• COLL 8 COLL 8 Operating Duties and Responsibilities—QFC Schemes

    Notes for ch 8

    1 This chapter provides the operating framework within which a QFC scheme must be operated on a day-to-day basis to ensure that persons are treated fairly when they become, while they remain, or as they cease to be, unitholders.
    2 The operator operates the scheme on a day-to-day basis. Its operation is governed particularly by the provisions of this chapter.
    3 The operator does not necessarily have to carry out all the activities it is responsible for and may outsource functions to others. This chapter sets out the parameters of any outsourcing.
    4 The independent entity's duty is, generally speaking, to safeguard the scheme property and to oversee certain functions of the operator (most notably the dealing, valuation, pricing and investment functions).
    Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL Part 8.1 COLL Part 8.1 Dealing—QFC Schemes

      • COLL Division 8.1.A COLL Division 8.1.A Dealing—QFC Qualified Investor Schemes

        • COLL 8.1.1 Application of Div 8.1.A to Umbrella Schemes—QFC Qualified Investor Schemes

          (1) This division applies to each subscheme of a QFC qualified investor scheme that is an umbrella scheme as if it were a separate QFC qualified investor scheme.

          Note Umbrella scheme and subscheme are defined in r 1.2.11.
          (2) The currency of a subscheme may, if appropriate, be used for the subscheme instead of the base currency of the umbrella scheme.

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

        • COLL 8.1.2 Initial Offer—QFC Qualified Investor Schemes

          (1) The period of the initial offer for a QFC qualified investor scheme, and how it ends, must be set out in the latest filed prospectus and must not be of unreasonable length.

          Note Initial offer and latest filed prospectus are defined in the glossary.
          (2) During the initial offer period, units may only be issued at the initial price.

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

        • COLL 8.1.3 How Units are Issued and Redeemed Etc—QFC Qualified Investor Schemes

          (1) Units in a QFC qualified investor scheme are issued or redeemed on behalf of the scheme by the operator making a record of—
          (a) the issue or redemption; and
          (b) the number or percentage of the units in each class that are issued or redeemed.

          Note Issue, redemption and class are defined in the glossary.
          (2) Units in a QFC qualified investor scheme cannot be issued or redeemed in any other way.
          (3) The time of an issue or redemption under subrule (1) is the time the record is made.
          (4) The operator of a QFC qualified investor scheme may arrange for the independent entity to issue or redeem units on behalf of the scheme if the operator would otherwise be obliged to issue or redeem the units on behalf of the scheme.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.4 Controls Over Issue and Redemption of Units—QFC Qualified Investor Schemes

          (1) The operator of a QFC qualified investor scheme must ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders of that class.

          Note Valuation point and class are defined in the glossary.
          (2) In issuing or redeeming units, the operator must not do, or fail to do, anything that would, or might, give the operator, or an associated person for the operator, a benefit or advantage at the expense of a unitholder or potential unitholder.

          Note Issue, redemption and associated person are defined in the glossary.
          (3) The operator must, as required by these rules and the latest filed prospectus—
          (a) issue and redeem units on behalf of the scheme; and
          (b) arrange for the payment of money or transfer of assets to or from the independent entity for scheme.

          Note Money and latest filed prospectus are defined in the glossary.
          (4) The operator of must keep a record of the issues and redemptions it makes.
          (5) If the operator breaches subrule (1) or (2), it must—
          (a) correct the breach as quickly as possible; and
          (b) reimburse the scheme any costs the scheme may have incurred in correcting the breach, subject to any reasonable minimum level for reimbursement provided in the latest filed prospectus.

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

        • COLL 8.1.5 Issue and Redemption of Units in Multiple Classes—QFC Qualified Investor Schemes

          (1) This rule applies to a QFC qualified investor scheme if the scheme has 2 or more classes of units in issue.

          Note Class is defined in the glossary.
          (2) The operator may treat all, or any 2 or more, of the classes (the relevant classes) as a single class in deciding how many units are to be issued or redeemed by reference to a particular valuation point if—
          (a) either—
          (i) the relevant classes have the same entitlement to participate in the scheme property, and the same liability for charges, expenses, and other payments, that may be recovered from the scheme property; or
          (ii) the relevant classes differ only as to whether income is distributed or accumulated by periodic credit to capital, and the price of the units in each class is calculated by reference to undivided shares in the scheme property; and
          (b) the independent entity gives its prior agreement.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.6 Issue and Redemption Generally—QFC Qualified Investor Schemes

          (1) The operator of a QFC qualified investor scheme must, at all times during a dealing day, be willing to issue units on behalf of the scheme to any eligible person in accordance with any conditions stated in the constitutional document and the latest filed prospectus, unless the operator has reasonable grounds to refuse the issue.

          Note Dealing day, issue and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1.
          (2) Conditions mentioned in subrule (1) must be fair and reasonable as between all unitholders and potential unitholders.
          (3) The operator of a QFC qualified investor scheme must, at all times during a dealing day, be willing to redeem on behalf of the scheme units of an eligible unitholder in accordance with any conditions in the constitutional document and the latest filed prospectus, unless the operator has reasonable grounds to refuse the redemption.

          Note Redemption is defined in the glossary.
          (4) On agreeing to redeem units under subrule (3), the operator must arrange for the independent entity to pay the appropriate proceeds of the redemption to the unitholder within any reasonable period provided in the constitutional document or the latest filed prospectus, unless the operator or independent entity has reasonable grounds for withholding payment.
          (5) Payment of proceeds on redemption must be made in any way provided in the latest filed prospectus.
          (6) The way provided for in the latest filed prospectus for subrule (5) must be fair as between redeeming unitholders and continuing unitholders.
          (7) The operator must issue or redeem units at a price calculated at the next valuation point for dealing purposes after receiving the instructions to issue or redeem the units.
          (8) If a QFC qualified investor scheme is operating limited redemption arrangements, the arrangements must provide for the operator to redeem units in the scheme at least once every 6 months.

          Note Limited redemption arrangements is defined in the glossary.

          Guidance on limited redemption periods

          The maximum period between dealing days for a QFC qualified investor scheme will depend on the reasonable expectations of the target investor group and the particular investment objectives, strategies and policy of the scheme. For example, for a scheme aiming to invest in large property developments, the expectation would be that it is reasonable to have a longer period between dealing days for liquidity reasons than for a scheme investing predominantly in listed securities.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.7 When Instructions for Issue and Redemption Must be Given—QFC Qualified Investor Schemes

          (1) The latest filed prospectus of a QFC qualified investor schemes must fix a time before a valuation point (the cut-off point) after which the operator must not accept instructions to issue or redeem units on behalf of the scheme at the valuation point.
          (2) The cut-off point must not be earlier than the close of business on the business day before the valuation point to which it relates.
          (3) However, if there are 2 or more valuation points on a day, the cutoff point for a valuation point must not be earlier than the valuation point immediately before it.

          Examples

          If there are 3 valuations points at 10 am, 12 noon and 2 pm on a business day (the relevant day), the cut-off points for the valuations points must comply with the following:
          (a) the cut-off point for the 10 am valuation point cannot be earlier than the close of business on the business day before the relevant day;
          (b) the cut-off point for the 12 noon valuation point cannot be earlier than 10 am on the relevant day;
          (c) the cut-off point for the 2 pm valuation point cannot be earlier than 12 noon on the relevant day.
          (4) Different cut-off points may be used to differentiate between the methods of submitting instructions to redeem to the operator but not to differentiate between unitholders or potential unitholders.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.8 Limited Issue—QFC Qualified Investor Schemes

          If a QFC qualified investor scheme limits the issue of units in any class, units in the class can only be issued if the issue—

          (a) is in accordance with the constitutional document and the latest filed prospectus; and
          (b) will not materially prejudice any existing unitholders.

          Note Issue, class and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1.

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

        • COLL 8.1.9 Issue Only to Qualified Investors—QFC Qualified Investor Schemes

          To remove any doubt, the operator of a QFC qualified investor scheme must not issue units in the scheme to a person who is not a qualified investor for the scheme.

          Note Issue is defined in the glossary. Qualified investor, for a QFC scheme, is defined in r 1.2.12 (2).

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

      • COLL Division 8.1.B COLL Division 8.1.B Dealing—QFC Retail Schemes

        Notes for div 8.1.B

        1 The operator of a QFC retail scheme is responsible for issuing and redeeming units on behalf of the scheme. The provisions of this division are intended to ensure that the operator treats persons fairly if they give instructions to the operator to issue or redeem units.
        2 This division also sets out common standards for how the amounts in relation to unit transactions are to be paid. These arrangements include the initial offer of units and the exchange of units for scheme property.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.10 Application of Div 8.1.B to Umbrella Schemes—QFC Retail Schemes

          (1) This division applies to each subscheme of a QFC retail scheme that is an umbrella scheme as if it were a separate QFC retail scheme.

          Note Umbrella scheme and subscheme are defined in r 1.2.11.
          (2) The currency of a subscheme may, if appropriate, be used for the subscheme instead of the base currency of the umbrella scheme.

          Note 1 Base currency is defined in the glossary.

          Note 2 Details of the initial offer must be provided in any prospectus available during the initial offer period (see r S4.16 (c) (Dealing)).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.11 Initial Offers—QFC Retail Schemes

          (1) During the initial offer period for a QFC retail scheme, units may only be issued at the initial price.

          Note Initial offer and initial price are defined in the glossary.
          (2) The length of the initial offer period must not be unreasonable, taking into account the characteristics of the scheme.
          (3) The period of the initial offer comes to an end if the operator believes on reasonable grounds that the price that would reflect the current value of the scheme property would differ from the initial price by more than 2%.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.12 How Units are Issued and Redeemed Etc—QFC Retail Schemes

          (1) Units in a QFC retail scheme are issued or redeemed on behalf of the scheme by the operator making a record of—
          (a) the issue or redemption; and
          (b) the number or percentage of the units in each class that are issued or redeemed.

          Note Issue, redemption and class are defined in the glossary.
          (2) Units in a QFC retail scheme cannot be issued or redeemed in any other way.
          (3) The time of an issue or redemption under subrule (1) is the time the record is made.
          (4) The operator of a QFC retail scheme may arrange for the independent entity to issue or redeem units on behalf of the scheme if the operator would otherwise be obliged to issue or redeem the units on behalf of the scheme.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.13 Controls Over Issue and Redemption of Units—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders of that class.

          Note Valuation point and class are defined in the glossary.
          (2) In issuing or redeeming units, the operator must not do, or fail to do, anything that would, or might, give the operator, or an associated person for the operator, a benefit or advantage at the expense of a unitholder or a potential unitholder.

          Note Issue, redemption and associated person are defined in the glossary.
          (3) The operator must, as required by these rules and the latest filed prospectus—
          (a) issue and redeem units on behalf of the scheme; and
          (b) arrange for the payment of money or transfer of assets to or from the independent entity for the scheme.

          Note Money and latest filed prospectus are defined in the glossary.
          (4) The operator must keep a record of the issues and redemptions it makes.
          (5) If the operator breaches subrule (1) or (2), it must—
          (a) correct the breach as quickly as possible; and
          (b) reimburse the scheme any costs the scheme may have incurred in correcting the breach, subject to any reasonable level for reimbursement provided in the latest filed prospectus.

          Note Breach is defined in the glossary.
          (6) The operator must have systems and controls to ensure compliance with subrule (1).

          Guidance for controls
          1 GENE principle 4 requires an authorised firm to have effective systems and controls. GENE principle 7 requires an authorised firm to have regard to its customers' interests and to treat them fairly.
          2 The operator should agree a period with the independent entity during which the operator will issue or redeem units. A period up to the next valuation point, but in all cases within 24 hours, may be acceptable if the provisions mentioned in paragraph 1 are complied with.
          Amended by QFCRA RM/2014-3 (as from 1st January 2015)

        • COLL 8.1.14 Issue and Redemption of Units in Multiple Classes—QFC Retail Schemes

          (1) This rule applies to a QFC retail scheme if the scheme has 2 or more classes of units in issue.

          Note Class is defined in the glossary.
          (2) The operator may treat all, or any 2 or more, of the classes (the relevant classes) as a single class in deciding how many units are to be issued or redeemed by reference to a particular valuation point if—
          (a) either—
          (i) the relevant classes have the same entitlement to participate in the scheme property, and the same liability for charges, expenses, and other payments, that may be recovered from the scheme property; or
          (ii) the relevant classes differ only as to whether income is distributed or accumulated by periodic credit to capital, and the price of the units in each class is calculated by reference to undivided shares in the scheme property; and
          (b) the independent entity gives its prior agreement.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.15 Changes to Number of Units Issued or Redeemed—QFC Retail Schemes

          (1) Any instructions to the operator of a QFC retail scheme for the issue or redemption of units may be altered to change the number of units issued or redeemed if the independent entity, after having taken reasonable care in considering the matter—
          (a) is satisfied that—
          (i) the alteration corrects an error in the instruction; and
          (ii) the error is an isolated error; and
          (b) agrees with the change.
          (2) However, the instruction may be altered only within the period within which payment must be made in relation to the unit under rule 8.1.16 (Payment for issued units—QFC retail schemes) or rule 8.1.19 (Payment for redeemed units—QFC retail schemes).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.16 Payment for Issued Units—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must not issue units in the scheme to a person unless the person has paid the independent entity the price of the units and any payments required under rule 8.2.16 (Dilution—QFC retail schemes).

          Note Issue and price are defined in the glossary.
          (2) Any payment made to the independent entity under this rule must be in cash or cleared funds unless rule 8.1.20 (Issue or redemption otherwise than for cash—QFC retail schemes) applies.
          (3) If the operator breaches this rule, the operator must reimburse the scheme for any lost interest unless the amount involved is not, in the independent entity's opinion, material to the scheme.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.17 Issue and Redemption Generally—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must, at all times during a dealing day, be willing to issue units on behalf of the scheme to any person in accordance with any conditions stated in the constitutional document and the latest filed prospectus, unless the operator has reasonable grounds to refuse the issue.

          Note Dealing day, issue and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1.
          (2) Conditions mentioned in subrule (1) must be fair and reasonable as between all unitholders and potential unitholders.
          (3) The operator of a QFC retail scheme must, at all times during a dealing day, be willing to redeem on behalf of the scheme units of a unitholder, unless the operator has reasonable grounds to refuse the redemption.

          Note Redemption is defined in the glossary.
          (4) Subject to rule 8.1.21 (Deferred redemption—QFC retail schemes), the operator of a QFC retail scheme must issue or redeem units at a price calculated at the next valuation point for dealing purposes after the operator receives instructions to issue or redeem the units.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.18 When Instructions for Issue or Redemption Must be Given—QFC Retail Schemes

          (1) The latest filed prospectus of a QFC retail scheme must fix a time before a valuation point (the cut-off point) after which the operator must not accept instructions to issue or redeem units on behalf of the scheme at the valuation point.
          (2) The cut-off point must not be earlier than the close of business on the business day before the valuation point to which it relates.
          (3) However, if there are 2 or more valuation points on a day, the cutoff point for a valuation point must not be earlier than the valuation point immediately before it.

          Examples

          If there are 3 valuations points at 10 am, 12 noon and 2 pm on a business day (the relevant day), the cut-off points for the valuations points must comply with the following:
          (a) the cut-off point for the 10 am valuation point cannot be earlier than the close of business on the business day before the relevant day;
          (b) the cut-off point for the 12 noon valuation point cannot be earlier than 10 am on the relevant day;
          (c) the cut-off point for the 2 pm valuation point cannot be earlier than 12 noon on the relevant day.

          Note Rule 8.1.21 (Deferred redemption—QFC retail schemes) allows, in certain circumstances, redemptions at a valuation point to be deferred to the next valuation point.
          (4) Different cut-off points may be used to differentiate between the methods of submitting instructions to redeem to the operator but not to differentiate between unitholders or potential unitholders.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.19 Payment for Redeemed Units—QFC Retail Schemes

          (1) If the operator of a QFC retail scheme redeems units on behalf of the scheme, the operator must, before the close of business on the 4th business day after the day the units are redeemed (or, if later, as soon as practicable after delivery to the independent entity of the evidence of title to the units that the independent entity may reasonably require), request the independent entity to pay the former unitholder the price of the units less any deduction required under rule 8.2.16 (Dilution—QFC retail schemes).

          Note Redemption, business day and price are defined in the glossary.
          (2) The independent entity must make the payment to the unitholder before the close of business on the 6th business day after the day the independent entity receives the request under subrule (1).
          (3) If the scheme property does not, and will not within the period required by subrule (2), include sufficient cash to make the payment in the appropriate currency within that period and the scheme cannot borrow the amount needed to make the payment without breaching rule 7.7.3 (Borrowing limits—QFC retail schemes)), the period is extended, for the relevant currency, until the shortage is rectified.

          Note Borrowing is defined in the glossary.
          (4) If subrule (3) applies, the operator must take reasonable steps to rectify the currency shortage as quickly as possible.
          (5) This rule does not apply if the rule 8.1.20 (Issue or redemption otherwise than for cash—QFC retail schemes) applies.
          (6) This rule does not require the independent entity or operator to pay an amount or transfer scheme property for a redemption of units if an amount is owing on the earlier issue of the units.

          Note Redemption and issue are defined in the glossary.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.20 Issue or Redemption Otherwise than for Cash—QFC Retail Schemes

          The independent entity of a QFC retail scheme may take into or transfer out of the scheme property assets other than cash as payment for the issue or redemption of units, but only if—

          (a) it has taken reasonable care to ensure that the assets would not be likely to result in any material prejudice to the interests of unitholders; and
          (b) the constitutional document and the latest filed prospectus permit it.

          Note Issue and redemption are defined in the glossary. Constitutional document is defined in r 3.1.1.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.1.21 Deferred Redemption—QFC Retail Schemes

          (1) If a QFC retail schemes has at least 1 valuation point on each business day, the constitutional document and latest filed prospectus may permit deferral of redemptions at a valuation point to the next valuation point if the requested redemptions exceed—
          (a) 10% of the scheme's value; or
          (b) if the latest filed prospectus provides another reasonable percentage—that percentage of the scheme's value.

          Note Constitutional document is defined in r 3.1.1. Latest filed prospectus, business day, redemption and valuation point are defined in the glossary.
          (2) Any deferral of redemptions under subrule (1) must be undertaken in accordance with the procedures explained in the latest filed prospectus.
          (3) The procedures must ensure—
          (a) the consistent treatment of all unitholders who have sought to redeem units at any valuation point at which redemptions are deferred; and
          (b) that all deals relating to an earlier valuation point are completed before deals relating to a later valuation point are considered.

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

    • COLL Part 8.2 COLL Part 8.2 Valuation and Pricing—QFC Schemes

      • COLL Division 8.2.A COLL Division 8.2.A Valuation and Pricing—QFC Qualified Investor Schemes

        • COLL 8.2.1 Application of Div 8.2.A to Umbrella Schemes—QFC Qualified Investor Schemes

          (1) This division applies in relation to each subscheme of a QFC qualified investor scheme that is an umbrella scheme as if it were a separate QFC qualified investor scheme.

          Note Umbrella scheme and subscheme are defined in r 1.2.11.
          (2) The currency of a subscheme may, if appropriate, be used for the subscheme instead of the base currency of the umbrella scheme.

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

        • COLL 8.2.2 Valuation—QFC Qualified Investor Schemes

          (1) For these rules, the value of the scheme property of a QFC qualified investor scheme is its net asset value.

          Note Net asset value is defined in the glossary.
          (2) To calculate the price of units in the scheme, the operator must conduct a fair and accurate valuation of all scheme property, on a forward price basis, in accordance with—
          (a) these rules; and
          (b) the constitutional document and latest filed prospectus.

          Note Constitutional document is defined in r 3.1.1. Forward price and latest filed prospectus are defined in the glossary.
          (3) The valuation of investments held as part of the scheme property must reflect their mid-market value.
          (4) If single prices are quoted for both buying and selling investments, the latest filed prospectus must explain how the investments must be valued.
          (5) If the scheme invests in approved money-market instruments, the operator must value an approved money-market instrument on an amortised cost basis if the instrument has a residual maturity of less than 3 months and has no specific sensitivity to market parameters, including credit risk.

          Note Approved money-market instrument is defined in r 7.1.5.
          (6) Any part of the scheme property that is not an investment must be valued by the operator at a fair value.

          Note Investment is defined in the glossary.
          (7) An interest in an immovable must be valued by the scheme's standing independent valuer under division 6.2.C.
          (8) Any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable, on acquiring or disposing of an investment or other part of the scheme property must be excluded from the value of the investment or other part of the scheme property.
          Amended by QFCRA RM/2016-1 (as from 19th September 2016)

        • COLL 8.2.3 Valuation Points—QFC Qualified Investor Schemes

          (1) A QFC qualified investor scheme must have a valuation point on each dealing day, other than a dealing day during the initial offer period.

          Note Valuation point, dealing day and initial offer are defined in the glossary.
          (2) The operator must prepare a valuation of the scheme property in accordance with rule 8.2.2 at each valuation point.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.4 Prices of Units—QFC Qualified Investor Schemes

          (1) The price of the unit at a valuation point must be calculated by the operator—
          (a) on the basis of the valuation under rule 8.2.3 (2) at the valuation point; and
          (b) in a way that is fair and reasonable as between unitholders; and
          (c) in a way that is otherwise in accordance with the constitutional document and latest filed prospectus.

          Note Constitutional document is defined in r 3.1.1. Valuation point and latest filed prospectus are defined in the glossary.
          (2) The operator must publish in an appropriate way the price of each class of unit in the scheme, based on each valuation under rule 8.2.3 (2).

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

      • COLL Division 8.2.B COLL Division 8.2.B Valuation and Pricing—QFC Retail Schemes

        Note for div 8.2.B

        The operator of a QFC retail scheme is responsible for valuing the scheme property and for calculating the price of units. This division protects unitholders and potential unitholders by—

        (a) setting out rules to ensure that the price of units is calculated fairly and regularly; and
        (b) allowing the operator to mitigate the effects of any dilution (reduction) in value of the scheme property caused by buying and selling underlying investments as a result of the issue or redemption of units; and
        (c) ensuring that prices are made public in an appropriate way.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.5 Application of Div 8.2.B to Umbrella Schemes—QFC Retail Schemes

          (1) This division applies in relation to each subscheme of a QFC retail scheme that is an umbrella scheme as if it were a separate QFC retail scheme.

          Note Umbrella scheme and subscheme are defined in r 1.2.11.
          (2) The currency of a subscheme may, if appropriate, be used for the subscheme instead of the base currency of the umbrella scheme.

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

        • COLL 8.2.6 Duty of Operator to Rectify Breaches of Div 8.2.B—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must take immediate action to rectify any breach of this division.

          Note Breach is defined in the glossary.
          (2) If the breach relates to the incorrect pricing of units in relation to the issue of units, the rectification must extend to the reimbursement or payment of amounts by the operator to unitholders, former unitholders or the scheme.

          Note Issue and money are defined in the glossary.
          (3) However, if the independent entity considers that the breach is of minimal significance or that making the reimbursement or payment would be inappropriate, the independent entity may direct that rectification need not extend to reimbursement or payment.
          (4) The independent entity may consider the breach to be of minimal significance if—
          (a) the independent entity has reviewed the operator's controls (and supporting systems) in accordance with rule 8.2.12 (Review by independent entity of operator's pricing controls etc—QFC retail schemes); and
          (b) the independent entity is satisfied, based on the review, that the operator's pricing controls comply with rule 8.2.11 (Pricing controls of operatorQFC retail schemes); and
          (c) the error in pricing of a unit is less than 0.5% of the correct price.
          (5) If the breach was caused by 1 or more factors or existed over a period, then, in deciding whether the breach is of minimal significance, the independent entity must consider each incorrect price separately.
          (6) To remove any doubt, even though the independent entity considers the breach to be of minimal significance, the independent entity may require reimbursement or payment of amounts by the operator to unitholders, former unitholders or the scheme.
          (7) In deciding under subrule (3) whether reimbursement or payment is inappropriate, the independent entity must take into account the need not to prejudice the rights of unitholders or unitholders of a class of units.
          (8) If the independent entity decides that making the reimbursement or payment would be inappropriate, the independent entity must tell the Regulatory Authority about the breach and its decision immediately, but within 1 business day.

          Examples

          See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.

          Note See also r 4.2.4 (Duty of independent entity to report certain breaches of law etc—all QFC schemes).
          (9) The independent entity must give the Regulatory Authority any information about the breach and its decision that the authority reasonably requires.
          (10) The independent entity must satisfy itself that any reimbursement or payment required under this rule is accurately and promptly calculated and paid.
          (11) This rule does not require reimbursement to unitholders or former unitholders of amounts that the operator and independent entity reasonably consider to be immaterial.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.7 Valuation Requirement——QFC Retail Schemes

          To calculate the price of units in a QFC retail scheme, the operator must conduct a fair and accurate valuation of all scheme property, on a forward price basis, in accordance with—

          (a) these rules; and
          (b) the constitutional document and latest filed prospectus.

          Note Constitutional document is defined in r 3.1.1. Forward price and latest filed prospectus are defined in the glossary.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.8 General Rules for Valuation of Scheme Property—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must value the scheme's investments using a reputable source.
          (2) The operator must keep the reliability of the source of prices under regular review.
          (3) For some or all of the investments held as part of the scheme property, the operator may quote different prices according to whether they are being bought (offer prices) or sold (bid prices).
          (4) The valuation of investments held as part of the scheme property must reflect their mid-market value.
          (5) If single prices are quoted for both buying and selling investments, the latest filed prospectus must explain how the investments must be valued.

          Note Latest filed prospectus is defined in the glossary.
          (6) If the scheme invests in approved money-market instruments, the operator must value an approved money-market instrument on an amortised cost basis if the instrument has a residual maturity of less than 3 months and has no specific sensitivity to market parameters, including credit risk.

          Note Approved money-market instrument is defined in r 7.1.5.
          (7) Any part of the scheme property that is not an investment must be valued at fair value. An interest in an immovable held by a QFC retail property fund must be valued by the fund's standing independent valuer under rule 12.5.6.

          Note Under rules 12.3.2 (3) and 12.5.6, an investment in an intermediate holding vehicle for the purpose of holding an immovable:
          (a) must be treated as if it were a direct investment in the immovable; and
          (b) must be valued as an immovable.
          (8) Any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable, on acquiring or disposing of an investment or other part of the scheme property must be excluded from the value of the investment or other part of the scheme property.
          (9) The operator must—
          (a) document the basis of valuation of the scheme property (including any fair value pricing policy for rule 8.2.9) and, if appropriate, the basis of any methodology; and
          (b) act consistently and fairly in making a valuation.
          Amended by QFCRA RM/2016-1 (as from 19th September 2016)

        • COLL 8.2.9 Fair Value Pricing for Securities—QFC Retail Schemes

          (1) If the operator of a QFC retail scheme has reasonable grounds to believe—
          (a) that no reliable price exists for a security at a valuation point; or
          (b) that the most recent price available for a security does not reflect the operator's best estimate of the value of the security at the valuation point;
          the operator must value the security at a price that, in its opinion, reflects a fair and reasonable price for the security (the fair value price).

          Note Security and valuation point are defined in the glossary.
          (2) Without limiting subrule (1), the operator may use the fair market price for the security if—
          (a) there has been no recent trade in the security; or
          (b) a significant event has happened since the most recent closure of the market where the price of the security is taken.
          (3) For subrule (2) (b), an event is significant if, because of the event, the most recent price of the security (or a basket of securities that includes the security) is materially different from the price that the operator believes on reasonable grounds would have existed at the valuation point had the relevant market been open.
          (4) In deciding whether to use a fair value price for the security, the operator must consider the following:
          (a) the nature of the QFC retail scheme;
          (b) the kind of security;
          (c) the basis and reliability of the alternative price used;
          (d) the operator's policy on the valuation of scheme property as disclosed in the latest filed prospectus.
          (5) Subrule (4) does not limit the matters the operator may consider.
          (6) If the unit price is calculated by the operator using—
          (a) properly applied fair value prices in accordance with this rule; and
          (b) a documented fair value pricing policy for the scheme;
          any subsequent information that indicates that the price should (or should perhaps) have been different from the price calculated by the operator does not, of itself, establish that the price was incorrectly calculated by the operator.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.10 Valuation Points—QFC Retail Schemes

          (1) A QFC retail scheme must not have less than 2 regular valuation points in any month and, if there are only 2 valuation points in any month, the regular valuation points must be at least 2 weeks apart.

          Note The prospectus of a QFC retail scheme must contain information about its regular valuation points for the purpose of dealing in units in accordance with rule S4.15 (Valuation and pricing).
          (2) No valuation points are required during the initial offer period.

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

        • COLL 8.2.11 Pricing Controls of Operator—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must be able to demonstrate that it has effective controls over its calculations of unit prices.
          (2) Without limiting subrule (1), the controls must be appropriate to ensure that—
          (a) prices of units are calculated in accordance with this division; and
          (b) the likelihood of incorrect prices is minimised.
          (3) In particular, the controls must ensure all the following:
          (a) asset prices are accurate and up-to-date;
          (b) investment transactions are accurately and promptly reflected in valuations;
          (c) the components of the valuation (including stock, cash, and units in issue) are regularly reconciled to their source or prime records and any reconciling items resolved promptly and debtors reviewed for recoverability;
          (d) sources of prices not obtained from the main pricing source are recorded and regularly reviewed;
          (e) compliance with investment and borrowing powers is regularly reviewed;
          (f) dividends are accounted for as soon as securities are quoted ex-dividend (unless it is prudent to account for them on receipt);
          (g) fixed interest dividends, interest and expenses are accrued at each valuation point;
          (h) tax positions are regularly reviewed and adjusted, if necessary;
          (i) reasonable tolerances are set for movements in the key elements of a valuation, and movements outside the tolerances are investigated;
          (j) the operator regularly reviews the portfolio valuation for accuracy;
          (k) valuation of OTC derivatives is accurate, up-to-date and complies with methods agreed with the independent entity.

          Note OTC derivative is defined in the glossary.
          (4) In exercising its pricing controls, the operator may exercise reasonable discretion in deciding the appropriate frequency of the operation of the controls and may choose a longer interval, if appropriate, given the level of activity in the scheme or the materiality of any effect on the price.
          (5) The operator must keep records to demonstrate the exercise of effective pricing controls.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.12 Review by Independent Entity of Operator's Pricing Controls Etc—QFC Retail Schemes

          (1) This rule sets out the reviews that the independent entity of a QFC retail scheme must conduct to be satisfied that the operator has controls that are appropriate to ensure that—
          (a) prices of units are calculated in accordance with this division; and
          (b) the likelihood of incorrect prices is minimised.
          (2) A review must extend to pricing functions that the operator has outsourced to a third party.
          (3) In conducting a review, the independent entity must—
          (a) thoroughly examine the operator's controls (and supporting systems) to confirm that they are appropriate; and
          (b) analyse the controls (and supporting systems) to decide the extent to which reliance can be placed on them.
          (4) A review must be conducted when the independent entity is appointed and afterwards as it considers appropriate given its knowledge of the robustness and stability of the operator's controls (and supporting systems).
          (5) A review must be conducted more frequently if the independent entity knows or suspects that the operator's controls (or any supporting systems) are weak or otherwise unsatisfactory.
          (6) In addition, the independent entity must from time to time review other aspects of the valuation of the scheme property, verifying on a sample basis, if necessary—
          (a) the assets, liabilities, accruals, units in issue and securities prices (and in particular the prices of securities that are not approved securities and the basis for the valuation of unquoted securities); and

          Note Approved security is defined in r 7.1.9.
          (b) any other relevant matter (for example, an accumulation factor or a currency conversion factor).
          (7) The independent entity must ensure that any issue identified in a review is properly followed up and resolved.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.13 Recording and Reporting Incorrect Pricing—QFC Retail Schemes

          (1) The operator must make and keep a record of each instance where the price of a unit is incorrect.
          (2) The record must be made as soon as the error is discovered.
          (3) The operator must—
          (a) report each instance to the independent entity as soon a practicable; and
          (b) give the independent entity details of the action taken, or to be taken, to avoid repetition of the error.

          Note Rule 4.2.4 deals with the duty of the independent entity to report certain breaches of the law.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.14 Prices of Units—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must ensure that the price of a unit in any class is calculated—
          (a) by reference to the scheme's net asset value at the relevant time; and
          (b) in accordance with these rules, the constitutional document and the latest filed prospectus.

          Note Class, net asset value and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1.
          (2) To remove any doubt and without limiting subrule (1), the constitutional document or the latest filed prospectus (or both) may make provision for large deals to be conducted at a higher issue price or lower redemption price than those published for the scheme, if the prices do not exceed the relevant maximum and minimum limits applying under this division.

          Note Large deal and redemption are defined in the glossary.
          (3) Any unit price calculated in accordance with subrule (1) must be expressed in a form that is accurate to at least 4 significant figures.
          (4) For each class of units, a single price must be calculated at which units are to be issued and redeemed.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.15 Issue and Redemption Prices—QFC Retail Schemes

          The operator of a QFC retail scheme must not—

          (a) issue a unit for more than the price of a unit in the relevant class at the relevant valuation point, plus—
          (i) any issue charge permitted under rule 8.6.4 (Charges on buying and selling units—QFC retail schemes); and
          (ii) any payments required under rule 8.2.16 (Dilution—QFC retail schemes); or
          (b) redeem a unit for less than the price of a unit in the relevant class at the relevant valuation point, less—
          (i) any redemption charge permitted under rule 8.6.4; and
          (ii) any deductions required under rule 8.2.16.

          Note Class, valuation point, issue charge and redemption charge are defined in the glossary.

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

        • COLL 8.2.16 Dilution—QFC Retail Schemes

          (1) In issuing or redeeming units in a QFC retail scheme, the operator must include in the unit price the dilution adjustment the operator considers necessary to reduce the effect of dilution.

          Note 1 Issue, redemption, dilution adjustment and dilution are defined in the glossary.

          Note 2 See the independent entity's duties under r 8.2.17 (Particular duties of independent entity in relation to dilution—QFC retail schemes).
          (2) In issuing or redeeming units in a QFC retail scheme, the operator may, in exceptional circumstances, require the payment or deduction of a dilution levy for the purpose of reducing the effect of dilution if the independent entity has agreed that the levy should be required.

          Note Dilution levy is defined in the glossary.
          (3) In applying a dilution adjustment or dilution levy, the operator must act in a fair way to reduce dilution and solely for that purpose.

          Note Dilution is defined in the glossary.
          (4) A dilution adjustment is made—
          (a) as part of the calculation of the unit price for the purpose of reducing dilution in the scheme; or
          (b) to recover any amount the scheme has paid, or the operator reasonably expects it to pay, in relation to the issue or redemption of units.
          (5) A dilution levy is payable at the same time as payment or transfer of property is required for the issue or redemption.
          (6) As soon as practicable after a valuation point, the operator must tell the independent entity the rate or amount of any dilution adjustment or dilution levy.

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

        • COLL 8.2.17 Particular Duties of Independent Entity in Relation to Dilution—QFC Retail Schemes

          (1) The independent entity must take reasonable care to ensure that—
          (a) the operator considers whether or not to exercise the power under rule 8.2.16 (Dilution—QFC retail schemes) to require a dilution levy and, if applicable, the rate or amount of any dilution levy that is required; or

          Note Dilution levy is defined in the glossary.
          (b) the operator has, in considering the matters mentioned in paragraph (a), taken into account all factors that are material and relevant to the operator's decision; and
          (c) the operator has, in considering whether to exercise the power under rule 8.2.16 to require a dilution levy, acted in accordance with the restrictions of that rule.

          Note See r 4.2.3 (2) for other duties of the independent entity in relation to pricing.
          (2) To remove any doubt, the independent entity has no duty in relation to the operator's exercise of any discretion mentioned in subrule (1).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.2.18 Publication of Prices—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must make dealing prices public in an appropriate way.

          Note Deal is defined in the glossary.
          (2) In deciding the appropriate way of making prices public, the operator must ensure all the following requirements are met:
          (a) that a unitholder or potential unitholder can obtain the prices at a reasonable cost;
          (b) that prices are available at reasonable times;
          (c) that publication is consistent with the way and frequency at which the units are dealt in;
          (d) that the way prices are made public is disclosed in the latest filed prospectus;

          Note Latest filed prospectus is defined in the glossary.
          (e) that prices are published in a consistent way.
          (3) Without limiting subrule (1), publication in the following ways may be appropriate:
          (a) publication in a national newspaper;
          (b) supply through an advertised local rate or freephone telephone number;
          (c) publication on the internet;
          (d) inclusion in a database of prices that is publicly available;
          (e) communication to all existing unitholders.
          (4) The operator must make previous prices available to any unitholder or potential unitholder on request.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL Division 8.2.C COLL Division 8.2.C Valuation—Money-Market Funds

        • COLL 8.2.19 Maintaining Value—All Money-Market Funds

          (1) This rule applies to a QFC qualified investor scheme or QFC retail scheme that is a money-market fund.

          Note Money-market fund is defined in r 1.3.12.
          (2) The operator must conduct a valuation of the scheme property on a mark to market basis at least once every week and at the same valuation point used to value the scheme property on an amortised cost basis.

          Note Valuation point is defined in the glossary.
          (3) The operator must ensure that the value of the scheme property when valued on a mark to market basis does not differ by more than 0.5% from the value of the scheme property when valued on an amortised cost basis.
          (4) The operator must tell the independent entity in writing whenever a valuation discloses that the mark to market value of the money-market fund differs from its amortised cost basis value by more than 0.1%.
          (5) The operator must agree with the independent entity procedures designed to stabilise the money-market fund if the mark to market value of the scheme differs from its amortised cost basis value by 0.1%, 0.2% or 0.3%.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL Part 8.3 COLL Part 8.3 Title and Register—QFC Schemes

      • COLL 8.3.1 Unitholder Register Requirements—All QFC Schemes

        (1) The operator of a QFC scheme must ensure that the unitholder register includes—
        (a) the name and address of each person (a relevant person) who is or has been a unitholder (for joint unitholders, no more than 4 persons need to be included); and
        (b) the number or percentage of units (including fractions of a unit) in each class held by each relevant person; and
        (c) the date each relevant person was registered for the units in the person's name and, if relevant, ceased to be registered for the units in the person's name; and
        (d) the number or percentage of units in each class currently in issue.

        Note 1 Unitholder register is defined in the glossary. Unitholder and unit are defined in r 1.2.5 and r 1.2.4 respectively.

        Note 2 For the operator's obligation to keep the register, see r 4.1.6.
        (2) The operator must not enter notice of any trust (whether express, implied or constructive) on the register.
        (3) The operator and independent entity are not bound by notice of any trust.
        (4) The operator and independent entity must rely on the unitholder register as conclusive evidence of the persons entitled to the units entered on it, unless the units are listed units.

        Note Under rule 4.1.6 (3), the records (held in the QCSD or in the relevant exchange's registry or system) of transfers or titles to units in the scheme are taken to be the definitive unitholder register and a record in that registry or system is conclusive evidence of title to a listed unit.
        (5) The operator must take all reasonable steps to ensure that the information on the register is at all times complete and up to date.
        (6) Without limiting subrule (5), the operator must do the following in relation to the register:
        (a) take reasonable steps to update the register on receiving written notice of a change of name or address of a unitholder;
        (b) ensure that the register, or a copy of the register, is available for inspection in the QFC during ordinary business hours by or on behalf of any unitholder, the Regulatory Authority, the independent entity or the auditor of the scheme;
        (c) on request by or on behalf of any unitholder, give the unitholder a copy of the register entries relating to the unitholder free of charge;
        (d) after consultation with the independent entity, carry out the conversion of units allowed under rule 8.3.4 (Conversion of units—all QFC schemes).
        (7) However, subrule (6) (b) does not prevent the operator from closing the register for periods of not longer than 30 business days in any year.

        Note Business day and year are defined in the glossary.
        (8) If the operator receives written notice of a change of name of a unitholder and a certificate has been issued for the unitholder's units, the operator must also either endorse the existing certificate or issue an updated one.
        Amended by QFCRA RM/2016-1 (as from 19th September 2016)

      • COLL 8.3.2 Transfer of Units by Act of Parties—All QFC Schemes

        (1) Every unitholder of a QFC scheme is entitled to transfer units entered in the unitholder register in the unitholder's name by an instrument of transfer in any form that the operator approves, but the operator is under no duty to accept the transfer unless it is permitted by the constitutional document and the latest filed prospectus.

        Note Constitutional document is defined in r 3.1.1. Latest filed prospectus is defined in the glossary.
        (2) However, the operator of a QFC qualified investor scheme must not accept the transfer of units entered in the unitholder register unless the transferee is a qualified investor for the scheme.

        Note Qualified investor, for a QFC scheme, is defined in r 1.2.12 (2).
        (3) Every instrument of transfer of units in a QFC scheme must be signed by, or on behalf of, the unitholder transferring the units (or, if the unitholder is a corporation, may be signed by 2 members of its governing body on behalf of the corporation).

        Note Corporation and governing body are defined in the glossary.
        (4) The transferor must be treated as the unitholder until the transferee's name is entered in the unitholder register.
        (5) Every instrument of transfer must be left for registration with the operator accompanied by—
        (a) any document required by the law applying in the QFC; and
        (b) any other evidence reasonably required by the operator.
        (6) The operator must keep an instrument of transfer for at least 6 years after the day it is registered.
        (7) On registration of an instrument of transfer, a record of the transferor, the transferee and the date of transfer must be made in the unitholder register.
        (8) Despite anything in this rule, the transfer of a listed unit may be made electronically or in any other way permitted by the rules of the exchange where it is listed (or by the regulator of that exchange). A transfer made in such a way is sufficient to transfer title to the unit.
        Amended by QFCRA RM/2016-1 (as from 19th September 2016)

      • COLL 8.3.3 Certificates for Units—All QFC Schemes

        (1) If units in a QFC scheme are issued or rule 8.3.2 (Transfer of units by act of parties—all QFC schemes) is complied with in relation to the transfer of units in a QFC scheme, the operator may issue a document evidencing title to the units in accordance with the constitutional document.

        Note Document evidencing title is defined in the glossary. Constitutional document is defined in r 3.1.1.
        (2) However, the operator must issue a document evidencing title as soon as practicable if the procedures for redeeming units require unitholders to surrender the document evidencing title.
        (3) For a QFC scheme that is listed in the Qatar Stock Exchange or in any other regulated exchange, a record (held in the QCSD's, or relevant exchange's, registry or system) of a transfer or title to a unit is taken to be a document evidencing title to the unit.
        Amended by QFCRA RM/2016-1 (as from 19th September 2016)

      • COLL 8.3.4 Conversion of Units—All QFC Schemes

        (1) This rule applies to a QFC scheme if there are 2 or more classes of units offered for issue.

        Note Class and issue are defined in the glossary.
        (2) A unitholder has the right to convert the units from a class to another class if converting the units does not breach the latest filed prospectus.

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

    • COLL Part 8.4 COLL Part 8.4 Operator and Independent Entity Appointment and Removal—QFC Schemes

      • COLL 8.4.1 Initial appointment of Operator and Independent Entity—All QFC Schemes

        On the registration of a scheme under these rules—

        (a) the person named in the application for registration as the person who is to become the operator becomes the initial operator of the scheme; and
        (b) the person appointed by the operator, and named in the application for registration, as the person who is to become the independent entity becomes the initial independent entity of the scheme.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.4.2 Removal of Operator—QFC Schemes

        (1) The independent entity of a QFC scheme may, by written notice given to the operator, remove the operator if any of the following events happens:
        (a) a meeting is called to consider a resolution for winding up the operator;
        (b) an application is made to dissolve the operator or strike it off the register of companies;
        (c) a petition is presented for winding up the operator;
        (d) a composition is made or proposed by the operator with any of the operator's creditors;
        (e) an administrator is appointed for the operator;
        (f) anything equivalent to an event mentioned in paragraphs (a) to (e) happens in relation to the operator outside the QFC;
        (g) the independent entity forms the reasonable opinion, and states in writing, that a change of operator is desirable in the interest of the unitholders;
        (h) a special resolution of the unitholders is passed to remove the operator;

        Note Special resolution is defined in the glossary.
        (i) the unitholders of 75% in value of the units in issue make a written request to the independent entity for the operator's removal.
        (2) The independent entity must, by written notice given to the operator, remove the operator if the operator is no longer eligible to be the operator of the scheme under rule 4.1.1 (Requirements for operator—all QFC schemes) because of action taken by the Regulatory Authority under the Financial Services Regulations, whether or not under article 31 (Own initiative action by the Regulatory Authority).
        (3) If the independent entity gives the operator a notice under subrule (1) or (2), the independent entity must give the Regulatory Authority a copy of the notice immediately, but within 1 business day after the day the notice is given to the operator.

        Examples

        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        (4) On receipt of a notice by the independent entity under subrule (1) or (2)—
        (a) the operator ceases to be the operator of the scheme; and
        (b) is released from all further obligations under these rules and the constitutional document.

        Note Constitutional document is defined in r 3.1.1.
        (5) Subrule (4) (b) does not affect the rights of the independent entity or any other person in relation to an act or omission by the operator before its removal.
        (6) The independent entity must appoint another person as the operator of the scheme.
        (7) The person appointed must be eligible to be the operator of the scheme under rule 4.1.1.
        (8) If the name of the scheme contains a reference to the name of the former operator, the former operator is entitled to require the new operator and the independent entity to propose a change to the name of the scheme.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.4.3 Retirement of Operator—All QFC Schemes

        (1) The operator of a QFC scheme is entitled to retire as operator in favour of another person if—
        (a) the operator appoints the other person as operator and assigns all its rights and functions as operator to the person; and
        (b) the person is eligible to be the operator of the scheme under rule 4.1.1 (Requirements for operator—all QFC schemes); and
        (c) the independent entity approves the appointment of the person as operator.
        (2) On the appointment of the person taking effect, the former operator—
        (a) is released from all further obligations under these rules and the constitutional document; and

        Note Constitutional document is defined in r 3.1.1.
        (b) may keep any consideration paid to it in relation to the change without having to account for it to any unitholder.
        (3) Subrule (2) (a) does not affect the rights of the independent entity or any other person in relation to an act or omission by the former operator before its retirement.
        (4) On the retirement of the operator, the replacement operator must immediately, but within 1 business day after the day the replacement operator's appointment takes effect, tell the Regulatory Authority about the retirement and the appointment.

        Examples

        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.4.4 Consequences of Removal or Retirement of Operator—All QFC Schemes

        (1) If the operator of a QFC scheme is removed or retires, it is entitled to continue to be recorded in the unitholder register for the units it holds.
        (2) This rule is subject to any restriction in the latest filed prospectus relating to the permitted categories of unitholders.

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

      • COLL 8.4.5 Removal of Independent Entity by Unitholders—All QFC Schemes

        (1) The independent entity of a QFC scheme may be removed by a special resolution of the unitholders.

        Note Special resolution is defined in the glossary.
        (2) On the removal of the independent entity, the operator must—
        (a) tell the Regulatory Authority about the removal immediately, but within 1 business day after the day the independent entity is removed; and
        (b) appoint another person as the independent entity.

        Examples for r (2) (a) and r (4)

        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        (3) The person appointed must be eligible to be the independent entity of the scheme under rule 4.2.1 (Requirements for independent entity—all QFC schemes).
        (4) On the appointment of the person as the independent entity, the operator must tell the Regulatory Authority about the appointment immediately, but within 1 business day after the day the appointment is made.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.4.6 Removal of Independent Entity No Longer Eligible for Appointment—All QFC Schemes

        (1) This rule applies if the independent entity of a QFC scheme that is an authorised firm is no longer eligible to be the independent entity of the scheme under rule 4.2.1 (Requirements for independent entity—all QFC schemes) because of action taken by the Regulatory Authority under the Financial Services Regulations, whether or not under article 31 (Own initiative action by the Regulatory Authority).
        (2) The operator must, by written notice given to the independent entity, remove the independent entity.

        Note If the independent entity is not an authorised firm, the independent entity may also be removed under the following rules:
        •   r 4.2.12 (Non-QFC independent entities—removal by operators)
        •   r 4.2.13 (Non-QFC independent entities—removal by Regulatory Authority).
        (3) On the removal of the independent entity, the operator must—
        (a) tell the Regulatory Authority about the removal immediately, but within 1 business day after the day the independent entity is removed; and
        (b) appoint another person as the independent entity.

        Examples for r (3) (a) and r (5)

        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        (4) The person appointed must be eligible to be the independent entity of the scheme under rule 4.2.1.
        (5) On the appointment of the person as the independent entity, the operator must tell the Regulatory Authority about the appointment immediately, but within 1 business day after the day the appointment is made.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.4.7 Retirement of Independent Entity—All QFC Schemes

        (1) The independent entity of a QFC scheme may retire voluntarily only if—
        (a) the operator has appointed another person (the replacement) as the independent entity; and
        (b) the independent entity has told the Regulatory Authority and the replacement—
        (i) about any matter relating to its retirement that it considers should be drawn to their attention; and
        (ii) if there is no such matter—that there is no matter relating to its retirement that it considers should be drawn to their attention.
        (2) The replacement must be eligible to be the independent entity of the scheme under rule 4.2.1 (Requirements for independent entity—all QFC schemes).
        (3) The voluntary retirement of the independent entity takes effect only when the appointment of another person as independent entity takes effect.
        (4) On the retirement of the independent entity, the operator must immediately, but within 1 business day after the day the retirement takes effect, tell the Regulatory Authority about the retirement and the appointment of the other person as the independent entity.

        Examples

        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.4.8 Consequences of Removal or Retirement of Independent Entity—All QFC Schemes

        (1) If the independent entity of a QFC scheme is removed or retires, the independent entity must, without delay, transfer or deliver the scheme property held by it to the replacement independent entity unless the QFC Court otherwise orders.
        (2) Until all the scheme property has been transferred or delivered, the independent entity remains accountable for it to the unitholders.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL Part 8.5 COLL Part 8.5 Outsourcing—QFC Schemes

      • COLL 8.5.1 What is Outsourcing?

        (1) For these rules, outsourcing, for a QFC scheme, is any form of arrangement that involves the operator or independent entity of the scheme relying on a third party service provider (including a member of its group) for the exercise of a function in relation to the scheme under these rules, any other Rules, the constitutional document or the latest filed prospectus.

        Note Group, exercise, function and latest filed prospectus are defined in the glossary. Rules is defined in INAP. Constitutional document is defined in r 3.1.1.
        (2) However, outsourcing does not include the following arrangements:
        (a) discrete advisory services (including, for example, the provision of legal advice), audit services, procurement of specialised training, billing, and physical security;
        (b) supply arrangements and functions (including, for example, the supply of electricity or water and the provision of catering and cleaning services);
        (c) purchase of standardised services (including, for example, market information services and the provision of prices);
        (d) the appointment of a group employee to exercise a controlled function for an authorised firm.

        Note Employee, controlled function and authorised firm are defined in the glossary.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.5.2 Outsourcing by Operator—All QFC Schemes

        (1) The operator of a QFC scheme may outsource its functions in relation to the scheme in accordance with this part, and not otherwise.

        Note The outsourcing provisions of CTRL do not apply in relation to an outsourcing of functions under this part (see CTRL, rule 8.1.1).
        (2) However, the operator must not outsource to the independent entity, or to a related person for the independent entity, any of the functions of the operator under a provision of these rules, the constitutional document, or the latest filed prospectus, if rule 4.2.3 (1) (Oversight functions of independent entity—all QFC schemes) applies to the provision.

        Note Related person is defined in the glossary.
        (3) Subrule (2) does not apply to the outsourcing to the independent entity of the function of providing scheme administration.

        Note Providing scheme administration is defined in the glossary.
        (4) Also, the operator must not outsource functions if the outsourcing may adversely impact on the Regulatory Authority's ability to supervise the operator's activities.
        Amended by QFCRA RM/2012-5 (as from 1st July 2013).
        Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • COLL 8.5.3 Outsourcing by Independent Entity—All QFC Schemes

        (1) The independent entity of a QFC scheme may outsource its functions in relation to the scheme in accordance with this part, and not otherwise.

        Note The outsourcing provisions of CTRL do not apply in relation to an outsourcing of functions under this part (see CTRL, rule 8.1.1).
        (2) However, the independent entity must not—
        (a) outsource to the operator (or, if the QFC scheme is a CIC or CIP, to a member (however described) of the governing body of the CIC or CIP) any of the functions of the independent entity under rule 4.2.3 (Oversight functions of independent entity— all QFC schemes) or rule 4.2.6 (Property safeguarding functions of independent entity— all QFC schemes); or

        Note CIC and CIP are defined in r 1.3.7 and r 1.3.8 respectively. Governing body is defined in the glossary.
        (b) outsource to a related person for the operator (or, if the QFC scheme is a CIC or CIP, to a related person for a member (however described) of the governing body of the CIC or CIP) any of the functions of the independent entity mentioned in paragraph (a); or

        Note Related person is defined in the glossary.
        (c) outsource to a person the function of holding documents evidencing title to scheme property unless the person is prohibited under the outsourcing agreement from giving them to a third party without the independent entity's agreement.

        Note Document evidencing title is defined in the glossary.
        (3) Also, the independent entity must not outsource functions if the outsourcing may adversely impact on the Regulatory Authority's ability to supervise the independent entity's activities in relation to the scheme.
        Amended by QFCRA RM/2012-5 (as from 1st July 2013).
        Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • COLL 8.5.4 Outsourcing Notice and Information—All QFC Schemes

        (1) The operator or independent entity of a QFC scheme must give the Regulatory Authority reasonable notice of its intention to outsource a function under this part.
        (2) The notice must be given at least 10 business days before the day the operator or independent entity outsources the function.

        Note Business day is defined in the glossary.
        (3) The operator or independent entity must give the Regulatory Authority any information about the proposed outsourcing that the authority reasonably needs.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.5.5 Provisions Applying to Outsourcing by Operator and Independent Entity—All QFC Schemes

        (1) This rule applies in relation to an outsourcing of functions made by the operator or independent entity (the regulated entity) of a QFC scheme under this part to another person (the service provider).
        (2) The outsourcing must be in writing and in the form of, or part of, an agreement between the regulated entity and the service provider (the outsourcing agreement).
        (3) The outsourcing agreement must—
        (a) describe in adequate detail the functions (the outsourced functions) to be exercised by the service provider under the outsourcing; and
        (b) describe in adequate detail the service standards to be applied by the service provider in exercising the outsourced functions; and
        (c) state that it is an outsourcing agreement under these rules; and
        (d) ensure that the operator and independent entity can, at all times, effectively monitor the exercise of the outsourced functions by the service provider; and
        (e) authorise the regulated entity—
        (i) to give further instructions to the service provider about the exercise of the outsourced functions; and
        (ii) to withdraw the outsourcing at any time, including with immediate effect, if this is in the interests of the unitholders; and
        (f) not prevent the operator or independent entity from acting in the best interests of the unitholders in relation to the outsourced functions; and
        (g) not prevent the scheme from being managed in the best interests of the unitholders; and
        (h) ensure that the scheme's auditor can effectively exercise its functions in relation to the scheme; and
        (i) require the service provider to comply with these rules, and any other law applying in the QFC, in relation to the outsourced functions; and
        (j) apply the law of the QFC to the agreement; and
        (k) ensure that the regulated entity and its internal and external auditors have access to books, records and data relating to the exercise of functions under the outsourcing; and
        (l) ensure that the outsourcing provides appropriate protection for confidential information and personal data; and

        Note Personal data is defined in the glossary.
        (m) provide appropriate contingency arrangements; and

        Note See r 8.5.5 (2) and (3) (Outsourcing management).
        (n) require the service provider to deal with the Regulatory Authority in an open and cooperative way in relation to the exercise of the outsourced functions; and
        (o) require the service provider to give the Regulatory Authority access to books, records and data relating to the exercise of the outsourced functions; and
        (p) require the service provider to give the Regulatory Authority any information it reasonably requires about the outsourced functions; and
        (q) require the service provider to keep any records made by the service provider in relation to the outsourced functions for at least 6 years after the day they are made; and
        (r) prevent the service provider from further outsourcing any of the outsourced functions to another person without the prior approval of—
        (i) if the regulated entity is the operator—the operator; or
        (ii) if the regulated entity is the independent entity—the independent entity and the operator.
        (4) Without limiting subrule (3), the regulated entity must take the steps necessary to mitigate against any operational risks in relation to the outsourcing.
        (5) The outsourcing agreement may provide that it has effect only in stated circumstances or subject to stated conditions, limits and directions.
        (6) The outsourcing of the outsourced functions to the service provider—
        (a) does not relieve the regulated entity from any regulatory obligations in relation to the outsourced functions; and
        (b) does not prevent the regulated entity from exercising all or part of the outsourced functions, despite anything in the outsourcing agreement or any other agreement.
        (7) The regulated entity remains responsible for ensuring—
        (a) that all applicable QFC regulatory requirements are complied with in relation to the outsourced functions; and
        (b) that the outsourced functions are otherwise properly exercised.
        (8) The service provider must exercise the outsourced functions subject to the terms of the outsourcing agreement, including any conditions, limits and directions in the outsourcing agreement.
        (9) So far as the outsourcing agreement is expressed to operate as a delegation, these rules, all other laws applying in the QFC, the constitutional document and the latest filed prospectus apply to the service provider in exercising the outsourced functions as if the service provider were the regulated entity.

        Note Constitutional document is defined in r 3.1.1. Latest filed prospectus is defined in the glossary.
        (10) Without limiting subrule (9), a function may be exercised by the service provider on the service provider's state of mind if—
        (a) the exercise of the function is dependent on the regulated entity's state of mind; and
        (b) the function is included in the outsourced functions; and
        (c) the outsourcing agreement is expressed to operate as a delegation in relation to the function.
        (11) So far as the outsourcing agreement is expressed to operate as a delegation, anything done by or in relation to the service provider in relation to the outsourced functions is taken to have been done by or in relation to the regulated entity.
        (12) In this rule:

        state of mind includes knowledge, intention, opinion, belief or purpose.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.5.6 Outsourcing Management—All QFC Schemes

        (1) The operator and independent entity of a QFC scheme must exercise appropriate skill, care and diligence in selecting, entering into and exiting from outsourcings by them under this part.
        (2) The operator or independent entity must ensure that—
        (a) 1 or more senior managers approve and periodically review its policy and procedures for functions outsourced under this part, including its procedures for the following:
        (i) the assessment of feasibility;
        (ii) the assessment of risk;
        (iii) the assessment of impact on its functions;
        (iv) the costing of outsourcings;
        (v) the criteria for selecting service providers; and

        Note Senior manager is defined in the glossary.
        (b) every service provider has the ability and capacity to exercise reliably and professionally the functions to be outsourced to the service provider, both at the start of the outsourcing and throughout its life cycle, having regard, for example, to—
        (i) whether the service provider is regulated, to what extent and by whom; and
        (ii) whether the exercise of the outsourced functions is subject to specific regulation or supervision; and
        (iii) the risk that outsourced functions are not properly exercised because of the number of other persons using the service provider; and
        (iv) the financial stability and expertise of the service provider; and
        (v) potential conflicts of interest that may arise in relation to the outsourced functions.
        (3) The operator or independent entity must ensure that it has a comprehensive contingency arrangement to allow business continuity if there is a significant loss of services from the service provider, including an exit strategy and, if appropriate, partial exit and step-in clauses.
        (4) The contingency arrangement must cover, among other things, the following:
        (a) a significant loss of resources by the service provider;
        (b) financial failure of the service provider;
        (c) an unexpected termination of the outsourcing.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.5.7 Application of pt 8.5 to Further Outsourcing—All QFC Schemes

        (1) This part applies to the further outsourcing, whether or not by the third party service provider, of a function outsourced to the third party service provider under this part as if—
        (a) the further outsourcing of the function were an outsourcing of the function; and
        (b) all necessary changes were made.
        (2) To remove any doubt, this rule is subject to rule 8.5.5 (3) (r) (Provisions applying to outsourcing by operator and independent entity—all QFC schemes).
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.5.8 Systems and Controls for Outsourcings—All QFC Schemes

        If the operator or independent entity of a QFC scheme outsources a function in relation to the scheme under this part, the operator or independent entity must ensure that, as part of its risk management framework, it implements and maintains systems and controls to monitor the exercise of the outsourced function.

        Note Function and exercise are defined in the glossary.

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

    • COLL Part 8.6 COLL Part 8.6 Payments—QFC Schemes

      • COLL Division 8.6.A COLL Division 8.6.A Payments—QFC Qualified Investor Schemes

        • COLL 8.6.1 Payments—QFC Qualified Investor Schemes

          (1) The operator of a QFC qualified investor scheme must ensure that the scheme does not incur any expense in relation to any movable or immovable property unless—
          (a) investing in the property is in accordance with the scheme's investment objectives, strategies and policy; or
          (b) the property is necessary for the direct pursuit of the scheme's business of investing in any investments to which it is dedicated.
          (2) Payments made by the independent entity out of the scheme property may be made from capital property rather than from income if the basis for this is set out in the latest filed prospectus.

          Note Capital property and latest filed prospectus are defined in the glossary.
          (3) Subrule (2) does not apply to payments for redemptions of units.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL Division 8.6.B COLL Division 8.6.B Payments—QFC Retail Schemes

        • COLL 8.6.2 COLL 8.6.2 Payments Out of Scheme Property—QFC Retail Schemes

          (1) The only payments that may be made from the scheme property of a QFC retail scheme are payments in relation to—
          (a) remunerating the persons operating the scheme; or
          (b) the administration of the scheme; or
          (c) the investment or safeguarding of the scheme property; or
          (d) any taxes payable by the scheme or on scheme property.
          (2) A payment under subrule (1) (a) to (c) must not be made from scheme property if it is unfair to (or materially prejudices the interests of) any class of unitholders or potential unitholders.
          (3) To remove any doubt, subrule (2) does not invalidate a payment that gives rise to a difference between the rights of separate classes of units if the difference relates solely to the payments that may be taken out of the scheme property.
          (4) If any annual management charge, or performance fee, (however described) that is payable to the operator in accordance with the latest filed prospectus is not paid when it is payable, the operator must tell the Regulatory Authority about the non-payment immediately, but within 1 business day.

          Examples

          See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

          • COLL 8.6.2 Guidance

            The operator should consider whether any payment to an affected person is unfair because of its amount or because it gives a disproportionate benefit to the affected person.

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

        • COLL 8.6.3 Performance Fees—QFC Retail Schemes

          (1) The latest filed prospectus of a QFC retail scheme may permit a payment (a performance fee) for the operator's periodic charges, or to any investment adviser, to be based on a comparison between fluctuations in the value or price of—
          (a) 1 or more aspects of the scheme property; and
          (b) property of any description, an index or another factor designed for the purpose.

          Note Latest filed prospectus and investment adviser are defined in the glossary.
          (2) Any performance fee must be consistent with rule 8.6.2 (Payments out of scheme property—QFC retail schemes).
          (3) The following provisions apply in deciding whether a performance fee is consistent with rule 8.6.2:
          (a) a performance fee must be calculated and paid after all other payments have been considered;
          (b) if a performance fee is to be paid on the basis of the performance of the scheme against an index or another factor—the index or other factor must be reasonable given the scheme's investment objectives, strategies and policy, and must be applied consistently;
          (c) a performance fee may be based on performance above a defined positive rate of return (the hurdle rate), which may be fixed or variable;
          (d) if paragraph (b) or (c) applies—the index or other factor, or hurdle rate, may be carried forward to future accrual periods;
          (e) the period over which the index or other factor, or hurdle rate, accrues and the frequency with which it crystallises must be reasonable;
          (f) unless allowed by rule 8.6.2 (1), there must be no arrangements to adjust the price or value of issue or redemption transactions in relation to performance fees accrued or paid if the transactions happen within the accrual period of the charge.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.6.4 Charges on Buying and Selling Units—QFC Retail Schemes

          (1) Only the operator of a QFC retail scheme may impose charges on unitholders or potential unitholders when they buy or sell units in the scheme.
          (2) The operator of a QFC retail scheme must not make any charge or levy in relation to—
          (a) the issue of units, except as permitted by subrule (3); or
          (b) the redemption of units, except as permitted by subrule (4).

          Note Issue and redemption are defined in the glossary.
          (3) Subrule (2) (a) does not prevent an issue charge made in accordance with the latest filed prospectus if the charge is a fixed amount or calculated as a percentage of the price of a unit.

          Note Issue charge and latest filed prospectus are defined in the glossary.
          (4) Subrule (2) (b) does not prevent a redemption charge made in accordance with—
          (a) the prospectus that was the latest filed prospectus when the units were purchased by the unitholder; and
          (b) rule 8.6.5.

          Note Redemption charge is defined in the glossary.
          (5) This rule is subject to rule 8.2.16 (Dilution—QFC retail schemes).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.6.5 Redemption Charges—QFC Retail Schemes

          (1) A redemption charge may be expressed as an amount or percentage.

          Note Redemption charge is defined in the glossary.
          (2) A redemption charge may also be expressed as diminishing over the time for which the unitholder has held the units or be calculated on the basis of the unit price performance of the units.
          (3) However, any redemption charge must not be such that it could be reasonably regarded as restricting any right of redemption.

          Note For the mandatory content of the prospectus of a QFC retail scheme in relation to redemption charges, see r S4.19 (Redemption charges).
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.6.6 Charges on Exchange of Units in Umbrella Schemes—QFC Retail Schemes

          For a QFC retail scheme that is an umbrella scheme, the operator must not make a charge of more than the amount stated in the latest filed prospectus on an exchange of units in a subscheme for units in another subscheme.

          Note Umbrella scheme and subscheme are defined in r 1.2.11. Latest filed prospectus is defined in the glossary.

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

        • COLL 8.6.7 COLL 8.6.7 Allocation of Payments to Income or Capital—QFC Retail Schemes

          (1) The operator of a QFC retail scheme must, in accordance with the latest filed prospectus, decide whether a payment is to be made from the income property or capital property of the scheme.

          Note Latest filed prospectus, income property and capital property are defined in the glossary.
          (2) In making a decision under subrule (1), the operator must—
          (a) have appropriate regard to whether the nature of the cost is income related or capital related and the scheme's investment objectives, strategies and policy; and
          (b) agree with the independent entity about how the payment should be treated.
          (3) If, for any class of units for any annual accounting period, the amount of the income property is less than the income distributed, the shortfall must, as from the end of that period, be charged to the capital account and must not later be transferred to the income account.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

          • COLL 8.6.7 Guidance

            Any payment as a result of effecting transactions for the scheme should be made from the capital property of the scheme. All other payments should be made from income property in the first instance, but may be transferred to the capital account in accordance with rule 8.6.7 (1).

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

        • COLL 8.6.8 Prohibition of Promotional Payments—QFC Retail Schemes

          (1) A payment must not be made from the scheme property of a QFC retail scheme to a person for, or for the promotion of, the issue or redemption of units in the scheme.

          Examples of prohibited payments
          1 commission payable to intermediaries
          2 payments in relation to the preparation or dissemination of financial communications (unless subrule (2) applies)
          (2) This rule does not apply to—
          (a) a payment to the operator to reimburse the operator for costs of preparing and printing the key information document required under CIPR for units in the scheme; or
          (b) any other payment to the operator if the payment is permitted under these rules.
          Amended by QFCRA RM/2019-4 (as from 1st January 2020).

        • COLL 8.6.9 Expenses in Relation to Property—QFC Retail Schemes

          The operator of a QFC retail scheme must ensure that the scheme does not incur any expense in relation to any property unless investing in the property is in accordance with the scheme's investment objectives, strategies and policy.

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

        • COLL 8.6.10 Payment of Liabilities on Transfer of Assets—QFC Retail Schemes

          (1) This rule applies if the scheme property of a QFC retail scheme (the first scheme) is transferred to another QFC retail scheme (or to the independent entity of the other scheme for the other scheme) in consideration of the issue of units in the other scheme to unitholders of the first scheme.

          Note In the circumstance described in subrule (1), the other scheme (or independent entity of the other scheme) becomes successor in title to the scheme property transferred.
          (2) The other scheme (or independent entity of the other scheme) may pay out of the scheme property of the other scheme any liability arising after the transfer if—
          (a) the liability could properly have been paid out of the scheme property transferred had it arisen before the transfer; and
          (b) there is nothing in the constitutional document of the other scheme expressly forbidding the payment; and

          Note Constitutional document is defined in r 3.1.1.
          (c) the operator of the other scheme is of the opinion that proper provision was made for meeting the liabilities that were known or could reasonably have been anticipated at the time of the transfer.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.6.11 Attribution of Scheme Property to Subschemes—QFC Retail Schemes

          (1) For a QFC retail scheme that is an umbrella scheme, any assets to be received into, or any payments out of, the scheme property that are not attributable to only a single subscheme must be attributed by the operator to the respective subschemes.
          (2) Any attribution under this rule must be made in a way that is fair to the unitholders of the QFC retail scheme generally.

          Note Umbrella scheme and subscheme are defined in r 1.2.11.
          Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL Part 8.7 COLL Part 8.7 Accounting Periods—QFC Schemes

      • COLL 8.7.1 Accounting Periods—All QFC Schemes

        (1) A QFC scheme must have—
        (a) an annual accounting period; and
        (b) a half-yearly accounting period.
        (2) A half-yearly accounting period starts on the first day of an annual accounting period and ends—
        (a) on the day 6 months before the last day of the annual accounting period; or
        (b) on another reasonable date stated in the latest filed prospectus.

        Note Latest filed prospectus is defined in the glossary.
        (3) The first annual accounting period starts—
        (a) on the first day of the initial offer period; or
        (b) if there is not an initial offer period for the scheme—on the date the scheme is registered;

        and, in either case, ends on the next accounting reference date unless subrule (4) applies.

        Note Initial offer and accounting reference date are defined in the glossary.
        (4) If the accounting reference date falls less than 6 months after the start of the first annual accounting period, the operator may extend the period to the next accounting reference date.
        (5) Each annual accounting period after the first period is for 12 months, starting on the next day after the accounting reference date and ending on the next accounting reference date, unless subrule (7) applies.
        (6) Each annual accounting period or half yearly accounting period ends at the end of the day worked out under this rule or, if the operator so decides, at the last valuation point on that day.

        Note Day and valuation point are defined in the glossary.
        (7) If the accounting reference date stated in the scheme's latest filed prospectus is changed, the operator may extend or shorten the annual accounting period by up to 6 months to end on the next accounting reference date.
        (8) Before extending or shortening an annual accounting period under subrule (4) or (7), the operator must—
        (a) consult the independent entity; and
        (b) consult the scheme's auditor; and
        (c) give the Regulatory Authority reasonable notice.
        (9) If the annual accounting period is extended under subrule (4) or (7) and this results in a longer than usual period before the publication of reports to unitholders, the operator must make summary information about the scheme's investment activities available to unitholders during the period.
        Amended by QFCRA RM/2014-3 (as from 1st January 2015)

    • COLL Part 8.8 COLL Part 8.8 Income Allocation and Distribution—QFC Schemes

      • COLL 8.8.1 Application of pt 8.8 to Umbrella Schemes—All QFC Schemes

        This part (other than rule 8.8.2 (1) and (2)) applies to a QFC scheme that is an umbrella scheme as if each subscheme were a separate QFC scheme.

        Note Umbrella scheme and subscheme are defined in r 1.2.11.

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

      • COLL 8.8.2 COLL 8.8.2 Income Allocation and Distribution—All QFC Schemes

        (1) A QFC scheme must have an annual income allocation date.

        Note Annual income allocation date is defined in the glossary.
        (2) The annual income allocation date must be within 4 months after the scheme's accounting reference date.

        Note Month and accounting reference date are defined in the glossary.
        (3) A QFC scheme may have an interim income allocation date and interim accounting periods.

        Note Interim income allocation date and interim accounting period are defined in the glossary.
        (4) An interim income allocation date must be within 4 months after the day the relevant interim accounting period ends.
        (5) A QFC scheme must have a distribution account to which the amount of income allocated to unit classes that distribute income is transferred at the end of the relevant accounting period.

        Note Distribution account and class are defined in the glossary.
        (6) The amount available for income allocations must be calculated by—
        (a) taking the net revenue after taxation decided in accordance with appropriate, internationally accepted professional standards specified in the constitutional document and the latest filed prospectus; and
        (b) making any transfers, to the extent permitted by the latest filed prospectus, between the income account and the capital account so that the amount available for income allocations is calculated as if the revenue from debt instruments had been decided without regard to the effect of—
        (i) the change in an index of consumer prices during the period, if the scheme's investment objectives, strategies and policy are to invest predominantly in debt instruments for which cash flows are decided by reference to the index (or a similar index of consumer prices) and the transfer relates only to amounts in relation to index-linked, gilt-edged securities; or
        (ii) amortisation, if the amount available for income allocations is not less than if the transfers had not been made; and
        (c) making any other transfers between the income account and the capital account that are required in relation to any of the following:
        (i) stock dividends;
        (ii) income equalisation included in income allocations from other collective investment schemes;
        (iii) the allocation of payments in accordance with—
        (A) for a QFC qualified investor scheme—the latest filed prospectus; and
        (B) for a QFC retail scheme—rule 8.6.7 (Allocation of payments to income or capital—QFC retail schemes);
        (iv) taxation;
        (v) the total amount of income property included in units issued and units redeemed during the period.
        Note Income account, capital account, debt instrument, income equalisation, income property and latest filed prospectus are defined in the glossary.
        (7) If income is allocated during an accounting period—
        (a) with effect from the end of the accounting period, the amount of income allocated to unit classes that accumulate income becomes part of the capital property and requires an adjustment to the proportion of the value of the scheme property to which they relate if other unit classes are in issue during the period; and

        Note Capital property is defined in the glossary.
        (b) the adjustment under paragraph (a) must ensure that the price remains unchanged despite the transfer of income; and
        (c) the amount of any interim distribution must not be more than the amount that, in the operator's opinion, would be available for allocation if the interim accounting period and all previous interim accounting periods in the same annual accounting period, taken together, were an annual accounting period.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

        • COLL 8.8.2 Guidance

          The constitutional document and latest filed prospectus would be expected to specify a document such as the Statement of Recommended Practice for financial statements of authorised funds issued by the United Kingdom Investment Management Association.

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

      • COLL 8.8.3 Unclaimed, Minimal and Joint Unitholders Distributions—All QFC Schemes

        (1) Any distribution of a QFC scheme that is unclaimed after 6 years (or, if the latest filed prospectus provides for a longer period, that period) becomes part of the capital property.

        Note Latest filed prospectus and capital property are defined in the glossary.
        (2) The operator and independent entity of a QFC scheme may agree a minimal amount in relation to which a distribution of income is not required, and how any such amounts are to be treated.
        (3) A distribution of a QFC scheme made to the joint unitholder named first on the unitholder register is as effective a discharge to the operator and independent entity as if that joint unitholder had been the sole unitholder.

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

    • COLL Part 8.9 COLL Part 8.9 Names—QFC Schemes

      • COLL 8.9.1 Name of Scheme Etc—All QFC Schemes

        (1) The operator of a QFC scheme must ensure that the name of the scheme, any subscheme of the scheme, or a class of units, is not undesirable or misleading.

        Note Subscheme is defined in r 1.2.11. Class is defined in the glossary.

        Guidance on names of CIC

        A CIC must not include in its name the following words, abbreviations of the following words or similar words or abbreviations:
        (a) limited;
        (b) unlimited;
        (c) public limited company.
        (2) If the Regulatory Authority is of the opinion that the operator is in breach of subrule (1) in relation to a name, it may direct the operator to take the steps necessary to have the name changed.
        (3) In deciding whether to give a direction under subrule (2) in relation to a name for a breach of subrule (1), the Regulatory Authority may consider whether the name—
        (a) implies that the scheme (or a part of the scheme) has merits that might, or might not, be justified; or
        (b) implies that the operator has merits that might, or might not, be justified; or
        (c) is inconsistent with the scheme's investment objectives, strategies or policy; or
        (d) might mislead investors into thinking that a person other than the operator is responsible for managing the scheme (or part of the scheme); or
        (e) incorrectly implies that the scheme is not a collective investment scheme, a scheme registered in the QFC or under these rules, or a particular kind of scheme registered under these rules (for example, a qualified investor scheme); or
        (f) is, in the Regulatory Authority's opinion, likely to offend the public or a part of the public; or
        (g) is substantially similar to the name of—
        (i) a scheme registered under PRIV or these rules; or
        (ii) a subscheme of an umbrella scheme registered under PRIV or these rules; or
        (iii) a class of units for a scheme registered under PRIV or these rules; or
        (h) implies a degree of security in relation to the capital or income that is not justified.

        Examples of names for para (e)

        names that include the word 'plan' or 'account'

        Examples of names for para (h)

        names that include the word 'guaranteed', 'protected' or 'secured'
        (4) Subrule (3) does not limit the matters the Regulatory Authority may consider.
        (5) If the name includes the word 'guaranteed', 'protected' or 'secured' (or a similar word), the Regulatory Authority may regard the name as undesirable or misleading unless the operator satisfies it of the matters mentioned in subrules (8) and (9).
        (6) If the name indicates or implies a guaranteed capital return, income return or both, the Regulatory Authority may regard the name as undesirable or misleading unless the operator satisfies it—
        (a) that the total amount paid for a unit is guaranteed under a guarantee; and
        (b) of the matters mentioned in subrules (8) and (9).
        (7) If the name indicates or implies a degree of capital security (for example, the words 'capital protected' or words with a similar meaning), the Regulatory Authority may regard the name as undesirable or misleading unless the operator satisfies it—
        (a) that an amount not materially less than the total amount paid for a unit is guaranteed under a guarantee; and
        (b) that the scheme's investment objectives, strategies and policy show a clear intention to provide a material degree of security in relation to the total amount paid for a unit; and
        (c) that the degree of capital security is apparent from the name and clearly stated in the latest filed prospectus; and
        (d) of the matters mentioned in subrules (8) and (9).
        (8) For subrule (5), (6) or (7), the operator must satisfy the Regulatory Authority that the scheme has a guarantee in relation to which all the following requirements are met:
        (a) the guarantee is given by a person other than the operator, the independent entity or an associated person for the operator or independent entity;

        Note Associated person is defined in the glossary.
        (b) the guarantor has the authority and resources to honour the terms of the guarantee;
        (c) the guarantee covers all unitholders of the scheme and is legally enforceable by each unitholder or by a person acting on the unitholder's behalf;
        (d) the guarantee relates to the total amount paid for a unit;
        (e) the guarantee provides for payment at a stated date or dates and is unconditional although reasonable commercial exclusions such as force majeure may be included;
        (f) if the guarantee applies to different classes of units—it is identical in its application to all classes except for differences attributable to income al received, or charges al incurred, by the different classes of units.
        (9) For subrule (5), (6) or (7), the operator must also satisfy the Regulatory Authority that the terms of the guarantee and the credentials of the guarantor are clearly set out in detail in the latest filed prospectus and that any exclusions such as force majeure are highlighted.
        (10) In deciding whether it is satisfied for subrule (7), the Regulatory Authority must take into account whether the degree of capital security implied by the name fairly reflects the nature of the arrangements for providing the security.
        (11) Subrule (10) does not limit the matters the Regulatory Authority may take into account for subrule (7).
        (12) In this rule:

        total amount paid, for a unit, includes any charge or other cost paid or incurred when the unit was bought.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

      • COLL 8.9.2 Use of Certain Names—All QFC Schemes

        (1) The operator of a QFC scheme must ensure that the name of the scheme, or of a class of units, does not state or imply that the scheme is an Islamic fund unless the scheme is an Islamic fund.

        Note Islamic fund is defined in r 1.3.11.
        (2) The operator of a QFC umbrella scheme must ensure that the name of a subscheme, or of a class of units of a subscheme, does not state or imply that the subscheme is an Islamic fund unless the subscheme is an Islamic fund.

        Note Umbrella scheme and subscheme are defined in r 1.2.11.
        (3) The operator of a QFC scheme must ensure that the name of the scheme, or of a class of units, does not state or imply that the scheme is a money-market fund unless the scheme is a money-market fund.

        Note Money-market fund is defined in r 1.3.12.
        (4) The operator of a QFC umbrella scheme must ensure that the name of a subscheme, or of a class of units of a subscheme, does not state or imply that the subscheme is a money-market fund unless the subscheme is a money-market fund.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL Part 8.10 COLL Part 8.10 Shari'a Supervisory Board—All Islamic Funds

      • COLL 8.10.1 Islamic Fund must have a Supervisory Board—All Islamic Funds

        (1) The operator of a QFC scheme that is an Islamic fund, or is an umbrella scheme that has a subscheme that is an Islamic fund, must ensure that there is at all times a Shari'a Supervisory Board for the fund (or subscheme).

        Note Islamic fund is defined in r 1.3.11. Umbrella scheme and subscheme are defined in r 1.2.11.
        (2) Any decision relating to the appointment or dismissal of a member of the Shari'a Supervisory Board, or to a change affecting the board, must be made by the operator and approved by the independent entity.
        (3) CTRL, Part 9.3 applies to a QFC scheme that is an Islamic fund, or is an umbrella scheme that has a subscheme that is an Islamic fund, as if—
        (a) the scheme (or subscheme) were an authorised firm to which the Part applies; and

        Note Authorised firm is defined in the glossary.
        (b) a reference to the authorised firm or its governing body were, subject to subrule (2), a reference to the scheme (or subscheme) or the operator, as the context requires; and
        (c) all other necessary changes were made.
        Derived from QFCRA RM/2010-05 (as from 1st January 2011)
        Amended by QFCRA RM/2021-1 (as from 1st July 2021)