COLL 7.7.2 General Power to Borrow—QFC Retail Schemes

(1) A QFC retail scheme that is a CIC or CIP may, in accordance with this rule and rule 7.7.3 (Borrowing limits—QFC retail schemes), borrow money for the use of the scheme on terms that the borrowing is to be repaid out of the scheme property.

Note CIC and CIP are defined in r 1.3.7 and r 1.3.8 respectively. Borrowing is defined in the glossary.
(2) The independent entity of a QFC retail scheme that is a CIT may, on the operator's instructions and in accordance with this rule and rule 7.7.3, borrow money for the use of the scheme on terms that the borrowing is to be repaid out of the scheme property.

Note CIT is defined in r 1.3.9.
(3) Subrules (1) and (2) are subject to the obligation of the scheme to comply with any restriction in the constitutional document.

Note Constitutional document is defined in r 3.1.1.
(4) Money may be borrowed under subrule (1) or (2) only from an eligible bank.

Note Eligible bank is defined in the glossary.
(5) The operator must ensure that any borrowing is on a temporary basis and that borrowings are not persistent.
(6) For subrule (5), the operator must have regard in particular to the following:
(a) the duration of any borrowing;
(b) the number of times the scheme borrows in any period.
(7) Without limiting subrule (5), the operator must ensure that no borrowing is for longer than 3 months, whether in relation to a particular amount or at all, without the independent entity's prior agreement.
(8) The independent entity may give its agreement under subrule (7) in relation to a borrowing only on the conditions that appear to the independent entity appropriate to ensure that the borrowing does not cease to be on a temporary basis only.
(9) A CIC or CIP must not issue any debt instrument unless it acknowledges or creates a borrowing that complies with subrules (1), (3) and (4).

Note Debt instrument is defined in the glossary.
(10) This rule does not apply to back-to-back borrowing.

Note Back-to-back borrowing is defined in the glossary.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)