CIS 12
Special Provisions for Certain Types of Scheme
CIS 12.1
Introduction
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Application
CIS 12.1.1
See Notes
The rules and guidance in this chapter apply in accordance with CIS 12.1.3 R (Table of application).
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Purpose
CIS 12.1.2
See Notes
This chapter provides additional rules for certain categories of scheme so as to recognise some of their special characteristics and to further the regulatory objective relating to the protection of consumers by providing detailed procedures for such specialist funds. In some cases these special rules adapt rules elsewhere in this sourcebook.
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CIS 12.1.3
See Notes
Table of application
This table belongs to CIS 12.1.1 R
| Paragraph or section number | ICVC | ACD | Any other directors of an ICVC | Depositary of an ICVC | Manager | Trustee |
| 12.2 | X | X | ||||
| 12.3.1R | X | X | ||||
| 12.3.2R | X | X | X | X | ||
| 12.3.3R | X | X | ||||
| 12.3.4R | X | X | ||||
| 12.4 | X | X | ||||
| 12.5.1R | X | X | X | X | X | X |
| 12.5.2R | X | X | X | X | ||
| 12.5.3R | X | X | ||||
| 12.5.4R | X | X | X | X | X | |
| 12.5.5R | X | X | ||||
| 12.5.6 | X | X | X | X | X | X |
| 12.5.7 | X | X | X | X | X | X |
| 12.5.8 | X | X | X | X | X | X |
| Note: "X" means applies. | ||||||
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CIS 12.2
Futures and options schemes and geared futures and options schemes
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Special rules for sales and redemptions
CIS 12.2.1
See Notes
- (1) In the case of a futures and options scheme and a geared futures and options scheme, CIS 4.4.3 R (Authorised fund manager's obligation to sell) and CIS 4.4.4 R (Authorised fund manager's obligation to redeem) do not apply:
- (a) in the 15 minutes immediately before a regular valuation point, or, if the regular valuation points are less than one hour apart, in the last quarter of the interval between them; and
- (b) if the authorised fund manager has stated in the prospectus that it is not obliged to sell or redeem in the 15 minutes (or lesser period) immediately before a regular valuation point.
- (2) In the case of a futures and options scheme and a geared futures and options scheme that is a dual-priced AUT, CIS 15.4.3 R (Manager's obligation to sell) and CIS 15.4.7 R (Manager's obligation to redeem) are disapplied under the same conditions as in (1)(a) and (b).
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CIS 12.3
Property schemes
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Standing independent valuer
CIS 12.3.1
See Notes
(1) An authorised fund manager of a property scheme must ensure that any immovables in the scheme property are valued by an appropriate valuer (standing independent valuer) appointed by the authorised fund manager. The appointment must be made with the approval of the trustee or depositary at the outset and upon any vacancy.
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Functions of the standing independent valuer
CIS 12.3.2
See Notes
(1) The authorised fund manager must ensure that the standing independent valuer appointed under CIS 12.3.1 R values all the immovables held within the scheme property, on the basis of a full valuation with physical inspection (including, where the immovable is or includes a building, internal inspection) at least once a year.
(2) The authorised fund manager must ensure that the standing independent valuer values the immovables, on the basis of a review of the last full valuation, at least once a month.
(3) If either the authorised fund manager or the depositary become aware of any matter appear likely to:
(a) affect the outcome of a valuation of an immovable; or
(b) cause the valuer to decide to value under (1) instead of under (2),
the one of them becoming aware must immediately inform the standing independent valuer of that matter. (4) The authorised fund manager must use its best endeavours to ensure that any affected person reports to the standing independent valuer immediately upon that person becoming aware of any matter within (3).
(5) Any valuation by the standing independent valuer must be on the basis of an "Open Market value" as defined in Practice Statement 4 in the Royal Institute of Chartered Surveyors' Appraisal and Valuation Manual (first edition published September 1995) but subject to CIS 4.8.3 R (3)(Valuation: requirements).
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Special rules for pricing
CIS 12.3.3
See Notes
(1) Any valuation under CIS 12.3.2 R has effect, until the next valuation under that rule, for the purposes of the value of immovables under CIS 4 and CIS 15.
(2) An agreement to transfer an immovable or an interest in an immovable is to be disregarded for the purpose of the valuation of the scheme property unless it appears to the authorised fund manager to be legally enforceable.
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Failure to obtain minimum subscriptions
CIS 12.3.4
See Notes
(1) Where it appears to the authorised fund manager that the aggregate of monies paid or agreed to be paid for units to be issued or sold is less than £5m (or the equivalent in the base currency), the authorised fund manager must use its best endeavours to enable the scheme to be wound up under CIS 14 or by the court.
(2) Paragraph (1) must be complied with either:
(a) immediately upon the expiry of any initial offer; or
(b) where there is no initial offer, within 21 days after the date on which persons are first invited to become holders in the scheme.
(3) In so far as is practicable, the authorised fund manager must pay back to a holder any preliminary or other charge by way of remuneration which it received in respect of units issued up to the end of the period in (2)(a) or (b).
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CIS 12.3.5
See Notes
Rules which do not apply to property schemes
This table belongs to CIS 12.3.3 R
| Single-priced ICVC or AUT | Dual-priced AUT |
| 4.2.5R | 15.2.4(3)R |
| 15.2.4(4)(a)R | |
| 15.2.6R | |
| Item 10 Table 15.8R para 10 - Valuation | |
| Note: Item 10 is disapplied in relation to immovables. | |
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CIS 12.4
Feeder funds and Funds of Funds
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Special rules for pricing
CIS 12.4.1
See Notes
(1) So far as is practicable, the authorised fund manager of a feeder fund must deal on the same basis (forward or historic) as the regulated collective investment scheme into which the feeder fund invests.
(2) The normal valuation point for a feeder fund must be within two hours after each normal valuation point for the scheme, or sub-fund, into which the feeder fund feeds.
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Fund of funds schemes
CIS 12.4.2
See Notes
(1) A fund of funds scheme must be valued no less frequently than if it were the relevant type of scheme by type of investment under CIS 5A.11.4 R (Eligible combinations of scheme) and the authorised fund manager of a fund of funds scheme must deal on the basis of forward prices if that is required for the relevant type of scheme under CIS 5A.11.4 R.
(2) Where a fund of funds scheme invests in money market schemes (within CIS 5A.5 (Money market schemes)), (1) applies only if the scheme does not invest in any other type of scheme.
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CIS 12.5
Umbrella schemes
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Qualification for authorisation
CIS 12.5.1
See Notes
(1) A proposed ICVC umbrella scheme does not qualify for an authorisation order unless each constituent sub-fund would, if it were the subject of a separate application for an authorisation order, qualify for such an authorisation order.
(2) A proposed ICVC that is intended to be an umbrella scheme which is to have a sub-fund which would, if it were a separate ICVC, be a geared futures and options scheme or a property scheme does not qualify for an authorisation order unless each of its proposed sub-funds would, if it were a separate ICVC, be an ICVC of the same category as each of the other sub-funds of the proposed ICVC.
(3) A unit trust scheme does not qualify to be authorised as an umbrella scheme unless each constituent part would, if it were the subject of a separate application for an authorisation order, qualify for separate authorisation by such an order.
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Base currency
CIS 12.5.2
See Notes
Any reference in these CIS rules to "base currency" that relates to:
(1) a valuation of a sub-fund; or
(3) a payment for a unit;
is to be treated as if the reference were to the currency stated in the prospectus as being the currency to be used for the purpose in question in relation to that sub-fund.- 01/12/2004
Allocation of scheme property
CIS 12.5.3
See Notes
In so far as any of the scheme property of an ICVC or an AUT that is an umbrella scheme, or any assets to be received as part of the scheme property, or any costs, charges or expenses to be paid out of the scheme property, are not attributable to one sub-fund only, the scheme property, assets, costs, charges or expenses must be allocated between the sub-funds in a manner which is fair to the holders of the umbrella scheme generally.
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Income
CIS 12.5.4
See Notes
Except in the case of CIS 9.2.1 R (Accounting period) and CIS 9.2.2 R (Annual income allocation date), CIS 9 applies as if each sub-fund were a separate ICVC or AUT (whichever is appropriate).
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An ICVC with only one sub-fund
CIS 12.5.5
See Notes
(1) If for a period of 24 consecutive months starting at any time after the first issue of a share of an ICVC which is an umbrella scheme, shares of less than two sub-funds are in issue, the directors must take such action as is necessary to change the category of the ICVC or to cause shares of more than one sub-fund to be in issue.
(2) If (1) becomes, or is reasonably expected by the directors to become, applicable, the ACD must, before or immediately upon the expiration of the 24 month period, notify the shareholders and the FSA of any action proposed in order to comply with (1).
(3) Paragraph (1) does not apply if, on or before the expiration of the 24 month period, winding up of the ICVC has commenced.
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Other sourcebook provisions relating to umbrella schemes
CIS 12.5.6
See Notes
Rules and some of the guidance elsewhere in this sourcebook relate specifically to umbrella schemes. For ease of understanding the main provisions are referred to in CIS 12.5.8 G.
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Investment and borrowing powers
CIS 12.5.7
See Notes
(1) In relation to an authorised fund which is an umbrella scheme under the rules in CIS 5A, the provisions in CIS 5A apply to each sub-fund as they would for an authorised fund except the following rules which will apply only at the level of the umbrella scheme:
(c)
CIS 5A.2.15 R (Concentration), but sub-funds in an umbrella scheme which are equivalent to a fund of funds scheme or a feeder fund are to be disregarded in this calculation.
(2) In relation to an authorised fund which is an umbrella scheme under the rules in CIS 5, the provisions in CIS 5 apply to each sub-fund as they would for an authorised fund, except the following rules which will apply at the level of the umbrella scheme:
(c)
CIS 5.2.31 R (Concentration).
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CIS 12.5.8
See Notes
Main provisions relating specifically to umbrella schemes.
This table belongs to CIS 12.5.6 G.
| Rule / Guidance (CIS) | Subject matter |
| 2.4.5A G(2) | What are limited issue shares? |
| 2.4.5B R(3) | Limited issue shares: requirements |
| 2.4.6R(2) | Rights of shareclasses |
| 2.6.3G(2) | What are limited issue units? |
| 2.6.4R(3) | Limited issue units: requirements |
| 3.5.2R(24) | Information to be contained in the prospectus (umbrella schemes) |
| 4.4.3R(1) | Authorised fund manager's obligation to sell |
| 4.7.4R(2) | Forward and historic pricing (single-pricing) |
| 5.1.4(3)G | Investment in collective investment schemes |
| Table 5.1.6G Note 2 | Investment powers |
| 5A.2.12R | Investment in other Collective Investment Schemes |
| 5A.2.16G | Significant influence and concentration |
| 5A.12R | General investment powers and restrictions |
| 8.2.8R | Fee payable on switching |
| 10.3.3(2) and (3)R; 10.3.4(2) & (3)R; | Annual and half-yearly reports |
| 10.4.2(15) and (16)R and 10.4.3R | Report of the directors/manager |
| 10.4.8R | Report of the auditor |
| 10.5.2R(3) | Publication of reports |
| 11.5.2R | Schemes of arrangement |
| 13.1.3R(9) | Suspension and resumption of dealings |
| 14.3R | Termination of a sub-fund |
| 15.4.3R | Manager's obligation to sell |
| 15.7.4R | Forward and historic pricing (dual-pricing) |
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