exchange the following information:

   1. (a)

      a brief description of the business;

   2. (b)

      the proportion of capital owned or intended to be owned;

   3. (c)

      the cost of the investment and aggregate market value, if any, at the latest practicable date;

   4. (d)

      a director's valuation at the latest practicable date, if different from the value in paragraph (c) or if there is no market value;

   5. (e)

      the earnings per share for the latest audited financial year;

   6. (f)

      the dividend per share received in the most recent financial year, including any abnormal dividends or other payments;

   7. (g)

      dividend cover or underlying earnings for the latest audited financial year;

   8. (h)

      the net assets attributable to the investment as at the date of the latest audited balance sheet; and

   9. (i)

      an analysis of any provision for diminution in value of investments, naming the investments against which provision has been made and stating in respect of each investment:

      1. (i)

         the cost;

      2. (ii)

         any provision made;

      3. (iii)

         the book value; and

      4. (iv)

         the reason for the provision.

In addition to the requirements in LR 9 (Continuing obligations) for half-yearly reports and preliminary statements of annual results an investment company must include information showing the split between:

1. (1)

   dividend and interest received; and

2. (2)

   other forms of income (including income of associated companies).

For an investment company,

1. (1)

   LR 9.8.8 R does not apply in respect of the Combined Code; and

2. (2)

   LR 9.8.6R (6) does not apply in respect of principles B.1 to B.2 and provisions B.1.1 to B.1.6 and B.2.1 to B.2.4 of the Combined Code except to the extent that they relate specifically to non-executive directors.

LR 11 (Related party transactions) applies to an investment company.

In addition to the definition in LR 11.1.4 R a related party includes any investment manager of the investment company or investment trust.

1. (1)

   An overseasinvestment company with a primary listing is not required to have a registrar situated in the United Kingdom if it has a transfer agent in the United Kingdom that has authority to remit transfers to the overseas registrar.

2. (2)

   Any change in transfer agent must be notified to a RIS as soon as possible.

An investment trust must comply with LR 9 (Continuing obligations) subject to the modifications and additional conditions set out in LR 15.4.20 R to LR 15.4.25 R.

An investment trust must comply with:

1. (1)

   LR 15.2.5 R to LR 15.2.9 R;

2. (2)

   LR 15.4.4 R to LR 15.4.9 R; and

3. (3)

   LR 15.4.11 R to LR 15.4.15 R.

In addition to the requirement set out in LR 15.4.12 R, an investment trust must include in its annual report and accounts:

1. (1)

   an analysis of the investment portfolio by broad industrial or commercial sector;

2. (2)

   an analysis of the investment portfolio between equity shares, convertible securities, fixed income securities and other investments;

3. (3)

   an analysis of income between dividends, interest and other forms of income;

4. (4)

   an analysis, where material to an appreciation of the investment trust's financial position, of realised and unrealised profits and losses as between investments quoted on a stock exchange and those that are not quoted on a stock exchange; and

5. (5)

   either:

   1. (a)

      a statement confirming that:

      1. (i)

         HM Revenue and Customs has approved it as an investment trust for the purpose of section 842 of the Income and Corporation Taxes Act 1988, specifying the last accounting period in respect of which such approval has been given; and

      2. (ii)

         the investment trust has subsequently directed its affairs so as to continue to be so approved; or

   2. (b)

      a statement, in the case of a newly listedinvestment trust confirming that:

      1. (i)

         the investment trust has announced that it will direct its affairs so as to enable it to seek approval from the HM Revenue and Customs; and

      2. (ii)

         it has subsequently directed its affairs so as to enable it to be so approved.

1. (1)

   Unless authorised by the shareholders, an investment company that is closed-ended may not issue further shares of the same class as existing shares for cash at a price below the net asset value per share of those shares unless they are first offered pro rata to existing holders of shares of that class.

2. (2)

   When calculating the net asset value per share treasury shares held by the company should not to be taken into account.

LR 10 (Significant transactions) applies to:

1. (1)

   investment trusts; and

2. (2)

   closed-endedinvestment companies;

excluding any transaction that falls within the stated investment policies of the investment trust or closed-endedinvestment company.

LR 15.4.16 R to LR 15.4.17 R apply to an investment trust.

This section applies to a property investment company.

To be listed, a property investment company must comply with LR 2 (Requirements for listing - all securities) and LR 6 (Additional requirements for listing for equity securities), with the modifications and additional conditions set out in LR 15.5.3 G to LR 15.5.10 R and, if applicable, LR 15.5.11 R to LR 15.5.13 R, and either:

1. (1)

   the requirements for listing for an investment company set out in LR 15.2.2 R to LR 15.2.14 R and LR 15.2.18 G ; or

2. (2)

   the requirements for listing for an investment trust set out in LR 15.2.2 R and LR 15.2.17 R to LR 15.2.18 G.

In addition to complying with LR 15.2.6 R the board of directors of a property investment company must be similarly independent of any property manager or property adviser of the company.

No single property (including all adjacent or contiguous properties) can, at the time of initial listing, constitute more than 15% of the total assets of a property investment company, consolidated where applicable.

Income receivable from any single tenant, or tenants within the same group in any one financial year, must not exceed 20% of the total rental income of a property investment company in that financial year.

At least 90% by value of properties held by a property investment company must be in the form of freehold or long leasehold properties or the equivalent.

The term "long leasehold" in LR 15.5.7 R means a leasehold with over 60 years remaining either:

1. (1)

   at the time of initial listing; or

2. (2)

   at the time of acquisition of the leasehold, if acquired subsequent to initial listing.

The proportion of a property investment company's property portfolio which is unoccupied or not producing income or which is in course of substantial development, redevelopment or refurbishment must not exceed 25% of the value of the portfolio.

A property investment company that is not an investment trust must not retain more than 15% of its net profits, before gains and losses on the disposal of properties and other investments.

A new applicant must have net assets of at least 30 million, including any funds raised at the time of listing.

The articles of association of a new applicant must prohibit the borrowings of a property investment company from exceeding 65% of the gross assets of the company, consolidated where applicable.

A new applicant must ensure that all directors, associates of directors and promoters agree not to dispose of their shares, other than among themselves, for a period of two years from the date on which dealings first commence.

A property investment company must comply with LR 9 (Continuing obligations) and LR 15.4 subject to the modifications and additional conditions set out in LR 15.5.15 R to LR 15.5.23 R.

1. (1)

   A property investment company must comply, at all times, with:

   1. (a)

      LR 15.5.3 G to LR 15.5.4 R;

   2. (b)

      LR 15.5.6 R to LR 15.5.8 R;

   3. (c)

      LR 15.5.9 R except that properties acquired by a propertyinvestment company need not be counted as part of the property portfolio until six months after acquisition;

   4. (d)

      LR 15.5.10 R; and

   5. (e)

      LR 15.5.13 R.

2. (2)

   No single property (including all adjacent or contiguous properties) can, at the time of acquisition, constitute more than 15% of the gross assets of a property investment company, consolidated where applicable.

A property investment company must inform the FSA as soon as possible if it ceases to comply with LR 15.5.15 R.

A property investment company's annual accounts must:

1. (1)

   state whether LR 15.5.15 R has been met throughout the accounting period;

2. (2)

   provide an explanation for any failures to meet LR 15.5.15 R throughout the accounting period; and

3. (3)

   include a summary of the valuation, carried out in accordance with LR 15.5.18 R, of the property investment company's portfolio.

A valuation required by LR 15.5.17R (3) must:

1. (1)

   either:

   1. (a)

      be made in accordance with the Appraisal and Valuation Standards (5th edition) issued by the Royal Institution of Chartered Surveyors; or

   2. (b)

      where the valuation does not comply in all applicable respects with the Appraisal and Valuation Standards (5th edition) issued by the Royal Institution of Chartered Surveyors, include a statement which sets out a full explanation of such non-compliance; and

2. (2)

   be carried out by an external valuer as defined in the Appraisal and Valuation Standards (5th edition) issued by the Royal Institution of Chartered Surveyors.

The summary described in LR 15.5.17R (3) must include:

1. (1)

   the total value of properties held at the year end;

2. (2)

   totals of the cost of properties acquired;

3. (3)

   the net book value of properties disposed of during the year; and

4. (4)

   an indication of the geographical location and type of properties held at the year end.

In addition to the notifications required by LR 9.6.11 R to LR 9.6.15 G, a property investment company must, so far as practicable, consult the FSA in advance about any proposed changes to the board in order that the FSA may consider whether the board still has the experience required by LR 15.5.3 G.

An acquisition or disposal of a property by a property investment company will be treated in the same way as acquisitions and disposals of properties by a property company as set out in LR 10.7.1 R to LR 10.7.4 G.

A listedproperty investment company which applies to be listed as a property company will be treated as a new applicant and its existing listing will be suspended.

This section applies to an authorised property unit trust.

To be listed, an authorised property unit trust must comply, with appropriate modifications to reflect the legal form of the trust, with LR 2 (Requirements for listing - all securities) and LR 6 (Additional requirements for listing for equity securities), with the following modifications and additional conditions:

1. (1)

   the requirements set out in LR 15.2.2 R, LR 15.2.4 R, LR 15.5.3 G and LR 15.5.11 R; and

2. (2)

   the trustee of the authorised property unit trust must be independent of the manager.

An authorised property unit trust must comply with the following, modified as necessary to reflect the legal form of the trust:

1. (1)

   LR 9 (Continuing obligations), as modified by the requirements set out in this section;

2. (2)

   LR 15.4.10 R;

3. (3)

   LR 15.4.12R (4);

4. (4)

   LR 15.4.14 R; and

5. (5)

   LR 15.7.7 R to LR 15.7.9 R.

The following do not apply to an authorised property unit trust:

1. (1)

   LR 9.2.3 R;

2. (2)

   LR 9.3.11 R to LR 9.3.12 R;

3. (3)

   LR 9.3.3R (3)(b) and (c);

4. (4)

   LR 9.5.14 R;

5. (5)

   LR 9.6.7 R to LR 9.6.15 G;

6. (6)

   LR 10 (Significant transactions);

7. (7)

   LR 11 (Related party transactions); and

8. (8)

   LR 12.2.1 R.

1. (1)

   The Model Code applies in relation to persons discharging managerial responsibilities within the managers of an authorised property unit trust as if it were a company and such persons discharging managerial responsibilities were employed by it.

2. (2)

   Paragraph 16 of the Model Code does not apply to dealings in an authorised property unit trust.

The amount of the charges and expenses (to the extent borne by the trust) of the managers, the trustee and any agent of the managers or trustee, or any sub-custodian, must be clearly set out in each annual report of an authorised property unit trust.

The number of units of an authorised property unit trust that are outstanding in bearer or registered form must be notified to a RIS at least monthly.

The bid and offer prices must be notified to a RIS on the occasion of each valuation of units.

An authorised property unit trust must notify the following information to a RIS as soon as possible and in any event within three months of the end of each distribution or allocation period:

1. (1)

   the total gross and net income per unit before charging fees to the authorised property unit trust;

2. (2)

   the net amount per unit (after allowing for charges and adjustments) to be distributed or allocated, together with the gross equivalent attributable to the distribution or allocation period (specifying, where grouping is permitted by the trust deed or equivalent constitutional document, the amount per unit represented by income equalisation);

3. (3)

   the date of the striking of the Unitholders register balances; and

4. (4)

   any date on and from which trading ex distribution (where applicable) will take place.

An authorised property unit trust must notify the following information to a RIS as soon as possible:

1. (1)

   any changes in the identity or control of the manager or trustee;

2. (2)

   any change in the investment policy of the trust; and

3. (3)

   any proposal to renew, vary, amalgamate or terminate the authorised property unit trust.

1. (1)

   A complete file must be maintained by the manager of all advertisements, brochures, leaflets and other documents issued by or on behalf of the manager with a view to effecting or stimulating sales or purchases of units.

2. (2)

   The file must be produced to the FSA at any time on demand.

This section applies to an open-ended investment company.

An open-ended investment company must comply with LR 15.2.1 R to LR 15.2.14 R.

LR 6.1.19 R (shares in public hands) does not apply to an open-ended investment company.

An open-ended investment company which is an unrecognised scheme is only required to make information available to the FSA and to other recipients as permitted under the Act.

An open-ended investment company must ensure that any information made available in accordance with PR 3.2 or LR 4.3 (publication of prospectus or listing particulars) complies with sections 21 (Restrictions on financial promotion) and 238 (Restrictions on promotion) of the Act to the extent applicable.

An open-ended investment company must comply with LR 9 and LR 15.4.3 G to LR 15.4.13 R subject to the modifications and additional conditions set out in LR 15.7.7 R to LR 15.7.11 R.

Changes in issued capital are not required to be disclosed under LR 9.6.4R (1) and (6) and LR 9.6.5 R as a result of issues and redemptions or repurchases in the normal course as described in the prospectus or listing particulars, unless and until the number of securities of the relevant class currently in issue increases or decreases by more than 10 per cent since the publication of the prospectus or listing particulars or the last notification to a RIS as the case may be.

LR 9.6.7 R to LR 9.6.10 G do not apply to an open-ended investment company.

The interests of a single person or entity which exceed 10% of the issued shares (calculated exclusive of treasury shares) of any class in the capital of the open-ended investment company must, so far as they are known to the company, be notified to a RIS as soon as possible following the company becoming aware of those interests.

LR 10 (Significant transactions) and LR 12 (Dealing in own securities and treasury shares) do not apply to an open-ended investment company.