COLL 7.4.2 Investments in Closed-Ended Schemes as Transferable Securities—QFC Retail Schemes

(1) For this chapter, a unit in a closed-ended scheme is taken to be a transferable security (and not a unit in a scheme) if it would meet all the requirements mentioned in rule 7.4.1 (General investment requirements for non-approved transferable securities—QFC retail schemes) if it were a transferable security and—
(a) for a unit in a closed-ended scheme constituted as a company—both the following requirements are met in relation to that scheme:
(i) the scheme is subject to corporate governance applied to companies;
(ii) if another person carries out asset management activity for the scheme—the other person is subject to regulation by a regulatory or governmental entity for the purposes of investor protection; or
(b) for a unit in a closed-ended scheme constituted as a trust—both the following requirements are met in relation to that scheme:
(i) the scheme is subject to corporate governance equivalent to that applied to companies;
(ii) if another person carries out asset management activity for the scheme—the other person is subject to regulation by a regulatory or governmental entity for the purposes of investor protection; or
(c) for a unit in a closed-ended scheme constituted as a limited partnership or under contract law—all the following requirements are met in relation to that scheme:
(i) the scheme is subject to corporate governance equivalent to that applied to companies;
(ii) the scheme is managed by a person who is subject to regulation by a regulatory or governmental entity for the purposes of investor protection;
(iii) the assets of the scheme are held separately from the property of the operator of that scheme and the property of any other scheme;
(iv) the scheme is subject to liquidation rules that adequately protect its investors.
Guidance for para (b) (i) and (c) (i)

In assessing whether a closed-ended scheme in trust or contractual form is subject to corporate governance equivalent to that applied to companies, the operator of a QFC retail scheme should consider whether the trust or contract constituting the closed-ended scheme provides its investors with rights—
(a) to vote on essential decisions affecting the closed-ended scheme, including appointment and removal of its operator, amendment of the trust or contract, changes to its investment objectives, strategies and policy, merger and liquidation; and
(b) to control the closed-ended scheme's investment objectives, strategies and policy through appropriate mechanisms.
(2) However, a QFC retail scheme must not invest in a unit in a closed-ended scheme under this rule if the purpose of the investment is to circumvent any investment limit or restriction (however described) of this chapter.

Note Closed-ended scheme is defined in r 1.2.10 (2).
Derived from QFCRA RM/2010-05 (as from 1st January 2011)