• PRIV 1 PRIV 1 General Provisions

    • Part 1.1 Part 1.1 Introductory

      • PRIV 1.1.1 Name of Rules

        These rules are the Private Placement Schemes Rules 2010 (or PRIV).

        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 1.1.2 Commencement

        These rules commence on 1 January 2011.

        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 1.1.3 Application of PRIV

        (1) These rules apply only to private placement schemes.

        Note A collective investment scheme that is established in the QFC may be registered under these rules as a private placement scheme or under COLL as a qualified investor scheme or retail scheme. COLL also deals with the marketing and sale in or from the QFC of units in schemes that are not established in the QFC, including schemes that are similar or equivalent to private placement schemes established in the QFC.
        (2) To remove any doubt, a reference in these rules to a collective investment scheme or scheme is a reference to a private placement scheme unless the contrary intention appears.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 1.1.4 What is a Private Placement Scheme?

        (1) A collective investment scheme (or scheme) is a private placement scheme if—
        (a) it is established in the QFC; and
        (b) it is registered under these rules as a private placement scheme; and
        (c) the number of unitholders does not at any time exceed 100.

        Note 1 Collective investment scheme (or scheme) is defined in r 1.2.1.

        Note 2 Unitholder is defined in r 1.2.5.
        (2) For this rule and the constitutional document of a scheme, in working out the number of unitholders that the scheme has at any time—
        (a) joint holders of a unit count as a single unitholder; and
        (b) a unit held on trust for a beneficiary is taken to be held by the beneficiary (rather than the trustee) if—
        (i) the beneficiary is presently entitled to a share of—
        (A) the trust estate; or
        (B) the income of the trust estate; or
        (ii) the beneficiary is, whether separately or together with other beneficiaries, in a position to control the trustee.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 1.1.5 Glossary

        The glossary at the end of these rules is part of these rules.

        Note 1 There are also relevant definitions in the INAP glossary. To assist the reader, the application of a definition in that glossary would usually be indicated by the word(s) being in italics (other than bold italics).

        Note 2 By contrast, the application of a definition in the glossary in these rules is not indicated by the word(s) being in italics.

        Note 3 For the application of definitions, see INAP, r 2.1.8 (Application of definitions).

        Note 4 A note in or to these rules is explanatory and is not part of the rules (see INAP, r 2.1.6 (1) and r 2.1.7).

        Note 5 However, examples and guidance are part of these rules (see INAP, r 2.1.4 (1) (b) and (2)).

        Note 6 An example is not exhaustive, and may extend, but does not limit the meaning of these rules or the particular provision of these rules to which it relates (see INAP, r 2.1.5).

        Note 7 For the effect of guidance, see the Financial Services Regulations, art 17 (4).

        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • Part 1.2 Part 1.2 Basic Concepts and Key Terms

      • Division 1.2.A Division 1.2.A Concepts Generally

        • PRIV 1.2.1 What is a Collective Investment Scheme?

          A collective investment scheme (or scheme) is an arrangement that is a collective investment fund under the Financial Services Regulations (other than an arrangement that is not a scheme under COLL, schedule 1).

          Note on FSR definition of collective investment fund

          The Financial Services Regulations (FSR), schedule 3, part 3, paragraphs 6.2 to 6.6 provide as follows:

          6.2 Subject to paragraphs 6.5 and 6.6, a collective investment fund is any arrangement:
          (1) the purpose or effect of which is to enable persons taking part in the arrangements (the participants) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of property or sums paid out of such profits or income;
          (2) that meets the property condition in paragraph 6.3 and the investment condition in paragraph 6.4.
          6.3 An arrangement will meet the property condition referred to in paragraph (2) if:
          (1) the arrangement is made with respect to property of any description, including money, whether the participants become owners of the property or any part of it or otherwise; and
          (2) any of the participants do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or give directions in respect of the property.
          6.4 An arrangement will meet the investment condition referred to in paragraph 6.2 if:
          (1) the contributions of the participants and the profits or income out of which payments to be made are pooled; and
          (2) the property is managed as a whole by or on behalf of the operator of the scheme.
          6.5 Arrangements for such pooling as is mentioned in paragraph 6.4 (1) in relation to separate parts of the property are not to be regarded as constituting a single collective investment fund unless the participants are entitled to exchange rights in one part for rights in another.
          6.6 The Regulatory Authority may make Rules specifying the circumstances in which particular arrangements do not constitute a collective investment fund for the purposes of paragraph 6.1.
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.2 Who is a Participant?

          A participant in a collective investment scheme (or scheme) is a person who takes part (or is to take part) in the scheme by making a contribution to the scheme property.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.3 What is the Scheme Property?

          The scheme property of a collective investment scheme (or scheme) is the property held for or in the scheme.

          Note Property is defined in the glossary.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.4 What is a Unit?

          A unit in a collective investment scheme (or scheme) is a unit representing the rights or interests (however described) of a participant in the scheme.

          Note The nature of the rights or interests will differ according to the form of the scheme. If the scheme is a company, the units would be shares in the company.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.5 Who is the Unitholder?

          The unitholder of a unit in a collective investment scheme (or scheme) is the person whose name is entered for the unit in the unitholder register.

          Note Unitholder register is defined in the glossary.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.6 Who is the Operator?

          (1) The operator of a collective investment scheme (or scheme) is the person responsible under these rules for managing the scheme, including all of the scheme property.

          Note 1 Scheme property is defined in r 1.2.3

          Note 2 The operator may outsource the management of all or a part of the scheme property (see pt 6.5).
          (2) This rule does not limit the operator's functions under these rules.

          Note Function is defined in the glossary.
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.7 What are Open-Ended and Closed-Ended Schemes?

          (1) An open-ended scheme is a collective investment scheme (or scheme) that permits its units to be redeemed, whether continuously or periodically.

          Note Unit is defined in r 1.2.4. Redemption is defined in the glossary.
          (2) A closed-ended scheme is a collective investment scheme (or scheme) that does not permit its units to be redeemed.
          (3) A scheme registered under these rules may be an open-ended scheme or closed-ended scheme.
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.8 What are Umbrella Schemes and Subschemes?

          (1) An umbrella scheme is a collective investment scheme (or scheme) under which the contributions of the unitholders, and the profit or income out of which payments are to be made to them, are pooled separately in relation to separate parts of the scheme property.

          Note Unitholder is defined in r 1.2.5 and scheme property is defined in r 1.2.3.
          (2) A subscheme of an umbrella scheme is a part of the scheme property that is pooled separately.
          (3) An umbrella scheme must be an open-ended scheme.

          Note Open-ended scheme is defined in r 1.2.7 (1).
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.9 What is an Islamic Fund?

          A scheme, or a subscheme of an umbrella scheme, is an Islamic fund if the constitutional document of the scheme states that the scheme or subscheme is an Islamic fund.

          Note 1 Umbrella scheme and subscheme are defined in r 1.2.8. Constitutional document is defined in r 3.1.1.

          Note 2 The following provisions must be complied with in relation to Islamic funds:

          •   r 5.5.1 (2) and (3) (Accounting standards)
          •   pt 6.9 (Shari'a Supervisory Board)
          •   sch 1 (Constitutional document content), r S1.4 (Islamic funds)
          •   sch 2 (Prospectus content), r S2.2 (f) (Description of scheme etc) and r S2.4 (Islamic funds).
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.10 Who is a Qualified Investor?

          (1) For these rules, a person can be a qualified investor for a scheme or an authorised firm (or both).
          (2) A qualified investor for a scheme is—
          (a) a person who would (if the scheme were an authorised firm and the person were a customer of the scheme) be a business customer or market counterparty of the scheme in relation to dealings in investments that consist of (or include) units in the scheme; or
          (b) a person who is a business customer or market counterparty of any authorised firm in relation to dealings in investments that consist of (or include) units in the scheme.
          (3) A qualified investor for an authorised firm in relation to units in a scheme is a person who is a business customer or market counterparty of the firm in relation to dealings in investments that consist of (or include) units in the scheme.
          (4) In this rule:

          market counterparty has the same meaning as in the Investment Management and Advisory Rules 2014.
          Amended by QFCRA RM/2019-4 (as from 1st January 2020).

      • Division 1.2.B Division 1.2.B Legal Forms for Schemes

        • PRIV 1.2.11 Permitted Legal Forms for Schemes

          A scheme must take 1 of the following legal forms:

          (a) a collective investment company (or CIC);
          (b) a collective investment partnership (or CIP);
          (c) a collective investment trust (or CIT);
          (d) another permitted form of scheme.

          Note The permitted legal forms of schemes are defined in r 1.2.12 to r 1.2.15.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.12 What is a Collective Investment Company (or CIC)?

          (1) A collective investment company (or CIC) is a company incorporated under the Companies Regulations 2005 if its articles of association provide that the company is established for the sole purpose of constituting a collective investment scheme.

          Note Articles of association is defined in the glossary.
          (2) If the CIC is an open-ended scheme, it must be an open-ended company with variable share capital.

          Note Open-ended scheme is defined in r 1.2.7(1).
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.13 What is a Collective Investment Partnership (or CIP)?

          A collective investment partnership (or CIP) is a limited partnership registered under the Partnership Regulations 2007 if its partnership agreement provides that the partnership is established for the sole purpose of constituting a collective investment scheme.

          Note Partnership agreement is defined in the glossary.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.14 What is a Collective Investment Trust (or CIT)?

          A collective investment trust (or CIT) is an express trust created under the Trust Regulations 2007 if its trust instrument provides that the trust is established for the sole purpose of constituting a collective investment scheme.

          Note Trust instrument is defined in the glossary.

          Derived from QFCRA RM/2010-06 (as from 1st January 2011)

        • PRIV 1.2.15 What is Another Permitted Form of Scheme?

          Another permitted form of scheme is an entity (other than a CIC, CIP or CIT) if—

          (a) the legal form of the entity—
          (i) is permitted under regulations made under the QFC Law or rules made by the Regulatory Authority or QFC Authority; or
          (ii) otherwise permitted under an approval, authority, or licence, (however described) given by the QFC Authority under the QFC Law; and
          (b) an instrument creating the legal form of the entity provides that the entity is established for the sole purpose of constituting a collective investment scheme.

          Note Entity, QFC Law and instrument are defined in the glossary.
          Derived from QFCRA RM/2010-06 (as from 1st January 2011)