COLL 12.6.9 Custody of immovables by REIT operator

(1) The operator of a REIT may act as custodian of an immovable that is part of the fund's scheme property if the operator has:
(a) adequate systems and controls to segregate and protect the immovable; and
(b) effective arrangements to ensure that the immovable is not available to creditors of the operator if the operator becomes insolvent.

Note Under rule 4.2.6 (6) (b), the independent entity of a REIT is not responsible in relation to an immovable held by the operator of the REIT as custodian in accordance with this rule. If the REIT operator acts as custodian, the fund's prospectus must state that fact (see rule S5.20 (1)).
(2) The systems and controls to segregate and protect the immovable must ensure that:
(a) legal title to the immovable is registered in the name of the fund;
(b) the operator identifies, manages and monitors any conflicts of interest as a result of it acting as custodian; and
(c) the operator designates by name or position the employees who are responsible for safeguarding the ownership rights of the fund over the immovable, including safekeeping documents evidencing title to the immovable.
(3) In designating an employee under subrule (2) (c), the operator must have regard to conflicts of interest that may arise between the employee's function of safeguarding ownership rights and the employee's other functions.
Inserted by QFCRA RM/2016-1 (as from 19th September 2016)