• PRIV 4 PRIV 4 The Operator

    • PRIV 4.1.1 Requirements for Operator

      (1) The operator of a scheme must be an authorised firm that—
      (a) is a corporation; and

      Note Corporation is defined in the glossary.
      (b) has an authorisation for each of the following regulated activities:
      (i) operating collective investment schemes;
      (ii) dealing in investments;
      (iii) managing investments;
      (iv) providing custody services; and

      Note Authorisation, regulated activity and the regulated activities mentioned in this paragraph are defined in the glossary.
      (c) is permitted under the scope of its authorisation to be the operator of the scheme, schemes of that kind or any scheme registered in the QFC; and
      (d) for a CIC or CIP — is a different person from the scheme.

      Note CIC and CIP are defined in r 1.2.12 and r 1.2.13 respectively.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.2 Operator Must Comply with Legal and Regulatory Requirements

      (1) The operator of a scheme must comply with every legal and regulatory requirement applying to the operator—
      (a) in relation to the scheme; or
      (b) as the operator of a scheme; or
      (c) as an authorised firm.
      (2) Without limiting subrule (1), the operator must act in accordance with the following:
      (a) these rules;
      (b) any regulations under which the scheme is established, including any law applied by, or that supplements, those regulations;
      (c) the other provisions of the law applying in the QFC in relation to—
      (i) the scheme; or
      (ii) the operator as the operator of a scheme or as an authorised firm;
      (d) the scope of the operator's authorisation, including any conditions, restrictions or requirements;

      Note Authorisation is defined in the glossary.
      (e) the scope of the scheme's registration, including any conditions, restrictions or requirements;
      (f) the constitutional document;

      Note Constitutional document is defined in r 3.1.1.
      (g) the latest filed prospectus.

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

    • PRIV 4.1.3 PRIV 4.1.3 Functions of Operator Generally

      (1) The operator of a scheme is responsible for managing the scheme, including all the scheme property.

      Note Scheme property is defined in r 1.2.3.
      (2) Without limiting subrule (1), the operator of a scheme must—
      (a) ensure that decisions about investments and borrowings by the scheme are made in accordance with the scheme's investment objectives, strategies and policy as stated in the constitutional document and latest filed prospectus; and

      Note Borrowing and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1.
      (b) value the scheme property in accordance with these rules; and
      (c) calculate the scheme's net asset value, and net asset value per unit, in accordance with these rules; and

      Note Net asset value and net asset value per unit are defined in the glossary.
      (d) if the scheme is an open-ended scheme — calculate the price of units for issue and redemption in accordance with these rules; and

      Note Open-ended scheme is defined in r 1.2.7 (1).
      (e) ensure the scheme property is—
      (i) clearly identified as scheme property; and
      (ii) held separately from the operator's own property, and the property of any other scheme.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 4.1.3 Guidance

        The Regulatory Authority would regard paragraph (e) (ii) as satisfied if the scheme property is held by an appropriate independent custodian (see r 2.1.2 (2) (g)).

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

    • PRIV 4.1.4 Duty of Operator to Report Certain Breaches of Law

      (1) This rule applies if—
      (a) the operator of a scheme becomes aware that the operator or any other person has breached, or suspects on reasonable grounds that the operator or any other person may have breached or may be about to breach, in relation to the scheme any provision of these rules, any other Rules, any other law of the QFC or the law of any other jurisdiction; and

      Note Rules is defined in INAP. Breach and jurisdiction are defined in the glossary.
      (b) the breach has had, or is likely to have, a material adverse effect on the scheme or the interests of unitholders.
      (2) The operator must tell the Regulatory Authority about the breach immediately, but within 1 business day.

      Examples — meaning of 'within 1 business day'
      1 If, on a business day, the operator becomes aware of the breach, the operator must tell the authority about it immediately, but on that day.
      2 If, on a day that is not a business day, the operator becomes aware of the breach, the operator must tell the authority about it immediately, but by no later than the next business day.

      Note Business day is defined in the glossary.
      (3) The operator must give the Regulatory Authority any information about the breach that the authority reasonably requires.

      Note Under GENE, r 4.1.3 an authorised firm must also advise the authority of certain significant events.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.5 Particular Duties of Operator

      The operator of a scheme must—

      (a) act honestly; and
      (b) exercise the degree of care and diligence that a reasonable person would exercise in the operator's position; and
      (c) act in the best interests of the unitholders and, if there is a conflict between the unitholders' interests and its own interests, give priority to the unitholders' interests; and
      (d) unless otherwise required or permitted by the constitutional document, treat unitholders who hold units in the same class equally and unitholders who hold units in different classes fairly; and

      Note Class is defined in the glossary.
      (e) not make improper use of information acquired as a result of being the operator—
      (i) to gain, directly or indirectly, a personal advantage or an advantage for another person; or
      (ii) to cause detriment to the unitholders; and
      (f) not make improper use of the position of operator—
      (i) to gain, directly or indirectly, a personal advantage or an advantage for another person; or
      (ii) to cause detriment to the unitholders.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.6 Property Safeguarding Functions of Operator

      (1) The operator of a scheme is responsible for the safeguarding of all the scheme property.

      Note 1 Scheme property is defined in r 1.2.3.

      Note 2 See also guidance to r 2.1.2 (2) (g).
      (2) Without limiting subrule (1), the operator must—
      (a) ensure that all the scheme property is properly accounted for; and
      (b) ensure that all the scheme property is—
      (i) clearly identified as scheme property; and
      (ii) held separately from the operator's own property and the property of any other person; and
      (c) ensure that any scheme property in registrable form is appropriately registered as soon as practicable; and
      (d) take into its custody or control under this rule all documents evidencing title to scheme property, other than in relation to derivatives and forward positions; and

      Note Document evidencing title and derivative are defined in the glossary.
      (e) ensure that any resulting benefit of a derivative or forward transaction is received by it for the scheme property; and
      (f) collect, hold and deal with income in relation to the scheme property.
      (3) If the operator is of the opinion that a deal in property in relation to the scheme breaches these rules or the constitutional document, the operator must, subject to the constitutional document—
      (a) cancel the transaction or make a disposal or acquisition to restore the previous situation; and
      (b) meet any resulting loss or expense.

      Note Deal and breach are defined in the glossary.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.7 Register of Unitholders

      (1) The operator of a scheme must ensure that a register of unitholders is kept as part of the operator's records under rule 4.1.8.
      (2) The operator must exercise all due diligence and take reasonable care to ensure that—
      (a) the register is accurate, complete and up to date; and
      (b) only a person who is a qualified investor for the scheme is recorded in the register.

      Note 1 Qualified investor, for a scheme, is defined in r 1.2.10 (2).

      Note 2 Rule 6.3.1 specifies the information that must be included in the register.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.8 Records of Operator

      (1) The operator of a scheme must make the records necessary—
      (a) to enable the operator to comply with—
      (i) these rules; and
      (ii) the other provisions of the law applying in the QFC in relation to—
      (A) the scheme; or
      (B) the operator as the operator of a scheme or as an authorised firm; and
      (b) to demonstrate at all times whether it has complied with these rules.
      (2) If the scheme is an open-ended scheme and the latest filed prospectus states that the operator's policy is to require a dilution adjustment or dilution levy, the operator must make a record of—
      (a) how it calculates and estimates dilution; and
      (b) its policy and method for deciding the rate or amount of any dilution adjustment or dilution levy.

      Note Latest filed prospectus, dilution adjustment, dilution levy and dilution are defined in the glossary. Open-ended scheme is defined in r 1.2.7 (1).
      (3) Subrule (2) does not limit subrule (1).
      (4) The operator must keep records made for this rule for at least 6 years after the day they are made.
      (5) The operator must, at the request of the Regulatory Authority or the auditor of the scheme—
      (a) make records kept under this rule available for inspection within a reasonable period of not longer than 3 days; and
      (b) provide a copy of any of the records, in the requested form (if any), within a reasonable period of not longer than 3 days.
      (6) The operator must not charge for making records available, or providing a copy of any records, under subrule (5).

      Note GENE, ch 6 also contains provisions about record-keeping.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.9 Operator Must Give Information etc to Auditor

      The operator of a scheme must, on request, immediately give the auditor of the scheme the information and explanations in relation to the scheme that the auditor reasonably requires.

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

    • PRIV 4.1.10 Duties of Officers etc of Operator

      (1) This rule applies to a person who is an officer, employee or agent of the operator of a scheme.
      (2) The person must not—
      (a) make improper use of information acquired as a result of being a person to whom this rule applies—
      (i) to gain, directly or indirectly, a personal advantage or an advantage for another person; or
      (ii) to cause detriment to unitholders; or
      (b) make improper use of the person's position as a person to whom this rule applies—
      (i) to gain, directly or indirectly, a personal advantage or an advantage for another person; or
      (ii) to cause detriment to unitholders.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • PRIV 4.1.11 Provisions of ch 4 Do Not Limit Other Functions

      (1) This rule applies to a provision of this chapter that gives a function (however expressed) to the Regulatory Authority, the operator of a scheme or another person.

      Note Function is defined in this glossary.
      (2) To remove any doubt, the provision is additional to, and does not limit, any function given to the Regulatory Authority, operator or other person under—
      (a) any other provision of these rules; or
      (b) any other law of the QFC; or
      (c) for the operator — the constitutional document.
      Derived from QFCRA RM/2010-06 (as from 1st January 2011)