COLL 4.2.6 Property Safeguarding Functions of Independent Entity—All QFC Schemes

(1) The independent entity of a QFC scheme is responsible for safeguarding all the scheme property.

Note For the exceptions to this rule, see rule 4.2.6 (6).
(2) Without limiting subrule (1), the independent entity 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 independent entity's own property, the operator's own property and the property of any other person; and
(c) take all steps and complete all documents needed to ensure completion of transactions properly entered into for the scheme; and
(d) ensure that instructions properly given by the operator about the exercise of rights in relation to the scheme property are carried out; and
(e) ensure that any scheme property in registrable form is registered as soon as practicable in its own name or in the name of its nominee or delegate, as appropriate; and
(f) take into its custody or control all documents evidencing title to the scheme property, other than in relation to derivatives and forward positions; and

Note Document evidencing title and derivative are defined in the glossary.
(g) ensure that any resulting benefit of a derivative or forward transaction is received by it for the scheme property; and
(h) collect, hold and deal with income in relation to the scheme property.
(3) If the scheme property includes units in any other scheme operated by the operator or an associate of the operator, the independent entity must exercise any voting rights given by the units in accordance with what the independent entity reasonably believes to be in the interest of the unitholders of the QFC scheme.

Note Associate is defined in the glossary.
(4) If the independent entity is of the opinion that a deal in property in relation to the scheme breaches these rules or the constitutional document, the independent entity may require the operator—
(a) to cancel the transaction or make a disposal or acquisition to restore the previous situation; and
(b) to meet any resulting loss or expense.

Note Deal and breach is defined in the glossary.
(5) If the independent entity is of the opinion that—
(a) an acquisition of property necessarily involves documents evidencing title being kept in the custody of a person other than the independent entity; and
(b) the independent entity cannot reasonably be expected to accept the responsibility that would otherwise be placed on it if it were to permit custody by the other person;
the operator must either cancel the transaction or make a corresponding disposal if the independent entity asks it to take action under this subrule.
(6) This rule does not apply in relation to an immovable that is part of the scheme property if:
(a) the operator of the fund has made adequate alternative arrangements for the immovable in accordance with rule 12.3.1; or
(b) the fund is a REIT and the operator of the fund holds the immovable as custodian in accordance with rule 12.6.9.

Note The operator of the fund is responsible for safeguarding an immovable described in rule 4.2.6 (6).
Amended by QFCRA RM/2016-1 (as from 19th September 2016)