Office of Public Sector Information
(1) In this Part “collective investment scheme” means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
(2) The arrangements must be such that the persons who are to participate (“participants”) do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions.
(3) The arrangements must also have either or both of the following characteristics—
(a) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled;
(b) the property is managed as a whole by or on behalf of the operator of the scheme.
(4) If arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts of the property, the arrangements are not to be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another.
(5) The Treasury may by order provide that arrangements do not amount to a collective investment scheme—
(a) in specified circumstances; or
(b) if the arrangements fall within a specified category of arrangement.
(1) In this Part “an open-ended investment company” means a collective investment scheme which satisfies both the property condition and the investment condition.
(2) The property condition is that the property belongs beneficially to, and is managed by or on behalf of, a body corporate (“BC”) having as its purpose the investment of its funds with the aim of—
(a) spreading investment risk; and
(b) giving its members the benefit of the results of the management of those funds by or on behalf of that body.
(3) The investment condition is that, in relation to BC, a reasonable investor would, if he were to participate in the scheme—
(a) expect that he would be able to realize, within a period appearing to him to be reasonable, his investment in the scheme (represented, at any given time, by the value of shares in, or securities of, BC held by him as a participant in the scheme); and
(b) be satisfied that his investment would be realized on a basis calculated wholly or mainly by reference to the value of property in respect of which the scheme makes arrangements.
(4) In determining whether the investment condition is satisfied, no account is to be taken of any actual or potential redemption or repurchase of shares or securities under—
(a) Chapter VII of Part V of the [1985 c. 6.] Companies Act 1985;
(b) Chapter VII of Part VI of the [S.I. 1986/1032 (N.I. 6.)] Companies (Northern Ireland) Order 1986;
(c) corresponding provisions in force in another EEA State; or
(d) provisions in force in a country or territory other than an EEA state which the Treasury have, by order, designated as corresponding provisions.
(5) The Treasury may by order amend the definition of “an open-ended investment company” for the purposes of this Part.
(1) In this Part “unit trust scheme” means a collective investment scheme under which the property is held on trust for the participants.
(2) In this Part—
“trustee”, in relation to a unit trust scheme, means the person holding the property in question on trust for the participants;
“depositary”, in relation to—
a collective investment scheme which is constituted by a body incorporated by virtue of regulations under section 262, or
any other collective investment scheme which is not a unit trust scheme,
means any person to whom the property subject to the scheme is entrusted for safekeeping;
“the operator”, in relation to a unit trust scheme with a separate trustee, means the manager and in relation to an open-ended investment company, means that company;
“units” means the rights or interests (however described) of the participants in a collective investment scheme.
(3) In this Part—
“an authorised unit trust scheme” means a unit trust scheme which is authorised for the purposes of this Act by an authorisation order in force under section 243;
“an authorised open-ended investment company” means a body incorporated by virtue of regulations under section 262 in respect of which an authorisation order is in force under any provision made in such regulations by virtue of subsection (2)(l) of that section;
“a recognised scheme” means a scheme recognised under section 264, 270 or 272.
(1) An authorised person must not communicate an invitation or inducement to participate in a collective investment scheme.
(2) But that is subject to the following provisions of this section and to section 239.
(3) Subsection (1) applies in the case of a communication originating outside the United Kingdom only if the communication is capable of having an effect in the United Kingdom.
(4) Subsection (1) does not apply in relation to—
(a) an authorised unit trust scheme;
(b) a scheme constituted by an authorised open-ended investment company; or
(c) a recognised scheme.
(5) Subsection (1) does not apply to anything done in accordance with rules made by the Authority for the purpose of exempting from that subsection the promotion otherwise than to the general public of schemes of specified descriptions.
(6) The Treasury may by order specify circumstances in which subsection (1) does not apply.
(7) An order under subsection (6) may, in particular, provide that subsection (1) does not apply in relation to communications—
(a) of a specified description;
(b) originating in a specified country or territory outside the United Kingdom;
(c) originating in a country or territory which falls within a specified description of country or territory outside the United Kingdom; or
(d) originating outside the United Kingdom.
(8) The Treasury may by order repeal subsection (3).
(9) “Communicate” includes causing a communication to be made.
(10) “Promotion otherwise than to the general public” includes promotion in a way designed to reduce, so far as possible, the risk of participation by persons for whom participation would be unsuitable.
(11) “Participate”, in relation to a collective investment scheme, means become a participant (within the meaning given by section 235(2)) in the scheme.
(1) The Treasury may by regulations make provision for exempting single property schemes from section 238(1).
(2) For the purposes of subsection (1) a single property scheme is a scheme which has the characteristics mentioned in subsection (3) and satisfies such other requirements as are prescribed by the regulations conferring the exemption.
(3) The characteristics are—
(a) that the property subject to the scheme (apart from cash or other assets held for management purposes) consists of—
(i) a single building (or a single building with ancillary buildings) managed by or on behalf of the operator of the scheme, or
(ii) a group of adjacent or contiguous buildings managed by him or on his behalf as a single enterprise,
with or without ancillary land and with or without furniture, fittings or other contents of the building or buildings in question; and
(b) that the units of the participants in the scheme are either dealt in on a recognised investment exchange or offered on terms such that any agreement for their acquisition is conditional on their admission to dealings on such an exchange.
(4) If regulations are made under subsection (1), the Authority may make rules imposing duties or liabilities on the operator and (if any) the trustee or depositary of a scheme exempted by the regulations.
(5) The rules may include, to such extent as the Authority thinks appropriate, provision for purposes corresponding to those for which provision can be made under section 248 in relation to authorised unit trust schemes.
(1) An authorised person may not approve for the purposes of section 21 the content of a communication relating to a collective investment scheme if he would be prohibited by section 238(1) from effecting the communication himself or from causing it to be communicated.
(2) For the purposes of determining in any case whether there has been a contravention of section 21(1), an approval given in contravention of subsection (1) is to be regarded as not having been given.
If an authorised person contravenes a requirement imposed on him by section 238 or 240, section 150 applies to the contravention as it applies to a contravention mentioned in that section.
(1) Any application for an order declaring a unit trust scheme to be an authorised unit trust scheme must be made to the Authority by the manager and trustee, or proposed manager and trustee, of the scheme.
(2) The manager and trustee (or proposed manager and trustee) must be different persons.
(3) The application—
(a) must be made in such manner as the Authority may direct; and
(b) must contain or be accompanied by such information as the Authority may reasonably require for the purpose of determining the application.
(4) At any time after receiving an application and before determining it, the Authority may require the applicants to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(5) Different directions may be given, and different requirements imposed, in relation to different applications.
(6) The Authority may require applicants to present information which they are required to give under this section in such form, or to verify it in such a way, as the Authority may direct.
(1) If, on an application under section 242 in respect of a unit trust scheme, the Authority—
(a) is satisfied that the scheme complies with the requirements set out in this section,
(b) is satisfied that the scheme complies with the requirements of the trust scheme rules, and
(c) has been provided with a copy of the trust deed and a certificate signed by a solicitor to the effect that it complies with such of the requirements of this section or those rules as relate to its contents,
the Authority may make an order declaring the scheme to be an authorised unit trust scheme.
(2) If the Authority makes an order under subsection (1), it must give written notice of the order to the applicant.
(3) In this Chapter “authorisation order” means an order under subsection (1).
(4) The manager and the trustee must be persons who are independent of each other.
(5) The manager and the trustee must each—
(a) be a body corporate incorporated in the United Kingdom or another EEA State, and
(b) have a place of business in the United Kingdom,
and the affairs of each must be administered in the country in which it is incorporated.
(6) If the manager is incorporated in another EEA State, the scheme must not be one which satisfies the requirements prescribed for the purposes of section 264.
(7) The manager and the trustee must each be an authorised person and the manager must have permission to act as manager and the trustee must have permission to act as trustee.
(8) The name of the scheme must not be undesirable or misleading.
(9) The purposes of the scheme must be reasonably capable of being successfully carried into effect.
(10) The participants must be entitled to have their units redeemed in accordance with the scheme at a price—
(a) related to the net value of the property to which the units relate; and
(b) determined in accordance with the scheme.
(11) But a scheme is to be treated as complying with subsection (10) if it requires the manager to ensure that a participant is able to sell his units on an investment exchange at a price not significantly different from that mentioned in that subsection.
(1) An application under section 242 must be determined by the Authority before the end of the period of six months beginning with the date on which it receives the completed application.
(2) The Authority may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within twelve months beginning with the date on which it first receives the application.
(3) The applicant may withdraw his application, by giving the Authority written notice, at any time before the Authority determines it.
(1) If the Authority proposes to refuse an application made under section 242 it must give each of the applicants a warning notice.
(2) If the Authority decides to refuse the application—
(a) it must give each of the applicants a decision notice; and
(b) either applicant may refer the matter to the Tribunal.
(1) If the manager or trustee of a unit trust scheme which complies with the conditions necessary for it to enjoy the rights conferred by any relevant Community instrument so requests, the Authority may issue a certificate to the effect that the scheme complies with those conditions.
(2) Such a certificate may be issued on the making of an authorisation order in respect of the scheme or at any subsequent time.
(1) The Authority may make rules (“trust scheme rules”) as to—
(a) the constitution, management and operation of authorised unit trust schemes;
(b) the powers, duties, rights and liabilities of the manager and trustee of any such scheme;
(c) the rights and duties of the participants in any such scheme; and
(d) the winding up of any such scheme.
(2) Trust scheme rules may, in particular, make provision—
(a) as to the issue and redemption of the units under the scheme;
(b) as to the expenses of the scheme and the means of meeting them;
(c) for the appointment, removal, powers and duties of an auditor for the scheme;
(d) for restricting or regulating the investment and borrowing powers exercisable in relation to the scheme;
(e) requiring the keeping of records with respect to the transactions and financial position of the scheme and for the inspection of those records;
(f) requiring the preparation of periodical reports with respect to the scheme and the provision of those reports to the participants and to the Authority; and
(g) with respect to the amendment of the scheme.
(3) Trust scheme rules may make provision as to the contents of the trust deed, including provision requiring any of the matters mentioned in subsection (2) to be dealt with in the deed.
(4) But trust scheme rules are binding on the manager, trustee and participants independently of the contents of the trust deed and, in the case of the participants, have effect as if contained in it.
(5) If—
(a) a modification is made of the statutory provisions in force in Great Britain or Northern Ireland relating to companies,
(b) the modification relates to the rights and duties of persons who hold the beneficial title to any shares in a company without also holding the legal title, and
(c) it appears to the Treasury that, for the purpose of assimilating the law relating to authorised unit trust schemes to the law relating to companies as so modified, it is expedient to modify the rule-making powers conferred on the Authority by this section,
the Treasury may by order make such modifications of those powers as they consider appropriate.
(1) The Authority may make rules (“scheme particulars rules”) requiring the manager of an authorised unit trust scheme—
(a) to submit scheme particulars to the Authority; and
(b) to publish scheme particulars or make them available to the public on request.
(2) “Scheme particulars” means particulars in such form, containing such information about the scheme and complying with such requirements, as are specified in scheme particulars rules.
(3) Scheme particulars rules may require the manager of an authorised unit trust scheme to submit, and to publish or make available, revised or further scheme particulars if there is a significant change affecting any matter—
(a) which is contained in scheme particulars previously published or made available; and
(b) whose inclusion in those particulars was required by the rules.
(4) Scheme particulars rules may require the manager of an authorised unit trust scheme to submit, and to publish or make available, revised or further scheme particulars if—
(a) a significant new matter arises; and
(b) the inclusion of information in respect of that matter would have been required in previous particulars if it had arisen when those particulars were prepared.
(5) Scheme particulars rules may provide for the payment, by the person or persons who in accordance with the rules are treated as responsible for any scheme particulars, of compensation to any qualifying person who has suffered loss as a result of—
(a) any untrue or misleading statement in the particulars; or
(b) the omission from them of any matter required by the rules to be included.
(6) “Qualifying person” means a person who—
(a) has become or agreed to become a participant in the scheme; or
(b) although not being a participant, has a beneficial interest in units in the scheme.
(7) Scheme particulars rules do not affect any liability which any person may incur apart from the rules.
(1) If it appears to the Authority that an auditor has failed to comply with a duty imposed on him by trust scheme rules, it may disqualify him from being the auditor for any authorised unit trust scheme or authorised open-ended investment company.
(2) Subsections (2) to (5) of section 345 have effect in relation to disqualification under subsection (1) as they have effect in relation to disqualification under subsection (1) of that section.
(1) In this section “rules” means—
(a) trust scheme rules; or
(b) scheme particulars rules.
(2) The Authority may, on the application or with the consent of any person to whom any rules apply, direct that all or any of the rules—
(a) are not to apply to him as respects a particular scheme; or
(b) are to apply to him, as respects a particular scheme, with such modifications as may be specified in the direction.
(3) The Authority may, on the application or with the consent of the manager and trustee of a particular scheme acting jointly, direct that all or any of the rules—
(a) are not to apply to the scheme; or
(b) are to apply to the scheme with such modifications as may be specified in the direction.
(4) Subsections (3) to (9) and (11) of section 148 have effect in relation to a direction under subsection (2) as they have effect in relation to a direction under section 148(2) but with the following modifications—
(a) subsection (4)(a) is to be read as if the words “by the authorised person” were omitted;
(b) any reference to the authorised person (except in subsection (4)(a)) is to be read as a reference to the person mentioned in subsection (2); and
(c) subsection (7)(b) is to be read, in relation to a participant of the scheme, as if the word “commercial” were omitted.
(5) Subsections (3) to (9) and (11) of section 148 have effect in relation to a direction under subsection (3) as they have effect in relation to a direction under section 148(2) but with the following modifications—
(a) subsection (4)(a) is to be read as if the words “by the authorised person” were omitted;
(b) subsections (7)(b) and (11) are to be read as if references to the authorised person were references to each of the manager and the trustee of the scheme;
(c) subsection (7)(b) is to be read, in relation to a participant of the scheme, as if the word “commercial” were omitted;
(d) subsection (8) is to be read as if the reference to the authorised person concerned were a reference to the scheme concerned and to its manager and trustee; and
(e) subsection (9) is to be read as if the reference to the authorised person were a reference to the manager and trustee of the scheme acting jointly.
(1) The manager of an authorised unit trust scheme must give written notice to the Authority of any proposal to alter the scheme or to replace its trustee.
(2) Any notice given in respect of a proposal to alter the scheme involving a change in the trust deed must be accompanied by a certificate signed by a solicitor to the effect that the change will not affect the compliance of the deed with the trust scheme rules.
(3) The trustee of an authorised unit trust scheme must give written notice to the Authority of any proposal to replace the manager of the scheme.
(4) Effect is not to be given to any proposal of which notice has been given under subsection (1) or (3) unless—
(a) the Authority, by written notice, has given its approval to the proposal; or
(b) one month, beginning with the date on which the notice was given, has expired without the manager or trustee having received from the Authority a warning notice under section 252 in respect of the proposal.
(5) The Authority must not approve a proposal to replace the manager or the trustee of an authorised unit trust scheme unless it is satisfied that, if the proposed replacement is made, the scheme will continue to comply with the requirements of section 243(4) to (7).
(1) If the Authority proposes to refuse approval of a proposal to replace the trustee or manager of an authorised unit trust scheme, it must give a warning notice to the person by whom notice of the proposal was given under section 251(1) or (3).
(2) If the Authority proposes to refuse approval of a proposal to alter an authorised unit trust scheme it must give separate warning notices to the manager and the trustee of the scheme.
(3) To be valid the warning notice must be received by that person before the end of one month beginning with the date on which notice of the proposal was given.
(4) If, having given a warning notice to a person, the Authority decides to refuse approval—
(a) it must give him a decision notice; and
(b) he may refer the matter to the Tribunal.
Any provision of the trust deed of an authorised unit trust scheme is void in so far as it would have the effect of exempting the manager or trustee from liability for any failure to exercise due care and diligence in the discharge of his functions in respect of the scheme.
(1) An authorisation order may be revoked by an order made by the Authority if it appears to the Authority that—
(a) one or more of the requirements for the making of the order are no longer satisfied;
(b) the manager or trustee of the scheme concerned has contravened a requirement imposed on him by or under this Act;
(c) the manager or trustee of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the Authority information which is false or misleading in a material particular;
(d) no regulated activity is being carried on in relation to the scheme and the period of that inactivity began at least twelve months earlier; or
(e) none of paragraphs (a) to (d) applies, but it is desirable to revoke the authorisation order in order to protect the interests of participants or potential participants in the scheme.
(2) For the purposes of subsection (1)(e), the Authority may take into account any matter relating to—
(a) the scheme;
(b) the manager or trustee;
(c) any person employed by or associated with the manager or trustee in connection with the scheme;
(d) any director of the manager or trustee;
(e) any person exercising influence over the manager or trustee;
(f) any body corporate in the same group as the manager or trustee;
(g) any director of any such body corporate;
(h) any person exercising influence over any such body corporate.
(1) If the Authority proposes to make an order under section 254 revoking an authorisation order (“a revoking order”), it must give separate warning notices to the manager and the trustee of the scheme.
(2) If the Authority decides to make a revoking order, it must without delay give each of them a decision notice and either of them may refer the matter to the Tribunal.
(1) An authorisation order may be revoked by an order made by the Authority at the request of the manager or trustee of the scheme concerned.
(2) If the Authority makes an order under subsection (1), it must give written notice of the order to the manager and trustee of the scheme concerned.
(3) The Authority may refuse a request to make an order under this section if it considers that—
(a) the public interest requires that any matter concerning the scheme should be investigated before a decision is taken as to whether the authorisation order should be revoked; or
(b) revocation would not be in the interests of the participants or would be incompatible with a Community obligation.
(4) If the Authority proposes to refuse a request under this section, it must give separate warning notices to the manager and the trustee of the scheme.
(5) If the Authority decides to refuse the request, it must without delay give each of them a decision notice and either of them may refer the matter to the Tribunal.
(1) The Authority may give a direction under this section if it appears to the Authority that—
(a) one or more of the requirements for the making of an authorisation order are no longer satisfied;
(b) the manager or trustee of an authorised unit trust scheme has contravened, or is likely to contravene, a requirement imposed on him by or under this Act;
(c) the manager or trustee of such a scheme has, in purported compliance with any such requirement, knowingly or recklessly given the Authority information which is false or misleading in a material particular; or
(d) none of paragraphs (a) to (c) applies, but it is desirable to give a direction in order to protect the interests of participants or potential participants in such a scheme.
Financial Services and Markets Act 2000