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Provisions to be included in constitution where collective investment scheme is constituted as sub-fund of umbrella VCC

Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005

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—(1) Where a collective investment scheme (called in this regulation the scheme) is constituted as a sub-fund of an umbrella VCC, the prescribed requirements in relation to the constitution of the umbrella VCC in respect of that scheme under section 286(2A)(c) of the Act are that the constitution must —(a)subject to paragraph (3), contain the provisions set out in paragraph (2); and(b)contain the provisions set out in regulation 10AA(4), subject to the following modifications:(i)a reference in a provision to the collective investment scheme constituted as a non-umbrella VCC is to the scheme;(ii)a reference in a provision to the non-umbrella VCC is to an umbrella VCC;(iii)a reference in a provision to a unit is to a unit of the scheme;(iv)a reference in a provision to an investment by a scheme is to an investment by the umbrella VCC on account of the scheme;(v)a reference in a provision to the borrowing limits and borrowing powers of a scheme is to the borrowing limits and borrowing powers of the umbrella VCC on account of the scheme.(2) For the purposes of paragraph (1)(a), the constitution must contain provisions that bind the umbrella VCC —(a)to issue, redeem or repurchase units in the scheme at a price equal to the proportion of the net asset value of the sub-fund represented by each unit, in accordance with the Code on Collective Investment Schemes, after adding or subtracting (as the case may be) any fees and charges in accordance with the constitution;(b)at the request of a participant of the scheme, to purchase from the participant units in the scheme that the participant has subscribed for or acquired;(c)to prepare or cause to be prepared —(i)semi-annual accounts and annual accounts relating to the scheme in the language of the prospectus; and(ii)semi-annual reports and annual reports relating to the scheme in the language of the prospectus,in accordance with the Code on Collective Investment Schemes; and(d)to entrust all the property of the scheme to an approved trustee that is the custodian of the scheme for safekeeping in accordance with the requirements mentioned in regulation 7B(1).(3) The constitution of the umbrella VCC may exclude the provision mentioned in paragraph (2)(b) if —(a)the scheme is an arrangement —(i)under which units that are issued are exclusively or primarily non-redeemable at the election of the holders of the units; and(ii)that is mentioned in paragraph (aa) or (b) of the definition of “closed-end fund” in section 2(1) of the Act;(b)the units of the scheme the offer of which requires a prospectus are listed for quotation on an approved exchange within 30 days after the prospectus is registered by the Authority;(c)the advertising and marketing materials (including the prospectus mentioned in sub-paragraph (b)) in relation to the scheme contain the following:(i)a statement to the effect that a participant in the scheme has no right to request the umbrella VCC to redeem or purchase, on account of the scheme, any of the participant’s units in the scheme for the period in which the units in the scheme are listed for quotation on an approved exchange;(ii)a warning to any prospective investor that the listing for quotation of the units in the scheme on an approved exchange does not guarantee a liquid market for the units; and(d)the constitution contains provisions that bind the responsible person for the scheme to offer to purchase the participants’ units in the scheme, in accordance with the provisions of the constitution and the requirements set out in the Second Schedule, if the units in the scheme —(i)are suspended from trading for at least 60 calendar days on all approved exchanges on which the units are listed for quotation; or(ii)cease to be listed for quotation on all approved exchanges.(4) In this regulation, “accounts” has the meaning given by section 2(1) of the Variable Capital Companies Act 2018.

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