Prudential Regulation Authority Rulebook

(1) There are three broad levels of regulation of collective investment schemes in the United Kingdom. These can be summarised as EU regulation, UK legislation and regulation by the FSA.

(2) EU collective investment scheme product regulation was introduced in 1985 by the Undertakings for Collective Investment in Transferable Securities Directive (UCITS Directive) and has been updated on several occasions by amendments to that Directive, with a revised version in 2009. If a scheme is established and authorised in the United Kingdom and complies with the provisions of the UCITS Directive, it is a UCITS scheme and is capable of being promoted throughout the EEA. However, not all regulated collective investment schemes are UCITS schemes (see COLLG 1A.1.3 G). COLLG 2A (European legislation) provides more detail on the scope and contents of the UCITS Directive.

(3) The main UK legislation is the Act (under which AUTs operate) and the Open-Ended Investment Company Regulations (OEIC Regulations) (under which ICVCs (also known as OEICs) operate). COLLG 3A (The FSA's responsibilities under the Act) provides details on the FSA's responsibilities under the Act; how a firm may go about applying for authorisation of a unit trust scheme or recognition of an overseas scheme; and what notifications are required to the FSA in terms of changes to those schemes. COLLG 4A (The FSA's responsibilities under the OEIC Regulations) provides details on the FSA's responsibilities under the OEIC Regulations; how a firm may go about applying for authorisation of an ICVC; and what notifications are required to the FSA in respect of changes to the ICVC.

(4) The main FSA requirements are set out in the Handbook, in particular in COLL. COLL is a specialist sourcebook of the Handbook and is structured in a way that gives rules and guidance on specific aspects of AUT and ICVC regulation and on recognised schemes. COLLG 5A (The COLL sourcebook) provides details of the structure of COLL.

(2) The promotion of regulated collective investment schemes is restricted by the Act. Under section 238 of the Act (Restrictions on promotion), regulated collective investment schemes may be promoted by authorised persons. UCITS schemes, non-UCITS retail schemes and recognised schemes may be promoted to retail investors. Qualified investor schemes may only be promoted to certain prescribed category of investor (see COLLG 5.1.3G(8)).

(1) An ICVC (or investment company with variable capital) is an open-ended investment company (or OEIC) as defined by section 236 of the Act (Open-ended investment companies) which is incorporated under the OEIC Regulations. Section 262 of the Act (Open-ended investment companies) empowers HM Treasury to make provisions relating to open-ended investment companies, which it has done by way of the OEIC Regulations, including provisions relating to the establishment of ICVCs. The FSA may authorise an ICVC by making an authorisation order under regulation 14 of the OEIC Regulations. Paragraph 1(3) of Schedule 5 to the Act states that an authorised open-ended investment company is an authorised person. So, an ICVC is an authorised person.

(2) An ICVC is constituted by an instrument of incorporation. Regulation 15(4) of the OEIC Regulations requires an ICVC to have at least one director. Where there is only one director, that director must be a body corporate with the permission of acting as the depositary or sole director of an open-ended investment company. COLL refers to this person as an authorised corporate director (ACD). A depositary must take responsibility for the safekeeping of the scheme property. The depositary must be independent of the ICVC and each of its directors.

(3) The directors and the depositary are required to comply with the OEIC Regulations and the rules in COLL and, in accordance with paragraph 6(1) of Schedule 2 to the OEIC Regulations, are also bound by the provisions of the instrument of incorporation.

(1) No person may carry on a regulated activity by way of business in the United Kingdom, or purport to do so, unless he is an authorised person (or an exempt person). This prohibition is referred to in the Act as the general prohibition. Guidance for persons considering carrying on regulated activities in the United Kingdom can be found in PERG. The FSA website page "How do I get authorised?"(http://www.fsa.gov.uk/doing/how) gives guidance on how to apply to the FSA for a Part IV permission . This authorisation is different to the authorisation of an AUT or an ICVC, as referred to in COLLG 1A.1.4 G and COLLG 1A.1.5 G respectively.

(3) The FSA maintains a public register of persons who have a permission to carry on a regulated activity. The register also contains details of all regulated collective investment schemes and it can be consulted on the FSA's website at www.fsa.gov.uk/fsaregister .