• Section 3 Section 3 Members and Share Capital

    • Article 16 - Members

      (1) The incorporators of an Investment Club are deemed to have agreed to become Members of the Investment Club by signing the incorporation document and on incorporation shall be entered as such in the Investment Club's register of Members (persons other than incorporators who have died or been dissolved).
      (2) Every other person who agrees to become a Member of the Investment Club and whose Name is entered in the register of Members after obtaining the QFC Authority's non-objection, is a Member of the Investment Club.
      (3) A person may cease to be a Member of an Investment Club in accordance with the articles of association of the Investment Club, as well as by death or dissolution.
      (4) A Member of an Investment Club can be of any nationality and either a natural person or a Body Corporate.
      (5) An Investment Club must have at least 2 Members and not more than 15 Members.
      (6) Every Investment Club shall keep a register of Members, together with:
      a. a statement of the Shares held by each Member, distinguishing each Share by its number (if the Share has a number) and, where the Investment Club has more than one class of issued Shares, by its class;
      b. the date on which each person was registered as a Member; and
      c. the date on which any person ceased to be a Member.
      (7) All Shares initially issued by the Investment Club to its Members shall be fully paid by way of cash consideration in accordance with Article 93 of these Regulations before the date of the issue of the Shares to the Member.
      (8) The value of the Shares in the Investment Club shall at all times be equal to the value of the assets of any kind of the Investment Club after the deduction of liabilities.
      Derived (as from 20th December 2016).

    • Article 17 - Rectification of register of Members

      (1) If:
      a. the Name of a person, the number of Shares held or the class of Shares held is, without sufficient reason, not entered in or omitted from an Investment Club's register of Members; or
      b. there is a failure or unnecessary delay in entering on the register the fact of a person having ceased to be a Member,
      a person aggrieved, or a Member of the Investment Club may apply to the CRO for rectification of the register.
      (2) The CRO may refuse the application or may order rectification of the register.
      (3) Whether or not the CRO exercises its power under Article 16(2), the QFC Civil and Commercial Court may make one or more of the following orders:
      a. on application by the CRO, an order enforcing any orders made by it under this Article 17;
      b. on application by a person aggrieved, a Member of the Investment Club or the Investment Club, an order directing the CRO to, or not to order the rectification of the register or to do any act or thing; or
      c. on application by a person aggrieved, an order requiring the Investment Club to pay damages or to do any act or thing.
      Derived (as from 20th December 2016).

    • Article 18 - Allotment of Shares

      (1) An Investment Club's director may, if authorised in accordance with Article 18 (2), offer, allot, grant options over or otherwise dispose of the Investment Club's unissued Shares to a person, at a time and on terms that the directors determine.
      (2) A disposal of Shares under Article 18(1) must be authorised by a Special Resolution of Members unless the Investment Club's articles of association provide for an Ordinary Resolution.
      (3) A disposal of Shares under Article 18(1) is subject to:
      a. any limitation of provision to the contrary in the Investment Club's articles of association; and
      b. any rights previously conferred on the holders of any existing Shares or class of Shares.
      Derived (as from 20th December 2016).

    • Article 19 - Subsequent Allotment of Shares

      (1) This Article applies to any allotment of Shares by an Investment Club other than the initial issue referred to in Article 18.
      (2) If the consideration to be paid for the Shares is other than cash, the Investment Club:
      a. must determine (by resolution) a reasonable cash value for the Shares;
      b. must resolve that the consideration is fair and reasonable for both the Investment Club and the Members; and
      c. must resolve that the cash consideration is not at a discount to the Share value to be credited for the issue of the Shares.
      (3) The resolution:
      d. if the Investment Club's articles of association so provide — may be an Ordinary Resolution of the Members, or a resolution of the directors; or
      e. must be a Special Resolution of the Members.
      (4) The resolution must include:
      a. a description of the consideration;
      b. a statement of the cash value of the consideration; and
      c. a statement of the basis for the assessment of that cash value.
      (5) The basis of assessing the Investment Club's asset value for the purposes of allotting Shares:
      a. may be specified in the Investment Club's articles of association;
      b. if not specified, must be determined by the Investment Club's directors and approved by Special Resolution for each allotment.
      (6) If a basis for the assessment of the Investment Club's asset value cannot be agreed, the asset value must be determined by an independent expert appointed for that purpose by Special Resolution, or (if the articles of association so provide) an Ordinary Resolution.
      (7) After the allotment of Shares has been approved, the Investment Club must notify the QFC Authority in the prescribed form and pay the prescribed fee (if any). The QFC Authority must, within 30 days of the notification, inform the Investment Club whether the QFC Authority objects to the allotment. If the QFC Authority has not objected within 30 days of receiving the notification, the QFC Authority is taken to have no objection.
      (8) The Investment Club must not register the allotment until the QFC Authority has confirmed that it does not object, or is taken, under paragraph 7 to have no objection.
      Derived (as from 20th December 2016).

    • Article 20 - Return as to allotments

      When an Investment Club makes an allotment of its Shares, the Investment Club shall within 30 days thereafter deliver to the CRO for registration a return of the allotments in the Prescribed Form stating the number and nominal amount of the Shares comprised in the allotment, the Names and Addresses of the allottees, and the amount paid for each Share, and, in the event that any Shares are allotted for a consideration other than cash, a statement of the consideration for which they have been so allotted.

      Derived (as from 20th December 2016).

    • Article 21 - Allotment of Shares at a discount

      (1) An Investment Club may allot Shares at a discount to their nominal value if the value of the Shares so allotted:
      a. is less than the nominal value of the Shares; and
      b. is proportionate to the asset value of the Investment Club.
      (2) For such an allotment, the asset value of the Investment Club must be determined as for an allotment under Article 19.
      Derived (as from 20th December 2016).

    • Article 22 - Transfer of Shares

      (1) The articles of association of an Investment Club must provide that no transfer of its Shares takes effect until:
      a. the Investment Club's Members have approved it by Special Resolution (or, if the articles of association so provide, by Ordinary Resolution); and
      b. the QFC Authority has confirmed in writing that it does not object (or is taken, under Article 22(3) below to have no objection).
      (2) An Investment Club must not register a transfer of its Shares unless:
      a. the transferor has executed a written instrument of transfer; and
      b. the transfer has been effected in accordance with the Rules.
      (3) After the transfer is approved by resolution (as provided in Article 22(1)), the Investment Club must notify the QFC Authority in the prescribed form and pay the prescribed fee (if any). The QFC Authority must inform the Investment Club, within 30 days of the notification, whether the QFC Authority objects to the transfer. If the QFC Authority has not objected within 30 days of receiving the notice of the transfer, the QFC Authority is taken to have no objection.
      (4) An Investment Club may refuse to register the transfer of a Share to a person that is not al a Member (even if the transfer has been approved by resolution in accordance with Article 22(1)) if the transfer contravenes these Regulations, the Rules or the Investment Club's articles of association. If an Investment Club refuses to register a transfer of Shares, the Investment Club must notify the transferor and transferee of the refusal within 21 days.
      (5) Nothing in this Article affects the power of an Investment Club to register as a Member a person to whom the right to a Share of the Investment Club has been transmitted by operation of law.
      (6) A transfer of a Share of a deceased Member of an Investment Club by the Member's personal representative is as valid as if the representative had been a Member when the instrument of transfer was executed.
      Derived (as from 20th December 2016).

    • Article 23 - Transfer of Shares requires QFC Authority Non-objection

      (1) The articles of association of an Investment Club must provide that no transfer of Shares in the Investment Club shall take effect until the transfer has been approved by a Special Resolution, or (if the articles of association so provide) an Ordinary Resolution, and the QFC Authority has confirmed in writing that it does not object to the transfer or is deemed to not object to the transfer.
      (2) An Investment Club may refuse to register the transfer of a Share to a person or entity which is not an existing Member and which has been approved by a Special Resolution or Ordinary Resolution in accordance with Article 23(1) if the transfer contravenes these Regulations, the Rules or the articles of association of the Investment Club. If an Investment Club refuses to register a transfer of Shares, the Investment Club shall promptly send to the transferor and transferee a notice of the refusal.
      (3) If a transfer of Shares of an Investment Club ("Share Transfer") has been approved by a Special Resolution or an Ordinary Resolution in accordance with Article 23(1), the Investment Club must notify the QFC Authority. The QFC Authority shall within 30 days of the notification of Share Transfer advise the Investment Club if the QFC Authority objects to the Share Transfer. If the QFC Authority has not so objected within 30 days of the receipt of the notice of the Share Transfer, the QFC Authority shall be deemed to have no objection.
      (4) An Investment Club must not register a Share Transfer before such time as the QFC Authority has confirmed or is deemed to have confirmed that the QFC Authority does not object to the transfer.
      Derived (as from 20th December 2016).

    • Article 24 - Issue of certificates

      (1) For each of its Shares allotted or transferred, an Investment Club must issue a certificate no later than 30 days after the allotment is made or the transfer is registered in the Investment Club's register of Members.
      (2) A certificate issued by an Investment Club specifying the Shares held by a Member is evidence of the Member's title to the Shares.
      Derived (as from 20th December 2016).

    • Article 25 - Rights Attaching to Shares

      (1) To the extent permitted by its articles of association, an Investment Club may create different classes of Shares. Subject to these Regulations, the rights attaching to Shares (or any class of Shares) shall be determined by the articles of association of the Investment Club.
      (2) The articles of association of the Investment Club shall set out:
      a. the right to vote at a meeting of the Investment Club carried by each class of Share;
      b. the right to repayments of capital attaching to each class of Share;
      c. the right to participate in any undistributed profit of each class of Share;
      d. the rights and obligations pertaining to the transfer of each class of Share;
      e. the right to dividends and other distributions attaching to each class of Share; and
      f. any other rights and obligations attaching to each class of Share.
      (3) Subject to the provisions of the articles of association of the Investment Club, each Share in the same class shall rank in all respects equally with any other Share in the Investment Club.
      (4) It shall not be lawful for an Investment Club to issue bearer Shares.
      Derived (as from 20th December 2016).

    • Article 26 - Alteration of Share Capital

      (1) An Investment Club, if so authorised by its articles of association, may alter its share capital by Ordinary Resolution in any of the following ways:
      a. increasing its authorised share capital by creating new Shares of such amount as it deems necessary;
      b. consolidating and dividing any or all of its Shares (whether issued or not) into Shares of a larger amount than its existing Shares;
      c. sub-dividing its Shares, or any of them, into Shares of a smaller amount than its existing Shares but so that, in the sub-division of any issued Shares, the proportion between the amount paid and the amount (if any) unpaid on each reduced Share shall be the same as it was in the case of the Share from which the reduced Share is derived;
      d. cancelling Shares which at the date of passing of the Ordinary Resolution to cancel them, have not been taken or agreed to be taken by any person, and diminishing the amount of the Investment Club's authorised share capital by the amount of the Shares so cancelled; and
      e. changing the currency denomination of its share capital or any class thereof to a currency denomination approved by the CRO.
      (2) A cancellation of Shares under this Article 26 does not for the purposes of these Regulations constitute a reduction of share capital.
      (3) An Investment Club having altered its share capital pursuant to Article 26(1), shall within 21 days thereafter give notice in the Prescribed Form to the CRO, together with a copy of the Ordinary Resolution effecting the alteration.
      Derived (as from 20th December 2016).

    • Article 27 - Class Rights

      (1) If provision for the variation of the rights attached to a class of Shares is made in the articles of association of the Investment Club, those rights may only be varied in accordance with those provisions.
      (2) If provision for the variation of the rights attached to a class of Shares is not included in the articles of association the rights may be varied if, but only if:
      a. the holders of three quarters in nominal value of the Shares of the class consent in writing to the variation; or
      b. a Special Resolution passed at a separate meeting of the holders of that class sanctions the variation.
      (3) Any alteration of a provision in the articles of association for the variation of the rights attached to a class of Shares, or the insertion of any such provision into the articles of association shall itself be treated as a variation of those rights.
      (4) If the rights attached to any class of Shares are varied in the manner referred to above, the holders of not less than 15 percent of the nominal value of the Shares of the class (being persons who did not consent to, or vote in favour of a resolution for the variation) may apply to the QFC Civil and Commercial Court to have the variation cancelled.
      (5) The application for cancellation of the variation must be made within 21 days after the date on which the consent was given or the resolution was passed and may be made on behalf of the Members entitled to make it by one or more of them as they may appoint in writing.
      (6) On any such application the QFC Civil and Commercial Court, after hearing the applicant and any other persons who apply to the QFC Civil and Commercial Court to be heard and appear to the QFC Civil and Commercial Court to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the Members represented by the applicant, disallow or cancel the variation and shall, if not so satisfied, confirm the variation.
      (7) The decision of the QFC Civil and Commercial Court on any such application shall be final.
      (8) In this Article 27, "variation" includes abrogation and "varied" is to be construed accordingly.
      Derived (as from 20th December 2016).

    • Article 28 - Reduction of Share Capital

      (1) An Investment Club, if authorised by an Ordinary Resolution and its articles of association, may reduce its Share capital in any way.
      (2) In particular, and without prejudice to the generality of Article 28(1), an Investment Club may:
      a. cancel any paid up share capital that is lost or unrepresented by available assets; or
      b. pay off any paid up share capital that is in excess of the Investment Club's requirements.
      (3) No Investment Club shall reduce the amount of its Share capital under Article 28(1) unless it complies with the following:
      a. at a date not more than 30 days and not less than 15 days before the date from which the reduction of the Share capital is to have effect, the Investment Club shall publish a notice in a newspaper approved by the CRO stating the amount of the Investment Club's Share capital at such date, the amount to which, and manner in which, the Share capital is to be reduced and the date from which the reduction is to have effect; and
      b. on the date from which the reduction is to have effect a certificate shall be signed by at least two directors of the Investment Club or the sole director if there is only one director declaring either:
      (i) that on that date and following the reduction of capital, the realisable value of the Investment Club's Assets will not be less than the aggregate of its Liabilities and issued Share capital and the Investment Club will be able to satisfy its Liabilities as they fall due; or
      (ii) that all the creditors of the Investment Club on that date have consented to the reduction.
      (4) Where Shares are to be cancelled in order to reduce the capital of an Investment Club, the Shares shall be acquired at a price that is proportionate to the value of the portfolio and the process for valuing the Shares to be purchased shall be the process set out in Articles 19(5) and 19(6).
      (5) Where an Investment Club reduces the amount of its Share capital then within 30 days after the date on which the reduction takes effect the Investment Club shall file a notice in the Prescribed Form with the CRO together with a copy of the notice referred to in Article 28(3)(a) and the certificate referred to in Article 28(3)(b) above.
      Derived (as from 20th December 2016).

    • Article 29 - Power of an Investment Club to purchase own shares

      (1) An Investment Club may purchase its own Shares.
      (2) The articles of association of an Investment Club may specify or provide for terms and conditions on which the Investment Club will purchase a Member's Shares.
      (3) A Member of an Investment Club may request the Investment Club to purchase any or all of the Member's Shares out of the proceeds of the sale of assets of the Investment Club. The Member must make the request in the form provided by the CRO for that purpose, and must submit it to the person exercising the Investment Club's Senior Executive Function.
      (4) Subject to Article 29(2) and the Member complying with Article 29(3), the Investment Club must purchase the Shares. Such purchase must be:
      a. at a price agreed with the Member; or
      b. where there is no agreement, at a price which reflects the Member's share of the Investment Club's asset value at the time of the purchase by the Investment Club less any costs that are apportioned to the Shares at that time. If a basis for the assessment of the Investment Club's asset value cannot be agreed, the asset value must be determined by an independent expert appointed for that purpose by Special Resolution, or (if the articles of association so provide) an Ordinary Resolution.
      (5) The basis of assessing the Investment Club's asset value is to be:
      a. if the Investment Club's articles of association specify a manner of determination—that manner; or
      b. otherwise, a manner determined by the directors of the Investment Club and approved by a Special Resolution for each purchase of Shares.
      (6) The Investment Club must purchase the Shares within
      a. the time period specified in the articles of an association; or
      b. where there is no time period specified 30 days from the date that the Member submits the form to the Investment Club.
      (7) An Investment Club must cancel any Shares it has purchased. The Investment Club's issued capital must be reduced accordingly. The cancellation of Shares need not be approved by resolution if the purchase is made in accordance with this Article.
      (8) If the Investment Club has only the minimum number of Members and 1 Member requests the Investment Club to purchase all of his or her Shares:
      a. the Investment Club must purchase the Shares; but
      b. after purchasing the Shares, the Investment Club must commence the process of voluntary winding-up as set out in the Insolvency Regulations and Rules.
      Derived (as from 20th December 2016).

    • Article 30 - Prohibition of Financial Assistance

      (1) An Investment Club shall not (directly or indirectly) provide financial assistance to a person to acquire its Shares.
      (2) In this Article 30, reference to "financial assistance" is a reference to financial assistance of any kind and includes:
      a. making a loan;
      b. making a gift;
      c. issuing a debenture;
      d. giving security over assets; or
      e. giving a guarantee or indemnity in respect of another person's liability.
      (3) The prohibition on financial assistance in this Article 30 shall not preclude:
      a. a distribution of the Investment Club's Assets by way of dividend lawfully made or a distribution made in the course of the Investment Club's winding up;
      b. the allotment of bonus Shares;
      c. a reduction of Share capital in accordance with these Regulations; or
      d. a purchase of Shares in accordance with these Regulations.
      Derived (as from 20th December 2016).

    • Article 31 - Dividends and Other Distributions

      (1) Subject to any limitations or provisions to the contrary in its articles of association, an Investment Club may, by a resolution of its directors, declare and pay or make dividends or other distributions in money, Shares or other property.
      (2) An Investment Club shall not declare, make or pay any dividend or other distribution if there are reasonable grounds for believing that:
      a. the Investment Club would after the payment of the dividend or making of the distribution be unable to satisfy its Liabilities as they become due; or
      b. the realisable value of the Investment Club's assets would thereafter be less than the aggregate of its Liabilities and its issued Share capital.
      Derived (as from 20th December 2016).

    • Article 32 - Consequences of an unlawful dividend or other distribution

      Where a dividend or other distribution, or part thereof, made by an Investment Club to any of its Members is made in contravention of Article 31 and, at the time of such dividend or other distribution, the Member knows or has reasonable grounds for believing that it is so made, he is liable to repay it, or that part of it, to the Investment Club or, in the case of a dividend or other distribution made otherwise than in cash, to pay the Investment Club a sum equal to the value of the dividend or other distribution or such part thereof, at that time, together with, in either case, interest at a rate prescribed, or calculated in accordance with, rules made by the QFC Authority.

      Derived (as from 20th December 2016).