Related provisions for COLL 3.3.3

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COLL 6.2.2GRP
(1) This section helps in achieving the regulatory objective of securing an appropriate degree of protection for consumers. In accordance with Principle 6, this section is also concerned with ensuring the authorised fund manager pays due regard to its clients' interests and treats them fairly.(2) An authorised fund manager is responsible for arranging for the issue and the cancellation of units for the authorised fund, and is permitted to sell and redeemunits for its own account.
COLL 6.2.3RRP
(1) During the initial offer period, units may only be issued at the initial price.(2) The length of any initial offer should not be unreasonable when considered alongside the characteristics of the authorised fund.(3) The authorised fund manager must, as soon as practicable after receiving the initial price from the purchaser and no later than the fourth business day following the end of the initial offer, pay the depositary in respect2 of any unit it has agreed to sell during
COLL 6.2.5RRP
(1) Units in an ICVC are issued or cancelled by the ACD making a record of the issue or cancellation and of the number of the units of each class concerned, and cannot be issued or cancelled in any other manner, unless COLL 3.2.6R (11) (Table: contents of the instrument constituting the scheme) applies.(2) The time of the issue or cancellation under (1) is the time when the record is made.
COLL 6.2.6RRP
(1) The trustee must issue or cancelunits in an AUT when instructed by the manager.(2) Any instructions given by the managermust state, for each class of unit to be issued or cancelled, the number to be issued or cancelled, expressed either as a number of units or as an amount in value (or as a combination of the two).(3) If the trustee is of the opinion that it is not in the interests of unitholders that any units should be issued or cancellation or that to do so would not be
COLL 6.2.6ARRP
3If an authorised fund has two or more classes of unit in issue, the authorised fund manager may treat any or all of those classes as one for the purpose of determining the number of units to be issued or cancelled by reference to a particular valuation point, if:(1) the depositary gives its prior agreement; and(2) the relevant classes:(a) have the same entitlement to participate in, and the same liability for charges, expenses and other payments that may be recovered from, the
COLL 6.2.8RRP
(1) An authorised fund manager must ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders for that class.(2) An authorised fund manager must not:(a) for an AUT, when giving instructions to the trustee2 for the issue or cancellation of units; or2(b) for an ICVC, when arranging for the issue or cancellation of units;do, or omit to do, anything that2 would, or might, confer on itself2 or an associate
COLL 6.2.9GRP
(1) As the authorised fund manager normally controls the issue, cancellation, sale and redemption of an authorised fund'sunits, it occupies a position that could, without appropriate systems and controls, involve a conflict of interest between itself and its clients.(2) SYSC 3.1.1 R (Systems and controls) requires that a firm take reasonable care to establish and maintain such systems and controls as are appropriate to its business and Principle 8 requires a firm to manage conflicts
COLL 6.2.10RRP
(1) Any instruction for the issue or cancellation of units under COLL 6.2.5 R (Issue and cancellation of units by an ICVC) or COLL 6.2.6 R (Issue and cancellation of units in an AUT) may be modified but only if the depositary agrees and has taken reasonable care to determine that:(a) the modification corrects an error in the instruction; and(b) the error is an isolated one.(2) Any error in (1) must be corrected within the payment period applicable under COLL 6.2.13 R (Payment
COLL 6.2.11RRP
(1) Where the authorised fund manager has not complied with COLL 6.2.8 R (1) (Controls over the issue and cancellation of units), it must correct the error as soon as possible and must reimburse the authorised fund any costs it may have incurred in correcting the position.(2) The authorised fund manager need not reimburse the authorised fund when:(a) the amount under (1) is not, in the depositary's opinion, material to the authorised fund;(b) the authorised fund manager can demonstrate
COLL 6.2.12GRP

Explanatory table: This table belongs to COLL 6.2.2 G (4) (Purpose).

Correction of box management errors

1

Controls by authorised fund managers

An authorised fund manager needs to be able to demonstrate that it has effective controls over:

(1)

its calculations of what units are owned by it (its 'box'); and

(2)

compliance with COLL 6.2.8 R which is intended to prevent a negative box.

2

Controls by depositaries

(1)

Under COLL 6.6.4 (General duties of the depositary), a depositary should take reasonable care to ensure that a scheme2 is managed in accordance with COLL 6.2 (Dealing) and COLL 6.3 (Pricing and valuation).

(2)

A depositary should therefore make a regular assessment of the authorised fund manager's box management procedures (including supporting systems) and controls. This should include reviewing the authorised fund manager's controls and procedures when the depositary assumes office, on any significant change and on a regular basis, to ensure that a series of otherwise minor changes do not have a cumulative and a significant effect on the accuracy of the controls and procedures.

3

Recording and reporting of box management errors

(1)

An authorised fund manager should record all errors which result in a breach of COLL 6.2.8 R (Controls over the issue and cancellation of units) and as soon as an error is discovered, the authorised fund manager should report the fact to the depositary, together with details of the action taken, or to be taken, to avoid repetition of the error.

(2)

A depositary should report material box management errors to the FSA immediately. Materiality should be determined by taking into account a number of factors including:

  • the implications of the error for the sufficiency of controls put into place by the authorised fund manager;
  • the significance of any breakdown in the authorised fund manager's management controls or other checking procedures;
  • the significance of any failure of systems or back-up arrangements;
  • the duration of an error; and
  • the level of compensation due to the scheme, and an authorised fund manager's ability (or otherwise) to meet claims for compensation in full.

(3)

A depositary should also make a return to the FSA (in the manner prescribed by SUP 16.6.8 R) on a quarterly basis.

COLL 6.2.13RRP
(1) The authorised fund manager must, by the close of business on the fourth business day following the issue of any units, arrange for payment to the trustee or the ICVC of:22(a) 2in the case of a single-priced authorised fund, the price of the units and any payments required under COLL 6.3.7 R (SDRT provision) and COLL 6.3.8 R (Dilution); or(b) 2in the case of a dual-priced authorised fund, the issue price of the units and any payment required under COLL 6.3.7 R.(2) The authorised
COLL 6.2.14RRP
(1) On cancellingunits the authorised fund manager must, before the expiry of the fourth business day following the cancellation of the units or, if later, as soon as practicable after delivery to the trustee or the ICVC of such evidence of title to the units as it may reasonably require, require the depositary to pay:2(a) 2in the case of a single-priced authorised fund, the price of the units (less any deduction required under COLL 6.3.7 R and COLL 6.3.8 R); or(b) 2in the case
COLL 6.2.15RRP
The depositary may take into or pay out of scheme property assets other than cash2 as payment for the issue or cancellation of units2 but only if:(1) it has taken reasonable care to ensure that the property concerned would not be likely to result in any material prejudice to the interests of unitholders; and(2) the instrument constituting the scheme so provides.
COLL 6.2.16RRP
(1) In accordance with COLL 4.2.5R (17) (Table: contents of the prospectus), the authorised fund manager must describe the arrangements for the sale and redemption of units in the prospectus.(2) The authorised fund manager must, at all times during the dealing day, be willing to effect the sale of units in the authorised fund, in accordance with the conditions in the instrument constituting the scheme and the prospectus unless:(a) it has reasonable grounds to refuse such sale;
COLL 6.2.17GRP
(1) The prospectus of an authorised fund that does not operate on the basis of historic prices may allow the authorised fund manager to identify a point in time in advance of a valuation point (a cut-off point) after which it will not accept instructions to sell or redeemunits2 at that valuation point. In order to protect customers' interests, the cut-off point should be no earlier than the close of business on the business day before the valuation point it relates to. If there
COLL 6.2.18RRP
(1) If an authorised fund limits the issue of any class of unit, the prospectus of an authorised fund must provide for the circumstances and conditions when units will be issued.(2) Where (1) applies, the authorised fund manager may not provide for the further issue of units unless, at the time of the issue2, it2is satisfied on reasonable grounds that the proceeds of that subsequent issue can be invested without compromising the scheme's investment objective or materially prejudicing
COLL 6.2.19RRP
(1) The instrument constituting the scheme and the prospectus of a non-UCITS retail scheme2 operating as a FAIF, or5 that invests substantially in immovables2 or whose investment objective is to provide a specified level of return, may provide for limited redemption arrangements appropriate to its aims and objectives.(2) Where (1) applies, the scheme must provide for sales and5redemptions at least once in every six months.(3) Within a scheme, unit classes may operate different
COLL 6.2.21RRP
(1) Subject to (1A) and (3) the5instrument constituting the scheme and the prospectus of an authorised fund which has at least one valuation point on each business day, may permit deferral of redemptions at a valuation point to the next valuation point where the requested redemptions exceed 10%, or some other reasonable proportion disclosed in the prospectus, of the authorised fund's value.5(1A) 5Subject to (3) the instrument constituting the scheme and the prospectus of a non-UCITS
COLL 8.5.2RRP
(1) The authorised fund manager must manage the scheme in accordance with:(a) the instrument constituting the scheme;(b) the rules in this sourcebook;(c) the most recently published prospectus; and(d) for an ICVC, the OEIC Regulations.(2) The authorised fund manager must carry out such functions as are necessary to ensure compliance with the rules in this sourcebook that impose obligations on the authorised fund manager or ICVC, as appropriate.(3) The authorised fund manager must:(a)
COLL 8.5.8RRP
(1) The manager or the trustee (in accordance with their responsibilities as set out in the instrument constituting the scheme) must maintain a register of unitholders as a document in accordance with this rule.(2) The register must contain:(a) the name and address of each Unitholder (for joint Unitholders no more than four need to be registered);(b) the number of units (including fractions of a unit) of each class held by each unitholder; and(c) the date on which the Unitholder
COLL 8.5.9RRP
(1) The value of the scheme property is the net value of the scheme property after deducting any outstanding borrowings (including any capital outstanding on a mortgage of an immovable).(2) Any part of the scheme property which is not an investment (save an immovable) must be valued at fair value.(3) For the purposes of (2), any charges that were paid, or would be payable, on acquiring or disposing of the asset must be excluded from the value of that asset.(4) The value of the
COLL 8.5.10RRP
(1) The authorised fund manager must:(a) ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders of that class; and(b) not do, or omit anything that would, or might confer on itself a benefit or advantage at the expense of a unitholder or potential unitholder.(2) For the purposes of (1) the authorised fund manager may take into account sales and redemptions after the valuation point, provided it has
COLL 8.5.10ARRP
3If a qualified investor scheme has two or more classes of unit in issue, the authorised fund manager may treat any or all of those classes as one for the purpose of determining the number of units to be issued or cancelled by reference to a particular valuation point, if:(1) the depositary gives its prior agreement; and(2) the relevant classes:(a) have the same entitlement to participate in, and the same liability for charges, expenses and other payments that may be recovered
COLL 8.5.11RRP
(1) The authorised fund manager must, at all times during the dealing day, be willing to effect the sale of units to any eligible investor (within any conditions in the instrument constituting the scheme and the prospectus which must be fair and reasonable as between all unitholders and potential unitholders) for whom the authorised fund manager does not have reasonable grounds to refuse such sale.(2) The authorised fund manager must, at all times during the dealing day, effect
COLL 8.5.14GRP
An affected person is not liable to account to another affected person or to the unitholders of the scheme for any profits or benefits it makes or receives that are made or derived from or in connection with:(1) dealings in the units of a scheme; or(2) any transaction in scheme property; or(3) the supply of services to the scheme;where disclosure of the non-accountability has been made in the prospectus of the scheme.
COLL 8.5.15RRP
(1) A qualified investor scheme must have:(a) an annual accounting period;(b) a half-yearly accounting period; and(c) an accounting reference date;the details of which must be set out in the prospectus.(1A) COLL 6.8.2 R (2) to COLL 6.8.2 R (7) (Accounting periods) also apply to the half-yearly accounting period and annual accounting period of a qualified investor scheme.1(2) A qualified investor scheme must have an annual income allocation date, which must be within four months
COLL 3.3.2GRP
(1) The instrument constituting the scheme may provide for different classes of unit to be issued in an authorised fund and, for a scheme which is an umbrella, provide that classes of units may be issued for each sub-fund.(2) In order to be satisfied that COLL 3.2.2 R (Relationship between the instrument constituting the schemeand the rules) is complied with, the FSA will take into account the principles in (a) to (c) when considering proposals for unit classes:(a) a unit class
COLL 3.3.4RRP
For a currency class unit:(1) the currency of the class concerned must not be the base currency (or, in the case of a sub-fund which, in accordance with a statement in the prospectus, is to be valued in some other currency, the currency of the class may be in the base currency, but must not be in that other currency);(2) the price must be expressed in the currency of the class concerned;(3) any distribution must be paid in the currency of the class concerned; and(4) statements
COLL 3.3.5RRP
(1) If any class of units in an authorised fund has different rights from another class of units in that fund, the instrument constituting the scheme must provide how the proportion of the value of the scheme property and the proportion of income available for allocation attributable to each such class must be calculated.(2) For an authorised fund which is not an umbrella, the instrument constituting the scheme must not provide for any class of units in respect of which:(a) the
COLL 3.3.5ARRP
1A class hedging transaction must:2(1) be undertaken in accordance with the requirements of COLL 5 (Investment and borrowing powers); and(2) (for the purposes of valuing scheme property and calculating the price of units in accordance with COLL 6.3 (Valuation and pricing)) be attributed only to the class of units2for which it is undertaken.
COLL 3.3.5BGRP
(1) 1Before undertaking a class hedging transaction for a class of units, the authorised fund manager should:2(a) ensure that the relevant prospectus clearly:(i) states that such a transaction may be undertaken for the relevant class of units2; and(ii) explains the nature of the risks that such a transaction may pose to investors in all classes;(b) consult the depositary about the adequacy of the systems and controls it uses to ensure compliance with COLL 3.3.5A R (Hedging of
COLL 3.3.8RRP
(1) The directors of an ICVC or the manager of an AUT may, unless expressly forbidden to do so by the instrument constituting the scheme, determine that:(a) each unit of any class is to be subdivided into two or more units; or(b) units of any class are to be consolidated.(2) The ICVC or the manager must (unless it has done so before the sub-division or consolidation became effective) immediately give notice to each unitholder (or the first named of joint unitholders) of any sub-division
COLL 3.3.9RRP
If there is any arrangement intended to result in a particular capital or income return from a holding of units in an authorised fund, or any investment objective of giving protection to the capital value of, or income return from, such a holding:(1) that arrangement or protection must not be such as to cause the possibility of a conflict of interest as between:(a) unitholders and the authorised fund manager or depositary; or(b) unitholders intended and not intended to benefit
COLL 3.3.10GRP
(1) In accordance with section 235(4) of the Act (Collective investment schemes), the participants in a scheme which is an umbrella are entitled to exchange rights in one sub-fund for rights in another sub-fund of the umbrella.(2) To satisfy (1), where any sub-fund in a scheme which is an umbrella has provisions in its prospectus limiting the issue of units in that sub-fund, the authorised fund manager should ensure that at least two sub-funds are able to issue units at any time.
COLL 6.4.2GRP
The aim of this section is to protect consumers, by setting out the requirements for a register of unitholders for an AUT and for a plan register for an authorised fund, so a proper record of ownership of units is maintained, whether held directly or indirectly through a group plan.
COLL 6.4.3GRP
(1) This section deals with matters relating to the register of unitholders of units in an AUT including its establishment and contents. The manager or trustee may be responsible for the register. In any event, the person responsible for the register must be stated in the trust deed and this section details what his duties are. The provisions relating to documentsevidencingtitle to units, including the issue of bearer certificates are dependent on the provisions in the trust deed
COLL 6.4.4RRP
(1) Either the manager or the trustee (as nominated in the trust deed) must establish and maintain a register of unitholders as a document in accordance with this section.(2) The manager or trustee in accordance with their duties under (1) must exercise all due diligence and take all reasonable steps to ensure the information contained on the register is at all times complete and up to date.(3) The register must contain:(a) the name and address of each unitholder (for joint unitholders,
COLL 6.4.5RRP
(1) If no person is entered in the register as the unitholder of a unit, the manager must be treated as the unitholder of each such unit which is in issue (other than a unit which is represented by a bearer certificate).(2) Where units are transferred to the manager, they need not be cancelled and the manager need not be entered on the register as the new unitholder.
COLL 6.4.6RRP
(1) Every unitholder is entitled to transfer units held on the register by an instrument of transfer in any form that the person responsible for the register may approve, but that person is under no duty to accept a transfer unless:(a) it is permitted by the trust deed or prospectus; and(b) the transfer is excluded by Schedule 19 of the Finance Act 1999 from a charge to stamp duty reserve tax, or there has been paid to the trustee, for the account of the AUT, an amount agreed
COLL 6.4.7RRP
(1) Following the sale of units or as a result of COLL 6.4.6 R (Transfer of units by act of parties) a document recording title to those units may be issued in such a form as the trust deed permits.(2) The person responsible for the register must issue any document in (1) or provide relevant information in a timely manner where the procedures for redeeming units require the unitholder to surrender that document.(3) Bearer certificates may only be issued if they are permitted by
COLL 6.4.8RRP
Where there is more than one class of units offered for issue or sale, the unitholder has a right to convert from one to the other, provided that doing so would not contravene any provision in the prospectus.
COLL 6.7.3GRP
(1) This section assists in securing the regulatory objective of protecting consumers through requirements which govern the payments out of scheme property and charges imposed on investors when buying or selling units.(2) The requirements clarify the nature of permitted charges and payments and ensure the disclosure for unitholders of any increases in charges and payments to the authorised fund manager.(3) The prospectus should make adequate provision for payments from an authorised
COLL 6.7.4RRP
(1) The only payments which may be recovered from the scheme property of an authorised fund are those in respect of: (a) remunerating the parties operating the authorised fund;(b) the administration of the authorised fund; or(c) the investment or safekeeping of the scheme property.(2) No payment under this rule can be made from scheme property if it is unfair to (or materially prejudices the interests of) any class of unitholders or potential unitholders.(3) Paragraphs (1) and
COLL 6.7.5GRP
(1) Details of permissible types of payments out of scheme property are to be set out in full in the prospectus in accordance with COLL 4.2.5R (13) and COLL 4.2.5R (14) (Table: contents of the prospectus).(2) An authorised fund manager should consider whether a payment to an affected person is unfair because of its amount or because it confers a disproportionate benefit on the affected person.3(3) COLL 6.7.4 R (2) (Payments out of scheme property) does not invalidate a payment
COLL 6.7.7RRP
(1) No person other than the authorised fund manager may impose charges on unitholders or potential unitholders when they buy or sell units.(2) An authorised fund manager must not make any charge or levy in connection with:(a) the issue or sale of units except where a preliminary charge is made in accordance with the prospectus of the scheme which must be either a fixed amount or calculated as a percentage of the price of a unit; or(b) the redemption or cancellation of units,
COLL 6.7.8GRP
(1) To introduce a new charge for the sale or redemption of units, or any new category of remuneration for its services or increase the rate stated in the prospectus, the authorised fund manager will need to comply with COLL 4.2.5 R (Table: contents of prospectus) and COLL 4.3 (Approvals and notifications).(2) A redemption charge may be expressed in terms of amount or percentage. It may also be expressed as diminishing over the time during which the unitholder has held the units
COLL 6.7.9RRP
For a scheme which is an umbrella, an authorised fund manager must not make a charge on an exchange of units in one sub-fund for units in another sub-fund unless the amount of the charge is not more than the amount stated in the current prospectus.
COLL 6.7.10RRP
(1) The authorised fund manager must determine whether a payment is to be made from the income property or capital property of an authorised fund, and in doing so the authorised fund manager must:(a) pay due regard to whether the nature of the cost is income related or capital related and the objective of the scheme; and(b) agree the treatment of any payment with the depositary.(2) Where, for any class of units5 for any annual accounting period, the amount of the income property
COLL 6.7.12RRP
2(1) No payment may be made from scheme property to any person, other than a payment to the authorised fund manager permitted by the rules in COLL, for the acquisition or promotion of the sale of units in an authorised fund.2(2) 2Paragraph (1) does3 not apply to the costs an authorised fund incurs3 preparing and printing the simplified prospectus, key investor information document6, key features document or key features illustration3, provided the prospectus states, in accordance
COLL 6.7.15RRP
(1) Where the property of an authorised fund is transferred to a second authorised fund (or to the depositary for the account of the authorised fund) in consideration of the issue of units in the second authorised fund to unitholders in the first scheme, (2) applies.(2) The ICVC, its depositary or the trustee of the AUT as the successor in title to the property transferred, may pay out of the scheme property any liability arising after the transfer which, had it arisen before
COLL 6.7.16GRP
An affected person is not liable to account to another affected person or to the unitholders of any scheme for any profits or benefits it makes or receives that are made or derived from or in connection with:(1) dealings in the units of a scheme; or(2) any transaction in scheme property; or(3) the supply of services to the scheme;where disclosure of the non-accountability has been made in the prospectus of the scheme.
COLL 6.3.2GRP
(1) In accordance with Principle 6, this section is intended to ensure that the authorised fund manager pays due regard to its clients' interests and treats them fairly.(2) An authorised fund manager is responsible for valuing the scheme property of the authorised fund it manages and for calculating the price of units in the authorised fund. This section protects clients by:(a) setting out rules and guidance1 to ensure the prices1 of units in both a single-priced authorised fund
COLL 6.3.3RRP
1(1) To determine the price of units the authorised fund manager must carry out a fair and accurate valuation of all the scheme property in accordance with the instrument constituting the scheme and the prospectus.1(2) 1For a dual-priced authorised fund, each valuation of the scheme property must consist of two parts, carried out on an issue basis and a cancellation basis respectively.
COLL 6.3.3CGRP
(1) 8The accounting policies and procedures referred to in COLL 6.3.3B R should enable the authorised fund manager of a UCITS scheme to value the scheme property accurately at each valuation point and to calculate dealingprices by reference to that valuation.(2) Where different share or unitclasses exist, it should be possible to extract from the accounting records the net asset value of each different class.[Note: recital (9) of the UCITS implementing Directive]
COLL 6.3.4RRP
(1) An authorised fund must not have fewer than two regular valuation points in any month and if there are only two valuation points in any month, the regular valuation points must be at least two weeks apart.(2) The prospectus of a scheme must contain information about its regular valuation points for the purposes of dealing in units in accordance with COLL 4.2.5R (16) (Table: contents of the prospectus).(3) Where a scheme operates limited redemption arrangements, (1) does not
COLL 6.3.5RRP
(1) An authorised fund manager must ensure that the1price of a unit of any class is calculated:1(a) 1by reference to the net value of the scheme property; and(b) 1in accordance with the provisions of both the instrument constituting the scheme and the prospectus.(2) Any unit price calculated in accordance with (1) must be expressed in a form that is accurate to at least four significant figures.(3) 1For each class of units in a single-priced authorised fund, a single price must
COLL 6.3.5ARRP
1The authorised fund manager of a single-priced authorised fund must not: (1) sell a unit for more than the price of a unit of the relevant class at the relevant valuation point, to which may be added any preliminary charge permitted and any payments required under COLL 6.3.7 R and COLL 6.3.8 R; or(2) redeem a unit for less than the price of a unit of the relevant class at the relevant valuation point, less any redemption charge permitted and any deductions under COLL 6.3.7 R
COLL 6.3.5BRRP
(1) 1The authorised fund manager of a dual-priced authorised fund must not:(a) sell a unit for more than the maximum sale price of a unit of the relevant class at the relevant valuation point, to which may be added any payment required under COLL 6.3.7 R; or (b) redeem a unit for less than the cancellation price of a unit of the relevant class at the relevant valuation point, less any redemption charge permitted and any deduction under COLL 6.3.7 R.(2) The maximum sale price of
COLL 6.3.6GRP

Table: This table belongs to COLL 6.3.2 G (2) (a) and COLL 6.3.3 R (Valuation)1.

Valuation and pricing

1

The valuation of scheme property

(1)

Where possible, investments should be valued using a reputable source. The reliability of the source of prices should be kept under regular review.

(2)

For some or all of the investments comprising the scheme property, different prices may quoted according to whether they are being bought (offer prices) or sold (bid prices). The valuation of a single-priced authorised fund should reflect the mid-market value of such investments. In the case of a dual-priced authorised fund, the issue basis of the valuation will be carried out by reference to the offer prices of investments and the cancellation basis by reference to the bid prices of those same investments. The prospectus should explain how investments will be valued for which a single price is quoted for both buying and selling.1

1

3(2A)

Schemes investing in approved money-market instruments5should value such instruments on an amortised cost basis on condition that:5

55

[Note:CESR's UCITS eligible assets guidelines with respect to article 4(2) of the UCITS eligible assets Directive]

(2B)

Short-term money market funds may value approved money-market instruments on an amortised cost basis.7

[Note: paragraph 21 of CESR's guidelines on a common definition of European money market funds]7

(3)

Any part of the scheme property of an authorised fund that is not an investment should be valued at a fair value, but for immovables this is subject to COLL 5.6.20 R (3) (f) (Standing independent valuer and valuation).

(4)

For the purposes of (2) and (3), any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable on acquiring or disposing of the investment or other part of the scheme property should, in the case of a single-priced authorised fund,2 be excluded from the value of an investment or other part of the scheme property. In the case of a dual-priced authorised fund, any such payments should be added to the issue basis of the valuation, or subtracted from the cancellation basis of the valuation, as appropriate. Alternatively, the prospectus of a dual-priced authorised fund may prescribe any other method of calculating unitprices that ensures an equivalent treatment of the effect of these payments.2

(5)

Where the authorised fund manager has reasonable grounds to believe that:

it should value an investment at a price which, in its opinion, reflects a fair and reasonable price for that investment (the fair value price);

(6)

The circumstances which may give rise to a fair value price being used include:

  • no recent trade in the security concerned; or
  • the occurrence of a significant event since the most recent closure of the market where the price of the security is taken.
In (b), a significant event is one that means the most recent price of a security or a basket of securities is materially different to the price that it is reasonably believed would exist at the valuation point had the relevant market been open.

(7)

In determining whether to use such a fair value price , the authorised fund manager should include in his consideration:

4(7A)

Where the authorised fund manager, the depositary or the standing independent valuer have reasonable grounds to believe that the most recent valuation of an immovable does not reflect the current value of that immovable, the authorised fund manager should consult and agree with the standing independent valuer a fair and reasonable value for the immovable.

(8)

The authorised fund manager should document the basis of valuation (including any fair value pricing policy) and, where appropriate, the basis of any methodology and ensure that the procedures are applied consistently and fairly.

(9)

Where a unit price is determined using properly applied fair value prices in accordance with policies in (8), subsequent information that indicates the price should have been different from that calculated will not normally give rise to an instance of incorrect pricing.

2

The pricing controls of the authorised fund manager

(1)

An authorised fund manager needs to be able to demonstrate that it has effective controls over its calculations of unit prices.

(2)

The controls referred to in (1) should ensure that:

  • asset prices are accurate and up to date;
  • investment 1transactions are accurately and promptly reflected in valuations;
  • the components of the valuation (including stock, cash, and units in issue1), are regularly reconciled to their source or prime records and any reconciling items resolved promptly and debtors reviewed for recoverability;
  • the sources of prices not obtained from the main pricing source are recorded and regularly reviewed;
  • compliance with the investment and borrowing powers is regularly reviewed;
  • dividends are accounted for as soon as securities1 are quoted ex-dividend (unless it is prudent to account for them on receipt):
  • fixed interest dividends, interest and expenses are accrued at each valuation point1;
  • tax positions are regularly reviewed and adjusted, if necessary;
  • reasonable tolerances are set for movements in the key elements of a valuation and movements outside these tolerances are investigated;5
  • the fund manager regularly reviews the portfolio valuation for accuracy5; and5
  • the valuation of OTC derivatives is accurate and up to date and in compliance with the methods agreed with the depositary.5

(3)

In exercising its pricing controls, the authorised fund manager may exercise reasonable discretion in determining the appropriate frequency of the operation of the controls and may choose a longer interval, if appropriate, given the level of activity on the authorised fund1or the materiality of any effect on the price.

(4)

Evidence of the exercise of the pricing controls should be retained.

(5)

Evidence of persistent or repetitive errors in relation to these matters, and in particular any evidence of a pattern of errors working in an authorised fund manager's favour, will make demonstrating effective controls more difficult.

(6)

Where the pricing1function is delegated to a third party, COLL 6.6.15 R (1) (Committees and delegation) will apply.

3

The depositary's review of the authorised fund manager's systems and controls

(1)

This section provides details of the types of checks a depositary should carry out to be satisfied that the authorised fund manager adopts systems and controls which are appropriate to ensure that prices of units are calculated in accordance with this section and to ensure that the likelihood of incorrect prices will be minimised. These checks also apply where an authorised fund manager has delegated all or some of its pricing1 functions to one or more third parties5.

5

(2)

A depositary should thoroughly review an authorised fund manager's systems and controls to confirm that they are satisfactory. The depositary's review should include an analysis of the controls in place to determine the extent to which reliance can be placed on them.

(3)

A review should be performed when the depositary is appointed and thereafter as it feels appropriate given its knowledge of the robustness and the stability of the systems and controls and their operation.

(4)

A review should be carried out more frequently where a depositary knows or suspects that an authorised fund manager's systems and controls are weak or are otherwise unsatisfactory.

(5)

Additionally, a depositary should from time to time review other aspects of the valuation of the scheme property of each authorised fund for which it is responsible, verifying, on a sample basis, if necessary, the assets, liabilities, accruals, units in issue1, securities prices (and in particular the prices of OTC derivatives,5unapproved securities and the basis for the valuation of unquoted securities) and any other relevant matters, for example an accumulation factor or a currency conversion factor.

(6)

A depositary should ensure that any issues, which are identified in any such review, are properly followed up and resolved.

4

The recording and reporting of instances of incorrect pricing

(1)

An authorised fund manager should record each instance where the price of a unit is incorrect as soon as the error is discovered, and report the fact to the depositary together with details of the action taken, or to be taken, to avoid repetition as soon as practicable.

(2)

In accordance with COLL 6.6.11 G (Duty to inform the FSA), the depositary should report any breach of the rules in COLL 6.3 immediately to the FSA. However, notification should relate to instances which the depositary considers material only.

(3)

A depositary should also report to the FSA immediately any instance of incorrect pricing1where the error is 0.5% or more of the price of a unit, where a depositary believes that reimbursement or payment is inappropriate and should not be paid by an authorised fund manager.

(4)

In accordance with SUP 16.6.8 R, a depositary should also make a return to the FSA on a quarterly basis which summarises the number of instances of incorrect pricing1 during a particular period.

5

The rectification of pricing breaches

(1)

COLL 6.6.3 R (1) (Functions of the authorised fund manager) places a duty on the authorised fund manager to take action to reimburse affected unitholders, former unitholders, and the scheme itself, for instances of incorrect pricing1, except if it appears to the depositary that the breach is of minimal significance.

(2)

A depositary may consider that the instance of incorrect pricing1is of minimal significance if:

(3)

In determining (2), if the instance of incorrect pricing1 is due to one or more factors or exists over a period of time, each price should be considered separately.

(4)

If a depositary deems it appropriate, it may, in spite of the circumstances outlined in (2), require a payment from the authorised fund manager or from the authorised fund to the unitholders, former unitholders, the authorised fund or the authorised fund manager (where appropriate).

(5)

The depositary should satisfy itself that any payments required following an instance of incorrect pricing1 are accurately and promptly calculated and paid.

(6)

If a depositary considers that reimbursement or payment is inappropriate, it should report the matter to the FSA, together with its recommendation and justification. The depositary should take into account the need to avoid prejudice to the rights of unitholders, or the rights of unitholders in a class of units.

(7)

It may not be practicable, or in some cases legally permissible, for the authorised fund manager to obtain reimbursement from unitholders, where the unitholders have benefited from the incorrect price.

(8)

In all cases where reimbursement or payment is required, amounts due to be reimbursed to unitholders for individual sums which are reasonably considered by the authorised fund manager and depositary to be immaterial, need not normally be paid.

COLL 6.3.8RRP
(1) When arranging to sell, redeem, issue or cancel units, or when units are issued or cancelled under COLL 6.2.7 R (1) (Issues and cancellations through an authorised fund manager), an authorised fund manager is permitted to:(a) require the payment of a dilution levy; or(b) make a dilution adjustment; or(c) neither require a dilution levy nor make a dilution adjustment;in accordance with its statements in the prospectus required by COLL 4.2.5R (18) (Table: contents of the
COLL 6.3.9RRP
(1) For the sale and redemption of units, the authorised fund manager must, in accordance with the prospectus of an authorised fund, operate on the basis of forward price only or historic prices.(2) If forward prices only are to be used, all deals1 must be at a forward price.(3) Forward prices for the sale and redemption of units must be used:(a) for a higher volatility fund;(b) where the regular valuation points are more than one business day1 apart;(c) if the request to deal1
COLL 6.3.11RRP
Where the authorised fund manager is prepared to deal1 in units, or is willing to issue or cancel1units, under COLL 6.2.7, it must make the dealing1prices public in an appropriate manner.
COLL 6.3.12GRP
(1) In determining the appropriate manner of making prices public, the authorised fund manager should ensure that:(a) a unitholder or potential unitholder can obtain the prices at a reasonable cost;(b) prices are available at reasonable times;(c) publication is consistent with the manner and frequency at which the units are dealt in1;(d) the manner of publication is disclosed in the prospectus; and(e) prices are published in a consistent manner.(2) Examples of what might be deemed
COLL 12.4.1RRP
(1) This section applies to:(a) an authorised fund manager of an AUT or ICVC;(b) any other director of an ICVC; and(c) an ICVC;which is a UCITS scheme whose units may be marketed in another EEA State (the Host State).(2) The marketing of units of a UCITS scheme in the Host State may not commence until the FSA has, in accordance with paragraph 20B(5) (Notice of intention to market) of Schedule 3 to the Act, notified the authorised fund manager, in response to the application of
COLL 12.4.2GRP
The effect of article 58(4) (b) of the UCITS Directive is that a UCITS scheme that is a master UCITS which only has one or more feeder UCITS in another EEA State and therefore does not raise capital directly from the public in that EEA State will not thereby be exercising its right to market its units in that Host State in accordance with Chapter XI of the UCITS Directive.[Note: article 58(4)(b) of the UCITS Directive]
COLL 12.4.3GRP
The authorised fund manager of a UCITS scheme whose units are being marketed in a Host State should be aware that it may be required by the laws, regulations and administrative provisions of the Host State regulator to maintain facilities in that State, including for making payments to unitholders, repurchasing or redeeming units and making available the information which is required to be provided in relation to the scheme.[Note: article 92 of the UCITS Directive]
COLL 12.4.4RRP
(1) The authorised fund manager of a UCITS scheme whose units are being marketed in the Host State must ensure that:(a) its instrument constituting the scheme, its prospectus and, where appropriate, its latest annual report and any subsequent half-yearly report; and(b) its key investor information document;together with their translations (wherever necessary), are kept up to date.(2) The authorised fund manager must notify any amendments to the documents referred to in (1) to
COLL 12.4.5RRP
(1) The authorised fund manager of a UCITS scheme whose units are being marketed in a Host State must ensure that investors within the territory of that Host State are provided with all the information and documents which it is required by the Handbook to provide to investors in the United Kingdom.(2) The information and documents referred to in (1) must be provided to investors in the way prescribed by the laws, regulations or administrative provisions of the Host State and in
COLL 12.4.6GRP
The frequency of the publication of the issue, sale, cancellation, repurchase or redemption prices of units of the UCITS scheme when they are marketed in another EEA State is governed by COLL 6.3.11 R (Publication of prices).[Note: article 94(3) of the UCITS Directive]
COLL 12.4.8RRP
(1) The authorised fund manager of a UCITS scheme whose units are being marketed in a Host State must ensure that an electronic copy of each document referred to in COLL 12.4.4 R (1) is made available on: (a) the website of the UCITS scheme or the authorised fund manager; or(b) another website designated by the authorised fund manager in the notification letter submitted to the FSA under paragraph 20B of Schedule 3 to the Act or any updates to it. (2) Any document that is made
COLL 4.4.2RRP
(1) The authorised fund manager, the depositary or the other directors of an ICVC may convene a general meeting of unitholders at any time.(2) The unitholders may request the convening of a general meeting by a requisition which must:(a) state the objects of the meeting;(b) be dated;(c) be signed by unitholders who, at that date, are registered as the unitholders of units representing not less than one-tenth in value (or such lower proportion stated in the instrument constituting
COLL 4.4.3RRP
This section applies, unless the context otherwise requires, to class meetings by reference to the units of the class concerned and the unitholders and prices of such units.
COLL 4.4.4RRP
(1) Unless a unit in the authorised fund is a participating security, in this section "unitholders" means unitholders as at a cut-off date selected by the authorised fund manager which is a reasonable time before notices of the relevant meeting are sent out.(2) If any unit in the authorised fund is a participating security, a registered unitholder of such a unit is entitled to receive a notice of a meeting or a notice of an adjourned meeting under COLL 4.4.5 R (Notice of general
COLL 4.4.6RRP
(1) The quorum required to conduct business at a meeting of unitholders is two unitholders, present in person or by proxy.(2) If after a reasonable time from the time for the start of the meeting, a quorum is not present, the meeting:(a) if convened on the requisition of unitholders, must be dissolved; and(b) in any other case, must stand adjourned to:(i) a day and time which is seven or more days after the day and time of the meeting; and(ii) a place to be appointed by the chairman.(3)
COLL 4.4.7RRP
(1) Except where an extraordinary resolution is specifically required or permitted, any resolution of unitholders is passed by a simple majority of the votes validly cast at a general meeting of unitholders.(2) In the case of an equality of, or an absence of, votes cast, the chairman is entitled to a casting vote.(3) Where a resolution (including an extraordinary resolution) is required to conduct business at a meeting of unitholders and every unitholder is prohibited under COLL
COLL 4.4.8RRP
(1) On a show of hands every unitholder who is present in person has one vote.(2) On a poll:(a) votes may be given either personally or by proxy or in another manner permitted by the instrument constituting the scheme;(b) the voting rights for each unit must be the proportion of the voting rights attached to all of the units in issue that the price of the unit bears to the aggregate price or prices of all of the units in issue:(i) if any unit is a participating security, at the
COLL 4.4.9RRP
(1) A resolution put to the vote of a general meeting must be determined on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by:(a) the chairman;(b) at least two unitholders; or(c) the depositary.(2) Unless a poll is demanded in accordance with (1), a declaration by the chairman as to the result of a resolution is conclusive evidence of the fact.
COLL 4.4.12RRP
(1) Where this sourcebook requires any notice or document to be served upon a unitholder, it is duly served :(a) for units held by a registered unitholder, if it is:(i) sent by post to or left at1 the unitholder's address as appearing in the register; or1(ii) sent1 by using an electronic medium in accordance with COLL 4.4.13 R (Other notices); or1(b) for units represented by bearer certificates, if given in the manner provided for in the prospectus.(2) Any notice or document served
COLL 4.4.13RRP
(1) Any document or notice to be served on or information to be given to, any person, including the FSA , must be in legible form.(2) For the purposes of this rule, any form is legible form which:(a) is consistent with the ICVC's, the directors', the authorised fund manager's or the depositary's knowledge of how the recipient of the document wishes or expects to receive the document;(b) is capable of being provided in hard copy by the authorised fund manager, the depositary or
COLL 7.7.6GRP
(1) The requirements and the process which must be followed to give effect to a proposal for a UCITS merger as specified by Chapter VI of the UCITS Directive (see articles 37 to 48) have been implemented in the United Kingdom by the provisions of Part 4 of the UCITS Regulations 2011. The main features of the regime as set out in those provisions include:(a) the different types of merger operation that will be recognised for a UCITS merger;(b) the need for the FSA to give prior
COLL 7.7.7RRP
(1) The authorised fund manager of a UCITS scheme that is a merging UCITS or a receiving UCITS in a proposed UCITS merger, must in conjunction with any other authorised fund manager or, as the case may be, management company of an EEA UCITS scheme that is a party to the proposed merger, draw up common draft terms of the proposed UCITS merger.(2) The common draft terms in (1) must set out the following particulars:(a) an identification of the type of UCITS merger and of the UCITS
COLL 7.7.10RRP
(1) The authorised fund manager of a UCITS scheme that is a merging UCITS or a receiving UCITS in a proposed UCITS merger must ensure that a document containing appropriate and accurate information on the merger is provided to the unitholders of that scheme so as to enable them to:(a) make an informed judgment about the impact of the proposal on their investment;(b) exercise their rights under regulation 12 (Right of redemption) of the UCITS Regulations 2011; and(c) where applicable,
COLL 7.7.12GRP
(1) The information provided to unitholders under COLL 7.7.10 R and COLL 7.7.13 R on any proposed merger should reflect the different needs of the unitholders of the merging UCITS and the receiving UCITS and assist their understanding of what is being proposed.(2) The reference to "conversion" in COLL 7.7.10 R (2) means an exchange of units in the merging UCITS or receiving UCITS for units in another UCITS scheme or EEA UCITS scheme that has similar investment policies and that
COLL 7.7.13RRP
(1) Where the merging UCITS is a UCITS scheme, the information document that its authorised fund manager must provide to its unitholders under COLL 7.7.10 R (3)(b) must also include:(a) details of any differences in the rights of unitholders of the merging UCITS before and after the proposed UCITS merger takes effect;(b) if the key investor information of the merging UCITS and the receiving UCITS show synthetic risk and reward indicators in different categories, or identify different
COLL 7.7.18RRP
Between the date when the information required under COLL 7.7.10 R is provided to unitholders and the date when the merger takes effect, the information document and the up-to-date key investor information of the receiving UCITS must be provided to each person who purchases or subscribes for units in either the merging UCITS or the receiving UCITS or who asks to receive copies of the instrument constituting the scheme, prospectus or key investor information of either scheme. [Note:
COLL 7.7.21GRP
(1) In a domestic UCITS merger, the effective date of the merger will be the date specified by the FSA in its order authorising the proposed merger in accordance with regulation 9 of the UCITS Regulations 2011.(2) For a UCITS scheme which is the receiving UCITS in a cross-border UCITS merger, the effective date of the merger will be the date agreed by the FSA and the merging UCITS'Home State regulator.(3) For a UCITS scheme which is the receiving UCITS in a domestic UCITS merger
COLL 4.5.9RRP
The matters set out in (1) to (13)2 must be included in any authorised fund manager's report, except where otherwise indicated:2(1) the names and addresses of :(a) the authorised fund manager;(b) the depositary;(c) the registrar;(d) any investment adviser;(e) the auditor; and(f) for a scheme which invests in immovables, the standing independent valuer;(2) (for an ICVC), the names of any directors other than the ACD;(3) a statement of the authorised status of the scheme;(4) (for
COLL 4.5.10RRP
The comparative table required by COLL 4.5.7R (1)(c) (Contents of the annual long report) must set out:(1) a performance record over the last five calendar years, or if the authorised fund has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing:(a) the highest and the lowest price of a unit of each class in issue during each of those years; and(b) the net income distributed (or, for accumulation units, allocated)
COLL 4.5.11RRP
(1) The depositary must make an annual report to unitholders which must be included in the annual report.(2) The annual report must contain:(a) a description, which may be in summary form, of the duties of the depositary under COLL 6.6.4 (General duties of the depositary) and in respect of the safekeeping of the scheme property; and(b) a statement whether, in any material respect:(i) the issue, sale, redemption and cancellation, and calculation of the price of the units and the
COLL 4.5.12RRP
The authorised fund manager must ensure that the report of the auditor to the unitholders includes the following statements:33(1) whether, in the auditor's opinion, the accounts have been properly prepared in accordance with the IMA SORP, the rules in this sourcebook, and the instrument constituting the scheme;(2) whether, in the auditor's opinion, the accounts give a true and fair view of the net revenue3and the net capital 3gains or losses on3the scheme property of the authorised
COLL 4.5.14RRP
(1) The authorised fund manager must, within four months after the end of each annual accounting period and two months after the end of each half-yearly accounting period respectively, make available and publish the long reports2 prepared in accordance with COLL 4.5.7R (1) to (3)2 (Contents of the annual long report) and COLL 4.5.8R (1) to (2)2 (Contents of the half-yearly long report).22(2) The reports referred to in (1) must:(a) be supplied free of charge to any person on request2;2(b)
COLL 7.4.1GRP
(1) This section deals with the circumstances and manner in which an AUT is to be wound up or a sub-fund of an AUT is to be terminated. Under section 256 of the Act (Requests for revocation of authorisation order), the manager or trustee of an AUT may request the FSA to revoke the authorisation order in respect of that AUT. Section 257 of the Act (Directions) gives the FSA the power to make certain directions.(2) The termination of a sub-fund under this section will be subject
COLL 7.4.2RRP
In this section, where a sub-fund of an AUT is being terminated, references to:(1) units, are references to units of the class or classes related to the sub-fund to be terminated;(2) a resolution or extraordinary resolution, are references to such a resolution passed at a meeting of unitholders of units of the class or classes referred to in (1);(3) scheme property, are references to the scheme property allocated or attributable to the sub-fund to be terminated; and(4) liabilities,
COLL 7.4.3RRP
(1) Upon the happening of any of the events or dates referred to in (2) and not otherwise:1(a) COLL 6.2 (Dealing), COLL 6.3 (Valuation and pricing) and COLL 5 (Investment and borrowing powers) cease to apply to the AUT or to the units and scheme property in the case of a sub-fund;1(b) the trustee must cease to issue and cancel1units, except in respect of the final cancellation under COLL 7.4.4 R (1) or (2);11(c) the manager must cease to sell and redeem units; (d) the manager
COLL 7.4.4RRP
(1) Where COLL 7.4.3 R (2) (f) applies, the trustee must cancel all units in issue and1 wind up the AUT or terminate the sub-fund in accordance with the approved scheme of arrangement.(2) In any other case falling within COLL 7.4.3 R:(a) once the AUT falls to be wound up or sub-fund terminated, the trustee must realise the scheme property;(b) after paying out or retaining adequate provision for all liabilities payable and for the costs of the winding up or termination, the trustee
COBS 4.13.2RRP
(1) A firm must ensure that a marketing communication that comprises an invitation to purchase units in a UCITS scheme or EEA UCITS scheme and that contains specific information about the scheme:(a) makes no statement that contradicts or diminishes the significance of the information contained in the prospectus and the key investor information document or EEA key investor information document for the scheme;(b) indicates that a prospectus exists for the scheme and that the key
COBS 4.13.3RRP
A firm must ensure that a marketing communication (other than a key investor information document or EEA key investor information document) relating to a feeder UCITS contains a statement that the feeder UCITS permanently invests at least 85% in value of its assets in units of its master UCITS.[Note: article 63(4) of the UCITS Directive]
COLL 8.2.2RRP
A qualified investor scheme may issue such classes of unit as are set out in the instrument constituting the scheme, provided the rights of any class are not unfairly prejudicial as against the interests of the unitholders of any other class of units in that scheme.
COLL 8.2.3RRP
4(1) The authorised fund manager must ensure that the name of the scheme, a sub-fund or a class of unit is not undesirable or misleading.(2) An authorised fund or a sub-fund may only be named or marketed as a ‘money market fund’ if it is:(a) a short-term money market fund; or(b) a money market fund.4[Note: Box 1, paragraph 2 of CESR's guidelines on a common definition of European money market funds]4
COLL 8.2.6RRP

This table belongs to COLL 8.2.5 R

1

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is a qualified investor scheme; and

(3)

in the case of an ICVC, whether the head office of the company is situated in England and Wales or Wales or Scotland or Northern Ireland.

3Property Authorised Investment Funds

1A

For a property authorised investment fund, a statement that:

(1)

it is a property authorised investment fund;

(2)

no body corporate may seek to obtain or intentionally maintain a holding of more that 10% of the net asset value of the fund; and

(3)

in the event that the authorised fund manager reasonably considers that a body corporate holds more than 10% of the net asset value of the fund, the authorised fund manager is entitled to delay any redemption or cancellation of units in accordance with 6A if the authorised fund manager reasonably considers such action to be:

(a)

necessary in order to enable an orderly reduction of the holding to below 10%; and

(b)

in the interests of the unitholders as a whole.

2

Constitution

The following statements:

(1)

the scheme property of the scheme is entrusted to a depositary for safekeeping (subject to any exception permitted by the rules);

(2)

if relevant, the duration of the scheme is limited and, if so, for how long;

(3)

charges and expenses of the scheme may be taken out of scheme property;

(4)

for an ICVC:

(a)

what the maximum and minimum sizes of the scheme's capital are; and

(b)

the unitholders are not liable for the debts of the company; and5

5(4A)

for an ICVC which is an umbrella, a statement that the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any such purpose;

(5)

for an AUT:

(a)

the trust deed:

(i)

is made under and governed by the law of England and Wales, or the law of Scotland or the law of Northern Ireland;

(ii)

is binding on each unitholder as if he had been a party to it and that he is bound by its provisions; and

(iii)

authorises and requires the trustee and the manager to do the things required or permitted of them by its terms;

(b)

subject to the provisions of the trust deed and all the rules made under section 247 of the Act (Trust scheme rules):

(i)

the scheme (other than sums held to the credit of the distribution account) is held by the trustee on trust for the unitholders according to the number of units held by each unitholder or, where relevant, according to the number of individual shares in the scheme property represented by the units held by each unitholder; and

(ii)

the sums standing to the credit of any distribution account are held by the trustee on trust to distribute or apply in accordance with COLL 8.5.15 R (Income);

(c)

a Unitholder is not liable to make any further payment after he has paid the price of his units and that no further liability can be imposed on him in respect of the units he holds; and

(d)

payments to the trustee by way of remuneration are authorised to be paid (in whole or in part) out of the scheme property.

3

Investment objectives

A statement of the object of the scheme, in particular the types of investments and assets in which it and each sub-fund (where applicable) may invest and that the object of the scheme is to invest in property of that kind with the aim of spreading investment risk.

4

Units in the scheme

A statement of:

(1)

the classes of units which the scheme may issue, indicating, for a scheme which is an umbrella, which class or classes may be issued in respect of each sub-fund; and

(2)

the rights attaching to units of each class (including any provisions for the expression in two denominations of such rights).

5

Limitation on issue of and redemption of units

Details as to:

(1)

the provisions relating to any restrictions on the right to redeem units in any class; and

(2)

the circumstances in which the issue of the units of any particular class may be limited.

6

Income and distribution

Details of the person responsible for the calculation, transfer, allocation and distribution of income for any class of unit in issue during the accounting period.

3Redemption or cancellation of units on breach of law or rules

6A

A statement that where any holding of units by a unitholder is (or is reasonably considered by the authorised fund manager to be) an infringement of any law, governmental regulation or rule, those units must be redeemed or cancelled.

7

Base currency

A statement of the base currency of the scheme.

8

Meetings

Details of the procedures for the convening of meetings and the procedures relating to resolutions, voting and the voting rights for unitholders.

9

Powers and duties of the authorised fund manager and depositary

Where relevant, details of any function to be undertaken by the authorised fund manager and depositary which the rules in COLL require to be stated in the instrument constituting the scheme.

10

Termination and suspension

Details of:

(1)

the grounds under which the authorised fund manager may initiate a suspension of the scheme and any associated procedures; and

(2)

the methodology for determining the rights of unitholders to participate in the scheme property on winding up.

110A

Investment in overseas2 property through an intermediate holding vehicle1

If investment in an overseas2 immovable is to be made through an intermediate holding vehicle or a series of intermediate holding vehicles, a statement that the purpose of that intermediate holding vehicle or series of intermediate holding vehicles will be to enable the holding of overseas2 immovables by the scheme.1

11

Other relevant matters

Details of those matters which enable the scheme, authorised fund manager or depositary to obtain any privilege or power conferred by the rules in COLL which is not otherwise provided for in the instrument constituting the scheme.

COLL 8.2.7RRP
Units whose issue may be limited can only be issued if permitted by the instrument constituting the scheme, under the conditions set out in the prospectus and provided that this will not materially prejudice any existing unitholders in the scheme.
COLL 8.3.2RRP
(1) An authorised fund manager must ensure that a prospectus of a qualified investor scheme is drawn up which contains the information, specified in COLL 8.3.4 R (Table: contents of qualified investor scheme prospectus), and the authorised fund manager must:(a) revise the prospectus immediately upon the occurrence of any materially significant change in the information required to be stated within it;(b) include the date of any revision in a prominent manner in the revised prospectus;22(c)
COLL 8.3.4RRP

This table belongs to COLL 8.3.2 R.

1

Document status

A statement that this document is the prospectus of the authorised fund valid as at a particular date which shall be the date of the document.

2

Description of the authorised fund

Information detailing:

(1)

the name of the authorised fund;

(2)

that the authorised fund is either an ICVC or an AUT;

(3)

that the scheme is a qualified investor scheme;

(4)

where relevant, that the unitholders in an ICVC are not liable for the debts of the authorised fund;

(5)

where relevant, the address of the ICVC's head office and the address in the United Kingdom for service on the ICVC of documents required or authorised to be served on it;

(6)

the effective date of the authorisation order made by the FSA and, if the duration of the authorised fund is not unlimited, when it will or may terminate;

(7)

the base currency for the authorised fund;

(8)

where relevant, the maximum and minimum sizes of the ICVC's capital; and

(9)

the circumstances in which the authorised fund may be wound up under the rules in COLL and a summary of the procedure for, and the rights of unitholders under, such a winding up.

3

Investment objectives and policy

(1)

Sufficient information to enable a unitholder to ascertain:

(a)

the investment objectives of the authorised fund;

(b)

the authorised fund's investment policy for achieving those investment objectives, including:

(i)

the general nature of the portfolio and any intended specialisation;

(ii)

the policy for the spreading of risk in the scheme property; and

(iii)

the policy in relation to the exercise of borrowing powers;

(c)

a description of any restrictions in the assets in which investment may be made; and

(d)

the extent (if any) to which that investment policy does not envisage remaining fully invested at all times.

(2)

For investment in immovables :

(a)

the countries or territories of immovables in which the authorised fund may invest;

(b)

the policy of the authorised fund manager in relation to insurance of immovables forming part of the scheme property; and

(c)

the policy of the authorised fund manager in relation to the granting of options over immovables in the scheme property and the purchase of options on immovables.

(3)

If intended, whether the scheme property may consist of units in collective investment schemes ("second schemes") which are managed by or operated by the authorised fund manager or by one of its associates and a statement as:

(a)

to the basis of the maximum amount of the charges in respect of transactions in a second scheme; and

(b)

the extent to which any such charges will be reimbursed to the scheme.

(4)

If intended, whether the scheme may enter into stock lending transactions and, if so, what procedures will operate and what collateral will be required.

(5)

Where a scheme is a feeder scheme which (in respect of investment in units in a single collective investment scheme) is dedicated to units in a collective investment scheme, details of the master scheme and the minimum (and, if relevant, maximum) investment that the feeder scheme may make in it;8

(6)

Where the scheme is a money market fund or a short-term money market fund, a statement identifying it as such a fund and a statement that the scheme's investment objectives and policies will meet the conditions in the definition of money market fund or short-term money market fund, as appropriate.9

4

Distributions and accounting dates

Relevant details of accounting and distribution dates and a description of the procedures:

(1)

for determining and applying income (including how any distributable income is paid); and

(2)

relating to unclaimed distributions.

5

The characteristics of units in the authorised fund

Information as to:

(1)

the names of the classes of units in issue or available for issue and the rights attached to them in so far as they vary from the rights attached to other classes;

(2)

how unitholders may exercise their voting rights and what these are; and

(3)

the circumstances where a mandatory redemption, cancellation or conversion of units from one class to another may be required.

6

The authorised fund manager

The following particulars of the authorised fund manager:

(1)

its name and the nature of its corporate form;

(2)

the country or territory of its incorporation;

(3)

the date of its incorporation and if the duration of its corporate status is limited, when that status will or may cease;

(4)

if it is a subsidiary, the name of its ultimate holding company and the country or territory in which that holding company is incorporated;

(5)

the address of its registered office, its head office, and, if different, the address of its principal place of business in the United Kingdom;

(6)

the amount of its issued share capital and how much of it is paid up;

(7)

for an ICVC, a summary of the material provisions of the contract between the ICVC and the authorised fund manager which may be relevant to unitholders including provisions (if any) relating to termination, compensation on termination and indemnity; and

(8)

for an AUT, the names of the directors of the manager.

7

Directors of an ICVC, other than the ACD

Other than for the ACD:

(1)

the names and positions in the ICVC of the directors; and

(2)

the manner, amount and calculation of the remuneration of the directors.

8

The depositary

The following particulars of the depositary:

(1)

its name and the nature of its corporate form;

(2)

the country or territory of its incorporation;

(3)

the address of its registered office and the address of its head office if that is different from the address of its registered office; and

(4)

if neither its registered office nor its head office is in the United Kingdom, the address of its principal place of business in the United Kingdom.

9

The investment adviser

If an investment adviser is retained in connection with the business of the authorised fund, its name and whether or not it is authorised by the FSA.

10

The auditor

The name of the auditor of the authorised fund.

11

The register of Unitholders

Details of the address in the United Kingdom where the register of unitholders is kept and can be inspected by unitholders.

12

Payments out of the scheme property

The payments that may be made out of the scheme property to any person whether by way of remuneration for services, or reimbursement of expense and for each category of remuneration or expense, the following should be specified:

(1)

the current rates or amounts of such remuneration;

(2)

how the remuneration will be calculated and accrue and when it will be paid;

(3)

if notice has been given to unitholders of the authorised fund manager's intention to:

(a)

introduce a new category of remuneration for its services; or

(b)

increase the basis of any current charge; or

(c)

change the basis of the treatment of a payment from the capital property set out in COLL 8.5.13 R (2) (Payments);

particulars of that introduction or increase and when it will take place;

(4)

the types of any other charges and expenses that may be taken out of the scheme property; and

(5)

if, in accordance with COLL 8.5.13 R (2), all or part of the remuneration or expense are to be treated as a capital charge:

(a)

that fact; and

(b)

the basis of the charge which may be so treated.

13

Dealing

Details of:

(1)

the dealing days and times in the dealing day on which the authorised fund manager will receive requests for the sale and redemption of units;

(2)

the procedures for effecting:

(a)

the issue and cancellation of units;

(b)

the sale and redemption of units; and

(c)

the settlement of transactions;

(3)

the steps required to be taken by a unitholder in redeeming units before he can receive the proceeds including any relevant notice periods and the circumstances and periods where a deferral of payment as provided in COLL 8.5.11 R (3) (Sale and redemption) may be applied;

(4)

the circumstances in which the redemption of units may be suspended;

(5)

the days and times in the day on which recalculation of the price will commence;

(6)

details of the minimum number or value of each type of unit in the authorised fund which:

(a)

any one person may hold; and

(b)

may be the subject of any one transaction of sale or redemption;

(7)

the circumstances in which the authorised fund manager may arrange for, and the procedure for, a redemption of units in specie;

(8)

the circumstances in which the further issue of units in any particular class may be limited and the procedures relating to this:66

(9)

the circumstances in which direct issue or cancellation of units by the ICVC or the trustee (as appropriate) may occur and the relevant procedures for such issues and cancellations; and66

(10)

6whether a unitholder may effect transfer of title to units on the authority of an electronic communication and if so the conditions that must be satisfied in order to effect a transfer.6

14

Valuation of scheme property

Details as to:

(1)

how frequently and at what times of the day the scheme property will be regularly valued to determine the price at which units in the scheme may be purchased from or redeemed by the authorised fund manager and a description of any circumstance where the scheme property may be specially valued;

(2)

in relation to each purpose for which the scheme property must be valued, the basis on which it will be valued; and

(3)

how the price of units of each class will be determined, including whether a forward price or historic price basis is to be applied.

15

Sale and redemption charges

If the authorised fund manager makes any charges on sale or redemption of units, details of the charging structure and how notice will be provided to unitholders of any increase.

15A5

Property Authorised Investment Funds

For a property authorised investment fund, a statement that:

(1)

it is a property authorised investment fund;

(2)

no body corporate may seek to obtain or intentionally maintain a holding of more than 10% of the net asset value of the fund; and

(3)

in the event that the authorised fund manager reasonably considers that a body corporate holds more than 10% of the net asset value of the fund, the authorised fund manager is entitled to delay any redemption or cancellation of units if the authorised fund manager reasonably considers such action to be:

(a)

necessary in order to enable an orderly reduction of the holding to below 10%; and

(b)

in the interests of the unitholders as a whole.

16

General information

Details as to:

(1)

when annual and half- yearly reports will be published; and

(2)

the address at which copies of the instrument constituting the scheme, any amending instrument and the most recent annual reports may be inspected and from which copies may be obtained.

17

Information on the umbrella

In the case of a scheme which is an umbrella, the following information:

(1)

that a unitholder may exchange units in one sub-fund for units in another sub-fund and that such an exchange is treated as a redemption and sale;

(2)

what charges may be made on exchanging units in one sub-fund for units in other sub-funds;

(3)

the policy for allocating between sub-funds any assets of, or costs, charges and expenses payable out of, the scheme property which are not attributable to any particular sub-fund;

(4)

in respect of each sub-fund, the currency in which the scheme property allocated to it will be valued and the price of units calculated and payments made, if this currency is not the base currency of the umbrella; and

(5)

for an ICVC, that:10

10

10(a)

its sub-funds are segregated portfolios of assets and, accordingly, the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any such purpose; and

10(b)

while the provisions of the OEIC Regulations provide for segregated liability between sub-funds, the concept of segregated liability is relatively new. Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not yet known how those foreign courts will react to regulations 11A and 11B of the OEIC Regulations.

18

Application of the prospectus contents to an umbrella

For a scheme which is an umbrella, information required must be stated:

(1)

in relation to each sub-fund where the information for any sub-fund differs from that for any other; and

(2)

for the umbrella as a whole, but only where the information is relevant to the umbrella as a whole.

318A

Investment in overseas4 property through an intermediate holding vehicle3

If investment in an overseas4 immovable is to be made through an intermediate holding vehicle or a series of intermediate holding vehicles a statement disclosing the existence of that intermediate holding vehicle or series of intermediate holding vehicles and confirming that the purpose of that intermediate holding vehicle or series of intermediate holding vehicles is to enable the holding of overseas4 immovables by the scheme.3

19

Additional information

Any other material information which is within the knowledge of the directors of an ICVC or the manager of an AUT, or which the directors or manager would have obtained by the making of reasonable enquiries which investors and their professional advisers would reasonably require, and reasonably expect to find in the prospectus, for the purpose of making an informed judgement about the merits of investing in the authorised fund and the extent and characteristics of the risks accepted by so participating.

COLL 8.3.5CRRP
The report of the authorised fund manager must include:(1) a review of the investment activities during the period to which the report relates;(2) particulars of any fundamental or significant change to the authorised fund made since the date of the last report; and(3) any other information which would enable unitholders to make an informed judgement on the development of the activities of the authorised fund during the period and the results of those activities as at the end
COLL 8.3.5DRRP
(1) The depositary must make an annual report to unitholders which must be included in the annual report.(2) The depositary's report must contain:(a) a description, which may be in summary form, of the duties of the depositary under COLL 8.5.4 R (Duties of the depositary) and in respect of the safekeeping of the scheme property; and(b) a statement whether in any material respect:(i) the issue, sale, redemption and cancellation and calculation of the price of the units and the
COLL 8.3.6RRP
(1) Any proposed change which would be reasonably considered to be a fundamental change to the scheme requires the prior sanction of an ordinary resolution of the unitholders.(2) Any proposed change to the scheme which is not within (1) but which would be reasonably considered to be significant, requires the giving of reasonable notice to Unitholders to become effective.(3) Alterations affecting only a particular sub-fund or class of units may be approved in accordance with (1)
COLL 6.6.3RRP
(1) The authorised fundmanager must manage the scheme in accordance with:(a) the instrument constituting the scheme;(b) the rules in this sourcebook;(c) the most recently published prospectus; and(d) for an ICVC, the OEIC Regulations.(2) The authorised fund manager must take such steps as necessary to ensure compliance with the rules in this sourcebook that impose obligations upon the ICVC.(3) The authorised fund manager must:(a) make decisions as to the constituents of the scheme
COLL 6.6.13RRP
(1) The depositary must take all necessary steps to ensure that instructions given to it by the authorised fund manager for the exercise of rights attaching to the ownership of scheme property are carried out.(2) Where the scheme property of an authorised fund contains units in any other scheme managed or otherwise operated by the manager of the AUT or, as the case may be, by any director of the ICVC or by any associate of either, the depositary must exercise any voting rights
COLL 6.6.17RRP
(1) The authorised fund manager, any other director of an ICVC and the depositary must take reasonable care to ensure that a transaction within (a) to (f) is not carried out on behalf of the scheme:(a) putting cash on deposit with an affected person unless that person is an eligible institution or an approved bank and the arm's length requirement in (2) is satisfied;(b) lending money by an affected person to, or for the account of, the scheme, unless the affected person is an
COLL 7.2.1RRP
(1) The authorised fund manager may, with the prior agreement of the depositary, and must without delay, if the depositary so requires, temporarily1 suspend the issue, cancellation, sale and redemption of units in an authorised fund (referred to in this chapter as "dealings in units"), where due to exceptional circumstances it is in the interest of all the unitholders in the authorised fund. (1A) The authorised fund manager and the depositary must ensure that the suspension is
COLL 7.2.1ARRP
2Where:(1) an authorised fund manager of a UCITS scheme which is a master UCITS or a qualifying master scheme3temporarily suspends the issue, cancellation, sale and redemption of its units, whether at its own initiative or at the request of the FSA; or(2) an operator of an EEA UCITS scheme which is a master UCITS or a qualifying master scheme3temporarily suspends the issue, cancellation, sale or redemption of its units, whether at its own initiative or at the request of its Home
COLL 7.2.2GRP
(1) 1Suspension should be allowed only in exceptional cases where circumstances so require and suspension is justified having regard to the interests of the unitholders. Difficulties in realising scheme assets or temporary shortfalls in liquidity may not on their own be sufficient justification for suspension. In such circumstances the authorised fund manager and depositary would need to be confident that suspension could be demonstrated genuinely to be in the best interests of
PERG 9.10.5GRP
There are a number of other exemptions in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (SI 2001/1060). In general terms, these exemptions are equivalent to the exemptions from section 21 of the Act that apply to units. There is guidance on those exemptions in PERG 8.20.3 G (Additional restriction on the promotion of collective investment schemes).
PERG 9.10.8GRP
A person who carries on in the United Kingdom the business of engaging in any regulated activity that relates to units or shares will need to be an authorised person (see PERG 2.7 and PERG 2.8 (Authorisation and regulated activities)).
PERG 9.10.9GRP
In order to be authorised, a person must have permission to carry on the regulated activities in question. What the permission needs to cover may differ according to whether the regulated activity being carried on relates to units or shares. So, for example, a body corporate that is an open-ended investment company will need permission if it carries on the regulated activity of dealing as principal or agent, arranging (bringing about) or making arrangements with a view to transactions
COLL 6.9.6GRP
(1) Regulation 15(9) of the OEIC Regulations and section 243(8) of the Act require that an authorised fund's name must not be undesirable or misleading. This section contains guidance on some specific matters the FSA will consider in determining whether the name of an authorised fund is undesirable or misleading. It is in addition to the requirements of regulation 19 of the OEIC Regulations (Prohibition on certain names).(2) The FSA will take into account whether the name of the
COLL 6.9.7RRP
The authorised fund manager must ensure that the name of a sub-fund or of a class of unit is not undesirable or misleading.
COLL 7.3.1GRP
(1) The winding up of an ICVC may be carried out under this section instead of by the court provided the ICVC is solvent and the steps required under regulation 21 the OEIC Regulations (The Authority's approval for certain changes in respect of a company) are fulfilled. This section lays down the procedures to be followed and the obligations of the ACD and any other directors of the ICVC. (2) The termination of a sub-fund may be carried out4 under this section, instead of by the
COLL 7.3.2RRP
In this section, where a sub-fund of an ICVC is being terminated, references to:(1) units, are references to units of the class or classes related to the sub-fund to be terminated;(2) a resolution, or extraordinary resolution, are references to such a resolution passed at a meeting of unitholders of units of the class or classes referred to in (1); (3) scheme property, are references to the scheme property allocated or attributable to the sub-fund to be terminated; and(4) liabilities,
COLL 7.3.6RRP
(1) Winding up or termination must commence once the conditions referred to in COLL 7.3.4 R (3) are both satisfied or, if later, once the events in COLL 7.3.4 R (4) have occurred. (2) Once winding up or termination has commenced: (a) COLL 6.2 (Dealing), COLL 6.3 (Valuation and pricing) and COLL 5 (Investment and borrowing powers) cease to apply to the ICVC or to the units and scheme property in the case of a sub-fund; (b) the ICVC must cease to issue and cancel3units, except
COLL 7.3.7RRP
(1) [deleted]44(2) The ACD must, as soon as practicable after winding up or termination has commenced, cause the scheme property to be realised and the liabilities of the ICVC or the sub-fund to be met out of the proceeds.(3) The ACD must instruct the depositary how such proceeds (until utilised to meet liabilities or make distributions to unitholders) must be held and those instructions must be prepared with a view to the prudent protection of creditors and unitholders against