• COLL Schedule 1 COLL Schedule 1 Arrangements not Collective Investment Schemes

    (see r 1.2.1)

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

    • COLL S1.1 Individual Investment Management Arrangements

      An arrangement is not a scheme if—

      (a) the property to which the arrangement relates (other than cash awaiting investment) consists of investments of 1 or more of the following kinds:
      (i) shares;
      (ii) debt instruments;
      (iii) warrants;
      (iv) options;
      (v) units in a collective investment scheme;
      (vi) long term insurance contracts; and

      Note Investment, share, debt instrument, warrant, option and long term insurance contract are defined in the glossary. Unit is defined in r 1.2.4.
      (b) each participant in the arrangement is entitled to a part of the property and to withdraw the part at any time; and
      (c) each of the following provisions applies to the arrangement:
      (i) the contributions of the participants are not pooled;
      (ii) the profits or income out of which payments are to be made are not pooled;
      (iii) the parts of the property to which the different participants are entitled are bought and sold separately only when a person becomes or ceases to be a participant.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.2 Pure Deposit-Based Arrangements

      An arrangement is not a scheme if the whole amount of the contribution of each participant in the arrangement is a deposit accepted by an authorised firm with an authorisation for deposit taking.

      Note Authorised firm, authorisation and deposit taking are defined in the glossary.

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

    • COLL S1.3 Arrangements not Operated by Way of Business

      An arrangement is not a scheme if it is operated otherwise than by way of business.

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

    • COLL S1.4 Debt Issues

      (1) An arrangement is not a scheme if it is an arrangement under which the rights or interests of participants in the arrangement are represented by investments of 1, and only 1, of the following kinds:
      (a) debt instruments if they are—
      (i) issued by—
      (A) a single corporation that is not a CIC; or
      (B) a single issuer that is not a corporation; and
      (ii) for instruments mentioned in subparagraph (i) (B)— issued or guaranteed by—
      (A) the government of any jurisdiction; or
      (B) a public or local authority of any jurisdiction; and
      (iii) not convertible or exchangeable for investments of any other kind;

      Note Debt instrument, corporation, jurisdiction and investment are defined in the glossary. CIC is defined in r 1.3.7.
      (b) debt instruments if—
      (i) they are instruments to which paragraph (a) (other than subparagraph (iii)) applies; and
      (ii) they are convertible or exchangeable for shares; and
      (iii) the shares are issued by—
      (A) the same person that issued the debt instruments; or
      (B) a single other issuer;

      Note Share is defined in the glossary.
      (c) warrants if—
      (i) they are issued otherwise than by a CIC; and
      (ii) they give rights to investments that—
      (A) are issued by the same issuer; and
      (B) are debt instruments mentioned in paragraph (a) or (b) or shares.
      Note Warrant is defined in the glossary.
      (2) An arrangement must not be taken not to be an arrangement to which subrule (1) applies only because 1 or more of the participants is a person (the counterparty)—
      (a) whose ordinary business—
      (i) involves the person in conducting 1 or more relevant activities; or
      (ii) would, apart from any exclusions under the Financial Services Regulations, schedule 3 (Regulated Activities and Permitted Activities), part 2 (Specified Activities), involve the person in conducting 1 or more relevant activities; and
      (b) whose rights or interests in the arrangement are or include rights or interests under a swap arrangement.
      (3) In this rule:

      relevant activities means regulated activities of any of the following kinds:
      (a) dealing in investments;
      (b) arranging deals in investments;
      (c) providing custody services;
      (d) arranging the provision of custody services;
      (e) managing investments;
      (f) advising on investments;
      (g) providing credit facilities;
      (h) arranging credit facilities;
      (i) operating collective investment schemes.

      Note Regulated activity and the regulated activities mentioned in para (a) to (i) are defined in the glossary.
      swap arrangement means an arrangement—
      (a) the purpose of which is to facilitate the making of payments to participants, whether or not of a particular amount, in a particular currency or at a particular time or rate of interest; and
      (b) under which the counterparty—
      (i) is entitled to receive amounts, whether representing principal or interest, payable in relation to any property subject to the arrangement or amounts worked out by reference to those amounts; and
      (ii) makes payments, whether or not of the same amount or in the same currency as amounts mentioned in subparagraph (i), that are worked out in accordance with an agreed formula by reference to those amounts.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.5 Common Accounts

      An arrangement is not a scheme if—

      (a) it is an arrangement under which the rights or interests of participants are rights to or interests in money held in a common account; and
      (b) that money is held in the account on the understanding that an amount representing the contribution of each participant is to be applied—
      (i) in making payments to the participant; or
      (ii) in satisfaction of amounts owed by the participant; or
      (iii) in the acquisition of property for the participant or the provision of services to the participant.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.6 Arrangements Entered into for Commercial Purposes Related to Existing Businesses

      (1) An arrangement is not a scheme if each of the participants in the arrangement—
      (a) conducts a business activity other than an excluded activity; and
      (b) enters into the arrangement for commercial purposes related to the business activity.
      (2) However, subrule (1) does not apply if the participant will conduct the business activity only because the participant is a participant in the arrangement.
      (3) In this rule:

      excluded activity means regulated activities of any of the following kinds:
      (a) dealing in investments;
      (b) arranging deals in investments;
      (c) providing custody services;
      (d) arranging the provision of custody services;
      (e) managing investments;
      (f) advising on investments;
      (g) providing credit facilities;
      (h) arranging credit facilities;
      (i) operating collective investment schemes.

      Note Regulated activity and the regulated activities mentioned in para (a) to (i) are defined in the glossary.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.7 Group Arrangements

      An arrangement is not a scheme if each of the participants is a corporation in the same group as the person responsible for managing the property held for or in the arrangement.

      Note Corporation, group and property are defined in the glossary.

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

    • COLL S1.8 Franchise Arrangements

      (1) A franchise arrangement is not a scheme.
      (2) In this rule:

      franchise arrangement means an arrangement under which a person earns profits or income by exploiting a right given by the arrangement to use—
      (a) a trade mark or design or other intellectual property; or
      (b) the goodwill attached to it.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.9 Timeshare Arrangements

      An arrangement is not a scheme if the rights or interests of the participants are timeshare rights.

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

    • COLL S1.10 Other Arrangements Relating to Use or Enjoyment of Property

      An arrangement is not a scheme if—

      (a) the predominant purpose of the arrangement is to enable the participants in the arrangement to share in the use or enjoyment of property or to make its use or enjoyment available free of charge to others; and
      (b) the property to which the arrangement relates—
      (i) does not consist of the currency of any jurisdiction; and
      (ii) does not consist of or include—
      (A) a specified product; or
      (A) a product that would be a specified product apart from any exclusion in Financial Services Regulations, schedule 3 (Regulated Activities and Permitted Activities), part 3 (Specified Products).

      Note Property, jurisdiction and specified product are defined in the glossary.

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

    • COLL S1.11 Arrangements Involving Issue of Certificates Representing Investments

      An arrangement is not a scheme if the rights or interests of the participants in the arrangement are securities receipts in relation to securities of a single issuer.

      Note Securities receipt and security are defined in the glossary.

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

    • COLL S1.12 Clearing Services

      An arrangement is not a scheme if its purpose is the provision of clearing services and the services are provided by an authorised firm.

      Note Authorised firm is defined in the glossary.

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

    • COLL S1.13 Contracts of Insurance

      A contract of insurance is not an arrangement that is a scheme.

      Note Contract of insurance is defined in the glossary.

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

    • COLL S1.14 Corporations

      (1) A corporation incorporated in the QFC is not an arrangement that is a scheme unless it is—
      (a) a CIC; or
      (b) a CIP; or
      (c) another permitted form of QFC scheme.

      Note Corporation is defined in the glossary. CIC, CIP and another permitted form of QFC scheme are defined in div 1.3.B.
      (2) A corporation (other than a partnership) incorporated outside the QFC is not an arrangement that is a scheme unless the arrangement meets the property condition in subrule (3) and the investment condition in subrule (4).
      (3) For subrule (2), an arrangement meets the property condition if—
      (a) it is made in relation to property that belongs beneficially to, and is managed by or on behalf of, the corporation; and
      (b) the corporation has for its purpose the investment of its property with the aim of—
      (i) spreading investment risk; and
      (ii) giving its members the benefit of the results of the management of its property.
      Note Property is defined in the glossary.
      (4) For subrule (2), an arrangement meets the investment condition if, in relation to the corporation, a reasonable investor would, if the investor were to take part in the arrangement—
      (a) expect to be able to realise, within a period appearing to the investor to be reasonable (or, for a closed-ended corporation, at the end of the corporation's operation), the investor's investment in the arrangement (represented, at any time, by the value of shares in, or securities of, the corporation held by the investor as a participant in the arrangement); and
      (b) be satisfied that the investment, if realised, would be realised on a basis calculated completely or mainly by reference to the value of property in relation to which the corporation makes arrangements.
      (5) In deciding whether the investment condition is met, no account may be taken of any actual or potential redemption or repurchase of shares or securities under provisions in force in any jurisdiction other than the QFC corresponding to the Companies Regulations 2005, article 31 (Redemption or purchase of own shares).
      (6) However, the Regulatory Authority may, by written notice given to the corporation, declare that subrule (1) or (2) does not apply in relation to the corporation.
      (7) The Regulatory Authority may make a declaration under subrule (6) if it considers that making the declaration is desirable to protect—
      (a) the interests of participants or potential participants in the corporation; or
      (b) the financial system operating in or from the QFC.
      (8) If the Regulatory Authority gives the corporation a notice under subrule (6), the notice must—
      (a) give reasons for the decision to make the declaration; and
      (b) tell the corporation that it may appeal to the Regulatory Tribunal against the decision.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.15 Partnerships

      (1) A partnership incorporated or otherwise established in the QFC as a partnership (and not a branch) is not an arrangement that is a scheme unless it is—
      (a) a CIP; or
      (b) another permitted form of QFC scheme.

      Note CIP and another permitted form of QFC scheme are defined in div 1.3.B.
      (2) A partnership incorporated or otherwise established outside the QFC is not an arrangement that is a scheme unless the arrangement meets the property condition in subrule (3) and the investment condition in subrule (4).
      (3) For subrule (2), an arrangement meets the property condition if—
      (a) it is made in relation to property that belongs beneficially to, and is managed by or on behalf of, the partnership; and
      (b) the partnership has for its purpose the investment of its property with the aim of—
      (i) spreading investment risk; and
      (ii) giving its members the benefit of the results of the management of its property.
      Note Property is defined in the glossary.
      (4) For subrule (2), an arrangement meets the investment condition if, in relation to the partnership, a reasonable investor would, if the investor were to take part in the arrangement—
      (a) expect to be able to realise, within a period appearing to the investor to be reasonable (or, for a closed-ended corporation, at the end of the corporation's operation), the investor's investment in the arrangement (whether or not represented, at any time, by the value of the investor's percentage interest in, or securities of, the partnership held by the investor as a participant in the arrangement); and
      (b) be satisfied that the investment, if realised, would be realised on a basis calculated completely or mainly by reference to the value of property in relation to which the partnership makes arrangements.
      (5) However, the Regulatory Authority may, by written notice given to the partnership, declare that subrule (1) or (2) does not apply in relation to the partnership.
      (6) The Regulatory Authority may make a declaration under subrule (5) if it considers that making the declaration is desirable to protect—
      (a) the interests of participants or potential participants in the partnership; or
      (b) the financial system operating in or from the QFC.
      (7) If the Regulatory Authority gives the partnership a notice under subrule (5), the notice must—
      (a) give reasons for the decision to make the declaration; and
      (b) tell the partnership that it may appeal to the Regulatory Tribunal against the decision.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL S1.16 Profit Sharing Investment Accounts

      (1) A profit sharing investment account is not an arrangement that is a scheme.
      (2) In this rule:

      profit-sharing investment account (or PSIA) is an account, portfolio or fund that satisfies the following conditions:
      (a) it is managed by an authorised firm in accordance with Shari'a and is held out as such;
      (b) under the management agreement with the firm, the investment account holder concerned and the firm agree to share any profit in a specified ratio, and the holder agrees to bear any loss not caused by the firm's negligence or breach of contract.
      Amended by QFCRA RM/2014-3 (as from 1st January 2015)