• 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)