Collective Investment Schemes Rules 2010 · Web viewCollective Investments Amendments Rules 2019 (QFCRA Rules 2019-5) Collective Investment Schemes Rules 2010 made under the Financial

Collective Investment Schemes Rules 2010

Endnotes

Endnotes

Collective Investment Schemes Rules 2010(COLL)

Version No. 8

Effective: 1 January 2020-14 October 2020

Includes amendments made by

COND Repeal and Miscellaneous Amendments Rules 2019

(QFCRA Rules 2019-4)

Collective Investments Amendments Rules 2019(QFCRA Rules 2019-5)


made under the

Financial Services Regulations

Contents

Page

Chapter 1General provisions1

Part 1.1Introductory1

1.1.1Name of rules1

1.1.2Commencement1

1.1.3Application of COLL1

1.1.4Glossary1

Part 1.2Basic concepts and key terms—all schemes3

1.2.1What is a collective investment scheme?3

1.2.2Who is a participant?4

1.2.3What is the scheme property?4

1.2.4What is a unit?4

1.2.5Who is the unitholder?4

1.2.6What is a QFC scheme?5

1.2.7What is a non-QFC scheme?5

1.2.8Who is the operator?5

1.2.9Who is the independent entity?6

1.2.10What are open-ended and closed-ended schemes?6

1.2.11What are umbrella schemes and subschemes?7

1.2.12Who is a qualified investor or retail customer?7

Part 1.3Basic concepts and key terms—QFC schemes9

1.3.1QFC schemes are qualified investor or retail schemes9

1.3.2What is a QFC qualified investor scheme?9

1.3.3What is a QFC retail scheme?9

1.3.4Types of QFC retail schemes9

1.3.5What is a QFC UCITS type scheme?9

1.3.5AWhat is a QFC retail property fund?10

1.3.6Permitted legal forms for QFC schemes10

1.3.7What is a QFC collective investment company (or CIC)?10

1.3.8What is a QFC collective investment partnership (or CIP)?11

1.3.9What is a QFC collective investment trust (or CIT)?11

1.3.10What is another permitted form of QFC scheme?11

1.3.11Islamic funds12

1.3.12Money-market funds12

1.3.13Other types of QFC schemes13

Part 1.4Basic concepts and key terms—non-QFC schemes14

1.4.1What is a non-QFC retail customer scheme?14

1.4.2What is a non-QFC qualified client scheme?14

Chapter 2Registration of schemes in QFC15

2.1.1Schemes established in QFC must be registered15

2.1.2Application for registration of scheme established in QFC15

2.1.3Decision on application for registration of scheme established in QFC16

Chapter 3Constitutional requirements—QFC schemes19

Part 3.1Constitutional document—QFC schemes19

3.1.1What is the constitutional document for a QFC scheme?19

3.1.2Matters to be included in constitutional document—all QFC schemes19

3.1.3Relationship between constitutional document and these rules—all QFC schemes19

3.1.4Constitutional document and checklist to be filed with registration application—all QFC schemes20

3.1.5Amendments of constitutional document—all QFC schemes20

3.1.6Prohibited amendments of constitutional document—QFC UCITS type schemes21

Part 3.2Units—QFC schemes22

3.2.1Fractions of units—all QFC schemes22

3.2.2Smaller and larger denomination shares etc—CICs22

3.2.3Bearer certificates must not be issued—all QFC schemes23

3.2.4Classes of units—QFC qualified investor schemes23

3.2.5Limited issue—QFC qualified investor schemes23

3.2.6Classes of units—QFC retail schemes24

3.2.7Currency class units—QFC retail schemes24

3.2.8Rights of unit classes—QFC retail schemes25

3.2.9Smaller and larger denomination shares—QFC retail schemes26

3.2.10Subdivision and consolidation of units—QFC retail schemes27

3.2.11Guarantees and capital protection—QFC retail schemes27

3.2.12Switching rights—QFC retail umbrella schemes28

Chapter 4The operator and independent entity—QFC schemes29

Part 4.1The operator—all QFC schemes29

4.1.1Requirements for operator—all QFC schemes29

4.1.2Operator must comply with legal and regulatory requirements—all QFC schemes30

4.1.3Functions of operator generally—all QFC schemes31

4.1.4Duty of operator to report certain breaches of law—all QFC schemes32

4.1.5Particular duties of operator—all QFC schemes33

4.1.6Register of unitholders—all QFC schemes34

4.1.7Records of operator—all QFC schemes34

4.1.8Operator must give information etc to independent entity and auditor—all QFC schemes35

4.1.9Maintenance of capital notification—CIC’s36

Part 4.2The independent entity—QFC schemes37

4.2.1Requirements for independent entity—all QFC schemes37

4.2.2Independent entity must comply with legal and regulatory requirements—all QFC schemes40

4.2.3Oversight functions of independent entity—all QFC schemes41

4.2.4Duty of independent entity to report certain breaches of law etc—all QFC schemes42

4.2.5Particular duties of independent entity—all QFC schemes43

4.2.6Property safeguarding functions of independent entity—all QFC schemes44

4.2.7Records of independent entity—all QFC schemes46

4.2.8Independent entity must give information etc to operator and auditor—all QFC schemes47

4.2.9Non-QFC independent entities—criteria for Regulatory Authority action47

4.2.10Non-QFC independent entities—annual compliance certificate48

4.2.11Non-QFC independent entities—oversight of property safeguarding functions by operators49

4.2.12Non-QFC independent entities—removal by operators49

4.2.13Non-QFC independent entities—removal by Regulatory Authority50

Part 4.3Operator and independent entity other provisions—QFC schemes53

4.3.1Duties of officers etc of operator and independent entity—all QFC schemes53

4.3.2Provisions of ch 4 do not limit other functions53

Chapter 5Investor relations—QFC schemes55

Part 5.1Transactions with affected persons—QFC schemes55

5.1.1Who is an affected person for a QFC scheme?55

5.1.2Transactions with affected persons—general rule for all QFC schemes56

5.1.3Transactions with affected persons—prior notice to unitholders of QFC schemes56

5.1.4Transactions with affected persons—transactions involving 5% or more of QFC scheme’s net asset value57

5.1.5Transactions with affected persons—details required for QFC scheme’s annual reports57

5.1.6Transactions with affected persons—additional restrictions for QFC retail schemes58

Part 5.2Prospectus requirements—QFC schemes62

5.2.1Prospectus to be drawn up—all QFC schemes62

5.2.2Prospectus etc to be made available—all QFC schemes62

5.2.3General information requirements for prospectus—all QFC schemes62

5.2.4Other general requirements for prospectus—all QFC schemes63

5.2.5Prospectus, checklist and any translations to be filed with registration application—all QFC schemes64

5.2.6Revisions of prospectus etc—all QFC schemes65

Part 5.3Prospectus responsibility—QFC schemes68

5.3.1Persons responsible for prospectus—all QFC schemes68

5.3.2Responsibility for expert statements in prospectus—all QFC schemes69

5.3.3Liability for prospectus—all QFC schemes69

5.3.4Exceptions from liability for prospectus—all QFC schemes70

Part 5.4Unitholder approvals and notice—QFC schemes73

5.4.1Changes requiring unitholder approval or notice—QFC qualified investor schemes73

5.4.2Fundamental changes requiring prior approval by unitholder meeting—QFC retail schemes74

5.4.3Significant changes requiring pre-event notification—QFC retail schemes75

5.4.4Notifiable changes—QFC retail schemes76

Part 5.5Unitholder meetings—QFC schemes77

5.5.1Unitholder meetings—QFC qualified investor schemes77

5.5.2Special meaning of unitholder in div 5.5.B—QFC retail schemes77

5.5.3Application of div 5.5.B to class meetings—QFC retail schemes78

5.5.4General meetings of unitholders—QFC retail schemes78

5.5.5Notice of general meetings of unitholders—QFC retail schemes79

5.5.6Quorum for unitholder meetings—QFC retail schemes80

5.5.7Resolutions at unitholder meetings—QFC retail schemes81

5.5.8Voting rights at unitholder meetings—QFC retail schemes81

5.5.9Right to demand poll at unitholder meetings—QFC retail schemes83

5.5.10Proxies at unitholder meetings—QFC retail schemes83

5.5.11Chair, adjournment and minutes of unitholder meetings—QFC retail schemes84

Part 5.6Reports, accounts and auditors—QFC schemes85

5.6.1Accounting standards—all QFC schemes85

5.6.2Appointment and removal of auditors etc—all QFC schemes86

5.6.3Reports and accounts generally—QFC qualified investor schemes87

5.6.4Contents of annual reports—QFC qualified investor schemes88

5.6.5Contents of half-yearly reports—QFC qualified investor schemes89

5.6.6Operator’s reports—QFC qualified investor schemes90

5.6.7Independent entity’s reports—QFC qualified investor schemes90

5.6.8Auditor’s reports—QFC qualified investor schemes91

5.6.9Preparation of long and short reports—QFC retail schemes92

5.6.10Contents of short reports—QFC retail schemes92

5.6.11Contents of annual long reports—QFC retail schemes94

5.6.12Contents of half-yearly long reports—QFC retail schemes96

5.6.13Operator’s reports—QFC retail schemes97

5.6.14Comparative tables—QFC retail schemes99

5.6.15Independent entity’s reports—QFC retail schemes100

5.6.16Auditor’s reports—QFC retail schemes101

5.6.17Provision of short reports—QFC retail schemes101

5.6.18Publication and availability of annual and half-yearly long reports—QFC retail schemes102

Chapter 6Investment and borrowing—QFC qualified investor schemes103

Part 6.1Investment and borrowing generally—QFC qualified investor schemes103

6.1.1General duties of operator in relation to investment and borrowing—QFC qualified investor schemes103

6.1.2Investment powers generally—QFC qualified investor schemes103

6.1.3Permissible investments generally—QFC qualified investor schemes104

6.1.4Spread of risk—QFC qualified investor schemes104

6.1.5Investments by money-market funds—QFC qualified investor schemes105

6.1.6Application of ch 6 to umbrella schemes—QFC qualified investor schemes106

Part 6.2Particular kinds of investments and transactions—QFC qualified investor schemes107

6.2.1Investments in schemes—QFC qualified investor schemes107

6.2.2Delivery of property under transactions in derivatives etc—QFC qualified investor schemes108

6.2.3Valuation of OTC derivatives—QFC qualified investor schemes109

6.2.4Cover for transactions in derivatives and forward transactions—QFC qualified investor schemes109

6.2.5Continuing nature of limits and requirements for derivatives and forward positions—QFC qualified investor schemes110

6.2.6Standing independent valuer—QFC qualified investor schemes110

6.2.7Requirements for making investments in immovables—QFC qualified investor schemes110

6.2.8Investments in non-Qatari immovables through intermediate holding vehicles—QFC qualified investor schemes112

6.2.9Additional requirements for immovables—QFC qualified investor schemes113

6.2.10Reports on valuation of immovables before acquisition or disposal—QFC qualified investor schemes114

6.2.11Valuation of immovables part of scheme property—QFC qualified investor schemes115

6.2.12Annual and other periodic valuation reports—QFC qualified investor schemes117

6.2.13Basis of valuation by standing independent valuer—QFC qualified investor schemes118

6.2.14Appointment of standing independent valuer—QFC qualified investor schemes119

6.2.15Standing independent valuer not to deal in immovables etc—QFC qualified investor schemes120

6.2.16Removal of standing independent valuer—QFC qualified investor schemes121

Part 6.3Stock lending and repos—QFC qualified investor schemes122

6.3.1Permitted stock lending and repos—QFC qualified investor schemes122

Part 6.4Borrowing—QFC qualified investor schemes123

6.4.1Borrowing—QFC qualified investor schemes123

Chapter 7Investment and borrowing—QFC retail schemes124

Part 7.1Investment and borrowing introduction—QFC retail schemes124

7.1.1 Objects of ch 7—QFC retail schemes124

7.1.2General duties of operator in relation to investment and borrowing—QFC retail schemes124

7.1.3Treatment of obligations under ch 7—QFC retail schemes126

7.1.4Valuation for ch 7—QFC retail schemes127

7.1.5What is an approved money-market instrument?128

7.1.6What is a transferable security?129

7.1.7What is an eligible market?130

7.1.8What is an approved derivative?131

7.1.9What is an approved security?131

7.1.10Application of ch 7 to umbrella schemes—QFC retail schemes131

Part 7.2Investments generally—QFC retail schemes132

7.2.1Investment powers generally—QFC retail schemes132

7.2.2Permissible investments generally—QFC retail schemes133

7.2.3Significant influence through transferable securities—UCITS type schemes133

7.2.4Investments by money-market funds—QFC retail schemes134

Part 7.3Investment diversification—QFC retail schemes136

7.3.1Prudent spread of risk—QFC retail schemes136

7.3.2Spread for certain transferable securities and money-market instruments—QFC retail schemes136

7.3.3Spread for transferable securities and money-market instruments issued by single issuer or group—QFC retail schemes137

7.3.4Spread exception for schemes replicating indices—QFC retail schemes138

7.3.5Spread for government or public securities issued by single issuer—QFC retail schemes140

7.3.6Spread for units in schemes etc—QFC retail schemes141

7.3.7Spread for OTC derivatives—QFC retail schemes142

7.3.8Spread for deposits—QFC retail schemes143

7.3.9Spread for certain investments with single person—QFC retail schemes144

7.3.10Concentration—QFC retail schemes144

7.3.11Application of pt 7.3—QFC retail schemes145

Part 7.4Particular kinds of investments—QFC retail schemes146

7.4.1General investment requirements for non-approved transferable securities—QFC retail schemes146

7.4.2Investments in closed-ended schemes as transferable securities—QFC retail schemes147

7.4.3Investments linked etc to other assets as transferable securities—QFC retail schemes149

7.4.4Investments in approved money-market instruments not admitted to eligible markets etc—QFC retail schemes150

7.4.5Investments in nil and partly paid securities—QFC retail schemes153

7.4.6Investments in collective investment schemes generally—QFC retail schemes154

7.4.7Investments in associated schemes—QFC retail schemes155

7.4.8Derivatives and forward transactions generally—QFC retail schemes156

7.4.9Permitted transactions in derivatives and forward transactions—QFC retail schemes158

7.4.10Permitted financial indices—QFC retail schemes160

7.4.11Delivery of property under transactions in derivatives and forward transactions—QFC retail schemes162

7.4.12Requirement to cover sales—QFC retail schemes162

7.4.13OTC transactions in derivatives—QFC retail schemes163

7.4.14Risk management for transactions in derivatives and forward transactions—QFC retail schemes165

7.4.15Investments in deposits—QFC retail schemes166

Part 7.5Exposure for derivatives and forward transactions—QFC retail schemes167

7.5.1Cover for transactions in derivatives and forward transactions—QFC retail schemes167

7.5.2Borrowing not available for cover—QFC retail schemes168

7.5.3Continuing nature of limits and requirements for derivatives and forward positions—QFC retail schemes169

Part 7.6Stock lending and repos—QFC retail schemes170

7.6.1Stock lending and repos generally—QFC retail schemes170

7.6.2Stock lending requirements—QFC retail schemes170

7.6.3Treatment of collateral for stock lending—QFC retail schemes171

7.6.4No limits on stock lending and repos—QFC retail schemes173

Part 7.7Cash, borrowing, lending and other provisions—QFC retail schemes175

7.7.1Cash and near cash—QFC retail schemes175

7.7.2General power to borrow—QFC retail schemes175

7.7.3Borrowing limits—QFC retail schemes177

7.7.4Restrictions on lending money—QFC retail schemes177

7.7.5Restrictions on lending property other than money—QFC retail schemes178

7.7.6General power to accept or underwrite placings—QFC retail schemes178

7.7.7Guarantees and indemnities—QFC retail schemes180

Chapter 8Operating duties and responsibilities—QFC schemes182

Part 8.1Dealing—QFC schemes182

8.1.1Application of div 8.1.A to umbrella schemes—QFC qualified investor schemes182

8.1.2Initial offer—QFC qualified investor schemes183

8.1.3How units are issued and redeemed etc—QFC qualified investor schemes183

8.1.4Controls over issue and redemption of units—QFC qualified investor schemes184

8.1.5Issue and redemption of units in multiple classes—QFC qualified investor schemes185

8.1.6Issue and redemption generally—QFC qualified investor schemes185

8.1.7When instructions for issue and redemption must be given—QFC qualified investor schemes187

8.1.8Limited issue—QFC qualified investor schemes187

8.1.9Issue only to qualified investors—QFC qualified investor schemes188

8.1.10Application of div 8.1.B to umbrella schemes—QFC retail schemes188

8.1.11Initial offers—QFC retail schemes188

8.1.12How units are issued and redeemed etc—QFC retail schemes189

8.1.13Controls over issue and redemption of units—QFC retail schemes189

8.1.14Issue and redemption of units in multiple classes—QFC retail schemes191

8.1.15Changes to number of units issued or redeemed—QFC retail schemes191

8.1.16Payment for issued units—QFC retail schemes192

8.1.17Issue and redemption generally—QFC retail schemes192

8.1.18When instructions for issue or redemption must be given—QFC retail schemes193

8.1.19Payment for redeemed units—QFC retail schemes194

8.1.20Issue or redemption otherwise than for cash—QFC retail schemes195

8.1.21Deferred redemption—QFC retail schemes195

Part 8.2Valuation and pricing—QFC schemes197

8.2.1Application of div 8.2.A to umbrella schemes—QFC qualified investor schemes197

8.2.2Valuation—QFC qualified investor schemes197

8.2.3Valuation points—QFC qualified investor schemes198

8.2.4Prices of units—QFC qualified investor schemes198

8.2.5Application of div 8.2.B to umbrella schemes—QFC retail schemes199

8.2.6Duty of operator to rectify breaches of div 8.2.B—QFC retail schemes200

8.2.7Valuation requirement——QFC retail schemes201

8.2.8General rules for valuation of scheme property—QFC retail schemes202

8.2.9Fair value pricing for securities—QFC retail schemes203

8.2.10Valuation points—QFC retail schemes204

8.2.11Pricing controls of operator—QFC retail schemes204

8.2.12Review by independent entity of operator’s pricing controls etc—QFC retail schemes206

8.2.13Recording and reporting incorrect pricing—QFC retail schemes207

8.2.14Prices of units—QFC retail schemes208

8.2.15Issue and redemption prices—QFC retail schemes208

8.2.16Dilution—QFC retail schemes209

8.2.17Particular duties of independent entity in relation to dilution—QFC retail schemes210

8.2.18Publication of prices—QFC retail schemes210

8.2.19Maintaining value—all money-market funds211

Part 8.3Title and register—QFC schemes213

8.3.1Unitholder register requirements—all QFC schemes213

8.3.2Transfer of units by act of parties—all QFC schemes214

8.3.3Certificates for units—all QFC schemes215

8.3.4Conversion of units—all QFC schemes216

Part 8.4Operator and independent entity appointment and removal—QFC schemes217

8.4.1Initial appointment of operator and independent entity—all QFC schemes217

8.4.2Removal of operator—QFC schemes217

8.4.3Retirement of operator—all QFC schemes219

8.4.4Consequences of removal or retirement of operator—all QFC schemes220

8.4.5Removal of independent entity by unitholders—all QFC schemes220

8.4.6Removal of independent entity no longer eligible for appointment—all QFC schemes221

8.4.7Retirement of independent entity—all QFC schemes222

8.4.8Consequences of removal or retirement of independent entity—all QFC schemes222

Part 8.5Outsourcing—QFC schemes224

8.5.1What is outsourcing?224

8.5.2Outsourcing by operator—all QFC schemes224

8.5.3Outsourcing by independent entity—all QFC schemes225

8.5.4Outsourcing notice and information—all QFC schemes226

8.5.5Provisions applying to outsourcing by operator and independent entity—all QFC schemes226

8.5.6Outsourcing management—all QFC schemes230

8.5.7Application of pt 8.5 to further outsourcing—all QFC schemes231

8.5.8Systems and controls for outsourcings—all QFC schemes232

Part 8.6Payments—QFC schemes233

8.6.1Payments—QFC qualified investor schemes233

8.6.2Payments out of scheme property—QFC retail schemes233

8.6.3Performance fees—QFC retail schemes234

8.6.4Charges on buying and selling units—QFC retail schemes235

8.6.5Redemption charges—QFC retail schemes236

8.6.6Charges on exchange of units in umbrella schemes—QFC retail schemes236

8.6.7Allocation of payments to income or capital—QFC retail schemes237

8.6.8Prohibition of promotional payments—QFC retail schemes238

8.6.9Expenses in relation to property—QFC retail schemes238

8.6.10Payment of liabilities on transfer of assets—QFC retail schemes238

8.6.11Attribution of scheme property to subschemes—QFC retail schemes239

Part 8.7Accounting periods—QFC schemes240

8.7.1Accounting periods—all QFC schemes240

Part 8.8Income allocation and distribution—QFC schemes242

8.8.1Application of pt 8.8 to umbrella schemes—all QFC schemes242

8.8.2Income allocation and distribution—all QFC schemes242

8.8.3Unclaimed, minimal and joint unitholders distributions—all QFC schemes244

Part 8.9Names—QFC schemes246

8.9.1Name of scheme etc—all QFC schemes246

8.9.2Use of certain names—all QFC schemes249

Part 8.10Shari’a Supervisory Board—all Islamic funds251

8.10.1Islamic fund must have a supervisory board—all Islamic funds251

Chapter 9Suspension, winding up and transfer schemes—QFC schemes252

Part 9.1Suspension and restart of dealings—QFC schemes252

9.1.1Suspension and restart of dealings—all QFC schemes252

Part 9.2Winding up—QFC schemes256

9.2.1Application of pt 9.2 to subschemes of QFC umbrella schemes—all QFC schemes256

9.2.2When scheme may be wound up—all QFC schemes256

9.2.3Winding-up required by constitutional document—all QFC schemes257

9.2.4Winding-up at direction of unitholders—all QFC schemes257

9.2.5Notification to Regulatory Authority that scheme not commercially viable etc—all QFC schemes257

9.2.6Winding-up by operator or independent entity—all QFC schemes259

9.2.7Accounting and reports during winding-up—all QFC schemes261

Part 9.3Transfer schemes—QFC schemes263

9.3.1Purpose—pt 9.3263

9.3.2Transfer schemes—all QFC schemes263

Chapter 10Financial promotions and investment activities—all schemes265

Part 10.1Financial promotions generally—all schemes265

10.1.1Declaration of non-QFC retail customer schemes265

10.1.2Certain financial promotions only to qualified investors etc—QFC qualified investor schemes266

10.1.3Certain financial promotions only to qualified investors etc—non-QFC qualified client schemes266

10.1.4Part 10.1 additional to CIPR267

Part 10.2Financial promotions—non-QFC schemes268

10.2.1What is a complying disclaimer for a non-QFC scheme?268

10.2.2Restrictions generally on financial promotions—all non-QFC schemes268

10.2.3Prospectus and disclaimer must be provided etc—all non-QFC schemes269

10.2.4Complying disclaimer must be given with other documents under CIPR—all non-QFC schemes270

10.2.5Authorised firms must pass on documents etc—all non-QFC schemes270

10.2.6Quarterly returns for financial promotions etc—all non-QFC schemes270

10.2.7Recordkeeping by authorised firms—all non-QFC schemes272

10.2.8Part 10.2 additional to CIPR272

Part 10.3Additional retail customer requirements—non-QFC retail customer schemes273

10.3.1Application—pt 10.3273

10.3.2Facilities to be maintained in QFC—non-QFC retail customer schemes273

10.3.3Retail customer to be informed about availability of facilities—non-QFC retail customer schemes274

10.3.4Documents to be available in QFC—non-QFC retail customer schemes274

10.3.5Pricing and redemption facilities to be available in QFC—non-QFC retail customer schemes275

10.3.6Other information facilities to be available in QFC—non-QFC retail customer schemes276

10.3.7Complaint facilities to be available in QFC—non-QFC retail customer schemes276

Chapter 11Other provisions277

Part 11.1General277

11.1.1Restitution orders for breach of relevant requirements—all schemes277

11.1.2Service of notices and other documents on unitholders—all QFC schemes277

11.1.3Notices and other documents to be in legible form etc—all schemes278

Part 11.2Fees—QFC schemes280

11.2.1Application fees—all QFC schemes280

11.2.2Annual fees—all QFC schemes280

11.2.3Waiver etc of fees—all QFC schemes281

Part 11.3Providing scheme administration—non-QFC schemes282

11.3.1Client money and assets—all non-QFC schemes282

Chapter 12QFC retail property funds283

Part 12.1General283

12.1.1Introduction283

12.1.2Concepts relating to property funds283

12.1.3Application of Chapter 12283

12.1.4Permissible investments—QFC retail property funds284

12.1.5Use of certain names—QFC retail property funds285

12.1.6Other provisions continue to apply to QFC retail property funds that are not REITs285

12.1.7Offer of QFC retail property funds288

Part 12.2Constitutional document and prospectus—QFC retail property funds289

12.2.1Extra constitution requirements—QFC retail property funds289

12.2.2Prohibited amendments of constitutional document—QFC retail property funds289

Part 12.3Custody, joint ownership and intermediate holding vehicles—QFC retail property funds290

12.3.1Operator may make alternative custody arrangements for immovables in certain jurisdictions—QFC retail property funds290

12.3.2Joint ownership arrangements—QFC retail property funds291

12.3.3Information about joint ownership arrangements—QFC retail property funds293

12.3.4Use of intermediate holding vehicles to hold immovables—QFC retail property funds294

12.3.5Duty of operator in relation to intermediate holding vehicles295

12.3.6Report on use of intermediate holding vehicles to purchase immovables—QFC retail property funds296

Part 12.4Standing independent valuer—QFC retail property funds298

12.4.1Appointment of standing independent valuer—QFC retail property funds298

12.4.2Standing independent valuer not to deal in immovables—QFC retail property funds299

12.4.3Basis of valuation by standing independent valuer—QFC retail property funds299

12.4.4Reappointment of standing independent valuer—QFC retail property funds300

12.4.5Removal of standing independent valuer—QFC retail property funds301

Part 12.5Investments—QFC retail property funds303

12.5.1Investment committee—QFC retail property funds303

12.5.2Requirements for making investments in immovables—QFC retail property funds303

12.5.3Operator’s duties in relation to title and insurance of immovables—QFC retail property funds304

12.5.4Operator’s duties in relation to option premiums and disposal of immovables—QFC retail property funds305

12.5.5Reports on valuation of immovables before acquisition or disposal—QFC retail property funds306

12.5.6Annual and periodic valuation of immovables—QFC retail property funds307

12.5.7Annual and other periodic valuation reports—QFC retail property funds308

12.5.8Valuation of financial instruments—QFC retail property funds309

12.5.9Borrowing by QFC retail property funds310

Part 12.6Real estate investment trusts312

12.6.1Application of Part 12.6312

12.6.2Real estate investment trusts or REITs312

12.6.3Legal forms—REITs314

12.6.4Other provisions continue to apply to REITs314

12.6.5Extra constitution requirements—REITs318

12.6.6Proposal to distribute less than stated percentage318

12.6.7REITs and intermediate holding vehicles319

12.6.8Investments by REITs in immovables under development319

12.6.9Custody of immovables by REIT operator319

12.6.10Transactions with affected persons—REITs320

12.6.11Depositing cash with, and borrowing money from, affected persons—REITs322

12.6.12Changes to disclosure about business with affected persons—REITs322

12.6.13When additional approval required from independent entity—REITs323

12.6.14Duty to notify relevant exchange—REITs323

12.6.15Duty to notify Regulatory Authority of trading suspension324

Schedule 1Arrangements not collective investment schemes325

Schedule 2Constitutional document content—QFC schemes337

Schedule 3Prospectus content—QFC qualified investor schemes347

Schedule 4Prospectus content—QFC retail schemes364

Schedule 5Prospectus content—REITs384

Glossary403

Endnotes433

Contents

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Chapter 1General provisions

Part 1.1Introductory

1.1.1Name of rules

These rules are the Collective Investment Schemes Rules 2010 (or COLL).

1.1.2Commencement

These rules commence on 1 January 2011.

1.1.3Application of COLL

These rules do not apply to a collective investment scheme that is registered under the Private Placement Schemes Rules 2010 (PRIV).

NoteA collective investment scheme that is established in the QFC may be registered under PRIV as a private placement scheme.

1.1.4Glossary

The glossary at the end of these rules is part of these rules.

Note 1There are also relevant definitions in the INAP glossary. To assist the reader, the application of a definition in that glossary would usually be indicated by the word(s) being in italics (other than bold italics).

Note 2By contrast, the application of a definition in the glossary in these rules is not indicated by the word(s) being in italics.

Note 3For the application of definitions, see INAP, r 2.1.8 (Application of definitions).

Note 4A note in or to these rules is explanatory and is not part of the rules (see INAP, r 2.1.6 (1) and r 2.1.7).

Note 5However, examples and guidance are part of these rules (see INAP, r 2.1.4 (1) (b) and (2)).

Note 6An example is not exhaustive, and may extend, but does not limit the meaning of these rules or the particular provision of these rules to which it relates (see INAP, r 2.1.5).

Note 7For the effect of guidance, see the Financial Services Regulations, art 17 (4).

Part 1.2Basic concepts and key terms—all schemes

Division 1.2.ACollective investment schemes

1.2.1What is a collective investment scheme?

A collective investment scheme (or scheme) is an arrangement that is a collective investment fund under the Financial Services Regulations (other than an arrangement that is not a scheme under schedule 1).

Note on FSR definition of collective investment fund

The Financial Services Regulations (FSR), schedule 3, part 3, paragraphs 6.2 to 6.6 provide as follows:

6.2Subject to paragraphs 6.5 and 6.6, a collective investment fund is any arrangement:

(1)the purpose or effect of which is to enable persons taking part in the arrangements (the participants) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of property or sums paid out of such profits or income;

(2)that meets the property condition in paragraph 6.3 and the investment condition in paragraph 6.4.

6.3An arrangement will meet the property condition referred to in paragraph (2) if:

(1)the arrangement is made with respect to property of any description, including money, whether the participants become owners of the property or any part of it or otherwise; and

(2)any of the participants do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or give directions in respect of the property.

6.4An arrangement will meet the investment condition referred to in paragraph 6.2 if:

(1)the contributions of the participants and the profits or income out of which payments to be made are pooled; or

(2)the property is managed as a whole by or on behalf of the operator of the scheme.

6.5Arrangements for such pooling as is mentioned in paragraph 6.4 (1) in relation to separate parts of the property are not to be regarded as constituting a single collective investment fund unless the participants are entitled to exchange rights in one part for rights in another.

6.6The Regulatory Authority may make Rules specifying the circumstances in which particular arrangements do not constitute a collective investment fund for the purposes of paragraph 6.1.

Division 1.2.BParticipants, scheme property, units and unitholders

1.2.2Who is a participant?

A participant in a collective investment scheme (or scheme) is a person who takes part (or is to take part) in the scheme by making a contribution to the scheme property.

1.2.3What is the scheme property?

The scheme property of a collective investment scheme (or scheme) is the property held for or in the scheme.

NoteProperty is defined in the glossary.

1.2.4What is a unit?

A unit in a collective investment scheme (or scheme) is a unit representing the rights or interests (however described) of a participant in the scheme.

NoteThe nature of the rights or interests will differ according to the form of the scheme. If the scheme is a company, the units would be shares in the company.

1.2.5Who is the unitholder?

The unitholder of a unit in a collective investment scheme (or scheme) is the person whose name is entered for the unit in the scheme’s records (however described).

Note 1For a QFC scheme, the name would be entered in:

(a)the scheme’s unitholder register (see rule 4.1.6 (1)); or

(b)if the unit is a listed unit—the QCSD’s, or relevant exchange’s, registry or system (see rule 4.1.6 (3)).

Note 2Unitholder has a special meaning in div 5.5.B (Unitholder meetings—QFC retail schemes) (see r 5.5.2).

Division 1.2.CQFC schemes and non-QFC schemes

1.2.6What is a QFC scheme?

A QFC scheme is a collective investment scheme (or scheme) that is established in the QFC and registered under these rules.

NoteCollective investment scheme (or scheme) is defined in r 1.2.1.

1.2.7What is a non-QFC scheme?

A non-QFC scheme is a collective investment scheme (or scheme) that is not established in the QFC.

Division 1.2.DOperator and independent entity

1.2.8Who is the operator?

(1)The operator of a collective investment scheme (or scheme) is the person (however described) responsible for managing the scheme, including all of the scheme property.

Note 1Scheme property is defined in r 1.2.3.

Note 2For a QFC scheme, this person is described in these rules as the scheme’s ‘operator’ (see r 4.1.3 (Functions of operator generally—all QFC schemes)). For a non-QFC scheme, this person may, for example, be described as the scheme’s ‘manager’.

Note 3The operator of a QFC scheme may outsource the management of all or a part of the scheme property (see pt 8.5).

(2)The law of the jurisdiction where the scheme is established is applied in deciding who is the person responsible for managing the scheme.

Note 1Jurisdiction is defined in the glossary.

Note 2For a QFC scheme, see pt 8.4 (Operator and independent entity appointment and removal—QFC schemes).

(3)The operator may also have other functions under the law of the jurisdiction where the scheme is established.

NoteFor a QFC scheme, see eg r 4.1.3 (Functions of operator generally—all QFC schemes).

1.2.9Who is the independent entity?

(1)The independent entity of a collective investment scheme (or scheme) is the person (however described) responsible, under rule 4.2.6, for safeguarding the scheme property.

Note 1Scheme property is defined in r 1.2.3.

Note 2For a QFC scheme, this person is described in these rules as the scheme’s ‘independent entity’. For a non-QFC scheme, this person may, for example, be described as the scheme’s ‘depository’ or ‘trustee’.

(2)The law of the jurisdiction where the scheme is established is applied in deciding who is the person responsible for safeguarding the scheme property.

Note 1Jurisdiction is defined in the glossary.

Note 2For a QFC scheme, see pt 8.4 (Operator and independent entity appointment and removal—QFC schemes).

(3)The independent entity may also have other functions under the law of the jurisdiction where the scheme is established.

NoteFor a QFC scheme, see eg r 4.2.3 (Oversight functions of independent entity—all QFC schemes).

Division 1.2.EOpen-ended and closed-ended schemes

1.2.10What are open-ended and closed-ended schemes?

(1)An open-ended scheme is a collective investment scheme (or scheme) that permits its units to be redeemed, whether continuously or periodically.

NoteUnit is defined in r 1.2.4. Redemption is defined in the glossary.

(2)A closed-ended scheme is a collective investment scheme (or scheme) that does not permit its units to be redeemed.

(3)Subject to subrule (4), a scheme registered under these rules must be an open-ended scheme.

(4)A QFC retail scheme that is a property fund may be closed-ended or open-ended. A REIT must be a closed-ended scheme.

Division 1.2.FUmbrella schemes

1.2.11What are umbrella schemes and subschemes?

(1)An umbrella scheme is a collective investment scheme (or scheme) under which the contributions of the unitholders, and the profit or income out of which payments are to be made to them, are pooled separately in relation to separate parts of the scheme property.

NoteUnitholder is defined in r 1.2.5 and scheme property is defined in r 1.2.3.

(2)A subscheme of an umbrella scheme is a part of the scheme property that is pooled separately.

Division 1.2.GQualified investors and retail customers

1.2.12Who is a qualified investor or retail customer?

(1)For these rules, a person can be a qualified investor or retail customer for a QFC scheme or an authorised firm (or for both).

(2)A qualified investor for a QFC scheme is:

(a)a person who would (if the scheme were an authorised firm and the person were a customer of the scheme) be a business customer or market counterparty of the scheme in relation to dealings in investments that consist of (or include) units in the scheme; or

(b)a person who is a business customer or market counterparty of any authorised firm in relation to dealings in investments that consist of (or include) units in the scheme.

Note Authorised firm, business customer and dealing in investments are defined in the Glossary.

(3)A qualified investor for an authorised firm in relation to units in a scheme is a person who is a business customer or market counterparty of the firm in relation to dealings in investments that consist of (or include) units in the scheme.

(4)For these rules, a retail customer of an authorised firm in relation to units in a scheme is a customer of the firm who is neither a business customer nor a market counterparty of the firm in relation to dealings in investments that consist of (or include) units in the scheme.

(5)Despite subrule (4), each of following persons is taken to be a retail customer of a QFC scheme:

(a)a person who would (if the scheme were an authorised firm and the person were a customer of the scheme) be a retail customer of the scheme in relation to dealings in investments that consist of (or include) units in the scheme;

(b)a person who is a retail customer of any authorised firm in relation to dealings in investments that consist of (or include) units in the scheme.

(6)In this rule:

market counterparty has the same meaning as in the Investment Management and Advisory Rules 2014.

Part 1.3Basic concepts and key terms—QFC schemes

Division 1.3.ATypes of QFC schemes generally

1.3.1QFC schemes are qualified investor or retail schemes

A QFC scheme registered under these rules is either—

(a)a qualified investor scheme; or

(b)a retail scheme.

1.3.2What is a QFC qualified investor scheme?

A QFC scheme is a qualified investor scheme if it is registered under these rules as a qualified investor scheme.

1.3.3What is a QFC retail scheme?

A QFC scheme is a retail scheme if it is registered under these rules as a retail scheme.

1.3.4Types of QFC retail schemes

QFC retail schemes may be UCITS type schemes or property funds.

1.3.5What is a QFC UCITS type scheme?

A QFC retail scheme is a UCITS type scheme if—

(a)the scheme’s constitutional document contains the statement required by part S2.31 (Extra constitution requirement—UCITS type schemes); or

(b)the scheme is an umbrella scheme that is a UCITS type scheme and each subscheme would be a UCITS type scheme if it were a separate scheme.

NoteUmbrella scheme and subscheme are defined in r 1.2.11.

1.3.5AWhat is a QFC retail property fund?

A QFC retail scheme is a property fund if:

(a)the scheme’s constitutional document contains the statement required by rule 12.2.1 (Extra constitution requirements—QFC retail property funds); or

(b)the scheme is an umbrella scheme that is a property fund and each subscheme would be a property fund if it were a separate scheme.

Division 1.3.BLegal forms for QFC schemes

1.3.6Permitted legal forms for QFC schemes

A QFC scheme must take 1 of the following legal forms:

(a)a QFC collective investment company (or CIC);

(b)a QFC collective investment partnership (or CIP);

(c)a QFC collective investment trust (or CIT);

(d)another permitted form of QFC scheme.

NoteThe permitted legal forms of QFC schemes are defined in r 1.3.7 to r 1.3.10.

1.3.7What is a QFC collective investment company (or CIC)?

(1)A company incorporated under the Companies Regulations 2005 is a QFC collective investment company (or CIC) if its articles of association provide that the company is established for the sole purpose of constituting a collective investment scheme.

NoteArticles of association is defined in the glossary.

(2)If the CIC is an open-ended scheme, it must be an open-ended company with variable share capital.

1.3.8What is a QFC collective investment partnership (or CIP)?

A QFC collective investment partnership (or CIP) is a limited partnership registered under the Partnership Regulations 2007 if its partnership agreement provides that the partnership is established for the sole purpose of constituting a collective investment scheme.

NotePartnership agreement is defined in the glossary.

1.3.9What is a QFC collective investment trust (or CIT)?

A QFC collective investment trust (or CIT) is an express trust created under the Trust Regulations 2007 if its trust instrument provides that the trust is established for the sole purpose of constituting a collective investment scheme.

NoteTrust instrument is defined in the glossary.

1.3.10What is another permitted form of QFC scheme?

Another permitted form of QFC scheme is an entity (other than a CIC, CIP or CIT) if—

(a)the legal form of the entity—

(i)is permitted under regulations made under the QFC Law or rules made by the Regulatory Authority or QFC Authority; or

(ii)otherwise permitted under an approval, authority, or licence, (however described) given by the QFC Authority under the QFC Law; and

(b)an instrument creating the legal form of the entity provides that the entity is established for the sole purpose of constituting a collective investment scheme.

NoteEntity, QFC Law and instrument are defined in the glossary.

Division 1.3.CParticular types of QFC schemes

1.3.11Islamic funds

A QFC scheme, or a subscheme of a QFC umbrella scheme, is an Islamic fund if the constitutional document of the scheme states that the scheme or subscheme is an Islamic fund.

Note 1Umbrella scheme and subscheme are defined in r 1.2.11. Constitutional document is defined in r 3.1.1.

Note 2The following provisions must be complied with in relation to Islamic funds:

r 5.6.1 (2) and (3) (Accounting standards—all QFC schemes)

pt 8.10 (Shari’a Supervisory Board—all Islamic funds)

sch 2 (Constitutional document content—QFC schemes), r S2.4 (Islamic funds)

sch 3 (Prospectus content—QFC qualified investor schemes), r S3.2 (e) (Description of scheme etc) and r S3.3 (Islamic funds)

sch 4 (Prospectus content—QFC retail schemes), r S4.2 (f) (Description of scheme etc) and r S4.3 (Islamic funds).

1.3.12Money-market funds

A QFC scheme, or a subscheme of a QFC umbrella scheme, is a money-market fund if the constitutional document of the scheme states that the scheme or subscheme is a money-market fund.

Note 1Umbrella scheme and subscheme are defined in r 1.2.11. Constitutional document is defined in r 3.1.1.

Note 2The following provisions must be complied with in relation to money-market funds:

r 6.1.5 (Investments by money-market funds—QFC qualified investor schemes)

r 7.2.4 (Investments by money-market funds—QFC retail schemes)

r 8.2.19 (Maintaining value—all money-market funds)

pt S2.4 (Extra constitution requirements—money-market funds)

sch 3 (Prospectus content—QFC qualified investor schemes), r S3.2 (f) (Description of scheme etc)

sch 4 (Prospectus content—QFC retail schemes), r S4.2 (g) (Description of scheme etc) (see also r S4.4 (r) (Investment objectives and policy etc)).

1.3.13Other types of QFC schemes

This division does not limit by implication the types of QFC schemes permitted under these rules.

Note 1See, for example, the definitions of feeder fund, fund of fund and property fund in the glossary.

Note 2For guaranteed funds and similar funds, see r 8.9.1 (5) to (11) (Name of scheme etc—all QFC schemes).

Part 1.4Basic concepts and key terms—non-QFC schemes

1.4.1What is a non-QFC retail customer scheme?

A non-QFC scheme is a retail customer scheme if it is a non-QFC scheme declared to be a retail customer scheme under rule 10.1.1 (Declaration of non-QFC retail customer schemes).

NoteNon-QFC scheme is defined in rule 1.2.7.

1.4.2What is a non-QFC qualified client scheme?

A non-QFC scheme is a qualified client scheme if is not a retail customer scheme.

NoteNon-QFC scheme is defined in rule 1.2.7.

Chapter 2Registration of schemes in QFC

2.1.1Schemes established in QFC must be registered

(1)A person must not operate a scheme that is established in the QFC unless it is registered under these rules or PRIV.

NotePRIV relates to private placement schemes.

(2)In this rule:

operate a scheme includes being responsible for managing the scheme or any of the scheme property.

NoteScheme is defined in r 1.2.1. Scheme property is defined in r 1.2.3.

2.1.2Application for registration of scheme established in QFC

(1)The person who is to become the initial operator of a scheme established in the QFC may apply to the Regulatory Authority for registration of the scheme under these rules as either—

(a)a qualified investor scheme; or

(b)a retail scheme.

Note 1Operator is defined in r 1.2.8.

Note 2See the following provisions:

r 3.1.4 (Constitutional document and checklist to be filed with registration application—all QFC schemes)

r 5.2.5 (Prospectus, checklist and any translations to be filed with registration application—all QFC schemes).

(2)The Regulatory Authority may, in writing, require the applicant to give the authority additional information or documents that the authority reasonably needs to decide the application.

(3)If the applicant does not comply with the requirement, the Regulatory Authority may refuse to consider the application.

(4)The applicant may withdraw the application by notice given to the Regulatory Authority at any time before the application is decided.

(5)If, at any time between the making of the application and the application being withdrawn or decided, the applicant becomes aware of a material change that is reasonably likely to be relevant to the Regulatory Authority’s consideration of the application, the applicant must tell the authority about the change immediately, but by no later than the next business day.

NoteBusiness day is defined in the glossary.

2.1.3Decision on application for registration of scheme established in QFC

(1)On an application under rule 2.1.2 for registration of a scheme, the Regulatory Authority must—

(a)register the scheme under these rules as either—

(i)a qualified investor scheme; or

(ii)a retail scheme; or

(b)refuse to register the scheme under these rules.

(2)The Regulatory Authority must register the scheme unless it considers that—

(a)the constitutional document does not comply with rule 3.1.2 (Matters to be included in constitutional document—all QFC schemes) or contains a provision that conflicts with any provision of these rules; or

(b)the name of the scheme, any subscheme of the scheme, or a class of units—

(i)is substantially similar to the name of—

(A)a scheme registered under PRIV or these rules; or

(B)a subscheme of an umbrella scheme registered under PRIV or these rules; or

(C)a class of units for a scheme registered under PRIV or these rules; or

(ii)is otherwise undesirable or misleading; or

NoteUmbrella scheme and subscheme are defined in r 1.2.11. Class is defined in the glossary.

Guidance on names of CIC

A CIC must not include in its name the following words, abbreviations of the following words or similar words or abbreviations:

(a)limited;

(b)unlimited;

(c)public limited company.

(c)the person named in the application as the person who is to become the initial operator of the scheme is not eligible, on the scheme’s registration, to be the operator of the scheme under rule 4.1.1 (Requirements for operator—all QFC schemes); or

NoteOperator is defined in r 1.2.8.

(d)the person appointed by the operator, and named in the application, as the person who is to become the initial independent entity of the scheme is not—

(i)an authorised firm that is eligible, on the scheme’s registration, to be the independent entity of the scheme under rule 4.2.1 (Requirements for independent entity—all QFC schemes); or

(ii)otherwise an appropriate person to be the independent entity of the scheme; or

Note 1Constitutional document is defined in r 3.1.1. Independent entity is defined in r 1.2.9.

Note 2For para (d) (ii), see r 4.2.9 (Non-QFC independent entities—criteria for Regulatory Authority action).

(e)the person named in the application as the person who is to become the initial auditor of the scheme is not eligible to be the auditor of the scheme under GENE, section 9.7 (Auditors) as applied by rule 5.6.2 (7) (Appointment and removal of auditors etc—all QFC schemes); or

(f)the prospectus drawn up for the scheme does not comply with these rules; or

NoteProspectus is defined in the glossary.

(g)the scheme does not otherwise comply with these rules; or

(h)it is otherwise inappropriate for the scheme to be registered under these rules.

NoteThe Regulatory Authority has power under the Financial Services Regulations, art 105 to give certain directions in relation to collective investment funds, including a direction to cease the issue or redemption of units in the fund and to wind up the fund.

(3)The Regulatory Authority may register the scheme either—

(a)without conditions, restrictions or requirements; or

(b)with the conditions, restrictions or requirements it considers appropriate.

(4)The Regulatory Authority must give the applicant written notice of its decision on the application.

(5)If the Regulatory Authority refuses to register the scheme or registers the scheme with conditions, restrictions or requirements not agreed to by the applicant, the notice must—

(a)give reasons for the decision; and

(b)tell the applicant that the applicant may appeal to the Regulatory Tribunal against the decision.

Chapter 3Constitutional requirements—QFC schemes

Part 3.1Constitutional document—QFC schemes

3.1.1What is the constitutional document for a QFC scheme?

The constitutional document, for a QFC scheme, is—

(a)for a CIC—the articles of association of the company; and

(b)for a CIP—the partnership agreement of the partnership; and

(c)for a CIT—the trust instrument of the trust; and

(d)for another permitted form of QFC scheme—any instrument creating the legal form of the entity.

NoteCIC, CIP, CIT and another permitted form of QFC scheme are defined in div 1.3.B (Legal forms for QFC schemes). Articles of association, partnership agreement and trust instrument are defined in the glossary.

3.1.2Matters to be included in constitutional document—all QFC schemes

The constitutional document of a QFC scheme must include the statements and provisions required by schedule 2 (Constitutional document content—QFC schemes) for the scheme.

3.1.3Relationship between constitutional document and these rules—all QFC schemes

(1)The constitutional document of a QFC scheme must not contain a provision—

(a)that conflicts with any provision of these rules; or

(b)that is unfairly prejudicial to the interest of unitholders generally or to the unitholders of any class of units.

NoteClass is defined in the glossary.

(2)A provision of the constitutional document of a QFC scheme has no effect to the extent—

(a)that it conflicts with any provision of these rules; or

(b)that it is unfairly prejudicial to the interest of unitholders generally or to the unitholders of any class of units.

(3)However, a provision of the constitutional document of a QFC scheme must not be taken to conflict with a provision of these rules to the extent it can operate concurrently with the provision of these rules.

(4)Any power given by these rules to a QFC scheme, or to the operator or independent entity of a QFC scheme, is subject to any applicable condition, restriction or requirement in the scheme’s constitutional document.

3.1.4Constitutional document and checklist to be filed with registration application—all QFC schemes

The person who is to become the operator of a scheme under these rules must file with the application for registration of the scheme—

(a)a copy of the scheme’s constitutional document; and

(b)a checklist prepared by the person listing all the statements and provisions required by these rules and indicating where they are in the constitutional document.

3.1.5Amendments of constitutional document—all QFC schemes

(1)This rule applies if the constitutional document of a QFC scheme is amended.

(2)Not later than 21 days after the day the amendment is made, the operator must file with the Regulatory Authority—

(a)a copy of the amendment and the constitutional document as amended; and

(b)a written certificate by the operator stating that—

(i)the amendment was made in accordance with these rules and the scheme’s constitutional document; and

(ii)the constitutional document as amended does not contain a provision that conflicts with any provision of these rules.

NoteSee pt 5.4 (Unitholder approvals and notice—QFC schemes) for the unitholder approval or notice required for amendments of the constitutional document.

3.1.6Prohibited amendments of constitutional document—QFC UCITS type schemes

The constitutional document of a QFC UCITS type scheme must not be amended in such a way that it ceases to be a UCITS type scheme.

NoteUCITS type scheme is defined in r 1.3.5.

Part 3.2Units—QFC schemes

Division 3.2.AUnits—all QFC schemes

3.2.1Fractions of units—all QFC schemes

The constitutional document of a QFC scheme may authorise the scheme to issue fractions of units.

NoteConstitutional document is defined in r 3.1.1.

3.2.2Smaller and larger denomination shares etc—CICs

(1)The constitutional document of a CIC may provide that the rights attached to shares of any class are to be expressed in 2 denominations; one of which (the smaller denomination) is to be such proportion of the other (the larger denomination) as is fixed by the constitutional document.

NoteCIC is defined in r 1.3.7. Constitutional document is defined in r 3.1.1.

(2)For any class of shares of a CIC to which subrule (1) applies, any share with rights expressed in the smaller denomination is a smaller denomination share, and any share with rights expressed in the larger denomination is a larger denomination share.

(3)For any class of shares of a CIC that is not expressed in 2 denominations, the rights that attach to a share of the class are equal to the rights that attach to every other share of that class.

(4)For any class of shares of a CIC that is expressed in 2 denominations—

(a)the rights that attach to a share of the class are equal to the rights that attach to every other share of that class of the same denomination; and

(b)the rights that attach to a smaller denomination share of the class are the relevant proportion of the rights that attach to a larger denomination share of that class.

(5)For subrule (4) (b):

relevant proportion means the proportion fixed by the constitutional document (as mentioned in subrule (1)).

3.2.3Bearer certificates must not be issued—all QFC schemes

(1)Bearer certificates must not be issued for units in a QFC scheme.

(2)In this rule:

bearer certificate means a certificate or other document evidencing title that indicates that the bearer is entitled to the units in the QFC scheme stated in it.

NoteDocument evidencing title is defined in the glossary.

Division 3.2.BUnits—QFC qualified investor schemes

3.2.4Classes of units—QFC qualified investor schemes

(1)The operator of a QFC qualified investor scheme may issue the classes of units that are set out in the constitutional document.

NoteClass is defined in the glossary. Constitutional document is defined in r 3.1.1.

(2)However, the operator may issue a class of units only if the rights of unitholders of any class are not unfairly prejudiced as against the interests of the unitholders of any other class of units.

3.2.5Limited issue—QFC qualified investor schemes

(1)This rule applies to units in a QFC qualified investor scheme if, under the constitutional document, the issue of the units may be limited.

(2)The operator may only issue the units if the issue—

(a)is permitted by the constitutional document; and

(b)is in accordance with the conditions, restrictions and requirements (if any) stated in the latest filed prospectus; and

(c)will not materially prejudice any existing unitholders.

NoteLatest filed prospectus is defined in the glossary.

Division 3.2.CUnits—QFC retail schemes

3.2.6Classes of units—QFC retail schemes

(1)The constitutional document of a QFC retail scheme may—

(a)provide for different classes of units to be issued; and

(b)if the scheme is an umbrella scheme—provide for different classes of units to be issued for a subscheme.

NoteConstitutional document is defined in r 3.1.1. Umbrella scheme and subscheme are defined in r 1.2.11.

(2)However, a new unit class must not be issued, or an existing unit class amended, if that would result in prejudice to unitholders of any other unit class.

(3)Also, the nature, operation and effect of a unit class must be reasonably capable of being explained clearly to prospective unitholders.

3.2.7Currency class units—QFC retail schemes

(1)This rule applies to a currency class unit in a QFC retail scheme.

Note 1A currency class unit differs from other units mainly in that its price, having been calculated initially in the base currency will be quoted (and normally paid for) in the currency of the designation of the class. Income distributions will also be paid for in the currency of designation of the class.

Note 2Currency class unit, base currency and class are defined in the glossary.

(2)The currency of the class must not be the base currency.

(3)However, if the units in a subscheme are, in accordance with a statement in the latest filed prospectus, to be valued in a currency other than the base currency, the currency of the class may be in the base currency, but must not be in that other currency.

NoteSubscheme is defined in r 1.2.11.

(4)The price must be expressed in the currency of the class.

NotePrice is defined in the glossary.

(5)Any distribution must be paid in the currency of the class.

(6)Statements of amounts of money or values included in statements must be given in the currency of the class (whether or not also given in the base currency).

3.2.8Rights of unit classes—QFC retail schemes

(1)If any class of units in a QFC retail scheme has different rights from another class of units in the scheme, the constitutional document must provide a method for calculating the proportion of the value of the scheme property, and the proportion of income available for allocation, attributable to each such class.


(2)For a QFC retail scheme that is not an umbrella scheme, the constitutional document must not provide for any class of units in relation to which—

(a)the extent of the rights to participate in the capital property, income property or distribution account would be decided differently from the extent of the corresponding rights for any other class of units; or

(b)payments or accumulation of income or capital would differ in source or form from those of any other class of units.

NoteCapital property, income property and distribution account are defined in the glossary.

(3)For a QFC retail scheme that is an umbrella scheme, subrule (2) (a) applies to classes of units in relation to each subscheme as if each subscheme were a separate QFC retail scheme.

(4)Subrules (2) and (3) do not prohibit a difference between the rights attached to classes of units that relates solely to any of the following:

(a)the accumulation of income by way of periodical credit to capital rather than distribution;

(b)charges and expenses that may be taken out of the scheme property or payable by the unitholders;

(c)the currency in which prices or values are expressed or payments made.

NotePrice is defined in the glossary.

3.2.9Smaller and larger denomination shares—QFC retail schemes

(1)This rule applies if the constitutional document of a CIC that is a QFC retail scheme provides, in relation to any class of shares, for smaller denomination shares and larger denomination shares.

NoteCIC is defined in r 1.3.7. Smaller denomination share and larger denomination share are defined in r 3.2.2 (2).

(2)If a registered holding of shares includes a number of smaller denomination shares that can be consolidated into a larger denomination share of the same class, the operator must consolidate the relevant number of the smaller denomination shares into a larger denomination share.

(3)To effect a transaction in shares, the operator may substitute the relevant number of smaller denomination shares for a larger denomination share.

(4)If the operator acts under subrule (3), subrule (2) does not apply to the resulting smaller denomination share holding until the transaction is completed.

3.2.10Subdivision and consolidation of units—QFC retail schemes

(1)Unless expressly forbidden by the constitutional document, the operator of a QFC retail scheme may decide—

(a)that each unit in any class is to be subdivided into 2 or more units; or

(b)that units in any class are to be consolidated.

(2)The operator must immediately give notice to each unitholder (or the first named of joint unitholders) of any subdivision or consolidation under subrule (1).

(3)Subrule (2) does not apply if the operator had given the notice before the subdivision or consolidation became effective.

3.2.11Guarantees and capital protection—QFC retail schemes

(1)This rule applies if there is—

(a)any arrangement intended to result in a particular capital or income return from a holding of units in a QFC retail scheme; or

(b)any investment objective of giving protection to the capital value of, or income return from, a holding of units in a QFC retail scheme.

(2)The arrangement or protection must not create the possibility of a conflict of interest as between—

(a)unitholders and the operator or independent entity; or

(b)unitholders intended and not intended to benefit from the arrangement.

(3)If, in accordance with any information mentioned in schedule 4 (Prospectus content—QFC retail schemes), rule S4.27 (a) (iv) (Additional information), action is required by the unitholders to obtain the benefit of any guarantee, the operator must provide reasonable written notice to unitholders before the action is required.

NoteThe Regulatory Authority may direct the operator of a QFC scheme to change the name of the scheme if the name implies a degree of security in relation to the capital or income that is not justified (see r 8.9.1 (3) (h) and (5) to (11).

3.2.12Switching rights—QFC retail umbrella schemes

In accordance with the Financial Services Regulations, schedule 3, part 3, paragraph 6.5, the participants in a QFC retail scheme that is an umbrella scheme are entitled to exchange rights in a subscheme for rights in another subscheme of the umbrella scheme.

NoteUmbrella scheme and subscheme are defined in r 1.2.11.

Chapter 4The operator and independent entity—QFC schemes

Part 4.1The operator—all QFC schemes

4.1.1Requirements for operator—all QFC schemes

(1)The operator of a QFC scheme must be an authorised firm that—

(a)is a corporation; and

NoteCorporation is defined in the glossary.

(b)has an authorisation for each of the following regulated activities:

(i)operating collective investment schemes;

(ii)dealing in investments;

(iii)managing investments; and

NoteAuthorisation, regulated activity and the regulated activities mentioned in this paragraph are defined in the glossary.

(c)is permitted under the scope of its authorisation to be the operator of the scheme, QFC schemes of that kind or any scheme registered in the QFC; and

(d)is a different person from the independent entity; and

(e)for a CIC or CIP—is a different person from the scheme; and

NoteCIC and CIP are defined in r 1.3.7 and r 1.3.8 respectively.

(f)is independent of—

(i)the independent entity; and

(ii)if the scheme is a CIC or CIP—the scheme; and

(iii)a member (however described) of the governing body of the independent entity or, for a CIC or CIP, the scheme.

NoteGoverning body is defined in the glossary.

(2)Without limiting subrule (1) (f), the operator is not independent of another person if—

(a)the operator has at any time during the last 2 years been involved in material business dealings with the person (otherwise than in the exercise of their respective functions as the holders of positions in relation to any scheme); or

(b)the person has a material interest in the operator or the operator has a material interest in the person.

NoteFunction is defined in the glossary.

4.1.2Operator must comply with legal and regulatory requirements—all QFC schemes

(1)The operator of a QFC scheme must comply with every legal and regulatory requirement applying to the operator—

(a)in relation to the scheme; or

(b)as the operator of a QFC scheme; or

(c)as an authorised firm.

(2)Without limiting subrule (1), the operator must act in accordance with the following:

(a)these rules;

(b)any regulations under which the QFC scheme is established, including any law applied by, or that supplements, those regulations;

(c)the other provisions of the law applying in the QFC in relation to—

(i)the scheme; or

(ii)the operator as the operator of a QFC scheme or as an authorised firm;

(d)the scope of the operator’s authorisation, including any conditions, restrictions or requirements;

NoteAuthorisation is defined in the glossary.

(e)the scope of the scheme’s registration, including any conditions, restrictions or requirements;

(f)the constitutional document;

NoteConstitutional document is defined in r 3.1.1.

(g)the latest filed prospectus.

NoteLatest filed prospectus is defined the glossary.

4.1.3Functions of operator generally—all QFC schemes

(1)The operator of a QFC scheme is responsible for managing the scheme, including all the scheme property.

NoteScheme property is defined in r 1.2.3.

(2)Without limiting subrule (1), the operator of a QFC scheme must—

(a)ensure that decisions about investments and borrowings by the scheme are made in accordance with the scheme’s investment objectives, strategies and policy as stated in the constitutional document and latest filed prospectus; and

NoteBorrowing and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1

(b)value the scheme property in accordance with these rules; and

(c)calculate the scheme’s net asset value, net asset value per unit, and the price of units for issue and redemption, in accordance with these rules; and

NoteNet asset value and net asset value per unit are defined in the glossary.

(d)ensure the scheme property is—

(i)clearly identified as scheme property; and

(ii)held separately from the operator’s own property, and the property of any other scheme; and

(e)give the independent entity instructions about the exercise of rights in relation to the scheme property; and

(f)not acquire or dispose of immovables without first giving the independent entity written notice of the acquisition or disposal.

NoteThe operator also has functions in relation to the scheme under a number of other provisions of these rules eg see pt 8.2 (Valuation and pricing—QFC schemes).

4.1.4Duty of operator to report certain breaches of law—all QFC schemes

(1)This rule applies if—

(a)the operator of a QFC scheme becomes aware that the operator, the independent entity or any other person has breached, or suspects on reasonable grounds that the operator, the independent entity or any other person may have breached or may be about to breach, in relation to the scheme any provision of these rules, any other Rules, any other law of the QFC or the law of any other jurisdiction; and

NoteRules is defined INAP. Breach and jurisdiction are defined in the glossary.

(b)the breach has had, or is likely to have, a material adverse effect on the scheme or the interests of unitholders.

(2)The operator must tell the Regulatory Authority about the breach immediately, but within 1 business day.

Examples—meaning of ‘within 1 business day’

1If, on a business day, the operator becomes aware of the breach, the operator must tell the authority about it immediately, but on that day.

2If, on a day that is not a business day, the operator becomes aware of the breach, the operator must tell the authority about it immediately, but by no later than the next business day.

NoteBusiness day is defined in the glossary.

(3)The operator must give the Regulatory Authority any information about the breach that the authority reasonably requires.

NoteUnder GENE, rule 4.1.3, an authorised firm must also advise the Authority of certain significant events.

4.1.5Particular duties of operator—all QFC schemes

The operator of a QFC scheme must—

(a)act honestly; and

(b)exercise the degree of care and diligence that a reasonable person would exercise in the operator’s position; and

(c)act in the best interests of the unitholders and, if there is a conflict between the unitholders’ interests and its own interests, give priority to the unitholders’ interests; and

(d)treat unitholders who hold units in the same class equally and unitholders who hold units in different classes fairly; and


(e)not make improper use of information acquired as a result of being the operator—

(i)to gain, directly or indirectly, a personal advantage or an advantage for another person; or

(ii)to cause detriment to the unitholders; and

(f)not make improper use of the position of operator—

(i)to gain, directly or indirectly, a personal advantage or an advantage for another person; or

(ii)to cause detriment to the unitholders.

4.1.6Register of unitholders—all QFC schemes

(1)Subject to subrule (3), the operator of a QFC scheme must ensure that a register of unitholders is kept as part of the operator’s records under rule 4.1.7.

(2)The operator must exercise all due diligence and take reasonable care to ensure that—

(a)the register is accurate, complete and up to date; and

(b)for a qualified investor scheme—only a person who is a qualified investor for the scheme is recorded in the register.

Note 1Qualified investor scheme, and qualified investor for a QFC scheme, are defined in r 1.3.2 and r 1.2.12 (2) respectively.

Note 2Rule 8.3.1 specifies the information that must be included in the register.

(3)For a QFC scheme that is listed in the Qatar Stock Exchange or in any other regulated exchange, the records (held in the QCSD’s, or in the relevant exchange’s, registry or system) of transfers or titles to units in the scheme is taken to be the unitholder register. A record in the QCSD’s, or relevant exchange’s, registry or system is conclusive evidence of title.

4.1.7Records of operator—all QFC schemes

(1)The operator of a QFC scheme must make the records necessary—

(a)to enable the operator to comply with—

(i)these rules; and

(ii)the other provisions of the law applying in the QFC in relation to—

(A)the scheme; or

(B)the operator as the operator of a QFC scheme or as an authorised firm; and

(b)to demonstrate at all times whether it has complied with these rules.

(2)If the scheme is a QFC qualified investor scheme and the latest filed prospectus states that the operator’s policy is to require a dilution adjustment or dilution levy, the operator must make a record of—

(a)how it calculates and estimates dilution; and

(b)its policy and method for deciding the rate or amount of any dilution adjustment or dilution levy.

NoteLatest filed prospectus, dilution adjustment, dilution levy and dilution are defined in the glossary.

(3)If the scheme is a QFC retail scheme, the operator must make a record of—

(a)how it calculates and estimates dilution; and

(b)its policy and method for deciding the rate or amount of any dilution adjustment or dilution levy.

(4)Subrules (2) and (3) do not limit subrule (1).

(5)The operator must keep records made for this rule for at least 6 years after the day they are made.

(6)The operator must, at the request of the Regulatory Authority, the independent entity or the auditor—

(a)make records kept under this rule available for inspection within a reasonable period of not longer than 3 days; and

(b)provide a copy of any of the records, in the requested form (if any), within a reasonable period of not longer than 3 days.

(7)The operator must not charge for making records available, or providing a copy of any records, under subrule (6).

NoteGENE, ch 6 also contains provisions about record-keeping.

4.1.8Operator must give information etc to independent entity and auditor—all QFC schemes

The operator of a QFC scheme must, on request, immediately give the independent entity or auditor of the scheme the information and explanations in relation to the scheme that the independent entity or auditor reasonably requires.

4.1.9Maintenance of capital notification—CIC’s

If the capital of a CIC changes so that it falls below the minimum, or exceeds the maximum, stated in the constitutional document, the operator must tell the Regulatory Authority about the change immediately, but within 1 business day after the day the change happens.

Examples

See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.

NoteCIC is defined in r 1.3.7.

Part 4.2The independent entity—QFC schemes

Division 4.2.AIndependent entity generally—QFC schemes

4.2.1Requirements for independent entity—all QFC schemes

(1)The independent entity of a QFC scheme must be—

(a)appointed by the operator; and

(b)either—

(i)an authorised firm that—

(A)has an authorisation for providing custody services and operating collective investment schemes; and

(B)is permitted under the scope of its authorisation to be the independent entity of the scheme, QFC schemes of that kind or any QFC scheme; and

(C)is a corporation; or

NoteAuthorised firm, authorisation, corporation and the regulated activities mentioned in para (i) (A) are defined in the glossary.

(ii)a corporation that is not an authorised firm or another QFC licensed firm if the operator has certified in writing that, after performing due diligence, it is satisfied that—

(A)the corporation is an appropriate person to be the independent entity of the scheme; and

(B)the corporation can effectively exercise the independent entity’s functions under these rules; and

(C)the appointment of the corporation as independent entity of the scheme is in the interest of participants and potential participants in the scheme; and

NoteQFC licensed firm, exercise and function are defined in the glossary. Participant is defined in r 1.2.2.

(c)a different person from the operator and, if the scheme is a CIC or CIP, the scheme; and

NoteCIC and CIP are defined in r 1.3.7 and r 1.3.8 respectively.

(d)independent of—

(i)the operator; and

(ii)if the scheme is a CIC or CIP—the scheme; and

(iii)a member (however described) of the governing body of the operator or, for a CIC or CIP, the scheme; and

Note 1Governing body is defined in the glossary.

Note 2See r (4) on the meaning of ‘independent’.

(e)for a CIT—the trustee of the trust.

NoteCIT is defined in r 1.3.9.

(2)In deciding whether to give a certificate under subrule (1) (b) (ii) in relation to a corporation, the operator must consider each of the following matters:

(a)anything the Regulatory Authority could consider in assessing the corporation’s fitness and propriety (within the meaning given by FSR, article 29) if the corporation were an applicant for an authorisation, including the following:

(i)the corporation’s expertise and market reputation;

(ii)the corporation’s credit rating, capital and financial resources;

(iii)the corporation’s regulatory status and history;

(iv)the other members of the corporation’s group and their activities;

NoteGroup is defined in the glossary.

(b)the need to ensure that the corporation provides protection for unitholders at least equivalent to the protection that would be provided by an independent entity that is an authorised firm;

(c)the regulatory regimes and legal systems (including insolvency laws) to which the corporation is subject;

(d)the regulatory authorisations (however described) held by the corporation;

(e)whether the corporation has entered into an agreement with the operator and, if so, the terms of the agreement;

(f)the corporation’s arrangements for safeguarding the scheme property and its use of agents and service providers;

(g)the obligations applying to the corporation, and the recourse available against the corporation by the operator, the Regulatory Authority and participants, under those regulatory regimes and legal systems in relation to anything done or not done by the corporation in relation to the scheme;

(h)whether the corporation has submitted to the jurisdiction of the Regulatory Authority, the QFC Court or both.

(3)Subrule (2) does not limit the matters the operator may consider.

(4)Without limiting subrule (1) (d), the independent entity is not independent of another person if—

(a)the independent entity has at any time during the last 2 years been involved in material business dealings with the person (otherwise than in the exercise of their respective functions as holders of positions in relation to a scheme); or

(b)the person has a material interest in the independent entity or the independent entity has a material interest in the person.

4.2.2Independent entity must comply with legal and regulatory requirements—all QFC schemes

(1)The independent entity of a QFC scheme must comply with every legal and regulatory requirement applying to the independent entity—

(a)in relation to the scheme; or

(b)as the independent entity of a QFC scheme; or

(c)if the independent entity is an authorised firm—as an authorised firm.

(2)Without limiting subrule (1), the independent entity must act in accordance with the following:

(a)these rules;

(b)any regulations under which the QFC scheme is established, including any law applied by, or that supplements, those regulations;

(c)the other provisions of the law applying in the QFC in relation to—

(i)the scheme; or

(ii)the independent entity as the independent entity of a QFC scheme; or

(iii)if the independent entity is an authorised firm—the independent entity as an authorised firm;

(d)if the independent entity is an authorised firm—the scope of the independent entity’s authorisation, including any conditions, restrictions or requirements;

NoteAuthorisation is defined in the glossary.

(e)the scope of the scheme’s registration, including any conditions, restrictions or requirements;

(f)the constitutional document;

(g)the latest filed prospectus.

NoteLatest filed prospectus is defined in the glossary.

4.2.3Oversight functions of independent entity—all QFC schemes

(1)The independent entity of a QFC scheme must take reasonable care to ensure that the scheme is managed by the operator in accordance with—

(a)the following provisions of these rules (as far as they apply to the scheme):

part 5.1 (Transactions with affected persons—QFC schemes)

rule 5.6.6 (Operator’s reports—QFC qualified investor schemes)

rule 5.6.13 (Operator’s reports—QFC retail schemes)

chapter 6 (Investment and borrowing—QFC qualified investor schemes)

chapter 7 (Investment and borrowing—QFC retail schemes)

part 8.1 (Dealing—QFC schemes)

part 8.2 (Valuation and pricing—QFC schemes)

part 8.7 (Accounting periods—QFC schemes)

part 8.8 (Income allocation and distribution—QFC schemes); and

(b)the provisions of the constitutional document, and the latest filed prospectus, that relate to any of the following matters:

(i)transactions with affected persons;

(ii)reports of the operator about the scheme;

(iii)investment and borrowing by the scheme;

(iv)dealing in units;

(v)valuation of the scheme property and pricing of units;

(vi)income and capital of the scheme, including their distribution.

(2)Without limiting subrule (1), the independent entity must take reasonable care to ensure on a continuing basis that—

(a)the operator is adopting appropriate procedures to ensure that the scheme’s net asset value, and the price per unit in each class, are calculated for each valuation point in accordance with these rules; and

(b)the operator has made and kept sufficient records to show that the scheme’s net asset value, and the price per unit in each class, have been calculated for each valuation point in accordance with these rules.

NoteNet asset value, class, price and valuation point are defined in the glossary.

4.2.4Duty of independent entity to report certain breaches of law etc—all QFC schemes

(1)This rule applies if the independent entity of a QFC scheme becomes aware that the operator or any other person has breached, or suspects on reasonable grounds that the operator or any other person may have breached or may be about to breach, in relation to the scheme any provision of these rules, any other law of the QFC or the law of any other jurisdiction.

NoteBreach and jurisdiction are defined in the glossary.

(2)The independent entity must immediately tell the operator in writing about the breach.

(3)Subrule (4) applies if—

(a)the independent entity is of the opinion that the operator has not taken, or does not propose to take, appropriate action in relation to the breach; and

(b)the breach—

(i)is of a provision mentioned in rule 4.2.3 (1) (Oversight functions of independent entity—all QFC schemes); or

(ii)has had, or is likely to have, a material adverse effect on the scheme or the interests of unitholders.

(4)If this subrule applies, the independent entity must tell the Regulatory Authority about the breach immediately, but within 1 business day.

Examples

See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.

(5)The independent entity must give the Regulatory Authority any information about the breach that the authority reasonably requires.

4.2.5Particular duties of independent entity—all QFC schemes

The independent entity of a QFC scheme must—

(a)act honestly; and

(b)exercise the degree of care and diligence that a reasonable person would exercise in the independent entity’s posit