The nature of many bodies corporate means that they will, in most if not all circumstances, come within the definition of collective investment scheme in section 235(1) to (3) of the Act (Collective investment schemes). The property concerned will generally be managed as a whole under the control of the directors of the body corporate or some other person for the purpose of running its business. The idea underlying the investment is that the investors will participate in or receive profits or income arising from the operation of the body corporate's business.
However, there are a number of exclusions that apply to prevent certain arrangements from being a collective investment scheme. These are in the Schedule to the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 (SI 2001/1062) (Arrangements not amounting to a collective investment scheme). The exclusion in paragraph 21 of the Schedule to that Order is of particular significance for bodies corporate. It excludes from being a collective investment scheme certain specified bodies corporate (such as building societies and friendly societies) as well as any other body corporate except a limited liability partnership or an open-ended investment company. This means that if a body corporate is an open-ended investment company it will not be excluded from the definition in section 235(1) to (3) of the Act. So it will be a collective investment scheme. Of course, it may be that other exclusions in the Schedule to the Order are available but this will depend on the circumstances of a particular body corporate (see PERG 9.4.5 G (Collective investment scheme (section 235 of the Act))).
Certain consequences flow according to whether or not a body corporate is an open-ended investment company. Different requirements apply to the marketing of the shares or securities issued by a body corporate which is an open-ended investment company, compared with one that is not (see PERG 9.10.1 G to PERG 9.10.6 G (Marketing of shares or securities issued by a body corporate)). In addition, the regulated activities that require permission may differ (see PERG 9.10.7 G to PERG 9.10.10 G (Implications for regulated activities)).