Termination of Authorised funds

Part

CIS Collective Investment Schemes

Chapter

Termination of Authorised funds

Printed on: 02/11/2024

Rulebook at: 01/07/2005

CIS 14

Termination of Authorised funds

CIS 14.1

Introduction

01/12/2004

Application

CIS 14.1.1

The rules and guidance in this chapter apply in accordance with CIS 14.1.4 R (Table of application)

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Purpose

CIS 14.1.2

This chapter helps with the regulatory objective of protecting consumers, by providing a cost effective and fair means of winding-up authorised funds and terminating sub-funds of ICVCs. ENF 17 deals with the FSA's powers to revoke the authorisation of authorised funds otherwise than by consent.

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Explanation of this chapter

CIS 14.1.3

CIS 14.2 deals with the winding-up of a solvent ICVC, which under regulation 21 of the OEIC regulations requires written notice to and consent from the FSA . CIS 14.3 deals with the termination of a solvent sub-fund of an ICVC, again under regulation 21. CIS 14.4 deals with the winding-up of an AUT. CIS 14.5 provides guidance on the information to be supplied to the FSA, in certain circumstances, when an authorised fund manager or depositary seek the FSA's consent to terminate an authorised fund.

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CIS 14.1.4

Table of application: This table belongs to CIS 14.1.1 R

Paragraph of Section No

ICVC

ACD

Any other directors of an ICVC

Depositary of an ICVC

Manager

Trustee

14.1

14.2.1-14.2.3

14.2.4

14.2.5

14.2.6

14.2.7

14.2.8

14.2.9

14.2.10

14.2.11

14.2.12(1)

14.2.12(2)

14.3.1-2

14.3.3

14.3.4

14.3.5

14.3.6

14.3.7

14.3.8

14.3.9

14.3.10

14.4.1-2

14.4.3

14.4.4

14.5

Note: "X" means "applies"

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CIS 14.2

Winding up a solvent ICVC

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Explanation of CIS 14.2

CIS 14.2.1

An ICVC may be wound up by the court, but, provided the ICVC is solvent and the steps required by the OEIC regulations and the conditions contained in this chapter are fulfilled, the winding up may instead be carried out under this chapter. Under regulation 21 of the OEIC regulations the ICVC must give written notice to the FSA of a proposal to wind up the ICVC. This section lays down procedures to be followed and the obligations of the ACD and any other directors. A winding up may not be carried out under these rules if there is a vacancy in the position of ACD.

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CIS 14.2.2

This table belongs to CIS 14.2.2 G

Summary of the main steps in winding up a solvent ICVC under FSA regulations, assuming FSA approval

Step number

Explanation

When

Rule

Commence preparation of solvency statement

By N

14.2.4(2)

Send audited solvency statement to the FSA with copy to depositary

By N + 21 days

14.2.4(4) and (5)

Receive the FSA approval

N + one month

Regulation 21 of ICVC regulations

Normal business ceases; publish notices

14.2.5

Realise proceeds, wind-up, instruct depositary accordingly

ASAP after E

14.2.6

Inform the FSA of W/U completion

ASAP after W/U complete

14.2.6(8)

Prepare final account + have audited

On completion of W/U

14.2.7

Send final account and auditor's report to the FSA + shareholders

Within 2 months of FAP

14.2.7(6)

Notes: N = Notice to be given to the FSA under regulation 21 of OEIC regulations
E = Effective time (CIS 14.2.5 R (1))
W/U = winding-up
FAP = Final accounting period (CIS 14.2.7 R (4))

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When an ICVC is to be wound up

CIS 14.2.3

(1) An ICVC must not be wound up except under this chapter or as an unregistered company under Part V of the Insolvency Act 1986.

(2) An ICVC must not be wound up under this chapter:

(a)

(i) unless and until effect may be given, under regulation 21 of the OEIC regulations, to a proposal to wind up the affairs of the ICVC otherwise than by the court; and

(ii) unless a statement has been prepared and sent or delivered to the FSA under CIS 14.2.4 R (Solvency statement) and received by the FSA prior to satisfaction of the condition in (a)(i); or

(b) if there is a vacancy in the position of ACD at the effective time; or

(3) Subject to (2) and the subsequent provisions of this section (CIS 14.2), the appropriate steps to wind up an ICVC under this section must be taken:

(a) if an extraordinary resolution to that effect is passed; or

(b) when the period (if any) fixed for the duration of the ICVC by its instrument of incorporation expires or any event occurs, for which its instrument of incorporation provides that the ICVC is to be wound up; or

(c) on the date stated in any agreement by the FSA in response to a request from the directors for the revocation of the authorisation order in respect of the ICVC, even if that agreement is subject to there being no material change in any relevant factor before the date of the revocation.

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Solvency statement

CIS 14.2.4

(1) Before a notice being given to the FSA under regulation 21 of the OEIC regulations of the proposal referred to in CIS 14.2.3 R (2)(a), the directors must make a full enquiry into the ICVC's affairs so as to ascertain whether the ICVC will be able to meet its liabilities (including contingent and prospective liabilities).

(2) On or before the giving of that notice, the ACD must prepare a statement, reflecting the results of the enquiry in (1), and either:

(a) confirming that the ICVC will be able to meet all its liabilities within twelve months of the date of that statement; or

(b) stating that such confirmation cannot be given.

(3) The statement referred to in (2) must:

(a) relate to the ICVC's affairs at a date which must not be more than 28 days before the date on which that notice is given to the FSA; and

(b) if there is more than one director, be approved by the board of directors and be signed on their behalf by the ACD and, if it contains the confirmation under (2)(a), by at least one other director if there is one or, if there is no director other than the ACD, the ACD.

(4) A statement which contains the confirmation under (2)(a) must annex a statement signed by the auditor appointed under Schedule 5 to the OEIC regulations to the effect that, in his opinion, the enquiry required by (1) has been properly made and is fairly reflected by the confirmation.

(5) The statement referred to in (2) must be sent or delivered to the FSA and a copy sent to the depositary either before, or on, or within the 21 days following, the date on which notice is given to the FSA in accordance with regulation 21 of the OEIC regulations.

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Consequences of commencement of winding up

CIS 14.2.5

(1) In this chapter the "effective time" means the time at which the conditions referred to in CIS 14.2.3 R (2)(a) are satisfied or, if later, the time, determined in accordance with CIS 14.2.3 R (3), at which the ICVC must be wound up.

(2) Immediately following the effective time:

(a) CIS 4 (Single-pricing and dealing) and CIS 5 (Investment and borrowing powers) cease to apply to the ICVC;

(b) the ICVC must cease to issue and cancel shares;

(d) no transfer of a share may be registered and no other change to the register of shareholders may be made without the sanction of the directors; and

(e) the ICVC must cease to carry on its business, except so far as may be required for its beneficial winding up; however, the corporate status and corporate powers of the ICVC and (subject to the preceding provisions of this rule (CIS 14.2.5 R)) the powers of the directors continue until the ICVC is dissolved.

(3) The ACD must as soon as practicable after the effective time:

(a) publish notice of the commencement of the winding up (if the head office of the ICVC is situated in England and Wales or Wales) in the London Gazette, or (if the head office of the ICVC is situated in Scotland) in the Edinburgh Gazette; and

(b) if the ACD has not previously notified shareholders of the proposal to wind up, give written notice of the commencement of the winding up to the shareholders.

01/09/2003

Manner of winding up

CIS 14.2.6

(1) The ACD must, as soon as practicable after the effective time, cause the scheme property to be realised and the liabilities of the ICVC to be met out of the proceeds.

(2) The ACD must give instructions to the depositary how such proceeds (until utilised to meet liabilities or make distributions to shareholders) must be held and those instructions must be with a view to the prudent protection of creditors and shareholders against loss.

(3) Provided there are sufficient liquid funds available after making adequate provision for the expenses of the winding up and the discharge of the ICVC's remaining liabilities, the ACD may arrange for the depositary to make one or more interim distributions out of those funds. Those distributions are to be to the shareholders proportionately to the right of their respective shares to participate in scheme property as at the effective time.

(4) When the ACD has caused all the scheme property to be realised and all of the liabilities of the ICVC known to the ACD to be met, the ACD must arrange for the depositary to make a final distribution. That distribution is to be on or before the date on which the final account is sent to shareholders in accordance with CIS 14.2.7 R (6) (Final account), and to be of the balance remaining (net of a provision for any further expenses of the ICVC) to the shareholders in the same proportions as provided by (3).

(5) Paragraphs (1) to (4) are subject to the terms of any scheme of arrangement sanctioned by an extraordinary resolution of the ICVC passed on or before the effective time.

(6) Where the ICVC and one or more shareholders (other than the ACD) agree, the requirement in (1) to realise the scheme property does not apply to that part of the scheme property which is proportionate to the right to participate in scheme property of that or those shareholders.

(7) In the case of (6), the ACD must cause the ICVC to distribute that part of the scheme property in specie to that or those shareholders in proportion to their respective rights to participate. The distribution is to be effected after making adjustments and retaining such provision as appears to the ACD appropriate to ensure that those shareholders bear the proportion of the liabilities of the ICVC and the expenses of the distribution attributable to their shares.

(8) As soon as is reasonably practicable after the winding up of the ICVC (including compliance with CIS 14.2.7 R (Final account)) is complete, the ACD must notify the FSA of that fact.

(9) Where any sum of money stands to the account of the ICVC at the date of its dissolution, the ACD must arrange for the depositary to pay or lodge that sum within one month after that date in accordance with regulation 33(4) or 33(5) of the OEIC regulations.

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Final account

CIS 14.2.7

(1) As soon as the ICVC's affairs are fully wound up (including distribution or provision for distribution in accordance with CIS 14.2.6 R (4)), the ACD must prepare an account of the winding up showing:

(a) how it has been conducted; and

(b) how the scheme property has been disposed of.

(2) The account in (1) must:

(a) if there is more than one director, be approved by the board of directors and be signed on their behalf by the ACD and at least one other director; or

(b) if there is no director other than the ACD, be signed by the ACD.

(3) Once signed, this account is the "final account" for the purposes of this chapter.

(4) The final account must state the date on which the ICVC's affairs were fully wound up and the date stated must be regarded as the final day of the accounting period of the ICVC then running ('final accounting period').

(5) The ACD must ensure that the ICVC's auditor makes a report in respect of the final account, which states the auditor's opinion whether the final account has been properly prepared for the purpose of (1).

(6) Within two months of the end of the final accounting period, the ACD must send a copy of the final account and the auditor's report on it to the FSA and to each person who was a shareholder (or the first named of joint holders) immediately before its end.

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Duty to ascertain liabilities

CIS 14.2.8

(1) The ACD must use all reasonable endeavours to ensure that all the liabilities of the ICVC are discharged before the completion of the winding up.

(2) The duty in (1) relates to all liabilities of the ICVC of which:

(a) the ACD is, or becomes, aware before the completion of the winding up; or

(b) the ACD would have become aware before the completion of the winding up had it used all reasonable endeavours to ascertain the liabilities of the ICVC.

(3) If the ACD rejects any claim against the ICVC in whole or part, the ACD must immediately send to the claimant written notice of its reasons for doing so.

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Reports and accounts

CIS 14.2.9

(1) While an ICVC is being wound up, the following continues to apply:

(a) the annual and half-yearly accounting periods (required by CIS 9.2.1 R);

(b) the rules in CIS 9 about annual and interim allocation of income; and

(2) The ACD need not (as would be required under CIS 10.5.2 R (2) (Publication of reports)) send to each shareholder a copy of any report relating to an annual accounting period or half-yearly accounting period which began after the effective time, if the directors of the ICVC, after consulting the FSA, have taken reasonable care to determine that the interests of shareholders are not such as to require the report to be sent to shareholders. However, a copy of the report must be supplied free of charge to any shareholder requesting one.

01/12/2004

Liabilities of the ACD

CIS 14.2.10

(1) The ACD is personally liable to meet any liability of an ICVC wound up under this chapter (whether or not the ICVC has been dissolved) that was not discharged before the completion of the winding up, except to the extent that the ACD can show that it has complied with CIS 14.2.8 R (Duty to ascertain liabilities).

(2) If the proceeds of the realisation of the assets attributable, or allocated in accordance with CIS 12.5.3 R (Allocation of scheme property), to a particular sub-fund of an umbrella ICVC are insufficient to meet the liabilities attributable or allocated to that sub-fund, the ACD must pay to the ICVC for the account of that sub-fund the amount of the deficit. This is subject to and to the extent that the ACD can show that the deficit did not arise as a result of any failure by the ACD to comply with the rules in CIS.

(3) The liabilities of the ACD under this rule (CIS 14.2.10 R) create a debt (in England and Wales in the nature of a specialty) accruing due from it on the completion of the winding up and payable upon the demand of the creditor in question (including the ICVC in the circumstances described in (2)).

(4) The obligations of the ACD under this rule (CIS 14.2.10 R) do not affect any other obligation of the ACD under these rules or the general law.

01/12/2004

Additional provisions applicable to umbrella companies

CIS 14.2.11

(1) Liabilities of an umbrella ICVC attributable, or allocated in accordance with CIS 12.5.3 R (Allocation of scheme property), to a particular sub-fund must be met first out of the scheme property attributable or allocated to such a sub-fund.

(2) If the liabilities to be met out of a particular sub-fund of an umbrella ICVC are greater than the proceeds of the realisation of the scheme attributable or allocated to that sub-fund, the deficit must be met out of the scheme property attributable or allocated to the solvent sub-funds of that umbrella ICVC in which the proceeds of realisation exceed liabilities and divided between those sub-funds in a manner that is fair to the shareholders in those solvent sub-funds.

(3) Paragraph (2) applies in respect of any deficit arising as a result of additional liabilities accruing to a sub-fund through the operation of (2).

(4) In calculating the amount of liabilities for the purpose of (2), account must be taken of any payments received or to be received from the ACD under CIS 14.2.10 R (Liabilities of the ACD).

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Miscellaneous

CIS 14.2.12

(1) If:

(a) during the course, or as a result, of the enquiry referred to in CIS 14.2.4 R (1) (Solvency statement), the directors become of the opinion that it will not be possible to provide the confirmation referred to in (2)(a) of that rule; or

(b) after the effective time, the ACD becomes of the opinion that the ICVC will be unable to meet all its liabilities within twelve months of the date of the statement provided under (a) of CIS 14.2.4 R (2);

the directors must immediately present a petition or cause the ICVC to present a petition for the winding up of the ICVC as an unregistered ICVC under Part V of the Insolvency Act 1986.

(2) If, after the commencement of a winding up under this chapter and before notice of completion of the winding up has been sent to the registrar of companies, there is a vacancy in the position of ACD, the directors must immediately present or cause the ICVC to present or, if there are no directors, the depositary must immediately present, a petition for the winding up of the ICVC as an unregistered ICVC under Part V of the Insolvency Act 1986.

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CIS 14.3

Termination of a sub-fund of an umbrella ICVC

01/12/2004

Explanation of CIS 14.3

CIS 14.3.1

(1) A termination of a sub-fund in accordance with this chapter will require alterations to the ICVC's instrument of incorporation and prospectus. The proposed alterations must be notified to the FSA and permitted to take effect in accordance with regulation 21 of the OEIC regulations before the termination can commence. On termination, the assets of the sub-fund will normally be realised, and the shareholders in the sub-fund will receive their respective shares of the proceeds net of liabilities and the expenses of the termination. A sub-fund may also be terminated in connection with a scheme of arrangement. In this case, shareholders in the sub-fund will become entitled to receive units in another regulated collective investment scheme in exchange for their shares in the sub-fund.

(2) The steps involved in the termination of a sub-fund are similar to those for the termination of an ICVC, so readers may find the guidance at CIS 14.2.2 G helpful.

01/12/2004

Special meanings for CIS 14.3

CIS 14.3.2

(1) In this section (CIS 14.3) references to:

(2) shares are references to shares of the class or classes related to the sub-fund to be terminated;

(3) shareholders are references to holders of such shares;

(4) a resolution or extraordinary resolution are references to such a resolution passed at a meeting of holders of shares of the class or classes referred to in (2);

(5) scheme property are references to the scheme property allocated or attributable to the sub-fund to be terminated; and

(6) liabilities are references to liabilities of the ICVC allocated or attributable to the sub-fund to be terminated.

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When a sub-fund is to be terminated

CIS 14.3.3

(1) A sub-fund must not be terminated:

(a) unless and until effect may be given under regulation 21 of the OEIC regulations to proposals to make the alterations to the ICVC's instrument of incorporation and prospectus that will be required if the sub-fund is terminated; and

(b) unless a statement has been prepared and sent or delivered to the FSA under CIS 14.3.4 R (Solvency statement) and received by the FSA before satisfaction of the condition in (a).

(2) Subject to (1) and the subsequent provisions of this section (CIS 14.3), a sub-fund must be terminated under this chapter:

(a) if an extraordinary resolution to that effect is passed; or

(b) when the period (if any) fixed for the duration of the sub-fund by the instrument of incorporation of the ICVC expires, or any event occurs on the occurrence of which the instrument of incorporation provides that the sub-fund is to be terminated; or

(c) on the date stated in any agreement by the FSA to a request from the directors of the ICVC for the termination of the sub-fund.

01/12/2004

Solvency statement

CIS 14.3.4

(1) Before a notice is given to the FSA under regulation 21 of the OEIC regulations of the proposal referred to in CIS 14.3.3 R (1)(a), the directors must make a full enquiry into the ICVC's affairs to the extent that they relate to the sub-fund so as to ascertain whether the ICVC will be able to meet its liabilities (including contingent and prospective liabilities).

(2) On or before that notice is given, the ACD must prepare a statement, reflecting the results of the enquiry in (1), and either:

(a) confirming that the ICVC will be able to meet all liabilities within twelve months of the date of the statement; or

(b) stating that the confirmation cannot be given.

(3) The statement referred to in (2) must:

(a) relate to the ICVC's affairs at a date which must not be more than 28 days before the date on which that notice is given to the FSA; and

(6) Termination of a sub-fund commences at the time at which the conditions referred to in CIS 14.3.3 R (1)(a) and CIS 14.3.3 R (1)(b) are both satisfied or, if later, the time determined under CIS 14.3.3 R (2) at which the sub-fund must be terminated.

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Consequences of commencement of termination of a sub-fund

CIS 14.3.5

(1) Immediately following the commencement of the termination of a sub-fund:

(a) CIS 4 (Single-pricing and dealing) and CIS 5 (Investment and borrowing powers) cease to apply to the shares and to the scheme property;

(b) the ICVC must cease to issue and cancel shares;

(d) no transfer of a share must be registered and no other change to the register of shareholders must be made without the sanction of the directors.

(2) If the ACD has not previously notified shareholders of the proposal to terminate the sub-fund, the ACD must, as soon as practicable after the commencement of the termination, give written notice of the commencement to the shareholders.

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Manner of termination

CIS 14.3.6

(1) The ACD must, as soon as practicable after the termination of the sub-fund has commenced, cause the scheme property to be realised and the liabilities to be met out of the proceeds.

(2) The ACD must give instructions to the depositary how those proceeds (until utilised to meet liabilities or pay distributions to shareholders) must be held. Those instructions must be with a view to the prudent protection of creditors and shareholders against loss.

(3) Provided there are sufficient liquid funds in the scheme property available after making adequate provision for the expenses of the termination and the discharge of the liabilities remaining to be discharged, the ACD may arrange for the depositary to make one or more interim distributions out of the funds to the shareholders proportionately to the right to participate in scheme property attached to their respective shares as at the date of the commencement of the termination.

(4) When the ACD has caused all the scheme property to be realised and all of the liabilities known to the ACD to be met, the ACD must arrange for the depositary to make a final distribution, on or before the date on which the termination account is sent to shareholders in accordance with CIS 14.3.7 R (5) (Termination account), of the balance remaining (net of a provision for any further expenses of the termination) to the shareholders in the same proportions as provided by (3).

(5) Paragraphs (1) to (4) are subject to the terms of any scheme of arrangement sanctioned by an extraordinary resolution passed on or before the commencement of the termination.

(7) In the case of (6) the ACD must cause the ICVC to distribute that part of the scheme property in specie to that or those shareholders in proportion to their respective rights to participate, after making such adjustments or retaining such provision as appears to the ACD appropriate for ensuring that that or those shareholders bear the proportion of the liabilities and the expenses of the distribution attributable to his or their shares.

(8) Where any sums (including unclaimed distributions) remain standing to the account of the scheme property following tender of payment (whether to a creditor or a shareholder) the ACD must instruct the depositary to retain the sums ("tendered sums") in an account ("unclaimed payments account") separate from any other part of the scheme property.

(9) The depositary must, if and when so instructed by the ACD, make a payment out of the unclaimed payments account for the purpose of settling a claim for a tendered sum.

(10) Any costs and reasonable expenses of the ACD for investigating a claim and any costs and expenses incurred by the depositary in making a payment out of the unclaimed payments account may be deducted from the payment and retained for its own benefit by the ACD or the depositary or both (as the case may be).

(11) The person entitled to any tendered sum is not entitled to any interest in respect of the unclaimed payments account and any interest arising in respect of the unclaimed payments account must be allocated between the continuing sub-funds of the ICVC in accordance with CIS 12.5.3 R (Allocation of scheme property).

(12) Amounts standing to the credit of an unclaimed payments account must be excluded from the value of the scheme property and must not be subject to any distribution under the provisions of CIS 14.2.6 R (Manner of winding up), but upon a dissolution of the ICVC under regulation 33 of the OEIC regulations, the depositary must cease to hold those amounts as part of that account and they will become subject to the provisions of CIS 14.2.6 R (9).

01/12/2004

Termination account

CIS 14.3.7

(1) As soon as the termination of the sub-fund (including distribution or provision for distribution in accordance with CIS 14.3.6 R (4)) has been completed, the ACD must prepare an account of the termination showing:

(a) how it has been conducted; and

(b) how the scheme property has been disposed of.

(2) The account in (1) must:

(a) if there is more than one director, following its approval by the board of directors, be signed on their behalf by the ACD and at least one other director; or

(b) if there is no director other than the ACD, be signed by the ACD.

(3) Once signed, this account is the "termination account" for the purposes of this chapter.

(4) The ACD must ensure that the ICVC's auditor makes a report to the shareholders in respect of the termination account which states the auditor's opinion whether the termination account has been properly prepared for the purpose of (1).

(5) Within two months of the termination of the sub-fund being completed, a copy of the termination account and the auditor's report on it must be sent to the FSA and to each person who was a shareholder (or the first named of joint holders) immediately before such completion.

01/12/2004

Duty to ascertain liabilities

CIS 14.3.8

(1) The ACD must use all reasonable endeavours to ensure that all the liabilities are discharged before the completion of the termination.

(2) The duty in (1) relates to all liabilities of which:

(a) the ACD is, or becomes, aware before the completion of the termination; or

(b) the ACD would have become aware before the completion of the termination had it used all reasonable endeavours to ascertain the liabilities.

(3) If the ACD rejects any claim against the ICVC in respect of a liability in whole or in part, the ACD must immediately send to the claimant written notice of its reasons for doing so.

01/12/2004

Reports and accounts

CIS 14.3.9

The obligations under CIS 9 (Income) and CIS 10 (Reports and accounts) continue in respect of a sub-fund being terminated until the completion of the termination.

01/12/2004

Liabilities of the ACD

CIS 14.3.10

(1) The ACD must keep the ICVC indemnified against any liability allocated or attributable to a sub-fund that has been terminated under these rules that was not discharged before the completion of the termination, except to the extent that the ACD can show that it has complied with CIS 14.3.8 R (Duty to ascertain liabilities).

(2) The liabilities of the ACD under (1) create a debt (in England and Wales in the nature of a specialty) accruing due from it on the completion of the termination and payable upon the demand of the ICVC.

01/12/2004

CIS 14.4

Winding up an AUT

01/12/2004

Explanation of CIS 14.4

CIS 14.4.1

This section (CIS 14.4) deals with the circumstances in which an AUT falls to be wound up and the manner of winding up. Under section 256 of the Act, the manager or trustee of an AUT may request the FSA to revoke the authorisation order in respect of that AUT. Section 257 of the Act gives the FSA the power to make any necessary directions.

01/12/2004

When an AUT is to be wound up

CIS 14.4.2

(1) Upon the happening of any of the events specified in paragraph (2) and not otherwise:

(a) CIS 4 (Single-pricing and dealing) or CIS 15 (Dual-pricing and dealing), whichever is applicable and CIS 5 or CIS 5A (Investment and borrowing powers) cease to apply to the AUT;

(b) the trustee must cease to issue and cancel units in the AUT;

(d) the manager must cease to arrange the issue or cancellation of units under CIS 4.5.3 R (Issues and cancellations through the authorised fund manager) or CIS 15.5.3 R (Issues and cancellations through the manager); and

(e) the trustee must proceed to wind up the AUT in accordance with CIS 14.4.3 R.

(2) The events referred to in (1) are:

(a) the authorisation order is revoked; or

(b) in response to a request to the FSA by the manager or the trustee for the revocation of the authorisation order, the FSA has agreed, albeit subject to there being no material change in any relevant factor, that, on the conclusion of the winding up of the AUT, the FSA will accede to that request; or

(c) the expiration of any period specified in the trust deed as the period at the end of which the AUT is to terminate; or

(d) the effective date of a duly approved scheme of arrangement, which is to result in the AUT that is subject to the scheme of arrangement being left with no property; and

(e) The date on which a relevant pension scheme is notified in writing by the Occupational Pensions Schemes Regulatory Authority that the scheme is no longer registered under the Welfare and Pensions Reform Act 1999 as a stakeholder pension scheme.

(3) This rule (CIS 14.4.2 R) is without prejudice to CIS 13.1.3 R (Suspension and resumption of dealing: requirement) and to any order or direction made under section 257 or 258 of the Act.

01/11/2002

Manner of winding up

CIS 14.4.3

(1) In a case falling within CIS 14.4.2 R (2)(d), the trustee must wind up the AUT in accordance with the approved scheme of arrangement.

(2) In any other case falling within CIS 14.4.2 R:

(a) the trustee must, as soon as practicable after the AUT falls to be wound up, realise the scheme property;

(b) after paying therefrom or retaining adequate provision for all liabilities properly so payable and for the costs of the winding up, the trustee must distribute the proceeds of that realisation to the unitholders and the manager (upon production by them of such evidence as the trustee may reasonably require as to their entitlement thereto) proportionately to their respective interests in the AUT as at the date of the relevant event referred to in CIS 14.4.2 R; and

(c) any unclaimed net proceeds or other cash (including unclaimed distribution payments) held by the trustee after the expiration of twelve months from the date on which they became payable must be paid by the trustee into court (or, in Scotland, as the court may direct), subject to the trustee having a right to retain any expenses incurred by him relating to that payment.

(3) In the case of an AUT which is a relevant pension scheme, payments must not be made to unitholders in the AUT. The realisation proceeds must be paid by the trustee in accordance with the destinations specified in the trust deed.

(4) Where the trustee and one or more unitholders agree, the requirement in (2) to realise the scheme property does not apply to that part of the property proportionate to the entitlement of that or those unitholders. The trustee may distribute that part in the form of property, after making adjustments or retaining provisions as appears to the trustee appropriate for ensuring that, that or those unitholders bear a proportional share of the liabilities and costs.

(5) On completion of the winding up in respect of the events referred to in CIS 14.4.2 R (2)(b), (c) or (d), the trustee must notify the FSA in writing of that fact and at the same time the manager or trustee must request the FSA to revoke the relevant authorisation order.

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Accounting and reports during winding up

CIS 14.4.4

(1) Subject to any order of the court, and to paragraphs (2) and (3), while an AUT is being wound up, whether under CIS 14.4.3 R or otherwise:

(a) the annual and half-yearly accounting periods continue to run;

(b) the provisions about annual and interim allocation of income (in CIS 9) continue to apply; and

(2) Where, for any annual or half-yearly accounting period, the trustee (after consulting the manager (if appropriate) and the FSA) has taken reasonable care to determine that timely production of an annual or half-yearly report is not required in the interests of the unitholders or the FSA, it may direct that immediate production of the report may be dispensed with.

(3) The period in question in (2) must be reported on together with the following period in the next report prepared for the purposes of (1) or (4).

(4) At the conclusion of the winding up, the accounting period then running is regarded as the final annual accounting period.

(5) Within two calendar months after the end of the final accounting period, the annual reports of the manager and trustee must be published and sent to each person who was a unitholder immediately before the end of the final accounting period.

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CIS 14.5

Schemes that are not commercially viable

01/12/2004

Explanation of this section

CIS 14.5.1

(1) The FSA expects that the majority of requests it will receive for the winding up of an ICVC (under regulation 21(1) of the OEIC regulations) or an AUT (under section 256 of the Act) will be from authorised fund managers and depositaries who consider that the AUT or ICVC in question is no longer commercially viable.

(2) It is in consumers' interests to minimise, as far as possible, the period between which the FSA receives such requests and responds to them. To assist the FSA in arriving at a quick decision, based on all the relevant factors, it would be helpful for the FSA to receive the information listed at CIS 14.5.2 G. Further information, however, may be requested by the FSA after receipt of the information, depending on the individual circumstances of the case.

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Information to be provided to the FSA

CIS 14.5.2

The information referred to in CIS 14.5.1 G is listed below:

(1) name of the authorised fund;

(2) size of the authorised fund;

(3) number of holders;

(4) whether dealing in units has been suspended;

(5) why the request is being made;

(6) what consideration has been given to the authorised fund entering into a scheme of arrangement with another authorised fund or recognised scheme and the reasons why a scheme of arrangement is not possible;

(7)

(a) whether holders have been informed of the intention to seek winding up or revocation;

(b) if not, when they will be informed;

(8) details of any proposed preferential switching rights offered or to be offered to holders;

(9) details of any proposed rebate of charges to be made to holders who recently purchased units;

(10) where the costs of winding-up will fall;

(11) the depositary's:

(a) statement whether having taken reasonable care it is certain that a scheme of arrangement is not practical and explain what steps have been considered that would result in the authorised fund not needing to wind up (for example appointing a replacement authorised fund manager);

(b) confirmation that:

(i) for an ICVC, it expects to report in the next report and accounts that the issue, sale and redemption prices, the cancellation of the ICVC's shares and the application of the ICVC's income has been carried out in accordance with the rules in CIS, and, where applicable, the OEIC regulations and the ICVC's instrument of incorporation, and that the investment and borrowing powers applicable to the ICVC have not been exceeded; or

(ii) for an AUT, it expects to report in the next report and accounts that the manager has managed the AUT in accordance with the rules in CIS, or (for a report and accounts that is unqualified) that there are no unresolved problems concerning the authorised fund that ought to be brought to the FSA's attention in connection with the possible exercise of powers under section 256 of the Act;

(12) the preferred date for the FSA's determination to revoke authorisation or date for the winding up; and

(13) any additional information or material considered to be relevant to the FSA's decision under section 256 of the Act or regulation 21 of the OEIC regulations (as appropriate).

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