COLL 12.3.2 Joint ownership arrangements—QFC retail property funds

(1) A QFC retail property fund may enter into an arrangement for the joint ownership of an immovable in accordance with this rule (joint ownership arrangement).
(2) Before a QFC retail property fund enters into a joint ownership arrangement, the operator of the fund:
(a) must be able to demonstrate that the arrangement is in the interests of the unitholders;
(b) must ensure that, under the arrangement:
(i) the fund has a majority stake or holding in relation to the arrangement;
(ii) the fund has, at all times, more than 50% ownership and control of each immovable subject to the arrangement;
(iii) the fund has the freedom to dispose of its interest in each immovable; and
(iv) the liability of the fund does not exceed the percentage of its interest in the arrangement;
(c) must ensure that due diligence is conducted to identify restrictions and constraints that may limit the fund's direct ownership of a 100% interest in any immovable subject to the arrangement; and
(d) must obtain a legal opinion about the arrangement.
(3) An investment in an intermediate holding vehicle for the purpose of holding an immovable (whether wholly or through a joint ownership arrangement) must be treated as if it were a direct investment in the immovable. The investment must be valued as an immovable under rule 12.5.6.
(4) Despite subrule (2) (b) (i), the Regulatory Authority may permit a QFC retail property fund to enter into a joint ownership arrangement in which the fund does not have a majority stake or holding if:
(a) the authority is satisfied that the interests of the unitholders are adequately protected (for example, the other joint owner of the property is a public sector entity in Qatar); or
(b) the law of the jurisdiction where the immovable is located requires local ownership or control of 51% or more.
(5) Despite subrule (2) (b) (ii), the Regulatory Authority may permit a QFC retail property fund to hold title to an immovable under a joint ownership arrangement, but without holding more than 50% ownership and control of the immovable, if the authority is satisfied that the interests of the unitholders are adequately protected.
(6) For subrule (2) (d), the legal opinion must include:
(a) a description of the significant terms of the arrangement;
(b) a statement whether the fund will have good marketable legal and beneficial title in each immovable subject to the arrangement;
(c) a description of the equity and profit-sharing arrangements of the parties to the contract;
(d) a statement that the contract and joint ownership arrangements are legal, valid, binding and enforceable under applicable law;
(e) a statement that all necessary licences and consents required in the jurisdiction where the immovable is located have been obtained;
(f) any restriction on the fund disposing of its interest, in whole or in part, in the immovable; and
(g) if relevant, the implication of any foreign law that may limit the fund's direct ownership of a 100% interest in the immovable.
Inserted by QFCRA RM/2016-1 (as from 19th September 2016)