COLL S1.14 Corporations

(1) A corporation incorporated in the QFC is not an arrangement that is a scheme unless it is—
(a) a CIC; or
(b) a CIP; or
(c) another permitted form of QFC scheme.

Note Corporation is defined in the glossary. CIC, CIP and another permitted form of QFC scheme are defined in div 1.3.B.
(2) A corporation (other than a partnership) incorporated outside the QFC is not an arrangement that is a scheme unless the arrangement meets the property condition in subrule (3) and the investment condition in subrule (4).
(3) For subrule (2), an arrangement meets the property condition if—
(a) it is made in relation to property that belongs beneficially to, and is managed by or on behalf of, the corporation; and
(b) the corporation has for its purpose the investment of its property with the aim of—
(i) spreading investment risk; and
(ii) giving its members the benefit of the results of the management of its property.
Note Property is defined in the glossary.
(4) For subrule (2), an arrangement meets the investment condition if, in relation to the corporation, a reasonable investor would, if the investor were to take part in the arrangement—
(a) expect to be able to realise, within a period appearing to the investor to be reasonable (or, for a closed-ended corporation, at the end of the corporation's operation), the investor's investment in the arrangement (represented, at any time, by the value of shares in, or securities of, the corporation held by the investor as a participant in the arrangement); and
(b) be satisfied that the investment, if realised, would be realised on a basis calculated completely or mainly by reference to the value of property in relation to which the corporation makes arrangements.
(5) In deciding whether the investment condition is met, no account may be taken of any actual or potential redemption or repurchase of shares or securities under provisions in force in any jurisdiction other than the QFC corresponding to the Companies Regulations 2005, article 31 (Redemption or purchase of own shares).
(6) However, the Regulatory Authority may, by written notice given to the corporation, declare that subrule (1) or (2) does not apply in relation to the corporation.
(7) The Regulatory Authority may make a declaration under subrule (6) if it considers that making the declaration is desirable to protect—
(a) the interests of participants or potential participants in the corporation; or
(b) the financial system operating in or from the QFC.
(8) If the Regulatory Authority gives the corporation a notice under subrule (6), the notice must—
(a) give reasons for the decision to make the declaration; and
(b) tell the corporation that it may appeal to the Regulatory Tribunal against the decision.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)