• PRIV 7 PRIV 7 Suspension, Winding Up and Transfer Schemes

    • Part 7.1 Part 7.1 Suspension and Restart of Dealings

      • PRIV 7.1.1 Suspension and Restart of Dealings

        (1) The operator of an open-ended scheme may, within any parameters that are fair and reasonable to all unitholders and are set out in the latest filed prospectus, temporarily suspend dealings in all units or a class of units.

        Note Open-ended scheme is defined in r 1.2.7 (1). Latest filed prospectus, deal and class are defined in the glossary.
        (2) The operator may suspend dealings under subrule (1) only if the operator has decided, having regard to the interests of all the unitholders in the scheme and on reasonable grounds, that there is a good and sufficient reason for the suspension in the interests of unitholders or potential unitholders.
        (3) If the operator decides to suspend dealings, the operator must tell the Regulatory Authority about the suspension and the reasons for it immediately, but within 1 business day after the day the operator makes the decision.

        Examples for this rule on 'within 1 business day'
        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        (4) The operator must also notify the unitholders about the suspension as soon as practicable after the suspension starts.
        (5) The operator must ensure that the suspension continues only for as long as it is justified having regard to the interests of all the unitholders in the scheme.
        (6) The suspension of dealings must end as soon as subrule (5) no longer applies.
        (7) The operator must—
        (a) review the suspension at least every 28 days; and
        (b) tell the Regulatory Authority about the result of the review immediately, but within 1 business day after conducting the review.
        (8) If the operator becomes aware of any material change in circumstances that may affect the continuation of the suspension, the operator must tell the Regulatory Authority about the change immediately, but within 1 business day.
        (9) The Regulatory Authority may, at any time, direct the operator to end the suspension.
        (10) The operator must immediately comply with the direction.
        (11) If the suspension ends, the operator must tell the Regulatory Authority about the restart of dealings immediately, but within 1 business day after the day dealings restart.

        Note The Regulatory Authority has power under the Financial Services Regulations, art 105 to give certain directions in relation to collective investment schemes (which are called collective investment funds in those regulations), including a direction to cease the issue or redemption of units in the scheme and to wind up the scheme.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • Part 7.2 Part 7.2 Winding Up

      • PRIV 7.2.1 Application of pt 7.2 to Subschemes of Umbrella Schemes

        This part applies to a subscheme of an umbrella scheme as if—

        (a) a reference to a scheme were a reference to the subscheme; and
        (b) a reference to units were a reference to units in the class or classes related to the subscheme; and
        (c) a reference to a meeting of unitholders were a reference to a meeting of unitholders of the class or classes mentioned in paragraph (b); and
        (d) a reference to a special resolution were a reference to a special resolution passed at a meeting of unitholders mentioned in paragraph (c); and
        (e) a reference to the scheme property were a reference to the scheme property attributed to the subscheme; and
        (f) a reference to liabilities were a reference to liabilities of the scheme attributable to the subscheme; and
        (g) all other necessary changes were made.

        Note Subscheme and umbrella scheme are defined in r 1.2.8.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 7.2.2 When Scheme may be Wound Up

        A scheme may be wound up—

        (a) by order of the QFC Court under the Insolvency Regulations 2005 or any other regulations in force in the QFC; or
        (b) if not inconsistent with any regulations in force in the QFC or these rules — in the way and circumstances provided in the constitutional document; or

        Note Constitutional document is defined r 3.1.1.
        (c) in the way and in any other circumstances provided by these rules or any other rules made by the Regulatory Authority.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 7.2.3 Winding-Up Required by Constitutional Document

        The constitutional document of a scheme may provide that the scheme is to be wound up—

        (a) at a stated time; or
        (b) in stated circumstances or on the happening of a stated event.

        Note Constitutional document is defined r 3.1.1.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 7.2.4 Notification to Regulatory Authority That Scheme Not Commercially Viable etc

        (1) If the operator of a scheme believes, on reasonable grounds, that the scheme is not commercially viable or the scheme's purpose cannot be accomplished, the operator must give the Regulatory Authority notice about the matter immediately, but within 1 business day after the day the operator forms the belief.

        Examples
        See examples to rule 4.1.4 (2) on the meaning of 'within 1 business day'.
        (2) The notice must include the following information:
        (a) the name of the scheme and its registration number given by the Regulatory Authority;
        (b) the size and type of scheme;
        (c) the number of unitholders;
        (d) if the scheme is an open-ended scheme — whether dealing in the scheme's units has been suspended;

        Note Open-ended scheme is defined in r 1.2.7 (1).
        (e) why the operator believes that the scheme is not commercially viable or the scheme's purpose cannot be accomplished;
        (f) what consideration has been given to the scheme entering into a transfer scheme under part 7.3 (Transfer schemes) with another scheme registered in the QFC or a subscheme of an umbrella scheme registered in the QFC and the reasons why a transfer scheme is not possible;
        (g) whether unitholders have been told of the intention to seek winding-up and, if not, whether and when they will be told of the intention;
        (h) details of any proposed rebate of charges to be made to unitholders who recently purchased units;
        (i) the preferred date for the start of the winding-up.
        (3) The Regulatory Authority may, in writing, require the operator to provide any further information or documents that the authority reasonably needs in relation to the scheme.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

      • PRIV 7.2.5 Winding-Up by Operator

        (1) This rule applies if any of the following circumstances (the prescribed circumstances) exist in relation to a scheme:
        (a) on a request by the operator for the cancellation of the scheme's registration, the Regulatory Authority agrees in principle that it will cancel the scheme's registration on the completion of the winding-up of the scheme;
        (b) the operator believes, on reasonable grounds, that the scheme is not commercially viable or the scheme's purpose cannot be accomplished;
        (c) if the constitutional document states that the duration of the scheme is limited — the scheme's duration ends;
        (d) the unitholders of the scheme direct the operator under the constitutional document to wind up the scheme;
        (e) if the scheme is subject to a transfer scheme approved under part 7.3 (Transfer schemes) under which it is to be left with no property — the transfer scheme commences.
        (2) If any of the prescribed circumstances apply in relation to the scheme—
        (a) the operator must cease—
        (i) any dealing in the scheme's units; and
        (ii) investing or borrowing for the scheme; and

        Note Dealing and borrowing are defined in the glossary.
        (b) the operator must take the steps necessary to wind up the scheme in accordance with any regulations in force in the QFC that apply to the winding-up, these rules, and any other rules made by the Regulatory Authority that apply to the winding-up.
        (3) If any of the prescribed circumstances mentioned in subrule (1) (a) to (d) apply in relation to the scheme—
        (a) the operator must realise the scheme property as soon as practicable; and
        (b) after meeting or making provision for all the scheme's liabilities and the costs of the winding-up, the operator must distribute the proceeds of the realisation to the unitholders in accordance with the constitutional document; and

        Note Constitutional document is defined r 3.1.1.
        (c) any unclaimed net proceeds or other cash (including unclaimed distribution payments) held by the operator after the end of 12 months from the day they became payable must be paid into the QFC Court, after meeting or making provision for the costs of paying them into the QFC Court under this paragraph.
        (4) If the operator and 1 or more unitholders agree, the requirement to realise the scheme property does not apply to the part of the scheme property proportionate to their entitlement.
        (5) The operator may distribute the part of the scheme property mentioned in subrule (4) to the unitholders mentioned in that subrule, after making the adjustments or provisions that appear appropriate to ensure that the unitholders bear a proportionate share of the liabilities of the scheme and the costs of the winding-up.
        (6) If the prescribed circumstances mentioned in subrule (1) (e) apply in relation to the scheme, the operator must wind up the scheme in accordance with the approved transfer scheme.
        (7) As soon as practicable after starting the winding-up, the operator—
        (a) tell the unitholders about the winding-up; and
        (b) publish notice of the winding-up in an English and an Arabic language national newspaper and, if the scheme has a website, on the scheme's website.
        (8) Not later than 5 business days after the day the winding-up of the scheme is completed, the operator must—
        (a) tell the Regulatory Authority about the completion of the winding-up; and
        (b) ask the authority to cancel the scheme's registration.
        (9) This rule is subject to any order of the QFC Court.

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

      • PRIV 7.2.6 Accounting and Reports During Winding-Up

        (1) While a scheme is being wound up, whether under rule 7.2.5 (Winding-up by operator) or otherwise—
        (a) the annual accounting periods and half-yearly accounting periods of the scheme continue to run; and
        (b) the provisions of these rules about annual and interim allocation of income continue to apply to the scheme; and
        (c) reports to unitholders and the Regulatory Authority continue to be required in relation to the scheme.
        (2) However, if the operator, after consulting the scheme's auditor and the Regulatory Authority, decides on reasonable grounds that timely preparation of a report under these rules is not required in the interest of unitholders or the Regulatory Authority, the operator may dispense with preparation of the report within the time otherwise required by these rules.
        (3) A period to which subrule (2) applies must be covered in the next relevant report required under these rules.
        (4) At the completion of the winding-up, the accounting period then running is regarded as the final annual accounting period.
        (5) Within 2 months after the end of the final annual accounting period, the final report of the operator must be sent to the Regulatory Authority and each person who was a unitholder immediately before the end of the final annual accounting period.
        (6) This rule is subject to any order of the QFC Court.
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)

    • Part 7.3 Part 7.3 Transfer Schemes

      • PRIV 7.3.1 Purpose — pt 7.3

        The purpose of this part is to make rules under the Financial Services Regulations, article 103 modifying those regulations, part 16 (Control of Business Transfers) in relation to schemes.

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

      • PRIV 7.3.2 Transfer Schemes

        (1) Financial Services Regulations, part 16 is modified in accordance with the following provisions of this rule.
        (2) If, for the purpose of a relevant scheme, it is proposed that scheme property of a scheme should become the property of another scheme registered in the QFC or the property of a subscheme of an umbrella scheme registered in the QFC, the proposal must not be implemented without the approval of a special resolution of the unitholders of the first scheme, unless subrule (3) applies.

        Note Subscheme and umbrella scheme are defined in r 1.2.8. Special resolution is defined in the glossary.
        (3) If, for the purpose of a relevant scheme, it is proposed that scheme property attributable to a subscheme (the first subscheme) of an umbrella scheme (the first umbrella scheme) should become the property of another scheme registered in the QFC or another subscheme of an umbrella scheme registered in the QFC (whether or not of the first umbrella scheme), the proposal must not be implemented without the approval of—
        (a) a special resolution of the unitholders in the first subscheme; and
        (b) a special resolution of the unitholders of units in the first umbrella scheme, unless implementation of the scheme is not likely to result in any material prejudice to the interests of the unitholders in any other subscheme of the first umbrella scheme.
        (4) If it is proposed that a scheme or a subscheme of an umbrella scheme should receive property (other than its first property) under a relevant scheme, or an arrangement equivalent to a scheme of arrangement, that is entered into by another scheme registered in the QFC, by a subscheme of an umbrella scheme registered in the QFC or by corporation, the proposal must not be implemented without the approval of a special resolution of the unitholders of the first scheme or of the class or classes of units related to the first subscheme (as appropriate).

        Note Corporation is defined in the glossary.
        (5) However, if the operator agrees that the receipt of the property by the scheme or subscheme as mentioned in subrule (4)—
        (a) is not likely to result in any material prejudice to the interests of the unitholders of the scheme; and
        (b) is consistent with the investment objectives, strategies and policy of the scheme or subscheme;
        the property may be transferred to the scheme or subscheme, and units may be issued in exchange for the property, as part of the relevant scheme without the approval of a special resolution.
        (6) To remove any doubt, relevant scheme has the meaning given by theFinancial Services Regulations, article 94 (4).
        Derived from QFCRA RM/2010-06 (as from 1st January 2011)