COLL 12.3.5 Duty of operator in relation to intermediate holding vehicles

(1) The operator of a QFC retail property fund that uses an intermediate holding vehicle or vehicles to hold immovables must ensure that:
(a) neither the constitution of the intermediate holding vehicle or vehicles nor the organisation, transactions or activities of any of the vehicles contravenes a requirement of this Chapter;
(b) subject to subrule (3), the governing body of each of the vehicles is appointed by the operator with the approval of the fund's independent entity and investment committee (if any);
(c) each of the vehicles undertakes the purchase, sale and management of immovables on behalf of the fund in accordance with the fund's investment objectives, strategies and policy; and
(d) the interests of the unitholders are otherwise adequately protected.
(2) The operator of a QFC retail property fund may, by the use of inter-company debt, transfer capital and income between the fund and an intermediate holding vehicle of the fund if:
(a) the purpose of the transfer is for investment in immovables or the repatriation of income generated by such an investment;
(b) a record of inter-company debt is kept to provide an accurate audit trail; and
(c) interest paid out on the debt instruments that gave rise to the inter-company debt is equivalent to the net rental income earned from the immovables less the intermediate holding vehicle's reasonable running costs (including tax).
(3) Subrule (1) (b) does not apply to an intermediate holding vehicle if:
(a) the vehicle does not have a majority stake or holding in relation to a joint ownership arrangement over the immovable; or
(b) the vehicle, at the time the immovable was acquired, was already established in another jurisdiction.
Inserted by QFCRA RM/2016-1 (as from 19th September 2016)