UPRU Prudential sourcebook for UCITS Firms

Export part as

UPRU 1

UCITS firms

UPRU 1.1

Introduction

Application

UPRU 1.1.1

See Notes

handbook-rule
This sourcebook and any provisions of the Interim Prudential sourcebook for investment businesses incorporated into this sourcebook by reference, apply to every UCITS firm.

UPRU 1.1.2

See Notes

handbook-guidance

Firms are reminded that a UCITS management company can be either:

UPRU 1.1.3

See Notes

handbook-guidance
  1. This sourcebook only applies to UCITS firms. UCITS investment firms are BIPRU limited licence firms and the prudential requirements for those firms are set out in the Prudential sourcebook for banks, building societies and investment firms and the General prudential sourcebook. The difference between the two types of UCITS management companies is that a UCITS investment firm in addition to carrying on the activities permitted by Article 5.2 of the UCITS Directive (scheme management), may also carry on the activities permitted by Article 5.3 such as portfolio management.
  2. (2) IFPRU limited licence firms and the prudential requirements for those firms are set out in the Prudential sourcebook for Investment Firms and the EU CRR.
  3. The difference between the two types of UCITS management companies is that a UCITS investment firms in addition to carrying on the activities permitted by Article 6(2) of the UCITS Directive (scheme management), may also carry on the activities permitted by Article 6(3) such as portfolio management.

UPRU 1.2

Purpose

UPRU 1.2.1

See Notes

handbook-guidance
  1. (1) The purpose of this sourcebook is to amplify Principle 4 (Financial prudence) which requires a firm to maintain adequate financial resources to meet its designated investment business commitments and to withstand the risks to which its business is subject. This assists in the achievement of the regulatory objectives of consumer protection and market confidence.
  2. (2) This sourcebook also implements certain requirements of the UCITS Directive as amended by the amending Council Directive 2001/107/EC which among other matters imposes capital requirements on a UCITS management company.

UPRU 2

Prudential requirements

UPRU 2.1

Financial resources and financial resources requirements

Financial resources

UPRU 2.1.1

See Notes

handbook-rule
A firm must ensure that it has at all times financial resources which equal or exceed the applicable financial resources requirement.

Financial resources requirement

UPRU 2.1.2

See Notes

handbook-rule

The financial resources requirement for a firm is the higher of:

  1. (1) subject to a maximum requirement of €10,000,000:
    1. (a) initial capital requirement of €125,000; plus
    2. (b) if the funds under management exceed €250,000,000, an additional amount of 0.02% of the excess; or
  2. (2) 13/52 of its annual audited fixed expenditure.

Annual audited fixed expenditure

UPRU 2.1.3

See Notes

handbook-rule

For the purposes of this sourcebook, a firm's annual audited fixed expenditure is:

  1. (1) the amount described as total expenditure in the most recent annual financial return, less the following items (if they are included within that expenditure):
    1. (a) staff bonuses, except to the extent that they are guaranteed;
    2. (b) employees' and directors' shares in profits, except to the extent that they are guaranteed;
    3. (c) other appropriations of profits;
    4. (d) shared commission and fees payable which are directly related to commission and fees receivable which are included within total revenue;
    5. (e) interest charges in respect of borrowings made to finance the acquisition of the firm's readily realisable investments;
    6. (f) interest paid to customers on client money;
    7. (g) interest paid to counterparties;
    8. (h) fees, brokerage and other charges paid to clearing houses, exchanges and intermediate brokers for the purposes of executing, registering or clearing transactions;
    9. (i) foreign exchange losses;
    10. (j) other variable expenditure; or
  2. (2) where the previous accounting period does not include twelve months' trading, an amount calculated in accordance with (1) pro-rated to an equivalent annual amount; or
  3. (3) where a firm has not prepared an annual financial return or annual accounts since the commencement of its permitted business, an amount based on forecast expenditure included in the budget for the first twelve months' trading, as submitted with its application for authorisation.

UPRU 2.1.4

See Notes

handbook-guidance
A firm's financial resources requirement will be recalculated and audited annually when its annual financial return is prepared. The firm should maintain financial resources sufficient to meet its new financial resources requirement from the date on which the annual financial return is approved by the auditor. The annual audited fixed expenditure applicable at the accounting reference date to which the annual financial return is prepared will be that based on the previous year's figures. This will usually be the same as that used in the fourth quarter's quarterly financial return prepared to the same accounting reference date.

UPRU 2.2

Method of calculation of financial resources

UPRU 2.2.1

See Notes

handbook-rule

UPRU 2.3

Application of certain rules in the interim prudential sourcebook for investment businesses

UPRU 2.3.1

See Notes

handbook-rule
  1. (1) The following rules in the Interim Prudential sourcebook for investment businesses apply to a firm in respect of qualifying subordinated loans, qualifying undertakings and records:
    1. (a) IPRU(INV) 5.2.5(1), (2) and (4) to (7) R;
    2. (b) IPRU(INV) 5.2.6(3) R; and
    3. (c) IPRU(INV) 5.3.1(1) R and IPRU(INV) 5.3.1(4) to 5.3.1(6) R.
  2. (2) References in those rules to:
    1. (a) IPRU(INV) Table 5.2.2(1) R are to be construed as references to UPRU Table 2.2.1 R;
    2. (b) IPRU(INV) 5.2.3(1) R are to be construed as references to UPRU 2.1.1 R;
    3. (c) IPRU(INV) 5.3.1(3) R are to be construed as references to UPRU 2.4.1 R; and
    4. (d) IPRU(INV) 5.2.1(2) are to be construed as references to UPRU 2.1.1 R.

UPRU 2.4

Records

UPRU 2.4.1

See Notes

handbook-rule
A firm must ensure that proper accounting records are kept in English to show and explain the firm's own account transactions.

Transitional Provisions and Schedules

UPRU TP 1

Transitional Provisions for UPRU

UPRU Sch 1

Record keeping requirements

UPRU Sch 1.1

See Notes

handbook-guidance

UPRU Sch 2

Notification requirements

UPRU Sch 2

See Notes

handbook-guidance

UPRU Sch 3

Fees and other required payments

UPRU Sch 3

See Notes

handbook-guidance

UPRU Sch 4

Powers exercised

UPRU Sch 4.1

See Notes

handbook-guidance

UPRU Sch 4.2

See Notes

handbook-guidance

UPRU Sch 5

Rights of action for damages

UPRU Sch 5.1

See Notes

handbook-guidance
The table below sets out the rules in this sourcebook contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

UPRU Sch 5.2

See Notes

handbook-guidance
Actions for damages: the Prudential sourcebook for UCITS Firms

UPRU Sch 6

Rules that can be waived

UPRU Sch 6.1

See Notes

handbook-guidance