Statutory Instrument 2001 No. 1228

      The Open-Ended Investment Companies Regulations 2001

      © Crown Copyright 2001

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STATUTORY INSTRUMENTS

2001 No. 1228

FINANCIAL SERVICES AND MARKETS

The Open-Ended Investment Companies Regulations 2001

  Made 27th March 2001 
  Coming into force in accordance with regulation 1(2)


ARRANGEMENT OF REGULATIONS


PART I

GENERAL
1. Citation, commencement and extent
2. Interpretation

PART II

FORMATION, SUPERVISION AND CONTROL
General
3. Open-ended investment company
4. Registration by the Authority
5. Safekeeping of scheme property by depositary
6. FSA rules
7. Modification or waiver of FSA rules
8. Notices: general
9. Publication
10. The Authority's procedures
11. The Tribunal
Authorisation
12. Applications for authorisation
13. Particulars of directors
14. Authorisation
15. Requirement for authorisation
16. Representations against refusal of authorisation
17. Certificates
Names
18. Registrar's approval of names
19. Prohibition on certain names
20. Registrar's index of company names
Alterations
21. The Authority's approval for certain changes in respect of a company
22. Procedure when refusing approval of proposed changes
Ending of authorisation
23. Ending of authorisation
24. Procedure
Powers of intervention
25. Directions
26. Applications to the court
27. Procedure on giving directions under regulation 25 and varying them on Authority's own initiative
28. Procedure: refusal to revoke or vary direction
29. Procedure: revocation of direction and grant of request for variation
Investigations
30. Power to investigate
Winding up
31. Winding up by the court
32. Dissolution on winding up by the court
33. Dissolution in other circumstances

PART III

CORPORATE CODE
Organs
34. Directors
35. Directors to have regard to interests of employees
36. Inspection of directors' service contracts
37. General meetings
38. Capacity of company
39. Power of directors and general meeting to bind the company
40. No duty to enquire as to capacity etc.
41. Exclusion of deemed notice
42. Restraint and ratification by shareholders
43. Events affecting company status
44. Invalidity of certain transactions involving directors
Shares
45. Shares
46. Share certificates
47. Exceptions from regulation 46
48. Bearer shares
49. Register of shareholders
50. Power to close register
51. Power of court to rectify register
52. Share transfers
Operation
53. Power incidental to carrying on business
54. Name to appear in correspondence etc.
55. Particulars to appear in correspondence etc.
56. Contracts: England and Wales
57. Execution of documents: England and Wales
58. Execution of deeds overseas: England and Wales
59. Authentication of documents: England and Wales
60. Official seal for share certificates
61. Personal liability for contracts and deeds
62. Exemptions from liability to be void
63. Power of court to grant relief in certain cases
64. Punishment for fraudulent trading
65. Power to provide for employees on cessation or transfer of business
Reports
66. Reports: preparation
67. Reports: accounts
68. Reports: voluntary revision
69. Auditors
Mergers and divisions
70. Mergers and divisions

PART IV

THE AUTHORITY'S REGISTRATION FUNCTIONS
71. Register of open-ended investment companies
72. Companies' registered numbers
73. Delivery of documents to the Authority
74. Keeping of company records by the Authority
75. Inspection etc. of records kept by the Authority
76. Provision by the Authority of documents in non-legible form
77. Documents relating to Welsh open-ended investment companies
78. Public notice by the Authority of receipt and issue of certain documents
79. Exclusion of deemed notice

PART V

MISCELLANEOUS
80. Contraventions
81. Offences by bodies corporate etc.
82. Jurisdiction and procedure in respect of offences
83. Evidence of grant of probate etc.
84. Minor and consequential amendments
85. Revocation etc.

SCHEDULES

  Schedule 1 Depositaries

  Schedule 2 Instrument of incorporation

  Schedule 3 Register of shareholders

  Schedule 4 Share transfers

  Schedule 5 Auditors

  Schedule 6 Mergers and divisions

  Schedule 7 Minor and consequential amendments

Whereas a draft of these Regulations has been approved by a resolution of each House of Parliament pursuant to section 429(2) of the Financial Services and Markets Act 2000[1];

     Now, therefore, the Treasury, in exercise of the powers conferred on them by sections 262 and 428(3) of that Act, and of all other powers enabling them in that behalf, hereby make the following Regulations: - 



PART I

GENERAL

Citation, commencement and extent
     1.  - (1) These Regulations may be cited as the Open-Ended Investment Companies Regulations 2001.

    (2) These Regulations come into force - 

    (a) for the purpose of regulation 6, on the day on which sections 247 and 248 of the Act come into force for the purpose of making rules;

    (b) for the purposes of regulations 7, 12, 13, 18(1) and (3), 74, 77 and 80 to 82, so far as relating to the making of applications for authorisation orders to be made on or after the day mentioned in sub-paragraph (c), on the day on which section 40 of the Act comes into force;

    (c) for all remaining purposes, on the day on which section 19 of the Act comes into force.

    (3) Subject to regulation 20(2)(b), these Regulations have effect in relation to any open-ended investment company which has its head office situated in Great Britain.

Interpretation
     2.  - (1) In these Regulations, except where the context otherwise requires - 

    "the 1986 Act" means the Insolvency Act 1986[3];

    "annual general meeting" has the meaning given in regulation 37(1);

    "annual report" has the meaning given in regulation 66(1)(a);

    "the appropriate registrar" means - 

    (a) the registrar of companies for England and Wales if the company's instrument of incorporation states that its head office is to be situated in England and Wales, or that it is to be situated in Wales;

    (b) the registrar of companies for Scotland if the company's instrument of incorporation states that its head office is to be situated in Scotland;

    "authorisation order" means an order made by the Authority under regulation 14;

    "bearer shares" has the meaning given in regulation 48;

    "certificated form" has the same meaning as in the Uncertificated Securities Regulations 1995[4];

    "court", in relation to any proceedings under these Regulations involving an open-ended investment company the head office of which is situated - 

    (a) in England and Wales, means the High Court; and

    (b) in Scotland, means the Court of Session;

    "depositary", in relation to an open-ended investment company, has the meaning given in regulation 5(1);

    "the designated person" means the person designated in the company's instrument of incorporation for the purposes of paragraph 4 of Schedule 4 to these Regulations;

    "FSA rules" means any rules made by the Authority under regulation 6(1);

    "larger denomination share" has the meaning given in regulation 45(5);

    "officer", in relation to an open-ended investment company, includes a director or any secretary or manager;

    "open-ended investment company" means an body incorporated by virtue of regulation 3(1) or a body treated as if it had been so incorporated by virtue of regulation 85(3)(a);

    "participating issuer" and "participating security" have the same meaning as in the Uncertificated Securities Regulations 1995;

    "prospectus" has the meaning given in regulation 6(2);

    "relevant provision" means any requirement imposed by or under the Act;

    "register of shareholders" means the register kept under paragraph 1(1) of Schedule 3 to these Regulations;

    "scheme property", in relation to an open-ended investment company, means the property subject to the collective investment scheme constituted by the company;

    "share certificate" has the meaning given in regulation 46(1);

    "smaller denomination share" has the meaning given in regulation 45(5);

    "transfer documents" has the meaning given in paragraph 5(3) of Schedule 4 to these Regulations;

    "the Tribunal" means the Financial Services and Markets Tribunal;

    "the UCITS Directive" means the Council Directive of 20 December 1985 on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (No. 85/611/EEC)[5];

    "umbrella company" means an open-ended investment company whose instrument of incorporation provides for such pooling as is mentioned in section 235(3)(a) of the Act (collective investment schemes) in relation to separate parts of the scheme property and whose shareholders are entitled to exchange rights in one part for rights in another; and

    "uncertificated form" and "uncertificated unit of a security" have the same meaning as in the Uncertificated Securities Regulations 1995.

    (2) In these Regulations any reference to a shareholder of an open-ended investment company is a reference to - 

    (a) the person who holds the share certificate, or other documentary evidence of title relating to that share mentioned in regulation 48; and

    (b) the person whose name is entered on the company's register of shareholders in relation to any share other than a bearer share.

    (3) In these Regulations, unless the contrary intention appears, expressions which are also used in the 1985 Act have the same meaning as in that Act.



PART II

FORMATION, SUPERVISION AND CONTROL

General

Open-ended investment company
     3.  - (1) If the Authority makes an authorisation order then, immediately upon the coming into effect of the order, the body to which the authorisation order relates is to be incorporated as an open-ended investment company (notwithstanding that, at the point of its incorporation by virtue of this paragraph, the body will not have any shareholders or property).

    (2) The name of an open-ended investment company is the name mentioned in the authorisation order made in respect of the company or, if it changes its name in accordance with these Regulations and FSA rules, its new name.

Registration by the Authority
     4.  - (1) Upon making an authorisation order under regulation 14, the Authority must forthwith register - 

    (a) the instrument of incorporation of the company;

    (b) a statement of the address of the company's head office;

    (c) a statement, with respect to each person named in the application for authorisation as director of the company, of the particulars set out in regulation 13; and

    (d) a statement of the corporate name and registered or principal office of the person named in the application for authorisation as the depositary of the company.

    (2) In this regulation any reference to the instrument of incorporation of a company is a reference to the instrument of incorporation supplied for the purposes of regulation 14(1)(c).

Safekeeping of scheme property by depositary
     5.  - (1) Subject to paragraph (2), all the scheme property of an open-ended investment company must be entrusted for safekeeping to a person appointed for the purpose ("a depositary").

    (2) Nothing in paragraph (1) - 

    (3) Schedule 1 to these Regulations makes provision with respect to depositaries of open-ended investment companies.

FSA rules
     6.  - (1) The Authority's powers to make rules under section 247 (trust scheme rules) and section 248 (scheme particulars rules) of the Act in relation to authorised unit trust schemes are, subject to the provisions of these Regulations, exercisable in relation to open-ended investment companies - 

    (2) In these Regulations any document which a person is required to submit and publish by virtue of rules made by the Authority under paragraph (1) for like purposes to those in section 248 of the Act is referred to as a prospectus.

Modification or waiver of FSA rules
     7.  - (1) The Authority may, on the application or with the consent of any person to whom any FSA rules apply, direct that all or any of the FSA rules - 

    (2) The Authority may, on the application or with the consent of an open-ended investment company and its depositary acting jointly, direct that all or any of the FSA rules - 

    (3) Section 148(3) to (9) and (11) of the Act (modification or waiver of rules) have effect in relation to a direction under paragraph (1) as they have effect in relation to a direction under section 148(2) of the Act but with the following modifications - 

    (4) Section 148(3) to (9) and (11) of the Act have effect in relation to a direction under paragraph (2) as they have effect in relation to a direction under section 148(2) of the Act but with the following modifications - 

Notices: general
     8. Subject to the provisions of these Regulations - 

Publication
     9. Section 391 of the Act (publication) applies to the notices mentioned in regulation 8 in the same way as it applies to any such notice given under any provision of the Act.

The Authority's procedures
     10. Section 395 of the Act (the Authority's procedures) applies to the procedure relating to the Authority's functions in relation to supervisory notices, warning notices and decision notices given under any provision of these Regulations.

The Tribunal
     11. Section 133 of the Act (proceedings: general provision) applies to any reference to the Tribunal under these Regulations as it applies to any reference to the Tribunal under the Act.

Authorisation

Applications for authorisation
     12.  - (1) Any application for an authorisation order in respect of a proposed open-ended investment company - 

    (a) must be made in such manner as the Authority may direct;

    (b) must state with respect to each person proposed in the application as a director of the company the particulars set out in regulation 13;

    (c) must state the corporate name and registered or principal office of the person proposed in the application as depositary of the company; and

    (d) must contain or be accompanied by such other information as the Authority may reasonably require for the purpose of determining the application.

    (2) At any time after receiving an application and before determining it the Authority may require the applicant to furnish additional information.

    (3) Different directions may be given and different requirements imposed in relation to different applications.

    (4) Any information to be furnished to the Authority under this regulation must be in such form or verified in such manner as it may specify.

    (5) A person commits an offence if - 

    (a) for the purposes of or in connection with any application under this regulation; or

    (b) in purported compliance with any requirement imposed on him by or under this regulation;

he furnishes information which he knows to be false or misleading in a material particular or recklessly furnishes information which is false or misleading in a material particular.

    (6) A person guilty of an offence under paragraph (5) is liable - 

    (a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;

    (b) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.

Particulars of directors
     13.  - (1) Subject to paragraph (2), an application for an authorisation order must contain the following particulars with respect to each person proposed as a director of the company - 

    (2) The application need not contain particulars of a directorship - 

    (3) For the purposes of paragraph (2), a body corporate is dormant during a period in which no significant transaction occurs; and it ceases to be dormant on the occurrence of such a transaction.

    (4) In paragraph (1)(a) - 

    (5) In paragraph (3) the reference to a significant transaction is, in relation to a company within the meaning of section 735(1) of the 1985 Act, a reference to a significant accounting transaction within the meaning of section 249AA(5)[6] of that Act.

Authorisation
     14.  - (1) Where an application is duly made under regulation 12, the Authority may make an authorisation order in respect of an open-ended investment company if - 

    (2) If the Authority makes an order under paragraph (1), it must give written notice of the order to the applicant.

    (3) In determining whether the requirement referred to in regulation 15(5) is satisfied in respect of any proposed director of a company, the Authority may take into account - 

    (4) An application must be determined by the Authority before the end of the period of six months beginning with the date on which it receives a completed application.

    (5) The Authority may determine an incomplete application if it considers it appropriate to do so and, if it does so, it must determine the application within the period of twelve months beginning with the date on which it first receives the application.

    (6) The applicant may withdraw his application, by giving the Authority written notice, at any time before the Authority determines it.

    (7) An authorisation order must specify the date on which it is to come into effect.

    (8) Schedule 2 to these Regulations makes provision with respect to the contents, alteration and binding nature of the instrument of incorporation of an open-ended investment company.

Requirements for authorisation
     15.  - (1) The requirements referred to in regulation 14(1)(a) are as follows.

    (2) The company and its instrument of incorporation must comply with the requirements of these regulations and FSA rules.

    (3) The head office of the company must be situated in England and Wales, Wales or Scotland.

    (4) The company must have at least one director.

    (5) The directors of the company must be fit and proper persons to act as such.

    (6) If the company has only one director, that director must be a body corporate which is an authorised person and which has permission under Part IV of the Act to act as sole director of an open-ended investment company.

    (7) If the company has two or more directors, the combination of their experience and expertise must be such as is appropriate for the purposes of carrying on the business of the company.

    (8) The person appointed as the depositary of the company - 

    (9) The name of the company must not be undesirable or misleading.

    (10) The aims of the company must be reasonably capable of being achieved.

    (11) The company must meet one or both of the following requirements - 

Representations against refusal of authorisation
     16.  - (1) If the Authority proposes to refuse an application made under regulation 12, it must give the applicant a warning notice.

    (2) If the Authority decides to refuse the application - 

Certificates
     17.  - (1) If an open-ended investment company which complies with the conditions necessary to enable it to enjoy the rights conferred by the UCITS Directive so requests, the Authority may issue a certificate to the effect that the company complies with those conditions.

    (2) Such a certificate may be issued on the making of an authorisation order in respect of the company or at any subsequent time.

Names

Registrar's approval of names
     18.  - (1) Where, in respect of a proposed open-ended investment company, it appears to the Authority that the requirements of regulation 14(1)(a) to (c) are or will be met, the Authority must notify the appropriate registrar of the name by which it is proposed that the company should be incorporated.

    (2) Every open-ended investment company must obtain the Authority's approval to any proposed change in the name by which the company is incorporated and the Authority must notify the appropriate registrar of the proposed name.

    (3) If it appears to the appropriate registrar that the provisions of regulation 19(1) are not contravened in relation to the proposed name, he must notify the Authority to that effect.

Prohibition on certain names
     19.  - (1) No open-ended investment company is to have a name that - 

    (2) In determining for the purposes of paragraph (1)(c) whether one name is the same as another, there are to be disregarded - 

    (a) the definite article, where it is the first word of the name;

    (b) the following word and expressions where they appear at the end of the name - 

         "company" or its Welsh equivalent ("cwmni");

         "and company" or its Welsh equivalent ("a'r cwmni");

         "company limited" or its Welsh equivalent ("cwmni cyfyngedig");

         "limited" or its Welsh equivalent ("cyfyngedig");

         "unlimited" or its Welsh equivalent ("anghyfyngedig");

         "public limited company" or its Welsh equivalent ("cwmni cyfyngedig cyhoeddus");

         "European Economic Interest Grouping" or any equivalent set out in Schedule 3 to the European Economic Interest Grouping Regulations 1989;

         "investment company with variable capital" or its Welsh equivalent ("cwmni buddsoddi â chyfalaf newidiol");

         "open-ended investment company" or its Welsh equivalent ("cwmni buddsoddiant penagored");

    (c) abbreviations of any of those words or expressions where they appear at the end of the name; and

    (d) type and case of letters, accents, spaces between letters and punctuation marks;

and "and" and "&" are to be taken as the same.

Registrar's index of company names
     20.  - (1) Upon making an authorisation order in respect of an open-ended investment company or upon approving any change in the name of such a company, the Authority must notify the appropriate registrar of the name by which the company is incorporated or, as the case may be, of the company's new name.

    (2) Section 714[8] of the 1985 Act (registrar's index of company and corporate names) has effect as if the bodies listed in subsection (1) of that section included - 

    (a) open-ended investment companies in respect of which an authorisation order has come into effect; and

    (b) collective investment schemes which are open-ended investment companies and which have a head office situated in Northern Ireland.

    Alterations

The Authority's approval for certain changes in respect of a company
     21.  - (1) An open-ended investment company must give written notice to the Authority of  - 

    (2) Any notice given under paragraph (1)(a) must be accompanied by a certificate signed by a solicitor to the effect that the change in question will not affect the compliance of the instrument of incorporation with Schedule 2 to these Regulations and with such of the requirements of FSA rules as relate to the contents of that instrument.

    (3) Effect must not be given to any proposal falling within paragraph (1) unless - 

    (4) No change falling within paragraph (1)(e) may be made if any of the requirements set out in regulation 15(4) to (7) and (8)(f) would not be satisfied if the change were made and no change falling within paragraph (1)(f) may be made if any of the requirements in regulation 15(8) would not be satisfied if the change were made.

Procedure when refusing approval of proposed changes
     22.  - (1) If the Authority proposes to refuse approval of a proposal to replace the depositary, or any director, of an open-ended investment company, it must give a warning notice to the company.

    (2) If the Authority proposes to refuse approval of any other proposal falling within regulation 21, it must give separate warning notices to the company and its depositary.

    (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 - 

    (5) If, having given a warning notice to a person, the Authority decides to approve the proposal, it must give him a decision notice.

Ending of authorisation

Ending of authorisation
     23.  - (1) The Authority may revoke an authorisation order if it appears to it that - 

    (a) any requirement for the making of the order is no longer satisfied;

    (b) the company, any of its directors or its depositary - 

      (i) has contravened any relevant provision; or

      (ii) has, in purported compliance with any such provision, knowingly or recklessly given the Authority information which is false or misleading in a material particular;

    (c) no regulated activity has been carried on in relation to the company for the previous twelve months; or

    (d) it is desirable to revoke the authorisation order in order to protect the interests of shareholders or potential shareholders in the company.

    (2) For the purposes of paragraph (1)(d), the Authority may take into account any matter relating to - 

    (a) the company or its depositary;

    (b) any director or controller of the depositary;

    (c) any person employed by or associated, for the purposes of the business of the company, with the company or its depositary;

    (d) any director of the company;

    (e) any person exercising influence over any director of the company or its depositary;

    (f) any body corporate in the same group as any director of the company or its depositary;

    (g) any director of any such body corporate;

    (h) any person exercising influence over any such body corporate;

    (i) any person who would be such a person as is mentioned in regulation 14(3)(a) to (d) were it to apply to a director as it applies to a proposed director.

    (3) Before revoking any authorisation order that has come into effect, the Authority must ensure that such steps as are necessary and appropriate to secure the winding up of the company (whether by the court or otherwise) have been taken.

Procedure
     24.  - (1) If the Authority proposes to make an order revoking an authorisation order ("a revoking order"), it must give separate warning notices to the company and its depositary.

    (2) If, having given warning notices, the Authority decides to make a revoking order it must without delay give the company and its depositary a decision notice and either of them may refer the matter to the Tribunal.

    (3) Sections 393 and 394 of the Act apply to a warning notice or a decision notice given in accordance with this regulation.

Powers of intervention

Directions
     25.  - (1) The Authority may give a direction under this regulation if it appears to the Authority that - 

    (a) one or more requirements for the making of an authorisation order are no longer satisfied;

    (b) the company, any of its directors or its depositary - 

      (i) has contravened or is likely to contravene any relevant provision; or

      (ii) has, in purported compliance with any such provision, knowingly or recklessly given the Authority information which is false or misleading in a material particular; or

    (c) it is desirable to give a direction in order to protect the interests of shareholders or potential shareholders in the company.

    (2) A direction under this regulation may - 

    (a) require the company to cease the issue or redemption, or both the issue and redemption, of shares or any class of shares in the company;

    (b) in the case of a director of the company who is the designated person, require that director to cease transfers to or from, or both to and from, his own holding of shares, or of any class of shares, in the company;

    (c) in the case of an umbrella company, require that investments made in respect of one or more parts of the scheme property which are pooled separately be realised and, following the discharge of such liabilities of the company as are attributable to the relevant part or parts of the scheme property, that the resulting funds be distributed to shareholders in accordance with FSA rules;

    (d) require any director of the company to present a petition to the court to wind up the company; or

    (e) require that the affairs of the company be wound up otherwise than by the court.

    (3) Subject to paragraph (4), if the authorisation order is revoked, the revocation does not affect the operation of any direction under this regulation which is then in force; and a direction under this regulation may be given in relation to a company in the case of which an authorisation order has been revoked if a direction under this regulation was already in force at the time of revocation.

    (4) Where a winding-up order has been made by the court, no direction under this regulation is to have effect in relation to the company concerned.

    (5) For the purposes of paragraph (1)(c), the Authority may take into account any matter relating to any of the persons mentioned in regulation 23(2).

    (6) If a person contravenes a direction under this regulation, section 150 (actions for damages) applies to the contravention as it applies to a contravention mentioned in that section.

    (7) The Authority may, on its own initiative or on the application of the company or its depositary, revoke or vary a direction given under this regulation if it appears to the Authority - 

    (a) in the case of revocation, that it is no longer necessary for the direction to take effect or continue in force;

    (b) in the case of variation, that the direction should take effect or continue in force in a different form.

Applications to the court
     26.  - (1) This regulation applies if the Authority could give a direction under regulation 25 in relation to an open-ended investment company.

    (2) The Authority may apply to the court for an order removing the depositary or any director of the company and replacing any such person with a person or persons nominated by the Authority.

    (3) The Authority may nominate a person for the purposes of paragraph (2) only if it is satisfied that, if the order were made, the requirements of paragraphs (4) to (7) or, as the case may be, of paragraph (8) of regulation 15 would be met.

    (4) If it appears to the Authority that there is no person whom it may nominate for the purposes of paragraph (2), it may apply to the court for an order removing the director in question or the depositary (or both) and appointing an authorised person to wind up the company.

    (5) On an application under this regulation the court may make such order as it thinks fit.

    (6) The court may, on the application of the Authority, rescind any such order as is mentioned in paragraph (4) and substitute such an order as is mentioned in paragraph (2).

    (7) The Authority must - 

Procedure on giving directions under regulation 25 and varying them on Authority's own initiative
     27.  - (1) A direction takes effect - 

    (2) A direction may be expressed to take effect immediately (or on a specified date) only if the Authority, having regard to the ground on which it is exercising its power under regulation 25, considers that it is necessary for the direction to take effect immediately (or on that date).

    (3) If the Authority proposes to give a direction under regulation 25, or gives such a direction with immediate effect, it must give separate written notices to the company and its depositary.

    (4) The notice must - 

    (5) If the direction imposes a requirement under regulation 25(2)(a) or (b), the notice must state that the requirement has effect until - 

    (6) If the direction imposes a requirement under regulation 25(2)(d) or (e), the petition must be presented (or, as the case may be, the company must be wound up) - 

    (7) The Authority may extend the period allowed under the notice for making representations.

    (8) If, having considered any representations made by a person to whom the notice was given, the Authority decides - 

it must give separate written notices to the company and its depositary.

    (9) If, having considered any representations made by a person to whom the notice was given, the Authority decides - 

it must give separate written notices to the company and its depositary.

    (10) A notice given under paragraph (8) must inform the person to whom it is given of his right to refer the matter to the Tribunal.

    (11) A notice under paragraph (9)(b) must comply with paragraph (4).

    (12) If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.

    (13) This regulation applies to the variation of a direction on the Authority's own initiative as it applies to the giving of a direction.

    (14) For the purposes of paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8) of the Act.

    (15) Section 395 of the Act (the Authority's procedures) has effect as if subsection (13) included a reference to a notice given in accordance with paragraph (3), (8) or (9)(b).

Procedure: refusal to revoke or vary direction
     28.  - (1) If on an application under regulation 25(7) for a direction to be revoked or varied the Authority proposes - 

it must give the applicant a warning notice.

    (2) If the Authority decides to refuse to revoke or vary the direction - 

Procedure: revocation of direction and grant of request for variation
     29.  - (1) If the Authority decides on its own initiative to revoke a direction under regulation 25 it must give separate written notices of its decision to the company and its depositary.

    (2) If on an application made under regulation 25(7) for a direction to be revoked or varied, the Authority decides to revoke or vary it in accordance with the application, it must give the applicant written notice of its decision.

    (3) A notice under this regulation must specify the date on which the decision takes effect.

    (4) The Authority may publish such information about the revocation or variation, in such way, as it considers appropriate.

Investigations

Power to investigate
     30.  - (1) The Authority or the Secretary of State may appoint one or more competent persons to investigate and report on the affairs of, or of any director or depositary of, an open-ended investment company if it appears to either of them that it is in the interests of shareholders or potential shareholders of the company to do so or that the matter is of public concern.

    (2) A person appointed under paragraph (1) to investigate the affairs of, or of any director or depositary of, a company may also, if he thinks it necessary for the purposes of that investigation, investigate the affairs of (or of the directors, depositary, trustee or operator of) - 

    (a) an open-ended investment company the directors of which include any of the directors of the company whose affairs are being investigated by virtue of that paragraph;

    (b) an open-ended investment company the directors of which include any of the directors of the depositary whose affairs are being investigated by virtue of that paragraph;

    (c) an open-ended investment company the depositary of which is - 

      (i) the same as the depositary of the company whose affairs are being investigated by virtue of that paragraph; or

      (ii) the depositary whose affairs are being investigated by virtue of that paragraph;

    (d) an open-ended investment company the directors of which include - 

      (i) the director whose affairs are being investigated by virtue of that paragraph; or

      (ii) any director of a body corporate which is the director whose affairs are being investigated by virtue of that paragraph;

    (e) a collective investment scheme the manager, depositary or operator of which is a director of the company whose affairs are being investigated by virtue of that paragraph;

    (f) a collective investment scheme the trustee of which is - 

      (i) the same as the depositary of the company whose affairs are being investigated by virtue of that paragraph; or

      (ii) the depositary whose affairs are being investigated by virtue of that paragraph; or

    (g) a collective investment scheme the manager, depositary or operator of which is - 

      (i) the director whose affairs are being investigated by virtue of that paragraph; or

      (ii) a director of a body corporate which is the director whose affairs are being investigated by virtue of that paragraph.

    (3) If the person ("A") appointed to conduct an investigation under this regulation considers that a person ("B") is or may be able to give information which is relevant to the investigation, A may require B - 

    (a) to produce to A any documents in B's possession or under his control which appear to A to be relevant to that investigation;

    (b) to attend before A; and

    (c) otherwise to give A all such assistance in connection with the investigation which B is reasonably able to give;

and it is B's duty to comply with that requirement.

    (4) Subsection (5) to (9) of section 170 of the Act (investigations: general) apply if - 

    (a) the Authority appoints a person under this regulation to conduct an investigation on its behalf; or

    (b) the Secretary of State appoints a person under this regulation to conduct an investigation on his behalf;

as they apply in the cases mentioned in subsection (1) of that section.

    (5) Section 174 of the Act (admissibility of statements made to investigators) applies to a statement made by a person in compliance with a requirement imposed on him under this regulation as it applies to a statement mentioned in that section.

    (6) Subsections (2) to (4) and (6) of section 175 (information and documents: supplemental provisions) and section 177 of the Act (offences) have effect as if this regulation were contained in Part XI of the Act (information gathering and investigations).

    (7) Subsections (1) to (9) of section 176 of the Act (entry of premises under warrant) apply in relation to a person appointed under paragraph (1) as if - 

    (a) references to an investigator were references to a person so appointed;

    (b) references to an information requirement were references to a requirement imposed under this regulation by a person so appointed;

    (c) the premises mentioned in section 176(3)(a) were the premises of a person whose affairs are the subject of an investigation under this regulation or of an appointed representative of such a person.

    (8) No person may be required under this regulation to disclose information or produce a document in respect of which he owes an obligation of confidence by virtue of carrying on a banking business unless - 

    (a) the imposition of the requirement is authorised by the Authority or the Secretary of State (as the case may be) or the person to whom the obligation of confidence is owed; or

    (b) the person to whom it is owed is - 

      (i) a director or depositary of any open-ended investment company which is under investigation; or

      (ii) any other person whose own affairs are under investigation.

      Winding up

Winding up by the court
     31.  - (1) Where an open-ended investment company is wound up as an unregistered company under Part V of the 1986 Act, the provisions of that Act apply for the purposes of the winding up with the following modifications.

    (2) A petition for the winding up of an open-ended investment company may be presented by the depositary of the company as well as by any person authorised under section 124 (application for winding up) or section 124A[9] of the 1986 Act (petition for winding up on grounds of public interest), as those sections apply by virtue of Part V of that Act, to present a petition for the winding up of the company.

    (3) Where a petition for the winding up of an open ended investment company is presented by a person other than the Authority - 

    (a) that person must serve a copy of the petition on the Authority; and

    (b) the Authority is entitled to be heard on the petition.

    (4) If, before the presentation of a petition for the winding up by the court of an open-ended investment company as an unregistered company under Part V of the 1986 Act, the affairs of the company are being wound up otherwise than by the court - 

    (a) section 129(2) of the 1986 Act (commencement of winding up by the court) is not to apply; and

    (b) any winding up of the company by the court is to be deemed to have commenced - 

      (i) at the time at which the Authority gave its approval to a proposal mentioned in paragraph (1)(d) of regulation 21; or

      (ii) in a case falling within paragraph (3)(b) of that regulation, on the day following the end of the one-month period mentioned in that paragraph.

Dissolution on winding up by the court
     32.  - (1) Section 172(8) of the 1986 Act (final meeting of creditors and vacation of office by liquidator), as that section applies by virtue of Part V of that Act (winding up of unregistered companies) has effect, in relation to open-ended investment companies, as if the reference to the registrar of companies was a reference to the Authority.

    (2) Where, in respect of an open-ended investment company, the Authority receives - 

the Authority must, on receipt of the notice, forthwith register it and, subject to the provisions of this regulation, at the end of the period of three months beginning with the day of the registration of the notice, the company is to be dissolved.

    (3) The Secretary of State may, on the application of the official receiver or any other person who appears to the Secretary of State to be interested, give a direction deferring the date at which the dissolution of the company is to take effect for such period as the Secretary of State thinks fit.

    (4) An appeal to the court lies from any decision of the Secretary of State on an application for a direction under paragraph (3).

    (5) Paragraph (3) does not apply to a case where the winding-up order was made by the court in Scotland, but in such a case the court may, on an application by any person appearing to the court to have an interest, order that the date at which the dissolution of the company is to take effect be deferred for such period as the court thinks fit.

    (6) It is the duty of the person - 

not later than seven days after the giving of the direction, the determination of the appeal or the making of the order, to deliver to the Authority for registration a copy of the direction or determination or, in respect of an order, a certified copy of the interlocutor.

    (7) If a person without reasonable excuse fails to deliver a copy as required by paragraph (6), he is guilty of an offence.

    (8) A person guilty of an offence under paragraph (7) is liable, on summary conviction - 

Dissolution in other circumstances
     33.  - (1) Where the affairs of an open-ended investment company have been wound up otherwise than by the court, the Authority must, as soon as is reasonably practicable after the winding up is complete, register that fact and, subject to the provisions of this regulation, at the end of the period of three months beginning with the day of the registration, the company is to be dissolved.

    (2) The court may, on the application of the Authority or the company, make an order deferring the date at which the dissolution of the company is to take effect for such period as the court thinks fit.

    (3) It is the duty of the company, on whose application an order of the court under paragraph (2) is made, to deliver to the Authority, not later than seven days after the making of the order, a copy of the order for registration.

    (4) Where any company, the head office of which is situated in England and Wales, or Wales, is dissolved by virtue of paragraph (1), any sum of money (including unclaimed distributions) standing to the account of the company at the date of the dissolution must on such date as is determined in accordance with FSA rules, be paid into court.

    (5) Where any company, the head office of which is situated in Scotland, is dissolved by virtue of paragraph (1), any sum of money (including unclaimed dividends and unapplied or undistributable balances) standing to the account of the company at the date of the dissolution must - 



PART III

CORPORATE CODE

Organs

Directors
     34.  - (1) On the coming into effect of an authorisation order in respect of an open-ended investment company, the persons proposed in the application under regulation 12 as directors of the company are deemed to be appointed as its first directors.

    (2) Subject to regulations 21 and 26, any subsequent appointment as a director of a company must be made by the company in general meeting, save that the directors of the company may appoint a person to act as director to fill any vacancy until such time as the next annual general meeting of the company takes place.

    (3) Any act of a director is valid notwithstanding - 

    (a) any defect that may thereafter be discovered in his appointment or qualifications; or

    (b) that it is afterwards discovered that his appointment had terminated by virtue of any provision contained in FSA rules which required a director to retire upon attaining a specified age.

    (4) The business of a company must be managed - 

    (a) where a company has only one director, by that director; or

    (b) where a company has more than one director, by the directors but subject to any provision contained in FSA rules as to the allocation between the directors of responsibilities for the management of the company (including any provision there may be as to the allocation of such responsibility to one or more directors to the exclusion of others).

    (5) Subject to the provisions of these Regulations, FSA rules and the company's instrument of incorporation, the directors of a company may exercise all the powers of the company.

Directors to have regard to interests of employees
     35.  - (1) The matters to which a director of an open-ended investment company must have regard in the performance of his functions include the interests of the company's employees in general, as well as the interests of its shareholders.

    (2) The duty imposed by this regulation on a director is owed by him to the company (and the company alone) and is enforceable in the same way as any other fiduciary duty owed to a company by its directors.

Inspection of directors' service contracts
     36.  - (1) Every open-ended investment company must keep at an appropriate place - 

    (2) All copies and memoranda kept by a company in accordance with paragraph (1) must be kept at the same place.

    (3) The following are appropriate places for the purposes of paragraph (1) - 

    (4) Every copy and memorandum required by paragraph (1) to be kept must be open to the inspection of any shareholder of the company.

    (5) If such an inspection is refused, the court may by order compel an immediate inspection of the copy or memorandum concerned.

    (6) Every copy and memorandum required by paragraph (1) to be kept must be made available by the company for inspection by any shareholder at the company's annual general meeting.

    (7) Paragraph (1) applies to a variation of a director's contract of service as it applies to the contract.

General meetings
     37.  - (1) Subject to paragraph (2), every open-ended investment company must in each year hold a general meeting ("annual general meeting") in addition to any other meetings, whether general or otherwise, it may hold in that year.

    (2) If a company holds its first annual general meeting within 18 months of the date on which the authorisation order made by the Authority in respect of the company comes into effect, paragraph (1) does not require the company to hold any other meeting as its annual general meeting in the year of its incorporation or in the following year.

    (3) Subject to paragraph (2), not more than 15 months may elapse between the date of one annual general meeting of a company and the date of the next.

Capacity of company
     38.  - (1) The validity of an act done by an open-ended investment company cannot be called into question on the ground of lack of capacity by reason of anything in these Regulations, FSA rules or the company's instrument of incorporation.

    (2) Nothing in paragraph (1) affects the duty of the directors to observe any limitation on their powers.

Power of directors and general meeting to bind the company
     39.  - (1) In favour of a person dealing in good faith, the following powers, that is to say - 

are deemed to be free of any limitation under the company's constitution.

    (2) For the purposes of this regulation - 

    (3) The reference in paragraph (1) to any limitation under the company's constitution on the powers therein set out includes any limitation deriving from these Regulations, from FSA rules or from a resolution of the company in general meeting or of a meeting of any class of shareholders.

    (4) Sub-paragraphs (b) and (c) of paragraph (2) do not apply where - 

    (5) Paragraph (1) does not affect any liability incurred by the directors or any other person by reason of the directors exceeding their powers.

No duty to enquire as to capacity etc.
     40. Subject to regulation 39(4)(b)(ii), a party to a transaction with an open-ended investment company is not bound to enquire - 

Exclusion or deemed notice
     41. A person is not to be taken to have notice of any matter merely because of its being disclosed in any document made available by an open-ended investment company for inspection; but this does not affect the question whether a person is affected by notice of any matter by reason of a failure to make such enquiries as ought reasonably to be made.

Restraint and ratification by shareholders
     42.  - (1) A shareholder of an open-ended investment company may bring proceedings to restrain the doing of an act which but for regulation 38(1) would be beyond the company's capacity.

    (2) Paragraph (1) of regulation 39 does not affect any right of a shareholder of an open-ended investment company to bring proceedings to restrain the doing of an act which is beyond any of the powers referred to in that paragraph.

    (3) No proceedings may be brought under paragraph (1) in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company; and paragraph (2) does not have the effect of enabling proceedings to be brought in respect of any such act.

    (4) Any action by the directors of a company - 

may only be ratified by a resolution of the company in general meeting.

    (5) A resolution ratifying such action does not affect any liability incurred by the directors or any other person, relief from any such liability requiring agreement by a separate resolution of the company in general meeting.

    (6) Nothing in this regulation affects any power or right conferred by or arising under section 150 (actions for damages) or section 380, 382 or 384 of the Act (injunctions and restitution orders).

Events affecting company status
     43.  - (1) Where either of the conditions mentioned in paragraph (2) is satisfied, an open-ended investment company is not entitled to rely against other persons on the happening of any of the following events - 

    (2) The conditions referred to in paragraph (1) are that - 

    (3) In this regulation "official notification" means the notification in the Gazette (by virtue of regulation 78) of any document containing the information referred to in paragraph (1) above, and "officially notified" is to be construed accordingly.

Invalidity of certain transactions involving directors
     44.  - (1) This regulation applies where - 

    (2) The transaction is voidable at the instance of the company.

    (3) Whether or not the transaction is avoided, any such party to the transaction as is mentioned in paragraph (1)(a), and any director of the company who authorised the transaction, is liable - 

    (4) Nothing in paragraphs (1) to (3) is to be construed as excluding the operation of any other enactment or rule of law by virtue of which the transaction may be called into question or any liability to the company may arise.

    (5) The transaction ceases to be voidable if - 

    (6) A person other than a director of the company is not liable under paragraph (3) if he shows that at the time the transaction was entered into he did not know that the directors concerned were exceeding their powers.

    (7) This regulation does not affect the operation of regulation 39 in relation to any party to the transaction not within paragraph (1)(a); but where a transaction is voidable by virtue of this regulation and valid by virtue of that regulation in favour of such a person, the court may, on the application of that person or of the company, make such order affirming, severing or setting aside the transaction, on such terms as appear to the court to be just.

    (8) For the purposes of this regulation - 

Shares
     45.  - (1) An open-ended investment company may issue more than one class of shares.

    (2) A shareholder may not have any interest in the scheme property of the company.

    (3) The rights which attach to each share of any given class are - 

    (4) In respect of any class of shares, the rights referred to in paragraph (3) may, if the company's instrument of incorporation so provides, be expressed in two denominations; and in the case of any such class, one (the "smaller") denomination is to be such proportion of the other (the "larger") denomination as is fixed by the instrument of incorporation.

    (5) In respect of any class of shares within paragraph (4), any share to which are attached rights expressed in the smaller denomination is to be known as a smaller denomination share; and any share to which are attached rights expressed in the larger denomination is to be known as a larger denomination share.

    (6) In respect of any class of shares, the rights which attach to each share of that class are - 

    (7) In respect of any class of shares within paragraph (4), the rights that attach to any smaller denomination share of that class are to be a proportion of the rights that attach to any larger denomination share of that class and that proportion is to be the same as the proportion referred to in paragraph (4).

Share certificates
     46.  - (1) Subject to regulations 47 and 48, an open-ended investment company must prepare documentary evidence of title to its shares ("share certificates") as follows - 

    (2) A company must exercise due diligence and take all reasonable steps to ensure that certificates prepared in accordance with paragraph (1)(a) to (e) are ready for delivery as soon as reasonably practicable.

    (3) Certificates need be prepared in the circumstances referred to in paragraph (1)(e) and (f) only if the company has received - 

    (4) Each share certificate must state - 

    (5) Where, in respect of any class of shares, the rights that attach to shares of that class are expressed in two denominations, the reference in paragraph (4)(a) (as it applies to shares of that class) to the number of shares is a reference to the total of - 

n
N +
p


    (6) In paragraph (5) - 

    (a) N is the relevant number of the larger denomination shares of the class in question;

    (b) n is the relevant number of the smaller denomination shares of that class; and

    (c) p is the number of smaller denomination shares of that class that are equivalent to one larger denomination share of that class.

    (7) Nothing in these Regulations is to be taken as preventing the total arrived at under paragraph (5) being expressed on the certificate as a single entry representing the result derived from the formula set out in that paragraph.

    (8) In England and Wales, a share certificate specifying any shares held by any person which is - 

    (a) under the common seal of the company; or

    (b) authenticated in accordance with regulation 59;

is prima facie evidence of that person's title to the shares.

    (9) In Scotland, a share certificate specifying any shares held by any person which is - 

is, unless the contrary is shown, sufficient evidence of that person's title to the shares.

Exceptions from regulation 46
     47.  - (1) An open-ended investment company which is a participating issuer must not prepare share certificates in respect of any share in the company which is an uncertificated unit of a security.

    (2) Nothing in regulation 46 requires a company to prepare share certificates in the following cases.

    (3) Case 1 is any case where the company's instrument of incorporation states that share certificates will not be issued and contains provision as to other procedures for evidencing a person's entitlement to shares.

    (4) Case 2 is any case where a shareholder has indicated to the company in writing that he does not wish to receive a certificate.

    (5) Case 3 is any case where shares are issued or transferred to the designated person.

    (6) Case 4 is any case where shares are issued or transferred to a nominee of a recognised investment exchange who is designated for the purposes of this paragraph in the rules of the investment exchange in question.

Bearer shares
     48. An open-ended investment company may, if its instrument of incorporation so provides, issue shares ("bearer shares") evidenced by a share certificate, or by any other documentary evidence of title for which provision is made in its instrument of incorporation, which indicates - 

Register of shareholders
     49. Schedule 3 to these Regulations makes provision with respect to the register of shareholders of an open-ended investment company.

Power to close register
     50.  - (1) Subject to paragraph (2), an open-ended investment company may, on giving notice by advertisement in a national newspaper circulating in all the countries in which shares in the company are sold, close the register of shareholders for any time or times not exceeding, in the whole, 30 days in each year.

    (2) Paragraph (1) has effect - 

Power of court to rectify register
     51.  - (1) An application to the court may be made under this regulation if - 

    (2) An application under this regulation may be made by the person aggrieved, by any shareholder of the company or by the company itself.

    (3) The court may refuse the application or may order rectification of the register of shareholders and payment by the company of any damages sustained by any party aggrieved.

    (4) On such an application the court may decide any question necessary or expedient to be decided for rectification of the register of shareholders including, in particular, any question relating to the right of a person who is a party to the application to have his name entered in or omitted from the register (whether the question arises as between shareholders and alleged shareholders or as between shareholders or alleged shareholders on the one hand and the company on the other hand).

Share transfers
     52. Schedule 4 to these Regulations makes provision for the transfer of registered and bearer shares in an open-ended investment company.

Operation

Power incidental to carrying on business
     53. An open-ended investment company has power to do all such things as are incidental or conducive to the carrying on of its business.

Name to appear in correspondence etc.
     54.  - (1) Every open-ended investment company must have its name mentioned in legible characters in all letters of the company and in all other documents issued by the company in the course of business.

    (2) If an officer of a company or a person on the company's behalf signs or authorises to be signed on behalf of the company any cheque or order for money or goods in which the company's name is not mentioned as required by paragraph (1) he is personally liable to the holder of the cheque or order for money or goods for the amount of it (unless it is duly paid by the company).

Particulars to appear in correspondence etc.
     55.  - (1) Every open-ended investment company must have the following particulars mentioned in legible characters in all letters of the company and in all other documents issued by the company in the course of business - 

    (a) the company's place of registration;

    (b) the number with which it is registered;

    (c) the address of its head office; and

    (d) the fact that it is an investment company with variable capital.

    (2) Where, in accordance with regulation 72, the Authority makes any change of existing registered numbers in respect of any open-ended investment company then, for a period of three years beginning with the date on which the notification of the change is sent to the company by the Authority, the requirement of paragraph (1)(b) is, notwithstanding regulation 72(4), satisfied by the use of either the old number or the new.

Contracts: England and Wales
     56. Under the law of England and Wales a contract may be made - 

and any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of such a company.

Execution of documents: England and Wales
     57.  - (1) Under the law of England and Wales the following provisions have effect with respect to the execution of documents by an open-ended investment company.

    (2) A document is executed by a company by the affixing of its common seal.

    (3) A company need not have a common seal, however, and the following provisions of this regulation apply whether it does or not.

    (4) A document that is signed by at least one director and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company.

    (5) A document executed by a company which makes it clear on its face that it is intended by the person or persons making it to be a deed has effect, upon delivery, as a deed; and it is to be presumed, unless a contrary intention is proved, to be delivered upon its being executed.

    (6) In favour of a purchaser, a document is deemed to have been duly executed by a company if it purports to be signed by at least one director or, in the case of a director which is a body corporate, it purports to be executed by that director; and, where it makes it clear on its face that it is intended by the person or persons making it to be a deed, it is deemed to have been delivered upon its being executed.

    (7) In paragraph (6), "purchaser" means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.

Execution of deeds overseas: England and Wales
     58.  - (1) Under the law of England and Wales an open-ended investment company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place elsewhere than in the United Kingdom.

    (2) A deed executed by such an attorney on behalf of the company has the same effect as if it were executed under the company's common seal.

Authentication of documents: England and Wales
     59. A document or proceeding requiring authentication by an open-ended investment company is sufficiently authenticated for the purposes of the law of England and Wales - 

Official seal for share certificates
     60.  - (1) An open-ended investment company which has a common seal may have, for use for sealing shares issued by the company and for sealing documents creating or evidencing shares so issued, an official seal which is a facsimile of its common seal with the addition on its face of the word "securities".

    (2) The official seal when duly affixed to a document has the same effect as the company's common seal.

    (3) Nothing in this regulation affects the right of an open-ended investment company whose head office is in Scotland to subscribe such shares and documents in accordance with the Requirements of Writing (Scotland) Act 1995[13].

Personal liability for contracts and deeds
     61.  - (1) A contract, which purports to be made by or on behalf of an open-ended investment company at a time before the coming into effect of an authorisation order in relation to that company, has effect (subject to any agreement to the contrary) as a contract made with the person purporting to act for the company or as agent for it, and he is accordingly personally liable under the contract.

    (2) Paragraph (1) applies - 

as it applies to the making of a contract.

    (3) If a company enters into a transaction at any time after the authorisation order made in respect of the company has been revoked and the company fails to comply with its obligations in respect of that transaction within 21 days of being called upon to do so, the person who authorised the transaction is liable, and where the transaction was authorised by two or more persons they are jointly and severally liable, to indemnify the other party to the transaction in respect of any loss or damage suffered by him by reason of the company's failure to comply with those obligations.

Exemptions from liability to be void
     62.  - (1) This regulation applies to any provision, whether contained in the instrument of incorporation of an open-ended investment company or in any contract with the company or otherwise - 

    (2) Except as provided by the following paragraph, any such provision is void.

    (3) This regulation does not prevent a company - 

Power of court to grant relief in certain cases
     63.  - (1) This regulation applies to - 

    (2) If, in any proceedings to which this regulation applies, it appears to the court hearing the case - 

the court may relieve him, either wholly or partly, from his liability on such terms as it may think fit.

    (3) If any such officer, auditor or depositary has reason to apprehend that any claim will or might be made against him in proceedings to which this regulation applies, he may apply to the court for relief.

    (4) The court, on an application under paragraph (3), has the same power to relieve the applicant as under this regulation it would have had if it had been a court before which the relevant proceedings against the applicant had been brought.

    (5) Where a case to which paragraph (2) applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if he is satisfied that the defendant or defender ought in pursuance of that paragraph to be relieved either in whole or in part from the liability sought to be enforced against him, withdraw the case in whole or in part from the jury and forthwith direct judgment to be entered for the defendant or defender on such terms as to costs or otherwise as the judge may think proper.

Punishment for fraudulent trading
     64.  - (1) If any business of an open-ended investment company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who was knowingly a party to the carrying on of the business in that manner is guilty of an offence and liable - 

    (2) This regulation applies whether or not the company has been, or is in the course of being, wound up (whether by the court or otherwise).

Power to provide for employees on cessation or transfer of business
     65.  - (1) The powers of an open-ended investment company include power to make the following provision for the benefit of persons employed or formerly employed by the company, that is to say, provision in connection with the cessation or the transfer to any person of the whole or part of the undertaking of the company.

    (2) The power conferred by paragraph (1) is exercisable notwithstanding that its exercise is not in the best interests of the company.

    (3) The power which a company may exercise by virtue of paragraph (1) may only be exercised by the company - 

and in any case after compliance with any other requirements of the instrument of incorporation applicable to the exercise of the power.

Reports

Reports: preparation
     66.  - (1) The directors of an open-ended investment company must - 

    (a) prepare a report ("annual report") for each annual accounting period of the company; and

    (b) subject to paragraph (2), prepare a report ("half-yearly report") for each half-yearly accounting period of the company.

    (2) Where a company's first annual accounting period is a period of less than 12 months, a half-yearly report need not be prepared for any part of that period.

    (3) The directors of a company must lay copies of the annual report before the company in general meeting.

    (4) Nothing in this regulation or in regulation 67 prejudices the generality of regulation 6(1).

    (5) In this regulation any reference to annual and half-yearly accounting periods of a company is a reference to those periods as determined in relation to that company in accordance with FSA rules.