SCHEDULE
(Article 1)
collective investment funds (recognized
funds) rules 2001
PART 1
INTRODUCTION
1.01 Interpretation
1.02 Holding
company, subsidiary and group
1.03 Application
PART 2
CONSTITUTION AND GENERAL REQUIREMENTS
2.01 The constitution
2.02 Public availability of constitutional
documents
2.03 Units
2.04 Classes of unit
2.05 Categories of recognized fund
2.06 Functionaries independent
2.07 Status of functionaries
2.08 Name and purpose of recognized fund.
2.09 Repurchase of units
2.10 Alteration of funds, etc.
2.11 Restriction on activities of manager
2.12 Avoidance of exclusion clauses
PART 3
PROSPECTUS
3.01 Preparation of a prospectus
3.02 Publication of prospectus
3.03 False or misleading prospectus
3.04 Revision of prospectus
PART 4
PRICING AND DEALING
SECTION
A
Initial offers and unitisations
4.01 Introduction to this Part and to
Section A
4.02 Creation of units: initial offer
4.03 Initial price
4.04 Compulsory termination of initial
offer
4.05 Creation of units: unitisation
SECTION
B
Creation and cancellation
4.06 Introduction
4.07 Creation instructions
4.08 Creation of units
4.09 Cancellation of units
4.10 Price of a unit
4.11 Refusal to create or cancel units
4.12 Modification to number of units
created or cancelled
SECTION
C
Sale and Repurchase
4.13 Introduction
4.14 Manager’s obligation to sell
4.15 Sale price parameters: dual pricing
basis
4.16 Sale price parameters: single pricing
basis
4.17 Manager’s obligation to
repurchase
4.18 Payment on repurchase
4.19 Repurchase price parameters: dual
pricing basis
4.20 Repurchase price parameters: single
price basis
4.21 Creation and cancellation through the
manager when not acting as principal
4.22 Notification of prices to the
depositary
4.23 Publication of prices
4.24 Instructions etc. by manager
4.25 Dilution levy
SECTION
D
Forward
and historic pricing
4.26 Introduction
Table
4.1 – Forward or Historic Pricing
Rules
- Notes
Section
1 - General
Section
2 - General duty to adopt forward pricing
Section 3 - Individual
deviations
Section
4 - Notification
SECTION E
‘In specie’ cancellation
4.27 In specie cancellation
SECTION
F
Valuation
4.28 Valuation of the property of the
recognized fund
Regular
Valuation
Additional
Valuation
Additional
or special requirements
PART 5
INVESTMENT AND BORROWING POWERS
5.01 Introduction
SECTION
A
GENERAL
5.02 Investment powers: general
5.03 Valuation
5.04 Part to be construed as a whole
5.05 Transferable security
5.06 Approved security
5.07 Warrants
5.08 Derivative and approved derivative
5.09 Eligible securities and derivatives
markets
5.10 Permitted immovable and approved
immovable
SECTION
B
SECURITIES FUNDS
5.11 Securities funds: general
5.12 Spread: general
5.13 Spread: Government and other public
securities
5.14 Investment in collective investment
funds
5.15 Investment in warrants and in nil paid
or partly paid securities
5.16 Significant influence
5.17 Investment in collective investment
funds managed by manager etc.
SECTION
C
MONEY MARKET FUNDS
5.18 Money market funds: general
5.19 Investment limits
5.20 Spread
5.21 Other provisions
SECTION
D
FUTURES AND OPTIONS FUNDS
5.22 Futures and options funds: general
5.23 Permitted transactions (derivatives
and forwards)
Off-exchange
5.24 Investment in collective investment
funds
5.25 Cover for derivatives and forward
transactions
5.26 Derivatives covering derivatives
Table
5.1 - Derivatives covering derivatives: ground rules
Rules
5.27 Deposit arrangements (for purchased
options) and borrowing
Deposit
arrangements
Borrowing
5.28 Continuing nature of limits and
requirements
SECTION
E
GEARED FUTURES AND OPTIONS FUNDS
5.29 Geared futures and options funds:
general
5.30 Limits on investment in initial outlay
5.31 Spread
5.32 Investment in collective investment
funds
5.33 Delivery of property pursuant to a
derivatives transaction
SECTION
F
PROPERTY FUNDS
5.34 Property funds: general
5.35 Permitted and approved immovables
5.36 Property related assets
5.37 Investment in collective investment
funds
5.38 Property related limits
5.39 Mortgaged property
5.40 Spread
5.41 Initial periods
5.42 Grant of options, mortgages etc.
5.43 Other provisions
SECTION
G
WARRANT FUNDS
5.44 Warrant funds
SECTION
H
FEEDER FUNDS
5.45 Feeder funds: general
5.46 Feeder funds investing in eligible investment
trusts
SECTION
I
FUNDS OF FUNDS
5.47 Funds of funds: general
5.48 Eligible combinations of funds
SECTION
J
UMBRELLA FUNDS
5.49 Umbrella funds: general
SECTION
K
EFFICIENT PORTFOLIO MANAGEMENT
5.50 Efficient portfolio management:
general
5.51 Appropriate transactions
5.52 Economic appropriateness
5.53 Generation of additional capital or
income
5.53 Generation of additional capital or
income
5.54 Permitted transactions
5.55 Cover for transactions under this
Section
5.56 Borrowing in the context of efficient
portfolio management
5.57 Continuing nature of limits and
requirements
SECTION
L
STOCKLENDING
5.58 Stocklending: general
5.59 Permitted stocklending
5.60 Limitation by value
5.61 Treatment of collateral
SECTION
M
CASH, BORROWING, LENDING ETC.
5.62 Cash and near cash
5.63 General power to borrow
5.64 Borrowing limits
5.65 Restriction on lending of money
5.66 Restriction on lending of property
other than money
5.67 General power to underwrite or accept
placings
5.68 Guarantees and indemnities
SECTION
N
MISCELLANEOUS
5.69 Requirement to cover sales
5.70 Investment in other group collective
investment funds
PART 6
TITLE AND TRANSFER
6.01 The register
6.02 The register as evidence of title
6.03 Inspection of the register and copies
of entries
6.04 The manager as unitholder
6.05 Certificates, etc.
6.06 Transfer of units by act of parties
6.07 Transfer of units by operation of law
6.08 Change of name and address of
unitholder
6.09 Conversion of units
6.10 Subdivision and consolidation of units
6.11 Default by unitholder
PART 7
POWERS AND DUTIES OF THE MANAGER, THE
DIRECTORS, THE COMPANY AND THE DEPOSITARY
SECTION
A
THE MANAGER
7.01 Management of the recognized fund
7.02 Dealings in property of the fund
7.03 Maintenance of records
7.04 Audit
7.05 Tax returns
7.06 Review of recognized fund’s
constitution
7.07 Manager to supply information to
depositary
SECTION
B
THE DEPOSITARY
7.08 Oversight by the depositary of the
manager
7.09 Control by the depositary over the
property of the fund
7.10 Exercise of rights in respect of the
property of the fund
SECTION
C
THE MANAGER, THE DIRECTORS, THE COMPANY AND
THE DEPOSITARY
7.11 Duties of the manager, the directors
the company and the depositary under the law
7.12 Timely performance of duties
7.13 Duties of the manager and depositary:
investment and borrowing powers
7.14 Delegation
7.15 Conflicts of interest etc.
SECTION
D
NEW MANAGERS AND DEPOSITARIES
7.16 Replacement of manager
7.17 Retirement of manager
7.18 Supplementary
7.19 Retirement and replacement of the depositary
PART 8
CHARGES AND EXPENSES
8.01 Payments by the recognized fund to the
manager
8.02 Preliminary charge
8.03 Increase in remuneration or
preliminary charge
8.04 Other payments out of the property of
the recognized fund
8.05 Exemption from liability to account
for profits
8.06 Allocation of payments to capital or
to income
8.07 Charges on repurchase
8.08 Exchange of units in umbrella funds
8.09 Restricted payments
8.10 Performance fees
8.11 Movable and immovable property
8.12 Amortisation
8.13 Tax
PART 9
INCOME
9.01 Accounting periods
9.02 Annual income allocation date
9.03 Annual allocation of income
9.04 Annual allocation to accumulation
units
9.05 Annual distribution to unitholders of
income units
9.06 Interim allocations of income
9.07 Income equalisation
9.08 How distributions may be made
9.09 Distribution statements and tax
certificates
PART 10
REPORTS
10.01 Annual and half-yearly reports
10.02 Publication of manager’s or directors’
reports
10.03 Annual and half-yearly reports to be offered to
purchasers of units
10.04 Manager to publish daily statement of availability
of reports, etc.
10.05 Annual Report by the depositary
10.06 Short form accounts in reports
PART 11
MEETINGS AND MODIFICATIONS
11.01 Introduction
11.02 Modification of the constitutional documents: with
meeting
11.03 Modification of the constitutional documents:
without meeting
11.04 Resolution to change the prospectus
11.05 Amalgamation
11.06 Reconstruction
11.07 Convening of meetings and attendance and voting
thereat
11.08 Powers of a meeting of unitholders
11.09 Notices of meetings of unitholders
11.10 Quorum
11.11 The chairman
11.12 Adjournment
11.13 Votes at meetings
11.14 Restrictions on the putting of composite
resolutions to meetings of holders
11.15 Proxies
11.16 Minutes
11.17 Meaning of ‘extraordinary resolution’
and of ‘ordinary resolution
11.18 Class meetings
11.19 Resolutions
PART 12
SPECIAL PROVISIONS FOR CERTAIN CATEGORIES
OF RECOGNIZED FUND
12.01 Efficient portfolio management: off-exchange
options
SECTION
A
FUTURES AND OPTIONS FUNDS
12.02 Off-exchange derivatives: discrepancy in valuation
12.03 Special rule for selling and repurchase
SECTION
B
GEARED FUTURES AND OPTIONS FUNDS
12.04 Special rules for pricing
12.05 Special rule for selling and repurchase
SECTION
C
PROPERTY FUNDS
12.06 Standing independent valuer
12.07 Functions of the standing independent valuer
12.08 Special rules for pricing
12.09 Failure to obtain minimum subscriptions
12.10 Notification of breaches etc.
12.11 Suspension of dealings
SECTION
D
WARRANT FUNDS
12.12 Special rules for pricing
SECTION
E
FEEDER FUNDS AND FUNDS OF FUNDS
12.13 Pricing and valuation of feeder funds
12.14 Feeder funds: notification of risk of loss of
eligibility of eligible investment trust
12.15 Valuation of funds of funds
SECTION
F
UMBRELLA FUNDS
12.16 Qualification to be authorised as an umbrella fund
12.17 Base currency
12.18 Allocation of property of the fund
12.19 Significant influence
PART 13
SUSPENSION AND TERMINATION
13.01 Suspension and resumption of sale and repurchase
of units
13.02 When the pool is to be wound up
13.03 Manner of winding up
13.04 Accounting and reports during winding up
PART 14
APPLICATION FOR RECOGNIZED FUND CERTIFICATE
14.01 Application for recognized fund certificate
14.02 Grant of recognized fund certificate
14.03 Cancellation or amendment and re-issue of
recognized fund certificate
14.04 Representations against refusal or cancellation or
amendment of a recognized fund certificate
PART 15
SUPPLEMENTARY
15.01 Service of notices and documents
PART 16
MISCELLANEOUS
16.01 Definitions
16.02 Transitional provisions
16.03 Early commencement
16.04 Status of recognized funds
SCHEDULES
SCHEDULE 1 – THE
CONSTITUTIONAL DOCUMENTS
Part
I Matters which must be
contained within the constitutional documents
1 Name
of the recognized fund
2 Recognized
fund status
3 Governing
law
4 Trust
instrument to be binding and authoritative
5 Base
currency
6 Investment
powers in eligible markets
7 Ownership
of property of the fund
8 Unitholder’s
liability to pay
9 Conflict
Part
II Matters which may be contained in
the constitutional documents (without prejudice to the generality of Part 2 of
this Order)
10 Duration
of the pool
11 Constituents
of property, permitted transactions and borrowing powers
12 Restricted
economic or geographic objectives
13 Classes
of units
14 Bearer
Certificates
15 Enabling
and restricting provisions
16 Compulsory
redemption, cancellation or transfer
17 Exemption
from liability
18 Restatement
of statutory provisions
SCHEDULE 2 – INFORMATION
TO BE CONTAINED IN A PROSPECTUS
1 The
manager and in the case of a company the manager and the company
2 The
depositary
3 The
investment adviser or investment manager
4 Standing
independent valuer
5 The
registrar
6 The
auditor
7 Legal
adviser
8 The
register of unitholders
9 The
constitution and objectives of the recognized fund
10 List
of eligible markets
11 The
characteristics of classes of units in the recognized fund
12 Valuation
of property
13 Preliminary
charge
14 Periodic
charge
15 Charge
on repurchase
16 Dilution
levy
17 Other
payments out of the property of the fund
18 Distribution
19 The
sale and repurchase of units in the recognized fund
20 Pricing
basis for sale and repurchase
21 General
information
22 Additional
information in all cases
23 Umbrella
Funds
24 Statements
to be included
25 Prominent
Statement
SCHEDULE 3 – ANNUAL
AND HALF YEARLY REPORTS
Part
I Report
of the manager of a unit trust or of the directors of a company
Part
II Report
of the manager or directors - short form accounts
Part
III Comparative
table
Part
IV Report of
the auditor
Part
V Auditor’s
statement relating to short form accounts
Part
VI Report of
the depositary
Part
VII Balance sheet
Part
VIII Statement of total
return
Part
IX Portfolio
statement
Part
X Statement
of movements in unitholder’s funds
Part
XI Notes to
the accounts
Part
XII Short form
accounts
SCHEDULE 4 – GLOSSARY
PART 1
INTRODUCTION
1.01 Interpretation
1 Schedule
4 to these Rules (Glossary) has effect for the interpretation of the
expressions referred to in it.
2 In
these Rules, unless the context otherwise requires –
“collective investment fund” shall have the same meaning
as in the Law;
“company”, except in Article 1.02, means a
recognized fund which is a body corporate;
“constitutional documents” means in relation to –
(a) a
unit trust, the trust instrument and fund rules, if any;
(b) a
company, its memorandum and articles of association or their equivalent and
fund rules, if any; and
(c) a
recognized fund other than a unit trust or company, such documents as shall be
prescribed by the Committee pursuant to the Law;
“custodian” means, in relation to a company, the person
entrusted with the safekeeping of the property of the fund pursuant to the
constitutional documents;
“depositary” means in relation to –
(a) a
unit trust, the trustee;
(b) a
company, its custodian; and
(c) a
recognized fund other than a unit trust or company, such person as shall be
prescribed by the Committee pursuant to the Law;
“depositary agreement” means any agreement pursuant to
which a depositary is appointed as depositary of a recognized fund;
“fund rules” means rules governing a recognized fund or
a constituent part of a recognized fund adopted pursuant to –
(a) in
relation to a unit trust, the trust instrument;
(b) in
relation to a company, its articles of association or their equivalent; and
(c) in
relation to a recognized fund other than a unit trust or company, such
documents as shall be prescribed by the Committee pursuant to the Law;
“management agreement” means any agreement pursuant to
which a manager is appointed as manager of a recognized fund;
“manager” means in relation to –
(a) a
unit trust or company, the person appointed as manager pursuant to the
constitutional documents or management agreement; and
(b) a
recognized fund other than a unit trust or company, such person as shall be
prescribed by the Committee pursuant to the Law;
“open-ended investment company” means a collective
investment fund in the form of a company the units of which –
(a) the
unitholders are entitled under the company’s constitutional documents to
have bought back or redeemed, directly or indirectly, out of the property of
the company or out of property provided by or at the instigation of the company
and at a price related to the net value of the property of the company to which
the units in question relate; or
(b) the
company ensures are capable of being sold by unitholders on an investment
exchange at a price not significantly different from that referred to in paragraph (a);
“pool” means a recognized fund or a constituent part of
an umbrella fund, as the case may be;
“recognized fund” means a collective investment fund in
respect of which there is a recognized fund certificate;
“trust instrument” means an instrument in writing
constituting a unit trust and made between the manager and the trustee, as
amended or supplemented in writing;
“trustee” means the person who, in relation to a unit
trust, holds the property of the fund on trust for the unitholders pursuant to
the constitutional documents;
“unit” shall have the same meaning as in the Law;
“unit trust” means a recognized fund, and where the
context otherwise requires another collective investment fund, in the form of a
trust the units of which –
(a) the
unitholders are entitled under the trust’s constitutional documents to
have bought back or redeemed, directly or indirectly, out of the property of
the trust or out of property provided by or at the instigation of the trustee
and at a price related to the net value of the property of the trust to which
the units in question relate; or
(b) the
trustee or the manager ensures are capable of being sold by unitholders on an
investment exchange at a price not significantly different from that referred
to in paragraph (a).
3 A
reference in these Rules to a numbered Article, Schedule or Part, without
further identification, is a reference to the Article, Schedule or Part bearing
that number in these Rules.
4 A
reference in any Article or other division of these Rules to a numbered or
lettered paragraph, sub-paragraph, clause or section by number or letter,
without further identification, is a reference to the paragraph, sub-paragraph,
clause or section of that number or letter in the Article or other division in
which it appears.
5 In
these Rules, unless the context otherwise requires, a reference to an
enactment, including an enactment of the United Kingdom, is a reference to that
enactment as amended, extended or applied by or under any other enactment, and
to any enactment which repeals and re-enacts the first mentioned enactment with
or without further amendment.
6 Any
note contained in these Rules forms part of them.
1.02 Holding company, subsidiary and
group
1 For
the purposes of this Article “company” shall have its natural
meaning and for the purposes of these Rules a company is, subject to paragraph
4, deemed to be a subsidiary of another if (but only if) –
a. that
other either –
(i) is a member of it
and controls the composition of its board of directors; or
(ii) holds more than
half in nominal value of its equity share capital, and accordingly is its
holding company; or
b. the
first-mentioned company is a subsidiary of any company which is that
other’s subsidiary.
2 For
the purposes of paragraph 1 the composition of a company’s board of
directors is deemed to be controlled by another company if (but only if) that
other company by the exercise of some power exercisable by it without the
consent or concurrence of another person can appoint or remove the holders of
all or the majority of the directorships.
3 For
the purposes of paragraph 2 the other company is deemed to have power to
appoint to a directorship with respect to which any of the following conditions
is satisfied –
a. that
person cannot be appointed to it without the exercise in his favour by the
other company of that power;
b. that
person’s appointment to the directorship follows necessarily from his
appointment as director of the other company; or
c. that
the directorship is held by the other company itself or by a subsidiary of it.
4 In
determining whether one company is a subsidiary of another –
a. any
shares held or power exercisable by the other in a fiduciary capacity are held
to be treated as not held or exercisable by it;
b. subject
to sub-paragraph c. any shares held or power exercisable –
(i) by any person as
nominee for the other (except where the other is concerned only in a fiduciary
capacity), or
(ii) by, or by a
nominee for, a subsidiary of the other (not being a subsidiary which is
concerned only in a fiduciary capacity),
are to be treated as held or exercisable by the other;
c. any
shares held or power exercisable by, or by a nominee for, the other or its
subsidiary are to be treated as not held or exercisable by the other if the
shares are held or the power exercisable as above mentioned by way of security
only.
5 For
the purposes of these Rules a company is deemed to be another’s holding
company, if (but only if) the other is its subsidiary, and a group company in
relation to a company means any other company that is its holding company or
subsidiary and any other company that is a subsidiary of that holding company.
1.03 Application
1 These
Rules shall apply to recognized funds and to applications for recognized fund
certificates.
PART 2
CONSTITUTION AND GENERAL REQUIREMENTS
2.01 The constitution
1 A
recognized fund does not qualify for the grant of a recognized fund certificate
unless the fund is constituted by constitutional documents that –
a. conform
with Schedule 1; and
b. (subject
to a. above) contains no provision that conflicts with or is inconsistent with
the requirements of any enactment, including these Rules.
2 Any
power conferred on the manager, the depositary, the directors or the company,
or on them together, in these Rules is subject to any express prohibition or
restriction contained in the constitutional documents, the management agreement
or depositary agreement, as the case may be.
3 Part
5 (Investment and borrowing powers) has effect in relation to any recognized
fund subject to any prohibition or restriction imposed by the constitutional
documents.
4 The
constitutional documents must not include any provision that is unfairly
prejudicial to the interests of unitholders generally or to the unitholders of
any class of units.
5 The
constitutional documents may provide that, if the holding of any units by a
unitholder or the beneficial ownership of units by any person is or has caused
(or in the reasonable opinion of the manager of the unit trust or the directors
is or might cause) an infringement of any law or governmental regulation or a
pecuniary or other disadvantage, including a tax disadvantage, on the part of
the recognized fund, the unitholders or the unitholders of units of any class,
then the units so held shall be transferred, repurchased or cancelled and, if
the constitutional documents contain such a provision, they shall also provide
the procedure for that transfer, repurchase or cancellation.
2.02 Public availability of
constitutional documents
1 The
manager shall make available a copy of the constitutional documents (and of any
supplements or amendments to the constitutional documents) together with the
management agreement and depositary agreement, as the case may be, for
inspection free of charge by any member of the public in accordance with
paragraph 2.
2 The
copy shall be made available at all times during ordinary office hours by the
manager at the principal place of business in Jersey where it carries on the
business of acting as the manager of recognized funds.
3 A
copy made available under this Article shall be made available in English.
4 The
manager shall allow any person to obtain (on payment of a reasonable fee) a
copy of any document made available pursuant to this Article.
2.03 Units
The interests of the unitholders in a pool shall consist of units
(including fractions of a unit) each unit representing one undivided share of
entitlement in the property of the pool; but this general rule is modified in
the circumstance of the pool consisting of more than one class of units as to
which see Article 2.04.
2.04 Classes of unit
1 Classes
of units may include –
a. income
units, in which the income is allocated periodically to unitholders under Article 9.05;
b. accumulation
units, in which the income is credited periodically to capital under Article 9.04;
c. roll-up
units, with respect to which income is not distributed periodically to
unitholders but is retained and forms part of the property of the pool; or
d. any
other of class of unit approved by the Commission;
and the pool will consist of income units only unless otherwise
specified in (or the manager or directors otherwise decide pursuant to a power
contained in) the constitutional documents.
2 If
any class of units in a recognized fund has different rights from any other
class of units in the recognized fund, the constitutional documents shall
provide how the proportion of the value of the property of the fund and the
proportion of income available for allocation attributable to each such class
shall be calculated.
3 Without
prejudice to the provisions of paragraph 1 and with the exception of units
issued to a functionary for the purposes of operating a recognized fund –
a. in
relation to any pool, the constitutional documents must not provide for any
class of unit in respect of which –
(i) the extent of the
rights to participate in the capital property, income property or distribution
account would be determined differently from the extent of the corresponding
rights for any other class of unit, or
(ii) payments or
accumulation or retention of income or capital would differ in source or form
from those of any other class of unit;
b. the
prohibitions in paragraph a. shall not be regarded as breached by reason of any
difference between the rights attached to one class of unit and another class
of unit that relates solely to –
(i) the accumulation
or roll-up of income whether by way of periodical credit to capital or
continual accretion rather than distribution, and/or
(ii) charges and
expenses that may be taken out of the property of the fund or payable by the
unitholder, and/or
(iii) the currency in which
prices or values are expressed or payments made, and/or
(iv) differences in rights
approved by the Commission pursuant to Article 2.04.1(d).
2.05 Categories of recognized fund
1 A
recognized fund must belong to one only of the following categories –
a. a
securities fund;
b. a
money market fund;
c. a
futures and options fund;
d. a
geared futures and options fund;
e. a
property fund;
f. a
warrant fund;
g. a
feeder fund;
h. a
fund of funds;
i. an
umbrella fund.
2 A
‘securities fund’ is a pool dedicated to transferable securities,
excluding a pool that is a warrant fund, a feeder fund or a fund of funds.
3 A
‘money market fund’ is a pool dedicated to –
a. deposits;
and
b. instruments
creating or evidencing indebtedness which are not transferable securities,
whether with or without securities which are transferable
securities.
4 A
‘futures and options fund’ is a pool dedicated to approved and
other derivatives (where most or all of the transactions are fully covered by
cash, securities or other derivatives), whether with or without transferable
securities.
5 A
‘geared futures and options fund’ is a pool dedicated to approved
and other derivatives (where most or all of the extent of investment is limited
by the amount of property available to be put up as initial outlay), whether
with or without transferable securities.
6 A
‘property fund’ is a pool dedicated to permitted immovables and
property related assets, whether with or without transferable securities.
7 A
‘warrant fund’ is a pool which would be a securities fund within
paragraph 2 above except that it is permitted to invest entirely in warrants.
8 A
‘feeder fund’ is a pool dedicated to a single regulated collective
investment fund or, in the case of a regulated collective investment fund having
more than one constituent part (or its equivalent) or class of unit, dedicated
to a single constituent part (or its equivalent) or class thereof, or dedicated
to an eligible investment trust.
9 A
‘fund of funds’ is a pool dedicated to a number of regulated
collective investment funds.
10 An
‘umbrella fund’ is a recognized fund in the form of an umbrella
fund each of the constituent parts of which belongs to any one of the
categories a to h in paragraph 1 above.
11 A
pool may not change from one category to another, nor may its objectives be
changed so as to achieve that effect except with the prior consent of the
Commission and the approval of the unitholders.
12 In
the case of a company which is an umbrella fund, any of its constituent parts
which is a futures and options fund, a geared futures and options fund or a
property fund, or any such additional category of pool as may be prescribed
from time to time by the Commission, shall invest in a manner acceptable to the
Commission.
2.06 Functionaries independent
1 In
the case of a unit trust, the manager and depositary must be persons who are
independent of each other.
2 In
the case of an open-ended investment company, the depositary must be a person
who is independent of that company and the manager.
3 Subject
to paragraph 4 and without prejudice to the generality of paragraphs 1 and 2,
in the case of a recognized fund which became a recognized fund prior to the
date of the coming into force of these Rules, the manager and depositary may be
bodies corporate having the same ultimate holding company, which is
incorporated and resident outside Jersey, if the Commission is satisfied that
the following conditions have been complied with –
a. that
the manager and depositary are subsidiaries of a corporate group with aggregate
capital resources, comprising paid-up share capital and reserves, in excess of
£1,000,000,000;
b. that
neither the manager nor the depositary is a subsidiary of the other;
c. that
no person is a director or other officer or employee of both the manager and
the depositary;
d. that
the depositary has undertaken to report to the Commission all contraventions by
the manager of the requirements of the Law or of any Regulations or Orders made
thereunder (including these Rules) applicable to a recognized fund and all
breaches by the manager of the obligations imposed upon the manager by the
constitutional documents;
e. that
guarantees or undertakings or both, satisfactory to the Commission, of any
liabilities of the depositary and the proper performance by the depositary of
its obligations in respect of the recognized fund have been given by a holding
company of the depositary.
4. If
the manager or depositary of a recognized fund is replaced following the date
of the coming into force of these Rules, the manager and depositary of that
fund shall cease to have the same ultimate holding company.
2.07 Status of functionaries
1 In
the case of a recognized fund, the manager and depositary must –
a. each
be a company incorporated in Jersey;
b. each
have its affairs administered in Jersey; and
c. each
have a place of business in Jersey.
2 In
the case of an open-ended investment company, the company must be a company
incorporated in Jersey and have a place of business in Jersey.
2.08 Name and purpose of recognized fund
The name of a recognized fund and the name of any constituent part
thereof must not be undesirable or misleading and the purposes of the fund or
constituent part must be reasonably capable of being successfully carried into
effect.
2.09 Repurchase of units
The unitholders must be entitled to have their units repurchased or
cancelled in accordance with the terms of the constitutional documents at a
price related to the net value of the property to which the units relate and
determined in accordance with those terms; but a recognized fund shall be
treated as complying with this Article if the constitutional documents and the
management agreement require the manager and the directors to ensure that a
unitholder is able to sell his units on an investment exchange at a price not
significantly different from that mentioned in this Article.
2.10 Alteration of funds, etc.
1 The
manager of a unit trust, or in the case of a company its directors, shall give
written notice to the Commission of –
a. any
proposed alteration of the constitutional documents or management agreement;
b. in
the case of a company, any proposed alteration of the depositary agreement;
c. any
proposal to replace the depositary or the manager;
d. any
proposal to alter the composition of the board of directors of the recognized
fund;
e. any
proposal of a scheme of arrangement as described in Article 11.05.1
(Amalgamation) or Article 11.06.1 (Reconstruction); and
f. any
election to change from one basis of unit pricing to another in accordance with
Article 4.10,
and any notice given in respect of a proposed alteration involving a
change in a document referred to in (a) or (b) shall be accompanied by a
certificate, satisfactory to the Commission, signed by an Advocate or Solicitor
of the Royal Court to the effect that the change will not affect the compliance
of the document with the requirements of these Rules.
2 The
directors or depositary, as the case may be, shall give written notice to the
Commission of any proposal to give to the manager notice of removal under Article 7.16.
3 Effect
shall not be given to any proposal referred to in paragraph 1 or 2 unless –
a. the
Commission has approved the proposal; or
b. one
month has elapsed since the date on which the notice was given without the
Commission having notified the parties that gave the notice to it that the
proposal is not approved.
2.11 Restriction on activities of
manager
1 The
manager of a recognized fund shall not engage in any activities other than
those mentioned in paragraph 2.
2 Those
activities are –
a. acting
as manager of –
(i) a unit trust,
(ii) an open-ended
investment company or any other body corporate whose business consists of
investing its funds with the aim of spreading investment risk and giving its
members the benefit of the results of the management of its funds by or on
behalf of that body, or
(iii) any other fund under
which the contributions of the unitholders and the profits or income out of
which payments are to be made to them are pooled;
b. activities
for the purposes of or in connection with those mentioned in sub-paragraph a.
2.12 Avoidance of exclusion clauses
Any provision contained in the constitutional documents, or in any
contract made with the recognized fund or its depositary, or otherwise shall be
void insofar as it would have the effect of exempting the manager, or the
depositary, or any officer of the recognized fund from liability for any
failure to exercise due care and diligence in the discharge of his functions in
respect of the recognized fund.
PART 3
PROSPECTUS
3.01 Preparation of a prospectus
1 A
document (‘prospectus’) stating prominently at the head of the
first page or on the cover page that the document is a prospectus prepared in
accordance with these Rules shall be prepared by the manager and, in the case
of a company, shall be approved by the directors of the company.
2 A
prospectus shall contain the matters specified in Schedule 2 and may contain
any other matter which does not conflict with and is not inconsistent with the
requirements of any enactment, including these Rules.
3.02 Publication of prospectus
1 The
manager of a recognized fund and, in the case of a company, the company –
a. shall
not market units in that recognized fund unless –
(i) a prospectus has
been prepared in English and approved in accordance with Article 3.01, and
(ii) arrangements have
been made for the prospectus to be available in sufficient numbers to enable
the manager or company, as the case may be, to satisfy those who accept the
offer referred to in sub-paragraph b., and
(iii) a copy of that document
has been sent –
(A) to the
Commission, and
(B) to
the depositary;
b. subject
to paragraph 2, shall not effect any sale of units in the recognized fund to
any person until it has offered that person free of charge a copy of the
prospectus in English.
2 The
requirement in paragraph 1b to offer a copy of the prospectus before effecting
a sale of units does not apply if the sale is effected otherwise than in the
course of a conversation conducted face to face or by telephone, but the
manager or the company, as the case may be, must send free of charge a copy of
the prospectus to the purchaser if he asks for it.
3.03 False or misleading prospectus
1 The
manager and, in the case of a company, the directors of the company are
responsible for the accuracy of the prospectus.
2 A
person shall not be responsible under paragraph 1 if the prospectus is
published without his knowledge or consent and, on becoming aware of
publication, he forthwith gives notice to the Commission that it was so
published.
3 A
person who is responsible under paragraph 1 for the accuracy of any prospectus
shall, subject to paragraphs 4 and 5 –
a. ensure
that the prospectus does not contain any untrue or misleading statement or omit
any matter required by these Rules to be included in it; and
b. without
prejudice to any liability incurred apart from this Article, be liable to pay
compensation to any person who has acquired any units in the recognized fund
and suffered loss in respect of them as a result of any such statement or
omission.
4 A
person is not in breach of paragraph 3a. and shall not incur liability under
paragraph 3b. if at the time when the prospectus was prepared or, in the case
of a director, approved he reasonably believed, having made such enquiries (if
any) as were reasonable, that the statement was true and not misleading, or
that the omission was proper, and that –
a. he
continued in that belief until the time of the relevant acquisition of units in
the recognized fund; or
b. the
acquisition took place before it was reasonably practicable to bring a
correction to the attention of potential purchasers; or
c. he
had already taken all such steps as it was reasonable for him to have taken to
secure that a correction was brought to the attention of potential purchasers;
or
d. the
person who acquired the units was not materially influenced or affected by that
statement or omission in making his decision.
5 A
person is also not in breach of paragraph 3a. and shall not incur liability under
paragraph 3b. if –
a. before
the acquisition a correction had been published in a manner calculated to bring
it to the attention of persons likely to acquire the units in question; or
b. he
took all such steps as it was reasonable for him to take to secure such
publication and reasonably believed that it had taken place before the units
were acquired; or
c. the
person who acquired the units knew at the time that the statement was false or
misleading or of the omission; or
d. the
issue arose only because of a failure to revise the prospectus, and that he
reasonably believed at the time of the failure that there was no change or new
matter such as to call for a revision of the prospectus under Article 3.04.1.
6 For
the purposes of this Article a revised prospectus shall be treated as a
different prospectus from the prospectus to which the revision was made.
7 References
in this Article to the acquisition of units include references to contracting
to acquire them.
3.04 Revision of prospectus
1 a
prospectus shall be –
a. revised
immediately upon the occurrence of any materially significant change in the
matters stated therein or upon the arising of any materially significant new
matter which ought to be stated therein in advance of an annual review so far
as is necessary to take account of that change or matter; and
b. reviewed
at least once in every twelve months, and revised to take account of any change
or any new matter, other than one which reasonably appears to the manager and,
in the case of a company, the directors to be insignificant.
2 A
revision of a prospectus may take the form of a complete substitution for the
previous prospectus or of a supplement to that prospectus but, whichever it is,
the date as at which the revision was made must be prominently displayed.
3 Without
prejudice to paragraph 6 of Article 3.03, references in these Rules to a
prospectus prepared in accordance with Article 3.01 include references to
a prospectus revised in accordance with this Article.
4 This
Article is subject to the procedural requirements affecting certain amendments
to a prospectus in other Articles in these Rules.
PART 4
PRICING AND DEALING
SECTION A
Initial offers and unitisations
4.01 Introduction to this Part and to
Section A
1 Units
in a pool may be created or cancelled only by the trustee or company and,
subject to Articles 4.05 and 4.09.8, only upon receipt by the trustee, or
the company and the depositary, as the case may be, of written instructions
given by, or an application made by, the manager (which for the purposes of
this Part in relation to any recognized fund shall be termed “creation
instructions” and “cancellation instructions”). Creation
instructions or cancellation instructions may be given at any time.
2 A
pool shall have the choice, subject to Section D, of operating on an historic
or forward pricing basis and subject to Article 4.10.1 of operating on a
single pricing or a dual pricing basis.
3 Articles 4.02
- 4.04 apply to the setting up of a new pool by way of an initial offer, and
apply during the period of such an offer.
4 The
period of the initial offer is not to exceed 21 days and an initial offer must,
subject to Article 4.04, be kept open for the period of the initial offer.
4.02 Creation of units: initial offer
1 During
the period of the initial offer and on the business day after it, units in the
pool may be created by the trustee or company under paragraph 2 or 4.
2 The
manager may give creation instructions at the beginning of the first business
day in the period.
3 At
or before the beginning of that day, the manager must irrevocably choose, in
respect of that initial offer, to proceed either under paragraph 4a (‘up
and running’) or under paragraph 4b (‘pay over and
wait’) and must notify his choice to the depositary and the company.
4 Where
on any business day during the period the manager assumes any obligation for
the sale of units, he must, depending on his choice under paragraph 3, either –
a. give
creation instructions, at the beginning of the next business day, to create
units in such number at least as will enable the manager immediately to fulfil
that obligation, whether from the units so created or from other units; or
b. proceed
as follows –
(i) pay to the
depositary (in any case where the purchaser has sent a remittance) on the day
of receipt of the remittance or on the next business day, the total amount, and
(ii) as soon as the
period of the initial offer has come to an end, give creation instructions to
create units in such number at least as will enable the manager to fulfil his
obligations for the sale of units whether from the units so created or from
other units.
5 The
creation instructions shall state the number of units to be created, expressed
either as a number of units or as an amount in value (or as a combination of
the two).
6 The
trustee, or company, must or may respectively (subject to Article 4.11),
create units on receipt of creation instructions given under this Article, and
must not, during an initial offer, create units otherwise.
4.03 Initial price
1 The
price for each unit created during the period of the initial offer payable by
the manager to the depositary shall be the initial price of that unit.
2 For
this purpose, ‘initial price’ means such amount as may be
determined by the manager (or in the case of a company its directors), and
notified to the depositary as being the amount, exclusive of the
manager’s preliminary charge, if any, which may be paid by a potential
unitholder to the manager for units on an initial offer.
3 The
amount which may be charged by the manager by way of preliminary charge shall
comply with Article 8.02.
4 A
unit is treated as created during the period of the initial offer if the
manager had agreed to the sale of it or received an order for it to be sold
before the close of the offer, and it was created only afterwards.
5 During
the period of the initial offer, the manager shall not as agent agree to create
units (as to which see Article 4.21 below) at a price which is other than
the initial price to which may be added, for the account of the manager, any
preliminary charge permitted under Article 8.02.
6 The
initial price of units shall be expressed in the currency of the class of
units: but, during the period of the initial offer, a currency other than that
currency may be used if the manager is satisfied that the rate of exchange
between the two currencies is not likely to result in any material prejudice to
the interests of unitholders or potential unitholders.
7 Where
the initial offer is made outside Jersey, there may be added to the initial
price of units so offered an amount sufficient to cover additional duty or
taxation leviable in that country and the cost of the remittance of money to
Jersey.
4.04 Compulsory termination of initial
offer
1 If
the manager has reason to believe that if the current price of a unit were to
be calculated by reference to a valuation taken forthwith, it would be likely
to vary from the initial price of that unit by 2% or more of the initial price,
the manager may carry out such a valuation.
2 If –
a. the
manager carries out such a valuation and it shows a variation of 2% or more; or
b. the
manager has reason to believe as mentioned in paragraph 1, but does not
forthwith carry out a valuation for the purpose of that paragraph, then the
period of the initial offer comes to an end and the manager must forthwith
refrain from –
(i) agreeing to sell
units at the initial price, and
(ii) arranging for the
trustee or company to create units at the initial price except to fulfil an
obligation to sell or an order for the purchase of units at that price which it
has already assumed or received.
4.05 Creation of units: unitisation
1 This
Article applies in the case of a unitisation, that is, arrangements for a newly
formed pool under which –
a. the
whole or part of the property of a body corporate (or a collective investment
fund) becomes the first property of the pool; and
b. the
holders of shares (or units) in the body corporate (or collective investment
fund) being wound-up or property of which is being transferred become the first
unitholders in the pool.
2 The
trustee, or in the case of a company its directors with the agreement in
writing of the depositary, alone shall have power, not dependent on an
instruction by the manager, to determine to create units, having regard to the
terms of any arrangements relating to the unitisation to which he or the
company is a party; and in exercising the power conferred by this paragraph,
any particular number of units may be created in exchange for assets other than
money only if the depositary is satisfied that to do so is not likely to result
in any material prejudice to the interests of unitholders or potential
unitholders.
3 Upon
such a determination, units shall be created in favour only of the holders of
shares or units referred to in paragraph 1b.
SECTION B
Creation and cancellation
4.06 Introduction
1 Articles 4.07-4.12
apply to creation and cancellation –
a. in
an ongoing pool; and
b. where
specifically stated, in relation to an initial offer and a unitisation.
2 In
this Section, a ‘valuation point’ means the valuation point fixed
by the manager under Article 4.28, whether on a periodic basis or for a
particular valuation and where a valuation point falls outside normal business
hours in Jersey, it shall be deemed (for the purposes of this Article and Articles 4.07.2
and 4.10) to be 9.00 am on the following business day; and a ‘notified
point’ means a subsequent moment, within two hours of a valuation point,
and arrived at under paragraph 3 below.
3 If
the manager wishes regularly to have a notified point, he may notify the
trustee or the company of his intention, indicating the period of time not
exceeding two hours after the valuation point at which he wishes the notified
point to occur; and any change in the period is ineffective unless agreed upon
by the depositary.
4.07 Creation instructions
1 Where
the manager wishes new units to be created, and complies with Article 4.10,
he may give creation instructions which shall state the number to be created,
expressed either as a number of units or as an amount in value (or as a
combination of the two).
2 Where
at any valuation point, the manager has any outstanding obligation to sell
units, then he must give creation instructions, before –
a. two
hours have elapsed since the valuation point; or
b. the
next valuation point (if it is to occur within two hours of the last valuation
point),
to create units in such number at least as will enable the manager
immediately to fulfil that obligation, (whether from the units so created or
from other units owned by him immediately before the valuation point (or
notified point if there is one)).
4.08 Creation of units
1 Subject
to paragraph 2 and to Article 4.11 units must be created on receipt of and
in accordance with creation instructions given by the manager under Article 4.07,
and must not, after an initial offer, be created otherwise.
2 The
units may be created in exchange for assets other than money, but only –
a. if
the depositary is satisfied that acquisition of the assets in exchange for the
number of units to be created is not likely to result in any material prejudice
to the interests of unitholders or potential unitholders; and
b. in
a case governed by Article 11.05 (amalgamation) or 11.06 (reconstruction)
the depositary is satisfied that the resolution concerned in relation to the
recognized fund of which he is depositary has been duly carried or else is not
required.
3 On
the creation of units, the manager shall, within the period specified in
paragraph 4 –
a. pay
the price of the units (if it remains unpaid) to the depositary in cash or in
cleared funds; or
b. in
the case of an exchange under paragraph 2, ensure transfer to the depositary of
the assets to be taken in exchange.
4 The
period expires at the close of business on the fourth business day next after
the relevant instructions were given by the manager.
5 In
a case within paragraph 2 (exchange) the manager must ensure that an
enforceable right in the assets is created in favour of the depositary with
effect from the creation of the units, even if the legal ownership is not then
transferred.
6 Paragraphs
2-5 above apply to an initial offer, but not to a unitisation.
4.09 Cancellation of units
1 Where
the manager wishes units to be cancelled, and complies with Article 4.10,
he may give cancellation instructions which shall state the number to be
cancelled, expressed either as a number of units or as an amount in value (or
as a combination of the two).
2 Where,
at any moment of giving cancellation instructions, the manager has any
outstanding obligation to sell units, he may not give cancellation instructions
if or to the extent that his so doing would prevent him immediately from
fulfilling any such obligation which had been assumed before the valuation
point (or notified point if there is one).
3 Subject
to Article 4.11 below units must be cancelled on receipt of cancellation
instructions given by the manager, but subject to paragraph 8 may not be cancelled
otherwise.
4 Where
cancellation instructions are given at a time which is less than two hours
after the last valuation point, and there have been received but not yet
executed cancellation instructions previously given under paragraph 3, the later
cancellation instructions must enable both or all sets of instructions to be
executed simultaneously.
5 On
the cancellation of units and on delivery to the depositary of such evidence of
the title to those units as he may reasonably require, the depositary shall,
within the period specified in paragraph 6, pay the price of the units to the
unitholder or the manager as the case may be.
6 The
period expires at the close of business on the fourth business day next after
the cancellation of the units; but, where the manager has not ensured that the
property of the pool includes or will include sufficient cash in the
appropriate currency (or a sufficient facility to borrow without infringing any
restriction in Part 5) within that period, the period is extended, for any
relevant currency, until the shortage is rectified.
7 Paragraph
5 does not apply where units are cancelled following a request for repurchase
or cancellation of units by the unitholder, for property transferred or sold
under Article 4.27.
8 Nothing
in this Article shall prevent or restrict the right of a pool to redeem all the
units in issue on a date, or on the occurrence of any event specified in its
constitutional documents, as the case may be, and in accordance with any
provisions so specified.
4.10 Price of a unit
1 Subject
to paragraphs 8 and 9, the constitutional documents may state that units are to
be priced on a single price basis or that they are to be priced on a dual price
basis. On the dual price basis a different valuation of the property of the
pool is required to price a unit on creation to that required to price a unit
on cancellation. Subject to paragraph 8, a change from one basis to the other
in respect of any pool is permissible provided the constitutional documents
permit such change in accordance with these Rules. The manager, or in the case
of a company its directors may elect to make such change by notice given to the
Commission in accordance with Article 2.10, and effect shall not be given
thereto until the requirements of Article 2.10.3 have been satisfied and
the proposed change and date of its implementation has been incorporated in a
revised prospectus in accordance with Article 3.04 and 90 days have
elapsed since the unitholders were notified in writing by the manager of the
change to the prospectus and of the date when it is to come into effect.
2 Subject
to paragraph 4, the price of a unit of any class shall be calculated as follows –
a. take
the proportion, attributable to the units of the class in question, of the value
of the property of the pool in accordance with Section F (excluding the
distribution account and the unclaimed payments account), calculated by
reference to the most recent valuation of the property of the pool;
b. compute
the number of units of the relevant class in issue immediately before the
valuation in a;
c. divide
the total at a. by the number of units at b;
d. express
the result in the base currency or, when appropriate, the currency of
designation of the class of units in question, or else comply with paragraph 3;
and
e. express
the price in a form that is accurate to at least four significant figures.
3 A
currency other than a currency referred to in 2d. above may be used if the
manager is satisfied that the rate of exchange between the two currencies is
not likely to result in any material prejudice to the interests of unitholders
or potential unitholders.
4 A
method of calculation other than that at paragraph 2 may be used as long as the
manager is sure that it is bound to produce the same result.
5 Where
a creation or cancellation is made at a time which is less than two hours after
the last valuation point and before the next valuation point, it must be made
by reference to the price of the relevant class of units calculated (or being
calculated) for the last valuation point.
6 Any
creation or cancellation to be made more than two hours after the last
valuation point must be made by reference to the price of the relevant class of
units next to be calculated and made only after the next valuation point has
been reached.
7 In
the case of a money market fund, in determining the price at which units may be
created, issued, cancelled, or repurchased the manager may take into account
interest, original issue discount, and other receipts minus expenses and other
outgoings that shall accrue between the relevant valuation point and the date
on which settlement of the transaction is to take place in accordance with the
constitutional documents provided that the policy of the manager shall be
disclosed in the prospectus.
8 The
constituent parts of an umbrella fund must all be priced on either a dual or a
single price basis.
9 All
pools shall, within three years following the coming into force of these Rules,
operate on a single pricing basis.
4.11 Refusal to create or cancel units
1 Subject
to paragraphs 2 and 3 –
a. on
receipt by a company of creation instructions or cancellation instructions the
company may forthwith give written notice to the manager stating that the
company refuses to create or cancel, as the case may be, all or such number of
the units requested to be created or cancelled as is specified in the notice;
and
b. on
receipt by the depositary of creation instructions or cancellation instructions
the depositary may forthwith give written notice to the manager stating that
the depositary refuses to create or cancel, as the case may be, all or such
number of the units requested to be created or cancelled as is specified in the
notice,
and the consequence of the giving of either such notice shall be
that the number of units shall not be created or cancelled.
2 Neither
a company nor the depositary may give such notice in relation to the creation
of units for the purposes of a unitisation and, in any other case may give it
only if –
a. in
a case where the company proposes to give such notice, the directors are of the
opinion; or
b. in
a case where the depositary proposes to give such notice, it is of the opinion,
that it is not in the interests of participants for the units the
subject of the notice to be created or cancelled as the case may be.
3 A
company or trustee shall not create or cancel units of any class, and the
depositary shall not consent to their creation or cancellation, during any
period in which repurchase of units of that class is suspended.
4 This
Article also applies to an initial offer.
4.12 Modification to number of units
created or cancelled
1 After
a creation instruction or cancellation instruction has been complied with, it
may be modified, and appropriate consequential adjustments may be made by way
of payment of money as between the manager and the depositary, provided that
the requirements of this Article are satisfied.
2 The
manager may make a modification under this Article only with the agreement of
the depositary; and the depositary may not agree unless it is reasonably
satisfied –
a. that
the purpose of the modification is to rectify the consequences of an error in
the instruction which related to the number of units held by, or proposed to be
created or cancelled in connection with the sale or repurchase of units to or
by, the manager; and
b. that,
in view of the quality of the manager’s control systems, the circumstance
that resulted in the error in question is an isolated one, and is unlikely to
recur.
3 A
modification under this Article shall be of no effect unless the consequential
adjustments are completed by the end of the business day next following the
relevant valuation point, or, if the depositary agrees, within the payment
period applicable to the original instruction under Article 4.08.3 or
4.09.5.
SECTION C
Sale and Repurchase
4.13 Introduction
1 Articles 4.14
to 4.25 apply to sale and repurchases –
a. in
an ongoing pool; and
b. where
specifically stated, in relation to an initial offer and a unitisation.
2 Those
Articles also apply in similar manner to creations and cancellations of units
effected or to be effected by the trustee or company acting through the manager
as agent.
3 A
currency other than the base currency may be used if the manager is satisfied
that the rate of exchange between the two currencies is not likely to result in
any material prejudice to the interests of unitholders or potential
unitholders.
4.14 Manager’s obligation to sell
1 Subject
to the pool having units in issue, the manager must at all times during the
dealing day be willing to sell units in the pool; and he must, at the request
in writing of any person, agree to sell units of at least one class in respect
of that pool to that person at a price arrived at under these Rules.
2 Paragraph
1 above does not apply –
a. if
the manager has reasonable grounds, relating to the circumstances of the person
concerned, for refusing to sell units to him;
b. if
the number or value of the units sought to be sold is less than any number or
value stated in the prospectus as the minimum number or value to be purchased
or held, or
c. (in
the case of a property fund) if the manager believes on reasonable grounds that
the number or value of units sought to be sold would lead to the holding by any
one person (or by any one person and any other person appearing to the manager
to be acting in concert with that person) of more units than any number stated
in the prospectus as the maximum number to be purchased or held.
3 Units
must be sold in the base currency, unless the person concerned requests and the
manager agrees that the units should be sold in another currency.
4 This
Article applies during an initial offer, but not during a unitisation.
5 This
Article is subject to Part 13 (Suspension and termination).
4.15 Sale price parameters: dual pricing
basis
1 In
the case of a pool in relation to which the dual pricing basis has been
adopted, except in the case of a large deal, the manager’s price for sale
of units shall not exceed the maximum sale price, that is a price fixed by the
manager and notified (or, for a sale at a forward price, next to be notified)
to the depositary: and that maximum sale price itself must not exceed the total
of –
a. the
relevant creation price; and
b. the
current preliminary charge.
2 In
the case of an initial offer, the manager’s price for sale of units shall
not exceed the sum of the initial price and any preliminary charge permitted
under Article 8.02.
3 In
the case of a large deal, the manager’s price for sale may exceed the
maximum sale price but must not exceed the limit above which the maximum sale
price could not have been fixed.
4 The
manager’s price for sale shall not be less than the minimum repurchase
price under Article 4.19.1.
5 In
applying this Article to dealings after a valuation point but before the price
relating to that point has been fixed and notified, the maximum sale price will
be the one next to be notified in respect of that point, or, where relevant,
the next point.
4.16 Sale price parameters: single pricing
basis
1 In
the case of a pool in relation to which the single pricing basis has been
adopted the manager’s price for sale of units shall not exceed the price
fixed by the manager and notified (or, for an issue at a forward price, next to
be notified) to the depositary to which may be added –
a. any
preliminary charge permitted under Article 8.02; and
b. any
dilution levy permitted under Article 4.25.
4.17 Manager’s obligation to
repurchase
1 Subject
to Article 4.27 the manager must at all times during the dealing day be
willing to repurchase units in the pool; and, accordingly, must at the request
in writing of any unitholder agree to repurchase units owned by that unitholder
at a price arrived at under these Rules.
2 Paragraph
1 above does not apply –
a. if
the number or value of the units sought to be repurchased is –
(i) less than the
entirety of the unitholder’s holding, and
(ii) less than any
number or value stated in the prospectus as the minimum number to be
repurchased; or
b. if
the number or value of the units of any class sought to be repurchased would
result in the unitholder holding less than any number or value stated in the
prospectus as the minimum number to be held of the relevant class; or
c. if
the manager ensures that the unitholder is able to sell his units on an
investment exchange at a price not significantly different from the price at
which they would have been repurchased; or
d. to
the extent that the power to refuse in paragraph 3 applies; or
e. in
the case of an initial offer or unitisation.
3 Units
must be repurchased in the base currency or, at the request of the unitholder,
in any other currency which is acceptable to the manager.
4 This
Article is subject to Part 13 (Suspension and termination).
4.18 Payment on repurchase
1 On
agreeing to repurchase units, the manager shall, within the period specified in
paragraph 2 pay the appropriate proceeds of repurchase (less, where applicable,
the cost of remitting the sum outside Jersey) to the unitholder.
2 The
period expires at the close of business on the fourth business day next after –
a. the
valuation point immediately following receipt by the manager of the request to
repurchase; or
b. the
time when the manager has all duly executed instruments and authorisations as
effect (or enable the manager to effect) transfer of title to the units,
whichever is the later.
3 This
Article does not apply where the manager is not repurchasing units in the usual
sense but is buying them as principal on an approved market in accordance with
a power in the constitutional documents, which envisages that settlement will
be in accordance with the rules of that market.
4 Nothing
in this Article shall require a manager to part with money in respect of a
repurchase of units where he has not yet received the money due on the earlier
sale of those units, or where he considers it necessary or appropriate to carry
out or complete identification procedures in relation to the unitholder or
another person pursuant to a statutory, regulatory or other obligation.
5 There
may be deducted from what would otherwise be the proceeds of repurchase of a
unit any repurchase charge permitted under Article 8.07.
4.19 Repurchase price parameters: dual
pricing basis
1 In
the case of a pool in relation to which the dual pricing basis has been
adopted, except in the case of a large deal, the manager’s price for
repurchase of units shall not be less than the relevant minimum repurchase
price already notified (or, for a repurchase at a forward price, next to be
notified) to the depositary.
2 The
minimum repurchase price shall not be less than the relevant cancellation
price.
3 In
the case of a large deal, the manager’s price for repurchase may be less
than the minimum repurchase price but must not be less than the relevant
cancellation price.
4 In
the case of an umbrella fund, except in the case of a large deal and then in
accordance with Article 4.15.3, the maximum price at which units in one
constituent part may be had in exchange for units in another such part shall
not exceed the relevant maximum sale price (less any preliminary charge) of the
new units; and the minimum price at which the old units may be taken in
exchange shall not be less than the equivalent minimum repurchase price except
in the case of a large deal and then in accordance with Article 4.19.3.
Any charge on exchange of units shall be in accordance with Article 8.08.
5 The
manager’s price for repurchase of units shall not exceed the relevant
creation price under Article 4.15.1a.
6 In
applying this Article to dealings after a valuation point but before the price
relating to that point has been notified, the minimum repurchase price will be
the one next to be notified in respect of that point, or where relevant, the
next point.
4.20 Repurchase price parameters: single
price basis
1 In
the case of a pool in relation to which the single pricing basis has been
adopted the amount to be paid by the manager as the proceeds of repurchase of a
unit shall not be less than the price fixed by the manager and notified (or,
for a repurchase at a forward price, next to be notified) to the depositary
less –
a. any
repurchase charge permitted under Article 8.07; and
b. any
dilution levy permitted under Article 4.25.
2 In
the case of an umbrella fund, the maximum price at which units in one
constituent part may be had in exchange for units in another such part shall
not exceed the relevant sale price of the new units as required to be notified
to the depositary under Article 4.16.1 to which may be added any dilution
levy permitted under Article 4.25; and the minimum price at which the old
units may be taken in exchange shall not be less than the price required to be
notified to the depositary under this Article less any dilution levy permitted
under Article 4.25. Any charge on exchange of units shall be in accordance
with Article 8.08.
4.21 Creation and cancellation through
the manager when not acting as principal
1 This
Article applies where the trustee or company has appointed the manager (with
the manager’s consent) to act as its agent in connection with the
creation or cancellation by the trustee or the company of units, either
generally or in relation to any particular person or class of persons.
2 At
the request of any person to whom the appointment relates, the manager is
obliged to arrange for units to be created under this Article in any case where
he is obliged to sell them under Article 4.14.
3 At
the request of any person to whom the appointment relates, the manager is
obliged to arrange for units to be cancelled under this Article in any case
where he is obliged to repurchase them under Article 4.17.
4 The
amount to be paid for a unit must be the total of –
a. the
price next to be notified to the depositary;
b. for
the account of the trustee or the company, any dilution levy permitted under Article 4.25;
and
c. if
the manager wishes and if not already incorporated in a. above, a preliminary
charge not exceeding the current charge permitted under Article 8.02.
5 The
amount to be paid on cancellation must be the total of –
a. the
price next to be notified to the depositary;
b. less,
for the account of the trustee or the company, any dilution levy permitted
under Article 4.25; and
c. less
any charge for the manager’s benefit if and to the extent that he would
have been entitled to make such a deduction on repurchasing the units in
question in accordance with Article 8.07.
6 The
manager shall not make any charge in connection with the creation or
cancellation of units under this Article which is not contemplated by this
Article.
7 Where
the manager, for the trustee or company, has agreed with a unitholder to
arrange the creation or cancellation of any units, he must, at the start of the
next business day, supply a report of his transactions to the trustee or
depositary and company, who shall then treat that report as if it were creation
instructions or cancellation instructions.
8 Where
the manager has agreed to arrange the cancellation of units for the trustee or
company, the manager shall pay the purchase price as if Article 4.18
applied to the transaction, and as if the units to be cancelled following the
purchase by the trustee or company were being transferred to the manager.
4.22 Notification of prices to the
depositary
1 Forthwith
upon completion of a valuation under Section F (whether regular or otherwise)
the manager shall notify the depositary of –
a. in
relation to a pool which is priced on a single pricing basis the price of a
unit or unit of each class (as the case may be) and the amount or rate of any
dilution levy applicable in respect of any creation, sale, repurchase or
cancellation of units; and
b. in
relation to a pool which is priced on a dual pricing basis –
(i) the creation
price,
(ii) the cancellation
price,
(iii) the maximum sale price,
and
(iv) the minimum repurchase
price.
2 The
prices to be notified under paragraph 1 are those relevant to deals based on
prices determined at that valuation point.
3 Any
notification under paragraph 1 shall include a statement of the number of units
owned by the manager at that valuation point (or notified point if there is
one).
4.23 Publication of prices
1 This
Article applies unless the manager is excused from dealing with the public
under these Rules.
2 Where
the manager holds himself out as willing –
a. to
sell or repurchase units (or units of any class); or
b. to
act as agent under Article 4.21,
he must make public the prices of units of each of those classes
including, in the case of a pool which has adopted a dual pricing basis,
maximum sale and minimum repurchase prices and must make public the current
preliminary charge, if any.
3 The
prices to be made public under paragraph 2 are to be the price or prices last
notified to the depositary under Article 4.22 or, in the case of
publication in a newspaper, last notified before the relevant newspaper ceased
to accept material for publication in the relevant edition.
4 Where
the manager is authorised to make a charge by way of deduction from the
proceeds of repurchase, he must include in any publication required by
paragraph 2 a note to indicate that fact.
5 Except
in respect of any class of units that is marketed predominantly outside of the
United Kingdom the prices to be made public under paragraph 2 above must be
published in at least one national newspaper in the United Kingdom.
6 Where
the manager holds himself out as willing to sell and repurchase units (or as
the case may be to act as agent under Article 4.21) in any other
jurisdiction, he must also comply with paragraph 2 above in that jurisdiction
in the manner provided for in the law of that jurisdiction.
7 The
manager shall disclose the cancellation price, orally or in writing, to any
person who requests it in person at, or by any communication addressed to, the
manager’s principal place of business, and the manager must have arrangements
to enable him accordingly to disclose, free of charge, at all times during the
dealing day, the price last notified to the depositary.
4.24 Instructions etc. by manager
1 Any
instruction or notification given (or report supplied), including the creation
instructions and the cancellation instructions, under this Part by the manager
to the depositary or company –
a. must
be recorded by the manager, at the time when it is given or supplied;
b. must
be sent in a form which enables the recipient to know or record the time of
receipt; and
c. may
be communicated in any form other than by word of mouth.
2 Instructions
are given to the recipient within any period under this Part if they are
received within that period, and instructions received after the expiry of any
period are treated as given after that expiry.
3 This
Article also applies, with the necessary modifications, to any notice or
notification given by the depositary or the company to the manager.
4.25 Dilution levy
1 In
relation to a pool which has adopted a single pricing basis the manager shall
have the power to require either or both of –
a. the
payment of a dilution levy in respect of the creation or sale of units or any
class of units; and
b. the
deduction of a dilution levy in respect of the repurchase or the cancellation
of units or any class of units.
2 Any
such payment or deduction shall become due at the same time as payment becomes
due in respect of the relevant creation, sale, repurchase or cancellation.
3 A
dilution levy may be imposed only in a manner that is, so far as practicable,
fair to all unitholders and potential unitholders, but the imposition of a
dilution levy (or a higher dilution levy) in respect of large deals in a manner
described in the prospectus current at the time of the deal shall not be
considered unfair.
4 If
the manager receives a dilution levy in respect of any unit sold by it, it
shall forthwith pay it to the depositary to become part of the property of the
pool, except to the extent that it has already been paid by the manager to the
depositary on the creation of the unit to the manager.
5 If
the manager deducts a dilution levy from the proceeds of repurchase of a unit
repurchased by it, it shall forthwith pay it to the depositary to become part
of the property of the pool, but if the same unit shall be cancelled, any
dilution levy that would otherwise then be deducted from the proceeds of
cancellation shall be reduced to the extent that it has already been paid by
the manager to the depositary on the repurchase.
SECTION D
Forward and historic pricing
4.26 Introduction
1 In
relation to the sale and repurchase of units, the manager may, subject to this
Article, operate on the basis of forward prices or on the basis of historic
prices, and his power to choose, or his duty to operate on one basis only, is
conditioned by Table 4.1 below.
2 Paragraph
1 is disapplied in relation to certain categories of pool (geared futures and
options funds, property funds and warrant funds) later in these Rules.
Table 4.1 - Forward or Historic Pricing
RULES
Notes
1 In
this table ‘F Only’ means that any price agreed upon must be a
forward price; ‘H’ means that any price agreed upon must be a
historic price unless the manager is required by the Table to deal at a forward
price. ‘General’ means ‘in relation to all sales and
repurchases agreed upon during the remainder of the relevant dealing period
(except those that are agreed upon individual deviations)’; and an
‘individual deviation’ is a decision, in relation to a particular
transaction, covered by the rules in Section 3 of the Table.
2 This
table does not apply to an initial offer or on unitisation.
Section
1 General
1 Manager’s
choice. The manager must express in the prospectus a choice for H or else for F
Only.
2 If
the manager’s current choice under 1 is F Only, all his deals must be at
a forward price.
3 A
manager may not choose H if his normal arrangements for valuation envisage
valuation more than one business day apart.
4 The
remainder of this table applies to a manager with a current choice of H.
5 He
may at any time elect for F Only in respect of the rest of the then current
dealing period.
6 He
may bind himself, in the prospectus, to switch from H to F Only at a certain
point in each dealing period.
7 An
election for (or switch to) F Only will last until the end of the dealing
period and will then lapse.
8 For
general purposes, repurchases must be on the same basis as sales.
Section
2 General
duty to adopt forward pricing
9 Market
movement. F Only applies once the manager knows or has reason to believe that
the property of the pool, if valued under these Rules, would exceed the 2%
tolerance (that is if there would be a 2% or greater difference between the
value of the property of the pool and the last calculated value (taking that as
100% for this purpose)), but decides not to carry out an additional valuation
under Article 4.28.
10 Valuation
taking over 2 hours. F Only applies if new prices have not been notified to the
depositary after 2 hours (or such longer period as the depositary may agree
with the manager generally or in any specific case) from the valuation point.
11 Rule
10 does not apply if, within two hours of the valuation point, the manager has
notified the depositary of the basis (creation or cancellation) on which the
next prices will be fixed, and of the spread (reckoned in percentage or money
terms) between the maximum sale price and the minimum repurchase price.
12 F
Only under rules 9 and 10 will start when the relevant moment arrives, will
last until the end of the dealing period and will then lapse.
Section
3 Individual
deviations
13 Rules
14 to 17 apply in relation to an individual transaction without affecting
the general position arrived at under Sections 1 and 2 above.
14 Request.
F Only applies if the applicant for sale or repurchase so requests.
15 Large
deals. F Only applies, if the manager so decides, in the case of a large deal
(or the later transactions which are part of a large deal).
16 Postal
deals. F Only applies if the order or offer reaches the manager through the
post or any other form of one-way communication (fax etc.).
17 Creation
or cancellation through the manager when not acting as principal. F Only
applies in the case of a sale or purchase under Article 4.21.
Section
4 Notification
18 The
manager must notify the depositary, and in the case of a company the company,
of the fact and time of any adoption of F Only under rule 5 or Section 2.
SECTION E
‘In specie’ cancellation
4.27 In specie cancellation
1 If
a unitholder requests the repurchase or cancellation of units the manager may
arrange that in lieu of payment of the price for the units in cash the trustee
or company shall cancel the units and transfer property of the pool or, if
required by the unitholder, the net proceeds of sale of the relevant property
of the pool to him, provided that –
a. the
prospectus contains a statement describing the circumstances in which the
manager is permitted to arrange for, and describing the procedures for, a
cancellation of units in the manner described above;
b. the
manager gives written notice to the unitholder before the proceeds of
cancellation would otherwise become payable in cash, that in lieu of such
payment it will arrange that the depositary will transfer property of the pool
(or the net proceeds of the sale of the relevant property of the pool) to the
unitholder; and
c. the
property of the pool to be transferred (or sold) is selected by the manager, in
consultation with the trustee or with the company and the depositary, and the
selection is made with a view to achieving no more advantage or disadvantage to
the unitholder requesting cancellation of his units than to the continuing
unitholders.
2 Notwithstanding
paragraph 1, the manager shall not, when acting as a principal, cancel units
other than for payment in cash.
SECTION F
Valuation
4.28 Valuation of the property of the
recognized fund
1 Regular Valuation. For the purposes of
determining in accordance with these Rules the price at which units of any
class in a pool may be created, cancelled, sold or repurchased, the manager
shall carry out a valuation of the property of the pool at each valuation point
for the pool.
2 An
investment included in the property of the pool for which different prices are
quoted according to whether it is being bought or sold shall, in the case of a
pool which has adopted a single price basis, be valued at its mid-market price
and, in the case of a pool which has adopted a dual price basis, shall be
valued in two parts, one being at its offered or buying price (plus any fiscal
charges or commissions or other charges that were paid or would be payable on
the acquisition of the investment or other part of the property of the pool)
and the other being at its bid or selling price (less any fiscal charges or
commissions or other charges that were paid or would be payable on the disposal
of the investment or other part of the property of the pool).
3 Any
part of the property of the pool which is not an investment shall be valued at
a fair value.
4 For
the purposes of the preceding paragraphs, in the case of a pool which has
adopted a single price basis there shall be excluded from the value of an
investment or other part of the property of the pool any fiscal charges or
commissions or other charges that were paid or would be payable on the
acquisition or disposal of the investment or other part of the property of the
pool.
5 There
must be at least two valuation points in each calendar month and if there are
only two valuation points in any calendar month they must be two weeks or more
apart.
6 Paragraph
5 does not apply to a warrant fund and there must be at least one valuation
point for them on each business day.
7 The
frequency of regular valuation points shall be specified in the prospectus.
8 Notwithstanding
paragraphs 5, 6 and 7, no valuation points are required during the period of
any initial offer (but see Article 4.04).
9 Additional Valuation. The manager may
determine to have an additional valuation point and to carry out an additional
valuation of the property of the pool at any time if it considers it desirable
to do so.
10 Prior
to any additional valuation point the manager shall inform the depositary of
it.
11 Additional or special requirements. Part 12
provides additional or special requirements relating to the valuation of fund
property for certain categories of recognized fund.
PART 5
INVESTMENT AND BORROWING POWERS
5.01 Introduction
Each of Sections B to J below applies only to recognized funds or
pools of the kind mentioned in the title to the relevant Section.
SECTION A
GENERAL
5.02 Investment powers: general
1 Subject
to this Part, the property of a pool may comprise any property the holding of
which is consistent with the relevant dedication in Article 2.05 and in
addition the property of a recognized fund may include movable or immovable
property that is necessary for the direct pursuit of the recognized
fund’s business of investing in the first mentioned property.
2 The
property of a pool may be invested only in accordance with this Part and within
any relevant upper limit (such as ‘up to 10%’) in this Part.
3 The
constitutional documents may restrict –
a. the
descriptions of asset in which the property of the pool may be invested; or
b. the
proportion of the capital property attributable to the pool to be invested in
assets of any description; or
c. the
descriptions of transactions permitted; or
d. the
borrowing powers in relation to the pool,
and any such restrictions shall be observed as if they were included
in this Part.
4 Restrictions
from time to time included in a prospectus pursuant to paragraph 9 of Schedule
2 (and Article 11.04) shall be observed as if they were included in this
Part.
5.03 Valuation
1 For
the purpose of this Part, the value of the property of the pool means the net
asset value, that is the net value of the property of the pool after deducting –
a. any
outstanding borrowings whether immediately due to be repaid or not; and
b. in
the case of a property fund, any capital sum outstanding on a hypothec or mortgage
of an immovable.
2 Subject
to paragraphs 3 and 4, Section F of Part 4 (Valuation) shall apply to any
valuation of the property of the pool for the purposes of this Part.
3 In
applying Part 4 for the purposes of this Part –
a. the
cancellation basis only is required in the case of a pool which is valued on a
dual price basis and in the case of a pool which is valued on a mid-market
price basis, that basis shall apply;
b. the
time as at which the valuation is being carried out for the purposes of this
Part (‘the relevant time’) is treated as if it were a valuation
point; and
c. valuation
solely for the purposes of this Part does not count as a valuation under Part
4, nor does the relevant time at b. of itself count as a valuation point for
the purposes of anything in Part 4.
4 Part
4 may be affected by specific provisions in this Part, such as valuation of
permitted immovables or Article 5.61 (stocklending).
5 Where
a pool has paid any sum by way of initial outlay under Section D, E or K, the
initial outlay is regarded as remaining part of the property of the pool, for
the purposes of this Part only, even if it is not so regarded under Part 4.
6 Where
the manager reasonably believes that the pool will become entitled to any
unrealised profits which have been made on account of a derivatives
transaction, that prospective entitlement is regarded as part of the property
of the pool for the purposes of this Part only.
5.04 Part to be construed as a whole
1 In
relation to any provision in this Part, whereby investment is permitted to be
carried out or retained only if possible obligations arising out of the
transaction would not cause any breach of any limit in these Rules (examples
being Articles 5.15.1 (warrants), 5.15.2 (nil or partly paid securities)
and 5.67.5 (underwriting)) it is to be assumed –
a. in
applying any of those provisions, that the maximum possible liability of the
pool under any other such provision has also to be provided for; but
b. in
relation to the value of the property of the pool itself, that any relevant
investment included in that property is valued in accordance with Part 4.
2 In
relation to any provision in this Part, whereby investment is permitted to be
carried out or retained under one Section if the transaction in question and
other similar transactions are ‘covered’, it is to be assumed –
a. in
applying any of those provisions, that the pool must also simultaneously
satisfy any other obligation relating to cover arising under another Section;
and
b. that
no element of cover is used more than once.
5.05 Transferable security
1 In
these Rules, ‘transferable security’ means any investment falling
within any of paragraphs 1 to 6 of Schedule 1 to the Financial Services Act,
unless paragraph 2 or 4 below applies.
2 An
investment is not a transferable security if the title to it cannot be
transferred, or can be transferred only with the consent of a third party.
3 In
applying paragraph 2, where a security is issued by a body corporate and is an
investment falling within paragraph 1 or 2 of Schedule 1 to the Financial
Services Act, the need for any consent on the part of the body or any members
or debenture holders of it may be ignored.
4 A
security is not a transferable security if the liability of the holder of it to
contribute to the debts of the issuer is not limited to any amount for the time
being unpaid by the holder of it in respect of it.
5.06 Approved security
1 A
transferable security is an ‘approved security’ if –
a. it
is admitted to official listing in a member state; or
b. it
is traded on or under the rules of an eligible securities market (otherwise
than by virtue of the specific permission of the market authority); or
c. it
is recently issued within the meaning of paragraph 2.
2 A
transferable security is recently issued if –
a. it
was issued, within the last twelve months, on terms that an application for
listing would be made to an exchange or market;
b. the
application at a. has not been refused;
c. the
manager is not aware of any reason why the application might be refused; and
d. acceptance
of the application at a. would bring the security within paragraph 1a. or b.
above.
5.07 Warrants
In these Rules, ‘warrants’ includes, in addition to an
investment falling within paragraph 4 of Schedule 1 to the Financial Services
Act, any other transferable security (not being a nil paid or partly paid
security) which is –
a. listed
on an eligible securities market; and
b. akin
to an investment within that paragraph in that it involves a down payment by
the then holder and a right later to surrender the instrument and to pay more
money in return for a further transferable security.
5.08 Derivative and approved derivative
1 In
these Rules ‘derivative’ means an option, or a future or a contract
for differences.
2 In
these Rules, ‘approved derivative’ means a derivative which is
traded or dealt in on an eligible derivatives market.
3 Off-exchange
derivatives transactions are defined later, in Article 5.23.
4 An
investment is not a derivative if it is a transferable security.
5.09 Eligible securities and derivatives
markets
1 A
securities market is eligible for the purposes of these Rules, if it is a
market established in a member state on which transferable securities admitted
to official listing in the member state are dealt in or traded.
2 A
securities market not falling within paragraph 1 or a derivatives market is, at
any time, eligible for the purposes of these Rules if –
a. the
manager or directors, after consultation with the depositary, have decided, in
accordance with paragraphs 3 and 4, to choose that market as one which is
appropriate for the purpose of investment of or dealing in the property of the
pool beyond, where appropriate, any limit which under these Rules, would
otherwise apply;
b. that
decision is notified in writing to the depositary and has not been revoked; and
c. the
market is included in a list in the prospectus.
3 For
the purposes of paragraph 2, a market may be considered to be appropriate if it –
a. is
regulated;
b. operates
regularly;
c. is
recognized; and
d. is
open to the public.
4 In
exercising the choice in paragraph 2, regard shall in particular be had –
a. to
the need for adequate liquidity in the market;
b. to
the arrangements relevant to the market for unimpeded transmission of income
and capital to or to the order of investors; and
c. to
any relevant guidance issued by the Commission, whenever issued.
5.10 Permitted immovable and approved
immovable
These concepts, relevant only to Section F (property funds) below,
are defined in that Section.
SECTION B
SECURITIES FUNDS
5.11 Securities funds: general
1 Subject
to this Section, to Sections A (general) and K (efficient portfolio management)
and to the subsequent Sections of this Part, the property of the pool of a
securities fund shall consist of transferable securities.
2 Up
to 10% in value of the property of the pool may consist of transferable
securities which are not approved securities, but there is no limit on the
value of the property which may consist of approved securities.
3 Up
to 5% in value of the property of the pool may consist of transferable
securities which are units in collective investment funds but only if they fall
within Article 5.14 below.
4 Investment
under paragraph 3 counts towards the limit in paragraph 2 (except where the
units are approved securities).
5 Articles 5.12
and 5.13 (spread) do not apply until –
a. the
expiry of a period of 6 months after the date on which the pool is authorised
(or on which the initial offer commenced if later); or
b. the
date when the value of the property of the pool first exceeds £1,000,000
(or the equivalent in the base currency) (or on which the initial offer ends,
if later),
whichever is the earlier, but the manager and the trustee or the
directors shall ensure, so far as practicable, during that period that the pool
is invested with the aim of spreading risk.
5.12 Spread: general
1 This
Article does not apply to Government and other public securities as defined in Article 5.13.5.
2 Up
to 5% in value of the property of the pool may consist of transferable
securities issued by any one issuer.
3 In
applying paragraph 2, investments within paragraph 5 of Schedule 1 to the
Financial Services Act (certificates representing securities) are treated as
equivalent to the underlying security.
4 The
figure of 5% in paragraph 2 may be regarded as 10% in respect of up to 40% of
the value of the property of the pool.
5.13 Spread: Government and other public
securities
1 This
Article applies to Government and other public securities only and in this
Article they are described as ‘such securities’.
2 As
long as 35% or less of the property of the pool is invested in such securities
issued by any one issuer, there is no limit on the amount which may be invested
in –
a. such
securities; or
b. such
securities issued by any one issuer or of any one issue.
3 Where,
however, the property of the pool is invested as to more than 35% in such
securities issued by any one issuer, then –
a. up
to 30% of the property of the pool may consist of such securities of any one
issue;
b. the
property of the pool must include such securities issued by that or another
issuer of at least six different issues; and
c. the
disclosures in paragraph 4 must have been duly made.
4 Where
it is intended or anticipated that paragraph 3 may apply, the constitutional
documents, and the most recently published prospectus, must clearly state –
a. the
fact that more than 35% of the property of the pool is or may be invested in
Government and other public securities issued by one issuer; and
b. the
identity of the issuer.
5 In
these Rules, ‘Government and other public securities’ means
transferable securities which are investments falling within paragraph 3 of
Schedule 1 to the Financial Services Act which are issued by or on behalf of –
a. the
Government of the United Kingdom, of Northern Ireland, or of a member state
other than the United Kingdom;
b. a
local authority in the United Kingdom or in any other member state;
c. the
Government of any of the countries listed in paragraph 6; or
d. an
international organisation of which the United Kingdom or another member state
is a member,
and also includes any investment which would have been such an
investment had it been issued, as opposed to merely guaranteed, by a Government
or local authority specified in a., b. or c. above.
6 The
countries relevant for paragraph 5c. above are –
a. Australia;
b. Canada;
c. Japan;
d. New
Zealand;
e. Switzerland;
f. United
States of America.
7 In
paragraphs 2, 3 and 4 (but not in paragraph 5) above, in relation to Government
and other public securities –
a. issue,
issued and issuer include guarantee, guaranteed and guarantor; and
b. an
issue differs from another if there is a difference as to repayment date, rate
of interest, guarantor or other terms of the issue.
5.14 Investment in collective investment
funds
1 A
securities fund may invest in units in a collective investment fund only if the
second fund –
a. is
either –
(i) a recognized
fund, or
(ii) a collective
investment fund that complies with the conditions necessary for it to enjoy the
rights conferred by the UCITS Directive, or
(iii) a recognised scheme, or
(iv) a collective investment
fund the units which are approved securities;
b. is
dedicated to investing funds raised from the public in transferable securities
or money market fund assets, as defined in Article 5.18;
c. operates
on the principle of risk spreading; and
d. has
terms which –
(i) prohibit more
than 5% in value of the property of the collective investment fund consisting
of units in collective investment funds, and
(ii) have the effect
that the only units in which the collective investment fund may invest are
units in collective investment funds themselves falling within this Article.
2 In
relation to investment under this Article into a constituent part, or its
equivalent, of a collective investment fund which is an umbrella fund, that
constituent part, or its equivalent, shall be treated as a separate collective
investment fund and such constituent part, or its equivalent, must meet all of
the requirements of paragraph 1.
5.15 Investment in warrants and in nil
paid or partly paid securities
1 A
warrant falls within any power of investment only if it is reasonably
foreseeable that the right to subscribe conferred by the warrant could be
exercised by the pool without contravening these Rules.
2 A
transferable security on which any sum is unpaid falls within any power of
investment only if it is reasonably foreseeable that the amount of any existing
and potential call for any sum unpaid could be paid by the pool, at the time
when payment is required, without contravening these Rules.
3 Up
to 5% of the value of the property of the pool may consist of warrants: but
there is no similar limit in respect of securities on which any sum is unpaid.
4 A
warrant, as defined in Article 5.07, which is an investment falling within
paragraph 5 of Schedule 1 to the Financial Services Act which is akin to an
investment falling within paragraph 4 of that Schedule may not be included in
the property of the pool unless it is listed on an eligible securities market.
5.16 Significant influence
1 A
recognized fund may only acquire transferable securities issued by a body
corporate carrying rights to vote at a general meeting of that body if –
a. immediately
before the acquisition the aggregate number of any such securities of that body
held by the recognized fund does not give the recognized fund power
significantly to influence the conduct of business of that body; and
b. the
acquisition will not give the recognized fund that power.
2 For
the purpose of paragraph 1 a recognized fund shall be taken to have power
significantly to influence the conduct of business of a body corporate if it
can, by virtue of the transferable securities held by it, exercise or control
the exercise of 20% or more of the votes cast at a general meeting of that
body (disregarding for this purpose any temporary suspension of voting rights
in respect of the securities of that body).
3 A
recognized fund must not hold –
a. transferable
securities which do not carry rights to vote at a general meeting of the body
corporate that issued them and represent more than 10% of the issued share
capital of that body corporate; or
b. more
than 10% of the units of a collective investment fund.
5.17 Investment in collective investment
funds managed by manager etc.
Units in a collective investment fund do not fall within Article 5.14
if the collective investment fund is managed or operated by the manager or an
associate of the manager of the investing fund, unless –
a. the
instrument constituting the collective investment fund states that its
investment will be restricted to a particular geographic area or economic
sector or other specific investment objective;
b. the
constitutional documents of the investing recognized fund and its prospectus
clearly state that the property of the pool may include such units; and
c. Article 5.70
(investment in other group collective investment funds) is complied with.
SECTION C
MONEY MARKET FUNDS
5.18 Money market funds: general
1 Subject
to this Section and to any other Sections of this Part, the property of the
pool of a money market fund shall consist of ‘money market fund
assets’.
2 For
this purpose, ‘money market fund assets’ means any of the following –
a. cash
and near cash;
b. bills
of exchange accepted by an eligible institution, if repayable within twelve
months;
c. investments
within paragraph 2 of Schedule 1 to the Financial Services Act (debentures)
which are –
(i) repayable within
twelve months,
(ii) not subordinated,
and
(iii) either approved
securities within Article 5.06.1a. or 5.06.1b. above (on-exchange), or
else are issued by an eligible institution otherwise than in return for a
deposit in a. above; and
d. a
deposit which would be within a. above (near cash) except that it is repayable
within six months (instead of immediately and without payment of a penalty
exceeding seven day’s interest calculated at ordinary commercial rates);
e. units
in one or more regulated collective investment funds or a constituent part, or
its equivalent, thereof each of which is either a money market fund or which is
of a category that is equivalent to a money market fund.
3 Article 5.20
(spread) does not apply until –
a. the
expiry of a period of 6 months after the date on which the money market fund is
authorised (or on which the initial offer commenced if later); or
b. the
date when the value of the property of the pool first exceeds £1,000,000
(or the equivalent in the base currency of the money market fund) (or on which
the initial offer ends, if later),
whichever is the earlier, but the manager and the trustee or the
directors shall ensure, so far as practicable, during that period that the pool
is invested with the aim of spreading risk.
5.19 Investment limits
1 This
Article is subject to Article 5.18.
2 At
least 35% in value of the property of the pool must consist of instruments or
deposits which are –
a. redeemable
or repayable within two weeks; or
b. capable
of being transferred without the consent of a third party (any issuer being
regarded as a third party for this purpose).
3 Up
to 80% in value of the property of the pool may consist of transferable
securities.
5.20 Spread
1 Up
to 5% in value of the property of the pool may consist of instruments issued by
any one issuer; but this limit does not apply to instruments which are
Government and other public securities.
2 Article 5.13
shall apply to Government and other public securities.
3 Up
to 10% in value of the property of the pool may be kept on deposit with any one
person.
4 For
the purposes of paragraph 3, the depositary and its associates are regarded as
one person, and the manager and its associates as another.
5 The
figure of 10% in paragraph 3 may be regarded as 20% if the person is an
eligible institution being an institution which has, or in the case of an
eligible institution within the terms of sub-paragraph a. or e. of the
definition of ‘eligible institution’ in Schedule 4 having a
subsidiary or holding company which is an eligible institution which has,
capital which is shareholders’ funds of an amount, as most recently
quoted in ‘The Banker’ magazine published by Financial Times
Information Limited, of US$ 1,000,000,000 or more, provided that the amount of
the aggregate of the deposits of all pools of the recognized fund do not exceed
10% of that person’s issued capital and reserves as shown in its most
recently published annual accounts.
6 Paragraphs
3, 4 and 5 do not apply to a money market fund with respect to any deposit
which is less than £1,000,000 (or the equivalent amount in the base
currency).
5.21 Other provisions
The following Articles apply to money market funds –
a. 5.15.2
(investment in nil paid or partly paid securities);
b. 5.16
(significant influence).
SECTION D
FUTURES AND OPTIONS FUNDS
5.22 Futures and options funds: general
1 Subject
to this Section and to any other Sections of this Part, the property of the
pool of a futures and options fund shall consist of any or all of the following –
a. transferable
securities available to a securities fund;
b. derivatives
under this Section;
c. forward
transactions in currencies or gold under this Section;
d. cash
or near cash (to which no limit applies);
e. units
in collective investment funds under Article 5.24; and
f. gold.
2 In
respect of investment within paragraph 1a., Section B above (securities funds)
shall apply as if the futures and options fund were a securities fund, but
subject to any specific modification in this Section.
3 In
respect of investment within paragraph 1b. or c., a derivatives or forward
transaction may be effected under this Section only if –
a. the
transaction is of the kind specified in Article 5.23 (permitted
transactions); and
b. the
transaction is fully covered, as required by Article 5.25 (cover for
derivatives and forward transactions), or else the subject of deposit
arrangements, as required by Article 5.27.
4 Up
to 10% in value of the property of the pool may be used for derivatives
transactions in the form of uncovered purchased options (taking the current
market value of the option as its value for this purpose), but the manager must
deduct from that figure of 10% any percentage of the value of the property of
the pool invested in transferable securities in the form of warrants.
5 Up
to 10% in value of the property of the pool may be held in the form of gold.
6 Spread.
Up to 10% in value of the property of the pool may be kept as cash on deposit
with any one person.
7 For
the purposes of paragraph 6, the depositary and his associates are regarded as
one person, and the manager and his associates as another.
8 The
figure of 10% in paragraph 6 may be regarded as 20% if the person is an
eligible institution being an institution which has, or in the case of an
eligible institution within the terms of sub-paragraph a. or e. of the
definition of ‘eligible institution’ in Schedule 4 having a
subsidiary or holding company which is an eligible institution which has,
capital which is shareholders’ funds of an amount, as most recently
quoted in ‘The Banker’ magazine published by Financial Times Information
Limited, of US$ 1,000,000,000 or more, provided that the amount of the
aggregate of the deposits of all pools of the recognized fund do not exceed 10%
of that person’s issued capital and reserves as shown in its most
recently published annual accounts.
9 Paragraphs
6, 7 and 8 do not apply to a futures and options fund with respect to any
deposit which is less than £1,000,000 (or the equivalent amount in the
base currency).
5.23 Permitted transactions (derivatives
and forwards)
1 A
derivatives transaction under this Section must be –
a. in
an approved derivative (as defined in Article 5.08.2); or
b. one
which complies with paragraphs 5 to 8 (off- exchange); or
c. a
‘synthetic future’ which complies with paragraphs 9 and 10.
2 Any
transaction in an approved derivative must be effected on or under the rules of
an eligible derivatives market.
3 Any
forward transaction must be with an approved counterparty which is within
paragraph 6 (eligible institutions, listed money market institutions, etc.).
4 No
more than 5% of the value of the property of the pool may be directed to
initial outlay in respect of off-exchange transactions with any one
counterparty.
5 Off-exchange. Any derivatives transaction under
paragraph 1.b. must be –
a. a
future or an option or a contract for differences resembling an option;
b. with
an approved counterparty under paragraph 6;
c. on
approved terms under paragraph 7; and
d. capable
of valuation under paragraph 8.
6 A
counterparty to a derivatives transaction is approved for the purposes of
paragraph 5 only if it is –
a. an
eligible institution;
b. a
person included in the list maintained by the Bank of England for the purposes
of section 43 of the Financial Services Act (listed money market institutions);
or
c. an
authorised person who is regulated by a recognised self-regulating organisation
(or by the Financial Services Authority) or a person registered and regulated
by the Commission in respect of investment business of a kind which includes
the writing or purchasing of off-exchange futures or options as principal.
7 The
terms of a derivatives transaction are approved for the purposes of paragraph 5
only if, before the transaction is entered into, the depositary is satisfied
that the counterparty has agreed with the manager –
a. to
provide a valuation in respect of that transaction, on a buying and selling
basis, or a mid-market price basis, as the case may be, –
(i) at least once a
week, and
(ii) at any other time
at the request of the manager; and
b. that
he will, at the request of the manager, enter into a further transaction to
close out that transaction at a price which is reasonably related to the
‘fair value’ price (that is at a price corresponding with the value
at which the derivative would be valued on the dual pricing basis, or the
single pricing basis (as appropriate) under Part 4).
8 A
derivatives transaction is capable of valuation for the purposes of paragraph 5
only if the manager reasonably believes that, throughout the time of the life
of the derivative (if the transaction is entered into), he will be able to
value the investment concerned with reasonable accuracy on the basis of a
pricing model which has been agreed between him and the depositary, or on some
other reliable basis reflecting an up-to-date market value which has been so
agreed.
9 ‘Synthetic
futures’. For the purposes of this Section, the manager may, in the two
ways described in paragraph 10, create out of two options something in the
nature of a composite derivative.
10 The
two ways referred to in paragraph 9 are that –
a. a
bought call option coupled with a written put option will create a synthetic
bought future; and
b. a
bought put option coupled with a written call option will create a synthetic
sold future,
provided that the two options –
(i) are
bought and written, whether simultaneously or not, on a single eligible
derivatives market;
(ii) relate
to the same underlying security or other asset;
(iii) give
the purchasers of the options the same rights of exercise (whether at the same
price or not); and
(iv) will
expire, if not exercised, together.
11 A
derivatives or forward transaction which will or could lead to delivery of
property to the depositary may be entered into only if –
a. such
property can be held by the pool (or else the transaction is a bought future or
bought call option); and
b. the
manager reasonably believes that delivery of the property pursuant to the
transaction will not occur or will not lead to a breach of these Rules.
12 A
transaction permitted under this Article may at any time be closed out.
5.24 Investment in collective investment
funds
1 Up
to 5% in value of the property of the pool may consist of units in collective
investment funds or constituent parts, or their equivalent, of umbrella funds
each of which –
a. is
a regulated collective investment fund or constituent part, or its equivalent,
thereof which is either a futures and options fund or a money market fund or a
fund of a category that is equivalent to the category of one of such funds; or
b. is
within Article 5.14; or
c. would
be within Article 5.14, if 5.14.1b. read as follows –
‘b. is dedicated to
investing funds raised from the public in approved and other derivatives (where
most or all of the transactions in derivatives are fully covered by cash,
securities or other derivatives) whether with or without transferable
securities or covered forward transactions in currency or gold.’
2 Units
in a collective investment fund or constituent part, or its equivalent, of an
umbrella fund do not fall within paragraph 1 above if the fund is managed or
operated by the manager or an associate of the manager of the investing pool,
unless –
a. the
constitutional documents of the investing pool and its prospectus clearly state
that the property of the investing pool may include such units; and
b. Article 5.70
(investment in other group collective investment funds) is complied with.
5.25 Cover for derivatives and forward
transactions
1 Except
where Article 5.27.1 applies, no derivatives or forward transaction may be
entered into under this Section unless the maximum potential exposure created
by the transaction, in terms of the principal or notional principal of the
derivative or forward contract, is –
a. covered
individually under paragraph 2 or 3; and
b. covered
globally under paragraph 4,
and for this purpose the examples in paragraph 9 below may be
relevant.
2 Subject
to paragraph 3, exposure is covered individually if there is, in the property
of the pool –
a. (in
the case of an exposure in terms of property) a transferable security or other
property which is of the right kind, and sufficient in amount, to match the
exposure; and
b. (in
the case of an exposure in terms of money), cash or near cash (or borrowing
pursuant to Article 5.27) or transferable securities which is or are, or,
on being turned into money in the right currency, will be, sufficient in amount
to match the exposure.
3 Exposure
to an index or basket of securities or other assets is covered individually
only if the recognized fund holds securities or other property which (taking
into account the closeness of the relationship between fluctuations in the
price of the two) can reasonably be regarded as appropriate to provide cover
for the exposure, and they may be so regarded even if there is not complete
congruence between the cover and the exposure.
4 Exposure
is covered globally for the purposes of this Section if, after taking account
of all the cover required under paragraph 2 or 3 for other positions already in
existence, there is available adequate cover from within the property of the
pool to enable the fresh transaction to be entered into.
5 Whether
or not a derivative or forward transaction is available under Article 5.26
to provide cover for another derivative or forward transaction under this
Section –
a. the
two transactions involved in a ‘synthetic future’ are to be treated
as if they were a single derivative, and the net exposure from the combination
is to be covered on the basis of the higher of the cover requirements of the
options which make up the synthetic future;
b. ‘synthetic
cash’ (that is where a position in a derivative offsets an exposure in
property to the point where that exposure has effectively been neutralised, and
the effect of the combined holding of both property and the position in the
derivative is the same as if the pool had received or stood to receive the
value of the property in cash) is available to provide cover for a transaction
as if it were cash.
6 Cash
not yet received into the property of the pool but due to be received within
one month is available as cover for the purposes of paragraphs 2b. and 3.
7 Subject
to paragraph 5, to the extent that property of the pool has been used for cover
in respect of one exposure (whether under this Section or otherwise), it is not
available for cover in respect of another.
8 Property
is not available for cover if it is the subject of a transaction under Section
L (stocklending), unless the manager reasonably believes that it is obtainable
(by return or re-acquisition) in time to meet the obligation for which cover is
required.
9 Examples
of the cover requirements are as follows –
a. A
bought put option (or a written call option) on 1000 ordinary £1 shares
(fully paid) of ABC plc has to be covered by an existing holding in the
recognized fund of 1000 ordinary £1 shares (fully paid) of ABC plc
(paragraph 2a. above).
b. A
bought call option (or written put option) on 1000 ordinary £1 shares
(fully paid) of ABC plc has to be covered by cover (in the form of cash or an
allowable substitute for cash or transferable securities) which is sufficient
in amount to meet the purchase of the shares on exercise of the option
(paragraph 2b. above).
c. A
sold contract for differences on short-dated sterling has to be covered by cash
or near cash or transferable securities, the values of which together at least
match the notional principal of the contract (e.g. a LIFFE short sterling
contract, or a successive series of such contracts, is covered by
£500,000) (paragraphs 2b. and 7 above).
d. A
sold future on the FT-SE 100 Index may be covered by holdings of equities, (or
a combination of cash (or near cash) and call options on that future) which
satisfy the test of appropriateness for cover in paragraph 3 in relation to
that future, and the values of which together at least match the current mark
to market valuation of the future (e.g. if the multiplier per full index point
is £25, and if the eventual obligation under the future is currently at
2800, the valuation of the futures position is 2800 x £25 =
£70,000) (paragraph 3 above and Article 5.26).
e. Where
the manager of a pool, which has holdings in ‘blue chip’ UK shares,
wishes to switch exposure to the US market, and decides to sell a FT-SE index
future to the value of those shares (this transaction satisfying the test of
appropriateness for cover in paragraph 3), then the sterling ‘synthetic
cash’ position created may thereupon be used as cover for a S&P 500
index future provided that the manager ensures that the cover remains
sufficient (e.g. by reference to the sterling/US dollar exchange rate)
(paragraphs 3 and 5b. above).
5.26 Derivatives covering derivatives
1 Where
the manager proposes to use a position resulting from a derivatives transaction
as cover (whether in whole or in part) for the exposure of another derivatives
transaction, Article 5.25 shall have effect as modified by this Article.
2 In
this Article ‘countervailing’ means that one of the two derivatives
has an exposure which, in terms of risk, is equal and opposite to the exposure
of the other, and ‘offset’ means that there is an equal and
opposite coverage in terms of risk.
3 On
the basis that the requirements of Article 5.25 about the amount and right
kind of assets used as cover are satisfied, the following Table contains the
rules for the purposes of paragraph 1.
Table 5.1 - Derivatives covering derivatives:
ground rules
RULES
1 A
derivative of one type provides cover for a countervailing derivative of the
same type (e.g. a bought future covers a sold future, and a bought call option
covers a written call option).
2 A
derivative of one type provides cover for a countervailing derivative of a
different type if, but only if, –
a. the
right under one offsets and is offset by the obligation under the other; or
b. rule
6 applies.
3 In
applying rules 1 and 2, differences between the derivatives in terms of price,
maturity and exercise price may be ignored, except where rule 4 applies.
4 Rule
1 above does not apply if an opportunity to exercise the right under the one
derivative will become available to the pool only after the first date on which
the potential obligation under the other may become an actual obligation.
5 Where,
under rule 1, the manager decides that a written option and a purchased option
should provide mutual cover, the manager must arrange for the depositary to
deposit and set aside with an eligible institution (and the manager may not use
for the purposes of providing cover under these Rules) the whole amount of the
difference between the exercise value of the two options (that is the amount
which would be payable by or to the pool on exercise of the options) inclusive
of any margin requirements of the exchange.
6 A
written option provides cover for, and is covered by, a countervailing future
only if the option is in the money to the purchaser of the option; but if the
written option is out of the money to the purchaser, then both it and the
future must each be separately covered under Article 5.25.
7 A
contract for differences may be included in these rules if and to the extent
that it has the characteristics of a future or an option.
5.27 Deposit arrangements (for purchased
options) and borrowing
1 Deposit arrangements. Where the manager proposes to
purchase an uncovered option in reliance on Article 5.22.4, he must
arrange for the depositary to deposit and set aside with an eligible
institution (and the manager must not use for the purposes of providing cover
under these Rules) any amount by which 5% of the exercise value of the option
(that is the amount which would be payable by the recognized fund on exercise
of the option) exceeds the amount paid by way of premium.
2 The
amount to be deposited and set aside may be in cash or else in Government and
other public securities (which are to be valued for this purpose at the current
mark to market valuation).
3 Borrowing. Cash obtained by borrowing, and borrowings
which the manager reasonably regards an eligible institution to be committed to
provide, are available for cover under Article 5.25, as long as the normal
limits on borrowing (as to which see Articles 5.63 and 5.64) are observed.
4 Where,
for the purposes of this Section, the depositary –
a. borrows
for the pool an amount of currency from an eligible institution; and
b. keeps
an amount in another currency, at least equal to the borrowing for the time
being in a., on deposit with the lender (or his agent or nominee),
then this Section shall apply as if the borrowed currency, and not
the deposited currency, were part of the property of the pool, and the normal
limits on borrowing under Articles 5.63 and 5.64 do not apply to that
borrowing.
5.28 Continuing nature of limits and
requirements
1 The
manager must, at each valuation point (and more frequently if necessary),
re-calculate the amount of cover required in respect of derivatives and forward
positions already in existence under this Section, and derivatives and rights
under forward transactions under this Section may be retained in the property
of the pool only so long as they remain covered both individually and globally
under Article 5.25 (or, where relevant, the deposit requirements in Article 5.27
are complied with).
2 If
at any time –
a. any
fact or matter relating to the recognized fund or its economic environment; or
b. the
aggregate of all outstanding derivatives or forward positions under this
Section,
is such that at least one of the relevant transactions (assuming it
did not exist) could not then properly have been effected, either in that size
or at all, the manager must forthwith on becoming aware of that fact take such
steps as are necessary to rectify the situation, whether by closing out or
providing additional cover or otherwise.
SECTION E
GEARED FUTURES AND OPTIONS FUNDS
5.29 Geared futures and options funds:
general
1 Subject
to this Section and to any other Sections of this Part, the property of the
pool of a geared futures and options fund shall consist of any or all of the
following –
a. transferable
securities available to a securities fund;
b. derivatives
or forward transactions which are covered on the basis available to a futures
and options fund;
c. derivatives
under this Section;
d. forward
transactions in currencies or gold under this Section;
e. cash
or near cash (to which no limit applies);
f. units
in collective investment funds under Article 5.32; and
g. gold.
2 In
respect of investment within paragraph 1a., Section B above (securities funds)
shall apply as if the pool were a securities fund, but subject to any special
modification in this Section.
3. In
respect of derivatives and forward transactions under paragraph 1.b., Section D
above (futures and options funds), except Article 5.24, shall apply as if
the pool were a futures and options fund, but subject to any special
modifications in this Section.
4 In
respect of derivatives within paragraph 1c. –
a. any
derivatives transaction must be in an approved derivative, or else one which
complies with Article 5.23.5 to 8 (off-exchange); and
b. any
transaction in an approved derivative must be effected on or under the rules of
an eligible derivatives market.
5 In
respect of transactions within paragraph 1d., this Section, except paragraph 4
above and Article 5.30.5, shall apply as if any forward transaction were a
derivatives transaction; and the transaction must be with a counterparty which
is within Article 5.23.6 (eligible institutions, listed money market
institutions, etc.).
6 Up
to 10% in value of the property of the pool may be held in the form of gold.
7 The
depositary of a geared futures and options fund does not have power to borrow
whether by virtue of this Section or Section K or otherwise.
5.30 Limits on investment in initial
outlay
1 Subject
to paragraph 3, up to 20% in value of the property of the pool at any time
may be devoted to initial outlay in any derivatives transactions which are at
any time outstanding.
2 In
these Rules, ‘initial outlay’ means the amount which the pool is
required to pay, transfer or deposit as a fidelity deposit or otherwise in
order to obtain rights under a derivatives transaction; and, for these
purposes, –
a. regard
shall be had to the rules of any relevant eligible derivatives market relating
to margin, initial margin, premium etc.;
b. any
increase in margin or initial margin, if required by such a market, is regarded
as initial outlay from then on;
c. any
decrease in margin or initial margin, if allowed by such a market, ceases to be
initial outlay from then on;
d. variation
margin (that is an additional sum required to be paid to retain the rights
following a movement in prices etc.) is not initial outlay;
e. premium
which may become payable in the future pursuant to the transaction in respect
of an option is regarded as initial outlay from the outset;
f. in
the case of a purchased option, the amount mentioned in paragraph 4 is to be
regarded as initial outlay;
g. in
the case of a written off-exchange option, the amount mentioned in paragraph 5
is to be regarded as initial outlay;
h. in
the case of an off-exchange future, the amount mentioned in paragraph 6 is to
be regarded as initial outlay; and
i. in
the case of a forward transaction, the amount mentioned in paragraph 7 is to be
regarded as initial outlay.
3 Up
to 10% in value of the property of the pool may be used for initial outlay on
derivatives transactions in the form of purchased options without it counting
towards the 20% in paragraph 1, but the manager must deduct from the
figure of 10% any percentage of the value of the property of the pool invested
in transferable securities in the form of warrants.
4 Where
an option is purchased for the account of the pool, the manager shall ascertain
the amount, if any, by which 5% of the exercise value of the option (that is
the amount which would be payable or receivable by the pool on exercise of the
option) exceeds the amount paid by way of premium.
5 Where
an off-exchange option is written for the account of the pool the manager shall
ascertain at the outset and at each valuation the sum of –
a. 5%
of the exercise value of the option (that is the amount which would be payable
by the purchaser of the option, on exercise of the option); and
b. the
amount, if any, by which the option is ‘in the money’ to the
purchaser of the option.
6 Where
a transaction in an off-exchange future is entered into for the account of the
pool, the manager shall ascertain at the outset and at each valuation the
amount which is the sum of –
a. 5%
of the value of the amount of property to be bought or sold pursuant to the
contract; and
b. the
amount, if any, by which the future would cause a loss to the pool if it were
to be closed out.
7 Where
a forward transaction is entered into for the account of the pool, the manager
shall ascertain at the outset and at each valuation the amount which is 5% of
the value of the forward contract (that is the amount of currency or of gold to
be purchased or sold pursuant to the transaction at the current valuation in
the currency or one of the currencies relevant for the purposes of the
transaction) for each period of three months (or part thereof) between the date
of the latest valuation and the date of maturity.
8 The
manager shall arrange for the depositary to deposit and set aside with an
eligible institution (and the manager must not use for the purposes of
providing cover under these Rules) the amounts for the time being required by
paragraphs 4, 5, 6 and 7.
9 The
amounts to be deposited and set aside may be in cash or else in Government and
other public securities (which are to be valued for this purpose at the current
mark to market valuation).
5.31 Spread
1 Subject
to Article 5.30 there is no limit on the value of the property of the pool
which may be devoted to initial outlay in respect of derivatives on or related
to any one category of underlying security, commodity or factor.
2 Notwithstanding
paragraph 1, the manager must exercise reasonable prudence in relation to the
diversification of the property of the pool so far as it is devoted to
derivatives, account being taken of the extent to which diversification is
already achieved by use of derivatives which by their nature are broadly
diversified (such as, for instance, derivatives related to a broadly based
index).
3 Up
to 5% in value of the property of the pool may be devoted to initial outlay in
respect of off-exchange transactions with any one counterparty.
4 In
paragraph 2, ‘diversification’ relates to diversification in terms
of geographical sectors, economic sectors, currencies, commodities, maturity of
instruments, exercise price under instruments and any other form of spreading
of risk undertaken by a reasonably prudent investment manager.
5 Up
to 10% in value may be kept as cash on deposit with any one person.
6 For
the purposes of paragraph 5, the depositary and his associates are regarded as
one person, and the manager and his associates as another.
7 The
figure of 10% in paragraph 5 may be regarded as 20% if the person is an
eligible institution being an institution which has, or in the case of an
eligible institution within the terms of sub-paragraph a. or e. of the
definition of ‘eligible institution’ in Schedule 4 having a
subsidiary or holding company which is an eligible institution which has,
capital which is shareholders’ funds of an amount, as most recently
quoted in ‘The Banker’ magazine published by Financial Times
Information Limited, of US$ 1,000,000,000 or more, provided that the amount of
the aggregate of the deposits of all pools of the recognized fund do not exceed
10% of that person’s issued capital and reserves as shown in its most
recently published annual accounts.
8 Paragraphs
5, 6 and 7 do not apply to a geared futures and options fund with respect to
any deposit which is less than £1,000,000 (or the equivalent amount in
the base currency).
5.32 Investment in collective investment
funds
1. Up
to 5% in value of the property of the pool may consist of units in collective
investment funds or constituent parts, or their equivalent, of umbrella funds
each of which –
a. is
a regulated collective investment fund or constituent part, or its equivalent,
thereof which is either a futures and options fund or a geared futures and
options fund or a money market fund or a fund of a category that is equivalent
to the category of one of such funds; or
b. is
within Article 5.14; or
c. would
be within Article 5.14, if 5.14.1b. read as follows –
‘b. is dedicated to
investing funds raised from the public –
(i) in
approved or other derivatives (where most or all of the transactions in
derivatives are fully covered by cash, securities and other derivatives),
whether with or without transferable securities or covered forward transactions
in currency or gold, or
(ii) in
approved and other derivatives (where the extent of investment is limited by
the amount of the property of the pool available to be put up as initial
outlay), whether with or without transferable securities and whether with or
without investment within (i) above.’
2 Units
in a collective investment fund or constituent part, or its equivalent, of an
umbrella fund do not fall within paragraph 1 above if the fund is managed or
operated by the manager or an associate of the manager of the investing pool,
unless –
a. the
constitutional documents of the investing pool and its prospectus clearly state
that the property of the investing pool may include such units; and
b. Article 5.70
(investment in other group collective investment funds) is complied with.
5.33 Delivery of property pursuant to a
derivatives transaction
1 When
entering into any derivatives transaction as a result of which any investment
or asset may become part of the property of the pool, the manager must comply
with paragraph 2 (where the investment or asset is one of which the property of
the pool could in some measure consist) or with paragraph 3 (in any other
case).
2 Where
this paragraph applies, the manager must reasonably believe that the
transaction will not result in any breach of these Rules –
a. either
because it can readily be closed out; or
b. because
the investment or asset concerned will at the expected time be included within
the property of the pool in a manner which conforms with these Rules.
3 Where
this paragraph applies, the manager must reasonably believe that the
transaction can readily be closed out.
4 Where,
in the event the belief in paragraph 2 or 3 proves unjustified, and the manager
decides with the consent of the depositary, pursuant to Article 7.13, that
it is in the interests of the unitholders that the property should temporarily
be acquired, then the property concerned may, notwithstanding anything else in
these Rules, form part of the property of the pool until the position can be
rectified.
SECTION F
PROPERTY FUNDS
5.34 Property funds: general
1 Subject
to this Section and to any other Sections of this Part, the property of the
pool of a property fund shall consist of any or all of the following –
a. approved
immovables;
b. property
related assets, as defined in Article 5.36 below;
c. Government
and other public securities;
d. units
in collective investment funds under paragraph 5.
2 Up
to 80% in value of the property of the pool may consist of approved immovables,
but this limit is subject to paragraph 6 below.
3 Up
to 80% in value of the property of the pool may consist of transferable
securities, but these must be property related assets which are approved
securities or else separately permitted within paragraph 4, 5 or 6 below.
4 Up
to 35% in value of the property of the pool may consist of Government and other
public securities.
5 Up
to 5% in value of the property of the pool may consist of units in collective
investment funds under Article 5.37 below.
6 Up
to 10% in value of the property of the pool may, under Article 5.36.2
below, consist of shares which are property related assets but are not approved
securities but any shares included pursuant to this paragraph must be included
within the 80% limit in paragraph 2, which may therefore on occasion produce a
limit of 70% for approved immovables.
7 Up
to 5% in value of the property of the pool may consist of transferable
securities within paragraph 3 which are warrants: but these must be property
related assets which are approved securities.
5.35 Permitted and approved immovables
1 In
these Rules ‘permitted immovable’ means any interest in any land or
building which falls within paragraph 2 (excluding immovable property of the
type referred to in Article 5.02.1); and an approved immovable is a
permitted immovable –
a. which
is regarded as transferable or having marriage value within paragraph 3 or 4;
b. which
is accessible within paragraph 5;
c. which
has a good root of title within paragraph 6;
d. which
is unencumbered (or adequately unencumbered) within paragraph 7; and
e. which
has been or is to be bought promptly and at a reasonable price within paragraph
8.
2 An
interest in land or a building qualifies for this purpose if –
a. it
is in Jersey or in England and Wales or in Northern Ireland a freehold or
leasehold interest, or in Scotland any interest or estate in or over land or
heritable right including a long lease, (or the equivalent in any other country
or territory);
b. the
land or building is situated in Jersey, the United Kingdom, another member
state or a country listed in paragraph 9; and
c. where
the interest is leasehold (or its equivalent) it has an unexpired term of
twenty years or more,
and furniture, fittings or other contents of any building may for
this purpose be regarded as part of it.
3 An
immovable is regarded as transferable if the manager has received a report from
an appropriate valuer (as to which see paragraph 10) valuing the immovable
(with and without any relevant subsisting mortgage) and stating that, in his
opinion, the immovable would, if acquired for the pool, be capable of being
disposed of reasonably expeditiously at that valuation.
4 An
immovable is regarded as having marriage value if the manager has received a
report from an appropriate valuer valuing the immovable and stating that –
a. it
is adjacent to or contiguous with an immovable included in the property of the
pool; and
b. in
his opinion, the total value of the immovable, if acquired for the pool, and of
the other immovable in a., would be at least equal to the sum of the price
payable for the immovable and the existing value of the other immovable in a.
5 An
immovable is regarded as accessible if the manager (after consulting the
depositary in any case of substantial doubt) is satisfied that reasonable
access to it is assured.
6 An
immovable is regarded as having a good root of title if the manager (after
taking such advice as appears to him appropriate) reasonably believes that the
title to the immovable is a good marketable title.
7 An
immovable is regarded –
a. as
unencumbered if there is no subsisting hypothec or mortgage over or on it; and
b. as
adequately unencumbered if the only hypothecs or mortgages over or on it are
one or more approved mortgages within Article 5.39 which secures or
together secure on the immovable repayment of a sum or sums not exceeding 50%
of the value at paragraph 3, (that is that part of the value which is valued on
the assumption that the immovable is not hypothecated or mortgaged).
8 An
immovable is regarded as bought promptly and at a reasonable price if –
a. it
is bought or agreed by enforceable contract to be bought within 6 months after
receipt of a report by the manager within paragraph 3 or paragraph 4;
b. at
the time of the purchase or agreement it would not reasonably have been
apparent to the manager that the report could no longer reasonably be relied
upon; and
c. it
is bought at no more than 105% of the valuation in the report.
9 The
countries or territories relevant for paragraph 2(b) above are –
a. Australia;
b. Austria;
c. Canada;
d. Finland;
e. Japan;
f. New
Zealand;
g. Norway;
h. Sweden;
i. Switzerland;
j. United
States of America.
10 In
these Rules, a person is an appropriate valuer if –
a. he
has knowledge of and experience in the valuation of immovables of the relevant
kind in the relevant area;
b. he
is or is qualified to be the standing independent valuer of a property fund or
is reasonably considered by the pool’s standing independent valuer to
hold equivalent qualifications;
c. he
is independent of the manager, depositary, company and each of the directors of
the company, in the sense required for a standing independent valuer under Article 12.06
below; and
d. neither
he nor any partner (if any) nor fellow director (if any) of his has been
engaged, whether as principal or as agent, in relation to the finding of the
immovable for the pool or the finding of the recognized fund for the immovable.
5.36 Property related assets
1 In
these Rules, property related assets means –
a. investments
falling within paragraph 1, 2 or 4 of Schedule 1 to the Financial Services Act
which are issued by a property company; or
b. investments
falling within paragraph 5 of that Schedule which confer rights in respect of
an investment within a. above,
and ‘property company’ means a body corporate a
substantial activity of which relates to permitted immovables (whether by way
of investing in, dealing in, developing, redeveloping or refurbishing them and
whether directly or indirectly).
2 Even
if not approved securities, property related assets may qualify for investment
purposes (under Article 5.34.6) if –
a. they
are investments falling within paragraph 1 of Schedule 1 to the Financial
Services Act;
b. they
are transferable securities; and
c. they
are shares in a body corporate at least 75% of whose total assets (before
deduction of liabilities and as shown in the most recently published accounts)
consist of permitted immovables.
3 Up
to 5% in the value of the property of the pool may consist of investments of
the type referred to in paragraph 2 issued by any one issuer; but that figure
may be regarded as 10% if –
a. the
pool owns at least 90% of the rights to vote which are exercisable in all
circumstances at general meetings of the body corporate; and
b. the
shares are or were bought within 6 months after receipt by the manager or the
company of –
(i) a report from an
appropriate valuer relating to permitted immovables owned by the body
corporate, indicating that they are transferable (as at Article 5.35.3) or
have marriage value (as at Article 5.35.4); and
(ii) a report, on the
value of any assets other than permitted immovables, from a person then
qualified to be an auditor of a company under the relevant legislation;
c. at
the time of the purchase it would not have been reasonably apparent to the
manager that the report at b(i) or (ii) could no longer reasonably be relied
on; and
d. the
shares were bought at no more than 105% of the total of the values in the reports
at b(i) and (ii).
5.37 Investment in collective investment
funds
1 A
property fund may invest in units in a collective investment fund or
constituent parts, or their equivalent, of an umbrella fund only if the second
fund –
a. is
a regulated collective investment fund or constituent part, or its equivalent,
thereof;
b. complies
or is treated as complying with Article 2.09 of these Rules (repurchase or
cancellation of units at price related to valuation); and
c. is
dedicated to approved immovables, with or without transferable securities which
are property related assets or Government and other public securities or is a
money market fund or a fund of a category that is equivalent to the category of
such a fund.
2 Units
in a collective investment fund or constituent part, or its equivalent, of an
umbrella fund do not fall within paragraph 1 above if the fund is managed or
operated by the manager or an associate of the manager of the investing pool,
unless –
a. the
constitutional documents of the investing pool and its prospectus clearly state
that the property of the investing pool may include such units; and
b. Article 5.70
(investment in other group collective investment funds) is complied with.
5.38 Property related limits
1 Up
to 10% in value of the property of the pool may consist of approved immovables
which are leasehold interests (or the equivalent: see Article 5.35.2a)
having an unexpired term of less than 60 years.
2 Up
to 25% in value of the property of the pool may consist of approved immovables
which are unoccupied and non-income producing or in course of substantial
development, redevelopment or refurbishment.
5.39 Mortgaged property
1 Up
to 15% in value of that part of the property of the pool which for the time
being consists of immovables may consist of mortgaged immovables.
2 An
immovable subject to one or more hypothecs or mortgages may be retained in the
pool only so long as the hypothec or mortgage or each of the hypothecs or
mortgages is an approved mortgage, the total sums outstanding under which do
not exceed 50% of the value of the immovable (assuming for this purpose that
the immovable is not hypothecated or mortgaged).
3 In
these Rules, a hypothec or mortgage is an approved mortgage only if the
depositary reasonably believes that the hypothec or mortgage can be discharged
on demand or within 28 days by repayment of all the money secured by the
hypothec or mortgage (including, where appropriate, any additional sum provided
for under the hypothec or mortgage) and that the hypothec or mortgage is
‘non-recourse’ in nature, that is that there is no property on
which the hypothec or mortgage is secured, whether immediately or contingently,
other than the approved immovable in question.
5.40 Spread
1 Up
to 15% in value of the property of the pool may consist of any one immovable.
2 In
paragraph 1 ‘one immovable’ includes adjacent or contiguous
immovables.
3 The
figure of 15% in paragraph 1 may be regarded as 25% once the immovable has been
included in the property of the pool in compliance with that paragraph.
4 Up
to 5% in value of the property of the pool may consist of property related
assets issued (or conferring rights to investments issued) by any one issuer.
5 The
figure of 5% in paragraph 4 may be regarded as 10% in respect of up to 40% of
the value of the property of the pool.
6 Up
to 20% of the income receivable in any accounting period may derive from
members of any one group; but there is no restriction on the income receivable
from any Government or body within Article 5.13 (issuers of Government and
other public securities).
5.41 Initial periods
1 During
the period of the initial offer, no immovable may be –
a. bought
or leased; or
b. agreed,
by enforceable contract, to be bought or leased,
unless it appears to the manager and to the depositary that more
than £5 million (or the equivalent amount in the base currency) has been
paid or agreed to be paid for units to be issued or sold.
2 Subject
to paragraphs 3 and 4, during the first two years starting with the date on
which the recognized fund receives a recognized fund certificate valid in
relation to the pool (or on which the period of the initial offer commenced, if
later) –
a. Articles 5.38.1
and 5.40 do not apply; and
b. the
obligation, derived from Article 5.34, that (unless properly held or
invested elsewhere) at least 20% in value of the property of the pool must
consist of approved immovables does not apply.
3 Paragraph
2 ceases to apply if, at any time during the two year period, six months have
elapsed from the first date on which the property of the pool exceeds £15
million in value (or the equivalent amount in the base currency).
4 Paragraph
2 postpones the application of Article 5.40.4 (spread of property related
assets) for a maximum of six months only from the date there mentioned, and not
of two years.
5 This
Article applies, where there is no initial offer, as if –
a. the
period of the process of unitisation; or
b. the
period of 21 days after the date on which persons are first invited to become
unitholders,
were the period of the initial offer.
5.42 Grant of options, mortgages etc.
1 No
option may be granted to buy any immovable comprised in the property of the
pool, whether under Section K below (efficient portfolio management) or
otherwise.
2 No
hypothec or mortgage other than an approved mortgage may be created on or over
any such immovable.
5.43 Other provisions
The following Articles apply to property funds –
a. 5.15
(investment in warrants and in nil or partly paid securities);
b. (subject
to Article 5.36.3) 5.16 (significant influence).
SECTION G
WARRANT FUNDS
5.44 Warrant funds
1 Subject
to this Section and to any other Sections of this Part, the property of the
pool of a warrant fund shall consist of property which could be the property of
the pool of a securities fund, except that up to 100% in value of the property
of the pool may consist of warrants.
2 Accordingly,
Section B above applies to a warrant fund as it applies to a securities fund,
except that Article 5.15 does not apply.
SECTION H
FEEDER FUNDS
5.45 Feeder funds: general
1 Subject
to Section A above and to Sections M and N below, the property of the pool of a
feeder fund –
a. shall
consist of units in a single recognized fund or other regulated collective
investment fund or another collective investment fund acceptable to the
Commission, or else;
b. shall
consist of shares in or debentures of a single eligible investment trust (as to
which see Article 5.46); and
c. may
include cash and near cash for the purposes of redemption of units of the pool
or for the purposes of efficient management of the pool or for other purposes
consistent with and ancillary to the pool.
2 A
feeder fund under Article 5.45.1a may not invest in –
a. a
geared futures and options fund;
b. a
property fund;
c. a
warrant fund;
d. a
feeder fund;
e. a
fund of funds, unless the fund of funds is prevented by its constitutional
documents from investing in any fund within a, b or c;
f. any
constituent part, or its equivalent, of an umbrella fund which is invested as
if it were a pool within a, b, c, d or e;
g. a
regulated collective investment fund which would, if authorised, fall within
any of a to f.
5.46 Feeder funds investing in eligible
investment trusts
1 An
investment trust is an eligible investment trust for the purposes of Article 5.45.1b
only –
a. if
it is acceptable to the Commission and it fulfils the initial condition in
paragraph 2; and
b. as
long as the depositary of the feeder fund has, at any time in the last six
months, been reasonably satisfied as to the matters in paragraph 3.
2 The
initial condition is that, at the date on which the recognized fund certificate
is granted or amended to be valid in relation to the feeder fund, the property
of the investment trust included net assets worth at least £25 million
(or, if the base currency of the feeder fund is not sterling, the equivalent in
that base currency).
3 The
matters of which the depositary must be or have been reasonably satisfied are –
a. at
least 70% of the income of the investment trust received during either or both
of –
(i) the last
completed accounting period, and
(ii) the first half of
the current accounting period,
consisted of income derived from approved securities;
b. (apart
from transactions for hedging purposes) the property of the investment trust either –
(i) cannot be
invested in derivatives, or
(ii) can be invested
in derivatives only on the footing of cover to at least the extent required of
a futures and options fund under Article 5.25;
c. not
more than 5% of the property of the investment trust consists of warrants;
d. not
more than 5% of the property of the investment trust consists of transferable
securities issued by any one issuer, except that the figure of 5% may be
regarded as 15% in respect of up to 30% in value of the property of the
investment trust;
e. the
feeder fund owns not more than 20% of the units or shares (or of any class
of units or shares) in or of the debentures (or of any class of debentures) of
the investment trust;
f. the
borrowing of the investment trust does not exceed 50% of the market value of
the shares of the investment trust at the mid value unit or share price for the
time being;
g. the
units or shares in (or debentures of) the investment trust are regularly
offered for purchase and sale by at least three market makers who are
recognized or registered as members of an eligible securities market; and
h. the
investment trust has no limit on its duration.
SECTION I
FUNDS OF FUNDS
5.47 Funds of funds: general
1 Subject
to this Section and to any other Sections of this Part, the property of the
pool which is a fund of funds shall consist of units in recognized funds and/or
other regulated collective investment funds.
2 A
fund of funds may not invest in –
a. a
feeder fund;
b. a
fund of funds;
c. any
constituent part, or its equivalent, of an umbrella fund which is a pool
constituting a. or b; or
d. a
regulated collective investment fund which would, if it were a recognized fund,
fall within a or b.
3 Up
to 20% in value of the property of the pool may consist of units in any
one pool or other regulated collective investment fund.
5.48 Eligible combinations of funds
1 A
fund of funds may invest in units in any one or more pools within, and/or one
or more regulated collective investment funds which, if they were recognized
funds, would be within, any one of Sections B, C, D, E, F, or G.
2 A
fund of funds may invest in units in one or more money market funds and/or one
or more regulated collective investment funds which, if they were recognized
funds, would be money market funds (within Section C above) and in units in any
one or more pools within, and/or one or more regulated collective investment
funds which, if they were recognized funds, would be within, any one of the
other Sections mentioned in paragraph 1.
3 As
in the case of a recognized fund where each constituent part of an umbrella
fund is a pool, each separate part or sub fund of any other regulated
collective investment fund equivalent to an umbrella fund shall also be treated
for the purposes of this Article and Article 5.47.3 as if it were a
separate pool.
SECTION J
UMBRELLA FUNDS
5.49 Umbrella funds: general
1 Subject
to paragraphs 2 and 3, each of the constituent parts of an umbrella fund shall
be invested in a manner which complies with the limits expressed in any one of
Sections B to I above.
2 No
constituent part of an umbrella fund may be invested in units in another
constituent part of the same umbrella fund.
3 No
constituent part of an umbrella fund may be invested in accordance with Section
D, E or F above unless the Commission has granted permission in writing for it
to do so and, on an application made to it in connection with this paragraph
and after being furnished with all such information as it may require, the
Commission may grant permission for the constituent part to be invested in
accordance with the relevant Section either unconditionally or subject to such
conditions as it considers appropriate, or may refuse to grant permission.
SECTION K
EFFICIENT PORTFOLIO MANAGEMENT
5.50 Efficient portfolio management:
general
1 This
Section applies to any pool.
2 In
the application of this Section to a feeder fund or fund of funds, Articles 5.51.2.c.
and 5.52.2.b. do not apply.
3 This
Section is subject to any restriction in the constitutional documents or in the
prospectus.
5.51 Appropriate transactions
1 This
Section enables the manager or the company to enter into transactions of the
kind specified in Article 5.54 (permitted transactions) for the purpose of
efficient portfolio management, but only when each of the following two
conditions is satisfied –
a. the
transaction is economically appropriate to that purpose, as required by Article 5.52;
and
b. the
transaction is fully covered, as required by Article 5.55.
2 The
purpose of efficient portfolio management is to achieve one or more of the
following in respect of the pool –
a. the
reduction of risk;
b. the
reduction of cost; and
c. the
generation of additional capital or income for the recognized fund with no, or
with an acceptably low level of, risk.
3 The
purpose in paragraph 2 relates to –
a. property
of the pool;
b. property
(whether precisely identified or not) which is to be or is proposed to be
acquired for the pool; and
c. anticipated
cash receipts of the pool, if due to be received at some time and likely to be
received within one month.
5.52 Economic appropriateness
1 Any
transaction under this Section must be one which (alone or in combination with
one or more others) is reasonably believed by the manager to be economically appropriate
to the efficient portfolio management of the pool.
2 This
means that the manager must reasonably believe that –
a. for
transactions undertaken to reduce risk or cost (or both), the transaction
(alone or in combination) will diminish a risk or cost of a kind or level which
it is sensible to reduce; and
b. for
transactions undertaken to generate additional capital or income, the pool is
certain (or certain barring events which are not reasonably foreseeable) to
derive a benefit from the transaction.
3 Where,
for example, the manager wishes to achieve a switch in exposure, he may do so,
rather than through sale and purchase of the property of the pool, by use of
derivatives (a technique commonly called ‘tactical asset
allocation’) if the transactions concerned reasonably appear to him to
satisfy paragraphs 1 and 2.a.
4 A
transaction may not be entered into under this Section if its purpose could
reasonably be regarded as speculative.
5 Where
the transaction relates to the actual or potential acquisition of transferable
securities, then the manager must intend that the scheme should invest in
transferable securities within a reasonable time; and he must thereafter ensure
that, unless the position has itself been closed out, that intention is
realised within that reasonable time.
5.53 Generation of additional capital or
income
1 There
is an acceptably low level of risk, for the purposes of Article 5.51.2.c,
in any case where the manager reasonably believes that the pool is certain (or
certain barring events which are not reasonably foreseeable) to derive a
benefit –
a. on
a basis set out in paragraph 2 or 3; or
b. pursuant
to Section L (stocklending).
2 The
first basis is that the pool takes advantage of pricing imperfections in
relation to the acquisition and disposal (or disposal and acquisition) of
rights in relation to the same or equivalent property, being property which the
pool holds or may properly hold.
3 The
second basis is that the pool receives a premium for the writing of a covered
call option or a covered put option, even if that benefit is obtained at the
expense of surrendering the chance of yet greater benefit.
5.54 Permitted transactions
1 A
transaction under this Section must be –
a. a
derivatives transaction; or
b. a
forward transaction in a currency (or, where the property of the pool may
include gold, in gold).
2 A
derivatives transaction under paragraph 1.a. must be –
a. in
an approved derivative (as defined in Article 5.08.2); or
b. one
which complies with Articles 5.23.5 to 8 (off-exchange); or
c. a
‘synthetic future’ which complies with Articles 5.23.9
and 10.
3 Any
transaction in an approved derivative must be effected on or under the rules of
an eligible derivatives market.
4 Any
forward transaction must be with an approved counterparty which is within Article 5.23.6
(eligible institutions, listed money market institutions, etc.).
5 No
more than 5% of the value of the property of the pool may be directed to
initial outlay in respect of off-exchange transactions with any one counterparty.
6 A
derivatives or forward transaction which would or could lead to delivery of
property to the depositary may be entered into only if –
a. such
property can be held by the pool;
b. the
manager reasonably believes that delivery of the property pursuant to the
transaction will not lead to a breach of these Rules.
7 A
transaction permitted under this Article may at any time be closed out.
5.55 Cover for transactions under this
Section
1 No
transaction may be entered into under this Section unless the maximum potential
exposure created by the transaction, in terms of the principal or notional
principal of the derivative or forward contract, is –
a. covered
individually under paragraph 2 or 3; and
b. covered
globally under paragraph 4,
and for this purpose the examples in paragraph 10 below may be
relevant.
2 Subject
to paragraph 3, exposure is covered individually if there is, in the property
of the pool –
a. (in
the case of an exposure in terms of property) a transferable security or other
property which is of the right kind, and sufficient in amount, to match the
exposure; and
b. (in
the case of an exposure in terms of money), cash or near cash (or borrowing
pursuant to Article 5.56) or transferable securities which is or are, or,
on being turned into money in the right currency, will be, sufficient in amount
to match the exposure.
3 Exposure
to an index or basket of securities or other assets is covered individually
only if the pool holds securities or other property which (taking into account
the closeness of the relationship between fluctuations in the price of the two)
can reasonably be regarded as appropriate to provide cover for the exposure,
and they may be so regarded even if there is not complete congruence between
the cover and the exposure.
4 Exposure
is covered globally for the purposes of this Section if, after taking account
of all the cover required under paragraph 2 or 3 for other positions already in
existence, there is available adequate cover from within the property of the
pool to enable the fresh transaction to be entered into.
5 A
derivative or forward transaction is not available to provide cover for another
derivative or forward transaction under this Section, but –
a. the
two transactions involved in a ‘synthetic future’ are to be treated
as if they were a single derivative, and the net exposure from the combination
is to be covered on the basis of the higher of the cover requirements of the
options which make up the synthetic future;
b. ‘synthetic
cash’ (that is where a position in a derivative offsets an exposure in
property to the point where that exposure has effectively been neutralised, and
the effect of the combined holding of both property and the position in the
derivative is the same as if the pool had received or stood to receive the
value of the property in cash) is available to provide cover for a transaction
as if it were cash; and
c. a
covered currency forward or a covered currency derivative may provide cover for
a derivative.
6 Cash
not yet received into the property of the pool but due to be received within
one month is available as cover for the purposes of paragraphs 2.b. and 3.
7 Subject
to paragraph 5, to the extent that property of the pool has been used for cover
in respect of one exposure, (whether under this Section or otherwise), it is
not available for cover in respect of another.
8 Property
anticipated under a derivative does not count as property under paragraph 2.a.
9 Property
is not available for cover if it is the subject of a transaction under Section
L (stocklending), unless the manager reasonably believes that it is obtainable
(by return or re-acquisition) in time to meet the obligation for which cover is
required.
10 Examples
of the cover requirements are as follows –
a. A
bought put option (or a written call option) on 1000 ordinary £1 shares
(fully paid) of ABC plc has to be covered by an existing holding in the pool of
1000 ordinary £1 shares (fully paid) of ABC plc (paragraph 2.a. above).
b. A
bought call option (or written put option) on 1000 ordinary £1 shares
(fully paid) of ABC plc has to be covered by cover (in the form of cash or an
allowable substitute for cash or transferable securities) which is sufficient
in amount to meet the purchase price of the shares on exercise of the option
(paragraph 2.b. above).
c. A
sold contract for differences on short-dated sterling has to be covered by cash
or near cash or transferable securities, the values of which together at least
match the notional principal of the contract (e.g. a LIFFE short sterling contract,
or a successive series of such contracts, is covered by £500,000)
(paragraphs 2.b. and 7 above).
d. A
sold future on the FT-SE 100 Index has to be covered by holdings of equities,
which satisfy the test of appropriateness for cover in paragraph 3 in relation
to that future, and the values of which together at least match the current
mark to market valuation of the future (e.g. if the multiplier per full index
point is £25, and if the eventual obligation under the future is
currently at 2800, the valuation of the futures position is 2800 x £25 =
£70,000) (paragraph 3 above).
e. Where
the manager of a recognized fund, which has holdings in ‘blue chip’
UK shares, wishes to switch exposure to the US market, and decides to sell a
FT-SE index future to the value of those shares (this transaction satisfying
the test of appropriateness for cover in paragraph 3), then the sterling
‘synthetic cash’ position created may thereupon be used as cover
for a S&P 500 index future provided that the manager ensures that the cover
remains sufficient (e.g. by reference to the sterling/US dollar exchange rate)
(paragraphs 3 and 5.b. above).
5.56 Borrowing in the context of
efficient portfolio management
1 Cash
obtained by borrowing, and borrowings which the manager reasonably regards an
eligible institution to be committed to provide, are available for cover under Article 5.55,
as long as the normal limits on borrowing (as to which see Article 5.63
and 5.64) are observed.
2 Where,
for the purposes of this Section, the manager –
a. borrows
for the pool an amount of currency from an eligible institution; and
b. keeps
an amount in another currency, at least equal to the borrowing for the time
being in a., on deposit with the lender (or his agent or nominee),
then this Section shall apply as if the borrowed currency, and not
the deposited currency, were part of the property of the fund, and the normal
limits on borrowing under Articles 5.63 and 5.64 below do not apply to
that borrowing.
5.57 Continuing nature of limits and
requirements
1 The
manager must, at each valuation point (and more frequently if necessary),
re-calculate the amount of cover required in respect of positions already in
existence under this Section, and derivatives and rights under forward transactions
under this Section may be retained in the property of the pool only so long as
they remain covered both individually and globally under Article 5.55.
2 If
at any time –
a. any
fact or matter relating to the pool or its economic environment; or
b. the
aggregate of all outstanding positions under this Section,
is such that at least one of the relevant transactions (assuming it
did not exist) could not then properly have been effected, either in that size
or at all, the manager must forthwith on becoming aware of that fact take such
steps as are necessary to rectify the situation, whether by closing out or by
providing additional cover or otherwise.
SECTION L
STOCKLENDING
5.58 Stocklending: general
1 This
Section applies to any pool to which Section K (efficient portfolio management)
applies, but not to a feeder fund or fund of funds.
2 The
powers conferred by this Section may be exercised by such a pool for the
purpose of efficient portfolio management, that is when it reasonably appears
to the manager to be economically appropriate to do so with a view to
generating additional income for the pool with no, or an acceptable degree of,
risk.
3 Paragraphs
1 and 2 are subject to any restrictions in the constitutional documents or
prospectus.
5.59 Permitted stocklending
1 The
depositary may, at the request of the manager, enter into a stocklending
arrangement (in relation to the property of the pool) whereby the property of
the pool is to be borrowed by a third party, but only if –
a. all
the terms of the agreement under which securities are to be re-acquired by the
depositary are in a form acceptable to the depositary and in accordance with
good market practice; or
b. the
counterparty is an authorised person or a person included in the list
maintained for the purposes of section 43 of the Financial Services Act
(listed money market institutions) or, in the case of stocklending effected
through Clearstream or Euroclear, is acceptable to Clearstream or Euroclear as
the case may be although undisclosed to the depositary; and
c. either
collateral is obtained which is –
(i) acceptable to the
depositary;
(ii) adequate within Article 5.61.1;
and
(iii) sufficiently immediate
within Article 5.61.2,
or in the case of stocklending effected through Clearstream or Euroclear,
a guarantee is given to the depositary by Clearstream or Euroclear as the case
may be which guarantees the transfer to the account of the depositary of the
securities transferred to the account of the borrower under the stocklending
arrangement of securities of the same kind and value, in the event of any
default on the part of the borrower.
2 The
counterparty for the purpose of paragraph 1 is the person who is obliged
pursuant to or in consequence of the agreement referred to in paragraph 1a to transfer
to the depositary or to the relevant account with Clearstream or Euroclear, as
appropriate, the securities transferred by, or to the order of, the depositary
under the stocklending arrangement or securities of the same kind.
5.60 Limitation by value
There is no limit on the value of the property of the pool which may
be the subject of transactions within this Section.
5.61 Treatment of collateral
1 Collateral
is adequate only if it –
a. exceeds
in value, at the time of the transfer to the depositary, the value of the
securities transferred by the depositary;
b. is
transferred to the depositary or its agent;
c. is
the subject of an agreement for transfer of the collateral, or of assets
equivalent to the collateral, by the depositary as soon as the need for it has
disappeared; and
d. is
in the form of one or more of the following –
(i) cash,
(ii) near cash,
(iii) Government and other
public securities,
(iv) a certificate of
deposit,
(v) a letter of credit,
(vi) securities transferred
in CREST by a DBV, or
(vii) securities transferred in the
Clearstream or Euroclear systems.
2 Collateral
is sufficiently immediate if –
a. it
is transferred before or at the time of the transfer of the securities by the
depositary; or
b. the
depositary reasonably believes at that time that it will be transferred at the
latest by the close of business on the day of the transfer.
3 The
depositary shall take such steps as are necessary to ensure that the value of
the collateral at all times exceeds the value of the securities transferred by
the depositary.
4 Any
agreement for transfer of securities or of collateral (or of the equivalent of
either) under this Section at a future date may be regarded, for the purposes
of valuation under Part 4 or these Rules, as an unconditional agreement for the
sale or transfer of property, whether or not the property is part of the
property of the pool.
5 Collateral
transferred to the depositary is part of the property of the pool for the
purposes of these Rules except in the following respects –
a. it
does not fall to be included in any valuation for the purposes of Part 4 or
these Rules, because it is offset under paragraph 4 above by an obligation to
transfer;
b. it
does not count as property for any purpose of Part 5 (other than this Section).
6 Paragraph
4 and paragraph 5a do not apply to any valuation of collateral itself for the
purposes of this Section.
7 The
duty in paragraph 3 may be regarded as satisfied in respect of collateral the
validity of which is about to expire or has expired, where the depositary
reasonably believes that sufficient collateral will again be transferred at the
latest by the close of business on the day of expiry.
SECTION M
CASH, BORROWING, LENDING ETC.
5.62 Cash and near cash
1 The
property of the pool may consist of cash and near cash, where this may
reasonably be regarded as necessary in order to enable –
a. redemption
of units;
b. efficient
management of the pool in accordance with its objectives; or
c. other
purposes which may reasonably be regarded as ancillary to the investment
objectives of the pool.
2 Paragraph
1 does not apply to –
a. a
money market fund;
b. a
futures and options fund; or
c. a
geared futures and options fund,
but the property of the pool of any such pool may consist of cash
and near cash without limitation.
3 Paragraph
1 does not apply during the period of the initial offer, during which the
property of the pool may consist of cash and near cash without limitation.
5.63 General power to borrow
1 Subject
to any restriction in the constitutional documents, the depositary or the
company may for the account of the pool in accordance with these Rules, borrow
money for the use of the pool on terms that the borrowing is to be repayable
out of the property of the pool.
2 The
depositary may borrow under paragraph 1 only from an eligible institution.
3 Paragraph
1 does not apply to a geared futures and options fund.
4 Except
in the case of a futures and options fund, the manager must ensure that the
borrowing for the use of the pool is on a temporary basis, and, for this
purpose –
a. the
manager may have regard in particular to –
(i) the duration of
any period of borrowing, and
(ii) the number of
occasions on which resort is had to borrowing in any period; and
b. the
manager must ensure that no period of borrowing exceeds 3 months, whether in
respect of any specific sum or at all, without the prior consent of the
depositary, which may be given only on such conditions as appear to the
depositary appropriate to ensure that the borrowing does not cease to be on a
temporary basis only.
5 This
Article does not apply to ‘back to back’ borrowing under Article 5.56.2.
6. A
recognized fund shall not issue any debenture falling within paragraph 2
of Schedule 1 to the Financial Services Act.
5.64 Borrowing limits
1 The
manager must ensure that the borrowing of a recognized fund for the use of a
pool does not, on any business day, exceed 10% of the value of the property of
the pool.
2 In
the case of a property fund, the manager must ensure that the borrowing shall
not, on any business day, exceed 10% of the value of that part of the property
of the pool which for the time being does not consist of immovables.
3 In
relation to a property fund, an approved mortgage under Article 5.39 or
5.42 does not count as borrowing for the purposes of paragraph 2 above.
4 This
Article does not apply to ‘back to back’ borrowing under Article 5.56.2.
5 In
this Article, ‘borrowing’ includes, as well as borrowing in a
conventional manner, any other arrangement designed to achieve a temporary
injection of money into the property of the pool, in the expectation that the
sum will be repaid, for example by way of a combination of derivatives which
produces an effect similar to a borrowing but does not include any arrangement
for the company to pay to a third party (including the manager) any costs which
the recognized fund is entitled to amortise under Article 8.12 and which
were paid on behalf of the recognized fund by such third party.
5.65 Restriction on lending of money
1 None
of the money in the property of the fund of any recognized fund may be lent.
2 Acquiring
a debenture is not lending for the purposes of paragraph 1; nor is the placing
of money on deposit or in a current account.
3 Paragraph
1 does not prevent a company from providing an officer of the company with
funds to meet expenditure to be incurred by him for the purposes of the company
(or for the purposes of enabling him properly to perform his duties as an
officer of the company) or from doing anything to enable an officer to avoid
incurring such expenditure.
5.66 Restriction on lending of property
other than money
1 None
of the property of the fund other than money may be lent by way of deposit or
otherwise.
2 Transactions
falling within Section L (stocklending) are not lending for the purposes of
paragraph 1.
3 None
of the property of the fund may be hypothecated or mortgaged or otherwise
encumbered except under Section F (property funds).
4 Nothing
in this Article prevents the company or the depositary at the request of the
manager or the company from lending, depositing, pledging or charging property
of the fund for margin requirements where the recognized fund is using
derivatives or forward transactions pursuant to any other provision of these
Rules.
5.67 General power to underwrite or
accept placings
1 Subject
to any restriction in the constitutional documents, any power in this Part to
invest in transferable securities may be used for the purpose of entering into
transactions to which this Article applies.
2 Subject
to paragraph 3, this Article applies to any agreement or understanding (whereby
transferable securities will or may become part of the property of the fund) –
a. which
is an underwriting or sub-underwriting agreement; or
b. which
contemplates that securities will or may be issued to or subscribed for or
acquired by the recognized fund.
3 This
Article does not apply to –
a. an
option; or
b. purchase
of a transferable security which confers a right –
(i) to subscribe for
or acquire a transferable security, or
(ii) to convert one
transferable security into another.
4 No
agreement or undertaking to which this Article applies may be entered into if
it relates to units in a collective investment fund.
5 The
exposure of a recognized fund to agreements and undertakings within paragraph 2
must, on any business day –
a. be
covered under Article 5.55 as if the exposure had been incurred in the
context of Section K (efficient portfolio management) by means of transactions
in approved derivatives; and
b. be
such that, if all possible obligations arising under them had immediately to be
met in full, there would be no breach of any limit in these Rules.
5.68 Guarantees and indemnities
1 A
recognized fund shall not provide any guarantee or indemnity in respect of the
obligations of any third party and none of the property of the fund may be used
to discharge any obligation arising under a guarantee or indemnity given by the
depositary or manager or the company or any director of the company with
respect to the obligations of any third party.
2 Paragraph
1 does not apply to an indemnity given to a person winding up a body corporate
or collective investment fund in circumstances to which Article 4.05.1
(unitisation) applies.
SECTION N
MISCELLANEOUS
5.69 Requirement to cover sales
1 No
agreement on behalf of a recognized fund to dispose of property may be made –
a. unless
that obligation, and any other similar obligation, could immediately be honoured
by the recognized fund in relation to the relevant pool by delivery of property
of the pool or the assignment of rights; and
b. the
property and rights at a. are owned by the recognized fund at the time of the
agreement.
2 Paragraph
1 does not apply to a derivatives or forward transaction under Section K
(efficient portfolio management).
3 Paragraph
1 does not apply to a futures and options fund or to a geared futures and
options fund.
5.70 Investment in other group
collective investment funds
1 No
recognized fund (the ‘first fund’) may invest in or dispose of
units in another collective investment fund (the ‘second fund’)
managed or operated by the manager or an associate of the manager of the first
fund, unless the manager of the first fund is under a duty to pay into the
property of the first fund, within the period specified in paragraph 2 –
a. on
investment, either any amount by which the consideration paid out of the
property of the first fund for the units in the second fund exceeds the price
that would have been paid for the benefit of the second fund had the units been
newly created or issued by it or, if such price cannot be ascertained by the
manager of the first fund, the maximum amount of any charge permitted to be
made by the issuer of units in the second fund; and
b. on
disposal, the amount of any charge made for the account of the manager of the
second fund or an associate of the manager in respect of the disposal.
2 The
period expires at the close of business on the fourth business day next after
the agreement to buy or to sell.
3 For
the purposes of this Article –
a. any
addition to or deduction from the consideration paid on the acquisition or
disposal of units in the second fund, which is applied for the benefit of the
second fund and is, or is akin to, a dilution levy made pursuant to Article 4.25,
shall be treated as part of the price of the units and not as part of any
charge; and
b. any
charge made in respect of an exchange of units in one constituent part or
separate part of the second fund for units in another constituent part or
separate part of that collective investment fund shall be included as part of
the consideration paid for the units.
PART 6
TITLE AND TRANSFER
6.01 The register
1 The
trustee or the company shall establish and maintain in Jersey a register of the
unitholders (‘the register’) in accordance with this Article.
2 The
trustee or the company may appoint the manager or, in the case of a company,
the depositary (the “registrar”) to establish and maintain the register
on its behalf and, if the trustee or the company does so –
a. the
trustee or the company remains responsible for the discharge of all of its
duties in relation to the register under these Rules; and
b. anything
required or authorised under these Rules to be done in relation to the register
by, to or before the trustee or a representative of the company may be done by,
to or before the registrar or its agent.
3 The
registrar may appoint some other person to establish and maintain the register
on its behalf and if the registrar does so it shall remain responsible for the
acts and omissions of that other person as though they were the acts and
omissions of the registrar itself.
4 The
register shall be maintained in a legible form or in a manner capable of being
reproduced in a legible form.
5 There
shall be entered in the register –
a. the
name and address of each unitholder or, in the case of joint unitholders, the
names of each of the joint unitholders and the address of the first such
unitholder (other than a unitholder or joint unitholders whose units are all
for the time being represented by bearer certificates);
b. the
number of units (including fractions of a unit) of each class held by each such
unitholder (other than units the title to which is for the time being
represented by bearer certificates);
c. the
date on which the unitholder was registered in the register in respect of the
units standing in his name; and
d. the
number of units (including fractions of a unit) of each class for the time
being in issue and represented by bearer certificates and the numbers of those
certificates,
but the trustee or the company is not bound to register more than
four persons as the joint unitholders of any units.
6 The
trustee or the company must –
a. take
all reasonable steps; and
b. exercise
all due diligence,
to ensure that the information contained in the register is at all
times complete and up to date.
7 In
relation to paragraph 6, the manager must in particular –
a. take
such steps as are necessary to obtain and supply information from or concerning
any new unitholder to enable the entry in the register to be made; and
b. forthwith
notify to the trustee or the company any information which the manager receives
relating to the accuracy of or any change to any entry in the register.
8 Nothing
in this Part requires the trustee or company to make or alter any entry in the
register or to issue any certificate or other document or to accept any
transfer or conversion in any case where either of them considers it necessary
or appropriate to carry out or complete identification procedures in relation
to the unitholder or another person pursuant to a statutory or regulatory
obligation.
6.02 The register as evidence of title
1 Subject
to Article 6.11 (default by unitholder), the register shall be conclusive
evidence as to the persons respectively entitled to the units entered therein.
2 No
notice of any trust, express, implied, or constructive in respect of any unit
shall be binding on the manager or the depositary or the company.
6.03 Inspection of the register and
copies of entries
1 The
trustee or the company shall make the register available for inspection by or
on behalf of the unitholders or the manager or depositary in Jersey free of
charge at all times during ordinary office hours except that the register of a
unit trust may be closed at such times and for such periods (not exceeding 30
days in any one year) as the trustee or the company may from time to time
determine.
2 The
trustee or company shall supply to the manager at his request a copy of the
register or any part of it.
3 The
trustee or company shall supply to a unitholder or his authorised
representative at his request and free of charge a copy in print of the entries
on the register relating to that unitholder.
6.04 The manager as unitholder
1 The
manager may, unless expressly forbidden to do so by the constitutional
documents, be a unitholder.
2 The
manager is deemed to hold each unit which is in issue (other than a unit the
title to which is for the time being represented by a bearer certificate) if no
person is entered in the register as the unitholder thereof.
3 Where
units are transferred by a unitholder to the manager, they need not be
cancelled, nor need the name of the manager be entered on the register as the
new unitholder.
6.05 Certificates, etc.
1 On
or following the sale of units or, subject to Article 6.06, at any other
time, a certificate or other document recording title to the units may be
issued to the unitholder if and in such form as the trustee or company
determines.
2 The
manager and the trustee or company must agree on the procedures to be followed
in repurchasing units.
3 Where
the procedures agreed under paragraph 2 require the unitholder to surrender any
document (or provide any information) as a condition precedent to obtaining the
proceeds of repurchase, they must also oblige the trustee or the company to
issue the document or provide any relevant information relating to an entry on
the register in a timely manner once it is in a position to do so under those
procedures.
4 Where
the constitutional documents enable bearer certificates to be issued, the
trustee must determine the form of them, and the manager and trustee must agree
on the procedures to be followed in respect of them.
5 The
steps required to be taken by a unitholder in relation to the sale and
repurchase of units must be specified in the prospectus.
6 Every
unitholder whose units are represented by certificates shall be entitled to
exchange any or all of his certificates for one or more certificates of such
denominations as he may require representing the same aggregate number of units
of the same class but, before any such exchange is carried out, the unitholder
shall surrender to the manager the certificate or certificates to be exchanged.
7 If
a certificate has become mutilated or defaced, the trustee or company in its
discretion may issue to the person entitled in exchange for and upon surrender
of the mutilated or defaced certificate a new certificate representing the same
aggregate number of units of the same class.
8 If
a certificate shall be lost, stolen or destroyed, the trustee or company may in
its discretion issue to the person entitled a new certificate in lieu thereof
but no such new certificate shall be issued unless the applicant has –
a. furnished
to the trustee or company evidence satisfactory to the trustee or company of
the loss, theft or destruction of the original certificate;
b. paid
all expenses incurred in connection with the investigation of the facts
thereof; and
c. if
required by the trustee or company so to do, furnished to the trustee or
company such indemnity as the trustee or the company may require.
9 If
authorised by the constitutional documents to do so, the trustee or company may
make –
a. the
issue of a certificate; and
b. the
registration of any grant of probate, letters of administration or any other
document relating to or affecting the title to any unit,
conditional on the payment to it of such reasonable fee as the
manager and trustee or company may agree.
6.06 Transfer of units by act of parties
1 Subject
to paragraph 2, every unitholder shall be entitled to transfer units held by
him in respect of which he is entered in the register by an instrument of
transfer in any usual or common form or in such other lawful form as the
manager and the trustee or directors may from time to time approve.
2 The
trustee and the company are not under any duty to accept a transfer –
a. if
the number or value of the units of any class sought to be transferred would
result in the unitholder, or the transferee, holding less than any number or
value stated in the prospectus as the minimum number or value to be held of the
relevant class;
b. if
the constitutional documents contain a limitation upon the categories of
persons who may be unitholders and the transferee is not within one of those
categories; or
c. if
the instrument relates to units of more than one class.
3 Every
instrument of transfer of units shall be signed by or on behalf of the unitholder
transferring the units (or, in the case of a body corporate, sealed by that
body or signed by one of its officers authorised so to sign) and, unless the
transferee is the manager, the transferor shall be deemed to remain the
unitholder until the name of the transferee has been entered in the register.
4 Every
instrument of transfer must be left with the trustee or the company for
registration accompanied by –
a. any
necessary declarations or other documents that may be required in consequence
of any legislation now or hereafter from time to time in force; and
b. such
other evidence as the trustee or company may require to prove the right of the
transferor to transfer the units or in the case of a body corporate the
authority of the signatory on its behalf.
5 All
instruments of transfer which shall be registered shall be retained by the
trustee or company in original, copy or non-documentary form for a period of
ten years.
6 Upon
registration of an instrument of transfer, a reference shall be made on the
register enabling the name of the transferor and the transferee and the date of
transfer to be identified.
6.07 Transfer of units by operation of
law
1 On
the death of any one of the joint unitholders the survivor or survivors shall
be the only persons recognized by the trustee or company as having any title to
or any interest in the units held by such joint unitholders.
2 The
executors or administrators of a deceased unitholder (not being one of two or
more joint unitholders) shall be the only persons recognized by the trustee or
company as having title to the units held by him.
3 Where
any person becomes entitled to a unit in consequence of the death or bankruptcy
of any sole unitholder or of the survivor of joint unitholders –
a. he
may, subject to b. below, upon producing such evidence as to his title as the
trustee or company may properly require, either be registered himself as
unitholder of the unit (upon giving to the trustee or company notice in writing
that he so desires) or transfer the unit to some other person;
b. the
provisions concerning transfer of units shall be applicable to any such notice
or transfer as if the death or bankruptcy had not occurred and as if the notice
or transfer were a transfer signed by the unitholder;
c. subject
to d. below, the person so entitled may give a discharge for all monies payable
in respect of the unit, but shall not until registered as a unitholder be
entitled to receive notices or attend or vote at any meeting of unitholders,
and
d. the
trustee or company may at its discretion retain any monies payable in respect
of the unit until the person so entitled is registered as the unitholder of
such unit or duly transfers the same.
6.08 Change of name and address of
unitholder
1 The
trustee or company shall –
a. upon
receipt of notice in writing of a change of name or change of address of any
unitholder;
b. upon
being satisfied thereof; and
c. on
compliance with such formalities as he may require,
alter the register accordingly.
2 Where
a certificate has been issued and remains valid and the name or address of the
unitholder is altered in the register, the trustee or company shall either
issue a new certificate to the unitholder or make an appropriate endorsement on
the unitholder’s existing certificate.
6.09 Conversion of units
1 This
Article applies to any pool in relation to which there are units of more than
one class in existence and governs the conditions of conversion of such units
of one class into units of another class within the same pool.
2 Conversion
by a unitholder is possible under this Article only if both classes of units
are in existence and are offered for sale (the terms of which offer do not
exclude the unitholder) at the time of the request for conversion.
3 If
a unitholder requests the manager to convert such units, the manager shall –
a. in
the case of a unit trust make a request in writing to the trustee; and
b. in
the case of a company, if the depositary gives its consent make the conversion,
but he need not do so, nor need the trustee comply with his request
if he does and the custodian need not give its consent, if the conversion would
result in the unitholder holding less than any number or value of units of
either class stated in the prospectus as the minimum number to be held.
4 Subject
to paragraph 3 the manager or trustee, as the case may be, shall convert the
units which are the subject of the request into the appropriate number of units
of the other class, and that number shall be determined by the manager, after
consulting the depositary, on terms that are fair to the unitholder requesting
conversion and to other unitholders.
5 Part
4 above does not apply when units are converted under this Article.
6.10 Subdivision and consolidation of
units
1 The
manager or company may, unless expressly forbidden to do so by the
constitutional documents, at any time or times when no bearer certificates are
in issue with the approval of the depositary determine –
a. that
each unit shall be subdivided into two or more units (whereupon each unit shall
stand subdivided accordingly); or
b. that
two or more units shall be consolidated (whereupon those units shall stand
consolidated).
2 Upon
a subdivision or consolidation of units the trustee or company shall (unless it
has done so before the subdivision or consolidation became effective) forthwith
give to each unitholder (or to the first named of joint unitholders) whose name
is entered in the register notice of the subdivision or consolidation.
6.11 Default by unitholder
Where –
a. the
unitholder of any units defaults in making any payment in money or a transfer
of property due to the manager or the trustee or company under these Rules, or
the constitutional documents, in respect of the creation or sale of units to
that unitholder; and
b. the
trustee or company is satisfied that there has been such a default by such
evidence furnished to the trustee or company as the trustee or company, as the
case may be, shall require,
the trustee or company may make any necessary deletion or alteration
in the register; and thereafter the manager shall be entitled to the units in
respect of which the defaulting unitholder’s name has been removed from
the register until those units are either cancelled or sold and paid for.
PART 7
POWERS AND DUTIES OF THE MANAGER, THE DIRECTORS, THE COMPANY AND THE
DEPOSITARY
SECTION A
THE MANAGER
7.01 Management of the recognized fund
1 It
is the duty of the manager to manage the recognized fund in accordance with –
a. the
constitutional documents and the management agreement;
b. these
Rules; and
c. the
most recently published prospectus.
2 Subject
to paragraph 1, it is the manager’s right and duty to make decisions as
to the constituents of the property of the fund in such a way as appears to him
likely to secure that the objectives of the recognized fund are attained and
that any particular objectives specified in the prospectus are achieved.
3 The
manager must instruct the depositary from time to time in writing as to how
rights attaching to the ownership of property of the fund are to be exercised;
but not in the case where, under Article 7.10.2, the depositary has the
right to decide after consultation with the manager or directors.
4 The
duty at paragraph 1 extends to taking all reasonable steps, and exercising due
diligence, to avoid the property of the fund being incorrectly priced, contrary
to any provision of Part 4.
5 The
duty at paragraph 1 extends to taking action forthwith to rectify any breach of
Part 4; and where the breach relates to the incorrect pricing (or late payment
in respect of the creation) of units –
a. rectification
shall, unless the depositary otherwise directs, extend to the reimbursement (or
payment) of money –
(i) by the manager to
the recognized fund, to unitholders or to former unitholders, or
(ii) by the recognized
fund to the manager, but
b. rectification
need not, unless the depositary otherwise directs, extend to any such
reimbursement (or payment) where it appears to the depositary that the
incorrect pricing (or late payment in respect of the creation) is of minimal
significance.
7.02 Dealings in property of the fund
1 The
manager may without the specific authority of the depositary give instructions
to agents as to the acquisition or disposal of property of the fund.
2 Where
the depositary is of the opinion that a particular acquisition or disposal of
property by the manager exceeds the powers conferred on the manager, it is the
duty of the manager at his own expense to cancel the transaction or make a
corresponding acquisition or disposal to secure restoration of the status quo
ante.
3 Where
the depositary is of the opinion that –
a. an
acquisition of property by the manager necessarily involves documents of title
or documents evidencing title being kept in the custody of a person other than
the depositary; and
b. the
depositary cannot reasonably be expected to accept the responsibility which
would otherwise be placed upon him as a delegator,
the depositary may require the manager to cancel the transaction or
make a corresponding disposal.
7.03 Maintenance of records
1 The
manager must keep such accounting and other records as are necessary –
a. to
enable it to comply with these Rules; and
b. to
demonstrate at any time that such compliance by it has been achieved.
2 The
manager must keep a daily record of the units held, acquired or disposed of by
it, including the class of such units, and of the balance of any acquisitions
and disposals.
3 The
manager must make the daily record available for inspection by the depositary
in Jersey free of charge at all times during ordinary office hours and must
supply the depositary with a copy of the record or any part of it on request
free of charge.
7.04 Audit
1 The
manager of a unit trust or the directors of a company must, at the outset, and
upon any vacancy, with the approval of the depositary appoint as an auditor for
the recognized fund a person –
a. qualified
under the Company Law for appointment as auditor of a company under that law;
and
b. not
disqualified from being an auditor of the manager or depositary under any
Article of the Permit Conditions Order or who would be disqualified under that
Article if the company were a relevant holder under that Article.
2 An
auditor appointed otherwise than under paragraph 1 must meet the requirements
of sub-paragraphs a. and b. of that paragraph.
3 The
audit fees of the auditor are determined by the manager of a unit trust or the
directors of a company, with the approval of the depositary, unless the auditor
was appointed by the company in general meeting in which case the company in
general meeting shall determine such fees.
4 The
manager must ensure that the accounts required to be included in the annual
report of the recognized fund are audited by the duly appointed auditors; and
that that report is accompanied by a report of the auditor to the unitholders
that those accounts have been audited in accordance with approved auditing
standards and stating whether or not in the auditor’s opinion they give a
true and fair view of the financial position of the recognized fund as at the
end of the annual accounting period.
5 An
auditor may be removed at any time by –
a. the
manager with the approval of the depositary in the case of a unit trust; and
b. by
the company in general meeting in the case of a company,
and this power exists notwithstanding anything in any agreement
between the persons concerned.
6 Notice
of the removal of an auditor shall be given by the manager or directors, as
appropriate, to the Commission.
7 An
auditor shall have –
a. a
right of access at all times to the accounting and other records of the
recognized fund and to all other documents relating to its business; and
b. the
right to require from the manager, directors, company and depositary such
information and explanation as he thinks necessary for the performance of his
duties as auditor.
7.05 Tax returns
The manager must from time to time prepare and supply to the
depositary such returns relating to the property of the fund as are required to
be submitted by the depositary or the company to any fiscal authority.
7.06 Review of recognized fund’s
constitution
The manager must keep under review the constitutional documents and
the prospectus with a view to ensuring that they are in compliance with the
law, including these Rules, and from time to time must make or propose the
making of such changes therein as are necessary or desirable in the interests
of unitholders.
7.07 Manager to supply information to
depositary
The manager must on the request of the depositary forthwith supply
it with such information concerning the management and administration of the
recognized fund as the depositary may reasonably require.
SECTION B
THE DEPOSITARY
7.08 Oversight by the depositary of the
manager
1 It
is the duty of the depositary to take reasonable care to ensure –
a. except
in relation to Part 5, that the recognized fund is managed by the manager in
accordance with Article 7.01.1, and
b. in
relation to Part 5, that decisions about the constituents of the property of
the fund do not exceed the powers conferred by that Part.
2 The
depositary must satisfy itself on reasonable grounds and on a continuing basis
that the manager has maintained and is maintaining sufficient records and is
adopting such procedures and methods for the calculation of prices at which units
are sold and repurchased to ensure that those prices are within the limits for
the time being prescribed by Part 4 above.
3 If
the depositary is at any time not satisfied of any matter specified in
paragraph 2, it must inform the Commission.
4 The
depositary, in the context of its role as such, must act solely in the
interests of the unitholders.
7.09 Control by the depositary over the
property of the fund
1 The
depositary must take all steps and execute all documents which are necessary to
secure that acquisitions, disposals and loans properly made by the manager in
accordance with Section A above are completed.
2 The
depositary must take into its custody or under its control all the capital
property of the recognized fund and hold it in trust for the unitholders in
accordance with these Rules and the constitutional documents and the depositary
agreement and shall ensure that any of the property of the fund in registered
form shall, as soon as practicable, be registered in the name of the
depositary, or subject to Article 7.14, its nominee and that any
transaction entered into for the purposes of Section K of Part 5 (Efficient
Portfolio Management) is entered into in such manner as to ensure that any
resulting benefit is received by the depositary and held by it as part of the
property of the fund.
3 The
depositary is responsible for the collection of any income due to be paid to
the recognized fund and for claiming any repayment of tax, and shall hold any
income received in trust for the unitholders in accordance with these Rules and
the constitutional documents.
4 The
depositary must keep such records as are necessary –
a. to
enable it to comply with these Rules; and
b. to
demonstrate that such compliance by it has been achieved.
7.10 Exercise of rights in respect of
the property of the fund
1 The
depositary must take all steps and execute all documents as are necessary to
secure that instructions properly given to it by the manager as to the exercise
of rights (including voting rights) attaching to the ownership of property of
the fund are carried out.
2 The
depositary may exercise (or not exercise) any right of voting conferred by any
of the property of the fund which is in units or shares in other collective
investment funds (or, in the case of a feeder fund dedicated to an eligible
investment trust, that investment trust) managed or otherwise operated by the
manager or a director or by an associate of the manager or such director
respectively, but only after consultation with the manager or the directors, as
the case may be.
3 The
depositary must upon the written request of the manager from time to time
execute and deliver or cause to be executed or delivered to the manager or his
nominees such powers of attorney or proxies as the manager may reasonably
require, in such name or names as the manager may request, authorising such
attorneys and proxies to vote consent or otherwise act in respect of all or any
part of the property of the fund not included in paragraph 2.
4 The
depositary must without undue delay forward to the manager all notices of
meetings, reports, circulars, proxy solicitations and other documents of a like
nature received by it as registered holder of any investment.
5 In
this Article ‘voting’ includes giving any consent to or approval of
any arrangement, scheme or resolution or any alteration in or abandonment of
any rights attaching to any part of the property of the fund and
‘right’ includes a requisition or joining in a requisition to
convene any meeting or to give notice of any resolution or to circulate any
statement or to consent to any short notice of any meeting.
SECTION C
THE MANAGER, THE DIRECTORS, THE COMPANY AND THE DEPOSITARY
7.11 Duties of the manager, the
directors the company and the depositary under the law
1 Subject
to paragraph 4, the duties of the manager, the directors, the company and the
depositary imposed on them by these Rules and by the constitutional documents
and the management agreement and depositary agreement are in addition to and
not in derogation from the duties which are otherwise imposed on them by law.
2 Subject
to paragraph 4, the manager, the directors, the company and the depositary are
required to fulfil those other duties by these Rules as well as by law.
3 Subject
to paragraph 4, the manager, directors, company and the depositary have, by
virtue of these Rules, all the powers conferred on them by the general law.
4 Paragraphs
1, 2 and 3 apply only in so far as the duties imposed or powers conferred by
the general law are not qualified or restricted by these Rules.
7.12 Timely performance of duties
The manager, the directors and the depositary must perform the
functions and fulfil the duties conferred upon them by these Rules in a timely
manner unless delay is both lawful and in the interests of the unitholders.
7.13 Duties of the manager and
depositary: investment and borrowing powers
1 Subject
to paragraphs 6 and 7, it is the duty of the manager –
a. to
take all reasonable steps; and
b. to
exercise all due diligence,
to avoid the property of the fund being used or invested contrary to
any provision in Part 5.
2 It
is the duty of the depositary –
a. to
take all reasonable steps; and
b. to
exercise all due diligence,
to exercise such degree of supervision of the manager’s
operation of the recognized fund as is appropriate with a view to ensuring that
the manager complies with paragraph 1.
3 The
duty at paragraph 1 extends to action forthwith to be taken by the manager, at
its own expense, to rectify any breach of any provision in Part 5 to which the
following paragraphs do not apply.
4 Paragraph
6 below applies –
a. where
the property of the fund at any time is used or invested contrary to any
provision of Part 5 (other than a provision excusing a failure to comply on a
temporary basis); and
b. the
reason for the contravention is beyond the control of both manager and
depositary.
5 Paragraph
6 also applies on or in anticipation of the arrival of a supervening
transaction (such as the purchase by the recognized fund of property pursuant
to a rights issue, the conversion by the recognized fund of convertible stock,
or the closing out of a position which, when open, justified a then existing
transaction under Section D or E of Part 5) –
a. which,
but for this Article, would constitute a breach of Part 5; and
b. where
it was not possible for the manager or depositary to know at the time of the
earlier transaction whether there would be a subsequent breach or not.
6 In
the circumstances envisaged by paragraph 4 or 5 –
a. nothing
in Part 5 prevents the manager from entering into a transaction within
paragraph 5 provided that it has obtained the consent of the depositary in
writing; and
b. the
manager must take such steps as are necessary to ensure a restoration of
compliance as soon as is reasonably practicable having regard to the interests
of the unitholders and, in any event, within the period specified in
paragraph 8.
7 Forthwith
upon the depositary becoming aware of any circumstance envisaged by paragraph 4
or 5, it must take such steps as are necessary to ensure that the manager
complies with paragraph 6b.
8 Subject
to paragraph 9, the maximum period for restoration of compliance under
paragraph 6b starts at the date of discovery of the relevant circumstance and
lasts –
a. except
where b, c or d applies, for six months;
b. where
the transaction in question was in derivatives pursuant to Section D or E of
Part 5 (futures and options funds or geared futures and options funds), until
the close of business five business days later;
c. where
the transaction in question was entered into under Section K of Part 5
(efficient portfolio management) until the close of business five business days
later; and
d. where
the recognized fund is a property fund and the property in question is an
immovable, for two years.
9 The
periods at 8b and 8c (five business days) are extended –
a. if
the transaction involved a delivery of a commodity (whether perishable or not),
from five to twenty business days; or
b. if
the reason for the contravention in paragraph 4 is the inability of the manager
to close out a transaction because of a limit in the number or value of
transactions imposed by an eligible derivatives exchange, until five business
days after –
(i) the inability
resulting for any such limit is removed; or
(ii) it becomes, to the
knowledge of the manager, reasonably practicable and reasonably prudent for the
transaction to be closed out in some other way.
7.14 Delegation
1 The
directors of a company may delegate to any director, or any committee
consisting of one or more directors, any of the directors’ powers or
duties, but the directors shall remain responsible for the acts or omissions of
any such director or committee as if they were acts or omissions of the
directors.
2 The
manager or the directors may delegate any function to any person, including the
depositary.
3 Subject
to paragraphs 4 and 5, the depositary may delegate any function to any person,
including the manager and any director of the recognized fund.
4 The
depositary may not delegate to the manager, or a director or the company, in
the case of a recognized fund which is a company –
a. any
function of oversight in respect of the manager, any of those directors or that
company; or
b. any
function of custody or control of the property of the fund,
nor may the depositary delegate any function in a. to an associate
of the manager, or of any of those directors or of the company.
5 The
depositary may not delegate to anyone the function of being a custodian of
documents of title or documents evidencing title to property of the fund unless
the arrangements with the custodian prevent the custodian from releasing the
documents into the possession of a third party without the consent of the
depositary.
6 If –
a. the
manager delegates, or causes to be delegated, any function concerning the
management of the property of the fund;
b. the
manager or the directors delegate or cause to be delegated any of their
respective functions to the depositary or to an associate of any of them or of
the depositary; or
c. the
depositary delegates any function to the manager or any of the directors of the
recognized fund or to an associate of its own or of the manager or any such
director,
then in the case of a., the manager and in the case of b., the
manager or the directors and in the case of c., the depositary, remains
responsible, even though it could have satisfied the conditions in paragraph 7,
for the acts or omissions of the delegate as if they were the acts or omissions
of the manager, or of the directors or of the depositary, as the case may be.
7 In
the case of any delegation by the manager, the directors or the depositary to
which paragraph 1 or 6 does not apply, the manager, the directors or the
depositary, as the case may be, are not responsible by virtue of these Rules
for any act or omission of the delegate if the manager, directors or depositary
can show –
a. that
it was reasonable for an agent to be employed for the function in question;
b. that
it was reasonable for the manager, directors or depositary to believe that the
agent was and remained competent to undertake the function in question; and
c. that
the manager, directors or depositary, as the case may be, had taken reasonable
care to ensure that the function in question was undertaken by the agent in a
competent manner.
8 Paragraphs
1, 2 and 3 are subject to any restriction in the constitutional documents and
the management agreement and depositary agreement.
7.15 Conflicts of interest etc.
1 The
manager, the directors and the depositary must respectively take all reasonable
steps to ensure that there is no breach of any of the following requirements in
this Article by any ‘affected person’, that is to say, as the case
may be, –
a. the
manager;
b. the
company;
c. the
directors;
d. the
depositary;
e. any
investment adviser; and
f. any
associate of any person in a., b., c., d. or e.
2 Cash
forming part of the property of the fund or standing to the credit of the
distribution account may be placed in any current, deposit or loan account with
an affected person only if he is an eligible institution and the arms length
requirement in paragraph 9 is satisfied.
3 An
affected person may lend money to the recognized fund only if he is an eligible
institution, and the arm’s length requirement in paragraph 9 is
satisfied.
4 An
affected person may not sell or deal in the sale of property to a recognized
fund, if it is a company, or to the depositary for the account of the
recognized fund unless paragraph 10 applies and for the purpose of this
paragraph a sale shall include any lease or other transaction under which
movable or immovable property is made available by the recognized fund.
5 An
affected person may not vest property in the depositary or the company, against
the issue of units in the recognized fund, unless upon a unitisation or unless
paragraph 10 applies.
6 An
affected person may not purchase property from the recognized fund or the
depositary acting for the account of the recognized fund unless Article 4.27
applies (in specie cancellation or repurchase) or unless paragraph 10 applies
and for the purpose of this paragraph a sale shall include any lease or other
transaction under which movable or immovable property is made available by the
recognized fund.
7 An
affected person may not enter into transactions within Section L of Part 5
(stocklending) in relation to the recognized fund unless the arm’s length
requirement in paragraph 9 is satisfied.
8 An
affected person within paragraph 1f above may not provide services for the
recognized fund unless the depositary has reliable evidence that the services
are provided on terms which satisfy the arm’s length requirement in
paragraph 9.
9 The
arm’s length requirement is that the arrangements are at least as
favourable to the recognized fund as would be those of any comparable arrangement
effected on normal commercial terms negotiated at arm’s length between
two independent parties.
10 There
is no breach of paragraphs 4, 5 or 6 if paragraph 11 (best execution on
exchange) or paragraph 12 (independent valuation) or paragraph 13 (arm’s
length transaction) applies.
11 There
is best execution on exchange for the purposes of paragraph 10 if –
a. the
property is an approved security or an approved derivative;
b. the
transaction is effected with or through a member of the relevant exchange under
the rules of that exchange;
c. there
is evidence in writing of the effecting of the transaction and of its terms;
and
d. the
manager has taken all reasonable steps to effect the transaction or to ensure
that it is effected on the terms which are the best available for the
recognized fund in the circumstances.
12 There
is independent valuation for the purposes of paragraph 10 if –
a. the
value of the property is certified in writing for the purpose of that
transaction by a person selected or approved by the depositary as –
(i) independent of
any affected person, and
(ii) qualified to
value property of the relevant kind; and
b. the
depositary is of the opinion that the terms of the transaction are not likely
to result in any material prejudice to unitholders.
13 There
is an arm’s length transaction for the purposes of paragraph 10 if –
a. paragraph
11a is not satisfied;
b. it
is not reasonably practicable to obtain an independent valuation under
paragraph 12; and
c. the
depositary has reliable evidence that the transaction is or will be on terms
which satisfy the arm’s length requirement in paragraph 9.
14 Paragraphs
2-8 are subject to any provision in the constitutional documents or management
agreement or depositary agreement forbidding the taking of advantage of all or
any of them.
15 Nothing
in this Article shall prevent the issue of units by the recognized fund to the
manager or the cancellation by the recognized fund of units held by or
belonging to the manager in accordance, in either case, with the relevant
provisions of Part 4.
SECTION D
NEW MANAGERS AND DEPOSITARIES
7.16 Replacement of manager
1 Subject
to Article 2.10, the manager for the time being shall be subject to
removal by notice in writing given by the directors or the depositary to the manager
in any of the following events –
a. a
resolution or court order to wind-up the manager is adopted or is made (except
in the case of a summary winding-up for the purpose of reconstruction or
amalgamation upon terms previously approved in writing by the depositary) or
the manager becomes bankrupt in any other manner specified in Article 13
of the Interpretation (Jersey) Law 1954;[13] or
b. the
manager commits, makes, suffers, consents to or acquiesces in any other act or
omission indicative of insolvency under the law of any jurisdiction;
c. for
good and sufficient reason the directors or the depositary are of the opinion
and so state in writing that a change of manager is desirable in the interest
of the unitholders;
d. an
extraordinary resolution is passed removing the manager (or to determine that
he be removed as soon as this is permitted by law);
e. the
holders of two thirds majority in value of the units of the relevant pool or
pools in existence (excluding units held or deemed to be held by the manager or
by any associate of the manager) make a request in writing to the directors or
the depositary that the manager be removed; or
f. the
manager ceases to hold a permit under the Law.
2 On
receipt of a notice given by the directors or depositary under paragraph 1 the
manager shall cease to be the manager; and the directors or the depositary
shall by instrument appoint some other person eligible under these Rules and
acceptable to the Commission to be the manager of the recognized fund upon and
subject to that other person’s entering into such instruments or
agreements and executing such other documents as the directors or depositary
and the Commission may require.
3 If
the name of the recognized fund contains a reference to the name of the former
manager, the former manager shall be entitled to require the new manager and
the depositary forthwith to propose a change in the name of the recognized
fund.
7.17 Retirement of manager
1 Subject
to Article 2.10, the manager shall have the right to retire in favour of
some other person eligible under these Rules, acceptable to the Commission and
approved in writing by the depositary upon and subject to fulfilment of the
following conditions –
a. the
retiring manager appointing in writing such a person as manager of the
recognized fund in its place and novating and assigning to such appointee all
its rights and duties as such a manager; and
b. the
new manager entering into such agreements and executing such documents as the
depositary may be advised is necessary or desirable to be entered into by that
person in order to secure the due performance of its duties as a manager.
2 Upon
retirement, the retiring manager –
a. is
absolved and released from all further obligations under these Rules and under
the constitutional documents but without prejudice to the rights of the
depositary or the company or of any unitholder or any other person in respect
of any act or omission on the part of the retiring manager prior to such
retirement; and
b. may
retain for its own benefit, and without having to account therefore to the
unitholders or any of them, any consideration paid to it in connection with the
change of manager.
3 Upon
the retirement of the retiring manager, the new manager may exercise all the
powers and enjoy all the rights and shall be subject to all the duties and
obligations of the manager under these Rules and under the constitutional
documents and management agreement or depositary agreement as fully as if it
had originally been a party to the constitutional documents or management
agreement or depositary agreement or had been appointed as the original manager
of the recognized fund.
7.18 Supplementary
1 Upon
the removal or retirement of the manager, the removed or retiring manager –
a. remains
entitled to all units held or deemed to be held by it;
b. may
require the issue to it of a certificate or certificates in respect thereof (if
certificates are currently issued);
c. is
to be registered in the register in respect thereof; and
d. thereafter
has and may exercise all rights of a unitholder.
7.19 Retirement and replacement of the
depositary
1 The
depositary may not retire voluntarily except upon the appointment of a new
depositary.
2 In
the event that the depositary –
a. desires
to retire; or
b. a
resolution or court order to wind-up the depositary is adopted or made (except
in the case of a summary winding-up for the purpose of reconstruction or
amalgamation upon terms previously approved in writing by the manager and by
the directors, in the case of a recognized fund which is a company) or the
depositary becomes bankrupt in any other manner specified in Article 13 of
the Interpretation (Jersey) Law 1954;[14] or
c. the
depositary commits, makes, suffers, consents to or acquiesces in any other act
or omission indicative of insolvency under the law of any jurisdiction; or
d. for
good and sufficient reason the directors are of the opinion and so state in
writing that a change of depositary is desirable in the interests of the
unitholders; or
e. an
extraordinary resolution is passed removing the depositary (or to determine
that he be removed as soon as this is permitted by law); or
f. the
depositary ceases to hold a permit under the Law,
then in the case of unit trust, the manager may, and in the case of
a company, the directors may, subject to Article 2.10 of these Rules, by
instrument supplemental to the constitutional documents or by agreement, as the
case may be, appoint another person eligible under these Rules to be the
depositary in its place on terms which are acceptable to the Commission.
PART 8
CHARGES AND EXPENSES
8.01 Payments by the recognized fund to
the manager
1 No
payment may be made or benefit given to the manager (whether as such or in any
other capacity) out of the property of the pool by way of remuneration for its
services, reimbursement of expenses or otherwise, unless the prospectus
specifies each type of payment or benefit that may be made or given, each type
of expense that may be so reimbursed and in the case of each category of remuneration
(or remuneration related to a class of unit), specifies –
a. how
it will be calculated and accrue and when it will be paid; and
b. the
maximum and current rates or amount of such remuneration.
8.02 Preliminary charge
1 If
the prospectus so permits, the manager may make a charge (“preliminary
charge”) upon the sale of units by the manager whether acting as
principal or not and that charge may be expressed either as a fixed amount, or
calculated as a percentage of the creation price.
2 The
manager shall not make any charge or levy in connection with the sale of units
of any class except that referred to at paragraph 1 and, in the case of a
recognized fund which has adopted a single pricing basis, a dilution levy in
accordance with Article 4.25.
3 Where
paragraph 1 permits the manager to include a preliminary charge, the amount
which he may include shall not exceed the amount stated in the prospectus as
the current charge.
4 Paragraph
1 does not apply on an exchange of units within an umbrella fund but nothing in
this Article shall prevent the manager from making a charge on such an exchange
in accordance with Article 8.08.
8.03 Increase in remuneration or
preliminary charge
The manager may not rely on any introduction of a new category of
remuneration for its services or any increase in the current rate or amount of
its remuneration payable out of the property of the fund up to or towards any
maximum stated in the prospectus or any introduction of or increase in the
preliminary charge payable under Article 8.02, unless not less than 90
days before the introduction or increase –
a. the
manager gave notice in writing of that introduction or increase and of the date
of its commencement (in the case of remuneration payable out of the property of
the fund to all unitholders or (in the case of preliminary charge) to all the
persons who ought reasonably to be known to it to have made an arrangement for
the purchase of units at regular intervals; and
b. the
manager has revised the prospectus to reflect the introduction or new current
rate or amount of remuneration or preliminary charge and the date of its
commencement and has made the revised prospectus available.
8.04 Other payments out of the property
of the recognized fund
1 No
payments may be made or benefit given out of the property of the fund, other
than under Article 8.01 and any sums due by virtue of any other Article in
these Rules, unless the obligation to make such payment or give such benefit
has been incurred by or for the account of the fund and the prospectus
specifies each type of payment or benefit that may be made or given.
2 Paragraph
3 applies where the property of a body corporate (such as an investment trust)
or of another collective investment fund is transferred to the depositary in consideration
of the creation of units in the recognized fund to shareholders in that body or
to participants in that other fund.
3 In
such a case the depositary as the successor in title to the other property may
pay out of the property of the fund any liability arising after the transfer
which, had it arisen before the transfer, could properly have been paid out of
that other property, but it may pay only if –
a. there
is nothing in the constitutional documents expressly forbidding the payment;
and
b. the
depositary is of the opinion that proper provision was made for meeting such
liabilities as were known or could reasonably have been anticipated at the time
of the transfer.
8.05 Exemption from liability to account
for profits
1 The
manager is not liable to account to the depositary or the unitholders or any of
them for the amount of any charge properly taken in accordance with these
Rules.
2 The
depositary is not liable to account to the manager or the unitholders or any of
them for the amount of any remuneration (or expenses) properly paid to the
depositary in pursuance of these Rules.
3 Where
the manager has disclosed prominently in the prospectus a statement that he or
another specified affected person is under no obligation to account to the
depositary or to the unitholders or any of them for any profit he makes on the
sale of units, or on the re-sale or cancellation of units which he has
repurchased, that person is not liable to account to the depositary or to the
unitholders or any of them for any such profit made since the disclosure.
4 A
person who is an affected person within Article 7.15.1 is not liable to
account either to another such affected person or to the unitholders or any of
them for any benefits or profits made or derived from or in connection with –
a. his
acting as agent for either or both of the depositary and the manager in the
sale or purchase of property to or from the depositary for the account of the
recognized fund;
b. his
part in any transaction or the supply of services permitted by Article 7.15;
or
c. his
dealing in property equivalent to any owned by (or dealt in for the account of)
the recognized fund.
8.06 Allocation of payments to capital
or to income
1 Any
payments under this Part (except as provided under paragraph 2 below) shall be
made from the income account of the pool in the first instance.
2 Any
broker’s commission, fiscal charges and other disbursements which are
necessary to be incurred in effecting transactions for the recognized fund, and
normally shown in contract notes, confirmation notes or difference accounts as
appropriate may be charged to the capital account; and any interest on
borrowings and charges incurred in effecting, terminating, negotiating or
varying the terms of borrowings and taxation and duties payable on respect of
or property of the pool and costs of the types described in Article 8.12
shall be made from the capital account or the income account, as the trustee,
or directors, reasonably believe appropriate.
3 Following
a payment made from the income account under paragraph 1 or 2, a transfer of
the debit item from the income account to the capital account may be made if
the expense is considered to be capital in nature.
4 Where
it is clear from the prospectus that the pool is designed –
a. to
concentrate on the generation of income as a higher priority than on capital
growth; or
b. to
place an equal emphasis on the generation of income and on capital growth,
the manager and the depositary (and in the case of a company if it
is also acceptable to the directors), may agree that all or any part of the
remuneration of the manager permitted by Article 8.01 is to be treated as
a capital charge, and a transfer of the relevant debit item may be made from
the income account to the capital account.
5 Following
(or if in the view of the trustee or company it is necessary to do so in
advance to enable) a payment made (or to be made) from the income account under
paragraph 1 or 2, a transfer of credit to the income account from the capital
account may be made if it appears to the trustee or company that there is
insufficient income in the income account to meet payments made (or to be
made), provided that the credit is re-transferred as soon as sufficient amounts
are available in the income account in respect of the same annual accounting
period.
6 Where,
in respect of any annual accounting period, taken as a whole, the amount of
income received or receivable is less than the net amount of payments made from
the income account, the shortfall shall, as from the end of that period, be
charged to the capital account and shall not thereafter be transferred to the
income account.
8.07 Charges on repurchase
1 If
the prospectus so permits, the manager may make a charge (the “repurchase
charge”) upon the repurchase or cancellation of units by the manager,
whether acting as agent or principal, and the amount payable on repurchase or
cancellation may be arrived at after deduction of the charge for the benefit of
the manager, and that charge may be expressed either as a fixed amount, or
calculated as a percentage of the proceeds of repurchase which would otherwise
have been payable.
2 The
amount or percentage of the repurchase charge may be expressed as diminishing
over the time during which the unitholder has held the units, but may not be
expressed as liable to vary in any other respect.
3 Where
the manager is permitted to make a repurchase charge the amount shall not
exceed the amount that would be derived by applying the rate or method
prescribed in the prospectus at the date on which the relevant units were sold.
4 Where
the prospectus of a recognized fund, whenever made available, is modified so as
to include a repurchase charge the modification must be expressed so as to
apply only to units created or sold after the date on which the modification
takes effect.
5 A
change in the rate or method of the repurchase charge which is adverse to
unitholders seeking to have their units cancelled or repurchased must be
limited so as to apply only to units which have been created or sold (whether
at the request of the current unitholder or otherwise) after the date on which
the modification takes effect.
6 The
manager may not rely on any change in the rate or method of the repurchase
charge, unless –
a. he
has given notice in writing of that increase and of the date of its
commencement to the depositary and to all the persons who ought reasonably to
be known to him to have made an arrangement for the purchase of units at
regular intervals;
b. he
has revised the prospectus to reflect the new rate or method and the date of
its commencement; and
c. 90
days have elapsed since the revised scheme particulars became available.
7 If
a prospectus contains a statement relating to the amount, or the calculation of
the amount, of a repurchase charge, it shall also contain a statement as to the
determination of the order in which units, which have been acquired at
different times by a unitholder, are to be taken to be repurchased or cancelled
for the purpose of the imposition of the repurchase charge.
8.08 Exchange of units in umbrella funds
1 In
the case of an umbrella fund, the manager may make a charge on an exchange of
units in one constituent part for units in an other constituent part but the
charge shall not exceed the aggregate of –
a. any
excess of the amount of the preliminary charge that would be applicable to a
sale of the units being acquired (by reference to the current preliminary
charge stated in the most recently published prospectus) over the preliminary
charge actually paid on the original acquisition of the units being
repurchased; and
b. the
amount of any fee payable on switching specified in that prospectus.
2 The
manager may not make a charge in excess of the fee referred to in paragraph
1(b), unless the prospectus contains a statement as to the determination of the
order in which units which have been acquired at different times by a
unitholder are to be taken to be repurchased or cancelled is to be determined
in so far as necessary for calculating the maximum charge for an exchange of
units in one constituent part for units in another constituent part.
8.
09 Restricted payments
No payment or benefit, other than a payment or benefit to the
manager not prohibited by these Rules, may be made out of or given at the
expense of the property of the fund to any person in consideration of that
person acquiring (whether directly, indirectly, absolutely or conditionally) or
promoting the sale of, or agreeing so to acquire or promote the sale of, units
in the recognized fund.
8.10 Performance fees
No payment may be made out of the property of the fund and no
repurchase charge may be made if the amount or frequency of the payment or the
amount of the repurchase charge is intended to depend upon fluctuations in the
value of the property of the fund or the income attributable thereto or in the
price of a unit of any class as compared with fluctuations in the value or
price of property of any description or in an index or other factor designated
for the purpose.
8.11 Movable and immovable property
A recognized fund shall not incur any expense for the use of any
movable or immovable property except to the extent that such property is
necessary for the direct pursuit of its business.
8.12 Amortisation
Without prejudice to Article 8.09, costs of the authorisation
and formation of a recognized fund and of its initial offer or sale of units
(or initial offer or sale of units in respect of a constituent part) may be
amortised over a period not exceeding ten years.
8.13 Tax
The restrictions contained in this Part shall not affect any
liability for any value added or similar tax related to a charge or expense,
but any notice given in accordance with this Part and any statement in a
prospectus relating to any charge or expense payable out of the property of the
fund or by any unitholder or potential unitholder shall, if the person liable
for the charge or expense may also be liable for such tax, contain a statement
to this effect.
PART 9
INCOME
9.01 Accounting periods
1 A
recognized fund must have an annual and a half-yearly accounting period, and
this Article determines what they are.
2 A
recognized fund must also have an accounting reference date, which is the date
in any year stated in the most recently published prospectus as the date on
which the recognized fund’s annual accounting period is to end.
3 The
first annual accounting period shall, subject to the Company Law, begin –
a. where
the recognized fund is the subject of an initial offer, on the first day of the
period of the initial offer; or
b. in
any other case, when the recognized fund is granted a recognized fund
certificate,
and each subsequent period shall begin immediately after the end of
the one before.
4 Each
annual accounting period shall end either at the end of the day arrived at
under paragraph 5 or, if the manager prefers, at the valuation point last
preceding the end of that day.
5 The
day for paragraph 4 is –
a. the
next accounting reference date after the beginning of the period in question;
or
b. if
that period is the first period or a period in the course of which a change in
the accounting reference date takes place, and the next accounting reference
date in either case is less than six months after the beginning of the period,
and the manager after consulting the auditor so determines, the next but one
accounting reference date.
6 A
half-yearly accounting period is a period beginning with the first day of an
annual accounting period and ending on the day which is –
a. six
months before the next accounting reference date; or
b. if
the next accounting reference date is less than six months after that first
day, six months before the next accounting reference date but one after that
first day.
7 The
manager may, with the agreement of the depositary, elect that a particular annual
or half-yearly accounting period shall end on a day which is not more than
seven days after and not more than seven days before the day on which the
period would otherwise end.
9.02 Annual income allocation date
1 A
recognized fund, other than a recognized fund consisting only of roll-up units,
must have an annual income allocation date, which is the date in any year
stated in the most recently published prospectus as the date on or before
which, in respect of each annual accounting period, an allocation of income is
to be made.
2 The
annual income allocation date must be a date within four months after the
relevant accounting reference date.
9.03 Annual allocation of income
1 Other
than in relation to a pool consisting only of roll-up units, at the end of each
annual accounting period, the trustee or the directors shall arrange for the
manager to transfer in the books of the recognized fund the income property
attributable to the pool to an account to be known as ‘the distribution
account’ and the amounts transferred shall be placed on deposit for an
appropriate period which allows for any distribution payments to be made.
2 The
trustee or the directors, as the case may be, are not obliged to comply with
paragraph 1 if it appears to them, having consulted the manager, that the
average payment to the unitholders (disregarding unitholders of bearer
certificates, unitholders of accumulation units, and unitholders who are the
manager or the depositary or associates of either of them) by way of income
would be less than £5.00 (or the equivalent amount in the base currency).
3 Where
the trustee or the directors decide under paragraph 2 not to distribute income,
they must so inform the manager who must then immediately arrange either –
a. to
carry the income forward to the next annual accounting period (and to regard it
as received at the start of that period); or
b. to
credit the income to the capital account.
4 On
or before each annual income allocation date the manager shall calculate under
paragraph 5 the amount available for income allocation in respect of the
immediately preceding annual accounting period, and he shall inform the trustee
or directors of that amount.
5 The
calculation of available income is as follows –
a. take
the aggregate of the income property received or receivable by the depositary
or otherwise for the account of the pool in respect of the period;
b. deduct
the aggregate of the charges, fees, expenses and other payments properly paid
or payable in respect of the period in accordance with Article 8.06.1
(payments out of income);
c. add
the manager’s best estimate of any relief from tax on such charges and
expenses;
d. make
such other adjustments as the manager considers appropriate (in the case of paragraph (i)
and (ii) below, after consulting the auditors) in relation to –
(i) taxation,
(ii) the proportion of
the price received or paid for units that is related to income (taking account
of any provisions in the constitutional documents relating to income
equalisation),
(iii) potential income which
is unlikely to be received until 12 months after the income allocation date,
(iv) income which should not
be accounted for on an accrual basis because of lack of information about how
it accrues, and
(v) any transfer between
income and capital account under Article 8.06; and
e. make
any other adjustments (including for amortisation under Article 8.12) that
the manager considers appropriate after consulting the auditors.
6 On
or before the annual income allocation date, the manager shall allocate the
available income to the units of each class in existence taking account of the
provisions of its constitutional documents relating to the proportion of
available income attributable to each class. This Article does not apply to any
roll-up units.
9.04 Annual allocation to accumulation
units
1 The
amount of income allocated to accumulation units shall, with effect from the
end of the annual accounting period, become part of the capital property and
the interests of the unitholders in that amount shall be satisfied by an
adjustment, as at the end of the period, in the proportion of the value of the
property of the pool to which the price of a unit of the relevant class is
related.
2 The
adjustment under paragraph 1 shall be such as will ensure that the price of an
accumulation unit of the relevant class remains unchanged notwithstanding the
transfer of the income to the capital property.
9.05 Annual distribution to unitholders
of income units
1 Subject
to paragraph 2, where the units in existence in a pool are or include income
units, on or before each annual income allocation date the manager shall give
the depositary timely instructions sufficient to enable the distribution of the
income allocated to those units among the unitholders and the manager rateably
in accordance with the number of such units held or deemed to be held by them
respectively at the end of the relevant annual accounting period and the
depositary shall pay the distribution in accordance with the instructions.
2 Before
distributing income under paragraph 1, there shall be –
a. deducted
any amounts previously allocated by way of interim allocation of income in
respect of that annual accounting period; and
b. deducted
and carried forward in the income account such amount as the manager and the
directors may from time to time determine.
3 Nothing
in this Part of these Rules requires the distribution of income allocated to
any units in any case where the manager or the depositary considers it
necessary or appropriate to carry out or complete identification procedures in
relation to the unitholder or another person pursuant to a statutory,
regulatory or other legal obligation.
9.06 Interim allocations of income
1 This
Article applies if at any time the most recently published prospectus –
a. states
that an allocation of income may be made before the annual income allocation
date in any year in respect of a period (‘an interim accounting
period’) within the annual accounting period; and
b. specifies
a date as the interim income allocation date in relation to that interim
accounting period.
2 In
such a case, Articles 9.03 to 9.05 shall apply so as to secure the making
of an interim allocation of income as if –
a. the
interim accounting period in question and all previous interim accounting periods
in the same annual accounting period taken together, were the annual accounting
period;
b. the
interim income allocation date were the annual income allocation date; and
c. the
manager and the company were to treat as the available amount of income for the
interim allocation a sum in his or their opinion, as the case may be, not
exceeding the amount which would be available for allocation of income if the
interim accounting period and all previous interim accounting periods in the
same annual accounting period taken together were an annual accounting period.
9.07 Income equalisation
The constitutional documents may provide that an allocation of
income (whether annual or interim) to be made in relation to any class of units
in respect of each unit created or sold during the accounting period in respect
of which that income allocation is made shall include a capital sum
(“income equalisation”).
9.08 How distributions may be made
1 Any
monies payable by the depositary to a unitholder in respect of any unit, the
title to which is for the time being represented by a bearer certificate, may
be paid by crossed cheque or warrant made payable to the person who, in such
manner as is prescribed in the constitutional documents, has identified himself
to the depositary as the person entitled to that distribution and may be sent
by post to such address as that person shall have disclosed to the depositary
for that purpose.
2 Any
monies payable by the depositary to the manager or to a registered unitholder
in respect of any unit may be paid –
(i) by
crossed cheque or other means including directly to the registered
unitholder’s bank account and when sent through the post to the
registered address of such unitholder or the first named of joint unitholders,
as the case may be; or
(ii) by
payment to the bank or other agent nominated in writing by the manager or
unitholder or all of the joint unitholders, as the case may be, by means of the
electronic transfer of funds or otherwise.
3 The
payment of any cheque to the first named of joint unitholders shall be as
effective a discharge to the person making the payment as if such first named
joint unitholder had been a sole unitholder.
4 Every
such cheque which is so sent or electronic or other payment which is so made
shall be a satisfaction of the monies payable and shall be a good discharge to
the person making the payment.
5 Where
the depositary holds an authority in writing given by the unitholder (or in the
case of joint unitholders by all of them) which has been accepted by the
trustee or company and is in such form and on such terms as the depositary
shall consider sufficient he shall pay the amount payable in accordance with
that authority and any payment so made shall be a good discharge to the
depositary.
6 Any
distribution payment which shall remain unclaimed after a period of ten years
from the date of payment shall then be transferred to and become part of the
capital property and thenceforth neither the payee nor the unitholder nor any
successor in title of his shall have any right thereto or therein.
9.09 Distribution statements and tax
certificates
1 On
or before each income allocation date (whether annual or interim) the
depositary shall send to each unitholder (or to the first named of joint
unitholders) entered in the register as at the end of the accounting period in
question and shall on request give or send to every unitholder of units the
title to which is represented by a bearer certificate –
a. a
statement prepared by the manager showing the calculation of the amount to
which the unitholder is entitled, whether or not the income is distributed to
him or allocated to accumulation units and, where applicable, a statement of
how much of the amount to which he is entitled represents income equalisation;
and
b. if
the manager so decides, a statement prepared by the manager identifying the
sources of income attributable to the unitholders and the amount of tax, if
any, withheld from, or accountable in respect of, such amount.
2 In
the case of any distribution on liquidation or dissolution of the pool, any
statement given in accordance with paragraph 1 shall show what proportion of
the distribution represents capital and what proportion represents income.
3 Paragraph
1b does not prevent the sending of a single tax certificate at least once in
every annual accounting period.
4 This
Article does not apply in relation to the unitholders of roll-up units.
PART 10
REPORTS
10.01 Annual and half-yearly reports
1 The
manager of a unit trust, or the directors of a company, as the case may be,
shall, in relation to each annual and half- yearly accounting period, prepare a
report stating the matters set out in Part I of Schedule 3 below in respect of
the 12 months (or 6 months) concerned and otherwise complying with the following
requirements of this Article:
Half-yearly reports need not be prepared in relation to the first
half-yearly accounting period if the first annual accounting period is a period
of less than twelve months.
2 A
report which relates to an annual accounting period shall contain –
a. a
comparative table relating to that period stating the matters set out in Part
III of Schedule 3 below;
b. a
copy of a report of the auditor to the unitholders on the accounts contained in
the report stating the matters set out in Part IV (or in the case of short form
accounts, Part V) of Schedule 3 below; and
c. a
copy of a report of the depositary to the unitholders stating the matters set
out in Part VI of Schedule 3 below and supplied to the manager or directors by
the depositary in accordance with Article 10.05 below.
3 A
report which relates to any accounting period shall contain the accounts of the
recognized fund for the period to which the report relates which shall, subject
to these Rules, include –
a. a
balance sheet stating the matters set out in Part VII of Schedule 3;
b. a
statement of total return stating the matters set out in part VIII of
Schedule 3;
c. a
portfolio statement stating the matters set out in part IX of Schedule 3;
d. a
statement of movement in unitholder’s funds stating the matters set out
in Part X of Schedule 3; and
e. notes
to the accounts stating the matters set out in Part XI of Schedule 3,
and shall be prepared in accordance with generally accepted
accounting principles and shall give a true and fair view of the financial
position of the recognized fund as at the end of period to which the accounts
relate.
4 A
report of an umbrella fund shall contain –
a. reports
relating to each of its constituent parts which shall each, so far as
practicable, contain the accounts and the information that would be required by
paragraphs 1, 2a and 3 if the constituent part were a separate recognized
fund; and
b. except
insofar as contained in a report relating to a constituent part in accordance
with that paragraph –
(i) the information
referred to in paragraphs 1 and 2a, and
(ii) the copy reports
relating to the recognized fund referred to in paragraphs 2b. and 2c.
5 A
report relating to a constituent part which is not contained in a report under
paragraph 4 shall contain –
a. so
far as practicable the accounts and information that would be required by
paragraphs 1, 2a and 3 if the constituent part were a separate recognized fund;
b. the
statements required by paragraph 13 of Part I of Schedule 3; and
c. the
copy reports relating to the recognized fund referred to in paragraphs 2b. and
2c.
6 The
manager, or the directors, shall ensure that the full accounts for an annual
accounting period give a true and fair view of the net income and the net gains
or losses on the property of the fund and each constituent part for that
accounting period and the financial position of the recognized fund or
constituent part as at the end of that period.
7 A
report which relates to any accounting period shall be signed by two directors
of the manager or, if the manager has only one director, by that director or,
if the recognized fund is a company, in accordance with the Company Law.
10.02 Publication of manager’s or
directors’ reports
1 The
manager shall within four months after the end of each annual accounting period
and within two months after the end of the half-yearly accounting period,
publish the manager’s or directors’ annual and half-yearly report
respectively in accordance with paragraphs 2 and 3 below.
2 The
manager shall send a copy of the report free of charge to each unitholder (or
to the first named of joint unitholders) entered in or entitled to be entered
in the register at the close of business on the last day of the relevant
accounting period (or, if the report relates to a half-yearly accounting period
for which no interim allocation of income is made, as at the last day of that
period) and shall supply free of charge a copy of the report to each unitholder
of bearer units on request by the unitholder.
3 In
the case of an umbrella fund, if the manager and trustee, or in the case of
company its directors, so determine for any accounting period, the reports sent
to unitholders in accordance with paragraph 2 may be the reports complying with
Article 10.01.5 relating to the respective constituent part to which their
unitholdings relate, but if requested to do so by any unitholder in respect of
any particular accounting period, the manager shall send or supply to that
unitholder (or in the case of joint unitholders, the first named), a report
complying with Article 10.01.4.
4 The
manager and the depositary shall make the most recent annual report and the
most recent half-yearly report (unless it has been superseded by an annual
report) available in English for inspection by the public free of charge at
each place specified for the purpose in the most recently published prospectus
during ordinary office hours.
5 The
manager shall send a copy of each annual and half-yearly report and any report
containing short form accounts on publication to the Commission.
10.03 Annual and half-yearly reports to be offered to
purchasers of units
1 Subject
to paragraph 2, the manager shall not effect any sale of units in the fund to
any person until it has offered that person free of charge a copy of the most
recent annual report of the manager in the case of a unit trust, or in the case
of a company of the directors, and the most recent half-yearly report of the
manager, or of the directors as the case may be, (unless it has been superseded
by an annual report) in English.
2 Paragraph
1 does not apply where the sale is effected otherwise than in the course of a
conversation conducted face to face or by telephone, but the manager must send
free of charge a copy of the documents mentioned there to the purchaser if he
asks for them.
10.04 Manager to publish daily statement of
availability of reports, etc.
1 The
manager shall, with every publication of prices under Article 4.23,
publish a statement that the most recent report of the manager, or of the
directors, and the prospectus are available free of charge to anyone who
applies to the manager for them.
2 Paragraph
1 is sufficiently complied with if one of the pages of the newspaper in which
managers publish prices carries the statement there required in relation to all
the recognized funds referred to in those pages.
10.05 Annual Report by the depositary
1 It
shall be the duty of the depositary to enquire into the conduct of the manager,
or in the case of a company the manager and the directors, in the management of
the recognized fund in each annual accounting period and to report thereon to
the unitholders.
2 The
depositary’s report shall contain the matters set out in Part VI of
Schedule 3 below and shall be delivered to the manager, or in the case of a
company the directors, in good time to enable its inclusion in the annual
report of the manager, or of the directors, to be published within four months
after the end of the annual accounting period.
10.06 Short form accounts in reports
1 If
the manager so determines the accounts to be included in a report sent to or
supplied to each unitholder in accordance with Article 10.02.2 or 10.02.3
may be short form accounts except to the extent that, in respect of any
particular accounting period, a unitholder (or in the case of joint
unitholders, the first named) has requested that a report containing the full
accounts referred to in Article 10.01.3 or 10.01.4 be sent or supplied to
him.
2 Short
form accounts must comply with the relevant requirements of Part II of
Schedule 3.
PART 11
MEETINGS AND MODIFICATIONS
11.01 Introduction
This Part in its application is made subject to Article 2.10
(Alteration of funds, etc.,) and is made subject to applicable law, the
provisions of which shall, in relation to a company apply to, and in the case
of any conflict shall replace, any provisions of this Part.
11.02 Modification of the constitutional documents:
with meeting
1 A
modification may be made to the constitutional documents only by amendment
thereto following –
a. the
calling of a meeting of unitholders by notice (if required under paragraph 2);
and
b. the
approval of the unitholders (if required under paragraph 3).
2 The
calling of a meeting is necessary unless the manager and the trustees, or
directors in the case of a company, have agreed that the modification is one
which may, in accordance with Article 11.03 below, be made without the
approval of a resolution.
3 The
approval of the unitholders (signified by the passing at the meeting of an
extraordinary resolution (or by special resolution if applicable law so
provides) authorising the modification) is required in any case where a meeting
of unitholders has to be called.
4 If
a meeting is required under paragraph 2, the notice calling the meeting must
state that the trustees, or directors, have reviewed the circumstances leading
to the proposed resolution and considers that the information accompanying the
notice contains sufficient information to enable unitholders to make an
informed decision.
11.03 Modification of the constitutional documents:
without meeting
1 Subject
to paragraph 2 and to any restriction on the powers to modify which may be
contained in the constitutional documents, a modification to the constitutional
documents may be made without the approval of a resolution of the unitholders
if it is required solely –
a. to
implement any change in the law, including a change brought about by an
amendment of these Rules;
b. as
a direct consequence of any such change in the law;
c. to
change the name of the recognized fund or of a constituent part of an umbrella
fund;
d. to
remove from the constitutional documents obsolete provisions;
e. to
replace the manager or the depositary when he has been removed or wishes to
retire or has retired;
f. to
remove references to a constituent part of an umbrella fund, following the
approval of the Commission under Article 2.10 of these Rules to a proposal
to alter the recognized fund by removing that constituent part;
g. by
virtue of Article 16.05 (transitional: constitutional documents etc.);
h. to
make any other modification which the depositary and the manager have agreed in
writing, or in the case of a company the directors consider, does not involve
any unitholders or potential unitholders in any material prejudice; or
i. solely
to reflect the introduction of a new constituent part.
2 A
modification is not within paragraph 1 if it would affect any express
restriction imposed by the constitutional documents on the powers which the
manager and depositary or either of them would otherwise be able to exercise
within these Rules.
11.04 Resolution to change the prospectus
1 Any
change to, or introduction of, any of the following provisions of the
prospectus.-
a. investment
policy or set of investment objectives in the prospectus of the kind referred
to at Article 11.14.2b. and paragraph 9 of Schedule 2;
b. manner
of calculation, accrual and payment of the manager’s remuneration of the
kind referred to at paragraph 14 of Schedule 2, except if it is a change
of minimal significance;
c. details
of any other payments of the kind referred to at paragraph 17 of Schedule
2 that may be taken out of the property of the fund; or
d. the
policy on dilution levy referred to at paragraph 15 of Schedule 2,
shall not be made without an ordinary resolution, and no significant
departure shall be made thereto unless and until the departure has been
approved by an ordinary resolution at a meeting of unitholders called for the
purpose, and a prospectus amended accordingly has been published.
2 Except
where approved by an extraordinary resolution at a meeting of unitholders
called for the purpose, any change to, or introduction of, any of the following
provisions to the prospectus relating to a proposal to –
a. change
the maximum rate or amount of the manager’s remuneration (other than a
decrease) of the kind referred to at paragraph 14a. of Schedule 2 may not be
made; and
b. treat
all or any part of the manager’s periodic charge as a capital charge, may
not be made; but this prohibition does not apply where –
(i) the pool
concerned already has clear investment objectives indicating –
a. greater
preference for the generation of income than for capital growth, or
b. equal
emphasis on the generation of income and on capital growth; and
(ii) 90 days have
elapsed since the unitholders were notified in writing by the manager of the
change to the prospectus and of the date when it is to come into effect.
3 Any
amendment to the prospectus to introduce a list, or to add an eligible market
to the list, required by paragraph 10 of Schedule 2 (list of eligible
markets) shall require approval of an ordinary resolution at a meeting of
unitholders unless –
a. the
amendment is, in the context of the investment strategy of the pool, of minimal
significance only, and the depositary and the manager have so agreed in
writing; or
b. the
manager has –
(i) given notice in
writing of the intended amendment to the depositary and the unitholders,
(ii) included in the
prospectus the proposed date of commencement of the amendment, and
(iii) before the amendment is
relied upon, waited for 90 days to elapse since the amended prospectus became
available.
4 Paragraphs
1, 2 and 3 shall not apply to a change to a prospectus which is required –
a. solely
to fulfil a requirement resulting from a change in the law (including a change
to these Rules); or
b. solely
to reflect an amendment to the constitutional documents made –
(i) in accordance
with Article 11.03.1(h), or
(ii) to reflect the
introduction of a new constituent part.
5 No
significant departure may be made in the management of the property of the pool
from the statements in its prospectus current at the relevant time in
fulfilment of the requirements of paragraph 9 of Schedule 2.
11.05 Amalgamation
1 An
amalgamation is a scheme of arrangement (notified to the Commission under Article 2.10
of these Rules whenever a recognized fund is involved) whereby the whole of the
property of a pool, or of a collective investment fund (whether a recognized
fund or not) or constituent part, or its equivalent, thereof, or body corporate
becomes the property (but not the first property) of a recognized fund, and
whereby unitholders (or shareholders) in the collective investment fund or body
corporate receive units in the recognized fund.
2 An
amalgamation shall not result in the unitholders in a recognized fund becoming
unitholders (or shareholders) in a collective investment fund which is not a
regulated collective investment fund.
3 Where
it is proposed that two or more pools should be amalgamated, the proposal will
require the approval of the unitholders in the pool or any pool which would
cease to exist if the proposal were implemented (‘the discontinuing fund
or funds’).
4 Where
it is proposed that a pool should be subject to an amalgamation with a
collective investment fund other than a recognized fund the proposal will
require the approval of the unitholders in the pool.
5 Where
it is proposed that a collective investment fund or constituent part, or its
equivalent, thereof or a body corporate should be discontinued and amalgamated
with a pool (‘the continuing fund’), the proposal will
(irrespective of any other approval and subject to Article 4.08.2) require
the approval of the unitholders in the continuing fund unless paragraph 6
applies.
6 This
paragraph applies if the depositary of the continuing fund is reasonably
satisfied that the inclusion of the property concerned –
a. is
not likely to result in any material prejudice to the interests of the
unitholders in the continuing fund;
b. is
consistent and is regarded by the manager as consistent with the objectives of
the continuing fund; and
c. could
be effected without any breach, inadvertent or not, of Part 5.
11.06 Reconstruction
1 A
reconstruction of a pool is a scheme of arrangement (notified to the Committee
under Article 2.10 of these Rules) whereby –
a. part
of the property of a pool becomes the property of a collective investment fund
or funds; or
b. the
whole of that property becomes the property of two or more collective
investment funds,
and whereby unitholders in the pool being reconstructed receive
units in the collective investment fund or funds in exchange for the property
received into that fund or funds.
2 A
proposal for reconstruction requires, in respect of the pool being
reconstructed, the approval of the unitholders in the pool.
3 Where
it is proposed that property of the pool being reconstructed should become
property of another pool, the proposal will (irrespective of any other approval
and subject to Article 4.08.2) require the approval of the unitholders in
that other pool, unless that approval would, by virtue of Article 11.05.5
and on the assumption that the property to be included were treated as a
discontinuing fund, not have been required on an amalgamation.
11.07 Convening of meetings and attendance and voting
thereat
1 The
trustee or the manager of a unit trust, or in the case of a company the
directors, may at any time convene a meeting of the unitholders at such a time
and place as the trustee after consulting the manager, or the directors, may
think fit.
2 The
trustee, or the directors, shall, on request in writing of unitholders
registered as holding not less than one-tenth (or any proportion below
one-tenth specified for this purpose in the constitutional documents) in value
of the units in issue, convene a meeting of unitholders at such time and place
as the trustee after consulting the manager, or the directors, may think fit.
3 The
manager shall be entitled to receive notice of and attend at any such meeting
but shall not be entitled to vote or be counted in the quorum therefore and
accordingly for the purposes of Articles 11.07 to 11.18, the units held or
deemed to be held by the manager shall not be regarded as being in issue.
4 The
words in paragraph 3 after ‘but’ do not apply in respect of any
units which the manager holds on behalf of or jointly with a person who, if
himself the sole registered unitholder, would be entitled to vote, and from
whom the manager has received voting instructions.
5 Any
associate of the manager shall not be entitled to vote at any such meeting
except in respect of units which he holds on behalf of or jointly with a person
who, if himself the registered unitholder, would be entitled to vote, and from
whom the associate has received voting instructions.
6 The
depositary and its legal advisors shall be entitled to attend every such
meeting.
7 In
this Article, and in Articles 11.08 to 11.18, ‘unitholders’
means –
a. the
persons who were unitholders on the date 7 days before the notice under Article 11.09
is sent or delivered, whichever is the earlier, but excluding any persons who
are known not to be unitholders at the time of the meeting or at any other
relevant time; and
b. in
the case of units for the time being represented by bearer certificates, the
persons who for the time being are unitholders of such units which were in
issue on the date 7 days before the notice under Article 11.09 is sent or
delivered, whichever is the earlier,
but where a meeting is adjourned, this paragraph applies as if the
references to Article 11.09 were references to Article 11.10.4.
11.08 Powers of a meeting of unitholders
A meeting of unitholders duly convened and held in accordance with
this part of the Articles shall be competent by extraordinary resolution, or
special resolution or ordinary resolution as the case may be, to require,
authorise or approve any act, matter or document in respect of which any such
resolution is required or expressly contemplated by these Rules, but shall not
have any other powers, except such as are permitted by applicable law and are
not inconsistent with these Rules, or are required by applicable law.
11.09 Notices of meetings of unitholders
1 Fourteen
days’ notice (or any longer period of notice specified for the purpose in
the constitutional documents or applicable law), inclusive of the day on which
the notice is deemed to be served and of the day specified pursuant to
paragraph 2, of every meeting shall be given to the unitholders in the manner
provided for in Part 15 below.
2 The
notice shall specify the place day and hour of meeting and the terms of the
resolutions to be proposed.
3 Unless
he has convened the meeting a copy of the notice shall be sent by post to the
depositary.
4 The
accidental omission to give notice to or the non-receipt of notice by any of
the unitholders shall not invalidate the proceedings at any meeting.
11.10 Quorum
1 The
quorum at a meeting of unitholders shall be two unitholders present in person
or by proxy or in the case of a corporation, by a duly authorised
representative.
2 No
business shall be transacted at any meeting unless the requisite quorum is
present at the commencement of business.
3 If
within half an hour from the time appointed for the meeting a quorum is not
present the meeting shall stand adjourned to such other day and time and to
such place as may be appointed by the chairman (if a chairman has been
appointed), or otherwise by the trustee, or in the case of a company the
directors, and if at such adjourned meeting a quorum is not present within
fifteen minutes from the time appointed for the meeting the one or more
unitholders present in person or by proxy or their duly authorised
representatives shall be a quorum.
4 At
least seven days’ notice of any adjourned meeting of unitholders which is
adjourned for 14 days or more shall be given in the same manner as for an
original meeting and such notice shall state that one or more unitholders
present in person or by proxy at the adjourned meeting whatever their number and
the number of units held by them will form a quorum. Otherwise it shall not be
necessary to give any such notice.
11.11 The chairman
Subject to any applicable law, some person, who need not be a
unitholder, nominated in writing by the trustee or the directors shall preside
at every meeting of unitholders or if no such person is nominated or if at any
meeting the person nominated shall not be present within fifteen minutes after
the time appointed for holding the meeting then the unitholders present in
person or by proxy shall choose one of their number to be chairman.
11.12 Adjournment
The chairman may, with the consent of any meeting of unitholders at
which a quorum is present, and shall if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting except business which might lawfully have
been transacted at the meeting from which the adjournment took place.
11.13 Votes at meetings
1 At
any meeting of unitholders a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is (before or on the declaration of
the result of the show of hands) demanded by the chairman, by the depositary or
by one or more unitholders present in person or by proxy and holding or
representing one-twentieth (or any proportion less than one-twentieth specified
for this purpose in the constitutional documents) in value of all the units in
issue on the date specified in Article 11.07.7.
2 Unless
a poll is so demanded a declaration by the chairman that a resolution has been
carried or carried unanimously or by a particular majority or lost shall be
conclusive evidence of the fact without proof of the number or proportion of
the votes recorded in favour or against such resolution.
3 If
a poll is duly demanded it shall be taken in such a manner as the chairman may
direct and the result of a poll shall be deemed to be the resolution of the
meeting at which the poll was demanded.
4 A
poll demanded on the election of a chairman or on a question of adjournment
shall be taken forthwith and a poll demanded on any other question shall be
taken at such time and place as the chairman directs.
5 The
demand for a poll shall not prevent the continuance of a meeting for the transaction
of any business other than the question on which the poll has been demanded.
6 On
a show of hands every unitholder who (being an individual) is present in
person, or (being a corporation) is present by its representative properly
authorised in that regard, shall have one vote.
7 On
a poll every unitholder who is present in person or by proxy shall have one
vote for every complete undivided share in the property of the fund and a
further part of one vote proportionate to any fraction of such an undivided
share of which he is the unitholder; and a unitholder entitled to more than one
vote need not, if he votes, use all his votes or cast all the votes he uses in
the same way.
8 A
corporation being a unitholder may authorise such person as it thinks fit to
act as its representative at any meeting of unitholders and the person so
authorised shall be entitled to exercise the same powers on behalf of the
corporation which he represents as the corporation could exercise if it were an
individual unitholder.
9 In
the case of joint unitholders the vote of the senior who tenders a vote whether
in person or by proxy shall be accepted to the exclusion of the votes of the
other joint unitholders and for this purpose seniority shall be determined by
the order in which the names stand in the register of unitholders.
10 On
a poll votes may be given either personally or by proxy.
11.14 Restrictions on the putting of composite
resolutions to meetings of holders
1 Modifications
to the constitutional documents and departures from policies or a set of
investment objectives stated in a prospectus of the description set out in
paragraph 2 shall not be taken to have been authorised by an extraordinary
resolution, a special resolution or an ordinary resolution, as the case may
require, at a meeting of unitholders unless each such modification or departure
has been the subject of a separate motion for its approval which has been
separately approved by an extraordinary resolution or special resolution or
ordinary resolution, as the case may be, at that meeting.
2 The
following are the descriptions of modification to the constitutional documents
and departures from policy or investment objectives referred to in paragraph 1 –
a. a
modification to any provision in the constitutional documents restricting –
(i) the descriptions
of asset in which the property of the pool may be invested,
(ii) the proportion of
the property of the pool to be invested in assets of any description,
(iii) the description of
transactions permitted, or
(iv) the borrowing powers of
the pool;
b. any
statement made in the prospectus that the manager will or may in relation to
any matter within paragraph 2a adopt, in the management of the pool, a policy
or set of investment objectives more restrictive than the restrictions imposed
in relation to that matter by Part 5 above or by the constitutional documents;
and
c. any
change to any statement in paragraph 2b.
11.15 Proxies
1 The
instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney duly authorised in writing or, if the appointor is
a corporation, either under the common seal or under the hand of an officer or
attorney so authorised.
2 The
instrument appointing a proxy and the power of attorney or other authority (if
any) under which it is signed or a notarially certified copy of such power or
authority shall be deposited at such place as the depositary or the manager
with the approval of the depositary may in the notice convening the meeting
direct (or if no such place is appointed then at the registered office of the
manager or in the case of a company, of the company) not less than forty-eight
hours before the time appointed for holding the meeting or adjourned meeting
(or in the case of a poll before the time appointed for the taking of the poll)
at which the person named in the instrument proposes to vote and in default the
instrument of proxy shall not be treated as valid.
3 No
instrument for appointing a proxy shall be valid after the expiration of twelve
months from the date named in it as the date of its execution.
4 A
person appointed to act as a proxy need not be a unitholder.
5 An
instrument of proxy may be in the usual common form or in any other form which
the depositary shall approve.
6 A
vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or other
revocation of the proxy or of the authority under which the proxy was executed
or the transfer of the units in respect of which the proxy is given provided
that no intimation in writing of such transfer or knowledge of such death,
insanity, or other revocation shall have been received at the place appointed
for the deposit of proxies or if no such place is appointed at the registered
office of the manager and made known to the person exercising the proxy at the
time at which the proxy is used.
11.16 Minutes
1 Minutes
of all resolutions and proceedings at every meeting of the unitholders shall be
made and duly entered in books to be from time to time provided for the purpose
at the expense of the manager or, in the case of a company, the company.
2 Any
such minute purporting to be signed by the chairman of the meeting shall be
conclusive evidence of the matters therein stated and, until the contrary is
proved, every such meeting in respect of the proceedings of which minutes have
been made shall be deemed to have been duly held and convened and all
resolutions passed thereat to have been duly passed.
11.17 Meaning of ‘extraordinary
resolution’ and of ‘ordinary resolution
1 In
these Rules ‘extraordinary resolution’ means a resolution –
a. proposed
and passed at a meeting of unitholders duly convened and held in accordance
with this Part of these Rules of which notice specifying the intention to
propose the resolution as an extraordinary resolution has been duly given; and
b. carried,
whether on a show of hands or on a poll, by a majority consisting of not less
than two-thirds (or any larger proportion specified for this purpose in the
constitutional documents) of the total number of votes cast for and against
such resolution.
2 In
these Rules ‘ordinary resolution’ means a resolution proposed
passed and carried in like manner mutatis mutandis to that described in
relation to an extraordinary resolution in paragraph 1 except that the required
majority shall consist of not less than one half of the total number of votes
cast for and against such resolution.
11.18 Class meetings
1 If
the depositary is of the opinion that any resolution to be proposed is one in
relation to which there is or might be a conflict of interest between the
unitholders of one class of units and the unitholders of another class of
units, whether such conflict might be in relation to classes which are both
within a single pool or, additionally in the case of an umbrella fund, between
the unitholders of a class of units in one constituent part and the unitholders
of a class of units in another, such resolution shall be deemed to have been
duly passed only if in lieu of being passed at a single meeting of all
unitholders it shall be duly passed at separate meetings respectively of the
unitholders of each class of units concerned.
2 This
part of these Rules shall apply to each separate meeting held pursuant to
paragraph 1 as it applies to other meetings.
11.19 Resolutions
1 Except
where an extraordinary resolution is specifically required or permitted by
these Rules or a special resolution is specifically required or permitted by
these Rules or Company Law, any resolution referred to in these Rules shall be
passed by an ordinary resolution.
2 In
the case of an equality of votes cast (whether on a show of hands or on a poll)
in respect of a resolution put to a general meeting, any chairman appointed
pursuant to the constitutional documents shall be entitled to a casting vote in
addition to any other vote he may have.
PART 12
SPECIAL PROVISIONS FOR CERTAIN CATEGORIES OF RECOGNIZED FUND
12.01 Efficient portfolio management: off-exchange
options
Article 12.02 applies to any pool (whether or not it is a
futures and options fund) in so far as it engages in transactions for efficient
portfolio management involving off-exchange derivatives.
SECTION A
FUTURES AND OPTIONS FUNDS
12.02 Off-exchange derivatives: discrepancy in
valuation
If at any time it appears to the manager that the latest valuation
provided to him under Article 5.23.7.a. and the latest valuation under Article 5.23.8
(valuation of off-exchange derivatives transactions) are not reasonably similar
in amount then the manager must –
a. take,
after consulting the depositary, whatever action relating to the transaction
which appears to be in the best interests of the unitholders; and
b. consider
with the depositary whether the discrepancy requires them to consider the
validity of the pricing model relevant to further off-exchange transactions
under Article 5.23.5.
12.03 Special rule for selling and repurchase
1 This
Article modifies Part 4 for futures and options funds.
2 Article 4.14.1
(obligation to sell units) and 4.17.1 (obligation to repurchase units) do not
apply in the 15 minutes immediately before a regular valuation point, or, if
the regular valuation points are less than one hour apart, in the last quarter
of the interval between them, if the manager has stated in the prospectus that
he is not obliged to sell or repurchase in the 15 minutes (or lesser period)
immediately preceding a regular valuation point.
3 Where
the manager has so stated in the prospectus, then he may not, during the
period, agree or decide to sell or repurchase units for himself as principal,
or arrange or agree to arrange for the trustee or company to create or cancel
units.
SECTION B
GEARED FUTURES AND OPTIONS FUNDS
12.04 Special rules for pricing
1 This
Article modifies Part 4 above for geared futures and options funds.
2 Prices
for sale and repurchase are to be on a forward basis only, and Article 4.26
does not apply.
3 Valuation
of the property of the pool is to be carried out at least once on every
business day.
12.05 Special rule for selling and repurchase
1 This
Article modifies Part 4 for geared futures and options funds.
2 Article 12.03.2
and 3 shall apply to such funds.
SECTION C
PROPERTY FUNDS
12.06 Standing independent valuer
1 The
manager shall, at the outset and upon any vacancy, with the approval of the
depositary appoint as the standing independent valuer for the pool a person who
is qualified under paragraph 2.
2 A
person is qualified to be the standing independent valuer if he is –
a. a
fellow or professional associate of the Royal Institution of Chartered
Surveyors;
b. a
fellow or associate of the Incorporated Society of Valuers and Auctioneers; or
c. a
fellow or associate of the Institute of Revenues, Rating and Valuation.
3 A
person is eligible to be appointed, or to retain appointment, as the standing
independent valuer only if he is independent of the manager, the depositary and
the directors, in that –
a. neither
he nor any partner (if any) or fellow director (if any) of his –
(i) is an officer,
servant or controller of, or
(ii) has a financial
interest which it is reasonable to regard as significant in,
the manager, the depositary, any of the directors or the recognized
fund or any body corporate in the same group as the manager, the depositary or
the recognized fund, as the case may be; and
b. neither
the manager nor the depositary nor any of the directors or their associates nor
the recognized fund nor any body corporate in the same group as the manager,
the depositary or the recognized fund has a financial interest which it is
reasonable to regard as significant in any partnership of which the person is a
member or in any body corporate of which he is a director or controller.
4 The
standing independent valuer may be removed from office by notice in writing
given by the manager or by the depositary: the manager may not give any such
notice without the agreement of the depositary, and the depositary must inform
the manager of any notice given by him.
5 Any
partner of the person appointed to be the standing independent valuer who would
himself be eligible for appointment may act on his behalf: and, if the standing
independent valuer considers it expedient that another person who is an
appropriate valuer should act on his behalf, he may appoint that other as his
delegate for the purpose of any specific valuation.
6 Details
of the standing independent valuer shall be given in the prospectus, as
specified in paragraph 4 of Schedule 2.
12.07 Functions of the standing independent valuer
1 The
standing independent valuer shall value all the immovables held within the
property of the pool, on the basis of a full valuation with physical inspection
(including, where the immovable is or includes a building, internal
inspection), at least once a year.
2 The
standing independent valuer shall also value the immovables, on the basis of a
review of the last full valuation, at least once a month.
3 The
depositary may at any time require the manager to procure an additional
valuation under paragraph 1 or under paragraph 2 as the depositary may specify.
4 Where,
since the last valuation under paragraph 1, any new immovable has been
purchased for the pool, and any appropriate valuer under Article 5.35 was
not the standing independent valuer, the standing independent valuer shall –
a. if
the report of the appropriate valuer was on the basis of full valuation with
internal inspection, review that valuation as part of any valuation under
paragraph 2 until the next full valuation under paragraph 1; and
b. if
the report of the appropriate valuer was not on the basis in a, value the
immovable on that basis as part of his next valuation under paragraph 2.
5. The
manager and depositary shall each inform the standing independent valuer
forthwith upon its becoming aware of any matter appearing likely to –
a. affect
the outcome of a valuation of an immovable;
b. cause
the valuer to decide to value under paragraph 1 instead of under paragraph 2;
or
c. cause
the valuer to recommend to the depositary that it should make a requirement
under paragraph 3.
6 The
manager and depositary shall each use their best endeavours to ensure that any
affected person reports to the valuer forthwith upon that person’s
becoming aware of any matter within paragraph 5.
7 Any
valuation by the standing independent valuer (except one under paragraph 4a)
shall be on the basis prescribed as an ‘open market value’ in the
Statements of Asset Valuation Practice and Guidance Notes on the valuation of
assets published by the Assets Valuation Standards Committee of the Royal
Institution of Chartered Surveyors (third edition published in August 1990
and revised in May 1992).
12.08 Special rules for pricing
1 This
Article modifies Part 4 above for property funds.
2 Any
valuation under Article 12.07 shall have effect, until the next valuation
under that Article, for the purposes of ascertaining under Part 4 the fair
value of the immovable property concerned.
3 Prices
for the purposes of sale and repurchase are to be on a forward basis only, and Article 4.26
does not apply.
4 An
agreement to transfer an immovable or an interest in an immovable is to be
disregarded for the purpose of the valuation of the property of the pool unless
it appears to be legally enforceable.
5 Dealing
costs are to be those estimated by the standing independent valuer, and his
estimate must have regard to any special reduction which he believes should be
available to the manager in the amount or rate of charges or commission
payable.
6 The
following provisions do not apply to property funds –
(i) Article 4.02.3;
(ii) Article 4.02.4.a.;
(iii) Article 4.04;
(iv) Article 4.26;
and
(v) Table
4.1.
12.09 Failure to obtain minimum subscriptions
1 Where,
immediately upon the expiry of the period of the initial offer, it appears to
the manager or the directors that the aggregate of monies paid or agreed to be
paid for units to be created or sold is less than £5m (or the equivalent
in the base currency) –
a. the
manager may not deduct any preliminary or periodic charge in respect of any
units to be sold on or after that expiry;
b. the
manager must credit back to the account of the unitholder any preliminary or
periodic charge deducted on selling units during the initial period; and
c. the
manager, the depositary and company must apply to the Commission for the
exercise of the power of the Commission under Article 14.03.3 for the
cancellation of the recognized fund certificate, or where the property fund is
a constituent part of an umbrella fund, for the amendment and re-issue of the
recognized fund certificate with its validity in relation to the property fund
removed.
2 Paragraph
1 applies, where there is no initial offer, as if –
a. the
period of the process of unitisation; or
b. the
period of 21 days after the date on which persons are first invited to become
unitholders,
were the period of the initial offer.
12.10 Notification of breaches etc.
If the manager of a property fund is at any time of the opinion that
there has been –
a. a
breach of any provision of Part 5; or
b. a
circumstance within the meaning of Article 7.13.4 or 7.13.5,
the manager must forthwith notify that breach (or circumstance)
together with the manager’s proposals for rectification (or restoration
of compliance) to –
c. the
depositary and the directors; and
d. the
Commission.
12.11 Suspension of dealings
1 This
Article applies, without prejudice to Article 13.01 (suspension etc.), if
at any time it appears to the depositary that there is insufficient property in
the pool by way of –
a. cash
or near cash;
b. property
related assets; or
c. other
assets capable of early liquidation,
to enable the trustee or company to cancel units as necessary to
enable the manager to meet the demand or likely demand for repurchase of units.
2 In
such a case, the trustee, or the directors with the agreement of the
depositary, –
a. shall
require the manager to suspend dealings in units (whether by way of sale,
repurchase, creation or cancellation);
b. shall
not, while the suspension remains in force, create or cancel units;
c. shall
forthwith inform the Commission of the suspension, stating the reasons for its
action; and
d. shall
thereupon confirm the suspension by giving notice in writing –
(i) to the manager,
and
(ii) to the
Commission.
3 The
manager shall comply with a requirement under paragraph 2a, and in each
country in which the recognized fund is registered for public sale shall notify
the suspension to the authorities responsible for the authorisation of
collective investment funds, stating the reasons for this action.
4 Following
the suspension, the manager shall report to the Commission with such frequency
as the Commission shall require (and in writing if so required) giving
particulars of the action being taken to enable dealings in units to be
resumed.
5 The
suspension shall expire on the close of business on the twenty eighth day after
the date of the suspension, unless extended under paragraph 6.
6 If
it appears to the manager, or to the trustee or directors, that it is desirable
in the interests of the unitholders that the suspension should be extended (or
further extended) it or they may, not less than 5 business days before the date
of expiry of the suspension, apply to the Commission in order to request such
extension and, if it appears to the Commission to be desirable to do so in the
interests of unitholders or potential unitholders, the Commission may grant
such application.
7 Articles 4.14
and 4.17 (manager’s obligation to sell and repurchase) are subject to
this Article.
SECTION D
WARRANT FUNDS
12.12 Special rules for pricing
1 This
Article modifies Part 4 above for warrant funds.
2 Prices
for sale and repurchase are to be on a forward basis only, and Article 4.26
does not apply.
3 Valuation
of the property of the pool is to be carried out at least once on every
business day.
SECTION E
FEEDER FUNDS AND FUNDS OF FUNDS
12.13 Pricing and valuation of feeder funds
1 The
manager of a feeder fund shall deal on the same basis (forward or historic) as
the pool, or regulated collective investment fund or other collective
investment fund or constituent part, or its equivalent, thereof, into which the
feeder fund feeds.
2 The
normal valuation point for a feeder fund must be within two hours after each
normal valuation point for the pool, or regulated collective investment fund or
other collective investment fund or constituent part, or its equivalent,
thereof, into which the feeder fund feeds.
3 Paragraphs
1 and 2 do not apply to a feeder fund dedicated to a single eligible investment
trust.
12.14 Feeder funds: notification of risk of loss of
eligibility of eligible investment trust
1 Where
the depositary is no longer satisfied of any matter specified in Article 5.46.3
(ongoing requirements for eligible investment trust status), it must forthwith
notify that circumstance and its immediate observations as to the resolution of
the problem to –
a. the
manager; and
b. the
Commission.
2 Within
four months of any notification under paragraph 1, the manager and the
depositary must apply to the Commission for the exercise of the power of the
Commission under Article 14.03 (Cancellation or amendment and re-issue of
recognized fund certificate) for the cancellation of the recognized fund
certificate, or where the feeder fund is a constituent part of an umbrella fund
for the amendment and re-issue of the recognized fund certificate with its
validity in relation to the feeder fund removed following the winding up of
that part, unless within that period, the relevant circumstance has ceased to
exist, and the depositary reasonably believes it will not recur.
12.15 Valuation of funds of funds
1 In
the case of a pool which is a fund of funds it shall be valued on the same
basis (forward or historic) and on the same frequency as would be applicable if
the fund of funds were itself a pool within the relevant Section (out of
Sections B, C, D, E, F, G) which is appropriate for the choice of investment by
the pool under Article 5.48.1.
2 Where
a fund of funds invests in money market funds (within Section C), Section C is
appropriate within paragraph 1 only if the pool does not invest in any other
category of pool or of other regulated collective investment fund or
constituent part, or its equivalent, thereof other than the equivalent of the
category of a pool within Section C.
SECTION F
UMBRELLA FUNDS
12.16 Qualification to be authorised as an umbrella
fund
A collective investment fund does not qualify for the grant of a
recognized fund certificate as an umbrella fund unless each constituent part
would, if it were the subject of a separate application for the grant of a
recognized fund certificate, qualify for such grant.
12.17 Base currency
In the case of an umbrella fund any reference to base currency shall
in the context of a valuation of a constituent part or the price of a unit in
respect of a constituent part or a payment in respect of such a unit
respectively be treated as if the reference were to the currency stated in the
prospectus as being the currency to be used for the purpose in question in
relation to the constituent part.
12.18 Allocation of property of the fund
In so far as any of the property of the fund of an umbrella fund, or
any assets to be received as part of the property of the fund, or any costs,
charges or expenses to be paid out of the property of the fund, are not
attributable to one constituent part only, subject to applicable law the
recognized fund must allocate such property of the fund, assets, costs, charges
or expenses between the constituent parts in a manner which is fair to the
unitholders of the umbrella fund generally.
12.19 Significant influence
The significant influence provisions contained in Article 5.16
shall be applied to the constituent parts of an umbrella fund as a whole and
not separately to each constituent part.
PART 13
SUSPENSION AND TERMINATION
13.01 Suspension and resumption of sale and repurchase
of units
1 The
manager may with the prior agreement of the trustee or the depositary and the
directors, or shall if the trustee or the directors with the agreement of the
depositary so requires, at any time for a period not exceeding 28 days suspend
the sale and the repurchase of units if he, or the trustee or directors in the
case of any requirement by them, is of the opinion that there is good and
sufficient reason to do so having regard to the interests of unitholders or
potential unitholders.
2 At
the time of suspension under paragraph 1 the manager, or the trustee or
directors if they have required the manager to suspend sale and repurchase,
shall –
a. inform
the Commission of the suspension, stating the reasons for this action; and
b. forthwith
confirm the suspension by giving notice in writing –
(i) to the
Commission, and
(ii) in each country
in which the recognized fund is registered for public sale, to the authorities
responsible for the authorisation of collective investment funds,
stating the reasons for this action.
3 If
sale and repurchase are suspended –
a. the
trustee or company shall not create or cancel units; and
b. the
manager shall not create or cancel units as agent for the trustee or company.
4 Before
the resumption of sale and repurchase of units, the manager shall inform the
Commission of the proposed resumption and forthwith after the resumption
confirm the resumption by giving notice in writing to the bodies and
authorities specified in paragraph 2b.
5 Nothing
in this Article shall prevent the manager from agreeing, during the period of
the suspension, to sell or to repurchase units (or to create or cancel them as
agent for the trustee or company) at a price calculated by reference to the
first valuation point after resumption of sale and repurchase but the potential
unitholder or existing unitholder as the case may be may withdraw his agreement
to purchase or sell such units by notice received by the manager at any time
prior to that valuation point.
6 During
the period of a suspension, none of the obligations in Part 4 relating to
the creation, cancellation, sale or repurchase of units or to the valuation of
units shall apply.
7 This
Article may be applied to one or more classes of unit without being applied to
other classes of unit in a pool; however, for the purpose of paragraph 1, the
manager or the trustee or directors (as the case may be) shall, in exercising
their powers, have regard to the interests of all of the unitholders in the
recognized fund.
13.02 When the pool is to be wound up
1 Unless
the Commission shall otherwise determine, upon the happening of any of the
events specified in paragraph 2 and, subject to any applicable law, not
otherwise –
a. Parts
4 and 5 above shall cease to apply to the pool;
b. the
trustee or company shall cease to create and cancel units in the pool;
c. the
manager shall cease to sell and repurchase units in the pool;
d. the
manager shall cease to create or cancel units as agent for the trustee or
company; and
e. the
pool shall be subject to the winding-up procedures specified in Article 13.03.
2 The
events referred to in paragraph 1 are –
a. the
cancellation of the recognized fund certificate granted with respect to the
pool concerned or its amendment and re-issue with its validity in relation to
the relevant pool removed;
b. the
determination by the Commission, under paragraph 3 of Article 14.03 to
cancel the recognized fund certificate applicable to the recognized fund or to
amend and re-issue it with its validity in relation to the relevant pool
removed at the request of the manager, or the depositary or the company;
c. the
expiration of any period or the occurrence of any event specified in the
constitutional documents as the period at the end of which or the event on the
occurrence of which the pool is to terminate;
d. the
effective date of a duly approved scheme of amalgamation in relation to the
pool;
e. the
effective date of a duly approved scheme of reconstruction which results in all
the property of the reconstructed pool becoming the property of two or more
regulated collective investment funds; or
f. the
passing of an extraordinary resolution, or in the case of a company a special
resolution, to the effect that the pool be wound-up.
3 This
Article is without prejudice to Article 13.01 and to any order or
direction made under the Law.
4 The
trustee or directors shall give notice to the Commission on the occurrence of
any of the events specified in paragraph 2c., 2d., 2e. and 2f.
13.03 Manner of winding up
1 In
the case of a pool falling within Article 13.02.2d or 13.02.2e, other than
the sole pool of a company, the depositary shall wind up the pool in accordance
with the approved scheme of amalgamation or reconstruction.
2 In
the case of any other pool falling within Article 13.02.2, other than the
sole pool of a company –
a. the
depositary shall, as soon as practicable after the pool falls to be wound up,
realise the property of the pool and, after paying or retaining adequate
provision for all liabilities properly so payable and retaining provision for
the costs of the winding up, distribute the proceeds of that realisation to the
unitholders and the manager (upon production by them of such evidence, if any,
as the depositary may reasonably require as to their entitlement thereto)
proportionately to their respective interests in the pool as at the date of the
relevant event referred to in Article 13.02.2; and
b. any
unclaimed net proceeds or other cash (including unclaimed distribution
payments) held by the depositary after the expiration of twelve months from the
date on which the same became payable shall be paid by the depositary into
court for distribution as the court may direct subject to the depositary having
a right to retain thereout any expenses incurred by him in making and relating
to that payment.
3 In
any case falling within Article 13.02.2a or 13.02.2b in relation to the
sole pool of a company the directors shall convene an extraordinary general
meeting of the company on a date not later than one month from the happening of
such event to consider a special resolution to wind-up the company.
4 In
any case falling within Article 13.02.2c, d, e or f in relation to the
sole pool of a company the company shall be wound-up in accordance with the
approved scheme of amalgamation or reconstruction, the constitutional documents
and any applicable law, as appropriate.
5 Where
the depositary and one or more unitholders agree, the requirement in paragraph
2 to realise the property of the pool shall not apply to that part of the
property proportionate to the entitlement of that or those unitholders, and the
depositary may distribute that part in the form of property, after making such
adjustments or retaining such provision as appears to the depositary appropriate
for ensuring that that or those unitholders bear a proportional share of the
liabilities and costs.
6 Nothing
in this Part of these Rules requires the depositary to distribute proceeds of a
realisation to any unitholder in any case where the manager or the depositary
considers it necessary or appropriate to carry out or complete identification
procedures in relation to the unitholder or another person pursuant to a
statutory or regulatory obligation.
7 On
completion of the winding up in respect of the events referred to in Articles 13.02.2b,
c, d, e or f the trustee or directors shall notify the Commission in writing of
that fact and at the same time an application shall be made for the
cancellation or amendment and re-issue of the recognized fund certificate
pursuant to Article 14.03.3.
13.04 Accounting and reports during winding up
1 Subject
to any order of the court, applicable law and to paragraphs 2 and 3, while a
pool is being wound up, whether under Article 13.03 or otherwise –
a. the
annual and half-yearly accounting periods shall continue to run;
b. the
provisions about annual and interim allocation of income shall continue to
apply; and
c. annual
and half-yearly reports shall continue to be required.
2 Where,
in respect of any annual or half-yearly accounting period, the depositary
(after consulting the manager (if appropriate) and the Commission) is satisfied
that timely production of an annual or half-yearly report is not required in
the interests of the unitholders or of the Commission and applicable law
allows, it may direct that immediate production of the report may be dispensed
with, and thereupon the period in question must be reported on together with
the ensuing period in the next report prepared under paragraph 1 or 3.
3 In
the case of a pool of a unit trust or a pool which is not the sole pool of a
company, at the conclusion of the winding up the accounting period then running
shall be regarded as the final annual accounting period, and the annual reports
of the manager and depositary, in respect of that final period, shall be
published and sent to the Commission and to each person who was a unitholder
immediately before the end of the final annual accounting period within two
months after the end of the period.
PART 14
APPLICATION FOR RECOGNIZED FUND CERTIFICATE
14.01 Application for recognized fund certificate
1 An
application for a recognized fund certificate or the extension of its validity
to include additional pool(s) shall be made to the Commission –
a. in
the case of a unit trust, by the manager and trustee; and
b. in
the case of an open-ended investment company, by that company, the manager and
the custodian,
and in any other case, as prescribed by the Committee or directed by
the Commission.
2 Each
such application shall:
a. be
in the form required from time to time by the Commission;
b. contain
or be accompanied by such other particulars as the Commission may require;
c. be
verified in such manner and to such extent as the Commission may require; and
d. be
accompanied by –
(i) in the case of a
unit trust, a copy of the trust instrument and fund rules, if any,
(ii) in the case of an
open-ended investment company, a copy of the memorandum and articles of
association of that company, the fund rules (if any), the management agreement
and the custodian agreement, and
(iii) a certificate,
satisfactory to the Commission, signed by an Advocate or Solicitor of the Royal
Court to the effect that each such document complies with such of the
requirements of these Rules as relate to its contents.
14.02 Grant of recognized fund certificate
1 The
Commission may, on an application duly made in accordance with Article 14.01
and after being furnished with all such information as it may require under
that Article, grant a certificate (a “recognized fund certificate”)
in respect of a collective investment fund if it appears that –
a. the
collective investment fund, if it were a recognized fund, would be within one
of the categories of recognized funds specified in the Article 2.05.1 and
takes the form of a unit trust or an open-ended investment company, or such
other form as may be specified by the Committee;
b. in
the case of a unit trust, the trustee and the manager are each the holder of a
permit granted under Article 6 of the Law;
c. in
the case of an open-ended investment company, that company, the manager and the
custodian are each the holder of a permit granted under Article 6 of the
Law;
d. in
the case of a collective investment fund in any other form, every functionary
nominated by the Commission is the holder of a permit granted under Article 6
of the Law; and
e. the
collective investment fund complies with such of the requirements of these
Rules as relate to a recognized fund of the particular category to which it
belongs.
2 Each
recognized fund certificate shall specify the category of recognized fund to
which it relates.
14.03 Cancellation or amendment and re-issue of
recognized fund certificate
1 The
Commission may at any time cancel or amend and re-issue a recognized fund certificate
if it appears to the Commission –
a. that
any of the requirements for the grant of the certificate or for inclusion of
the recognized fund or a constituent part thereof in the category to which it
belongs are no longer satisfied and that the recognized fund certificate should
in consequence be cancelled or amended and re-issued as the case may be;
b. that
it is undesirable in the interests of the participants or potential
participants that the pool should continue to be a recognized fund or a constituent
part thereof; or
c. without
prejudice to paragraph (b), that –
(i) in the case of a
unit trust, the manager or the trustee, or
(ii) in the case of an
open-ended investment company, that company or the manager or the custodian,
has contravened any provision of the Law or of any Regulations or
Order (including these Rules) made under it or of any permit granted under the
Law or, in purported compliance with any such provisions or permit, has
furnished the Commission with false, inaccurate or misleading information or
has contravened any prohibition, restriction, direction or requirement imposed
under the Law.
2 For
the purposes of sub-paragraph b. of paragraph 1, the Commission may take into
account any matter relating to –
a. the
recognized fund or any constituent part thereof;
b. in
the case of a unit trust, the manager or the trustee; or
c. in
the case of an open-ended investment company, that company, the manager or the
custodian;
d. in
the case of a collective investment fund in any other form, such functionaries
as the Commission may decide;
e. a
director or controller of any of the persons stated in sub-paragraphs b., c.
and d; or
f. any
person employed by or associated with any of the persons stated in
sub-paragraphs b., c. and d.
3 The
Commission may cancel or amend and re-issue a recognized fund certificate at
the request of –
a. in
the case of a unit trust, the manager or the trustee;
b. in
the case of a company, that company or the manager or the custodian; and
c. in
any other case, such functionaries as the Commission shall decide,
but the Commission may refuse to do so if it considers that any
matter concerning the recognized fund should be investigated as a preliminary
to a decision on whether the recognized fund certificate should be cancelled or
amended and re-issued, or the cancellation or amendment and re-issue, would not
be in the interests of the unitholders and in the case of amendment will
require that the request for re-issue of an amended recognized fund certificate
be made to the Commission by the same functionaries as would have been required
to make the application had it been an application for a new certificate.
4 On
cancellation or amendment and re-issue of a recognized fund certificate under
this Article, each of the persons referred to in sub-paragraph a., b. or c, as
the case may be, of paragraph 3 shall forthwith notify that fact to –
a. the
authorities responsible for the authorisation of collective investment funds in
each country in which the recognized fund is registered for public sale; and
b. each
unitholder of the recognized fund other than, in the case of a unit trust, the
bearer of a bearer certificate.
5 The
notice required of each of the persons respectively referred to in paragraph 4
may be given by them jointly.
6 On
cancellation or amendment and re-issue of a recognized fund certificate under
this Article, each of the persons referred to in sub-paragraph a., b. or c. as
the case may be of paragraph 3 shall forthwith procure the return of the
pre-existing certificate to the Commission.
14.04 Representations against refusal or cancellation
or amendment of a recognized fund certificate
1 Where
the Commission proposes –
a. to
refuse to grant a recognized fund certificate under Article 14.02; or
b. to
cancel or to amend and re-issue a recognized fund certificate under Article 14.03
otherwise than in response to a request made under paragraph 3 of that Article,
it shall give to the applicants or, as the case may be, the persons
to whom the certificate was granted written notice of its intention to do so,
stating the reasons for which it proposes to act and giving particulars of the
rights conferred by paragraph 2.
2 A
person to whom a notice is given under paragraph 1, may, within twenty-one days
of the date of the notice, make written representations to the Commission and,
if desired, oral representations to the Commission.
3 The
Commission shall have regard to any representations made in accordance with
paragraph 2 in determining whether to refuse to grant a recognized fund
certificate or to cancel or amend and re-issue the recognized fund certificate,
as the case may be.
PART 15
SUPPLEMENTARY
15.01 Service of notices and documents
1 In
the case of a unit trust any notice required to be served upon a unitholder shall
be deemed to have been duly given –
a. in
the case of units held by a registered unitholder, if it is sent by post to or
left at his address as appearing in the register and if a joint unitholder the
address of the first named unitholder; or
b. in
the case of units for the time being represented by bearer certificates, if it
is given in the manner provided for in the most recently published prospectus.
2 Subject
to Article 4.24, any notice required to be served or information to be
supplied or given to any person other than a unitholder, including the
Commission, shall be in writing or else in such other form as enables the
recipient to know or record the time of receipt and to preserve a legible copy
thereof.
3 Subject
to any applicable law any notice served by post shall be deemed to have been
served on the second day following that on which the letter containing the same
is posted, and in proving such service it shall be sufficient to prove that
such letter was properly addressed, stamped and posted.
4 Service
of a notice or document on any one of several joint unitholders shall be deemed
effective service on the other joint unitholders.
PART 16
MISCELLANEOUS
16.01 Definitions
In this Part –
1 ‘the
commencement date’ is the date of coming into force of the Collective Investment Funds (Recognized Funds)
(Rules) (Jersey) Order 2003;[15]
2 ‘the
effective date’ is the first day of January 2005;
3 ‘the
previous Order’ means the Collective
Investment Funds (Recognized Funds) (General Provisions) (Jersey) Order 1988.[16]
16.02 Transitional Provisions
Subject to Article 16.03 and to its other provisions, these
Rules shall have effect in relation to recognized funds and applications for
recognized fund certificates on and from the effective date.
16.03 Early commencement
1 Where,
in relation to any fund the depositary and the manager and, in the case of a
company, the company desire that these Rules should have effect in advance of
the date which, but for this Article, would be the effective date, they may
jointly specify (by giving not less than 7 days notice in writing to the
Commission) a date falling after the commencement date and before the effective
date; and the previous Order shall cease to have effect and these Rules (other
than Article 16.02) shall thereupon have effect in relation to that fund
on the date so specified and as if references to the effective date were
references to the date so specified.
2 A
notice duly given under paragraph 1 is not revocable.
16.04 Status of existing recognized funds
1 Subject
to paragraph 2, a fund that held a recognized fund certificate pursuant to the
previous Order shall be treated as holding a recognized fund certificate as a
fund in the corresponding category granted pursuant to Article 14.02 of
these Rules.
2 In
the case of a fund that held a recognized fund certificate as a government and
other public securities fund pursuant to the previous Order, the fund shall be
treated as holding a recognized fund certificate as a securities fund granted
pursuant to Article 14.02 of these Rules and a replacement recognized fund
certificate shall be issued with respect to the fund.
SCHEDULE 1
THE CONSTITUTIONAL DOCUMENTS
(Article 2.01)
PART I
Matters which must be contained within the
constitutional documents
1 Name
of the recognized fund
A statement of the name of the recognized fund being a name not
inconsistent with the recognized fund’s recognized fund status under
paragraph 2 and any restricted economic or geographic objectives under
paragraph 12.
2 Recognized
fund status
A statement –
a. in
all cases, of the relevant category of recognized funds under Article 2.05.1
to which the recognized fund belongs;
b. in
the case of a feeder fund, of the name and authorised status of the collective
investment fund, or constituent part, or its equivalent, thereof (or of the
name of the eligible investment trust) into which the feeder fund is to feed;
c. in
the case of a fund of funds, identifying the categories of the recognized funds
or other regulated collective investment funds or, if umbrella funds,
constituent parts, or their equivalent, thereof in which the fund of funds may
invest; and
d. in
the case of an umbrella fund, identifying, in the case of each constituent
part, to which of the relevant categories that part would belong if it were
itself the subject of a separate application for the grant of a recognized fund
certificate under Article 14.01 of this Order.
3 Governing
law
A statement that in the case of a recognized fund which is a unit
trust that the trust instrument is made under and governed by the law of
Jersey.
4 Trust
instrument to be binding and authoritative
In the case of a recognized fund which is a unit trust a statement
that the trust instrument is binding on each unitholder as if he had been a
party to it and is bound by its provisions and authorises and requires the
trustee and the manager to do the things required or permitted of them by the
terms of the trust instrument.
5 Base
currency
A statement of the currency that is the base currency of each pool.
6 Investment
powers in eligible markets
Except in the case of a feeder fund, a statement that, subject to
any restriction in this Order or the constitutional documents, the recognized
fund has the power to invest in any securities market or deal on any derivatives
market –
a. which
is an eligible securities or derivatives market for that fund by virtue of this
Order; or
b. to
the extent that power to do so is conferred by this Order irrespective of any
issue of eligibility.
7 Ownership
of property of the fund
a. In
the case of a unit trust a declaration that, subject to the provisions of the
trust instrument and to this Order and to all Orders made under Article 10,13
and 17 of the Law and for the time being in force –
(i) the
property of the fund (other than sums standing to the credit of the
distribution account) is held by the trustee:
(a) on trust for the
unitholders of the units pari passu according to the number of units held by
each unitholder in each pool (the property of each pool being declared to be held
on separate trusts), or
(b) in the case where there
is more than one class of units within a pool, according to the number of
undivided shares in the property of the pool, represented by the units held by
each unitholder, and
(ii) the
sums standing to the credit of the distribution account are held by the trustee
on trust to distribute or apply them in accordance with this Order;
b. in
the case of a company that the property of the fund shall be entrusted to a
custodian for its safekeeping and in the case of a company which is an umbrella
fund, and any of its constituent parts is a futures and options fund, a geared
futures and options fund or a property fund, or any such additional category of
fund as may be prescribed from time to time by the Committee, a requirement
that each shall invest in a manner which is acceptable to the Commission.
8 Unitholder’s
liability to pay
In the case of a recognized fund which is a unit trust a provision
that a unitholder is not liable to make any further payment after he has paid
the purchase price of his units and that no further liability can be imposed on
him in respect of the units which he holds.
9 Conflict
The constitutional documents shall contain a provision to the effect
that the contents of this Order shall be deemed to form part of the trust
instrument or articles of association of the company as the case may be.
PART II
Matters which may be contained in the
constitutional documents (without prejudice to the generality of Part 2 of this
Order)
10 Duration
of the pool
If a pool is to terminate after the expiration of a particular
period, a statement to that effect.
11 Constituents
of property, permitted transactions and borrowing powers
If the descriptions of asset which may be included in the capital
property attributable to the pool or the proportion of the capital property
attributable to the pool which may consist of an asset of any description or
the descriptions of transactions which may be effected on behalf of the pool or
the borrowing powers exercisable in relation to the pool are narrower than
those permitted for the category of pool to which the pool belongs under Part 5
above, a statement of those narrower descriptions of asset, proportions,
transactions or borrowing powers.
12 Restricted
economic or geographic objectives
If there are to be any restrictions on the geographic areas or
economic sectors in which investment of the capital property attributable to
the pool may be made, a statement of what they are.
13 Classes
of units
A description of the class or classes of units and the rights
attached thereto, indicating which class or classes of units may be created in
respect of each pool.
14 Bearer
Certificates
In the case of a pool which is a unit trust or which is a
constituent part thereof a provision authorising the issue of bearer
certificates.
15 Enabling
and restricting provisions
Any provision –
a. dealing
with a matter not referred to earlier in this Schedule the inclusion of which
serves to enable the recognized fund, any constituent part, the manager or the
depositary to obtain any privilege or power conferred by these Rules; or
b. which
is expressly contemplated in these Rules.
16 Compulsory
redemption, cancellation or transfer
A provision that if any units are owned or held by any person in circumstances
which the manager (or in the case of a company the company) considers might
result in the recognized fund or any unitholder incurring any liability to
taxation or infringing any law or regulation or suffering any regulatory,
pecuniary or administrative disadvantage which the recognized fund or
unitholder might not otherwise have incurred or suffered, the units shall be
repurchased, cancelled or transferred and, if the constitutional documents
contain such a provision, they shall also provide the procedure for that
repurchase, cancellation or transfer.
17 Exemption
from liability
Subject to applicable law, a provision exempting any person carrying
on a restricted activity in relation to a recognized fund, and, in the case of
a company, the directors, from liability for failure to discharge their
functions in respect of the recognized fund to the extent that due care and
diligence has been exercised.
18 Restatement
of statutory provisions
Any provision which in all material respects has the same effect as
a provision contained, at the time when the provision is made, in the Law or in
Orders made under Article 10, 13 and 17 of the Law.
SCHEDULE 2
INFORMATION TO BE CONTAINED IN A PROSPECTUS
(Article 3.01.02)
1 The
manager and in the case of a company the manager and the company
State the following particulars of the manager and company if any –
a. its
name;
b. the
nature of its corporate form;
c. that
it is incorporated in Jersey;
d. if
it is a subsidiary, the name of its ultimate holding company and the country or
territory in which that holding company is incorporated;
e. the
following addresses –
(i) the
address of its registered office,
(ii) the
address of the its head office if that is different from the address of its
registered office;
g. the
date of its incorporation;
h. if
the duration of its corporate status is limited, when that status will or may
cease;
i. in
the case of a manager only, the amount of its issued share capital and how much
of it is paid up;
j. the
names of the directors and, in each case, any significant business activities
of the director not connected with the business of the manager or company;
k if
the manager is the manager of another recognized fund and the manager, or in
the case of a company its directors, consider it necessary to be disclosed or
the Commission so require, the name of that recognized fund, and such other
information as is necessary or required to be disclosed;
l. that
the manager and, in the case of a company the company, are each the holder of a
permit;
j. a
summary of the material provisions, relating to the manager, of the
constitutional documents and/or of the management agreement as the case may be
which may be relevant to unitholders including provisions relating to the
remuneration of the manager.
2 The
depositary
State the following particulars of the depositary –
a. its
name;
b. the
nature of its corporate form;
c. that
it is incorporated in Jersey;
d. if
it is a subsidiary, the name of its ultimate holding company and the country or
territory in which that holding company is incorporated;
e. the
address of its registered office;
f. the
address of its head office if that is different from the address of its
registered office;
g. a
description of its principal business activity;
h. that
it is the holder of a permit;
i. a
summary of the material provisions, relating to the depositary, of the
constitutional documents and/or of the custodian agreement as the case may be
which may be relevant to unitholders including provisions relating to the
remuneration of the depositary.
3 The
investment adviser or investment manager
If the manager or company employs the services of an investment
adviser or investment manager, state the following particulars of the
investment adviser –
a. his
name and his function;
b. whether
or not he is the holder of a permit;
c. if
he is a body corporate in a group of which the manager or depositary is a
member, that fact;
d. if
his principal activity is not providing services as an investment adviser or an
investment manager, what the principal activity is;
e. the
main terms of any agreement or arrangement between him and the manager (other
than, if paid by the manager, those relating to his remuneration) or company
and, if he has the authority of the manager or company to make decisions on
behalf of the manager or company, that fact and a description of the matters in
relation to which he has that authority;
f if
he is authorised to deal on behalf of the recognized fund and is an associate
of the manager, the relationship by virtue of which he is an associate, and the
maximum percentage commission payable to him under the agreement or arrangement
in e. for any deal done or which could be done on behalf of the recognized
fund.
4 Standing
independent valuer
In relation to a property fund state the following particulars of
the standing independent valuer –
a. his
name;
b. particulars
of his professional qualification;
c. if
he is a member of a professional regulatory organisation, its name, and the
status of his membership if relevant;
d. the
material terms of the agreement or arrangement between him and the manager.
5 The
registrar
Unless the depositary is the registrar state the registrar’s
name and address.
6 The
auditor
State the name and address of the auditor of the recognized fund.
7 Legal
adviser
The name and address of the legal adviser to the recognized fund
shall be stated.
8 The
register of unitholders
State the address where the register of unitholders can be
inspected.
9 The
constitution and objectives of the recognized fund
State –
a. the
name of the recognized fund;
b. that
the collective investment fund is a recognized fund under the Law;
c.
(i) the
relevant category of recognized funds under Article 2.05.1 to which the
recognized fund belongs; and
(ii) additionally,
in the case of a feeder fund, the name of, and the basis for permitted
investment under Article 5.45 into the collective investment fund into
which the feeder fund is to feed; and
(iii) additionally,
in the case of a fund of funds identifying the categories of collective
investment fund or constituent parts, or their equivalent, thereof in which the
fund of funds may invest; and
(iv) additionally,
in the case of an umbrella fund, the relevant category of each pool.
d. the
date on which the recognized fund was established and, if the duration of the
recognized fund is not unlimited, when it will or may terminate;
e. if
the recognized fund is a company, particulars of its capital structure;
f. sufficient
information to enable a unitholder or a potential unitholder to ascertain –
(i)
a. what is the
objective of the recognized fund; and
b. what is the
manager’s investment policy for achieving that objective;
c. if that
policy does not envisage remaining fully invested at all times a statement of the
manager’s policy in that respect;
(ii) the
general nature of the portfolio and any intended specialisation e.g. in an
economic sector, geographical area or type of investment or other property;
(iii) a
description of the types of property which may be included in the recognized
fund and any limitations on the extent to which the recognized fund may invest
in such property indicating (where appropriate) where the restrictions imposed
on the recognized fund are tighter than would otherwise be imposed by these
Rules;
(iv) where
the recognized fund’s ability to invest in a particular type of property
or to a particular extent is provided for by the constitutional documents, that
fact;
(v) the
names of the states, local authorities and/or public international bodies in
whose securities the recognized fund may invest more than 35%;
(vi) whether
the manager or company may enter into any and if so what transactions for the
purposes of efficient portfolio management; and
(vii) a
statement of what borrowing powers are exercisable in relation to the
recognized fund.
g. in
the case of a recognized fund which may invest in other collective investment
funds, the extent to which the property of the fund may be invested in the
units of collective investment funds which are managed by the manager or by an
associate of the manager.
h. in
the case of a property fund –
(i) the
maximum extent to which the property of the fund may be invested in –
· immovables,
· property
related assets, and
(ii) where
the manager expects that the property will be invested (during the period when
that version of the prospectus may be in circulation) in Government and other
public securities –
· the
fact that the property may be so invested, and
· the
maximum limit permitted for such investment (whether by virtue of these Rules
or a decision by the manager to adopt a lower maximum);
i. the
circumstances in which the winding-up of the recognized fund can be decided
upon, a description of the procedure to be followed in a winding-up and what
the rights of unitholders will be in a winding-up;
j. the
accounting reference date;
k. if
there are interim accounting periods, what they are.
10 List
of eligible markets
List any individual eligible securities and derivatives markets
through which the recognized fund may invest or deal by virtue of Article 5.09.2:
any securities market in a member state which is eligible by virtue of Article 5.09.1
may be included in the list or referred to in general terms.
11 The
characteristics of classes of units in the recognized fund
State –
a. in
relation to each available class of unit in the recognized fund, the
entitlement of the unitholder of that unit to participate in the property of
the fund and the income thereof, a statement of the nominal value (if any) of
each class of unit and, where there is more than one class of unit, the names
given to each class and the characteristics of each class which distinguishes
it from the others;
b. if
the trust instrument constituting the recognized fund authorises the issue of bearer
certificates, that fact;
c. in
the case of unit trust the fact that the nature of the right represented by
units is that of a beneficial interest under a trust and, in the case of a
company, the fact that the nature of the right represented by units is that of
a redeemable participating preference share in that company;
d. what
voting rights are exercisable at meetings of unitholders by the unitholders
and, if different rights attach to different classes of units, what those
different rights are and, in the case of a company, whether persons other than
unitholders can vote at meetings of unitholders and who those persons are.
12 Valuation
of property
State –
a. how
frequently and at what time or times of day the property of the pool will be
regularly valued for the purpose of determining prices at which units in the
pool may be purchased from or repurchased by the manager or recognized fund and
a description of any circumstances in which the pool may be specially valued;
b. the
basis on which the property of the pool will be valued; and
c. how
the price of units of each class will be determined.
13 Preliminary
charge
If the price at which units may be purchased may include a
preliminary charge by the manager, state –
a. the
current rate or amount of preliminary charge; and
b. if
notice has been given to unitholders of the manager’s intention to
introduce a preliminary charge or to increase the rate or amount currently
charged, particulars of that introduction or increase and when it will take
effect.
14 Periodic
charge
If the manager (whether as such or in any other capacity) may make a
charge out of the property of the fund, state –
a. the
maximum rate or amount of that charge;
b. if
the rate or amount of that charge currently made is below the maximum, that
rate or amount;
c. how
it will be calculated and accrue and when it will be paid;
d. if
notice has been given to unitholders of the manager’s intention to
introduce a new category of remuneration for its services or to increase any
rate or amount currently charged, particulars of that introduction or increase
and when it will take effect; and
e. if,
in accordance with Article 8.06.4, the manager and the depositary or
directors have agreed that all or part of that charge is to be treated as a
capital charge –
i. that
fact, and
ii. the
actual or maximum amount of the charge which may be so treated, and
f. if
notice has been given to unitholders of an intention to propose an increase in
the maximum amount of that charge at a meeting of unitholders, particulars of
that proposal.
15 Charge
on repurchase
If the manager may make a charge by way of deduction from the
proceeds of repurchase, state –
a. the
amount of that charge or, if it is variable, the rate or method of arriving at
it;
b. if
the amount or rate or method has been changed, that details of any previous
amount or rate or method may be obtained from the manager on request;
c. if
notice has been given to the depositary of an intention to introduce a
repurchase charge or to propose a change in the amount or rate or method which
is adverse to unitholders, particulars of that proposal; and
d. how
the order in which units acquired at different times by a unitholder shall be
determined insofar as necessary for the purposes of the repurchase charge.
16 Dilution
levy
State –
a what
is meant by dilution, by dilution levy and by large deals; and
b what
is the manager’s policy on imposing a dilution levy including its policy
on large deals.
17 Other
payments out of the property of the fund
State –
a. if
the depositary is to be remunerated out of the property of the recognized fund,
the information envisaged by Article 8.04, and that remuneration will be
paid out of the property of the fund;
b. if
the depositary is to be reimbursed out of the property of the fund expenses
incurred in performing any of the duties of the depositary, what those duties
are, and that expenses incurred in their performance will be reimbursed out of
the property of the fund;
c. where
the recognized fund is a company, any remuneration and expenses of the
directors, payable out of the property of the fund;
d any
remuneration payable to any third party and, if this does not apply, any
remuneration payable by the recognized fund for services provided by an
affected person; and
e. the
type of any other payments or benefits which may lawfully be made or given out
of the property of the fund and how their amounts will be determined.
18 Distribution
State, except in relation to a recognized fund consisting entirely
of roll-up units –
a. the
annual income allocation date and, if any, the interim income allocation dates
and, if there are unitholders who hold bearer certificates, the procedure for
the purposes of receiving distributions of income;
b. if
grouping for equalisation is permitted by the constitutional documents, that
fact with an explanation of its meaning and a statement of what the grouping
periods are.
19 The
sale and repurchase of units in the recognized fund
State –
a. the
dealing days and times in the dealing day on which the manager or company will
be available to receive requests for the sale and repurchase of units;
b. the
procedures for effecting the sale and repurchase of units and the settlement of
transactions;
c. whether
or not certificates evidencing title to units will be issued;
d. the
steps required to be taken by a unitholder in obtaining the repurchase of units
before he can receive the proceeds of repurchase;
e. the
amounts of the following minima (if they apply) for each class of unit in the
recognized fund –
(i) the
minimum number of units which any one person may hold,
(ii) the
minimum value of units which any one person may hold,
(iii) the
minimum number or value of units which may be the subject of any one
transaction which may be the subject of any one transaction by potential
unitholders and unitholders;
f. the
circumstances in which the repurchase of units may be suspended;
g. the
days and times in the day on which the re-calculation of creation and
cancellation prices will commence;
h. where
and when the most recent sale and repurchase prices will be published;
i. the
investment exchanges (if any) on which units in the recognized fund are listed
or dealt;
j. that
in case of a pool the total consideration payable under a deal in units in the
pool which is to be a large deal within the meaning of Part 4 above is an
amount exceeding a specified sum, that specified sum being not less than
£15,000.
20 Pricing
basis for sale and repurchase
State the manager’s normal basis of dealing (whether at a
forward price, or at a historic price, or on the basis of a switch from the
latter to the former in every dealing period) and whether the recognized fund
is operated on a dual or a single dealing price basis and provide an adequate
explanation of the relevant bases.
21 General
information
State –
a. when
annual and half-yearly reports will be published;
b. if
the manager or company has elected to produce short form accounts, a statement
that a report containing the full accounts is available on request;
c. the
address at which copies of the constitutional documents, any amending
instrument and of the most recent annual and half-yearly reports may be
inspected and from which copies of them may be obtained;
d. how
the manager will publish, for the benefit of unitholders whose units in a unit
trust are evidenced by bearer certificates, notice –
(i) of
the fact that annual and half-yearly reports are available for inspection,
(ii) that
a distribution of income has been declared,
(iii) of
the calling of a meeting of unitholders,
(iv) of
the termination of the recognized fund or the amendment or revocation of its
recognized fund certificate,
(v) that
amendments have been made to the constitutional documents or the management agreement
or custodian agreement,
(vi) that
the prospectus has been revised;
e. the
extent to which and the circumstances in which –
(i) the
recognized fund is liable to pay or suffer tax on any appreciation in the value
of the property of the fund or on the income of the property of the fund, and
(ii) deductions
by way of withholding tax may be made from distributions of income to
unitholders and payments made to unitholders on the repurchase of units.
22 Additional
information in all cases
State any other material information which is within the knowledge
of the manager, or in the case of a company its directors or the manager, or
which such manager or directors would have obtained by the making of reasonable
enquiries –
a. 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 participating in the recognized fund and
the extent and characteristics of the risks accepted by so participating; and
b. including
a statement of any risks investment in the recognized fund may be reasonably
regarded as presenting for reasonably prudent investors of moderate means.
23 Umbrella
Funds
1 State,
in the case of an umbrella fund –
a. that
a unitholder is entitled to exchange units in one constituent part for units in
any other constituent part;
b. that
an exchange of units in one constituent part for units in another constituent
part may be a realisation for the purposes of capital gains taxation;
c. the
circumstances under which if any, or as the case may be that in no
circumstances, a unitholder who exchanges units in one constituent part for
units in another constituent part will be given a right by law to withdraw from
or cancel the transaction;
d. what
charges, if any, may be made on exchanging units in one constituent part for
units in another;
e. the
policy for allocating between constituent parts any assets of, or costs,
charges and expenses payable out of the property of the fund which are not
attributable to any particular constituent part;
f. how
the method of amortisation of any costs to be amortised under Article 8.12
may be affected by the introduction or termination of a constituent part;
g. in
respect of each constituent part, the currency in which the property of the
fund 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 fund.
2 In
the application of this Schedule to an umbrella fund, information required –
a. shall
be stated in relation to each constituent part of the recognized fund where the
information for any constituent part differs from that for any other
constituent part;
b. shall
be stated for the recognized fund as a whole, but only where the information is
meaningful in relation to the recognized fund as a whole; and
c shall
contain a statement of the extent, if any, to which the constituent parts of
the umbrella fund are not “ring fenced” and in the event of the
umbrella fund being unable to meet liabilities attributable to any particular
constituent part out of the assets attributable to such constituent part, the
excess liabilities may have to be met out of the assets attributable to the
other constituent parts.
24 Statements
to be included
The following statements shall be included –
a. “If
you are in any doubt about the contents of this prospectus, you should consult
your stockbroker, bank manager, solicitor, accountant or other financial
adviser.”;
b. as
appropriate: “It should be remembered that the price of
units/shares/participations and income from them can go down as well as
up.”;
c.
(i) in
the case of a unit trust –
“The manager has taken all reasonable care to ensure that the
facts stated herein are true and accurate in all material respects and that
there are no other material facts, the omission of which would make misleading
any statement herein whether of fact or opinion. The manager accepts
responsibility accordingly.”
(ii) in
the case of a company a statement to the following effect –
“The manager and the directors of the company have taken all
reasonable care to ensure that the facts stated herein are true and accurate in
all material facts, the omission of which would make misleading any statement
herein whether of fact or opinion. The manager and all the directors of the
company accept responsibility accordingly.”
25 Prominent
Statement
Prominent statement that this is the prospectus of the recognized
fund valid as at (and date it).
SCHEDULE 3
ANNUAL AND HALF YEARLY REPORTS
(Article 10.01.1)
PART I
Report of the manager of a unit trust or of
the directors of a company
The following matters shall be set out in every annual and
half-yearly report:
1 The
names and addresses of the following –
a. the
manager;
b. the
depositary;
c. any
investment adviser or investment manager;
d. the
registrar;
e. the
auditor; and
f. in
the case of a property fund, the standing independent valuer.
2 In
the case of a company the names of its directors.
3 The
objectives of the recognized fund.
4 The
manager’s (or in the case of a company the directors’) policy for
achieving the objectives of the recognized fund.
5 A
statement that the collective investment fund is a recognized fund within the
meaning of these Rules.
6 A
statement of which of the categories of recognized fund in Article 2.05.1
the collective investment fund belongs to and, in the case of an umbrella fund,
this statement and the name of the constituent part is to be made separately in
relation to each constituent part.
7 A
review of the recognized fund’s investment activities during the period
to which the report relates.
8 Where
the manager has elected to produce a report including short form accounts for
the recognized fund, a statement that a report containing the full accounts is
available on request.
9 Particulars
of any significant change in the prospectus made since the making of the last
report.
10 A
statement of any subdivision or consolidation of any class of units which has
been effected during the period to which the report relates.
11 Any
other significant information which would enable unitholders to make an
informed judgement on the development of the activities of the recognized fund
during this period and the results of those activities as at the end of that
period.
12 In
the case of a report relating to an umbrella fund:
a. information
required under the above paragraphs shall be given in respect of each
constituent part if it would vary from that given in respect of the umbrella
company as a whole and include such statements about the changes over the
period to which the report relates in the capital value of units in and income
from that constituent part as the manager or the directors as the case may be
consider appropriate to enable a unitholder to judge the relative merits of
investment in that constituent part as compared with investment in any other
constituent part; and
b. the
report shall contain statements to the effect that –
(i) there are and/or
(as the case may be), in the future there may be, other constituent parts of
that umbrella fund, and
(ii) if the assets
attributable to any constituent part were insufficient to meet the liabilities
attributable to it, whether the shortfall might have to be met out of the
assets attributable to one or more other constituent parts of the umbrella
fund.
13 In
the case of a report relating to a constituent part which is not contained in a
report relating to the umbrella fund of which the constituent part is part –
a. statements
equivalent to those required by paragraph 12 and, in the case of the statement
under 12b.(ii) making it clear whether the shortfall, or part of it, might have
to be met out of the property of the pool to which the report relates;
b. a
statement of whether the auditors report on the annual accounts of the
recognized fund for the period in question was unqualified or qualified and, if
it was qualified, contain a copy of that report in full together with any
further material needed to understand the qualification; and
c. where
appropriate a statement that a report relating to the umbrella fund as a whole
is available from the recognized fund on request.
PART II
Report of the manager or directors - short
form accounts
A report of a manager or the directors that contains short form
accounts for any annual accounting period shall –
a. state
whether the report of the auditor on the full accounts was unqualified or
qualified and, if it was qualified, set out the report in full; and
b. state
whether the report of the auditor on the full accounts contained a statement
under paragraphs 4 or 5 of Part IV of this Schedule and, if so, set out the
statement(s) in full.
PART III
Comparative table
The following matters shall be set out in the comparative table in
relation to each pool and included in the report of the manager or the
directors –
1 A
performance record over the last 5 calendar years, or if the pool 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 sale price and the lowest repurchase price of the units of each class
in issue during each of those years; and
b. if
applicable the net income per unit distributed or, in the case of accumulation
units, allocated during each of those years taking account of any sub-division
or consolidation of units that occurred during that period.
2 Over
the last three annual accounting periods (or, if the pool has not been in
existence during the whole of that period, over the whole period in which it
has been in existence) the total net asset value of the property of the pool at
the end of each of those years and the net asset value per unit of each class
and the number of units of each class in existence or deemed to be in existence
at the end of each of those years.
3 If,
in the period covered by the table –
a. the
pool has been the subject of any event, (such as an amalgamation or
reconstruction but excluding any creation or cancellation of units for cash)
having, to a significant extent, an effect on the size of the pool; or
b. there
have been changes in the investment objectives of the pool,
an indication, related in the body of the table to the relevant year
in the table, of the date of the event or change in investment objectives, and
a brief description of its nature.
PART IV
Report of the auditor
The report of the auditor to the unitholders for any annual
accounting period shall state –
1 whether
in the auditor’s opinion the accounts prepared for that period for the
recognized fund (or, in the case of a report prepared for the purposes of Article 10.1.5,
in respect of the accounts of a constituent part) have been properly prepared
in accordance with generally accepted accounting principles and in accordance
with these Rules and the constitutional documents; and
2 if
there is any material departure from the standard expected by paragraph 1, what
that departure is and the reasons for it; and
3 whether
in the auditor’s opinion the accounts give a true and fair view of the
net income and the net gains or losses on the property of the fund (or as the
case may be the property of the pool) for that period and the financial
position of the recognized fund or constituent part as at the end of that
period; and
4 if
the auditor is of the opinion that proper accounting records for the recognized
fund (or as the case may be the constituent part) have not been kept by the
manager or that the accounts are not in agreement with the manager’s
accounting records for the recognized fund, or constituent part that fact; and
5 if
the auditor has not been given all the information and explanations which, to
the best of his knowledge and belief, are necessary for the purposes of his
audit, that fact; and
6 if
the auditor is of the opinion that the information given in the report of the
manager or of the directors for that period is inconsistent with the accounts,
that fact.
PART V
Auditor’s statement relating to short
form accounts
In relation to short form accounts for any annual accounting period,
the auditor shall state whether, in the auditor’s opinion, the short form
accounts are consistent with the full accounts, and are prepared in accordance
with the generally accepted accounting principles and in accordance with these
Rules and the constitutional documents.
PART VI
Report of the depositary
The report of the depositary to the unitholders for any annual
accounting period shall state whether in the depositary’s opinion the
recognized fund has been managed in that period –
a. in
accordance with the limitations imposed on the investment and borrowing powers
of the manager (in the case of a company the manager and the directors) and
depositary by the constitutional documents, by the prospectus and these Rules;
and
b. otherwise
in accordance with the provisions of the constitutional documents and these
Rules,
and if he has not done so, the respects in which the manager or the
directors, has or have not done so and the steps which the depositary has taken
in respect thereof.
PART VII
Balance sheet
The balance sheet included in the accounts in relation to each pool
of a recognized fund shall set out a statement of assets and liabilities of
each pool as at the end of the period to which the report relates and show:
1 The
total value of the portfolio of investments.
2 Details
of current assets.
3 Details
of current liabilities.
4 Net
current assets.
5 Net
assets.
6 The
value of unitholders’ funds.
PART VIII
Statement of total return
The following matters shall be set out in the statement of total
return included in the accounts in relation to each pool of a recognized fund
for the period to which the report relates:
1 Net
gains/losses on the investments.
2 Other
gains/losses.
3 Net
income/expenses showing separately gross income and total expenses.
4 Total
return.
5 Distributions
paid or to be paid.
6 Net
increase/decrease in unitholder’s funds from investment activities.
7 The
above main components will require more detailed analysis in the notes to the
accounts as follows:
a. investment
gains/losses should be analysed to show realised gains/losses, the extent to
which such gains/losses had been shown in previous periods, together with the
change in realised gains/losses during the period;
b. other
gains/losses should be described;
c. details
of individual components of gross income and total expenses should be included
in relation to the statement of net income/expenses;
d. details
of the distributions paid or to be paid, including a reconciliation, if
applicable, of the amount of income available for allocation to unitholders
should be included.
PART IX
Portfolio statement
A portfolio statement should set out details of each investment
grouped into different categories of assets in which the property of the pool
is invested, held at the end of the period to which the report relates
according to a classification appropriate to the investment objectives and
showing:
a. the
percentage of the value of the property of the pool that each holding
represents. The percentage should also be shown for each category of holding
the property of the pool, together with the comparative percentages for each of
the categories;
b. holdings
which are listed on an eligible securities market and holdings which are not
listed on and eligible securities market;
c. the
aggregate nominal value of positions held on derivatives for each security of
index as an asset or a liability, together with the market value;
d. the
total value of the portfolio of investments;
e. net
current assets;
f. net
assets; and
g. a
full description of the significant changes in the portfolio; during that
period. In determining whether there have been any significant changes in the
portfolio, the manager shall have regard to any guidance note issued by the
Commission containing guidance as to what constitutes a significant change for
these purposes.
PART X
Statement of movements in unitholder’s
funds
The following matters should also be included in the accounts in
relation to each pool of a recognized fund for the period to which the report
relates:
1 The
net assets at the beginning of the period.
2 The
amount of cash or the value of assets received on the creation of new units.
3 The
amount of cash or the value of assets paid out on the cancellation of units.
4 The
net increase/decrease in the aggregate value of unitholder’s funds from
investment activities.
5 The
net asset value at the end of the period.
PART XI
Notes to the accounts
The following matters shall be set out in the notes to the accounts
in relation to each pool of the recognized fund:
1 Accounting
policies
a. the
policy regarding dividends and other income received and receivable;
b. the
basis of valuation of the property of the pool;
c. if
applicable, a statement of the basis for converting amounts in currencies other
than the base currency into amounts in the base currency;
d. an
explanation of any tax charge or refund appearing in the statement of total
return;
e. if
applicable, an explanation of the basis for valuing unlisted or suspended
securities; and
f. any
other items which are material to the accounts.
2 Capital
and reserves
a. In
the case of a company the following details should be shown in respect of
capital and reserves:
(i) movements on
share capital and share premium accounts during the period;
(ii) movements on
reserves during the period, including details of any transfers to or from
income, or to a share premium account; and
(iii) details of the rights
attaching to different classes of shares.
b. in
the case of a unit trust the number of units in existence or deemed to be in
existence at the end of the period to which the accounts relate.
3 Properties
The name and qualifications of the person valuing the properties (if
any) and the basis of valuation.
4 Income
equalisation
A definition and explanation of income equalisation if it is to
apply.
5 Net
current assets
An analysis of net current assets as at the end of the period to
which the accounts relate (unless they are shown in the balance sheet).
6 Back
to back loans
Details of any back to back loans.
7 Contingent
liabilities
A statement showing the contingent liabilities in respect of any
underwriting commitments, placing arrangements, nil paid rights, or partly paid
shares, and any other material items.
8 Forward
exchange transactions
A statement of open forward exchange positions and the unrealised
profit or loss thereon unless they are shown in the portfolio statement.
9 Stock
lending activities
Details of the aggregate value of securities on loan to third
parties, and the value of collateral held for the account of the pool in respect
of those securities.
10 Any
other information required to give a true and fair view.
PART XII
Short form accounts
The following matters shall be included in short form accounts in
relation to each pool for any accounting period:
1 The
statement of total return required by Part VIII of this Schedule.
2 A
statement of investments and other assets including:
a. a
summary of the different types of investments and the total value of
investments;
b. net
current assets; and
c. net
assets.
3 The
statement of movements in unitholder’s funds required by Part X of this
Schedule.
SCHEDULE 4
GLOSSARY
(Article 1.01.1)
In these Rules, unless the context otherwise requires, the following
expressions shall have the following meanings –
‘accounting reference date’ means the date stated in the
most recently published prospectus as the date on which the recognized
fund’s annual accounting period is to end in each year;
‘accumulation unit’ means a unit in a recognized fund
described as such;
‘affected person’: see Article 7.15.1;
‘amalgamation’: in relation to a recognized fund, see Article 11.05.1;
‘annual accounting period’: see Article 9.01;
‘annual income allocation date’: see Article 9.02.1;
‘applicable law’ means the law of Jersey including
without limitation Company Law;
‘appropriate valuer’: see Article 5.35.10;
‘approved derivative’: see Article 5.08.2;
‘approved immovable’: see Article 5.35;
‘approved mortgage’: see Article 5.39;
‘approved security’: see Article 5.06;
‘articles’ in relation to an open-ended investment
company means its articles of association as originally framed or as altered;
‘associate’, in relation to a person, means –
a. an
undertaking in the same group as that person; and
b. any
other person whose business or domestic relationship with the first person or
its associate might reasonably be expected to give rise to a community of
interest between them which may involve a conflict of interest in dealings with
third parties;
‘authorised company’ means a company incorporated by
virtue of The Open-Ended Investment Companies (Investment Companies with
Variable Capital) Regulations 1996 of the United Kingdom (S.I. 1996
No. 2827);
‘authorised person’: means an authorised person as
defined in the Financial Services Act;
‘authorised unit trust scheme’ means an authorised unit
trust scheme as defined in the Financial Services Act;
‘base currency’, subject to Article 12.17, means
the currency specified in the constitutional documents as the base currency of
the recognized fund;
‘bearer certificate’ means a certificate representing
units of any class in a unit trust –
a. which
contains a statement that the bearer of the certificate is entitled to the
number of units of that class represented by the certificate; or
b. delivery
of which is otherwise sufficient to transfer title to the units concerned;
‘Bermuda United Kingdom class scheme’ means any company
certified under the Companies Act 1981 of Bermuda to be a United Kingdom
class scheme;
‘to borrow’ includes to obtain by synthetic borrowing;
‘business day’, in relation to anything done or to be
done in any part of Jersey, means any day other than a Saturday, a Sunday or a
bank holiday and, in relation to anything done or to be done by reference to a
market outside the Jersey, means any day on which that market is normally open
for business;
‘cancellation’ means the cancellation of units by the
trustee or the redemption of shares by the company and, in both cases, includes
the manager acting as agent for the recognized fund in connection with the
cancellation of units and “cancel” in relation to such units shall
be construed accordingly;
‘cancellation price’ means the price for each unit
payable by the trustee or the company on the cancellation of units;
‘capital account’ means an account relating to the capital
property of the pool;
‘capital property’ means all the property for the time
being held on the trusts of the trust instrument or all the property for the
time being of a company attributable to units in the company other than income
property and any amount for the time being standing to the credit of the
distribution account;
‘cash’ includes foreign currency;
‘category’ has, in relation to recognized funds and any
constituent parts thereof, the meaning in Article 2.05 and in relation to
other collective investment funds and any constituent parts, or their
equivalent, thereof has mutatis mutandis an equivalent meaning;
‘Clearstream’ means Clearstream Banking Luxembourg or
its successor which clears, or handles the physical exchange and lending of,
securities and stores securities;
‘close out’, in relation to a transaction entered into
for the pool, means the entry into a further transaction under which the
obligation to deliver or receive which arises or may, at the option of the
other party to the transaction, arise under the original transaction is offset
by an equivalent and opposite obligation or right to receive or deliver;
‘collateral’ means any form of security, guarantee or
indemnity provided by way of security for the discharge of any liability arising
from a transaction;
‘collective investment fund’ has the same meaning as in Article 2
of the Collective Investment Funds (Jersey)
Law 1988;[17]
‘Commission’ means the Jersey Financial Services
Commission;
‘Committee’ means the Finance and Economics Committee of
the States of Jersey;
‘company’ has the meaning given in Part 1 of these
Rules;
‘Company Law’ means the Companies (Jersey) Law 1991;[18]
‘constituent part’, in relation to an umbrella fund,
means one of the separate parts into which the property of the umbrella fund is
pooled separately;
‘constitutional documents’ has the meaning given in Part
1 of these Rules;
‘contract for differences’ means a contract rights under
which constitute an investment falling within paragraph 9 of Part I of Schedule
1 to the Financial Services Act (Contracts for differences etc.)
‘controller’, in relation to a permit holder, means a
person who, either alone or with any associate or associates, is entitled to
exercise, or control the exercise of, 15 per cent or more of the voting power
at any general meeting of the permit holder or of another body corporate of
which it is a subsidiary, and “control” shall be construed
accordingly and in relation to a director means a person in accordance with
whose advice the director would be accustomed to act (but disregarding advice
given in a professional capacity) and for the purposes of this definition
“associate” in relation to any person, means that person’s
wife, husband, or minor child or step-child, any body corporate of which that
person is a director, any person who is an employee or partner of that person
and if that person is a body corporate, any subsidiary of that body corporate
and any employee of any such subsidiary;
‘covered’: in relation to a derivatives or forward transaction,
see Article 5.25 or 5.55;
‘creation’ means the creation of units by the trustee or
the issue of shares by the company and, in both cases, includes the manager
acting as agent for the recognized fund in connection with the creation of
units and “create” in relation to such units shall be construed
accordingly;
‘creation price’ means the price for each unit payable
to the trustee or the company on the creation of units;
‘CREST’ means the system for evidencing and transferring
title to securities without a written instrument operated by CRESTCo Limited, a
recognized clearing house and the operator of a relevant system;
‘current preliminary charge’: see Article 8.02 and
Schedule 2, paragraph 13;
‘custodian’ has the meaning given in Part 1;
‘class’, in relation to units in a recognized fund,
means each of the classes of unit described in Article 2.04;
‘dealing day’ means the period in each business day (or
in each other day when the manager is open for business) during which the
manager keeps his premises or any of them open to the public or otherwise
publicly available for business of any kind;
‘dealing period’ means the period between one valuation
point and the next;
‘dedicated’, in the context of a recognized fund, means
that the pool has as its sole objective the enablement of unitholders to
participate in or receive –
a. profits
or income arising from the acquisition, holding, management or disposal of
investments or assets of the relevant description; or
b. sums
paid out of profits or income in a; or
c. other
benefits where expressly permitted under these Rules;
‘delivery by value’ or ‘DBV’ means a
transaction type described as ‘delivery by value’ used to deliver
and receive securities within CREST;
‘deposit’ has the same meaning as in Article 2 of the
Banking Business (Jersey) Law 1991;[19]
‘depositary’ has the meaning given in Part 1;
‘depositary agreement’ has the meaning given in Part 1;
‘derivative’: see Article 5.08.1;
‘derivatives transaction’: means a transaction in a
derivative;
‘dilution’ means the amount of dealing costs incurred,
or expected to be incurred, by the pool to the extent that they may reasonably
be expected to result, or have resulted, from the acquisition or disposal of
investments by the recognized fund as a consequence (whether or not immediate)
of the increase or decrease in the cash resources of the pool resulting from
the creation or cancellation of units over a period. For the purposes of this
definition, dealing costs include the costs of dealing in an investment,
professional fees and other expenses incurred, or expected to be incurred, in
relation to the acquisition or disposal of approved immovables and, where there
is a spread between buying and selling prices of the investment, the indirect
cost resulting from differences between such prices;
‘dilution levy’ means a charge of such amount or at such
a rate as may be determined by the manager to be made, in the case of a pool
which has adopted a single pricing basis, for the purpose of reducing dilution;
‘director’ except where the context otherwise requires,
means a director of the company;
‘distribution account’: see Article 9.03.1;
‘documents evidencing title’ includes any means of
evidencing title whether in documentary form or otherwise;
‘effective date’: see Article 16.01;
‘eligible’, in the context of a securities market, means
any market which the manager is, or directors are, for the time being, entitled
to regard as one through which more than 10% of the property of the pool may be
invested for the purposes of Article 5.09, and, in the context of a
derivatives market, means any market or exchange which the manager is, or
directors are, for the time being, entitled to regard as one through which
transactions for the account of the recognized fund may be effected for the
purposes of that Article;
‘eligible institution’ means any of the following –
a. a
person registered under the Banking
Business (Jersey) Law 1991;[20]
b. Bank
of England;
c. The
Central Bank of another member state’;
d. an
authorised institution within the meaning of the Banking Act 1987 (c.22)
of the United Kingdom;
e. a
bank which is a subsidiary or holding company of an eligible institution within
sub-paragraph d.;
f. a
building society within the meaning of the Building Societies Act 1986
(c.53) of the United Kingdom which has adopted the power to provide money
transaction services and has not assumed any restriction on the extent of that
power;
g. a
credit institution as defined in Article 1 of the First `Banking
Coordination Directive (77/780/EEC), other than an institution referred to in Article 2(2)
of that Directive, or an investment firm as defined in Article 1(2) of the
Investment Services Directive (93/22 EEC), if the credit institution is
established or the investment firm is authorised as the case may be, in the
United Kingdom or in another member state;
h. a
registered person under the Protection of Depositors (Bailiwick of Guernsey)
Ordinance 1971;
‘eligible investment trust’: see Article 5.46;
‘Euroclear’ means the Euroclear Clearance System
Société Coopérative or its successor which controls the
system that clears, or handles the physical exchange and lending of, securities
and stores securities;
‘extraordinary resolution’ see Article 11.17;
‘feeder fund’: see Article 2.05.8;
‘Financial Services Act’ means the Financial Services
Act 1986 (c.60) of the United Kingdom;
‘first commencement date’: see Article 16.01;
‘floating rate note’ means an investment within
paragraph 2 of Schedule 1 to the Financial Services Act which carries interest
at a rate which is re-fixed periodically by reference to an interest rate
index;
‘forward price’ means a price calculated by reference to
the valuation point next following the manager’s agreement to sell or, as
the case may be, to repurchase the units in question;
‘FSA’ means the Financial Services Authority of the
United Kingdom;
‘fund of funds’: see Article 2.05.9;
‘future’ means a contract with rights which constitute
an investment falling within paragraph 8 of Part I of Schedule 1 of the
Financial Services Act;
‘futures and options fund’: see Article 2.05.4;
‘geared futures and options fund’: see Article 2.05.5;
‘Government and other public securities’: see Article 5.13.5;
‘group’: see Article 1.02;
‘guidance’ means any guidance issued by the Commission
in relation to any matter contemplated by or relating to these Rules;
‘Guernsey class ‘A’ scheme’ means a scheme
which is declared by the Guernsey Financial Services Commission to be a class A
scheme pursuant to the Protection of Investors (Bailiwick of Guernsey) Law 1987
and the subordinate legislation and rules made thereunder;
‘half-yearly accounting period’: see Article 9.01.6;
‘historic price’ means a price calculated by reference
to the valuation point immediately preceding the manager’s agreement to
sell, or, as the case may be, to repurchase the units in question;
‘holding company’: see Article 1.02;
‘hypothec’ means a charge over property in accordance
with the law of Jersey or elsewhere;
‘income account’ means an account relating to the income
property of the recognized fund;
‘income equalisation’: see Article 9.07;
‘income property’ means all sums, including income
equalisation, deemed by the manager, or in the case of a company the directors
or the manager, after consultation with the auditor, to be in the nature of
income received or receivable by the trustee, or in the case of a company the
company, in respect of the property of the fund but excluding any amount for
the time being standing to the credit of the distribution account;
‘income unit’: see Article 2.04;
‘initial margin’ means cash or other property deposited
in accordance with the rules of an eligible derivatives market on entering into
a margined contract;
‘initial offer’ means an offer for sale of units in a
pool (otherwise than on a unitisation) where all or part of the consideration
paid to the depositary for the units is to be used to acquire the initial
capital property attributable to the pool;
‘initial outlay’: see Article 5.30.2;
‘initial price of units’: see Article 4.03;
‘instrument constituting the collective investment
fund’, in the case of a collective investment fund other than a unit
trust, includes any instrument to which the open-ended investment company or
its manager is a party setting out any arrangements with any other person
relating to any aspect of the operation or management of the collective
investment fund, and, in the case of a unit trust means the trust instrument;
‘interim accounting period’: see Article 9.06;
‘interim income allocation date’: see Article 9.06;
‘investment’ means any right asset or interest falling
within any paragraph of Part I of Schedule 1 to the Financial Services Act;
‘investment adviser’ or ‘investment
manager’, in relation to a manager, means a person who is engaged by the
manager under a commercial arrangement not being a mere contract of employment –
a. to
supply the manager with advice in relation to the pool as to the merits of
investment opportunities or information relevant to the making of judgements
about the merits of investment opportunities; or
b. to
exercise as a delegate of the manager any function concerning the management of
the property of the pool;
‘investment manager’: see investment adviser;
‘Jersey’ means the Bailiwick;
‘Law’ means the Collective
Investment Funds (Jersey) Law 1988;[21]
‘management agreement’, has the meaning given in Part 1;
‘manager’, has the meaning given in Part 1;
‘margin’ means cash or other property paid, transferred
or deposited under the terms of a margined contract, and for these purposes
cash or property shall be treated as having been paid, transferred or deposited
if it must be paid, transferred or deposited in order to comply with a
requirement imposed by the market on which the contract is made or traded;
‘margined contract’ means any contract for a derivative;
‘member state’ means, at any time, in addition to a
State which is a member of the European Union, any other State which is within
the European Economic Area;
‘money market fund’: see Article 2.05.3;
‘money market fund assets’: see Article 5.18.2;
‘mortgage’ includes a charge, heritable security or
other similar security created on or over an immovable;
‘near cash’ means money, deposits or investments which
fall within any of the following –
a. money
deposited with an eligible institution which is in –
(i) a current
account; or
(ii) a deposit
account, if the money can be withdrawn immediately and without payment of a
penalty exceeding seven days’ interest calculated at ordinary commercial
rates;
b. certificates
of deposit issued by an eligible institution if immediately redeemable at the
option of the holder;
c. Government
and other public securities, if redeemable at the option of the holder or bound
to be redeemed within two years;
d. a
bill of exchange issued by any Government or body within Article 5.13.5
(issuers of Government and other public securities), and
e. deposits
with a local authority of a kind which fall within paragraph 9 of Part II of
the First Schedule to the Trustee Investments Act 1961 of the United
Kingdom, and equivalent deposits with any local authority in another member
state, if the money can be withdrawn immediately and without payment of a
penalty as described at a. above;
‘net asset value’: see Article 5.03.1;
‘notified point’: see Article 4.06.2;
‘OEIC Regulations’ means the Financial Services
(Open-Ended Investment Companies) Regulations 1997;
‘off-exchange’ means otherwise than on or under the
rules of an eligible derivatives market;
‘off exchange option’ means an option (or a contract for
differences in the nature of an option) which falls within Article 5.23.5
to 8;
‘ordinary resolution’ see Article 11.17;
‘open-ended investment company’ has the meaning given in
Part 1 of these Rules;
‘option’ means a right exercisable within a specified
period of time, at the option of the holder of the right, to dispose of or
acquire any property at a specified price and includes where appropriate a
contract for differences resembling an option;
‘period of the initial offer’: see Article 4.01.4;
‘periodic valuation’: see Article 4.28.1;
‘permitted immovable’: see Article 5.35;
‘pool’ has the meaning given in Part 1;
‘premium’, in relation to an option, means the total
amount which the purchaser of the option is, or may be, required to pay in
consideration for the right to exercise the option;
‘the previous Order’: see Article 16.01.1;
‘principal or notional principal’, in relation to any
derivatives transaction or forward transaction, is to be interpreted as follows –
a. ‘principal’
means (except where b. applies) the amount of property or the value of the
property which must be delivered in order to satisfy settlement of a derivative
or forward contract which is not a contract for differences;
b. ‘principal’,
in the case of an option on a future, means the amount of property or the value
of the property which would be required under a. in relation to the future, and
c. ‘notional
principal’ means –
(i) in the case of a
contract for differences which is an index derivative, the current mark to
market valuation of a contract for differences resembling a futures contract or
the exercise value of a contract for differences resembling an option contract,
as the case may be, and
(ii) in the case of
any other contract for differences, the notional lot size of a contract, so that,
for example, the notional principal in the case of a LIFFE short sterling
contract is £500,000;
‘property fund’: see Article 2.05.6;
‘property of the fund’, in relation to a recognized
fund, means the capital property and the income property and all such property
must be attributable to one or more pools;
‘property of the pool’ means that part of the property
of the fund that is attributable to a pool;
‘property related assets’: see Article 5.36;
‘prospectus’: see Article 3.01;
‘purchase’, in relation to an option, means acquiring
the right to exercise the option;
‘recently issued’: see, in relation to transferable
securities, Article 5.06.2;
‘recognized fund’ has the meaning given in Part 1;
‘recognized fund certificate’ means a certificate issued
by the Commission under Article 14.02;
‘recognised scheme’ means a recognised scheme as defined
in the Financial Services Act;
‘recognised self-regulating organisation’ means a
recognised self-regulating organisation as defined in the Financial Services
Act;
‘reconstruction’: see Article 11.06;
‘repurchase price’ means the manager’s price for
repurchase under Articles 4.19 or 4.20;
‘register’: see Article 6.01;
‘registrar’ means the person who maintains the register;
‘regulated collective investment fund’ means a
recognized fund, or an authorised unit trust scheme, or an authorised company,
or a recognised scheme, or a Guernsey class ‘A’ scheme, or a
Bermuda United Kingdom class scheme, or an Isle of Man authorised scheme, or an
undertaking which meets the requirements of Directive 85/611 of the European
Union (UCITS);
‘repurchase’, in relation to units in a recognized fund,
means the purchase of units from a unitholder by the manager as a principal;
‘roll-up unit’ means a unit in a recognized fund
described as such;
‘sale’ in relation to units in a recognized fund, means
the sale of units by the manager as a principal and “sell” and
“sale price” shall be construed accordingly;
‘securities company’ means an authorised company which
is a securities company as defined in Article 2.03.2 of the OEIC
Regulations;
‘securities fund’: see Article 2.05.2;
‘special resolution’ means a resolution which is a
special resolution as defined in the Company Law;
‘standing independent valuer’: see Article 12.06;
‘sub fund’ means a part of the property of a collective
investment fund which is pooled separately;
‘subsidiary’: see Article 1.02;
‘synthetic borrowing’ means any arrangement of the kind
described in Article 5.64.5;
‘synthetic cash’: see Article 5.25.5.b;
‘synthetic future’: see Article 5.23.9;
‘transferable security’: see Article 5.05;
‘trust instrument’ has the meaning given in Article 1.01;
‘trustee’, has the meaning given in Article 1.01;
‘types of collective investment fund’ means categories
of regulated collective investment funds or constituent parts, or their
equivalent, thereof;
‘UCITS Directive’ means the Council Directive of 20
December 1985 on the co-ordination of the laws, regulations and
administrative provisions relating to undertakings for collective investment in
transferable securities (No. 85/611/EEC);
‘umbrella fund’ means a recognized fund (or where the
context requires other collective investment fund) where the contributions of
the unitholders and the profits and income out of which payments are to be made
to them are not only pooled but that the constitutional documents provide that
such pooling is to be accomplished separately in relation to separate parts of
the property in question and that unitholders are entitled to exchange rights
in one part for rights in another;
‘unit trust’ has the meaning given in Article 1.01
of these Rules;
‘units’, shall have the meaning given in Article 1
of the Law;
‘unitholder’, means
a. in
relation to a unit in a recognized fund, the person who is entered in the register
as the holder of that unit or, where the context requires, is the holder of a
unit in another collective investment fund; or
b. in
relation to a unit in a recognized unit trust or, where the context otherwise
requires, in another collective investment fund, where a bearer certificate
represents that unit, the bearer of that bearer certificate;
‘unitisation’: see Article 4.05.1;
‘units in existence’ means all units which have been
created, but including any unit which the trustee or company is obliged to
create, and excluding any unit which the trustee or company is obliged to
cancel;
‘valuation point’: see Article 4.28;
‘warrant’: see Article 5.07;
‘warrant fund’: see Article 2.05.7;
‘write’, in relation to an option, means the granting of
the option.