• COLL 3 COLL 3 Constitutional Requirements — QFC Schemes

    • COLL Part 3.1 COLL Part 3.1 Constitutional Document—QFC Schemes

      • COLL 3.1.1 What is the Constitutional Document for a QFC Scheme?

        The constitutional document, for a QFC scheme, is—

        (a) for a CIC-the articles of association of the company; and
        (b) for a CIP-the partnership agreement of the partnership; and
        (c) for a CIT-the trust instrument of the trust; and
        (d) for another permitted form of QFC scheme-any instrument creating the legal form of the entity.

        Note CIC, CIP, CIT and another permitted form of QFC scheme are defined in div 1.3.B (Legal forms for QFC schemes). Articles of association, partnership agreement and trust instrument are defined in the glossary.

        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 3.1.2 Matters to be Included in Constitutional Document—All QFC Schemes

        The constitutional document of a QFC scheme must include the statements and provisions required by schedule 2 (Constitutional document content—QFC schemes) for the scheme.

        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 3.1.3 Relationship Between Constitutional Document and These Rules—All QFC Schemes

        (1) The constitutional document of a QFC scheme must not contain a provision—
        (a) that conflicts with any provision of these rules; or
        (b) that is unfairly prejudicial to the interest of unitholders generally or to the unitholders of any class of units.

        Note Class is defined in the glossary.
        (2) A provision of the constitutional document of a QFC scheme has no effect to the extent—
        (a) that it conflicts with any provision of these rules; or
        (b) that it is unfairly prejudicial to the interest of unitholders generally or to the unitholders of any class of units.
        (3) However, a provision of the constitutional document of a QFC scheme must not be taken to conflict with a provision of these rules to the extent it can operate concurrently with the provision of these rules.
        (4) Any power given by these rules to a QFC scheme, or to the operator or independent entity of a QFC scheme, is subject to any applicable condition, restriction or requirement in the scheme's constitutional document.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 3.1.4 Constitutional Document and Checklist to be Filed with Registration Application—All QFC Schemes

        The person who is to become the operator of a scheme under these rules must file with the application for registration of the scheme—

        (a) a copy of the scheme's constitutional document; and
        (b) a checklist prepared by the person listing all the statements and provisions required by these rules and indicating where they are in the constitutional document.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 3.1.5 Amendments of Constitutional Document—All QFC Schemes

        (1) This rule applies if the constitutional document of a QFC scheme is amended.
        (2) Not later than 21 days after the day the amendment is made, the operator must file with the Regulatory Authority—
        (a) a copy of the amendment and the constitutional document as amended; and
        (b) a written certificate by the operator stating that—
        (i) the amendment was made in accordance with these rules and the scheme's constitutional document; and
        (ii) the constitutional document as amended does not contain a provision that conflicts with any provision of these rules.

        Note See pt 5.4 (Unitholder approvals and notice—QFC schemes) for the unitholder approval or notice required for amendments of the constitutional document.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 3.1.6 Prohibited Amendments of Constitutional Document— QFC UCITS Type Schemes

        The constitutional document of a QFC UCITS type scheme must not be amended in such a way that it ceases to be a UCITS type scheme.

        Note UCITS type scheme is defined in r 1.3.5.

        Amended by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL Part 3.2 COLL Part 3.2 Units—QFC Schemes

      • COLL Division 3.2.A COLL Division 3.2.A Units—All QFC schemes

        • COLL 3.2.1 Fractions of Units—All QFC Schemes

          The constitutional document of a QFC scheme may authorise the scheme to issue fractions of units.

          Note Constitutional document is defined in r 3.1.1.

          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.2 Smaller and Larger Denomination Shares etc—CICs

          (1) The constitutional document of a CIC may provide that the rights attached to shares of any class are to be expressed in 2 denominations; one of which (the smaller denomination) is to be such proportion of the other (the larger denomination) as is fixed by the constitutional document.

          Note CIC is defined in r 1.3.7. Constitutional document is defined in r 3.1.1.
          (2) For any class of shares of a CIC to which subrule (1) applies, any share with rights expressed in the smaller denomination is a smaller denomination share, and any share with rights expressed in the larger denomination is a larger denomination share.
          (3) For any class of shares of a CIC that is not expressed in 2 denominations, the rights that attach to a share of the class are equal to the rights that attach to every other share of that class.
          (4) For any class of shares of a CIC that is expressed in 2 denominations—
          (a) the rights that attach to a share of the class are equal to the rights that attach to every other share of that class of the same denomination; and
          (b) the rights that attach to a smaller denomination share of the class are the relevant proportion of the rights that attach to a larger denomination share of that class.
          (5) For subrule (4) (b):

          relevant proportion means the proportion fixed by the constitutional document (as mentioned in subrule (1)).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.3 Bearer Certificates Must not be Issued—All QFC Schemes

          (1) Bearer certificates must not be issued for units in a QFC scheme.
          (2) In this rule:

          bearer certificate means a certificate or other document evidencing title that indicates that the bearer is entitled to the units in the QFC scheme stated in it.

          Note Document evidencing title is defined in the glossary.
          Amended by QFCRA RM/2016-1 (as from 19th September 2016)

      • COLL Division 3.2.B COLL Division 3.2.B Units—QFC Qualified Investor Schemes

        • COLL 3.2.4 Classes of Units—QFC Qualified Investor Schemes

          (1) The operator of a QFC qualified investor scheme may issue the classes of units that are set out in the constitutional document.

          Note Class is defined in the glossary. Constitutional document is defined in r 3.1.1.
          (2) However, the operator may issue a class of units only if the rights of unitholders of any class are not unfairly prejudiced as against the interests of the unitholders of any other class of units.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.5 Limited Issue—QFC Qualified Investor Schemes

          (1) This rule applies to units in a QFC qualified investor scheme if, under the constitutional document, the issue of the units may be limited.
          (2) The operator may only issue the units if the issue—
          (a) is permitted by the constitutional document; and
          (b) is in accordance with the conditions, restrictions and requirements (if any) stated in the latest filed prospectus; and
          (c) will not materially prejudice any existing unitholders.

          Note Latest filed prospectus is defined in the glossary.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL Division 3.2.C COLL Division 3.2.C Units—QFC Retail Schemes

        • COLL 3.2.6 Classes of Units—QFC Retail Schemes

          (1) The constitutional document of a QFC retail scheme may—
          (a) provide for different classes of units to be issued; and
          (b) if the scheme is an umbrella scheme—provide for different classes of units to be issued for a subscheme.

          Note Constitutional document is defined in r 3.1.1. Umbrella scheme and subscheme are defined in r 1.2.11.
          (2) However, a new unit class must not be issued, or an existing unit class amended, if that would result in prejudice to unitholders of any other unit class.
          (3) Also, the nature, operation and effect of a unit class must be reasonably capable of being explained clearly to prospective unitholders.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.7 Currency Class Units—QFC Retail Schemes

          (1) This rule applies to a currency class unit in a QFC retail scheme.

          Note 1 A currency class unit differs from other units mainly in that its price, having been calculated initially in the base currency will be quoted (and normally paid for) in the currency of the designation of the class. Income distributions will also be paid for in the currency of designation of the class.

          Note 2 Currency class unit, base currency and class are defined in the glossary.
          (2) The currency of the class must not be the base currency.
          (3) However, if the units in a subscheme are, in accordance with a statement in the latest filed prospectus, to be valued in a currency other than the base currency, the currency of the class may be in the base currency, but must not be in that other currency.

          Note Subscheme is defined in r 1.2.11.
          (4) The price must be expressed in the currency of the class.

          Note Price is defined in the glossary.
          (5) Any distribution must be paid in the currency of the class.
          (6) Statements of amounts of money or values included in statements must be given in the currency of the class (whether or not also given in the base currency).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.8 Rights of Unit Classes—QFC Retail Schemes

          (1) If any class of units in a QFC retail scheme has different rights from another class of units in the scheme, the constitutional document must provide a method for calculating the proportion of the value of the scheme property, and the proportion of income available for allocation, attributable to each such class.

          Note Class is defined in the glossary.
          (2) For a QFC retail scheme that is not an umbrella scheme, the constitutional document must not provide for any class of units in relation to which—
          (a) the extent of the rights to participate in the capital property, income property or distribution account would be decided differently from the extent of the corresponding rights for any other class of units; or
          (b) payments or accumulation of income or capital would differ in source or form from those of any other class of units.

          Note Capital property, income property and distribution account are defined in the glossary.
          (3) For a QFC retail scheme that is an umbrella scheme, subrule (2) (a) applies to classes of units in relation to each subscheme as if each subscheme were a separate QFC retail scheme.
          (4) Subrules (2) and (3) do not prohibit a difference between the rights attached to classes of units that relates solely to any of the following:
          (a) the accumulation of income by way of periodical credit to capital rather than distribution;
          (b) charges and expenses that may be taken out of the scheme property or payable by the unitholders;
          (c) the currency in which prices or values are expressed or payments made.

          Note Price is defined in the glossary.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.9 Smaller and Larger Denomination Shares—QFC Retail Schemes

          (1) This rule applies if the constitutional document of a CIC that is a QFC retail scheme provides, in relation to any class of shares, for smaller denomination shares and larger denomination shares.

          Note CIC is defined in r 1.3.7. Smaller denomination share and larger denomination share are defined in r 3.2.2 (2).
          (2) If a registered holding of shares includes a number of smaller denomination shares that can be consolidated into a larger denomination share of the same class, the operator must consolidate the relevant number of the smaller denomination shares into a larger denomination share.
          (3) To effect a transaction in shares, the operator may substitute the relevant number of smaller denomination shares for a larger denomination share.
          (4) If the operator acts under subrule (3), subrule (2) does not apply to the resulting smaller denomination share holding until the transaction is completed.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.10 Subdivision and Consolidation of Units—QFC Retail Schemes

          (1) Unless expressly forbidden by the constitutional document, the operator of a QFC retail scheme may decide—
          (a) that each unit in any class is to be subdivided into 2 or more units; or
          (b) that units in any class are to be consolidated.
          (2) The operator must immediately give notice to each unitholder (or the first named of joint unitholders) of any subdivision or consolidation under subrule (1).
          (3) Subrule (2) does not apply if the operator had given the notice before the subdivision or consolidation became effective.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.11 Guarantees and Capital Protection—QFC Retail Schemes

          (1) This rule applies if there is—
          (a) any arrangement intended to result in a particular capital or income return from a holding of units in a QFC retail scheme; or
          (b) any investment objective of giving protection to the capital value of, or income return from, a holding of units in a QFC retail scheme.
          (2) The arrangement or protection must not create the possibility of a conflict of interest as between—
          (a) unitholders and the operator or independent entity; or
          (b) unitholders intended and not intended to benefit from the arrangement.
          (3) If, in accordance with any information mentioned in schedule 4 (Prospectus content—QFC retail schemes), rule S4.27 (a) (iv) (Additional information), action is required by the unitholders to obtain the benefit of any guarantee, the operator must provide reasonable written notice to unitholders before the action is required.

          Note The Regulatory Authority may direct the operator of a QFC scheme to change the name of the scheme if the name implies a degree of security in relation to the capital or income that is not justified (see r 8.9.1 (3) (h) and (5) to (11).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 3.2.12 Switching Rights—QFC Retail Umbrella Schemes

          In accordance with the Financial Services Regulations, schedule 3, part 3, paragraph 6.5, the participants in a QFC retail scheme that is an umbrella scheme are entitled to exchange rights in a subscheme for rights in another subscheme of the umbrella scheme.

          Note Umbrella scheme and subscheme are defined in r 1.2.11.

          Derived from QFCRA RM/2010-05 (as from 1st January 2011)