Collective Investment Schemes Rules 2010
Transcript of Collective Investment Schemes Rules 2010
Collective Investment
Schemes Rules 2010
(COLL)
Version No. 9
Effective: 15 October 2020
Includes amendments made by
Miscellaneous Amendments Rules 2020
(QFCRA Rules 2020-6)
V9 Collective Investment Schemes Rules 2010 contents 1 Effective: 15/Oct/20
Collective Investment Schemes Rules 2010
made under the
Financial Services Regulations
Contents
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Chapter 1 General provisions 1
Part 1.1 Introductory 1
1.1.1 Name of rules 1
1.1.2 Commencement 1
1.1.3 Application of COLL 1
1.1.4 Effect of definitions, notes and examples 1
1.1.5 References to particular currencies 2
Part 1.2 Basic concepts and key terms—all schemes 3
1.2.1 What is a collective investment scheme? 3
1.2.2 Who is a participant? 4
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1.2.3 What is the scheme property? 4
1.2.4 What is a unit? 4
1.2.5 Who is the unitholder? 4
1.2.6 What is a QFC scheme? 5
1.2.7 What is a non-QFC scheme? 5
1.2.8 Who is the operator? 5
1.2.9 Who is the independent entity? 6
1.2.10 What are open-ended and closed-ended schemes? 6
1.2.11 What are umbrella schemes and subschemes? 7
1.2.12 Who is a qualified investor or retail customer? 7
Part 1.3 Basic concepts and key terms—QFC schemes 9
1.3.1 QFC schemes are qualified investor or retail schemes 9
1.3.2 What is a QFC qualified investor scheme? 9
1.3.3 What is a QFC retail scheme? 9
1.3.4 Types of QFC retail schemes 9
1.3.5 What is a QFC UCITS type scheme? 9
1.3.5A What is a QFC retail property fund? 10
1.3.6 Permitted legal forms for QFC schemes 10
1.3.7 What is a QFC collective investment company (or CIC)? 10
1.3.8 What is a QFC collective investment partnership (or CIP)? 11
1.3.9 What is a QFC collective investment trust (or CIT)? 11
1.3.10 What is another permitted form of QFC scheme? 11
1.3.11 Islamic funds 12
1.3.12 Money-market funds 12
1.3.13 Other types of QFC schemes 13
Part 1.4 Basic concepts and key terms—non-QFC schemes 14
1.4.1 What is a non-QFC retail customer scheme? 14
1.4.2 What is a non-QFC qualified client scheme? 14
Chapter 2 Registration of schemes in QFC 15
2.1.1 Schemes established in QFC must be registered 15
2.1.2 Application for registration of scheme established in QFC 15
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2.1.3 Decision on application for registration of scheme established in QFC 16
Chapter 3 Constitutional requirements—QFC schemes 19
Part 3.1 Constitutional document—QFC schemes 19
3.1.1 What is the constitutional document for a QFC scheme? 19
3.1.2 Matters to be included in constitutional document—all QFC schemes 19
3.1.3 Relationship between constitutional document and these rules—all QFC schemes 19
3.1.4 Constitutional document and checklist to be filed with registration application—all QFC schemes 20
3.1.5 Amendments of constitutional document—all QFC schemes 20
3.1.6 Prohibited amendments of constitutional document—QFC UCITS type schemes 21
Part 3.2 Units—QFC schemes 22
3.2.1 Fractions of units—all QFC schemes 22
3.2.2 Smaller and larger denomination shares etc—CICs 22
3.2.3 Bearer certificates must not be issued—all QFC schemes 23
3.2.4 Classes of units—QFC qualified investor schemes 23
3.2.5 Limited issue—QFC qualified investor schemes 23
3.2.6 Classes of units—QFC retail schemes 24
3.2.7 Currency class units—QFC retail schemes 24
3.2.8 Rights of unit classes—QFC retail schemes 25
3.2.9 Smaller and larger denomination shares—QFC retail schemes 26
3.2.10 Subdivision and consolidation of units—QFC retail schemes 27
3.2.11 Guarantees and capital protection—QFC retail schemes 27
3.2.12 Switching rights—QFC retail umbrella schemes 28
Chapter 4 The operator and independent entity—QFC schemes 29
Part 4.1 The operator—all QFC schemes 29
4.1.1 Requirements for operator—all QFC schemes 29
4.1.2 Operator must comply with legal and regulatory requirements—all QFC schemes 30
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4.1.3 Functions of operator generally—all QFC schemes 31
4.1.4 Duty of operator to report certain breaches of law—all QFC schemes 32
4.1.5 Particular duties of operator—all QFC schemes 33
4.1.6 Register of unitholders—all QFC schemes 34
4.1.7 Records of operator—all QFC schemes 34
4.1.8 Operator must give information etc to independent entity and auditor—all QFC schemes 36
4.1.9 Maintenance of capital notification—CIC’s 36
Part 4.2 The independent entity—QFC schemes 37
4.2.1 Requirements for independent entity—all QFC schemes 37
4.2.2 Independent entity must comply with legal and regulatory requirements—all QFC schemes 40
4.2.3 Oversight functions of independent entity—all QFC schemes 41
4.2.4 Duty of independent entity to report certain breaches of law etc—all QFC schemes 42
4.2.5 Particular duties of independent entity—all QFC schemes 43
4.2.6 Property safeguarding functions of independent entity—all QFC schemes 44
4.2.7 Records of independent entity—all QFC schemes 46
4.2.8 Independent entity must give information etc to operator and auditor—all QFC schemes 47
4.2.9 Non-QFC independent entities—criteria for Regulatory Authority action 47
4.2.10 Non-QFC independent entities—annual compliance certificate 48
4.2.11 Non-QFC independent entities—oversight of property safeguarding functions by operators 49
4.2.12 Non-QFC independent entities—removal by operators 49
4.2.13 Non-QFC independent entities—removal by Regulatory Authority 50
Part 4.3 Operator and independent entity other provisions—QFC schemes 53
4.3.1 Duties of officers etc of operator and independent entity—all QFC schemes 53
4.3.2 Provisions of ch 4 do not limit other functions 53
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Chapter 5 Investor relations—QFC schemes 55
Part 5.1 Transactions with affected persons—QFC schemes 55
5.1.1 Who is an affected person for a QFC scheme? 55
5.1.2 Transactions with affected persons—general rule for all QFC schemes 56
5.1.3 Transactions with affected persons—prior notice to unitholders of QFC schemes 56
5.1.4 Transactions with affected persons—transactions involving 5% or more of QFC scheme’s net asset value 57
5.1.5 Transactions with affected persons—details required for QFC scheme’s annual reports 57
5.1.6 Transactions with affected persons—additional restrictions for QFC retail schemes 58
Part 5.2 Prospectus requirements—QFC schemes 62
5.2.1 Prospectus to be drawn up—all QFC schemes 62
5.2.2 Prospectus etc to be made available—all QFC schemes 62
5.2.3 General information requirements for prospectus—all QFC schemes 62
5.2.4 Other general requirements for prospectus—all QFC schemes 63
5.2.5 Prospectus, checklist and any translations to be filed with registration application—all QFC schemes 64
5.2.6 Revisions of prospectus etc—all QFC schemes 65
Part 5.3 Prospectus responsibility—QFC schemes 68
5.3.1 Persons responsible for prospectus—all QFC schemes 68
5.3.2 Responsibility for expert statements in prospectus—all QFC schemes 69
5.3.3 Liability for prospectus—all QFC schemes 69
5.3.4 Exceptions from liability for prospectus—all QFC schemes 70
Part 5.4 Unitholder approvals and notice—QFC schemes 73
5.4.1 Changes requiring unitholder approval or notice—QFC qualified investor schemes 73
5.4.2 Fundamental changes requiring prior approval by unitholder meeting—QFC retail schemes 74
5.4.3 Significant changes requiring pre-event notification—QFC retail schemes 75
5.4.4 Notifiable changes—QFC retail schemes 76
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contents 6 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 5.5 Unitholder meetings—QFC schemes 77
5.5.1 Unitholder meetings—QFC qualified investor schemes 77
5.5.2 Special meaning of unitholder in div 5.5.B—QFC retail schemes 77
5.5.3 Application of div 5.5.B to class meetings—QFC retail schemes 78
5.5.4 General meetings of unitholders—QFC retail schemes 78
5.5.5 Notice of general meetings of unitholders—QFC retail schemes 79
5.5.6 Quorum for unitholder meetings—QFC retail schemes 80
5.5.7 Resolutions at unitholder meetings—QFC retail schemes 81
5.5.8 Voting rights at unitholder meetings—QFC retail schemes 81
5.5.9 Right to demand poll at unitholder meetings—QFC retail schemes 83
5.5.10 Proxies at unitholder meetings—QFC retail schemes 83
5.5.11 Chair, adjournment and minutes of unitholder meetings—QFC retail schemes 84
Part 5.6 Reports, accounts and auditors—QFC schemes 85
5.6.1 Accounting standards—all QFC schemes 85
5.6.2 Appointment and removal of auditors etc—all QFC schemes 86
5.6.3 Reports and accounts generally—QFC qualified investor schemes 87
5.6.4 Contents of annual reports—QFC qualified investor schemes 88
5.6.5 Contents of half-yearly reports—QFC qualified investor schemes 89
5.6.6 Operator’s reports—QFC qualified investor schemes 90
5.6.7 Independent entity’s reports—QFC qualified investor schemes 90
5.6.8 Auditor’s reports—QFC qualified investor schemes 91
5.6.9 Preparation of long and short reports—QFC retail schemes 92
5.6.10 Contents of short reports—QFC retail schemes 92
5.6.11 Contents of annual long reports—QFC retail schemes 94
5.6.12 Contents of half-yearly long reports—QFC retail schemes 96
5.6.13 Operator’s reports—QFC retail schemes 97
5.6.14 Comparative tables—QFC retail schemes 99
5.6.15 Independent entity’s reports—QFC retail schemes 100
5.6.16 Auditor’s reports—QFC retail schemes 100
5.6.17 Provision of short reports—QFC retail schemes 101
5.6.18 Publication and availability of annual and half-yearly long reports—QFC retail schemes 102
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V9 Collective Investment Schemes Rules 2010 contents 7 Effective: 15/Oct/20
Chapter 6 Investment and borrowing—QFC qualified investor schemes 103
Part 6.1 Investment and borrowing generally—QFC qualified investor schemes 103
6.1.1 General duties of operator in relation to investment and borrowing—QFC qualified investor schemes 103
6.1.2 Investment powers generally—QFC qualified investor schemes 103
6.1.3 Permissible investments generally—QFC qualified investor schemes 104
6.1.4 Spread of risk—QFC qualified investor schemes 104
6.1.5 Investments by money-market funds—QFC qualified investor schemes 105
6.1.6 Application of ch 6 to umbrella schemes—QFC qualified investor schemes 106
Part 6.2 Particular kinds of investments and transactions—QFC qualified investor schemes 107
6.2.1 Investments in schemes—QFC qualified investor schemes 107
6.2.2 Delivery of property under transactions in derivatives etc—QFC qualified investor schemes 108
6.2.3 Valuation of OTC derivatives—QFC qualified investor schemes 108
6.2.4 Cover for transactions in derivatives and forward transactions—QFC qualified investor schemes 109
6.2.5 Continuing nature of limits and requirements for derivatives and forward positions—QFC qualified investor schemes 109
6.2.6 Standing independent valuer—QFC qualified investor schemes 110
6.2.7 Requirements for making investments in immovables—QFC qualified investor schemes 110
6.2.8 Investments in non-Qatari immovables through intermediate holding vehicles—QFC qualified investor schemes 112
6.2.9 Additional requirements for immovables—QFC qualified investor schemes 113
6.2.10 Reports on valuation of immovables before acquisition or disposal—QFC qualified investor schemes 114
6.2.11 Valuation of immovables part of scheme property—QFC qualified investor schemes 115
6.2.12 Annual and other periodic valuation reports—QFC qualified investor schemes 117
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contents 8 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
6.2.13 Basis of valuation by standing independent valuer—QFC qualified investor schemes 118
6.2.14 Appointment of standing independent valuer—QFC qualified investor schemes 119
6.2.15 Standing independent valuer not to deal in immovables etc—QFC qualified investor schemes 120
6.2.16 Removal of standing independent valuer—QFC qualified investor schemes 120
Part 6.3 Stock lending and repos—QFC qualified investor schemes 122
6.3.1 Permitted stock lending and repos—QFC qualified investor schemes 122
Part 6.4 Borrowing—QFC qualified investor schemes 123
6.4.1 Borrowing—QFC qualified investor schemes 123
Chapter 7 Investment and borrowing—QFC retail schemes 124
Part 7.1 Investment and borrowing introduction—QFC retail schemes 124
7.1.1 Objects of ch 7—QFC retail schemes 124
7.1.2 General duties of operator in relation to investment and borrowing—QFC retail schemes 124
7.1.3 Treatment of obligations under ch 7—QFC retail schemes 126
7.1.4 Valuation for ch 7—QFC retail schemes 127
7.1.5 What is an approved money-market instrument? 128
7.1.6 What is a transferable security? 129
7.1.7 What is an eligible market? 130
7.1.8 What is an approved derivative? 131
7.1.9 What is an approved security? 131
7.1.10 Application of ch 7 to umbrella schemes—QFC retail schemes 131
Part 7.2 Investments generally—QFC retail schemes 132
7.2.1 Investment powers generally—QFC retail schemes 132
7.2.2 Permissible investments generally—QFC retail schemes 133
7.2.3 Significant influence through transferable securities—UCITS type schemes 133
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7.2.4 Investments by money-market funds—QFC retail schemes 134
Part 7.3 Investment diversification—QFC retail schemes 136
7.3.1 Prudent spread of risk—QFC retail schemes 136
7.3.2 Spread for certain transferable securities and money-market instruments—QFC retail schemes 136
7.3.3 Spread for transferable securities and money-market instruments issued by single issuer or group—QFC retail schemes 137
7.3.4 Spread exception for schemes replicating indices—QFC retail schemes 138
7.3.5 Spread for government or public securities issued by single issuer—QFC retail schemes 140
7.3.6 Spread for units in schemes etc—QFC retail schemes 141
7.3.7 Spread for OTC derivatives—QFC retail schemes 142
7.3.8 Spread for deposits—QFC retail schemes 143
7.3.9 Spread for certain investments with single person—QFC retail schemes 144
7.3.10 Concentration—QFC retail schemes 144
7.3.11 Application of pt 7.3—QFC retail schemes 145
Part 7.4 Particular kinds of investments—QFC retail schemes 146
7.4.1 General investment requirements for non-approved transferable securities—QFC retail schemes 146
7.4.2 Investments in closed-ended schemes as transferable securities—QFC retail schemes 147
7.4.3 Investments linked etc to other assets as transferable securities—QFC retail schemes 149
7.4.4 Investments in approved money-market instruments not admitted to eligible markets etc—QFC retail schemes 150
7.4.5 Investments in nil and partly paid securities—QFC retail schemes 153
7.4.6 Investments in collective investment schemes generally—QFC retail schemes 154
7.4.7 Investments in associated schemes—QFC retail schemes 155
7.4.8 Derivatives and forward transactions generally—QFC retail schemes 156
7.4.9 Permitted transactions in derivatives and forward transactions—QFC retail schemes 158
7.4.10 Permitted financial indices—QFC retail schemes 160
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contents 10 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
7.4.11 Delivery of property under transactions in derivatives and forward transactions—QFC retail schemes 162
7.4.12 Requirement to cover sales—QFC retail schemes 162
7.4.13 OTC transactions in derivatives—QFC retail schemes 163
7.4.14 Risk management for transactions in derivatives and forward transactions—QFC retail schemes 165
7.4.15 Investments in deposits—QFC retail schemes 166
Part 7.5 Exposure for derivatives and forward transactions—QFC retail schemes 167
7.5.1 Cover for transactions in derivatives and forward transactions—QFC retail schemes 167
7.5.2 Borrowing not available for cover—QFC retail schemes 168
7.5.3 Continuing nature of limits and requirements for derivatives and forward positions—QFC retail schemes 169
Part 7.6 Stock lending and repos—QFC retail schemes 170
7.6.1 Stock lending and repos generally—QFC retail schemes 170
7.6.2 Stock lending requirements—QFC retail schemes 170
7.6.3 Treatment of collateral for stock lending—QFC retail schemes 171
7.6.4 No limits on stock lending and repos—QFC retail schemes 173
Part 7.7 Cash, borrowing, lending and other provisions—QFC retail schemes 175
7.7.1 Cash and near cash—QFC retail schemes 175
7.7.2 General power to borrow—QFC retail schemes 175
7.7.3 Borrowing limits—QFC retail schemes 177
7.7.4 Restrictions on lending money—QFC retail schemes 177
7.7.5 Restrictions on lending property other than money—QFC retail schemes 178
7.7.6 General power to accept or underwrite placings—QFC retail schemes 178
7.7.7 Guarantees and indemnities—QFC retail schemes 179
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V9 Collective Investment Schemes Rules 2010 contents 11 Effective: 15/Oct/20
Chapter 8 Operating duties and responsibilities—QFC schemes 181
Part 8.1 Dealing—QFC schemes 181
8.1.1 Application of div 8.1.A to umbrella schemes—QFC qualified investor schemes 181
8.1.2 Initial offer—QFC qualified investor schemes 182
8.1.3 How units are issued and redeemed etc—QFC qualified investor schemes 182
8.1.4 Controls over issue and redemption of units—QFC qualified investor schemes 183
8.1.5 Issue and redemption of units in multiple classes—QFC qualified investor schemes 184
8.1.6 Issue and redemption generally—QFC qualified investor schemes 184
8.1.7 When instructions for issue and redemption must be given—QFC qualified investor schemes 185
8.1.8 Limited issue—QFC qualified investor schemes 186
8.1.9 Issue only to qualified investors—QFC qualified investor schemes 187
8.1.10 Application of div 8.1.B to umbrella schemes—QFC retail schemes 187
8.1.11 Initial offers—QFC retail schemes 187
8.1.12 How units are issued and redeemed etc—QFC retail schemes 188
8.1.13 Controls over issue and redemption of units—QFC retail schemes 188
8.1.14 Issue and redemption of units in multiple classes—QFC retail schemes 190
8.1.15 Changes to number of units issued or redeemed—QFC retail schemes 190
8.1.16 Payment for issued units—QFC retail schemes 191
8.1.17 Issue and redemption generally—QFC retail schemes 191
8.1.18 When instructions for issue or redemption must be given—QFC retail schemes 192
8.1.19 Payment for redeemed units—QFC retail schemes 193
8.1.20 Issue or redemption otherwise than for cash—QFC retail schemes 194
8.1.21 Deferred redemption—QFC retail schemes 194
Part 8.2 Valuation and pricing—QFC schemes 196
8.2.1 Application of div 8.2.A to umbrella schemes—QFC qualified investor schemes 196
8.2.2 Valuation—QFC qualified investor schemes 196
8.2.3 Valuation points—QFC qualified investor schemes 197
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8.2.4 Prices of units—QFC qualified investor schemes 197
8.2.5 Application of div 8.2.B to umbrella schemes—QFC retail schemes 198
8.2.6 Duty of operator to rectify breaches of div 8.2.B—QFC retail schemes 199
8.2.7 Valuation requirement——QFC retail schemes 200
8.2.8 General rules for valuation of scheme property—QFC retail schemes 201
8.2.9 Fair value pricing for securities—QFC retail schemes 202
8.2.10 Valuation points—QFC retail schemes 203
8.2.11 Pricing controls of operator—QFC retail schemes 203
8.2.12 Review by independent entity of operator’s pricing controls etc—QFC retail schemes 205
8.2.13 Recording and reporting incorrect pricing—QFC retail schemes 206
8.2.14 Prices of units—QFC retail schemes 207
8.2.15 Issue and redemption prices—QFC retail schemes 207
8.2.16 Dilution—QFC retail schemes 208
8.2.17 Particular duties of independent entity in relation to dilution—QFC retail schemes 209
8.2.18 Publication of prices—QFC retail schemes 209
8.2.19 Maintaining value—all money-market funds 210
Part 8.3 Title and register—QFC schemes 212
8.3.1 Unitholder register requirements—all QFC schemes 212
8.3.2 Transfer of units by act of parties—all QFC schemes 213
8.3.3 Certificates for units—all QFC schemes 214
8.3.4 Conversion of units—all QFC schemes 215
Part 8.4 Operator and independent entity appointment and removal—QFC schemes 216
8.4.1 Initial appointment of operator and independent entity—all QFC schemes 216
8.4.2 Removal of operator—QFC schemes 216
8.4.3 Retirement of operator—all QFC schemes 218
8.4.4 Consequences of removal or retirement of operator—all QFC schemes 219
8.4.5 Removal of independent entity by unitholders—all QFC schemes 219
8.4.6 Removal of independent entity no longer eligible for appointment—all QFC schemes 220
8.4.7 Retirement of independent entity—all QFC schemes 221
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8.4.8 Consequences of removal or retirement of independent entity—all QFC schemes 221
Part 8.5 Outsourcing—QFC schemes 223
8.5.1 What is outsourcing? 223
8.5.2 Outsourcing by operator—all QFC schemes 223
8.5.3 Outsourcing by independent entity—all QFC schemes 224
8.5.4 Outsourcing notice and information—all QFC schemes 225
8.5.5 Provisions applying to outsourcing by operator and independent entity—all QFC schemes 225
8.5.6 Outsourcing management—all QFC schemes 229
8.5.7 Application of pt 8.5 to further outsourcing—all QFC schemes 230
8.5.8 Systems and controls for outsourcings—all QFC schemes 231
Part 8.6 Payments—QFC schemes 232
8.6.1 Payments—QFC qualified investor schemes 232
8.6.2 Payments out of scheme property—QFC retail schemes 232
8.6.3 Performance fees—QFC retail schemes 233
8.6.4 Charges on buying and selling units—QFC retail schemes 234
8.6.5 Redemption charges—QFC retail schemes 235
8.6.6 Charges on exchange of units in umbrella schemes—QFC retail schemes 235
8.6.7 Allocation of payments to income or capital—QFC retail schemes 236
8.6.8 Prohibition of promotional payments—QFC retail schemes 236
8.6.9 Expenses in relation to property—QFC retail schemes 237
8.6.10 Payment of liabilities on transfer of assets—QFC retail schemes 237
8.6.11 Attribution of scheme property to subschemes—QFC retail schemes 238
Part 8.7 Accounting periods—QFC schemes 239
8.7.1 Accounting periods—all QFC schemes 239
Part 8.8 Income allocation and distribution—QFC schemes 241
8.8.1 Application of pt 8.8 to umbrella schemes—all QFC schemes 241
8.8.2 Income allocation and distribution—all QFC schemes 241
8.8.3 Unclaimed, minimal and joint unitholders distributions—all QFC schemes 243
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contents 14 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 8.9 Names—QFC schemes 245
8.9.1 Name of scheme etc—all QFC schemes 245
8.9.2 Use of certain names—all QFC schemes 248
Part 8.10 Shari’a Supervisory Board—all Islamic funds 250
8.10.1 Islamic fund must have a supervisory board—all Islamic funds 250
Chapter 9 Suspension, winding up and transfer schemes—QFC schemes 251
Part 9.1 Suspension and restart of dealings—QFC schemes 251
9.1.1 Suspension and restart of dealings—all QFC schemes 251
Part 9.2 Winding up—QFC schemes 255
9.2.1 Application of pt 9.2 to subschemes of QFC umbrella schemes—all QFC schemes 255
9.2.2 When scheme may be wound up—all QFC schemes 255
9.2.3 Winding-up required by constitutional document—all QFC schemes 256
9.2.4 Winding-up at direction of unitholders—all QFC schemes 256
9.2.5 Notification to Regulatory Authority that scheme not commercially viable etc—all QFC schemes 256
9.2.6 Winding-up by operator or independent entity—all QFC schemes 258
9.2.7 Accounting and reports during winding-up—all QFC schemes 260
Part 9.3 Transfer schemes—QFC schemes 262
9.3.1 Purpose—pt 9.3 262
9.3.2 Transfer schemes—all QFC schemes 262
Chapter 10 Financial promotions and investment activities—all schemes 264
Part 10.1 Financial promotions generally—all schemes 264
10.1.1 Declaration of non-QFC retail customer schemes 264
10.1.2 Certain financial promotions only to qualified investors etc—QFC qualified investor schemes 265
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10.1.3 Certain financial promotions only to qualified investors etc—non-QFC qualified client schemes 265
10.1.4 Part 10.1 additional to CIPR 266
Part 10.2 Financial promotions—non-QFC schemes 267
10.2.1 What is a complying disclaimer for a non-QFC scheme? 267
10.2.2 Restrictions generally on financial promotions—all non-QFC schemes 267
10.2.3 Prospectus and disclaimer must be provided etc—all non-QFC schemes 268
10.2.4 Complying disclaimer must be given with other documents under CIPR—all non-QFC schemes 269
10.2.5 Authorised firms must pass on documents etc—all non-QFC schemes 269
10.2.6 Quarterly returns for financial promotions etc—all non-QFC schemes 269
10.2.7 Recordkeeping by authorised firms—all non-QFC schemes 271
10.2.8 Part 10.2 additional to CIPR 271
Part 10.3 Additional retail customer requirements—non-QFC retail customer schemes 272
10.3.1 Application—pt 10.3 272
10.3.2 Facilities to be maintained in QFC—non-QFC retail customer schemes 272
10.3.3 Retail customer to be informed about availability of facilities—non-QFC retail customer schemes 273
10.3.4 Documents to be available in QFC—non-QFC retail customer schemes 273
10.3.5 Pricing and redemption facilities to be available in QFC—non-QFC retail customer schemes 274
10.3.6 Other information facilities to be available in QFC—non-QFC retail customer schemes 275
10.3.7 Complaint facilities to be available in QFC—non-QFC retail customer schemes 275
Chapter 11 Other provisions 276
Part 11.1 General 276
11.1.1 Restitution orders for breach of relevant requirements—all schemes 276
11.1.2 Service of notices and other documents on unitholders—all QFC schemes 276
11.1.3 Notices and other documents to be in legible form etc—all schemes 277
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contents 16 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 11.2 Fees—QFC schemes 279
11.2.1 Application fees—all QFC schemes 279
11.2.2 Annual fees—all QFC schemes 279
11.2.3 Waiver etc of fees—all QFC schemes 280
Part 11.3 Providing scheme administration—non-QFC schemes 281
11.3.1 Client money and assets—all non-QFC schemes 281
Chapter 12 QFC retail property funds 282
Part 12.1 General 282
12.1.1 Introduction 282
12.1.2 Concepts relating to property funds 282
12.1.3 Application of Chapter 12 282
12.1.4 Permissible investments—QFC retail property funds 283
12.1.5 Use of certain names—QFC retail property funds 284
12.1.6 Other provisions continue to apply to QFC retail property funds that are not REITs 284
12.1.7 Offer of QFC retail property funds 287
Part 12.2 Constitutional document and prospectus—QFC retail property funds 287
12.2.1 Extra constitution requirements—QFC retail property funds 287
12.2.2 Prohibited amendments of constitutional document—QFC retail property funds 288
Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC retail property funds 288
12.3.1 Operator may make alternative custody arrangements for immovables in certain jurisdictions—QFC retail property funds 288
12.3.2 Joint ownership arrangements—QFC retail property funds 289
12.3.3 Information about joint ownership arrangements—QFC retail property funds 291
12.3.4 Use of intermediate holding vehicles to hold immovables—QFC retail property funds 292
12.3.5 Duty of operator in relation to intermediate holding vehicles 293
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12.3.6 Report on use of intermediate holding vehicles to purchase immovables—QFC retail property funds 294
Part 12.4 Standing independent valuer—QFC retail property funds 296
12.4.1 Appointment of standing independent valuer—QFC retail property funds 296
12.4.2 Standing independent valuer not to deal in immovables—QFC retail property funds 297
12.4.3 Basis of valuation by standing independent valuer—QFC retail property funds 297
12.4.4 Reappointment of standing independent valuer—QFC retail property funds 298
12.4.5 Removal of standing independent valuer—QFC retail property funds 299
Part 12.5 Investments—QFC retail property funds 301
12.5.1 Investment committee—QFC retail property funds 301
12.5.2 Requirements for making investments in immovables—QFC retail property funds 301
12.5.3 Operator’s duties in relation to title and insurance of immovables—QFC retail property funds 302
12.5.4 Operator’s duties in relation to option premiums and disposal of immovables—QFC retail property funds 303
12.5.5 Reports on valuation of immovables before acquisition or disposal—QFC retail property funds 304
12.5.6 Annual and periodic valuation of immovables—QFC retail property funds 305
12.5.7 Annual and other periodic valuation reports—QFC retail property funds 306
12.5.8 Valuation of financial instruments—QFC retail property funds 307
12.5.9 Borrowing by QFC retail property funds 308
Part 12.6 Real estate investment trusts 309
12.6.1 Application of Part 12.6 309
12.6.2 Real estate investment trusts or REITs 309
12.6.3 Legal forms—REITs 310
12.6.4 Other provisions continue to apply to REITs 310
12.6.5 Extra constitution requirements—REITs 314
12.6.6 Proposal to distribute less than stated percentage 314
12.6.7 REITs and intermediate holding vehicles 315
Contents
Page
contents 18 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
12.6.8 Investments by REITs in immovables under development 315
12.6.9 Custody of immovables by REIT operator 315
12.6.10 Transactions with affected persons—REITs 316
12.6.11 Depositing cash with, and borrowing money from, affected persons—REITs 318
12.6.12 Changes to disclosure about business with affected persons—REITs 318
12.6.13 When additional approval required from independent entity—REITs 319
12.6.14 Duty to notify relevant exchange—REITs 319
12.6.15 Duty to notify Regulatory Authority of trading suspension 320
Schedule 1 Arrangements not collective investment schemes 321
Schedule 2 Constitutional document content—QFC schemes 333
Schedule 3 Prospectus content—QFC qualified investor schemes 343
Schedule 4 Prospectus content—QFC retail schemes 360
Schedule 5 Prospectus content—REITs 381
Glossary 401
Endnotes 431
General provisions Chapter 1 Introductory Part 1.1
Rule 1.1.1
V9 Collective Investment Schemes Rules 2010 page 1 Effective: 15/Oct/20
Chapter 1 General provisions
Part 1.1 Introductory
1.1.1 Name of rules
These rules are the Collective Investment Schemes Rules 2010 (or
COLL).
1.1.2 Commencement
These rules commence on 1 January 2011.
1.1.3 Application of COLL
These rules do not apply to a collective investment scheme that is
registered under the Private Placement Schemes Rules 2010 (PRIV).
Note A collective investment scheme that is established in the QFC may be
registered under PRIV as a private placement scheme.
1.1.4 Effect of definitions, notes and examples
(1) A definition in the Glossary also applies to any instructions or
document made under these rules.
(2) A note in or to these rules is explanatory and is not part of these rules.
However, examples and guidance are part of these rules.
(3) An 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.
Note Under FSR, article 17 (4), guidance is indicative of the view of the
Regulatory Authority at the time and in the circumstances in which it was
given.
Chapter 1 General provisions Part 1.1 Introductory Rule 1.1.5
page 2 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
1.1.5 References to particular currencies
In these rules, the specification of an amount of money in a particular
currency is also taken to specify the equivalent sum in any other
currency at the relevant time.
General provisions Chapter 1 Basic concepts and key terms—all schemes Part 1.2
Rule 1.2.1
V9 Collective Investment Schemes Rules 2010 page 3 Effective: 15/Oct/20
Part 1.2 Basic concepts and key terms—all schemes
Division 1.2.A Collective investment schemes
1.2.1 What 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:
6.2 Subject 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.
6.3 An 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.
6.4 An 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.
Chapter 1 General provisions Part 1.2 Basic concepts and key terms—all schemes Rule 1.2.2
page 4 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
6.5 Arrangements 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.
6.6 The 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.B Participants, scheme property, units and unitholders
1.2.2 Who 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.
1.2.3 What is the scheme property?
The scheme property of a collective investment scheme (or scheme)
is the property held for or in the scheme.
Note Property is defined in the glossary.
1.2.4 What 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.
Note The 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.
1.2.5 Who 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 1 For a QFC scheme, the name would be entered in:
(a) the scheme’s unitholder register (see rule 4.1.6 (1)); or
General provisions Chapter 1 Basic concepts and key terms—all schemes Part 1.2
Rule 1.2.6
V9 Collective Investment Schemes Rules 2010 page 5 Effective: 15/Oct/20
(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 2 Unitholder has a special meaning in div 5.5.B (Unitholder meetings—
QFC retail schemes) (see r 5.5.2).
Division 1.2.C QFC schemes and non-QFC schemes
1.2.6 What 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.
Note Collective investment scheme (or scheme) is defined in r 1.2.1.
1.2.7 What 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.D Operator and independent entity
1.2.8 Who 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 1 Scheme property is defined in r 1.2.3.
Note 2 For 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 3 The 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 1 Jurisdiction is defined in the glossary.
Note 2 For a QFC scheme, see pt 8.4 (Operator and independent entity
appointment and removal—QFC schemes).
Chapter 1 General provisions Part 1.2 Basic concepts and key terms—all schemes Rule 1.2.9
page 6 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(3) The operator may also have other functions under the law of the
jurisdiction where the scheme is established.
Note For a QFC scheme, see eg r 4.1.3 (Functions of operator generally—all
QFC schemes).
1.2.9 Who 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 1 Scheme property is defined in r 1.2.3.
Note 2 For 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 1 Jurisdiction is defined in the glossary.
Note 2 For 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.
Note For a QFC scheme, see eg r 4.2.3 (Oversight functions of independent
entity—all QFC schemes).
Division 1.2.E Open-ended and closed-ended schemes
1.2.10 What 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.
Note Unit is defined in r 1.2.4. Redemption is defined in the glossary.
General provisions Chapter 1 Basic concepts and key terms—all schemes Part 1.2
Rule 1.2.11
V9 Collective Investment Schemes Rules 2010 page 7 Effective: 15/Oct/20
(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.F Umbrella schemes
1.2.11 What 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.
Note Unitholder 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.G Qualified investors and retail customers
1.2.12 Who 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 eligible counterparty of the scheme in relation to
Chapter 1 General provisions Part 1.2 Basic concepts and key terms—all schemes Rule 1.2.12
page 8 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
dealings in investments that consist of (or include) units in the
scheme; or
(b) a person who is a business customer or eligible 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 eligible
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 an eligible 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:
eligible counterparty has the same meaning as in the Investment
Management and Advisory Rules 2014.
General provisions Chapter 1 Basic concepts and key terms—QFC schemes Part 1.3
Rule 1.3.1
V9 Collective Investment Schemes Rules 2010 page 9 Effective: 15/Oct/20
Part 1.3 Basic concepts and key terms—QFC schemes
Division 1.3.A Types of QFC schemes generally
1.3.1 QFC 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.
1.3.2 What 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.
1.3.3 What is a QFC retail scheme?
A QFC scheme is a retail scheme if it is registered under these rules
as a retail scheme.
1.3.4 Types of QFC retail schemes
QFC retail schemes may be UCITS type schemes or property funds.
1.3.5 What 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.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
Chapter 1 General provisions Part 1.3 Basic concepts and key terms—QFC schemes Rule 1.3.5A
page 10 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
1.3.5A What 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.B Legal forms for QFC schemes
1.3.6 Permitted 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.
Note The permitted legal forms of QFC schemes are defined in r 1.3.7 to
r 1.3.10.
1.3.7 What 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.
Note Articles 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.
General provisions Chapter 1 Basic concepts and key terms—QFC schemes Part 1.3
Rule 1.3.8
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1.3.8 What 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.
Note Partnership agreement is defined in the glossary.
1.3.9 What 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.
Note Trust instrument is defined in the glossary.
1.3.10 What 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.
Note Entity, QFC Law and instrument are defined in the glossary.
Chapter 1 General provisions Part 1.3 Basic concepts and key terms—QFC schemes Rule 1.3.11
page 12 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Division 1.3.C Particular types of QFC schemes
1.3.11 Islamic 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 1 Umbrella scheme and subscheme are defined in r 1.2.11. Constitutional
document is defined in r 3.1.1.
Note 2 The 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).
1.3.12 Money-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 1 Umbrella scheme and subscheme are defined in r 1.2.11. Constitutional
document is defined in r 3.1.1.
Note 2 The 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)
General provisions Chapter 1 Basic concepts and key terms—QFC schemes Part 1.3
Rule 1.3.13
V9 Collective Investment Schemes Rules 2010 page 13 Effective: 15/Oct/20
• 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)).
1.3.13 Other types of QFC schemes
This division does not limit by implication the types of QFC schemes
permitted under these rules.
Note 1 See, for example, the definitions of feeder fund, fund of fund and
property fund in the glossary.
Note 2 For guaranteed funds and similar funds, see r 8.9.1 (5) to (11) (Name of
scheme etc—all QFC schemes).
Chapter 1 General provisions Part 1.4 Basic concepts and key terms—non-QFC schemes Rule 1.4.1
page 14 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 1.4 Basic concepts and key terms—non-QFC schemes
1.4.1 What 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).
Note Non-QFC scheme is defined in rule 1.2.7.
1.4.2 What is a non-QFC qualified client scheme?
A non-QFC scheme is a qualified client scheme if is not a retail
customer scheme.
Note Non-QFC scheme is defined in rule 1.2.7.
Registration of schemes in QFC Chapter 2
Rule 2.1.1
V9 Collective Investment Schemes Rules 2010 page 15 Effective: 15/Oct/20
Chapter 2 Registration of schemes in QFC
2.1.1 Schemes 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.
Note PRIV 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.
Note Scheme is defined in r 1.2.1. Scheme property is defined in r 1.2.3.
2.1.2 Application 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 1 Operator is defined in r 1.2.8.
Note 2 See 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.
Chapter 2 Registration of schemes in QFC Rule 2.1.3
page 16 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(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.
Note Business day is defined in the glossary.
2.1.3 Decision 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
Registration of schemes in QFC Chapter 2
Rule 2.1.3
V9 Collective Investment Schemes Rules 2010 page 17 Effective: 15/Oct/20
(C) a class of units for a scheme registered under PRIV
or these rules; or
(ii) is otherwise undesirable or misleading; or
Note Umbrella 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
Note Operator 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 1 Constitutional document is defined in r 3.1.1. Independent entity
is defined in r 1.2.9.
Note 2 For 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
Chapter 2 Registration of schemes in QFC Rule 2.1.3
page 18 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
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
Note Prospectus 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.
Note The 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.
Constitutional requirements—QFC schemes Chapter 3 Constitutional document—QFC schemes Part 3.1
Rule 3.1.1
V9 Collective Investment Schemes Rules 2010 page 19 Effective: 15/Oct/20
Chapter 3 Constitutional requirements—QFC schemes
Part 3.1 Constitutional document—QFC schemes
3.1.1 What 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.
Note CIC, 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.
3.1.2 Matters 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.
3.1.3 Relationship 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
Chapter 3 Constitutional requirements—QFC schemes Part 3.1 Constitutional document—QFC schemes Rule 3.1.4
page 20 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) that is unfairly prejudicial to the interest of unitholders generally
or to the unitholders of any class of units.
Note Class 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.
3.1.4 Constitutional 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.
3.1.5 Amendments of constitutional document—all QFC schemes
(1) This rule applies if the constitutional document of a QFC scheme is
amended.
Constitutional requirements—QFC schemes Chapter 3 Constitutional document—QFC schemes Part 3.1
Rule 3.1.6
V9 Collective Investment Schemes Rules 2010 page 21 Effective: 15/Oct/20
(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.
Note See pt 5.4 (Unitholder approvals and notice—QFC schemes) for the
unitholder approval or notice required for amendments of the
constitutional document.
3.1.6 Prohibited 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.
Note UCITS type scheme is defined in r 1.3.5.
Chapter 3 Constitutional requirements—QFC schemes Part 3.2 Units—QFC schemes Rule 3.2.1
page 22 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 3.2 Units—QFC schemes
Division 3.2.A Units—all QFC schemes
3.2.1 Fractions of units—all QFC schemes
The constitutional document of a QFC scheme may authorise the
scheme to issue fractions of units.
Note Constitutional document is defined in r 3.1.1.
3.2.2 Smaller 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.
Note CIC 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.
Constitutional requirements—QFC schemes Chapter 3 Units—QFC schemes Part 3.2
Rule 3.2.3
V9 Collective Investment Schemes Rules 2010 page 23 Effective: 15/Oct/20
(5) For subrule (4) (b):
relevant proportion means the proportion fixed by the constitutional
document (as mentioned in subrule (1)).
3.2.3 Bearer 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.
Note Document evidencing title is defined in the glossary.
Division 3.2.B Units—QFC qualified investor schemes
3.2.4 Classes 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.
Note Class 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.
3.2.5 Limited 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
Chapter 3 Constitutional requirements—QFC schemes Part 3.2 Units—QFC schemes Rule 3.2.6
page 24 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(c) will not materially prejudice any existing unitholders.
Note Latest filed prospectus is defined in the glossary.
Division 3.2.C Units—QFC retail schemes
3.2.6 Classes 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.
Note Constitutional 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.
3.2.7 Currency class units—QFC retail schemes
(1) This rule applies to a currency class unit in a QFC retail scheme.
Note 1 A 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 2 Currency 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
Constitutional requirements—QFC schemes Chapter 3 Units—QFC schemes Part 3.2
Rule 3.2.8
V9 Collective Investment Schemes Rules 2010 page 25 Effective: 15/Oct/20
other than the base currency, the currency of the class may be in the
base currency, but must not be in that other currency.
Note Subscheme is defined in r 1.2.11.
(4) The price must be expressed in the currency of the class.
Note Price 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).
3.2.8 Rights 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.
Note Class is defined in the glossary.
(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.
Note Capital 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.
Chapter 3 Constitutional requirements—QFC schemes Part 3.2 Units—QFC schemes Rule 3.2.9
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(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.
Note Price is defined in the glossary.
3.2.9 Smaller 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.
Note CIC 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.
Constitutional requirements—QFC schemes Chapter 3 Units—QFC schemes Part 3.2
Rule 3.2.10
V9 Collective Investment Schemes Rules 2010 page 27 Effective: 15/Oct/20
3.2.10 Subdivision 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.
3.2.11 Guarantees 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
Chapter 3 Constitutional requirements—QFC schemes Part 3.2 Units—QFC schemes Rule 3.2.12
page 28 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
obtain the benefit of any guarantee, the operator must provide
reasonable written notice to unitholders before the action is required.
Note The 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).
3.2.12 Switching 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.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
The operator and independent entity—QFC schemes Chapter 4 The operator—all QFC schemes Part 4.1
Rule 4.1.1
V9 Collective Investment Schemes Rules 2010 page 29 Effective: 15/Oct/20
Chapter 4 The operator and independent entity—QFC schemes
Part 4.1 The operator—all QFC schemes
4.1.1 Requirements for operator—all QFC schemes
(1) The operator of a QFC scheme must be an authorised firm that—
(a) is a corporation; and
Note Corporation 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
Note Authorisation, 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
Note CIC 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
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(iii) a member (however described) of the governing body of
the independent entity or, for a CIC or CIP, the scheme.
Note Governing 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.
Note Function is defined in the glossary.
4.1.2 Operator 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;
The operator and independent entity—QFC schemes Chapter 4 The operator—all QFC schemes Part 4.1
Rule 4.1.3
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(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;
Note Authorisation is defined in the glossary.
(e) the scope of the scheme’s registration, including any conditions,
restrictions or requirements;
(f) the constitutional document;
Note Constitutional document is defined in r 3.1.1.
(g) the latest filed prospectus.
Note Latest filed prospectus is defined the glossary.
4.1.3 Functions of operator generally—all QFC schemes
(1) The operator of a QFC scheme is responsible for managing the
scheme, including all the scheme property.
Note Scheme 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
Note Borrowing 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
Chapter 4 The operator and independent entity—QFC schemes Part 4.1 The operator—all QFC schemes Rule 4.1.4
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(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
Note Net 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.
Note The 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).
4.1.4 Duty 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
Note Rules 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.
The operator and independent entity—QFC schemes Chapter 4 The operator—all QFC schemes Part 4.1
Rule 4.1.5
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(2) The operator must tell the Regulatory Authority about the breach
immediately, but within 1 business day.
Examples—meaning of ‘within 1 business day’
1 If, on a business day, the operator becomes aware of the breach, the operator
must tell the authority about it immediately, but on that day.
2 If, 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.
Note Business day is defined in the glossary.
(3) The operator must give the Regulatory Authority any information
about the breach that the authority reasonably requires.
Note Under GENE, rule 4.1.3, an authorised firm must also advise the
Authority of certain significant events.
4.1.5 Particular 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
Note Class is defined in the glossary.
(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
Chapter 4 The operator and independent entity—QFC schemes Part 4.1 The operator—all QFC schemes Rule 4.1.6
page 34 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(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.
4.1.6 Register 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 1 Qualified investor scheme, and qualified investor for a QFC scheme, are
defined in r 1.3.2 and r 1.2.12 (2) respectively.
Note 2 Rule 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.
4.1.7 Records 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
The operator and independent entity—QFC schemes Chapter 4 The operator—all QFC schemes Part 4.1
Rule 4.1.7
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(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.
Note Latest 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.
Chapter 4 The operator and independent entity—QFC schemes Part 4.1 The operator—all QFC schemes Rule 4.1.8
page 36 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(7) The operator must not charge for making records available, or
providing a copy of any records, under subrule (6).
Note GENE, ch 6 also contains provisions about record-keeping.
4.1.8 Operator 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.
4.1.9 Maintenance 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’.
Note CIC is defined in r 1.3.7.
The operator and independent entity—QFC schemes Chapter 4 The independent entity—QFC schemes Part 4.2
Rule 4.2.1
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Part 4.2 The independent entity—QFC schemes
Division 4.2.A Independent entity generally—QFC schemes
4.2.1 Requirements 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
Note Authorised 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
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page 38 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(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
Note QFC 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
Note CIC 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 1 Governing body is defined in the glossary.
Note 2 See r (4) on the meaning of ‘independent’.
(e) for a CIT—the trustee of the trust.
Note CIT 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;
The operator and independent entity—QFC schemes Chapter 4 The independent entity—QFC schemes Part 4.2
Rule 4.2.1
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(iv) the other members of the corporation’s group and their
activities;
Note Group 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.
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page 40 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
4.2.2 Independent 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;
Note Authorisation is defined in the glossary.
(e) the scope of the scheme’s registration, including any conditions,
restrictions or requirements;
(f) the constitutional document;
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Rule 4.2.3
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(g) the latest filed prospectus.
Note Latest filed prospectus is defined in the glossary.
4.2.3 Oversight 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;
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(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.
Note Net asset value, class, price and valuation point are defined in the
glossary.
4.2.4 Duty 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.
Note Breach 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
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Rule 4.2.5
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(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.
4.2.5 Particular 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 position; and
(c) be independent of the operator; and
(d) act as independent entity solely in the interests of the
unitholders; and
(e) treat unitholders who hold units in the same class equally and
unitholders who hold units in different classes fairly; and
Note Class is defined in the glossary.
(f) not make improper use of information acquired as a result of
being the independent entity—
(i) to gain, directly or indirectly, a personal advantage or an
advantage for another person; or
(ii) to cause detriment to the unitholders; and
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(g) not make improper use of the position of independent entity—
(i) to gain, directly or indirectly, a personal advantage or an
advantage for another person; or
(ii) to cause detriment to the unitholders.
4.2.6 Property safeguarding functions of independent entity—all QFC schemes
(1) The independent entity of a QFC scheme is responsible for
safeguarding all the scheme property.
Note For the exceptions to this rule, see rule 4.2.6 (6).
(2) Without limiting subrule (1), the independent entity must—
(a) ensure that all the scheme property is properly accounted for;
and
(b) ensure that all the scheme property is—
(i) clearly identified as scheme property; and
(ii) held separately from the independent entity’s own
property, the operator’s own property and the property of
any other person; and
(c) take all steps and complete all documents needed to ensure
completion of transactions properly entered into for the scheme;
and
(d) ensure that instructions properly given by the operator about the
exercise of rights in relation to the scheme property are carried
out; and
(e) ensure that any scheme property in registrable form is registered
as soon as practicable in its own name or in the name of its
nominee or delegate, as appropriate; and
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(f) take into its custody or control all documents evidencing title to
the scheme property, other than in relation to derivatives and
forward positions; and
Note Document evidencing title and derivative are defined in the
glossary.
(g) ensure that any resulting benefit of a derivative or forward
transaction is received by it for the scheme property; and
(h) collect, hold and deal with income in relation to the scheme
property.
(3) If the scheme property includes units in any other scheme operated
by the operator or an associate of the operator, the independent entity
must exercise any voting rights given by the units in accordance with
what the independent entity reasonably believes to be in the interest
of the unitholders of the QFC scheme.
Note Associate is defined in the glossary.
(4) If the independent entity is of the opinion that a deal in property in
relation to the scheme breaches these rules or the constitutional
document, the independent entity may require the operator—
(a) to cancel the transaction or make a disposal or acquisition to
restore the previous situation; and
(b) to meet any resulting loss or expense.
Note Deal and breach is defined in the glossary.
(5) If the independent entity is of the opinion that—
(a) an acquisition of property necessarily involves documents
evidencing title being kept in the custody of a person other than
the independent entity; and
(b) the independent entity cannot reasonably be expected to accept
the responsibility that would otherwise be placed on it if it were
to permit custody by the other person;
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the operator must either cancel the transaction or make a
corresponding disposal if the independent entity asks it to take action
under this subrule.
(6) This rule does not apply in relation to an immovable that is part of the
scheme property if:
(a) the operator of the fund has made adequate alternative
arrangements for the immovable in accordance with rule 12.3.1;
or
(b) the fund is a REIT and the operator of the fund holds the
immovable as custodian in accordance with rule 12.6.9.
Note The operator of the fund is responsible for safeguarding an immovable
described in rule 4.2.6 (6).
4.2.7 Records of independent entity—all QFC schemes
(1) The independent entity of a QFC scheme must make the records
necessary—
(a) to enable the independent entity 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 independent entity as the independent entity of a
QFC scheme or, if the independent entity is an
authorised firm, as an authorised firm; and
(b) to demonstrate at all times whether it has complied with these
rules.
(2) The independent entity must keep records made for this rule for at
least 6 years after the day they are made.
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Rule 4.2.8
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(3) The independent entity must, at the request of the Regulatory
Authority, operator or 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.
(4) The independent entity must not charge for making records available,
or providing a copy of any records, under subrule (3).
Note GENE, ch 6 also contains provisions about record-keeping by
independent entities that are authorised firms.
4.2.8 Independent entity must give information etc to operator and auditor—all QFC schemes
The independent entity of a QFC scheme must, on request,
immediately give the operator or auditor of the scheme the
information and explanations in relation to the scheme that the
operator or auditor reasonably requires.
Division 4.2.B Non-QFC independent entities—QFC schemes
4.2.9 Non-QFC independent entities—criteria for Regulatory Authority action
(1) This rule applies in relation to the making of a decision by the
Regulatory Authority under these rules about whether a corporation
that is not an authorised firm or another QFC licensed firm is an
appropriate person to be the independent entity of a QFC scheme (or
a scheme established in the QFC that is proposed to become a QFC
scheme).
Note This rule applies to decisions under the following provisions:
• r 2.1.3 (2) (d) (ii) (Decision on application for registration of scheme
established in QFC)
• r 4.2.13 (2) (a) (Non-QFC independent entities—removal by
Regulatory Authority).
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(2) The Regulatory Authority may consider all or any of the matters
mentioned in rule 4.2.1 (2) (a) to (h) (Requirements for independent
entity—all QFC schemes).
(3) Subrule (2) does not limit the matters the Regulatory Authority may
consider.
4.2.10 Non-QFC independent entities—annual compliance certificate
(1) This rule applies to the independent entity of a QFC scheme if the
independent entity is not an authorised firm.
(2) Not later than 1 February in each year, the independent entity must
give the operator a written certificate about its compliance with the
following provisions in relation to the QFC scheme during the
previous year (the reporting year):
• rule 4.2.3 (Oversight functions of independent entity—all QFC
schemes)
• rule 4.2.6 (Property safeguarding functions of independent
entity—all QFC schemes).
(3) The certificate must—
(a) name the QFC scheme; and
(b) state whether the independent entity complied fully with all
relevant provisions in relation to its functions under rule 4.2.3
and rule 4.2.6 and, if it did not fully comply with all relevant
provisions, the details of any material non-compliance.
Note Function is defined in the glossary.
(3A) If the QFC scheme is a property fund and the exception in
rule 4.2.6 (6) (a) or (b) applies, the certificate must include a
description of the immovable for which the independent entity is not
responsible.
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Rule 4.2.11
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(4) In this rule:
relevant provisions means the provisions of—
(a) these rules; and
(b) any other law of the QFC applying in relation to the scheme; and
(c) the law of any other jurisdiction (if any) applying in relation to
the scheme.
Note Jurisdiction is defined in the glossary.
4.2.11 Non-QFC independent entities—oversight of property safeguarding functions by operators
(1) This rule applies in relation to the independent entity of a QFC
scheme if the independent entity is not an authorised firm.
(2) The operator must take reasonable care to ensure that the independent
entity exercises its functions under rule 4.2.6 (Property safeguarding
functions of independent entity—all QFC schemes) in accordance
with the provisions of—
(a) these rules; and
(b) any other law of the QFC applying in relation to the scheme; and
(c) the law of any other jurisdiction (if any) applying in relation to
the scheme.
4.2.12 Non-QFC independent entities—removal by operators
(1) This rule applies in relation to the independent entity of a QFC
scheme if—
(a) the independent entity is not an authorised firm; and
(b) the operator considers that the independent entity is not, or is no
longer, an appropriate person to be the independent entity of the
scheme.
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(2) In making a decision for subrule (1) (b), the operator must consider
the matters mentioned in rule 4.2.1 (2) (a) to (h) (Requirements for
independent entity—all QFC schemes).
(3) Subrule (2) does not limit the matters the operator may consider.
(4) If this rule applies, the operator must—
(a) by written notice given to the independent entity, remove the
independent entity; and
(b) appoint another person as the independent entity of the scheme.
(5) The person appointed must be eligible to be the independent entity of
the scheme under rule 4.2.1.
(6) If the independent entity is removed under this rule, the operator must
tell the Regulatory Authority about the removal immediately, but
within 1 business day after the day the independent entity is removed.
(7) If another person is appointed as the independent entity under this
rule, the operator must tell the Regulatory Authority about the
appointment immediately, but within 1 business day after the day the
appointment is made.
Examples for r (6) and r (7)
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(8) This rule is additional to, and does not limit, part 8.4 (Operator and
independent entity appointment and removal—QFC schemes).
4.2.13 Non-QFC independent entities—removal by Regulatory Authority
(1) The rule applies in relation to the independent entity of a QFC scheme
if the independent entity is not an authorised firm.
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Rule 4.2.13
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(2) The Regulatory Authority may, by written notice given to the
operator, require the operator to remove the independent entity and
appoint another person as the independent entity if satisfied that—
(a) the independent entity is not, or is no longer, an appropriate
person to be the independent entity of the scheme; or
Note See r 4.2.9 (Non-QFC independent entities—criteria for
Regulatory Authority action)).
(b) it is desirable to remove the independent entity to protect
participants or potential participants in the scheme or the
financial system operating in or from the QFC; or
(c) the independent entity is in breach of, or has been in breach of,
these rules, any other law of the QFC or the law of any other
jurisdiction; or
(d) a request has been received under the Financial Services
Regulations, article 20 (International relations and co-operation)
in relation to the independent entity.
(3) The Regulatory Authority may give a notice under subrule (2) only if
it has—
(a) given the independent entity and the operator prior notice of its
intention to give the notice; and
(b) given the independent entity and the operator a reasonable
opportunity to make representations; and
(c) considered any representations made.
(4) However, subrule (3) does not apply if—
(a) the Regulatory Authority considers that any delay likely to arise
because of the application of the subrule would be prejudicial to
participants or potential participants in the QFC scheme or the
financial system operating in or from the QFC; or
(b) the power is to be exercised following a decision by the
Regulatory Authority under the Financial Services Regulations,
part 9 (Disciplinary and enforcement powers), or by the
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Regulatory Tribunal or the QFC Court, in relation to the
independent entity.
(5) If subrule (4) (a) applies, the Regulatory Authority must—
(a) give the independent entity and the operator an opportunity to
make representations promptly after the notice under subrule (2)
has been given; and
(b) consider any representations made.
(6) If the Regulatory Authority gives a notice under subrule (2), it must
give the independent entity a written notice—
(a) stating that it has given the notice under subrule (2); and
(b) giving reasons for the notice; and
(c) tell the independent entity that the independent entity may
appeal to the Regulatory Tribunal against the decision.
(7) The operator must give effect to a notice under subrule (2).
(8) The person appointed by the operator as the replacement independent
entity must be eligible to be the independent entity of the scheme
under rule 4.2.1 (Requirements for independent entity—all QFC
schemes).
(9) This rule is additional to, and does not limit, any other powers of the
Regulatory Authority to remove the independent entity of a QFC
scheme.
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Rule 4.3.1
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Part 4.3 Operator and independent entity other provisions—QFC schemes
4.3.1 Duties of officers etc of operator and independent entity—all QFC schemes
(1) This rule applies to a person who is an officer, employee or agent of
the operator or independent entity of a QFC scheme.
(2) The person must not—
(a) make improper use of information acquired as a result of being
a person to whom this rule applies—
(i) to gain, directly or indirectly, a personal advantage or an
advantage for another person; or
(ii) to cause detriment to unitholders; or
(b) make improper use of the person’s position as a person to whom
this rule applies—
(i) to gain, directly or indirectly, a personal advantage or an
advantage for another person; or
(ii) to cause detriment to unitholders.
4.3.2 Provisions of ch 4 do not limit other functions
(1) This rule applies to a provision of this chapter that gives a function
(however expressed) to the Regulatory Authority, the operator or
independent entity of a QFC scheme or another person.
Note Function is defined in this glossary.
(2) To remove any doubt, the provision is additional to, and does not
limit, any function given to the Regulatory Authority, operator,
independent entity or other person under—
(a) any other provision of these rules; or
(b) any other law of the QFC; or
Chapter 4 The operator and independent entity—QFC schemes Part 4.3 Operator and independent entity other provisions—QFC schemes Rule 4.3.2
page 54 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(c) for the operator—the constitutional document.
Investor relations—QFC schemes Chapter 5 Transactions with affected persons—QFC schemes Part 5.1
Rule 5.1.1
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Chapter 5 Investor relations—QFC schemes
Part 5.1 Transactions with affected persons—QFC schemes
5.1.1 Who is an affected person for a QFC scheme?
An affected person for a QFC scheme is any of the following:
(a) the operator;
(b) the independent entity;
(c) a member (however described) of the governing body of the
operator, the independent entity or, for a CIC or CIP, the
scheme;
(d) any standing independent valuer of the scheme;
(e) any investment adviser for the scheme;
(f) a person to whom functions of the operator or independent entity
in relation to the scheme are outsourced;
(g) the auditor of the scheme;
(h) any associated person for any person mentioned in
paragraphs (a) to (g);
(i) a unitholder with 5% or more in value of all the units then in
issue.
Note Governing body, standing independent valuer, investment adviser,
function and associated person are defined in the glossary. CIC and CIP
are defined in r 1.3.7 and r 1.3.8 respectively.
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5.1.2 Transactions with affected persons—general rule for all QFC schemes
(1) This rule applies to a transaction by the operator of a QFC scheme in
relation to the scheme property if the transaction is with an affected
person.
(2) The operator must ensure that the transaction—
(a) is on terms at least as favourable to the scheme as any
comparable transaction on normal commercial terms negotiated
at arm’s length with an independent third party; and
(b) does not breach any other provision of this part; and
(c) is not prohibited by the constitutional document or the latest
filed prospectus.
Note Constitutional document is defined in r 3.1.1. Breach and latest
filed prospectus are defined in the glossary.
5.1.3 Transactions with affected persons—prior notice to unitholders of QFC schemes
(1) Subject to subrule (3), this rule applies to a proposed transaction by
the operator of a QFC scheme in relation to the scheme property if
the transaction is with an affected person.
(2) The operator must not enter into the transaction unless the operator
has given the unitholders prior written notice of the transaction (or
transactions that include the transaction), including an explanation of
how rule 5.1.2 has been complied with in relation to the transaction
(or the transactions).
Example of written notice
notice given in the scheme’s latest filed prospectus
(3) This rule does not apply to a REIT if the transaction is for the
acquisition or sale of an immovable in Qatar and all of the conditions
in rule 12.6.10 are satisfied.
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Rule 5.1.4
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5.1.4 Transactions with affected persons—transactions involving 5% or more of QFC scheme’s net asset value
(1) Subject to subrule (4), this rule applies to a proposed transaction by
the operator of a QFC scheme in relation to the scheme property if—
(a) the transaction is with an affected person; and
(b) the total consideration for, or value of, the transaction (or the
transaction and all earlier such transactions within the last
12 months) is 5% or more of the latest net asset value of the
scheme, as disclosed in the scheme’s latest audited accounts.
Note Net asset value is defined in the glossary.
(2) The operator must not enter into the transaction unless the unitholders
have given prior approval to the transaction at a general meeting in
accordance with the constitutional document. If the scheme is a
property fund, the approval may be by ordinary resolution of the
unitholders.
(3) For subrule (2), the operator must give notice to unitholders of the
results of the voting in relation to the approval. The notice must be
given as soon as practicable after the general meeting.
(4) This rule does not apply to a REIT if the transaction is for the
acquisition or sale of an immovable in Qatar and all of the conditions
in rule 12.6.10 are satisfied.
5.1.5 Transactions with affected persons—details required for QFC scheme’s annual reports
(1) If the operator of a QFC scheme enters into any transaction with an
affected person in relation to the scheme property during an annual
accounting period, the scheme’s annual report, or the scheme’s
annual long and short reports, for the period must include—
(a) a summary of the total value of transactions with affected
persons in relation to the scheme property during the period; and
(b) a summary of the nature of the transactions; and
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(c) a summary of the identities of the affected persons; and
(d) if the unitholders voted at a general meeting held during the
period to approve a transaction with an affected person—details
of the approval and the results of the voting in relation to the
approval; and
(e) a written certificate by the operator stating that each transaction
was in accordance with these rules and the scheme’s
constitutional document.
(2) If the operator of a QFC scheme does not enter into a transaction with
an affected person in relation to the scheme property during an annual
accounting period, the scheme’s annual report, or the scheme’s
annual long and short reports, for the period must include a statement
to that effect.
5.1.6 Transactions with affected persons—additional restrictions for QFC retail schemes
(1) The operator of a QFC retail scheme must take reasonable care to
ensure that the following transactions, arrangements or agreements
are not entered into:
(a) the putting of cash on deposit by the scheme with an affected
person, unless that person is an authorised firm or regulated
financial institution and the transaction complies with the arm’s
length requirement in subrule (2);
Note Deposit, authorised firm and regulated financial institution are
defined in the glossary.
(b) the lending of money by an affected person to or for the scheme,
unless the affected person is an authorised firm or regulated
financial institution and the transaction complies with the arm’s
length requirement in subrule (2);
(c) the dealing in property by an affected person with or in relation
to the scheme (or the independent entity acting for the scheme),
unless subrule (3) applies;
Note Deal is defined in the glossary.
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Rule 5.1.6
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(d) the vesting of property (other than cash) by an affected person
in the scheme (or with the independent entity acting for the
scheme) against the issue of units in the scheme, unless—
(i) subrule (3) applies; or
(ii) the purpose of the vesting is for—
(A) all or part of the property of a corporation or another
collective investment scheme to become the first
property of the QFC retail scheme; and
(B) holders of shares or units in the corporation or other
collective investment scheme to become the first
unitholders in the QFC retail scheme;
Note Corporation is defined in the glossary.
(e) the acquisition of scheme property by an affected person from
the scheme (or the independent entity acting for the scheme),
unless subrule (3) applies or the acquisition is otherwise
permitted by the constitutional document or under these rules;
Note See r 8.1.20 (Issue or redemption otherwise than for cash—QFC
retail schemes).
(f) a stock lending arrangement or repo agreement with or in
relation to the scheme, unless the transaction complies with the
arm’s length requirement in subrule (2).
Note Stock lending arrangement and repo agreement are defined in the
glossary.
(2) A transaction mentioned in subrule (1) (a), (b) or (f) must be as
favourable to the scheme as any comparable arrangement on normal
commercial terms negotiated at arm’s length between the affected
person and an independent third party.
(3) A transaction does not breach subrule (1) (c), (d) or (e) if the
transaction complies with—
(a) subrule (4) (the best execution on-exchange requirement); or
(b) subrule (5) (the independent valuation requirement); or
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(c) subrule (6) (the arm’s length transaction requirement).
(4) For subrule (3), the transaction complies with this subrule (the best
execution on-exchange requirement) if—
(a) the property is an approved derivative or approved security; and
Note Approved derivative is defined in r 7.1.8. Approved security is
defined in r 7.1.9.
(b) the transaction is effected under the rules of the relevant market
with or through a person who is bound by those rules; and
(c) there is written evidence of the effecting of the transaction and
its terms; and
(d) the operator has taken all reasonable steps to ensure that the
transaction is effected on the terms that are the best available for
the scheme.
(5) For subrule (3), the transaction complies with this subrule (the
independent valuation requirement) if—
(a) the value of the property is certified in writing for the purpose
of the transaction by a person approved by the independent
entity as—
(i) independent of any affected person; and
(ii) qualified to value property of the relevant kind; and
(b) the independent entity is of the opinion that the terms of the
transaction are not likely to result in any material prejudice to
unitholders.
(6) For subrule (3), the transaction complies with this subrule (the arm’s
length transaction requirement) if—
(a) the property is not an approved derivative or approved security;
and
(b) it is not reasonably practicable to comply with subrule (5) (the
independent valuation requirement); and
Investor relations—QFC schemes Chapter 5 Transactions with affected persons—QFC schemes Part 5.1
Rule 5.1.6
V9 Collective Investment Schemes Rules 2010 page 61 Effective: 15/Oct/20
(c) the independent entity has reliable evidence that the transaction
is or will be on terms that comply with the arm’s length
requirement in subrule (2).
Chapter 5 Investor relations—QFC schemes Part 5.2 Prospectus requirements—QFC schemes Rule 5.2.1
page 62 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 5.2 Prospectus requirements—QFC schemes
5.2.1 Prospectus to be drawn up—all QFC schemes
The operator of a QFC scheme must ensure that a prospectus is drawn
up for the scheme in accordance with these rules.
Note Prospectus is defined in the glossary.
5.2.2 Prospectus etc to be made available—all QFC schemes
(1) The operator of a QFC scheme must make available free of charge
the latest filed prospectus, and the latest filed translation of the
prospectus in each language for which there is a translation prepared
by or for the operator, to any person eligible to invest in the scheme
before the person buys units (or additional units) in the scheme.
Note Latest filed prospectus and latest filed translation are defined in the
glossary.
(2) The operator of a UCITS type scheme must, on the request of a
unitholder of the scheme, give the unitholder the following
information supplementary to the information provided by the latest
filed prospectus:
(a) the quantitative limits applying to the risk management of the
scheme;
(b) the methods used in relation to risk management;
(c) any recent developments in relation to the risk and yield of the
main categories of investment.
Note UCITS type scheme is defined in r 1.3.5.
5.2.3 General information requirements for prospectus—all QFC schemes
(1) The operator of a QFC scheme must ensure that the scheme’s
prospectus at all times contains all the information that investors and
their professional advisers would reasonably require, and reasonably
Investor relations—QFC schemes Chapter 5 Prospectus requirements—QFC schemes Part 5.2
Rule 5.2.4
V9 Collective Investment Schemes Rules 2010 page 63 Effective: 15/Oct/20
expect to have drawn to their attention, in the prospectus for the
purpose of making an informed judgment about—
(a) the merits and risks of participating in the scheme; and
(b) the extent and characteristics of the risks accepted by
participating in the scheme.
(2) The operator must ensure that at all times the prospectus contains a
clear and easily understandable explanation of any risks that
investment in the scheme may reasonably be regarded as presenting
to investors in the scheme.
(3) Without limiting subrules (1) and (2), the operator must ensure that
at all times the prospectus includes the information, statements and
provisions required for the QFC scheme by—
(a) if the scheme is a qualified investor scheme—Schedule 3
(Prospectus content—QFC qualified investor schemes);
(b) if the scheme is a retail scheme other than a REIT—Schedule 4
(Prospectus content—QFC retail schemes); and
(c) if the scheme is a REIT—Schedule 5 (Prospectus content—
REITs).
5.2.4 Other general requirements for prospectus—all QFC schemes
(1) The operator of a QFC scheme must ensure that any prospectus for
the scheme—
(a) is in English; and
(b) presents information about the scheme clearly and fairly; and
(c) does not contain any untrue or misleading statement; and
(d) otherwise complies with these rules.
(2) Subrule (1) (a) does not prevent the operator preparing, or arranging
for the preparation of, a translation of the prospectus in any other
language.
Chapter 5 Investor relations—QFC schemes Part 5.2 Prospectus requirements—QFC schemes Rule 5.2.5
page 64 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(3) However, the operator must ensure that any translation of a
prospectus prepared by or for the operator—
(a) presents information about the scheme clearly and fairly; and
(b) does not contain any untrue or misleading statement; and
(c) is otherwise a correct translation; and
(d) prominently displays the date of the translation; and
(e) states that it is a translation authorised by the operator; and
(f) otherwise complies with these rules.
5.2.5 Prospectus, checklist and any translations to be filed with registration application—all QFC schemes
(1) The person who is to become the operator of a collective investment
scheme established in the QFC must file with the application for
registration of the scheme under these rules—
(a) the original prospectus for the scheme; and
(b) a checklist prepared by the person listing all the statements and
information required by these rules and indicating where they
are in the original prospectus; and
(c) each translation of the original prospectus that has been prepared
by or for the person; and
(d) for each translation mentioned in paragraph (c)—a certificate by
the person who made the translation stating that the translation
is a correct translation of the original prospectus.
(2) If the person mentioned in subrule (1) (either before or after becoming
the initial operator of the scheme), or a person who is a later operator
of the scheme, prepares another translation of the original prospectus
or has another translation prepared, the person must immediately, but
within 1 business day after the day the translation is prepared, file
with the Regulatory Authority—
(a) the translation; and
Investor relations—QFC schemes Chapter 5 Prospectus requirements—QFC schemes Part 5.2
Rule 5.2.6
V9 Collective Investment Schemes Rules 2010 page 65 Effective: 15/Oct/20
(b) a certificate by the person who made the translation stating that
the translation is a correct translation of the original prospectus.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(3) The certificate of a person under subrule (1) (d) or (2) (b) must state,
in English, the person’s—
(a) full name and address; and
(b) qualifications for making the translation.
5.2.6 Revisions of prospectus etc—all QFC schemes
(1) The operator of a QFC scheme must keep the latest filed prospectus
under review.
(2) If the operator becomes aware of the happening of any fundamental
change affecting a statement or information required to be included
in the prospectus, the operator must—
(a) immediately revise the prospectus and immediately file a
revised or supplementary prospectus with the Regulatory
Authority; and
(b) if a translation of the latest filed prospectus has been filed with
the authority in a particular language—the operator must
immediately prepare, or arrange for the preparation of, a
translation of the revised or supplementary prospectus in that
language and immediately file the translation with the authority.
Note For what constitutes fundamental change, see definition in glossary and
rule 5.4.2.
(3) Without limiting subrules (1) and (2), the operator must, at least once
every year—
(a) review the latest filed prospectus, make any revisions necessary
and, whether or not revisions are necessary, immediately file a
prospectus or revised prospectus with the Regulatory Authority;
and
Chapter 5 Investor relations—QFC schemes Part 5.2 Prospectus requirements—QFC schemes Rule 5.2.6
page 66 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) if a translation of the latest filed prospectus has been filed with
the authority in a particular language—file with any revised or
supplementary prospectus filed under paragraph (a) a translation
of that prospectus in the same language.
(4) To remove any doubt, subrules (2) and (3) do not prevent the
operator—
(a) revising the latest filed prospectus at any other time; or
(b) preparing, or arranging for the preparation of, a translation or
revised translation of the latest filed prospectus in any language.
(5) If the operator revises the latest filed prospectus otherwise than under
subrule (2) or (3), the operator must immediately file a revised or
supplementary prospectus with the Regulatory Authority.
(6) If the operator prepares, or arranges for the preparation of, a
translation or revised translation of the latest filed prospectus
otherwise than under subrule (2) or (3), the operator must
immediately file the translation with the Regulatory Authority.
(7) A prospectus filed under this rule must be accompanied by a checklist
prepared by the operator listing all the statements and information
required by these rules and indicating where they are in the
prospectus.
(8) A translation of a prospectus filed under this rule must be
accompanied by a certificate signed by the person who made the
translation stating that the translation is a correct translation of the
prospectus.
(9) The certificate of a person under subrule (8) must state, in English,
the person’s—
(a) full name and address; and
(b) qualifications for making the translation.
Investor relations—QFC schemes Chapter 5 Prospectus requirements—QFC schemes Part 5.2
Rule 5.2.6
V9 Collective Investment Schemes Rules 2010 page 67 Effective: 15/Oct/20
(10) If, under this rule, the operator is required to do something
immediately, the operator must do the thing immediately, but within
1 business day after the day the requirement to do the thing arises.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
Chapter 5 Investor relations—QFC schemes Part 5.3 Prospectus responsibility—QFC schemes Rule 5.3.1
page 68 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 5.3 Prospectus responsibility—QFC schemes
5.3.1 Persons responsible for prospectus—all QFC schemes
(1) Each of the following persons is responsible for a QFC scheme’s
prospectus:
(a) the operator;
(b) each member (however described) of the governing body of the
operator;
Note Governing body is defined in the glossary.
(c) subject to subrules (2) and (3), each person who has accepted,
and is stated in the prospectus to have accepted, responsibility
for the prospectus or any part of it;
(d) subject to subrules (2) and (3), each person who is taken under
rule 5.3.2 (Responsibility for expert statements in prospectus—
all QFC schemes) to have accepted responsibility for part of the
prospectus;
(e) subject to subrules (2) and (3), each person not mentioned in
paragraphs (a) to (d) who has authorised, and is stated in the
prospectus to have authorised, the prospectus or any part of it.
(2) If a person accepts (or is taken under rule 5.3.2 to have accepted)
responsibility for, or authorises, only part of a prospectus, the person
is responsible only for that part of the prospectus.
(3) However, the person is responsible for that part of the prospectus only
if it is included in, or substantially in, the form and context in which
the person accepted responsibility for it, consented to its inclusion or
authorised it.
(4) This rule does not make a person responsible for a prospectus only
because the person gave advice about its contents, in a professional
capacity, to a person mentioned in subrule (1) (a) to (e).
Investor relations—QFC schemes Chapter 5 Prospectus responsibility—QFC schemes Part 5.3
Rule 5.3.2
V9 Collective Investment Schemes Rules 2010 page 69 Effective: 15/Oct/20
5.3.2 Responsibility for expert statements in prospectus—all QFC schemes
(1) For this rule, an expert is a person whose profession or reputation
gives authority to statements made by the person.
(2) For rule 5.3.1 (1) (d), an expert is taken to have accepted
responsibility for a part of a QFC scheme’s prospectus if—
(a) the part is a statement made by, or is based on a statement made
by, the expert; and
(b) the expert gave the operator written consent for the statement to
be included in the prospectus; and
(c) the prospectus states that the expert authorised the statement;
and
(d) the expert does not withdraw the consent, by written notice
given to the operator, before the prospectus is filed with the
Regulatory Authority.
(3) The operator must keep the following for at least 6 years after the day
the prospectus is last made available to a person eligible to invest in
the scheme:
(a) the expert’s consent;
(b) any written notice given to the operator withdrawing the
expert’s consent.
5.3.3 Liability for prospectus—all QFC schemes
(1) A person responsible under rule 5.3.1 (Persons responsible for
prospectus—all QFC schemes) for a prospectus is liable to pay
compensation to another person who acquires (or contracts to
acquire) units in the scheme for any loss or damage arising from—
(a) any untrue or misleading statement in the prospectus; or
(b) the omission from the prospectus of any matter required by these
rules to have been included in it.
Chapter 5 Investor relations—QFC schemes Part 5.3 Prospectus responsibility—QFC schemes Rule 5.3.4
page 70 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(2) However, if rule 5.3.1 (1) (c), (d) or (e) applies to the person, the
person is only liable to pay compensation in relation to a part of the
prospectus for which the person is responsible under rule 5.3.1 (2)
and (3).
(3) Also, this rule is subject to rule 5.3.4.
(4) To remove any doubt, this rule does not limit any liability that exists
apart from this rule.
(5) In this rule:
prospectus includes a translation of the prospectus prepared by or for
the operator.
5.3.4 Exceptions from liability for prospectus—all QFC schemes
(1) A person (other than the operator) is not liable under rule 5.3.3 to pay
compensation, in relation to a statement in, or omission from, a QFC
scheme’s prospectus, to another person who acquires units in the
scheme if—
(a) at the time the prospectus was filed with the Regulatory
Authority, the person believed on reasonable grounds, after
having made all inquiries that were reasonable—
(i) that the statement was true and not misleading; or
(ii) that the omitted matter was properly omitted; and
Note See defs acquire and prospectus in r (6).
(b) 1 or more of the following subparagraphs apply:
(i) the person continued in that belief until the units were
acquired;
(ii) the units were acquired before it was reasonably
practicable to bring a correction to the attention of
potential purchasers of the units;
Investor relations—QFC schemes Chapter 5 Prospectus responsibility—QFC schemes Part 5.3
Rule 5.3.4
V9 Collective Investment Schemes Rules 2010 page 71 Effective: 15/Oct/20
(iii) before the units were acquired, the person had already
taken all reasonable steps to ensure that a correction was
brought to the attention of potential purchasers of the units;
(iv) the person who acquired the units was not materially
influenced or affected by the statement or omission in
making the decision to invest.
(2) A person (the first person) is not liable under rule 5.3.3 to pay
compensation, in relation to a statement in a QFC scheme’s
prospectus, to another person who acquired units in the scheme if—
(a) the statement is a part of the prospectus for which a third person
(the expert) is taken, under rule 5.3.2 (Responsibility for expert
statements in prospectus—all QFC schemes), to have accepted
responsibility; and
(b) at the time the prospectus was filed with the Regulatory
Authority, the first person believed on reasonable grounds, after
having made all inquiries that were reasonable—
(i) that the expert was competent to make the statement; and
(ii) that the expert gave the operator written consent to include
the statement in the prospectus; and
(iii) that the expert had not withdrawn the consent; and
(iv) that the statement was included in, or substantially in, the
form and context in which the expert consented to its
inclusion; and
(c) 1 or more of the following subparagraphs apply:
(i) the first person continued in that belief until the units were
acquired;
(ii) the units were acquired before it was reasonably
practicable to bring a correction to the attention of
potential purchasers of the units;
Chapter 5 Investor relations—QFC schemes Part 5.3 Prospectus responsibility—QFC schemes Rule 5.3.4
page 72 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(iii) before the units were acquired, the first person had already
taken all reasonable steps to ensure that a correction was
brought to the attention of potential purchasers of the units;
(iv) the person who acquired the units was not materially
influenced by the statement in making the decision to
invest.
(3) For the application of subrule (1) (b) (iii) or (2) (c) (iii) in relation to
a person, it is sufficient if, before the units were acquired—
(a) the correction had been published in a way likely to bring it to
the attention of potential purchasers of the units; or
(b) the person took all reasonable steps to ensure that such a
correction was published and believed on reasonable grounds
the correction had been published.
(4) A person is not liable under rule 5.3.3 to pay compensation, in relation
to a statement in or omission from a QFC scheme’s prospectus, to
another person who acquired units in the scheme if the other person
knew, at the time of acquisition, that the statement was untrue or
misleading or of the omission.
(5) For this rule—
(a) a revised or supplementary prospectus is taken to be a different
prospectus from the original prospectus; and
(b) each revised or supplementary prospectus filed with the
Regulatory Authority is taken to be a different prospectus from
each other revised or supplementary prospectus filed with the
authority.
(6) In this rule:
acquire units includes contract to acquire them.
prospectus includes a translation of the prospectus prepared by or for
the operator.
Investor relations—QFC schemes Chapter 5 Unitholder approvals and notice—QFC schemes Part 5.4
Rule 5.4.1
V9 Collective Investment Schemes Rules 2010 page 73 Effective: 15/Oct/20
Part 5.4 Unitholder approvals and notice—QFC schemes
Division 5.4.A Unitholder approvals and notice—QFC qualified investor schemes
5.4.1 Changes requiring unitholder approval or notice—QFC qualified investor schemes
(1) Any proposed change or event that would reasonably be considered a
fundamental change in relation to a QFC qualified investor scheme
requires the prior approval of an ordinary resolution of the
unitholders.
(2) Any proposed change or event that would not reasonably be
considered a fundamental change in relation to a QFC qualified
investor scheme, but that would reasonably be considered a
significant change, requires the giving of reasonable notice to
unitholders to become effective.
(3) If a change mentioned in subrule (1) or (2) affects only a particular
subscheme or class of units, it is sufficient to comply with the subrule
only in relation to unitholders of the subscheme or class of units.
(4) For subrule (3), the provisions of these rules apply in relation to the
change as if—
(a) a reference to unitholders of the scheme were a reference to the
unitholders of the subscheme or class of units; and
(b) all other necessary changes were made.
(5) The operator of a QFC qualified investor scheme must ensure this
rule is complied with in relation to the scheme.
(6) If a fundamental change in relation to a QFC qualified investor
scheme happens, the operator must give the Regulatory Authority
Chapter 5 Investor relations—QFC schemes Part 5.4 Unitholder approvals and notice—QFC schemes Rule 5.4.2
page 74 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
written notice of the change not later than 21 days after the day the
change happens.
Note For what constitutes fundamental change, see definition in glossary and
rule 5.4.2.
Division 5.4.B Unitholder approvals and notice—QFC retail schemes
5.4.2 Fundamental changes requiring prior approval by unitholder meeting—QFC retail schemes
(1) The operator of a QFC retail scheme must, by way of a special
resolution, obtain prior approval from the unitholders for any
proposed change or event in relation to the scheme that is a
fundamental change.
Note Special resolution is defined in the glossary.
(2) For this rule, a fundamental change is a change or event—
(a) that changes the purpose or nature of the scheme; or
(b) that may materially prejudice a unitholder; or
(c) that changes the risk profile of the scheme; or
(d) that introduces any new type of payment out of scheme property.
Guidance on fundamental changes
1 Any change or event may be fundamental depending on its degree of
materiality and effect on the scheme and its unitholders. Consequently, the
operator will need to decide in each case whether a particular change is
fundamental in nature.
2 For rule 5.4.2 (2) (a) to (c), a fundamental change is likely to include any of
the following:
(a) any proposal for a scheme of arrangement;
(b) a change in the investment objectives, strategies or policy to achieve
capital growth from investment in one jurisdiction rather than another
jurisdiction;
(c) a change in the investment objectives, strategies or policy to achieve
capital growth from investments in fixed interest rather than investments
in equity;
Investor relations—QFC schemes Chapter 5 Unitholder approvals and notice—QFC schemes Part 5.4
Rule 5.4.3
V9 Collective Investment Schemes Rules 2010 page 75 Effective: 15/Oct/20
(d) a change in the investment objectives, strategies or policy to allow the
scheme to invest in derivatives as an investment strategy that increases
its volatility;
(e) a change to the characteristics of the scheme to distribute income
annually rather than monthly.
5.4.3 Significant changes requiring pre-event notification—QFC retail schemes
(1) The operator of a QFC retail scheme must give prior written notice of
not less than 60 days to unitholders of any proposed change or event
in relation to the scheme that is a significant change.
(2) For this rule, a significant change is a change or event that is not a
fundamental change under rule 5.4.2, but—
(a) affects a unitholder’s ability to exercise rights in relation to the
unitholder’s investment; or
(b) would reasonably be expected to cause the unitholder to
reconsider participation in the scheme; or
(c) results in any increased payments out of the scheme property to
the operator or an associated person for the operator; or
Note Associated person is defined in the glossary.
(d) materially increases other types of payments out of scheme
property.
Guidance on significant changes
1 Any change or event may be significant depending on its degree of materiality
and effect on the scheme and its unitholders. Consequently, the operator will
need to decide in each case whether a particular change is significant in nature.
2 For rule 5.4.3, a significant change is likely to include any of the following:
(a) a change in how the scheme property is valued;
(b) a change in the method of price publication;
(c) a change in the operator’s operational policy (for example, allocation of
payments policy).
Chapter 5 Investor relations—QFC schemes Part 5.4 Unitholder approvals and notice—QFC schemes Rule 5.4.4
page 76 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
5.4.4 Notifiable changes—QFC retail schemes
(1) The operator of a QFC retail scheme must notify unitholders in an
appropriate way, and within a reasonable time, of any change or event
in relation to the scheme that is a notifiable change.
(2) For this rule, a notifiable change is a change or event, other than a
fundamental change under rule 5.4.2 or a significant change under
rule 5.4.3, that is reasonably likely to affect, or has affected, the
scheme or its operation unless the operator decides that the change or
event is insignificant.
Guidance on notifiable changes
1 The circumstances causing a notifiable change may or may not be within the
control of the operator.
2 For rule 5.4.4, a notifiable change is likely to include any of the following:
(a) a change of named investment manager if the scheme has been marketed
on the basis of the manager’s involvement;
(b) a change of named investment adviser if the scheme has been marketed
on the basis of the adviser’s involvement;
(c) a significant political event that affects the scheme or its operation;
(d) a change on the time of the valuation point;
(e) a change of independent entity;
(f) a change in the scheme’s name.
3 The appropriate way and reasonable time for notification would depend on the
nature of the change or event. Consequently, the operator will need to assess
each change or event individually.
4 An appropriate way for notification could include any or all the following:
(a) sending a notice to unitholders;
(b) publishing the information on a website;
(c) including the information in the next annual report of the scheme.
Investor relations—QFC schemes Chapter 5 Unitholder meetings—QFC schemes Part 5.5
Rule 5.5.1
V9 Collective Investment Schemes Rules 2010 page 77 Effective: 15/Oct/20
Part 5.5 Unitholder meetings—QFC schemes
Division 5.5.A Unitholder meetings—QFC qualified investor schemes
5.5.1 Unitholder meetings—QFC qualified investor schemes
(1) The constitutional document of a QFC qualified investor scheme
must set out details of the procedures for the calling and conducting
of meetings, and for resolutions, of unitholders.
(2) The procedures must be reasonable and fair as between the parties.
(3) The operator must record minutes of all proceedings to which
rule 5.4.1 (Changes requiring unitholder approval or notice—QFC
qualified investor schemes) or this rule apply.
(4) The operator must keep the minutes for at least for 6 years after the
day they are made.
Division 5.5.B Unitholder meetings—QFC retail schemes
5.5.2 Special meaning of unitholder in div 5.5.B—QFC retail schemes
(1) A reference in this division to a unitholder of a QFC retail scheme in
relation to a meeting is a reference to a unitholder of the scheme as at
a cut-off date for the meeting selected by—
(a) if the independent entity calls the meeting—the independent
entity; and
(b) in any other case—the operator.
(2) The date selected by the independent entity or operator must be a
reasonable time before notices of the meeting are sent out.
Chapter 5 Investor relations—QFC schemes Part 5.5 Unitholder meetings—QFC schemes Rule 5.5.3
page 78 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
5.5.3 Application of div 5.5.B to class meetings—QFC retail schemes
(1) This division applies to a class meeting for a class of units in a QFC
retail scheme as if—
(a) a reference to a general meeting of the scheme were a reference
to the class meeting; and
(b) a reference to units were a reference to units in the class; and
(c) a reference to unitholders were a reference to unitholders of
units in the class; and
(d) a reference to prices of units were a reference to prices of units
in the class; and
(e) all other necessary changes were made.
Note Class is defined in the glossary.
(2) In this rule:
class meeting, for a class of units in the scheme, means a separate
meeting of unitholders of that class of units.
5.5.4 General meetings of unitholders—QFC retail schemes
(1) The operator or independent entity of a QFC retail scheme may call
a general meeting of unitholders at any time.
(2) The unitholders may, at any time, request the calling of a general
meeting of unitholders.
(3) The request must—
(a) state the object of the meeting; and
(b) be dated; and
(c) be signed by unitholders who, at that date, are registered as the
unitholders of units representing not less than the required
percentage in value of all the units then in issue; and
(d) be given to the operator or independent entity.
Investor relations—QFC schemes Chapter 5 Unitholder meetings—QFC schemes Part 5.5
Rule 5.5.5
V9 Collective Investment Schemes Rules 2010 page 79 Effective: 15/Oct/20
(4) If the operator or independent entity is given a request for a general
meeting of unitholders that complies with subrule (3), the operator or
independent entity must immediately call a general meeting.
(5) The date fixed for the general meeting called under subrule (4) must
not be later than 8 weeks after the day the request is given to the
operator or independent entity.
(6) In this rule:
required percentage means—
(a) 10%; or
(b) if the constitutional document provides for a lower percentage—
that percentage.
5.5.5 Notice of general meetings of unitholders—QFC retail schemes
(1) This rule applies if the operator or independent entity of a QFC retail
scheme (the initiating entity) decides to call a general meeting to
unitholders.
(2) The initiating entity must give unitholders notice of the meeting.
(3) The notice must—
(a) be given to each unitholder at least 14 days before the date fixed
for the meeting; and
(b) state the place, date and time of the meeting; and
(c) state the terms of the resolutions to be proposed.
Note Rule 5.5.10 (3) also requires a notice to contain a reasonably prominent
statement that a unitholder may appoint a proxy if the unitholder is
entitled to attend and vote.
(4) If the meeting is adjourned, the initiating entity must give unitholders
notice of the adjourned (or further adjourned) meeting.
Chapter 5 Investor relations—QFC schemes Part 5.5 Unitholder meetings—QFC schemes Rule 5.5.6
page 80 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(5) Notice of an adjourned meeting (including a further adjourned
meeting) must—
(a) be given to each unitholder at least 14 days before the date of
the adjourned meeting; and
(b) state the place, date and time of the adjourned meeting; and
(c) state that, although 2 unitholders present in person or by proxy
are required for a quorum at the adjourned meeting, this may be
reduced to 1 if a quorum is not present after a reasonable time
from the time fixed for the start of the meeting.
Note See r 5.5.6 (Quorum for unitholder meetings—QFC retail
schemes).
(6) In working out the 14-day period for subrule (3) (a) or (5) (a), the day
the notice is given and the day of the meeting are included.
(7) If the operator is the initiating entity, the operator must give a copy
of each notice under subrule (2) or (4) to the independent entity not
later than the start of the 14-day period mentioned in subrule (3) (a)
or (5) (a).
(8) If the independent entity is the initiating entity, the independent entity
must give a copy of each notice under subrule (2) or (4) to the operator
not later than the start of the 14-day period mentioned in subrule (3)
(a) or (5) (a).
(9) The accidental failure to give notice to, or the non-receipt of notice
by, any unitholder does not invalidate the proceedings at any meeting.
5.5.6 Quorum for unitholder meetings—QFC retail schemes
(1) The quorum required to conduct business at a meeting of unitholders
of a QFC retail scheme is 2 unitholders, present in person or by proxy.
(2) If a quorum is not present after a reasonable time from the time fixed
for the start of the meeting, the meeting—
(a) if called at the request of unitholders—must be dissolved; and
Investor relations—QFC schemes Chapter 5 Unitholder meetings—QFC schemes Part 5.5
Rule 5.5.7
V9 Collective Investment Schemes Rules 2010 page 81 Effective: 15/Oct/20
(b) in any other case—must be adjourned to—
(i) a day and time that is at least 7 days after the day and time
of the meeting; and
(ii) a place to be appointed by the chair of the meeting.
(3) If, at an adjourned meeting under subrule (2) (b), a quorum is not
present after a reasonable time from the time fixed for the start of the
meeting, a single person who is entitled to be counted in a quorum,
and is present at the meeting, is taken to be a quorum.
5.5.7 Resolutions at unitholder meetings—QFC retail schemes
(1) Unless a special resolution is required or permitted by these rules, any
resolution of unitholders of a QFC retail scheme is passed by a simple
majority of the votes validly cast at a general meeting of unitholders.
Note Special resolution is defined in the glossary.
(2) But, if the votes are equal, the chair of the meeting is entitled to a
casting vote.
(3) If a resolution (including a special resolution) is required to conduct
business at a meeting of unitholders, and every unitholder is
prohibited under rule 5.5.8 from voting—
(a) it is not necessary to call a meeting of unitholders; and
(b) a resolution may, with the prior written agreement of the
independent entity, instead be passed with the written consent of
the unitholders representing 50% or more (or, for a special
resolution, 75% or more) of the units in issue.
5.5.8 Voting rights at unitholder meetings—QFC retail schemes
(1) On a show of hands at a general meeting of unitholders of a QFC
retail scheme, every unitholder of the scheme who is present in person
has 1 vote.
Chapter 5 Investor relations—QFC schemes Part 5.5 Unitholder meetings—QFC schemes Rule 5.5.8
page 82 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(2) On a poll, the following provisions apply:
(a) votes may be given in person, by proxy or in another way
permitted by the constitutional document;
(b) the voting rights for each unit are calculated in accordance with
the following formula:
where:
A is the total number of the voting rights given by all the units
in issue at the cut-off date selected by the operator under rule
5.5.2 (Special meaning of unitholder in div 5.5.B—QFC retail
schemes).
B is the price of the unit.
C is the total of the prices of all the units in issue at the cut-off
date selected by the operator under rule 5.5.2;
Note See r (6) for the treatment of the operator’s units.
(c) a unitholder need not use all the unitholder’s votes or cast all the
unitholder’s votes in the same way.
Note Price and issue are defined in the glossary.
(3) For joint unitholders, the vote of the most senior unitholder who
votes, whether in person or by proxy, must be accepted to the
exclusion of the votes of the other joint unitholders. For this purpose
seniority is decided by the order in which the names are recorded in
the unitholder register.
(4) The operator cannot be counted in the quorum of any meeting of the
scheme, and neither the operator nor any associate of the operator
may vote at any meeting of the scheme.
Note Associate is defined in the glossary.
C
BA
Investor relations—QFC schemes Chapter 5 Unitholder meetings—QFC schemes Part 5.5
Rule 5.5.9
V9 Collective Investment Schemes Rules 2010 page 83 Effective: 15/Oct/20
(5) The prohibition in subrule (4) against voting at any meeting of the
scheme does not apply in relation to units held on behalf of, or jointly,
with a person if—
(a) the person would be entitled to vote if the person were the
registered unitholder; and
(b) the operator or associate of the operator has received voting
instructions from the person.
(6) For this division, units held, or treated as held, by the operator must
not be taken to be in issue unless subrule (5) applies to them.
5.5.9 Right to demand poll at unitholder meetings—QFC retail schemes
(1) A resolution put to the vote at a general meeting of unitholders of a
QFC retail scheme must be decided on a show of hands unless a poll
is demanded by—
(a) the chair of the meeting; or
(b) at least 2 unitholders; or
(c) the independent entity.
(2) The poll may be demanded only before or on the declaration of the
result of the show of hands.
(3) Unless a poll is demanded in accordance with this rule, a declaration
by the chair of the meeting about the result of a resolution is
conclusive evidence of the result.
5.5.10 Proxies at unitholder meetings—QFC retail schemes
(1) A unitholder of a QFC retail scheme may appoint another person to
attend a general meeting of unitholders of the scheme and vote in the
unitholder’s place.
(2) Unless the constitutional document provides otherwise, a unitholder
of a QFC retail scheme may appoint more than 1 proxy to attend on
the same occasion but a proxy may vote only on a poll.
Chapter 5 Investor relations—QFC schemes Part 5.5 Unitholder meetings—QFC schemes Rule 5.5.11
page 84 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(3) Every notice calling a meeting of unitholders of a QFC retail scheme
must contain a reasonably prominent statement that a unitholder may
appoint a proxy if the unitholder is entitled to attend and vote.
(4) Any document relating to the appointment of a proxy must not be
required to be received more than 48 hours before the time fixed for
the start of the meeting or adjourned meeting.
5.5.11 Chair, adjournment and minutes of unitholder meetings—QFC retail schemes
(1) A meeting of unitholders of a QFC retail scheme must have a chair
for the meeting who is nominated by the independent entity.
(2) If the chair is not present after a reasonable time from the time fixed
for the start of the meeting, the unitholders present must choose a
unitholder present to be the chair of the meeting.
(3) The chair of the meeting may adjourn the meeting from time to time,
and from place to place, if a quorum is present at the meeting and the
meeting agrees.
(4) The chair of the meeting must adjourn the meeting from time to time,
and from place to place, if directed to do so by the meeting.
(5) Business must not be transacted at any adjourned meeting unless it
could have been lawfully transacted at the original meeting.
(6) The operator must ensure that—
(a) minutes of all resolutions and proceedings at every meeting of
unitholders are made and kept for at least 6 years after the day
of the meeting; and
(b) any minute under paragraph (a) is signed by the chair of the
meeting.
(7) Any minute mentioned in subrule (6) (b) is conclusive evidence of
the matters stated in it.
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.1
V9 Collective Investment Schemes Rules 2010 page 85 Effective: 15/Oct/20
Part 5.6 Reports, accounts and auditors—QFC schemes
Division 5.6.A Accounting standards and auditors—all QFC schemes
5.6.1 Accounting standards—all QFC schemes
(1) The operator of a QFC scheme must prepare and keep the scheme’s
financial accounts and statements in accordance with IFRS,
US GAAP or other accounting standards approved in writing by the
Regulatory Authority.
(1A) If the operator decides to prepare and keep the financial accounts and
statements in accordance with a standard other than the one it has
previously used, it must notify the authority in writing before
beginning to do so.
(2) If the scheme is an Islamic fund, the operator must prepare and keep
all financial accounts and statements in accordance with the
accounting standards of AAOIFI FAS 14.
Note Islamic fund is defined in r 1.3.11. AAOIFI is defined in the glossary.
(3) If the operator of an umbrella scheme operates 1 or more subschemes
that are Islamic funds, it must prepare and keep all financial accounts
and statements in accordance with IFRS, as supplemented by
AAOIFI FAS 14.
Note 1 Umbrella scheme and subscheme are defined in r 1.2.11.
Note 2 AAOIFI FAS 14 sets out the accounting rules for conventional
institutions that offer Islamic financial services.
(4) In this rule:
IFRS means International Financial Reporting Standards.
US GAAP means generally accepted accounting principles in the
United States of America.
Chapter 5 Investor relations—QFC schemes Part 5.6 Reports, accounts and auditors—QFC schemes Rule 5.6.2
page 86 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
5.6.2 Appointment and removal of auditors etc—all QFC schemes
(1) The operator of a QFC scheme must ensure that there is an auditor of
the scheme at all times, and that the auditor is a QFC approved
auditor.
(2) The operator of a QFC scheme may, from time to time, appoint a QFC
approved auditor as auditor of the scheme.
(3) The audit fees of the auditor are as decided by the operator.
(4) The operator may remove the auditor at any time.
(5) The operator may exercise a power under subrule (2), (3) or (4) only
with the independent entity’s approval.
(6) The power under subrule (4) has effect despite anything in any
agreement between the auditor and all or any of the following:
(a) the operator;
(b) the independent entity;
(c) the scheme.
(7) GENE, section 9.7 (Auditors) applies to the appointment and removal
of the auditor of the QFC scheme as if the scheme were an authorised
firm.
Note Authorised firm is defined in the glossary.
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.3
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Division 5.6.B Reports and accounts—QFC qualified investor schemes
5.6.3 Reports and accounts generally—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must prepare a
report for each annual accounting period and half-yearly accounting
period in accordance with this division.
Note Annual accounting period and half-yearly accounting period are
defined in the glossary.
(2) However if the first annual accounting period is less than 12 months,
a half-yearly report need not be prepared for that period.
(3) A report for an annual accounting period must be prepared within
4 months after the day the period ends, and a report for a half-yearly
accounting period must be prepared within 3 months after the day the
period ends.
(4) The operator must give a copy of an annual or half-yearly report free
of charge to any unitholder on request.
(5) If a person eligible to invest in the scheme asks for a copy of the latest
annual or half-yearly report, the operator must give a copy free of
charge to the person before any sale (or further sale) of units to the
person is concluded.
(6) The operator must give a copy of each annual and half-yearly report
to the Regulatory Authority within 21 days after the day the report is
prepared.
(7) If the scheme is an umbrella scheme, any annual report given to a
unitholder or other person under subrule (4) or (5) may be a report
prepared under rule 5.6.4 (3) for the relevant subscheme.
(8) However, the operator must also give the unitholder or other person
a copy of the annual report prepared under rule 5.6.4 (2) for the
scheme as a whole if the unitholder or other person asks for it.
Chapter 5 Investor relations—QFC schemes Part 5.6 Reports, accounts and auditors—QFC schemes Rule 5.6.4
page 88 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
5.6.4 Contents of annual reports—QFC qualified investor schemes
(1) An annual report for a QFC qualified investor scheme other than a
QFC umbrella scheme must contain the following:
(a) the full audited accounts for the annual accounting period;
(b) the operator’s report for the period in accordance with rule 5.6.6
(Operator’s reports—QFC qualified investor schemes);
(c) the independent entity’s report for the period in accordance with
rule 5.6.7 (Independent entity’s reports—QFC qualified
investor schemes);
(d) the auditor’s report for the period in accordance with rule 5.6.8
(Auditor’s reports—QFC qualified investor schemes).
Note See also r 5.1.5 (Transactions with affected persons—details required for
QFC scheme’s annual reports).
(2) An annual report for a QFC qualified investor scheme that is an
umbrella scheme must be prepared for the scheme as a whole and
must contain the following:
(a) for each subscheme—the full audited accounts for the
subscheme for the annual accounting period and the operator’s
report for the subscheme for the period in accordance with
rule 5.6.6;
(b) an aggregation of all the accounts required by paragraph (a);
(c) the independent entity’s report for the scheme for the period in
accordance with rule 5.6.7;
(d) the auditor’s report for the scheme for the period in accordance
with rule 5.6.8.
(3) If the scheme is an umbrella scheme, the operator may, in addition to
complying with subrule (2), prepare a further annual report for any 1
or more individual subschemes.
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.5
V9 Collective Investment Schemes Rules 2010 page 89 Effective: 15/Oct/20
(4) A report under subrule (3) for a subscheme must contain the
following:
(a) the full audited accounts for the subscheme for the annual
accounting period;
(b) the operator’s report for the subscheme for the period in
accordance with rule 5.6.6;
(c) the independent entity’s report for the scheme for the period in
accordance with rule 5.6.7;
(d) the auditor’s report for the scheme for the period in accordance
with rule 5.6.8.
(5) The operator of a QFC qualified investor scheme must ensure that the
accounts mentioned in subrule (1) (a), (2) (a) and (4) (a) give a true
and fair view of—
(a) the net income and the net gains and losses on the scheme
property of the scheme (or subscheme) for the annual
accounting period; and
(b) the financial position of the scheme (or subscheme) as at the end
of the period.
5.6.5 Contents of half-yearly reports—QFC qualified investor schemes
(1) A half-yearly report for a QFC qualified investor scheme, or a
subscheme of a QFC umbrella scheme, must contain—
(a) the full accounts for the half-yearly accounting period; and
(b) the operator’s report for the period in accordance with rule 5.6.6.
(2) If the scheme is an umbrella scheme, the operator may choose
whether the half-yearly report is prepared for the scheme as a whole,
each individual subscheme, or both.
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page 90 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
5.6.6 Operator’s reports—QFC qualified investor schemes
A report of the operator of a QFC qualified investor scheme for a
period must include the following:
(a) a review of the investment activities of the scheme (or
subscheme) during the period against the prospectus applying to
the period;
(b) particulars of any fundamental or significant change in relation
to the scheme (or subscheme) since the date of the operator’s
last report;
(c) any other information that would enable unitholders to make an
informed judgment on the development of the activities of the
scheme (or subscheme) during the period and the results of those
activities as at the end of the period.
5.6.7 Independent entity’s reports—QFC qualified investor schemes
(1) The independent entity of a QFC qualified investor scheme must
make an annual report to the unitholders.
(2) The report for an annual accounting period must include the
following:
(a) a description, which may be in summary form, of the functions
of the independent entity under these rules;
(b) a statement whether, in any material respect, the provisions
mentioned in rule 4.2.3 (1) (Oversight functions of independent
entity—all QFC schemes) have not been complied with during
the period;
(c) a statement whether, in any material respect, the investment and
borrowing powers and restrictions applying to the scheme have
been exceeded during the period.
(3) The independent entity must give the report to the operator for
inclusion in the annual report prepared under rule 5.6.3 (Reports and
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.8
V9 Collective Investment Schemes Rules 2010 page 91 Effective: 15/Oct/20
accounts generally—QFC qualified investor schemes) for the annual
accounting period.
5.6.8 Auditor’s reports—QFC qualified investor schemes
The operator of a QFC qualified investor scheme must ensure that the
report of the auditor to the unitholders for an annual accounting
period includes the following statements:
(a) whether, in the auditor’s opinion, the accounts have been
properly prepared in accordance with these rules and the
constitutional document;
(b) whether, in the auditor’s opinion, the accounts give a true and
fair view of—
(i) the net income and the net gains or losses of the scheme
property for the period; and
(ii) the financial position of the scheme as at the end of the
period;
(c) whether the auditor is of the opinion that proper accounting
records for the scheme have been kept and whether the accounts
are in agreement with the accounting records;
(d) whether the auditor has been given all the information and
explanations that, to the best of the auditor’s knowledge and
belief, are necessary for the purposes of the audit;
(e) whether the auditor is of the opinion that the information given
in the operator’s report for the period is consistent with the
accounts.
Chapter 5 Investor relations—QFC schemes Part 5.6 Reports, accounts and auditors—QFC schemes Rule 5.6.9
page 92 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Division 5.6.C Reports and accounts—QFC retail schemes
5.6.9 Preparation of long and short reports—QFC retail schemes
(1) The operator of a QFC retail scheme must prepare:
(a) a long report for each annual accounting period; and
(b) a short report for each half-yearly accounting period that does
not end at the end of an annual accounting period.
(2) The long report and short report must be prepared in accordance with
this Division.
Note Annual accounting period and half-yearly accounting period are
defined in the glossary.
(3) For a QFC retail scheme that is an umbrella scheme, the operator must
prepare a short report for each subscheme but need not prepare a short
report for the QFC retail scheme as a whole.
5.6.10 Contents of short reports—QFC retail schemes
(1) The short report for a QFC retail scheme (or, for a QFC retail scheme
that is an umbrella scheme, a subscheme) for a period must contain
the following for the period:
(a) the name of the scheme (or subscheme), its investment
objectives, strategies and policy, a brief assessment of its risk
profile, and the name and address of the operator;
(b) a review of the scheme’s (or subscheme’s) investment activities
and investment performance during the period;
(c) a performance record consistent with rule 5.6.14 (Comparative
tables—QFC retail schemes) that enables a unitholder to put into
context the results of the investment activities of the scheme (or
subscheme) during the period;
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.10
V9 Collective Investment Schemes Rules 2010 page 93 Effective: 15/Oct/20
(d) sufficient information to enable unitholders to form a view of
where the portfolio is invested at the end of the period and the
extent to which that has changed over the period;
(e) any other significant information that would reasonably enable
unitholders to make an informed judgment on the activities of
the scheme (or subscheme) during the period and the results of
those activities at the end of the period;
(f) a statement that the latest long report is available on request.
Note See also r 5.1.5 (Transactions with affected persons—details required for
QFC scheme’s annual reports).
(2) Without limiting subrule (1) (d) and (e), the short report must include
the following for the relevant period:
(a) particulars of any change or event in relation to the scheme
during the period that is a fundamental change under rule 5.4.2
(Fundamental changes requiring prior approval by unitholder
meeting—QFC retail schemes);
(b) particulars of any change or event in relation to the scheme
during the period that is a significant change under rule 5.4.3
(Significant changes requiring pre-event notification—QFC
retail schemes), if the change or event affects the unitholders’
ability to make an informed judgment on the activities of the
scheme (or subscheme);
(c) particulars of any other developments in relation to the
investment objectives, strategies and policy of the scheme (or
subscheme) or the instruments used by it during the period;
(d) the total expense ratio;
(e) particulars of any qualification of the reports of the auditor and
independent entity;
(f) particulars of any income or distribution relating to the period.
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(3) The operator must take reasonable steps to ensure that the short report
is structured and written in such a way that it can be easily understood
by the average investor.
(4) The short report must be in the form of a separate stand-alone
document and must not include any extraneous material.
Note Document is defined in the glossary.
(5) The inclusion in a single document of the short reports of 2 or more
QFC retail schemes with the same operator (or 2 or more subschemes
of a QFC retail scheme that is an umbrella scheme) does not breach
subrule (4) if each of the reports is discrete and easily identifiable.
(6) The operator must ensure that the information given in the short
report is consistent with the long report for the relevant accounting
period prepared under rule 5.6.11 (Contents of annual long reports—
QFC retail schemes) or rule 5.6.12 (Contents of half-yearly long
report—QFC retail schemes).
5.6.11 Contents of annual long reports—QFC retail schemes
(1) An annual long report for a QFC retail scheme other than an umbrella
scheme must contain the following:
(a) the full audited accounts for the annual accounting period;
(b) the operator’s report for the period in accordance with rule
5.6.13 (Operator’s reports—QFC retail schemes);
(c) the comparative table for the period in accordance with rule
5.6.14 (Comparative tables—QFC retail schemes);
(d) the independent entity’s report for the period in accordance with
rule 5.6.15 (Independent entity’s reports—QFC retail schemes);
(e) the auditor’s report for the period in accordance with rule 5.6.16
(Auditor’s reports—QFC retail schemes).
Note See also r 5.1.5 (Transactions with affected persons—details required for
QFC scheme’s annual reports).
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.11
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(2) An annual long report for a QFC retail scheme that is an umbrella
scheme must be prepared for the scheme as a whole and must contain
the following:
(a) for each subscheme—the following:
(i) the full audited accounts for the subscheme for the annual
accounting period;
(ii) the operator’s report for the subscheme for the period in
accordance with rule 5.6.13;
(iii) the comparative table for the subscheme for the period in
accordance with rule 5.6.14;
(b) the aggregation of all the accounts required by paragraph (a) (i);
(c) the independent entity’s report for the scheme for the period in
accordance with rule 5.6.15;
(d) the auditor’s report for the scheme for the period in accordance
with rule 5.6.16.
(3) If the scheme is an umbrella scheme, the operator may, in addition to
complying with subrule (2), prepare a further annual long report for
any 1 or more individual subschemes of the scheme.
(4) A report under subrule (3) for a subscheme must contain the
following:
(a) the full accounts for the subscheme for the annual accounting
period;
(b) the operator’s report for the subscheme for the period in
accordance with rule 5.6.13;
(c) the comparative table for the subscheme for the period in
accordance with rule 5.6.14;
(d) the independent entity’s report for the scheme for the period in
accordance with rule 5.6.15;
(e) the auditor’s report for the scheme for the period in accordance
with rule 5.6.16.
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(5) The operator of a QFC retail scheme must ensure that the accounts
mentioned in subrule (1) (a), (2) (a) (i) and (4) (a) give a true and fair
view of—
(a) the net income and the net gains and losses on the scheme
property of the scheme (or subscheme) for the annual
accounting period; and
(b) the financial position of the scheme (or subscheme) as at the end
of the period.
5.6.12 Contents of half-yearly long reports—QFC retail schemes
(1) A half-yearly long report for a QFC retail scheme that is not an
umbrella scheme must contain—
(a) the full accounts for the half-yearly accounting period; and
(b) the operator’s report for the period in accordance with rule
5.6.13 (Operator’s reports—QFC retail schemes).
(2) A half-yearly long report for a QFC retail scheme that is an umbrella
scheme must be prepared for the scheme as a whole and must contain
the following:
(a) for each subscheme—the following:
(i) the full accounts for the subscheme for the half-yearly
accounting period;
(ii) the operator’s report for the subscheme for the period in
accordance with rule 5.6.13;
(b) the aggregation of all the accounts required by paragraph (a) (i).
(3) The operator of a QFC retail scheme that is an umbrella scheme may,
in addition to complying with subrule (2), prepare a further half-
yearly long report for any 1 or more individual subschemes.
(4) A report under subrule (3) for a subscheme must contain the full
accounts, and the operator’s report, that would be required by subrule
(1) if the subscheme were a separate QFC retail scheme.
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.13
V9 Collective Investment Schemes Rules 2010 page 97 Effective: 15/Oct/20
5.6.13 Operator’s reports—QFC retail schemes
A report of the operator of a QFC retail scheme must include the
following:
(a) the names and addresses of the following:
(i) the operator;
(ii) the independent entity;
(iii) any investment adviser;
(iv) the auditor;
(b) for a CIC—the names of the directors of the CIC;
(c) for a CIP—the name of the general partner of the CIP;
(d) a statement that the scheme is registered under these rules;
(e) a statement that the unitholders are not liable for—
(i) the debts or other liabilities of the scheme; or
(ii) acts or omissions of the operator or independent entity;
(f) the scheme’s investment objectives, strategies and policy;
(g) a review of the investment activities during the period to which
the report relates;
(h) particulars of any change or event in relation to the scheme
during the period that is a fundamental change under rule 5.4.2
(Fundamental changes requiring prior approval by unitholder
meeting—QFC retail schemes);
(i) particulars of any change or event in relation to the scheme
during the period that is a significant change under rule 5.4.3
(Significant changes requiring pre-event notification—QFC
retail schemes), if the change or event affects the unitholders’
ability to make an informed judgment on the activities of the
scheme (or subscheme);
Chapter 5 Investor relations—QFC schemes Part 5.6 Reports, accounts and auditors—QFC schemes Rule 5.6.13
page 98 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(j) for a scheme that invests a substantial part of the scheme
property in other schemes—a statement of the maximum
proportion of management fees charged to the scheme itself and
to other schemes in which it invests;
(k) any other information that would enable unitholders to make an
informed judgment on the development of the scheme’s
activities during the period and the results of the schemes
activities as at the end of that period;
(l) for a report on an umbrella scheme prepared in accordance with
rule 5.6.11 (2) (Contents of annual long reports—QFC retail
schemes) or rule 5.6.12 (2) (Contents of half-yearly long
reports—QFC retail schemes)—
(i) for a CIC—a statement to the effect that, as a subscheme
is not a legal entity, if the assets attributable to any
subscheme were insufficient to meet the liabilities
attributable to it, the shortfall might have to be met out of
the assets attributable to 1 or more other subschemes of the
CIC; and
(ii) for each subscheme—the information mentioned in
paragraphs (a) to (j) if it would differ from the information
given for the umbrella scheme as a whole;
(m) for a report on an individual subscheme of an umbrella scheme
prepared in accordance with rule 5.6.11 (3) or rule 5.6.12 (3)—
(i) for a CIC—a statement corresponding to that required by
paragraph (l) (i) making it clear that, if the liability relates
to another subscheme of the umbrella scheme, the shortfall
(or any part of it) might have to be met out of the assets of
the subscheme to which the report relates; and
(ii) a statement that the latest long report prepared for the
scheme as a whole is available on request.
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.14
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5.6.14 Comparative tables—QFC retail schemes
(1) The comparative table required by rule 5.6.11 (1) (c) or (4) (c)
(Contents of annual long reports—QFC retail schemes) must set out
the following:
(a) a performance record over the last 5 years (or, if the scheme has
not been in existence for 5 years, the years in which it has been
in existence) showing—
(i) the highest and the lowest price of a unit in each class in
issue during each of those years;
(ii) the net income distributed (or, for accumulation units,
allocated) for a unit in each class in issue during each of
those years, taking into account any subdivision or
consolidation of units that happened during those years;
Note Year and accumulation unit are defined in the glossary.
(b) as at the end of the last 3 annual accounting periods (or, if the
scheme has had less than 3 annual accounting periods, all of the
scheme’s annual accounting periods), the following:
(i) the net asset value;
(ii) the net asset value per unit;
(iii) the number of units in issue of each class;
(iv) the price per unit in each class.
Note Net asset value, net asset value per unit and price are defined in
the glossary.
(2) If, in the period covered by the table—
(a) the scheme has been the subject of a change or event (for
example, a scheme of arrangement) having a material effect on
the size of the scheme, but excluding any issue or redemption of
units for cash; or
Note Scheme of arrangement is defined in the glossary.
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(b) there have been changes in the scheme’s investment objectives,
strategies or policy;
the table must include an indication, related in the body of the table
to the relevant year in the table, of the date of the change or event and
a brief description of its nature.
5.6.15 Independent entity’s reports—QFC retail schemes
(1) The independent entity of a QFC retail scheme must make an annual
report to the unitholders.
(2) The report for an annual accounting period must include the
following:
(a) a description, which may be in summary form, of the functions
of the independent entity under these rules;
(b) a statement whether, in any material respect, any of the
following matters have not been carried out during the period in
accordance with these rules or, if applicable, the constitutional
document:
(i) the sale, issue and redemption of units;
(ii) the calculation of the price of units;
(iii) the application of the scheme’s income;
(c) a statement whether, in any material respect, the investment and
borrowing powers and restrictions applying to the scheme have
been exceeded during the period.
5.6.16 Auditor’s reports—QFC retail schemes
The operator of a QFC retail scheme must ensure that the report of
the auditor to the unitholders for an annual accounting period includes
the following statements:
(a) whether, in the auditor’s opinion, the accounts have been
properly prepared in accordance with these rules and the
constitutional document;
Investor relations—QFC schemes Chapter 5 Reports, accounts and auditors—QFC schemes Part 5.6
Rule 5.6.17
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(b) whether, in the auditor’s opinion, the accounts give a true and
fair view of—
(i) the net revenue, and the net capital gains or losses on the
scheme property, for the period; and
(ii) the financial position of the scheme as at the end of the
period;
(c) whether the auditor is of the opinion that proper accounting
records for the scheme have been kept and whether the accounts
are in agreement with those records;
(d) whether the auditor has been given all the information and
explanations that, to the best of the auditor’s knowledge and
belief, are necessary for the purpose of the audit;
(e) whether the auditor is of the opinion that the information given
in the operator’s report for the period is consistent with the
accounts.
5.6.17 Provision of short reports—QFC retail schemes
(1) Within 4 months after the end of each annual accounting period and
within 3 months after the end of each half-yearly accounting period,
the operator of a QFC retail scheme must send a copy of the short
report for the period prepared in accordance with rule 5.6.10
(Contents of short reports—QFC retail schemes) to—
(a) each unitholder (or to the first named of joint unitholders)
entered in or entitled to be entered in the unitholder register at
the close of business on the last day of the accounting period;
and
(b) any other person on request.
Note Annual accounting period, half-yearly accounting period and month
are defined in the glossary.
(2) Unitholders of a QFC retail scheme that is an umbrella scheme must
be sent a short report for the relevant period for the particular
subscheme in which they hold units.
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(3) However, a unitholder of a subscheme must also be provided with the
long report for the period for the umbrella scheme on request.
(4) A report provided under this rule must be provided free of charge.
5.6.18 Publication and availability of annual and half-yearly long reports—QFC retail schemes
(1) Within 4 months after the end of each annual accounting period and
3 months after the end of each half-yearly accounting period, the
operator of a QFC retail scheme must publish and make available the
long report for the period prepared in accordance with rule 5.6.11
(Contents of annual long reports—QFC retail schemes) or rule 5.6.12
(Contents of half-yearly long reports—QFC retail schemes).
Note Annual accounting period, half-yearly accounting period and month
are defined in the glossary.
(2) The long report must—
(a) be given free of charge to any person on request; and
(b) be available in English, and any other language in which they
have been published, for inspection by the public free of charge
during ordinary office hours at a place in the QFC; and
(c) be given to the Regulatory Authority as soon as it is available,
but within the relevant period mentioned in subrule (1).
Investment and borrowing—QFC qualified investor schemes Chapter 6 Investment and borrowing generally—QFC qualified investor
schemes Part 6.1
Rule 6.1.1
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Chapter 6 Investment and borrowing—QFC qualified investor schemes
Part 6.1 Investment and borrowing generally—QFC qualified investor schemes
6.1.1 General duties of operator in relation to investment and borrowing—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that the
scheme property is not invested or used in breach of this chapter.
Note Breach is defined in the glossary.
(2) If the operator becomes aware of a breach of this chapter, the operator
must take action to rectify the breach at its own expense.
(3) The operator must take action under subrule (2) immediately unless
subrule (4) applies.
(4) If the operator believes on reasonable grounds that taking action
under subrule (2) immediately would not be in the best interests of
the unitholders, the operator must take the action as soon as it is in
the interests of unitholders to do so.
6.1.2 Investment powers generally—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that
investments included in the scheme property are investments to which
the scheme is dedicated.
Note Investment and dedicated are defined in the glossary.
(2) Subrule (1) is subject to the other provisions of this chapter.
Chapter 6 Investment and borrowing—QFC qualified investor schemes Part 6.1 Investment and borrowing generally—QFC qualified investor
schemes Rule 6.1.3
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(3) The constitutional document and the latest filed prospectus may
further restrict—
(a) the kinds of property in which the scheme property may be
invested; and
(b) the kinds of transactions permitted by the scheme and any
relevant limits.
(4) Subrule (3) does not limit the further restrictions that the
constitutional document and latest filed prospectus may impose on
investment by the scheme or on the use of the scheme property.
(5) The operator must ensure that any further restrictions are complied
with.
6.1.3 Permissible investments generally—QFC qualified investor schemes
(1) The scheme property of a QFC qualified investor scheme must be
invested only in 1 or more of the following:
(a) specified products;
(b) immovables;
(c) gold, silver, platinum and palladium;
(d) commodity contracts traded on an eligible exchange.
(2) This rule is subject to the other provisions of this chapter.
6.1.4 Spread of risk—QFC qualified investor schemes
The operator of a QFC qualified investor scheme must take
reasonable steps to ensure that the scheme property provides a spread
of risk, taking into account the scheme’s investment objectives,
strategies and policy as stated in the constitutional document and the
latest filed prospectus, and, in particular, any investment objective
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schemes Part 6.1
Rule 6.1.5
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about return to the unitholders (whether from capital appreciation,
income or both).
Note Constitutional document is defined in r 3.1.1 and latest filed prospectus
is defined in the glossary.
6.1.5 Investments by money-market funds—QFC qualified investor schemes
(1) A QFC qualified investor scheme that is a money-market fund must
comply with its primary investment objective, and the investment
restrictions, mentioned in schedule 2 (Constitutional document
content—QFC schemes), rule S2.33 (Primary investment objective
etc—QFC money-market funds).
Note Money-market fund is defined in r 1.3.12.
(2) For the investment restrictions, an approved money-market
instrument is a high-quality approved money-market instrument if—
(a) it has been rated by at least 1 rating agency; and
(b) it has been awarded the highest available credit rating by each
rating agency that has rated it.
Note Approved money-market instrument is defined in r 7.1.5. Rating agency
is defined in INAP.
(3) If an approved money-market instrument forms part of the scheme
property of a QFC qualified investor scheme that is a money-market
fund, the operator must monitor the instrument to ensure that it
continues to be of high quality, taking into account both its credit risk
and its final maturity.
(4) A QFC qualified investor scheme that is a money-market fund must
provide liquidity through same day or next day settlement.
(5) The weighted average maturity of its investments must not exceed
60 days.
Chapter 6 Investment and borrowing—QFC qualified investor schemes Part 6.1 Investment and borrowing generally—QFC qualified investor
schemes Rule 6.1.6
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6.1.6 Application of ch 6 to umbrella schemes—QFC qualified investor schemes
(1) This chapter applies to each subscheme of a QFC qualified investor
scheme that is an umbrella scheme as if it were a separate QFC
qualified investor scheme.
Note Subscheme and umbrella scheme are defined in r 1.2.11.
(2) However, a subscheme of an umbrella scheme must not invest in
another subscheme of the same umbrella scheme.
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investor schemes Part 6.2
Rule 6.2.1
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Part 6.2 Particular kinds of investments and transactions—QFC qualified investor schemes
Division 6.2.A Collective investments schemes—QFC qualified investor schemes
6.2.1 Investments in schemes—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that the
scheme invests in units in a collective investment scheme (the second
scheme) only if—
(a) the second scheme is a QFC scheme; or
(b) the second scheme is a non-QFC scheme, but the operator has
taken reasonable care to decide that the second scheme meets all
the following requirements:
(i) it is subject to an independent annual audit conducted in
accordance with international accounting standards;
(ii) it has its value verified by a person independent of the
scheme’s operator in relation to each day on which dealing
in the scheme’s units may take place;
(iii) there are mechanisms in place to enable unitholders of the
scheme to redeem their units within a reasonable time;
(iv) it is prohibited from having more than 15% of its value in
units in schemes;
(v) it operates in accordance with the principle of risk
spreading.
(2) If the second scheme is an umbrella scheme, subrule (1) applies to
each subscheme as if it were a separate scheme.
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investor schemes Rule 6.2.2
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Division 6.2.B Derivatives, forward transactions and commodity contracts—QFC qualified investor schemes
6.2.2 Delivery of property under transactions in derivatives etc—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must take
reasonable care to decide the following when entering into any
transaction in derivatives, or any commodity contract, that may result
in any asset becoming part of the scheme property:
(a) if it is an asset in which the scheme property could be invested—
that the transaction—
(i) can be readily closed out; or
(ii) would, at the expected time of delivery, relate to an asset
that could be included in the scheme property under this
chapter;
(b) in any other case—that the transaction can be readily closed out.
Note Derivative, commodity and close out are defined in the glossary.
(2) If the operator makes a decision under subrule (1) in relation to an
asset that proves to be incorrect, the operator may nevertheless
acquire the asset for the scheme if the operator decides on reasonable
grounds that the acquisition is in the interest of the unitholders.
(3) An asset acquired under subrule (2) may form part of the scheme
property until the position can be rectified.
(4) Subrule (3) applies despite any other provision of this chapter.
6.2.3 Valuation of OTC derivatives—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that a
transaction by the scheme in an OTC derivative can be valued.
Note OTC derivative is defined in the glossary.
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investor schemes Part 6.2
Rule 6.2.4
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(2) For subrule (1), the transaction can be valued only if the operator
having taken reasonable care decides that, if the transaction were to
be entered into, the operator could value the investment throughout
the life of the OTC derivative with reasonable accuracy—
(a) on the basis of an up-to-date market value that the operator and
independent entity have agreed is reliable; or
(b) if such a value is not available—on the basis of a pricing model
that the operator and independent entity have agreed uses an
adequate recognised methodology.
6.2.4 Cover for transactions in derivatives and forward transactions—QFC qualified investor schemes
(1) A transaction in derivatives or a forward transaction may be entered
into by the operator of a QFC qualified investor scheme only if the
maximum exposure, in terms of the principal or notional principal
created by the transaction to which the scheme is or may be
committed by another person, is covered globally under subrule (2).
Note Derivative, principal and notional principal are defined in the glossary.
(2) Exposure is covered globally if adequate cover from within the
scheme property is available to meet the scheme’s total exposure
taking into account any reasonably foreseeable market movement.
(3) The total exposure relating to derivatives held in the scheme property
must not at any time exceed the scheme’s net asset value.
Note Net asset value is defined in the glossary.
(4) No element of cover may be used more than once.
6.2.5 Continuing nature of limits and requirements for derivatives and forward positions—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must, as frequently
as necessary to ensure compliance with rule 6.2.4 (Cover for
transactions in derivatives and forward transactions—QFC qualified
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investor schemes Rule 6.2.6
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investor schemes), re-calculate the amount of cover required in
relation to derivatives and forward positions.
(2) Derivatives and forward positions may be kept in the scheme property
only so long as they remain covered globally under rule 6.2.4 (2).
(3) The operator must use a risk management process to monitor and
measure as frequently as appropriate the risk of the scheme’s
derivatives and forward positions and their contribution to the
scheme’s overall risk profile.
Division 6.2.C Immovables—QFC qualified investor schemes
6.2.6 Standing independent valuer—QFC qualified investor schemes
A QFC qualified investor scheme that holds, or proposes to hold,
immovables as part of the scheme property must at all times have a
valuer of the scheme (the standing independent valuer).
6.2.7 Requirements for making investments in immovables—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that the
scheme does not invest in an immovable to be held as part of the
scheme property unless all the following requirements are met:
(a) the immovable must be located in a jurisdiction identified in the
latest filed prospectus;
(b) the operator must have taken reasonable care to decide that the
title to the interest to be acquired in the immovable is a good
marketable title;
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investor schemes Part 6.2
Rule 6.2.7
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(c) the standing independent valuer has valued the interest and the
operator and independent entity have received a report on the
valuation that states either—
(i) that, in the valuer’s opinion, the interest in the immovable
could, if acquired by the scheme, be disposed of
reasonably quickly at the valuation stated in the report; or
(ii) that—
(A) the immovable is adjacent to or in the vicinity of
another immovable already included in the scheme
property; and
(B) in the valuer’s opinion, the total value of the interests
in the immovables would at least equal the total of
the price payable for the interest in the immovable
and the existing value of the interest in the other
immovable.
Note See r 6.2.10 (Reports on valuation of immovables before
acquisition or disposal—QFC qualified investor schemes).
(2) However, a report of the standing independent valuer must not be
relied on to acquire the interest in the immovable if—
(a) the interest is not acquired, or agreed by enforceable contract to
be acquired, within 3 months after the date of the report; or
(b) it is (or should reasonably be) apparent to the operator that the
standing independent valuer’s report cannot, or can no longer,
reasonably be relied on; or
(c) the price of the interest is, or becomes, more than 105% of the
valuation of the interest stated in the report.
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investor schemes Rule 6.2.8
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6.2.8 Investments in non-Qatari immovables through intermediate holding vehicles—QFC qualified investor schemes
(1) An immovable located outside Qatar may be held by a QFC qualified
investor scheme through an intermediate holding vehicle, or a series
of intermediate holding vehicles, if—
(a) the purpose of the vehicle, or each of the vehicles, is to enable
the scheme to hold immovables located outside Qatar; and
(b) the vehicle, or each of the vehicles, is wholly owned by the
scheme, or by another intermediate holding vehicle or series of
intermediate holding vehicles wholly owned by the scheme,
unless and to the extent that the law of the jurisdiction where the
immovable is located requires local ownership; and
(c) the vehicle, or each of the vehicles, undertakes the purchase, sale
and management of immovables on behalf of the scheme in
accordance with the scheme’s investment objectives, strategies
and policy; and
(d) the interests of the unitholders are otherwise adequately
protected.
Note Intermediate holding vehicle is defined in the glossary.
(2) Any investment in an intermediate holding vehicle for the purpose of
holding an immovable located outside Qatar must be treated for this
chapter as if it were a direct investment in the immovable.
(3) The operator of a QFC qualified investor scheme may, by the use of
inter-company debt, transfer capital and income between the scheme
and an intermediate holding vehicle of the scheme if—
(a) the purpose of the transfer is for investment in immovables
located outside Qatar or repatriation of income generated by
such an investment; and
(b) a record of inter-company debt is kept to provide an accurate
audit trail; and
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investor schemes Part 6.2
Rule 6.2.9
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(c) interest paid out on the debt instruments that gave rise to the
inter-company debt is equivalent to the net rental income earned
from the immovables less the intermediate holding vehicle’s
reasonable running costs (including tax).
(4) If practicable, an intermediate holding vehicle of a QFC qualified
investor scheme must have the same auditor and accounting reference
date as the scheme.
(5) The accounts of any intermediate holding vehicle of a QFC qualified
investor scheme must be consolidated into the annual and half-yearly
reports of the scheme.
6.2.9 Additional requirements for immovables—QFC qualified investor schemes
(1) The operator must ensure that the following requirements are
complied with in relation to interests in immovables held as part of
the scheme property of a QFC qualified investor scheme:
(a) the amount secured by mortgages over any immovable must not
exceed 100% of the latest valuation of the scheme’s interest in
the immovable stated in a report by the scheme’s standing
independent valuer;
(b) no option may be granted to a person to buy or obtain an interest
in any immovable if this might unduly prejudice the ability to
provide redemption;
(c) the total of all premiums paid for options to purchase interests
in immovables must not exceed 10% of the value of the scheme
property in any 12-month period, calculated at the date of the
granting of the option;
(d) an interest in an immovable must not be disposed of unless—
(i) the standing independent valuer has valued the interest;
and
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investor schemes Rule 6.2.10
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(ii) the operator and independent entity have received a report
on the valuation;
Note See r 6.2.10 (Reports on valuation of immovables before
acquisition or disposal—QFC qualified investor schemes).
(e) each immovable must be adequately protected by appropriate
insurance that is sufficient to cover its reinstatement.
(2) However, a report of the standing independent valuer must not be
relied on under subrule (1) (d) to dispose of an interest in an
immovable if the interest is not disposed of, or agreed by enforceable
contract to be disposed of, within 3 months after the date of the report.
6.2.10 Reports on valuation of immovables before acquisition or disposal—QFC qualified investor schemes
(1) This rule applies to a report by the standing independent valuer of a
QFC qualified investor scheme in relation to the proposed acquisition
or disposal for the scheme of an interest in an immovable.
Note See the following provisions:
• r 6.2.7 (2) (c) (Requirements for making investments in
immovables—QFC qualified investor schemes)
• r 6.2.9 (1) (d) (Additional requirements for immovables—QFC
qualified investor schemes).
(2) The report must—
(a) include a brief description of the immovable, including—
(i) its location and existing use; and
(ii) the nature of the interest the scheme is proposed to acquire,
or dispose of, in the immovable; and
(iii) any encumbrances affecting the immovable; and
(iv) whether the immovable is leased and, if leased, the terms
of the lease and its expiry; and
(v) the capital value of the immovable at the date of valuation;
and
Investment and borrowing—QFC qualified investor schemes Chapter 6 Particular kinds of investments and transactions—QFC qualified
investor schemes Part 6.2
Rule 6.2.11
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(vi) the net monthly income (if any) from the immovable; and
(vii) any other matters that may affect the immovable or the
value of the interest; and
(b) include all material details about the basis of valuation and the
assumptions used; and
(c) describe and explain the valuation methods used; and
(d) if more than 1 valuation method is available—explain the
reasons for choosing a particular method; and
(e) outline the structure and condition of the relevant market,
including an analysis of the supply and demand situation, the
market trend, and investment activities; and
(f) confirm the professional status of the standing independent
valuer and that the report is prepared on a fair and unbiased
basis; and
(g) be dated as at the date the valuation is made.
6.2.11 Valuation of immovables part of scheme property—QFC qualified investor schemes
(1) The following provisions apply in relation to the valuation of interests
in immovables held as part of the scheme property of a QFC qualified
investor scheme:
(a) the operator must ensure that the standing independent valuer—
(i) values, at least once a year, all the interests in immovables
held as part of the scheme property, on the basis of a full
valuation with physical inspection (including, if the
immovable is or includes a building, internal inspection of
the building); and
(ii) gives the operator and independent entity a report on the
valuation;
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investor schemes Rule 6.2.11
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(b) for paragraph (a), any inspection in relation to adjacent
properties of a similar nature and value may be limited to the
inspection of only a single representative property;
(c) the operator must also ensure that the standing independent
valuer—
(i) values, at least once a month, all the interests in
immovables held as part of the scheme property, on the
basis of a review of the last full valuation (unless the valuer
decides that the valuation of an interest in an immovable
should be conducted on the basis mentioned in paragraph
(a)); and
(ii) gives the operator and independent entity a report on the
valuation;
Note Month is defined in the glossary.
(d) if the operator or independent entity becomes aware of any
matter that appears likely—
(i) to affect the valuation of an interest in an immovable; or
(ii) to cause the standing independent valuer to decide to value
on the basis mentioned in paragraph (a) instead of on the
basis mentioned in paragraph (c);
it must immediately tell the standing independent valuer about
the matter;
(e) the operator must use its best endeavours to ensure that any other
affected person immediately tells the standing independent
valuer if the affected person becomes aware of a matter
mentioned in paragraph (d).
Note Affected person is defined in r 5.1.1.
(2) The valuation of an interest in an immovable under this rule has effect
for these rules until the next valuation of the interest under this rule.
Investment and borrowing—QFC qualified investor schemes Chapter 6 Particular kinds of investments and transactions—QFC qualified
investor schemes Part 6.2
Rule 6.2.12
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6.2.12 Annual and other periodic valuation reports—QFC qualified investor schemes
(1) This rule applies to a report by the standing independent valuer of a
QFC qualified investor scheme under rule 6.2.11 (Valuation of
immovables part of scheme property—QFC qualified investor
schemes).
(2) The report must—
(a) include a brief description of each immovable in which the
scheme holds an interest, including—
(i) its location and existing use; and
(ii) the nature of the interest the scheme holds in the
immovable; and
(iii) any encumbrances affecting the immovable; and
(iv) whether the immovable is leased and, if leased, the terms
of the lease and its expiry; and
(v) the capital value of the immovable at the date of valuation;
and
(vi) the net monthly income (if any) from the immovable; and
(vii) any other matters that may affect the immovable or the
value of the interest; and
(b) include all material details about the basis of valuation and the
assumptions used; and
(c) describe and explain the valuation methods used; and
(d) if more than 1 valuation method is available—explain the
reasons for choosing a particular method; and
(e) outline the structure and condition of the relevant market,
including an analysis of the supply and demand situation, the
market trend, and investment activities; and
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investor schemes Rule 6.2.13
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(f) confirm the professional status of the standing independent
valuer and that the report is prepared on a fair and unbiased
basis; and
(g) be dated as at the date the valuation is made.
6.2.13 Basis of valuation by standing independent valuer—QFC qualified investor schemes
(1) Any valuation of an interest in an immovable by the standing
independent valuer of a QFC qualified investor scheme must be—
(a) on the basis of ‘open market value’ (as defined in the
constitutional document and the latest filed prospectus); or
(b) on another appropriate basis.
Guidance
1 The constitutional document and latest filed prospectus would be expected to
define ‘open market value’ using an authoritative text such as the latest edition
of the Royal Institute of Chartered Surveyors’ Appraisal and Valuation
Standards (the ‘Red Book’).
2 In considering whether valuation of an interest in an immovable by the
standing independent valuer is made on another basis that is appropriate, the
operator must consider whether the valuation was made in accordance with
internationally accepted valuation principles, procedures and definitions as set
out in the International Valuations Standards published by the International
Valuation Standards Committee.
(2) The basis on which the standing independent valuer makes a
valuation is subject to the constitutional document and the latest filed
prospectus.
(3) In making a valuation, the standing independent valuer—
(a) may treat the contents of any building as part of the building;
and
(b) must disregard any arrangement to dispose of an interest in an
immovable forming part of the scheme property unless the
valuer is satisfied on reasonable grounds that the arrangement is
legally enforceable.
Investment and borrowing—QFC qualified investor schemes Chapter 6 Particular kinds of investments and transactions—QFC qualified
investor schemes Part 6.2
Rule 6.2.14
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6.2.14 Appointment of standing independent valuer—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme that holds, or
proposes to hold, immovables as part of the scheme property must, as
required from time to time and with the independent entity’s
approval, appoint a person as the standing independent valuer.
(2) A person must not be appointed as the standing independent valuer
unless—
(a) the person conducts the business of valuing immovables; and
(b) the operator and the independent entity are satisfied that the
person has the skills, experience, qualifications and attributes to
be the standing independent valuer of the scheme, having regard
in particular to the scheme’s investment objectives, strategies
and policy; and
(c) the person is independent of—
(i) the operator and 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 operator, the independent entity or, for a CIC or CIP,
the scheme.
Note Governing body is defined in the glossary.
Guidance for para (b)
The operator and independent entity should be satisfied that the person meets all
the following requirements:
(a) the person is a fellow or associate (however described), or has key personnel
who are fellows or associates (however described), of a relevant recognised
professional body of surveyors or property valuers (for example, a member of
the Royal Institute of Chartered Surveyors (MRICS), a RICS registered valuer
or a body recognised by RICS);
(b) the person has, or has access to, expertise relevant to the scheme and, in
particular, knowledge and experience in the valuation of immovables of the
relevant kind in the relevant area;
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investor schemes Rule 6.2.15
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(c) the person has robust internal controls and checks and balances to ensure—
(i) the integrity of valuation reports; and
(ii) that valuation reports are properly and professionally prepared in
accordance with international best practice;
(d) the person has adequate professional indemnity insurance;
(e) the person does not have ownership or other commercial links with other
persons providing services to the scheme (for example, investment advisers)
that could impair the person’s ability to provide independent and objective
valuation services to the scheme.
(3) Without limiting (2) (c), a person (A) is not independent of another
person (B) if—
(a) A has at any time during the last 2 years been involved in
material business dealings with B (otherwise than in the exercise
of their respective functions as the holders of positions in
relation to any scheme); or
(b) B has a material interest in A or A has a material interest in B.
6.2.15 Standing independent valuer not to deal in immovables etc—QFC qualified investor schemes
The standing independent valuer of a QFC qualified investor scheme
must not be personally engaged, and must not have an associated
person who is engaged, in finding immovables for the scheme or
finding the scheme for immovables.
Note Associated person is defined in the glossary.
6.2.16 Removal of standing independent valuer—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme may, with the
independent entity’s approval, remove the standing independent
valuer at any time.
Investment and borrowing—QFC qualified investor schemes Chapter 6 Particular kinds of investments and transactions—QFC qualified
investor schemes Part 6.2
Rule 6.2.16
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(2) The operator of a QFC qualified investor scheme must remove a
person as the standing independent valuer if—
(a) a special resolution of the unitholders is passed to remove the
person as the standing independent valuer; or
Note Special resolution is defined in the glossary.
(b) the person breaches rule 6.2.15 (Standing independent valuer
not to deal in immovables etc—QFC qualified investor
schemes); or
(c) the person:
(i) becomes insolvent;
(ii) is wound up or put into liquidation; or
(iii) is placed in receivership or administration; or
(d) the person ceases to be eligible to be appointed as the standing
independent valuer.
(3) The power to remove the standing independent valuer under this rule
has effect despite anything in any agreement between the valuer and
all or any of the following:
(a) the operator;
(b) the independent entity;
(c) the scheme.
Chapter 6 Investment and borrowing—QFC qualified investor schemes Part 6.3 Stock lending and repos—QFC qualified investor schemes Rule 6.3.1
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Part 6.3 Stock lending and repos—QFC qualified investor schemes
6.3.1 Permitted stock lending and repos—QFC qualified investor schemes
(1) The independent entity of a QFC qualified investor scheme may, at
the operator’s request, enter into a stock lending arrangement or repo
agreement.
Note Stock lending arrangement and repo agreement are defined in the
glossary.
(2) Subrule (1) is subject to the constitutional document and the latest
filed prospectus.
(3) The independent entity must ensure that the value of any collateral
for a stock lending arrangement is at all times at least equal to the
value of the securities transferred by the independent entity.
(4) If the validity of any collateral expires, the independent entity’s duty
under subrule (3) is satisfied if the independent entity or the operator,
as appropriate, takes reasonable care to ensure that sufficient
collateral will be transferred by close of business on the day of the
expiry.
Note Collateral is defined in the glossary.
Investment and borrowing—QFC qualified investor schemes Chapter 6 Borrowing—QFC qualified investor schemes Part 6.4
Rule 6.4.1
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Part 6.4 Borrowing—QFC qualified investor schemes
6.4.1 Borrowing—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must—
(a) ensure that the scheme’s total borrowing does not, on any day,
exceed the permitted percentage of the scheme’s net asset value;
and
Note Borrowing and net asset value are defined in the glossary.
(b) ensure that any further borrowing restrictions in the
constitutional document and latest filed prospectus are complied
with; and
(c) take reasonable care to ensure that arrangements are in place that
will enable borrowings to be closed out to ensure that paragraphs
(a) and (b) are complied with.
Note Close out is defined in the glossary.
(2) For subrule (1) (a), the permitted percentage is—
(a) 100 %; or
(b) if the Regulatory Authority, by written notice, sets a different
percentage (whether higher or lower) for the scheme (whether
at the time of registration or later) or for QFC qualified investor
schemes that include the scheme—the percentage set.
(3) If the Regulatory Authority sets a different percentage by notice
under subrule (2) (b), the authority must—
(a) publish the notice on an approved website; and
(b) give a copy of the notice to the operator of each scheme to which
the notice applies.
Note Approved website is defined in INAP.
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Chapter 7 Investment and borrowing—QFC retail schemes
Part 7.1 Investment and borrowing introduction—QFC retail schemes
7.1.1 Objects of ch 7—QFC retail schemes
(1) The objects of this chapter include helping to protect investors in QFC
retail schemes by providing minimum standards for the investments
that may be held by a QFC retail scheme.
(2) In particular, this chapter—
(a) restricts the proportion of the scheme property of a QFC retail
scheme that may be held in transferable securities that are not
approved securities and derivatives that are not approved
derivatives; and
Note Approved security is defined in r 7.1.9 and approved derivative is
defined in r 7.1.8.
(b) requires a QFC retail scheme to comply with a number of
investment rules that require the spreading of risk.
(3) The intention of the restriction mentioned in subrule (2) (a) is, in part,
to limit investment in transferable securities and derivatives that
cannot be accurately valued and readily disposed of.
7.1.2 General duties of operator in relation to investment and borrowing—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that, except to the
extent permitted by subrule (3) (b), the scheme property is not
invested or used in breach of this chapter.
Note Breach is defined in the glossary.
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Rule 7.1.2
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(2) If the operator becomes aware of a breach of this chapter in relation
to the QFC retail scheme, the operator must immediately take action,
at its own expense, to rectify the breach, unless the breach happened
because of circumstances to which subrule (3) applies.
(3) The operator must ensure that this chapter is complied with as soon
as practicable having regard to the interests of the unitholders and, in
any event, within the maximum period mentioned in subrule (6) if—
(a) the scheme property is—
(i) invested or used in breach of this chapter; and
(ii) the breach is beyond the control of both the operator and
the independent entity; or
(b) all the following subparagraphs apply:
(i) there is a transaction (the subsequent transaction)
deriving from the exercise of a right (for example, the right
to convert stock or subscribe to a rights issue) attributable
to an investment of the scheme (the original investment);
(ii) the subsequent transaction would, apart from this rule, be
a breach of this chapter;
(iii) at the time of the acquisition of the original investment, it
was reasonable for the operator to expect that a breach
would not be caused by the subsequent transaction.
(4) In subrule (3) (b) (i), the reference to the exercise of a right includes
the taking effect of a right without any action by or on behalf of the
independent entity or operator.
(5) If the independent entity becomes aware of any breach of this chapter
in relation to the QFC retail scheme, it must immediately ensure that
the operator complies with subrule (2).
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(6) The maximum period to ensure that this chapter is complied with
under subrule (3) starts on the day the operator finds out about the
relevant circumstances and ends—
(a) if the transaction was a transaction under rule 7.4.9 (Permitted
transactions in derivatives and forward transactions—QFC
retail schemes)—at the close of business 5 business days after
that day or, if that period is extended under subrule (7), the
period as extended; or
Note Business day is defined in the glossary.
(b) if the transaction relates to an immovable—2 years after that
day; or
(c) in any other case—for 6 months after that day.
(7) The period mentioned in subrule (6) (a) is extended—
(a) if the transaction involved a delivery of a commodity—from 5 to
20 business days; or
Note Commodity is defined in the glossary.
(b) if the reason for the breach mentioned in subrule (3) (a) is the
inability of the operator to close out a transaction because of a
limit in the number or value of transactions imposed by a
derivatives market that is an eligible market—until 5 business
days after—
(i) the inability resulting from the limit is removed; or
(ii) it becomes, to the operator’s knowledge, practicable and
prudent for the transaction to be closed out in another way.
Note Close out is defined in the glossary. Eligible market is defined in r 7.1.7.
7.1.3 Treatment of obligations under ch 7—QFC retail schemes
(1) If a provision of this chapter allows a QFC retail scheme to enter into
a transaction, or retain an investment, only if possible obligations
arising out of the transaction or retention would not breach any limits
under this chapter, it must be assumed that the maximum possible
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Rule 7.1.4
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liability of the scheme under any other applicable provision of this
chapter must also be provided for.
(2) If a provision of this chapter allows a QFC retail scheme to enter into
a transaction, or retain an investment, only if the transaction or
retention is covered, or any other similar transactions or investments
are covered—
(a) it must be assumed that, in applying any of the provisions of this
chapter, the scheme must also, simultaneously, satisfy any other
applicable obligation relating to cover; and
(b) no element of cover may be used more than once.
7.1.4 Valuation for ch 7—QFC retail schemes
(1) For this chapter, the value at any time of the scheme property of a
QFC retail scheme is its net asset value at that time calculated in
accordance with division 8.2.B (Valuation and pricing—QFC retail
schemes).
Note Net asset value is defined in the glossary.
(2) In valuing the scheme property for this chapter, the following
provisions apply:
(a) the time at which the valuation is conducted (the relevant time)
must be treated as if it were a valuation point, but the valuation
and the relevant time do not count as a valuation or a valuation
point for division 8.2.B;
(b) initial outlay must be regarded as remaining part of the scheme
property;
Note Initial outlay is defined in the glossary.
(c) if the operator, having taken reasonable care, decides that the
scheme will become entitled to any unrealised profit that has
been made for a transaction in derivatives—the prospective
entitlement must be regarded as part of the scheme property.
Note Derivative is defined in the glossary.
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7.1.5 What is an approved money-market instrument?
(1) For these rules, an approved money-market instrument is a money-
market instrument that is normally dealt in on the money market, is
liquid and has a value that can be accurately decided at any time.
(2) For this rule, a money-market instrument is normally dealt in on the
money market if any of the following apply to it:
(a) it has a maturity at issue of no more than 397 days;
(b) it has a residual maturity of no more than 397 days;
(c) it undergoes regular yield adjustments in line with money
market conditions at intervals of no longer than 397 days;
(d) it has a risk profile, including credit and interest rate risks,
corresponding to the risk profile of an instrument—
(i) that has a maturity mentioned in paragraph (a) or (b); or
(ii) that is subject to yield adjustments mentioned in paragraph
(c).
(3) For this rule, a money-market instrument is liquid if it can be sold at
limited cost in an adequately short time, taking into account the
obligation of the operator to redeem units on the instructions of any
unitholder.
Note See r 8.1.17 (3) (Issue and redemption generally—QFC retail schemes).
(4) For this rule, a money-market instrument has a value that can be
accurately decided at any time if accurate and reliable valuation
systems are available for it.
(5) The valuation systems must meet both of the following requirements:
(a) they must enable the operator to calculate a net value of a
money-market instrument in accordance with the value at which
the instrument could be exchanged between knowledgeable,
willing parties in an arm’s length transaction;
(b) they must be based either on market data or on valuation models,
including systems based on amortised costs.
Investment and borrowing—QFC retail schemes Chapter 7 Investment and borrowing introduction—QFC retail schemes Part 7.1
Rule 7.1.6
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(6) A money-market instrument that is normally dealt in on the money
market and is admitted to or dealt in on an eligible market must be
presumed to be liquid and to have a value that can be accurately
decided at any time unless there is information available to the
operator that would lead to a different decision.
Note Eligible market is defined in r 7.1.7.
7.1.6 What is a transferable security?
(1) For these rules, a transferable security is an investment that is any of
the following:
(a) a share;
(b) a government or public security;
(c) another debt instrument;
(d) a warrant;
(e) a securities receipt.
Note 1 Investment and each of the types of investment mentioned in r (1) are
defined in the glossary.
Note 2 For other kinds of investments that are taken to be transferable securities,
see the following provisions:
• r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• r 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
(2) However, an investment is not a transferable security if the title to
the investment cannot be transferred, or can be transferred only with
the consent of a third party.
(3) In applying subrule (2) to a share or debt instrument issued by a
corporation, the need for any consent on the part of the corporation
or any of its members, or the debt instrument holders of it, may be
disregarded.
Note Corporation is defined in the glossary.
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(4) Also, an investment is not a transferable security unless the liability
of the holder of the investment to contribute to the debts of the issuer
is limited to any amount for the time being unpaid by the holder in
relation to the investment.
7.1.7 What is an eligible market?
(1) For these rules, a derivatives or securities market is an eligible market
in relation to a QFC scheme if it meets all the following requirements:
(a) the operator, after consultation with and notification to the
independent entity, decides that the market is appropriate for
investment of scheme property or dealing in investments for the
scheme property;
(b) the market is included in a list in the latest filed prospectus;
Note Latest filed prospectus is defined in the glossary.
(c) the independent entity has taken reasonable care to decide that—
(i) adequate custody arrangements can be provided for
dealing in investments on the market; and
(ii) all reasonable steps have been taken by the operator in
deciding whether the market meets the requirement of this
rule.
(2) For subrule (1) (a), a market may be considered appropriate only if it
meets all the following requirements:
(a) it is regulated;
(b) it operates regularly;
(c) it is recognised as a market or exchange, or as a self-regulating
organisation, by an appropriate regulatory or governmental
entity;
(d) it is open to the public;
(e) it is adequately liquid;
Investment and borrowing—QFC retail schemes Chapter 7 Investment and borrowing introduction—QFC retail schemes Part 7.1
Rule 7.1.8
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(f) it has adequate arrangements for unimpeded transmission of
income and capital to or to the order of investors.
7.1.8 What is an approved derivative?
An approved derivative is a derivative that is traded or dealt in on, or
under the rules of, a derivatives market that is an eligible market.
Note Derivative and deal are defined in the glossary. Eligible market is
defined in r 7.1.7.
7.1.9 What is an approved security?
An approved security is a transferable security that is traded on, or
under the rules of, a securities market that is an eligible market
(otherwise than by the specific permission of the market authority).
Note Transferable security is defined in r 7.1.6. Eligible market is defined in
r 7.1.7.
7.1.10 Application of ch 7 to umbrella schemes—QFC retail schemes
(1) This chapter applies to each subscheme of a QFC retail scheme that
is an umbrella scheme as it were a separate QFC retail scheme.
Note Subscheme and umbrella scheme are defined in r 1.2.11.
(2) However, the following rules apply to the umbrella scheme itself and
not separately to each subscheme:
• rule 7.2.3 (Significant influence through transferable securities—UCITS type schemes)
• rule 7.3.10 (Concentration—QFC retail schemes).
(3) Also, a subscheme of an umbrella scheme must not invest in another
subscheme of the same umbrella scheme.
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Part 7.2 Investments generally—QFC retail schemes
7.2.1 Investment powers generally—QFC retail schemes
(1) The scheme property of a QFC retail scheme must be invested only
in investments mentioned in rule 7.2.2 (Permissible investments
generally—QFC retail schemes) to which the scheme is dedicated.
Note Investment and dedicated are defined in the glossary.
(2) The scheme property of a QFC retail scheme must be invested and
used only in accordance with the relevant provisions of this chapter,
including within any limit or other restriction (however described) of
this chapter.
(3) The constitutional document and the latest filed prospectus of a QFC
retail scheme may further restrict—
(a) the kinds of property in which the scheme property may be
invested; and
(b) the proportion of the capital property of the scheme that may be
invested in investments of any kind; and
(c) the kinds of transactions permitted by the scheme and any
relevant limits; and
(d) the borrowing powers of the scheme.
Note Constitutional document is defined in r 3.1.1. Capital property is defined
in the glossary.
(4) Subrule (3) does not limit the further restrictions that the
constitutional document and latest filed prospectus may impose on
investment and borrowing by the scheme or on the use of the scheme
property.
(5) The operator must ensure that any further restrictions are complied
with.
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Rule 7.2.2
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7.2.2 Permissible investments generally—QFC retail schemes
The scheme property of a QFC retail scheme (other than a QFC retail
property fund) must be invested only in any 1 or more of the
following:
(a) transferable securities;
(b) money-market instruments;
(c) units in schemes;
(d) derivatives and forward transactions;
(e) deposits.
Note 1 A QFC retail scheme cannot invest in precious metals or commodity
contracts. A QFC retail scheme that is a QFC retail property fund can
invest in immovables, property-related assets and other investments (see
rule 12.1.4).
Note 2 Transferable security is defined in rule 7.1.6. For investments that are
treated as transferable securities, see the following provisions:
• rule 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• rule 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
7.2.3 Significant influence through transferable securities—UCITS type schemes
(1) The operator of a QFC retail scheme must ensure that the scheme
does not acquire transferable securities (the relevant securities)
issued by a corporation if—
(a) the relevant securities give the right to vote (whether or not on
substantially all matters) at general meetings of the corporation;
and
(b) either—
(i) the scheme already holds transferable securities issued by
the corporation that give the scheme power to influence
significantly the conduct of business by the corporation; or
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(ii) acquisition of the relevant securities would give the
scheme that power.
Note Corporation is defined in the glossary.
(2) For subrule (1), the QFC retail scheme is taken to have power to
influence significantly the conduct of business by the corporation if
the scheme, or the operator or independent entity (or both acting
together), can exercise or control the exercise of at least 1/3 of the
voting rights in the corporation because of the transferable securities
issued by the corporation that are held by the scheme.
(3) For subrule (2), any temporary suspension of voting rights must be
disregarded.
7.2.4 Investments by money-market funds—QFC retail schemes
(1) A QFC retail scheme that is a money-market fund must comply with
its primary investment objective, and the investment restrictions,
mentioned in schedule 2 (Constitutional document content—QFC
schemes), rule S2.33 (Primary investment objective etc—QFC
money-market funds).
Note Money-market fund is defined in r 1.3.12.
(2) For the investment restrictions, an approved money-market
instrument is a high-quality approved money-market instrument if—
(a) it has been rated by at least 1 rating agency; and
(b) it has been awarded the highest available credit rating by each
rating agency that has rated it.
Note Approved money-market instrument is defined in r 7.1.5. Rating agency
is defined in INAP.
(3) If an approved money-market instrument forms part of the scheme
property of a QFC retail scheme that is a money-market fund, the
operator must monitor the instrument to ensure that it continues to be
of high quality, taking into account both its credit risk and its final
maturity.
Investment and borrowing—QFC retail schemes Chapter 7 Investments generally—QFC retail schemes Part 7.2
Rule 7.2.4
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(4) A QFC retail scheme that is a money-market fund must provide
liquidity through same day or next day settlement.
(5) The weighted average maturity of its investments must not exceed 60
days.
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Part 7.3 Investment diversification—QFC retail schemes
7.3.1 Prudent spread of risk—QFC retail schemes
The operator of a QFC retail scheme must ensure that the scheme
property provides a prudent spread of risk, taking into account the
scheme’s investment objectives, strategies and policy as stated in the
constitutional document and latest filed prospectus.
Note Constitutional document is defined in r 3.1.1 and latest filed prospectus
is defined in the glossary.
7.3.2 Spread for certain transferable securities and money-market instruments—QFC retail schemes
(1) This rule applies to a transferable security if—
(a) the transferable security is not an approved security; and
(b) either—
(i) the transferable security has been issued for 1 year or
longer; or
(ii) the transferable security has been issued for less than
1 year and the terms of issue did not include an
undertaking that application would be made for it to be
admitted to an eligible market.
Note 1 Transferable security is defined in r 7.1.6. Approved security is defined
in r 7.1.9. Eligible market is defined in r 7.1.7.
Note 2 For investments that are treated as transferable securities, see the
following provisions:
• r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• r 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
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Rule 7.3.3
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(2) This rule applies to a money-market instrument if—
(a) the instrument is not an approved money-market instrument; or
(b) the instrument is an approved money-market instrument but the
scheme could not invest in it under rule 7.4.4 (Investments in
approved money-market instruments not admitted to eligible
markets etc—QFC retail schemes).
Note Approved money-market instrument is defined in r 7.1.5.
(3) The operator of a QFC retail scheme must ensure that not more than
10% in value of the scheme property consists of transferable
securities and money-market instruments to which this rule applies.
7.3.3 Spread for transferable securities and money-market instruments issued by single issuer or group—QFC retail schemes
(1) This rule does not apply to government or public securities.
Note 1 Government or public security is defined in the glossary.
Note 2 See r 7.3.5 (Spread for government or public securities issued by single
issuer—QFC retail schemes).
(2) The operator of a QFC retail scheme must ensure that not more than
5% in value of the scheme property consists of transferable securities
or money-market instruments (or both) issued by a single person.
Note 1 Transferable security is defined in r 7.1.6.
Note 2 For investments that are treated as transferable securities, see the
following provisions:
• r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• r 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
(3) However, the 5% limit under subrule (2) is raised to 10% in relation
to not more than 40% in value of the scheme property.
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(4) Covered bonds need not be taken into account for the purpose of
applying the raised limit of 10% in relation to 40% in value of the
scheme property.
Note Covered bond is defined in the glossary.
(5) Also, the 5% limit under subrule (2) is raised to 25% in relation to
covered bonds if the total value of the covered bonds held does not
exceed 80% in value of the scheme property.
(6) In addition, the 5% limit under subrule (2) may be increased to no
more than 20% (or 35%) under rule 7.3.4 (Spread exception for
schemes replicating indices—QFC retail schemes).
(7) In applying subrules (2) to (6), securities receipts must be treated as
equivalent to the underlying security.
Note Securities receipt is defined in the glossary.
(8) The operator of a QFC retail scheme must also ensure that not more
than 20% in value of the scheme property consists of transferable
securities or money-market instruments (or both) issued by members
of a single group.
Note Group is defined in the glossary.
7.3.4 Spread exception for schemes replicating indices—QFC retail schemes
(1) Despite rule 7.3.3 (2) (Spread for transferable securities and money-
market instruments issued by single issuer or group—QFC retail
schemes), a QFC retail scheme may invest up to 20% in value of the
scheme property in shares and debt instruments that are issued by a
single person if the aim of the scheme’s investment objectives,
strategies and policy as stated in its constitutional document and latest
filed prospectus is to replicate the performance or composition of an
index that is a permitted index under subrule (3).
Note Share, debt instrument and entity are defined in the glossary.
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Rule 7.3.4
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(2) However, the limit in subrule (1) may be increased to no more than
35%, but only in relation to a single person and if—
(a) justified by exceptional market conditions; and
(b) the latest filed prospectus includes a prominent statement of the
increased limit.
(3) For subrule (1), a permitted index is an index that meets all the
following requirements:
(a) the index is sufficiently diversified (see subrule (5));
(b) the index is a representative benchmark for the market to which
it refers (see subrule (6));
(c) the index is published in an appropriate way (see subrule (7)).
(4) For subrule (1), replication of the composition of an index is
replication of the composition of the underlying assets, including by
way of efficient portfolio management.
Guidance
The scheme property of a scheme replicating an index under this rule need not
consist of the exact composition and weighting of the underlying assets if the
scheme’s investment objectives, strategies and policy are to achieve a result
consistent with the replication of the index rather than an exact replication.
Note Efficient portfolio management is defined in the glossary.
(5) For subrule (3) (a), an index is sufficiently diversified if its
components comply with this part.
(6) For subrule (3) (b), an index is a representative benchmark for the
market to which it refers if its provider uses a recognised
methodology that generally does not result in the exclusion of a major
issuer of the market to which it refers.
(7) For subrule (3) (c), an index is published in an appropriate way if—
(a) it is accessible to the public; and
(b) the index provider is independent of the QFC retail scheme.
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(8) Subrule (7) (b) does not prevent the index provider and the scheme or
its operator from being part of the same group, if effective
arrangements to manage conflicts of interest are in place.
Note Group is defined in the glossary.
7.3.5 Spread for government or public securities issued by single issuer—QFC retail schemes
(1) This rule applies to government or public securities.
Note Government or public security is defined in the glossary.
(2) If no more than 35% in value of the scheme property of a QFC retail
scheme is invested in government or public securities issued by a
single issuer, there is no limit on the amount that may be invested in
government or public securities or in any single issue.
(3) A QFC retail scheme may invest more than 35% in value of the
scheme property in government or public securities issued by a single
issuer only if all the following requirements are met:
(a) the operator, after consultation with the independent entity
before making the investment, is satisfied that the investment is
in accordance with the investment objectives, strategies and
policy of the scheme as stated in the constitutional document
and latest filed prospectus;
(b) no more than 30% in value of the scheme property consists of
government or public securities of a single issue;
(c) the scheme property includes government or public securities of
at least 6 different issues, whether they are issued by that issuer
or another issuer;
(d) the constitutional document expressly authorises the scheme to
invest more than 35% in value of the scheme property in
government or public securities issued by a single issuer;
(e) the disclosure required by subrule (4) has been made.
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Rule 7.3.6
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(4) For subrule (3) (e), the latest filed prospectus must prominently
state—
(a) that more than 35% of the scheme property is or may be invested
in government or public securities issued by a single issuer; and
(b) the names of the jurisdictions, or the public or local authorities,
issuing government or public securities in which the scheme
may invest more than 35% of the scheme property.
Note Jurisdiction is defined in the glossary.
(5) For this rule, an issue of government or public securities differs from
another issue if there is a difference in relation to repayment date, rate
of interest, guarantor or other material terms of the issue.
(6) In this rule:
issue includes guarantee.
7.3.6 Spread for units in schemes etc—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that not more than
20% in value of the scheme property consists of units in any single
collective investment scheme.
Note See r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes) for units in schemes that are treated as
transferable securities and not as units in a scheme.
(2) However, subrule (1) does not apply to units in a feeder fund.
Note Feeder fund is defined in the glossary.
(3) The operator of a QFC retail scheme must ensure that no more than
30% in value of the scheme property is invested under
rule 7.4.6 (Investments in collective investment schemes generally—
QFC retail schemes) in units in non-QFC retail customer schemes.
Note Non-QFC retail customer scheme is defined in r 1.4.1.
(4) However, subrule (3) does not apply to units in a feeder fund or fund
of funds.
Note Fund of funds is defined in the glossary.
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7.3.7 Spread for OTC derivatives—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that the exposure to
a single counterparty in an OTC derivative transaction does not
exceed 10% in value of the scheme property.
Note OTC derivative is defined in the glossary.
(2) In calculating a limit under this rule, the exposure in relation to an
OTC derivative may be reduced to the extent that collateral is held in
relation to it if the collateral meets all the following requirements:
(a) it is marked-to-market on a daily basis and its value exceeds the
amount at risk;
(b) it is exposed only to negligible risks (for example, risks for
government bonds of first credit rating or cash) and is liquid;
(c) it is held by a third-party custodian not related to the provider or
is legally secured from the consequences of a failure of a related
party;
(d) it can be fully enforced by the QFC retail scheme at any time.
Note Collateral is defined in the glossary.
(3) In calculating a limit under this rule, OTC derivative positions with
the same counterparty may be netted if the netting procedures—
(a) correspond as closely as possible to—
(i) the off-balance sheet netting procedures required to be
used by an authorised firm under BANK, Division 4.5.E;
or
(ii) substantially equivalent provisions under the law of
another jurisdiction; and
(b) are based on legally binding agreements.
Guidance for para (a) (ii)
Substantially equivalent provisions would include the conditions in the Banking
Consolidation Directive (the Directive of the European Parliament and Council of
14 June 2006 relating to the taking up and pursuit of the business of credit
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Rule 7.3.8
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institutions (No 2006/48/EC)), annex III, part 7 (Contractual netting (Contracts for
novation and other netting agreements)).
(4) In applying this rule, a derivative transaction is taken to be free of
counterparty risk if—
(a) it is performed on an exchange; and
(b) it is cleared through a clearing house that meets both of the
following requirements:
(i) the clearing house is backed by an appropriate performance
guarantee;
(ii) the clearing house is characterised by a daily mark-to-
market valuation of the derivative position and at least
daily margining.
Guidance on spread generally
The operator of a QFC retail scheme should particularly note rule 7.3.7 (2) (d) under
which collateral has to be legally enforceable at any time. The Regulatory
Authority, therefore, expects the operator to undertake legal due diligence before
entering into any financial collateral arrangement. This is particularly important if
the collateral arrangement has a cross-border dimension. The Regulatory Authority
also expects the independent entity to exercise reasonable care to review collateral
arrangements in accordance with its functions.
7.3.8 Spread for deposits—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that no more than
20% in value of the scheme property consists of deposits placed with
any single eligible bank.
Note Deposit and eligible bank are defined in the glossary.
(2) For subrule (1), all uninvested cash that is capital property of the
scheme is taken to be a deposit.
Note Capital property is defined in the glossary.
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7.3.9 Spread for certain investments with single person—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that no more than
20% in value of the scheme property consists of any combination of
2 or more of the following issued by or made with a single person:
(a) transferable securities (including covered bonds) or money-
market instruments;
(b) deposits;
(c) exposures to an OTC derivative transaction.
Note For investments that are treated as transferable securities, see the
following provisions:
• r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• r 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
(2) In calculating the limit under this rule, the provisions of rule 7.3.7 (2)
to (4) (Spread for OTC derivatives—QFC retail schemes) apply with
any necessary changes.
7.3.10 Concentration—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that the scheme
does not acquire transferable securities (other than debt instruments)
that—
(a) do not give a right to vote on any matter at a general meeting of
the issuer of the transferable securities; and
(b) represent more than 10% of the transferable securities issued by
the issuer.
Note 1 Transferable security is defined in r 7.1.6. Debt instrument is defined in
the glossary.
Note 2 For investments that are treated as transferable securities, see the
following provisions:
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Rule 7.3.11
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• r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• r 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
(2) The operator of a QFC retail scheme must ensure that the scheme
does not acquire—
(a) more than 10% of the debt instruments issued by a single issuer;
or
(b) more than 25% of the units in a collective investment scheme;
or
(c) more than 10% of the money-market instruments issued by a
single issuer.
(3) However, the operator need not comply with a limit under subrule (2)
if, at the time of the acquisition, the net amount in issue of the debt
instruments, units in the collective investment scheme or money-
market instruments cannot be calculated.
7.3.11 Application of pt 7.3—QFC retail schemes
The provisions of this part do not apply to a QFC retail scheme until
6 months after the day the initial offer period starts if rule 7.3.1
(Prudent spread of risk—QFC retail schemes) is complied with
during that period.
Note Month and initial offer are defined in the glossary.
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Part 7.4 Particular kinds of investments—QFC retail schemes
Division 7.4.A Transferable securities—QFC retail schemes
7.4.1 General investment requirements for non-approved transferable securities—QFC retail schemes
(1) A QFC retail scheme may invest in a transferable security that is not
an approved security if the security meets all the following
requirements:
(a) the potential loss that the scheme may incur in relation to
holding the transferable security is limited to the amount paid
for it;
(b) its liquidity does not compromise the ability of the operator to
comply with its obligation under these rules to redeem units on
the instructions of any unitholder;
Note See r 8.1.17 (3) (Issue and redemption generally—QFC retail
schemes).
(c) a reliable valuation is available for it (see subrule (2));
(d) appropriate information is available for it (see subrule (3));
(e) it is negotiable;
(f) its risks are adequately captured by the operator’s risk
management process.
Note Transferable security is defined in r 7.1.6. Approved security is defined
in r 7.1.9.
(2) For subrule (1) (c), reliable valuation is available for the transferable
security if—
(a) for a transferable security that is an approved security—there are
accurate, reliable and regular prices that are either market prices
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Rule 7.4.2
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or prices made available by valuation systems independent from
issuers; and
(b) for a transferable security that is not an approved security—
there is a valuation on a periodic basis that is derived from
information from the issuer of the security or competent
independent research.
(3) For subrule (1) (d), appropriate information is available for the
transferable security if—
(a) for a transferable security that is an approved security—there is
regular, accurate and comprehensive information available to
the market on the security or, if relevant, on the security’s
portfolio; and
(b) for a transferable security that is not an approved security—
there is regular and accurate information available to the
scheme’s operator on the security or, if relevant, on the
security’s portfolio.
(4) Unless there is information available to the scheme’s operator that
would lead to a different decision, a transferable security that is an
approved security is presumed—
(a) not to compromise the operator’s ability to comply with its
obligation under these rules to redeem units at the request of any
unitholder; and
(b) to be negotiable.
7.4.2 Investments in closed-ended schemes as transferable
securities—QFC retail schemes
(1) For this chapter, a unit in a closed-ended scheme is taken to be a
transferable security (and not a unit in a scheme) if it would meet all
the requirements mentioned in rule 7.4.1 (General investment
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requirements for non-approved transferable securities—QFC retail
schemes) if it were a transferable security and—
(a) for a unit in a closed-ended scheme constituted as a company—
both the following requirements are met in relation to that
scheme:
(i) the scheme is subject to corporate governance applied to
companies;
(ii) if another person carries out asset management activity for
the scheme—the other person is subject to regulation by a
regulatory or governmental entity for the purposes of
investor protection; or
(b) for a unit in a closed-ended scheme constituted as a trust—both
the following requirements are met in relation to that scheme:
(i) the scheme is subject to corporate governance equivalent
to that applied to companies;
(ii) if another person carries out asset management activity for
the scheme—the other person is subject to regulation by a
regulatory or governmental entity for the purposes of
investor protection; or
(c) for a unit in a closed-ended scheme constituted as a limited
partnership or under contract law—all the following
requirements are met in relation to that scheme:
(i) the scheme is subject to corporate governance equivalent
to that applied to companies;
(ii) the scheme is managed by a person who is subject to
regulation by a regulatory or governmental entity for the
purposes of investor protection;
(iii) the assets of the scheme are held separately from the
property of the operator of that scheme and the property of
any other scheme;
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Rule 7.4.3
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(iv) the scheme is subject to liquidation rules that adequately
protect its investors.
Guidance for para (b) (i) and (c) (i)
In assessing whether a closed-ended scheme in trust or contractual form is subject
to corporate governance equivalent to that applied to companies, the operator of a
QFC retail scheme should consider whether the trust or contract constituting the
closed-ended scheme provides its investors with rights—
(a) to vote on essential decisions affecting the closed-ended scheme, including
appointment and removal of its operator, amendment of the trust or contract,
changes to its investment objectives, strategies and policy, merger and
liquidation; and
(b) to control the closed-ended scheme’s investment objectives, strategies and
policy through appropriate mechanisms.
(2) However, a QFC retail scheme must not invest in a unit in a closed-
ended scheme under this rule if the purpose of the investment is to
circumvent any investment limit or restriction (however described) of
this chapter.
Note Closed-ended scheme is defined in r 1.2.10 (2).
7.4.3 Investments linked etc to other assets as transferable securities—QFC retail schemes
(1) For this chapter, any other investment is taken to be a transferable
security (and not an investment of another kind) if—
(a) the investment would meet all the requirements mentioned in
rule 7.4.1 (General investment requirements for non-approved
transferable securities—QFC retail schemes) if it were a
transferable security; and
(b) the investment is backed by or linked to the performance of
other assets, which may differ from those in which a QFC retail
scheme may otherwise invest.
(2) If the investment embeds a derivative, the requirements of this
chapter about derivatives and forward positions apply to the
embedded derivative component of the investment.
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(3) For subrule (2), an investment embeds a derivative if it contains a
component that meets all the following requirements:
(a) by virtue of that component some or all of the cash flows that
otherwise would be required by the investment (which functions
as host contract) can be modified according to a specified
interest rate, financial instrument price, foreign exchange rate,
index of prices or rates, credit rating or credit index or other
variable, and therefore change in a way similar to a stand-alone
derivative;
(b) the component’s characteristics and risks are not closely related
to the economic characteristics and risks of the investment
functioning as host contract;
(c) the component has a significant impact on the risk profile and
pricing of the investment;
(d) the component is not transferable by contract independently of
the investment.
Note See guidance to r 7.4.8 on transferable securities and money-market
instruments that embed derivatives.
Division 7.4.B Money-market instruments—QFC retail schemes
7.4.4 Investments in approved money-market instruments not admitted to eligible markets etc—QFC retail schemes
(1) This rule applies to an approved money-market instrument that is not
admitted to or dealt in on an eligible market.
Note Approved money-market instrument is defined in r 7.1.5 and eligible
market is defined in r 7.1.7.
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Rule 7.4.4
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(2) A QFC retail scheme may invest in the approved money-market
instrument if all the following requirements are met:
(a) the instrument is—
(i) issued or guaranteed by—
(A) the State or the central government of a
zone 1 country; or
(B) the Qatar Central Bank or the central bank of a zone 1
country; or
(C) a multilateral development bank; or
Note Zone 1 country and multilateral development bank are
defined in INAP.
(ii) issued or guaranteed by—
(A) a regional or local authority of the State or a
zone 1 country; or
(B) an entity owned by an entity mentioned in
subparagraph (i) (A) or (ii) (A) if the first entity
exercises regulatory or other non-commercial
functions; or
(iii) issued by an entity if any of its securities are dealt with on
an eligible market; or
(iv) issued or guaranteed by an entity that is subject to, and
complies with, prudential rules, and meets 1 or more of the
following requirements:
(A) it is located in Qatar or a zone 1 country;
(B) it has at least investment grade rating given by a
rating agency;
Note Rating agency is defined in INAP.
(C) on the basis of an in-depth analysis of the entity, it can
be demonstrated that the prudential rules applying to
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the entity are at least as stringent as those applied by
the Regulatory Authority in the QFC;
(b) appropriate information in accordance with subrules (3) to (5) is
available for the instrument;
(c) the instrument is freely transferable.
(3) If the approved money-market instrument is issued or guaranteed by
an entity mentioned in subrule (2) (a) (i), or issued by an entity
mentioned in subrule (2) (a) (ii) and guaranteed by an entity
mentioned in subrule (2) (a) (i), information must be available on the
issue or the issue programme, or on the legal and financial situation
of the issuer before the issue of the instrument.
(4) If the approved money-market instrument is issued or guaranteed by
an entity mentioned in subrule (2) (a) (ii) but is not guaranteed by an
entity mentioned in subrule (2) (a) (i), or is issued by an entity
mentioned in subrule (2) (a) (iii), all the following information must
be available:
(a) information on the issue or the issue programme, or on the legal
and financial situation of the issuer before the issue of the
instrument;
(b) updates of that information on a regular basis and whenever a
significant event happens;
(c) available and reliable statistics on the issue or the issue
programme, or other data enabling an appropriate assessment of
the credit risks related to investment in the instruments.
Guidance for r (4) (b) and r (5) (b)
Regular updates of information should normally happen on at least an annual basis.
(5) If the approved money-market instrument is issued or guaranteed by
an entity mentioned in subrule (2) (a) (iv), all the following
information must be available:
(a) information both on the issue or the issue programme, and the
legal and financial situation of the issuer before the issue of the
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Rule 7.4.5
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instrument, verified by appropriately qualified third parties not
subject to instructions from the issuer;
Guidance for para (a)
The appropriately qualified third parties should specialise in the verification
of legal or financial documentation and be composed of persons meeting
professional standards of integrity.
(b) updates of that information on a regular basis and whenever a
significant event happens;
(c) available and reliable statistics on the issue or the issue
programme.
Division 7.4.C Nil and partly paid securities—QFC retail schemes
7.4.5 Investments in nil and partly paid securities—QFC retail schemes
A QFC retail scheme may invest in a transferable security or money-
market instrument on which an amount is unpaid only if it is
reasonably foreseeable that the amount of any existing and potential
call for any amount unpaid could be paid by the scheme, at the time
payment is required, without breaching this chapter.
Note For other kinds of investments that are taken to be transferable securities,
see the following provisions:
• r 7.4.2 (Investments in closed-ended schemes as transferable
securities—QFC retail schemes)
• r 7.4.3 (Investments linked etc to other assets as transferable
securities—QFC retail schemes).
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Division 7.4.D Collective investment schemes—QFC retail schemes
7.4.6 Investments in collective investment schemes generally—QFC retail schemes
(1) A QFC retail scheme (the investing scheme) may invest in units in a
collective investment scheme (the second scheme) only if the second
scheme meets all the following requirements:
(a) the second scheme is a QFC retail scheme or a non-QFC retail
customer scheme;
Note Non-QFC retail customer scheme is defined in r 1.4.1.
(b) if the second scheme is a non-QFC retail customer scheme—the
investment and borrowing powers of the second scheme are the
same as, or more restrictive than, the investment and borrowing
powers of a QFC retail scheme under these rules;
(c) if the second scheme is a non-QFC retail customer scheme—the
second scheme and its operator are required to comply with
requirements equivalent to the requirements applying under rule
7.4.7 (Investments in associated schemes—QFC retail schemes)
in relation to a QFC retail scheme;
(d) the second scheme is prohibited from having more than 10% in
value of its scheme property consisting of units in collective
investment schemes;
(e) if the second scheme is an umbrella scheme—each subscheme
meets the requirements of paragraph (d) and, if the second
scheme is a non-QFC retail customer scheme, also of paragraph
(c).
Note 1 Umbrella scheme and subscheme are defined in r 1.2.11.
Note 2 Investments to which r 7.4.2 (Investments in closed-ended schemes as
transferable securities—QFC retail schemes) applies are treated as
investments in transferable securities, and not investments in units in a
scheme.
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Rule 7.4.7
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Note 3 See also r 7.3.6 (3) (Spread for units in schemes etc—QFC retail
schemes).
(2) To remove any doubt, this rule is subject to rule 7.4.7.
7.4.7 Investments in associated schemes—QFC retail schemes
(1) For this rule, a scheme is an associated scheme for a QFC retail
scheme if the operator of the first scheme is—
(a) the operator of the QFC retail scheme; or
(b) an associate of the operator of the QFC retail scheme.
Note Associate is defined in the glossary.
(2) A QFC retail scheme must not invest in units in an associated scheme
unless the latest filed prospectus of the QFC retail scheme clearly
states that the scheme property of the QFC retail scheme may include
units in the associated scheme.
Note Latest filed prospectus is defined in the glossary.
(3) If—
(a) a QFC retail scheme invests in units in an associated scheme or
disposes of units in an associated scheme; and
(b) there is a charge in relation to the investment or disposal;
the operator of the QFC retail scheme must pay the QFC retail scheme
the amount payable under subrule (4) or (5) within 4 business days
after the day the operator agrees to make the investment or disposal.
(4) For an investment mentioned in subrule (3), the operator of the QFC
retail scheme must pay the QFC retail scheme—
(a) any amount by which the consideration paid by the QFC retail
scheme exceeds the price that would have been paid for the
benefit of the associated scheme if the units were newly issued
or sold by the associated scheme; or
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(b) if that price cannot be ascertained by the operator—the
maximum amount of any charge permitted to be made by the
seller of units in the associated scheme.
(5) For a disposal mentioned in subrule (3), the operator of the QFC retail
scheme must pay the QFC retail scheme the amount of any charge
made in relation to the disposal for the operator of the associated
scheme, the operator of the QFC retail scheme or an associate of
either operator.
(6) For this rule—
(a) any addition to or deduction from the consideration paid on the
acquisition or disposal by a QFC retail scheme of units in an
associated scheme that is applied for the benefit of the associated
scheme, and is (or is like) a dilution levy made under rule 8.2.16
(Dilution—QFC retail schemes), must be treated as part of the
price of the units and not as part of any charge; and
(b) any charge made in relation to an exchange of units in a
subscheme or separate part of the associated scheme for units in
another subscheme or separate part of that scheme must be
included as part of the consideration paid for the units.
Division 7.4.E Derivatives and forward transactions—QFC retail schemes
7.4.8 Derivatives and forward transactions generally—QFC retail schemes
(1) A transaction in a derivative or a forward transaction must not be
effected for a QFC retail scheme unless the transaction is—
(a) permitted under rule 7.4.9 (Permitted transactions in derivatives
and forward transactions—QFC retail schemes); and
(b) covered as required by rule 7.5.1 (Cover for transactions in
derivatives and forward transactions—QFC retail schemes).
Note Derivative is defined in the glossary.
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Rule 7.4.8
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(2) If a QFC retail scheme invests in a derivative, the exposure to the
underlying assets must not exceed the limits in part 7.3 (Investment
diversification—QFC retail schemes), except as provided in
subrule (4).
(3) If a transferable security or money-market instrument embeds a
derivative, the embedded derivative component must be taken into
account in applying any limit under this chapter.
Note See r (7) on working out whether an instrument embeds a derivative.
(4) If—
(a) a QFC retail scheme invests in an index-based derivative; and
(b) rule 7.4.10 (Permitted financial indices—QFC retail schemes)
applies to the index;
the underlying constituents do not have to be taken into account in
the application of part 7.3 to subrule (2) of this rule.
(5) The relaxation under subrule (4) is subject to the operator complying
with rule 7.3.1 (Prudent spread of risk—QFC retail schemes).
(6) A scheme must not use transferable securities or money-market
instruments that embed a derivative to circumvent this chapter.
(7) Rule 7.4.3 (3) (Investments linked etc to other assets as transferable
securities—QFC retail schemes) applies to subrules (3) and (6) of this
rule, with any necessary changes, for the purpose of working out
whether a transferable security or money-market instrument embeds
a derivative.
Guidance on transferable securities and money-market instruments that embed derivatives
1 Collateralised debt obligations (CDOs) or asset-backed securities using
derivatives, with or without active management, will generally not be
considered as embedding a derivative unless—
(a) they are leveraged, that is, the CDOs or asset-backed securities are not
limited recourse vehicles and an investor’s loss can be higher than the
investor’s initial investment; or
(b) they are not sufficiently diversified.
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.4 Particular kinds of investments—QFC retail schemes Rule 7.4.9
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2 If a transferable security or money-market instrument embedding a derivative
is structured as an alternative to an OTC derivative, the requirements of rule
7.4.13 (OTC transactions in derivatives—QFC retail schemes) will apply. This
will be the case for tailor-made hybrid instruments, such as a single tranche
CDO structured to meet the specific need of a QFC retail scheme. These tailor-
made hybrid instruments should be considered to embed a derivative. Such a
product offers an alternative to the use of an OTC derivative for the same
purpose of achieving a diversified exposure to a pre-set risk level to a portfolio
of entities.
3 The following list of transferable securities and money-market instruments,
which is illustrative and non-exhaustive, could be assumed to embed a
derivative:
(a) credit linked notes;
(b) transferable securities and money-market instruments if their
performance is linked to the performance of a bond index;
(c) transferable securities and money-market instruments if their
performance is linked to the performance of a basket of shares, with or
without active management;
(d) transferable securities or money-market instruments with a fully
guaranteed nominal value if their performance is linked to the
performance of a basket of shares, with or without active management;
(e) convertible bonds;
(f) exchange bonds.
4 Transferable securities and money-market instruments that embed a derivative
are subject to the requirements of this chapter applying to derivatives. It is the
operator’s responsibility to ensure that these requirements are complied with.
The nature, frequency and scope of checks performed should depend on the
characteristics of the embedded derivatives and their impact on the scheme,
taking into account its investment objectives, strategies and policy and its risk
profile.
7.4.9 Permitted transactions in derivatives and forward transactions—QFC retail schemes
(1) A transaction in a derivative by a QFC retail scheme must—
(a) be in an approved derivative; or
Note Approved derivative is defined in r 7.1.8.
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Rule 7.4.9
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(b) if the transaction is in an OTC derivative—comply with
rule 7.4.13 (OTC transactions in derivatives—QFC retail
schemes).
(2) The underlying of a transaction in a derivative by a QFC retail scheme
must—
(a) comply with part 7.2 (Investments generally—QFC retail
schemes) and this part; or
(b) consist of any 1 or more of the following to which the scheme is
dedicated:
(i) financial indices that are permitted financial indices under
rule 7.4.10 (Permitted financial indices—QFC retail
schemes);
(ii) interest rates;
(iii) foreign exchange rates;
(iv) currencies.
Note Dedicated is defined in the glossary.
(3) A transaction in an approved derivative by a QFC retail scheme must
be effected on, or under the rules of, a derivatives market that is an
eligible market.
Note Eligible market is defined r 7.1.7.
(4) A transaction in a derivative must not cause a QFC retail scheme to
diverge from its investment objectives, strategies and policy as stated
in the constitutional document and the latest filed prospectus.
Note Constitutional document is defined in r 3.1.1. Latest filed prospectus is
defined in the glossary.
(5) A transaction in a derivative must not be effected by a QFC retail
scheme if the intended effect is to create the potential for an
uncovered sale of any of the following:
(a) transferable securities;
(b) money-market instruments;
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.4 Particular kinds of investments—QFC retail schemes Rule 7.4.10
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(c) units in collective investment schemes;
(d) derivatives.
Note Transferable security is defined in r 7.1.6.
(6) For subrule (5), a sale is not considered uncovered if the requirements
mentioned in rule 7.4.12 (3) (Requirements to cover sales—QFC
retail schemes) are met in relation to the sale.
(7) Any forward transaction by a QFC retail scheme must be made with
an eligible bank.
Note Eligible bank is defined in the glossary.
(8) A QFC retail scheme must not effect a transaction in a derivative on
a commodity.
Note Commodity is defined in the glossary.
7.4.10 Permitted financial indices—QFC retail schemes
(1) For rule 7.4.9 (2) (b) (i) (Permitted transactions in derivatives and
forward transactions—QFC retail schemes), a permitted financial
index is a financial index that meets all the following requirements:
(a) the index is sufficiently diversified (see subrule (2));
(b) the index represents an adequate benchmark for the market to
which it refers (see subrule (3));
(c) the index is published in an appropriate way (see subrule (4)).
(2) For subrule (1) (a), a financial index is sufficiently diversified if—
(a) it is composed in such a way that price movements or trading
activities for a component do not unduly influence the
performance of the whole index; and
(b) its components are at least as diverse as the investments of a
QFC retail scheme are required to be under part 7.3 (Investment
diversification—QFC retail schemes).
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Rule 7.4.10
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(3) For subrule (1) (b), a financial index represents an adequate
benchmark for the markets to which it refers if—
(a) it measures the performance of a representative group of
underlyings in a relevant and appropriate way; and
(b) it is revised and rebalanced periodically, following criteria that
are publicly available, to ensure that it continues to reflect the
markets to which it refers; and
(c) the underlyings are sufficiently liquid, allowing users to
replicate it if necessary.
(4) For subrule (1) (c), a financial index is published in an appropriate
way if—
(a) its publication process relies on sound procedures to collect
prices, and calculate and subsequently publish the index value,
including pricing procedures for components for which a market
price is not available; and
(b) material information is provided on a wide and timely basis on
matters such as index calculation, rebalancing methodologies,
index changes, and any operational difficulties in providing
timely or accurate information.
(5) If the composition of underlyings of a transaction in a derivative does
not satisfy the requirements mentioned in subrule (1) for a permitted
financial index, the underlyings for that transaction may be regarded
as a combination of the underlyings if they satisfy the requirements
of rule 7.4.9 (2) (Permitted transactions in derivatives and forward
transactions—QFC retail schemes).
Guidance on financial indices underlying derivatives
1 An index based on derivatives on commodities or an index on property may
be regarded as a permitted financial index under rule 7.4.10 if it meets all the
requirements of the rule.
2 If the composition of an index is not sufficiently diversified to avoid undue
concentration, its underlying assets should be combined with the other assets
of the scheme in assessing compliance with the requirements of rule 7.5.1
(Cover for transactions in derivatives and forward transactions—QFC retail
schemes) and part 7.3 (Investment diversification—QFC retail schemes).
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.4 Particular kinds of investments—QFC retail schemes Rule 7.4.11
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3 To avoid undue concentration, if derivatives on an index composed of assets
in which a QFC retail scheme cannot invest are used to track or gain high
exposure to the index, the index should be at least diversified in a way that is
equivalent to the diversification achieved for the scheme by part 7.3.
4 If derivatives on that index are used for risk-diversification purposes and the
exposure of the scheme to the index complies with part 7.3, there is no need
to look at the underlying components of the index to ensure that it is
sufficiently diversified.
7.4.11 Delivery of property under transactions in derivatives and forward transactions—QFC retail schemes
A transaction in a derivative or a forward transaction by a QFC retail
scheme that will or could lead to the delivery of property for the
scheme may be entered into only if—
(a) the property can be held for the scheme; and
(b) the operator, having taken reasonable care, decides that delivery
of the property under the transaction will not happen or will not
lead to a breach of these rules.
Note Property and breach are defined in the glossary.
7.4.12 Requirement to cover sales—QFC retail schemes
(1) An agreement must not be made by or on behalf of a QFC retail
scheme to dispose of property or rights unless—
(a) the obligation to make the disposal and any other similar
obligation could immediately be honoured by the scheme by
delivery of property or the assignment of rights; and
(b) the property or rights mentioned in paragraph (a) are owned by
the scheme at the time the agreement is made.
(2) Subrule (1) does not apply to a deposit.
Note Deposit is defined in the glossary.
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Rule 7.4.13
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(3) Subrule (1) does not apply if—
(a) the risks of the underlying financial instrument of a derivative
can be appropriately represented by another financial instrument
and the underlying financial instrument is liquid; or
(b) the operator or independent entity has the right to settle a
derivative in cash, and cover exists within the scheme property
that falls within 1 or more of the following asset classes:
(i) cash;
(ii) liquid debt instruments (for example, government bonds
of first credit rating) with appropriate safeguards (in
particular, haircuts);
(iii) other liquid assets having regard to their correlation with
the underlying of the financial derivative instrument,
subject to appropriate safeguards (for example, haircuts if
relevant).
(4) In the asset classes mentioned in subrule (3), an asset may be
considered as liquid if the financial instrument can be converted into
cash in no longer than 7 business days at a price closely corresponding
to the current valuation of the instrument on its own market.
7.4.13 OTC transactions in derivatives—QFC retail schemes
(1) A transaction in an OTC derivative under rule 7.4.9 (1) (b) (Permitted
transactions in derivatives and forward transactions—QFC retail
schemes) must be—
(a) with an approved counterparty (see subrule (2)); and
(b) on approved terms (see subrule (3)); and
(c) capable of valuation (see subrule (5)); and
(d) subject to verifiable valuation (see subrule (6)).
Note OTC derivative is defined in the glossary.
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(2) For subrule (1) (a), a counterparty is an approved counterparty only
if the counterparty is an eligible bank.
Note Eligible bank is defined in the glossary.
(3) For subrule (1) (b), the terms of a transaction are approved terms if,
before the transaction is entered into, the independent entity is
satisfied that the counterparty has agreed with the operator—
(a) to provide a reliable and verifiable valuation in relation to the
transaction corresponding to its fair value at least daily and at
any other time at the operator’s request; or
(b) that it or an alternative counterparty will, at the operator’s
request, enter into a further transaction to sell, liquidate or close
out the transaction at a fair value at any time.
Note Close out is defined in the glossary.
(4) For subrule (3) (b), fair value is the amount for which an asset could
be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm’s length transaction.
(5) For subrule (1) (c), a transaction in a derivative is capable of
valuation if the operator, having taken reasonable care, decides that,
if the transaction were entered into, it would be able to value the
investment throughout the life of the derivative with reasonable
accuracy on a basis of—
(a) an up-to-date market value that the operator and independent
entity have agreed is reliable; and
(b) if paragraph (a) does not apply—a pricing model that the
operator and independent entity have agreed uses an adequate
recognised methodology.
(6) For subrule (1) (d), a transaction in a derivative is subject to verifiable
valuation if the operator, having taken reasonable care, decides that,
Investment and borrowing—QFC retail schemes Chapter 7 Particular kinds of investments—QFC retail schemes Part 7.4
Rule 7.4.14
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if the transaction were entered into, the valuation of the investment
would be verified throughout the life of the derivative by—
(a) an appropriate third party independent of the derivative’s
counterparty, at an adequate frequency and in such a way that
the operator can check it; or
(b) a department within the operator that is independent of the
department in charge of managing the scheme property and is
adequately equipped to verify the valuation.
(7) Without limiting rule 4.2.3 (Oversight functions of independent
entity—all QFC schemes), the independent entity must take
reasonable care to ensure that the operator has systems and controls
that are adequate to ensure compliance with this rule.
7.4.14 Risk management for transactions in derivatives and forward transactions—QFC retail schemes
(1) The operator of a QFC retail scheme must use a risk management
process that enables it to monitor and measure, as frequently as
appropriate, the risks associated with—
(a) the scheme’s derivatives and forward positions; and
(b) their contribution to the overall risk profile of the scheme.
(2) The operator must tell the Regulatory Authority about the following
details of the risk management process before using the process:
(a) the methods for estimating risks in derivative and forward
transactions;
(b) the types of derivatives and forward transactions to be used
within the scheme together with their underlying risks and any
relevant quantitative limits.
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.4 Particular kinds of investments—QFC retail schemes Rule 7.4.15
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(3) The operator must tell the Regulatory Authority in advance about any
material change proposed for the details of the risk management
process mentioned in subrule (2) (a) or (b).
Guidance on risk management process
1 The risk management process for a QFC retail scheme should take account of
the investment objectives, strategies and policy of the scheme as stated in the
constitutional document and latest filed prospectus.
2 The independent entity should take reasonable care to review the
appropriateness of the risk management process in accordance with its
functions under these rules.
3 The operator is expected to demonstrate more sophistication in its risk
management process for a QFC retail scheme with a complex risk profile than
for a QFC retail scheme with a simple risk profile. In particular, the risk
management process should take account of any characteristic of non-linear
dependence in the value of a position to its underlying.
4 The operator should take reasonable care to establish and maintain the systems
and controls appropriate to its business that are required by CTRL.
5 The risk management process should enable the re-calculation required by rule
7.5.3 (Continuing nature of limits and requirements for derivatives and
forward positions—QFC retail schemes) to be undertaken at least daily or at
each valuation point, whichever the more frequent.
6 The operator should undertake the risk assessment with the highest degree of
care if the counterparty to the derivative is an associate of the operator or the
credit issuer.
Division 7.4.F Deposits—QFC retail schemes
7.4.15 Investments in deposits—QFC retail schemes
A QFC retail scheme may invest in a deposit if—
(a) it is with an eligible bank; and
(b) it is either—
(i) repayable on demand; or
(ii) has the right to be withdrawn; and
(c) it matures in no longer than 12 months.
Note Deposit, eligible bank and month are defined in the glossary.
Investment and borrowing—QFC retail schemes Chapter 7 Exposure for derivatives and forward transactions—QFC retail
schemes Part 7.5
Rule 7.5.1
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Part 7.5 Exposure for derivatives and forward transactions—QFC retail schemes
Guidance for pt 7.5
1 A scheme may invest in derivatives and forward transactions if the exposure
to which the scheme is committed by the transaction itself is suitably covered
from within the scheme property. Exposure will include any initial outlay in
relation to the transaction.
2 Cover ensures that a scheme is not exposed to the risk of loss of property,
including money, to an extent greater than the scheme’s net asset value at any
time. Therefore, a scheme is required to hold scheme property sufficient in
value or amount to match the exposure arising from a derivative obligation to
which the scheme is committed. Rule 7.5.1 (Cover for transactions in
derivatives and forward transactions—QFC retail schemes) sets out detailed
requirements for cover.
3 In accordance with rule 7.1.3 (2) (b) (Treatment of obligations under ch 7—
QFC retail schemes), cover used in relation to a transaction in a derivative or
forward transaction must not be used for cover in relation to another
transaction in a derivative or forward transaction.
7.5.1 Cover for transactions in derivatives and forward
transactions—QFC retail schemes
(1) A transaction in a derivative or a forward transaction may be entered
into by the operator of a QFC retail scheme only if the maximum
exposure, in terms of the principal or notional principal created by the
transaction to which the scheme is or may be committed by another
person, is covered globally under subrule (2).
Note Derivative, principal and notional principal are defined in the glossary.
(2) Exposure is covered globally if adequate cover from within the
scheme property is available to meet the scheme’s total exposure,
taking into account the value of the underlying assets, any reasonably
foreseeable market movement, counterparty risk, and the time
available to liquidate any positions.
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.5 Exposure for derivatives and forward transactions—QFC retail
schemes Rule 7.5.2
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(3) Cash not yet received into the scheme property but due to be received
within 1 month is available as cover for subrule (2).
Note Month is defined in the glossary.
(4) Property that is the subject of a transaction under part 7.6 (Stock
lending and repos—QFC retail schemes) is only available for cover
if the operator has taken reasonable care to decide that it is obtainable
(by return or re-acquisition) in time to meet the obligation for which
cover is required.
(5) The total exposure relating to derivatives held in the scheme property
must not at any time exceed the scheme’s net asset value.
Note Net asset value is defined in the glossary.
7.5.2 Borrowing not available for cover—QFC retail schemes
(1) Cash obtained from borrowing by or for a QFC retail scheme, and
borrowing that the operator of a QFC retail scheme reasonably
regards an eligible bank to be committed to provide, is not available
for cover under rule 7.5.1 (Cover for transactions in derivatives and
forward transactions—QFC retail schemes).
Note Borrowing and eligible bank are defined in the glossary.
(2) If a QFC retail scheme, or the independent entity of a QFC retail
scheme acting for the scheme on the operator’s instructions—
(a) borrows an amount of currency from an eligible bank; and
(b) keeps an amount in another currency, at least equal to that
borrowing for the time being, on deposit with the eligible bank
(or its agent or nominee);
this part applies as if the borrowed currency, and not the deposited
currency, were part of the scheme property.
Investment and borrowing—QFC retail schemes Chapter 7 Exposure for derivatives and forward transactions—QFC retail
schemes Part 7.5
Rule 7.5.3
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7.5.3 Continuing nature of limits and requirements for derivatives and forward positions—QFC retail schemes
(1) The operator of a QFC retail scheme must, as frequently as necessary,
re-calculate the amount of cover required in relation to derivatives
and forward positions already in existence under this chapter.
(2) Derivatives and forward positions may be retained in the scheme
property only so long as they remain covered globally under rule 7.5.1
(Cover for transactions in derivatives and forward transactions—QFC retail schemes).
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.6 Stock lending and repos—QFC retail schemes Rule 7.6.1
page 170 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 7.6 Stock lending and repos—QFC retail schemes
Notes for pt 7.6
1 This part covers techniques relating to transferable securities and money-
market instruments that are used for the purpose of efficient portfolio
management. It permits the generation of additional income for the benefit of
the QFC retail scheme (and its investors) by entry into stock lending
arrangements and repo agreements for the scheme.
2 The particular method of stock lending permitted in this part is in fact not a
transaction that is a loan in the normal sense. Rather it is an arrangement under
which the lender transfers securities to the borrower otherwise than by way of
sale and the borrower is to transfer the securities, or securities of the same type
and amount, back to the lender at a later date. In accordance with good market
practice, a separate transaction by way of transfer of assets is also involved in
stock lending arrangements to provide collateral to cover the ‘lender’ against
the risk that the future transfer back of the securities may not be satisfactorily
completed.
7.6.1 Stock lending and repos generally—QFC retail schemes
A QFC retail scheme may, or the independent entity of a QFC retail
scheme may on the operator’s instructions, enter into a stock lending
arrangement or repo agreement if it reasonably appears to the
operator to be appropriate to be entered into with a view to generating
additional income for the scheme with an acceptable degree of risk.
Note Stock lending arrangement and repo agreement are defined in the
glossary.
7.6.2 Stock lending requirements—QFC retail schemes
(1) A stock lending arrangement may be entered into by or for a QFC
retail scheme only if all the following requirements are met:
(a) all the terms of the agreement under which securities are to be
reacquired by the independent entity for the scheme are in a form
that is acceptable to the independent entity and are in accordance
with good market practice;
Investment and borrowing—QFC retail schemes Chapter 7 Stock lending and repos—QFC retail schemes Part 7.6
Rule 7.6.3
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(b) the counterparty is—
(i) an authorised firm; or
(ii) a person authorised (however described) under the law of
the State or a zone 1 country to deal in investments as
principal in relation to OTC derivatives and the person is
principally regulated by a regulatory or governmental
entity in that jurisdiction;
Note Authorised firm and OTC derivative are defined in the glossary.
Zone 1 country is defined in INAP.
(c) collateral is obtained to secure the obligation of the counterparty
under the terms mentioned in paragraph (a) and the collateral
is—
(i) acceptable to the independent entity; and
(ii) adequate under rule 7.6.3 (1) (Treatment of collateral for
stock lending—QFC retail schemes); and
(iii) sufficiently immediate under rule 7.6.3 (2).
Note Collateral is defined in the glossary.
(2) For subrule (1), the counterparty is the person who is obliged under
the agreement mentioned in subrule (1) (a) to transfer to the
independent entity—
(a) the securities transferred by the independent entity under the
stock lending arrangement; or
(b) securities of the same type and amount.
7.6.3 Treatment of collateral for stock lending—QFC retail schemes
Guidance on stock lending—treatment of collateral
If a stock lending arrangement is entered into for a QFC retail scheme, the value of
scheme property remains unchanged. The securities transferred cease to be part of
the scheme property, but there is an obligation by the counterparty to transfer back
the securities or equivalent securities. The independent entity will also receive
collateral to set against the risk of default in transfer. The collateral is equally
Chapter 7 Investment and borrowing—QFC retail schemes Part 7.6 Stock lending and repos—QFC retail schemes Rule 7.6.3
page 172 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
irrelevant to the valuation of the scheme property (because it is transferred against
an obligation of equivalent value by way of re-transfer). This rule accordingly
makes provision for the treatment of collateral in that context.
(1) For rule 7.6.2 (1) (c) (ii) (Stock lending requirements—QFC retail
schemes), collateral is adequate only if it is—
(a) transferred to the independent entity or its nominee or delegate,
as appropriate; and
(b) at the time of the transfer to the independent entity, at least equal
in value to the value of the securities transferred by the
independent entity; and
(c) in the form of 1 or more of the following:
(i) cash;
(ii) a certificate of deposit;
(iii) a letter of credit;
(iv) a readily realisable investment;
(v) commercial paper with no embedded derivative content.
(vi) units in an eligible money-market fund.
Note Collateral, readily realisable investment and eligible money-market
fund are defined in the glossary.
(2) For rule 7.6.2 (1) (c) (iii), collateral is sufficiently immediate if—
(a) it is transferred before or at the time of the transfer of the
securities by the independent entity; or
(b) the independent entity takes reasonable care to decide at the time
mentioned in paragraph (a) that it will be transferred at the latest
by the close of business on the day of the transfer.
(3) The independent entity must ensure that the value of the collateral is,
at all times, at least equal to the value of the securities transferred by
the independent entity.
Investment and borrowing—QFC retail schemes Chapter 7 Stock lending and repos—QFC retail schemes Part 7.6
Rule 7.6.4
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(4) If the validity of any collateral expires or is about to expire, the
independent entity’s duty under subrule (3) is satisfied if the
independent entity takes reasonable care to ensure that sufficient
collateral will be transferred by close of business on the day of the
expiry.
(5) Any agreement for transfer at a future date of securities, collateral, or
the equivalent of either, under this rule may be regarded, for the
purposes of valuation under division 8.2.B (Valuation and pricing—
QFC retail schemes), or this chapter, as an unconditional agreement
for the sale or transfer of property, whether or not the property is part
of the property of the scheme.
(6) Collateral transferred to the independent entity is part of the scheme
property for these rules, except in the following respects:
(a) it must not be included in any valuation for division 8.2.B or this
chapter, because it is offset under subrule (5) by an obligation to
transfer;
(b) it does not count as scheme property for any purpose of this
chapter other than this rule.
(7) Subrules (5) and (6) (a) do not apply to any valuation of collateral
itself for this rule.
7.6.4 No limits on stock lending and repos—QFC retail schemes
(1) There is no limit on the value of the scheme property of a QFC retail
scheme that may be the subject of stock lending arrangements or repo
agreements under this part.
(2) However, the use of stock lending arrangements or repo agreements,
or the reinvestment of cash collateral, must not—
(a) result in a change of the scheme’s investment objectives,
strategies and policy; or
(b) add substantial supplementary risks to the scheme’s risk profile.
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(3) Collateral in the form of cash may only be invested in 1 or more of
the following:
(a) certificates of deposit;
(b) letters of credit;
(c) readily realisable investments;
(d) commercial paper with no embedded derivative component;
(e) units in an eligible money-market fund;
(f) deposits, but only if the deposits—
(i) are with an eligible bank; and
(ii) can be withdrawn within 5 business days or any shorter
period required under the stock lending arrangement.
Note Readily realisable investment, eligible money-market fund, deposit and
eligible bank are defined in the glossary.
(4) If a QFC retail scheme generates leverage through the reinvestment
of collateral, this must be taken into account in calculating the
scheme’s global exposure.
Investment and borrowing—QFC retail schemes Chapter 7 Cash, borrowing, lending and other provisions—QFC retail schemes Part 7.7
Rule 7.7.1
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Part 7.7 Cash, borrowing, lending and other provisions—QFC retail schemes
7.7.1 Cash and near cash—QFC retail schemes
(1) Cash and near cash must not be retained in the scheme property of a
QFC retail scheme except to the extent that its retention may
reasonably be regarded as necessary to enable any of the following:
(a) the pursuit of scheme’s investment objectives, strategies and
policy;
(b) the redemption of units;
(c) the efficient management of the scheme in accordance with its
investment objectives, strategies and policy;
(d) other purposes that may reasonably be regarded as ancillary to
the scheme’s investment objectives, strategies and policy.
Note Near cash and redemption are defined the glossary.
(2) However, during the period of the initial offer, the scheme property
may consist of cash and near cash without any limit.
Note Initial offer is defined in the glossary.
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
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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.
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Rule 7.7.3
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7.7.3 Borrowing limits—QFC retail schemes
(1) The operator of a QFC retail scheme (other than a retail property
fund) must ensure that the scheme’s total borrowing does not, on any
day, exceed 10% of its net asset value.
Note For the limits on borrowing by QFC retail property funds, see rule 12.5.9.
(2) This rule does not apply to back-to-back borrowing.
7.7.4 Restrictions on lending money—QFC retail schemes
(1) None of the money in the scheme property of a QFC retail scheme
may be lent.
Note Money is defined in the glossary.
(2) For subrule (1), money is lent by the scheme if it is paid to a person
on the basis that it must be repaid, whether or not by that person.
(3) However, for subrule (1), the following are not lending:
(a) acquiring a debt instrument;
(b) placing money on deposit or in a current account.
Note Debt instrument is defined in the glossary.
(4) This rule does not prevent a QFC retail scheme that is a CIC or CIP
from—
(a) providing an officer of the scheme with funds to meet
expenditure to be incurred by the officer for the purposes of—
(i) the scheme; or
(ii) to perform duties as an officer of the scheme; or
(b) doing anything to enable an officer of the scheme to avoid
expenditure mentioned in paragraph (a).
Note CIC and CIP are defined in r 1.3.7 and r 1.3.8 respectively.
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(5) In this rule:
officer, of a CIC or CIP, means—
(a) a member of the governing body of the CIC or CIP; or
(b) the chief executive, manager, secretary, or other similar officer,
of the CIC or CIP.
7.7.5 Restrictions on lending property other than money—QFC retail schemes
(1) The scheme property of a QFC retail scheme other than money must
not be lent by way of deposit or otherwise.
(2) For subrule (1), transactions permitted by part 7.6 (Stock lending and
repos—QFC retail schemes) are not lending.
(3) The scheme property must not be mortgaged.
(4) If transactions in derivatives or forward transactions are used for a
QFC retail scheme in accordance with this chapter, this rule does not
prevent the scheme, or the independent entity on the operator’s
instructions, from—
(a) lending, depositing, pledging or charging scheme property for
margin requirements; or
(b) transferring property under the terms of an agreement in relation
to margin requirements, if the operator reasonably considers that
both the agreement and the margin requirements made under it
(including in relation to the level of margin) provide appropriate
protection to unitholders.
Note Margin is defined in the glossary.
7.7.6 General power to accept or underwrite placings—QFC retail schemes
(1) This rule applies to any agreement entered into by a QFC retail
scheme—
(a) that is an underwriting or sub-underwriting agreement; or
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Rule 7.7.7
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(b) that contemplates that securities will or may be issued,
subscribed or acquired for the scheme.
Note Securities is defined in the glossary.
(2) However, this rule, does not apply to—
(a) an option; or
(b) a purchase of a transferable security that gives a right to—
(i) subscribe for or acquire a transferable security; or
(ii) convert a transferable security into another transferable
security.
Note Option is defined in the glossary. Transferable security is defined in
r 7.1.6.
(3) Any power in this chapter to invest in transferable securities may be
used by the QFC retail scheme for the purpose of entering into an
agreement to which this rule applies, subject to any restriction in the
constitutional document being complied with.
Note Constitutional document is defined in r 3.1.1.
(4) The exposure of the QFC retail scheme to agreements to which this
rule applies must, on any day, be—
(a) covered under rule 7.5.1 (Cover for transactions in derivatives
and forward transactions—QFC retail schemes); and
(b) such that, if all possible obligations arising under them had
immediately to be met in full, there would be no breach of this
chapter.
(5) In this rule:
agreement includes understanding.
7.7.7 Guarantees and indemnities—QFC retail schemes
(1) A QFC retail scheme, and the independent entity of a QFC retail
scheme, must not provide any guarantee or indemnity in relation to
the obligation of any person.
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(2) None of the scheme property of a QFC retail scheme may be used to
discharge any obligation arising under a guarantee or indemnity in
relation to the obligation of any person.
(3) This rule does not apply to any of the following:
(a) any indemnity or guarantee given for margin requirements if the
derivatives or forward transactions are being used in accordance
with the provisions of this chapter;
Note Margin and derivative are defined in the glossary.
(b) any indemnity given to the independent entity against any
liability incurred by it in safeguarding the scheme property;
(c) any indemnity given by the scheme or the independent entity to
another person if—
(i) the other person is engaged to assist the independent entity
to safeguard any of the scheme property; and
(ii) the indemnity is against any liability incurred by the other
person in safeguarding scheme property;
(d) for a CIC or CIP—an indemnity given to a person winding up a
corporation or scheme (the relevant entity) if the indemnity is
given for the purposes of arrangements by which all or part of
the property of the relevant entity becomes the first property of
the CIC or CIP and the shareholders or unitholders of the
relevant entity become the first unitholders of the CIC or CIP;
Note CIC and CIP are defined in r 1.3.7 and 1.3.8 respectively.
Corporation is defined in the glossary.
(e) for a CIT—an indemnity given to a person winding up a
corporation or scheme if all or part of the property of the
corporation or scheme is to become part of the scheme property
of the CIT by way of unitisation.
Note CIT is defined in r 1.3.9. Unitisation is defined in the glossary.
Operating duties and responsibilities—QFC schemes Chapter 8 Dealing—QFC schemes Part 8.1
Rule 8.1.1
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Chapter 8 Operating duties and responsibilities—QFC schemes
Notes for ch 8
1 This chapter provides the operating framework within which a QFC scheme
must be operated on a day-to-day basis to ensure that persons are treated fairly
when they become, while they remain, or as they cease to be, unitholders.
2 The operator operates the scheme on a day-to-day basis. Its operation is
governed particularly by the provisions of this chapter.
3 The operator does not necessarily have to carry out all the activities it is
responsible for and may outsource functions to others. This chapter sets out
the parameters of any outsourcing.
4 The independent entity’s duty is, generally speaking, to safeguard the scheme
property and to oversee certain functions of the operator (most notably the
dealing, valuation, pricing and investment functions).
Part 8.1 Dealing—QFC schemes
Division 8.1.A Dealing—QFC qualified investor schemes
8.1.1 Application of div 8.1.A to umbrella schemes—QFC qualified investor schemes
(1) This division applies to each subscheme of a QFC qualified investor
scheme that is an umbrella scheme as if it were a separate QFC
qualified investor scheme.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
(2) The currency of a subscheme may, if appropriate, be used for the
subscheme instead of the base currency of the umbrella scheme.
Note Base currency is defined in the glossary.
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8.1.2 Initial offer—QFC qualified investor schemes
(1) The period of the initial offer for a QFC qualified investor scheme,
and how it ends, must be set out in the latest filed prospectus and must
not be of unreasonable length.
Note Initial offer and latest filed prospectus are defined in the glossary.
(2) During the initial offer period, units may only be issued at the initial
price.
Note Initial price is defined in the glossary.
8.1.3 How units are issued and redeemed etc—QFC qualified investor schemes
(1) Units in a QFC qualified investor scheme are issued or redeemed on
behalf of the scheme by the operator making a record of—
(a) the issue or redemption; and
(b) the number or percentage of the units in each class that are
issued or redeemed.
Note Issue, redemption and class are defined in the glossary.
(2) Units in a QFC qualified investor scheme cannot be issued or
redeemed in any other way.
(3) The time of an issue or redemption under subrule (1) is the time the
record is made.
(4) The operator of a QFC qualified investor scheme may arrange for the
independent entity to issue or redeem units on behalf of the scheme
if the operator would otherwise be obliged to issue or redeem the units
on behalf of the scheme.
Operating duties and responsibilities—QFC schemes Chapter 8 Dealing—QFC schemes Part 8.1
Rule 8.1.4
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8.1.4 Controls over issue and redemption of units—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that at
each valuation point there are at least as many units in issue of any
class as there are units registered to unitholders of that class.
Note Valuation point and class are defined in the glossary.
(2) In issuing or redeeming units, the operator must not do, or fail to do,
anything that would, or might, give the operator, or an associated
person for the operator, a benefit or advantage at the expense of a
unitholder or potential unitholder.
Note Issue, redemption and associated person are defined in the glossary.
(3) The operator must, as required by these rules and the latest filed
prospectus—
(a) issue and redeem units on behalf of the scheme; and
(b) arrange for the payment of money or transfer of assets to or from
the independent entity for scheme.
Note Money and latest filed prospectus are defined in the glossary.
(4) The operator of must keep a record of the issues and redemptions it
makes.
(5) If the operator breaches subrule (1) or (2), it must—
(a) correct the breach as quickly as possible; and
(b) reimburse the scheme any costs the scheme may have incurred
in correcting the breach, subject to any reasonable minimum
level for reimbursement provided in the latest filed prospectus.
Note Breach is defined in the glossary.
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8.1.5 Issue and redemption of units in multiple classes—QFC qualified investor schemes
(1) This rule applies to a QFC qualified investor scheme if the scheme
has 2 or more classes of units in issue.
Note Class is defined in the glossary.
(2) The operator may treat all, or any 2 or more, of the classes (the
relevant classes) as a single class in deciding how many units are to
be issued or redeemed by reference to a particular valuation point if—
(a) either—
(i) the relevant classes have the same entitlement to
participate in the scheme property, and the same liability
for charges, expenses, and other payments, that may be
recovered from the scheme property; or
(ii) the relevant classes differ only as to whether income is
distributed or accumulated by periodic credit to capital,
and the price of the units in each class is calculated by
reference to undivided shares in the scheme property; and
(b) the independent entity gives its prior agreement.
8.1.6 Issue and redemption generally—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must, at all times
during a dealing day, be willing to issue units on behalf of the scheme
to any eligible person in accordance with any conditions stated in the
constitutional document and the latest filed prospectus, unless the
operator has reasonable grounds to refuse the issue.
Note Dealing day, issue and latest filed prospectus are defined in the glossary.
Constitutional document is defined in r 3.1.1.
(2) Conditions mentioned in subrule (1) must be fair and reasonable as
between all unitholders and potential unitholders.
(3) The operator of a QFC qualified investor scheme must, at all times
during a dealing day, be willing to redeem on behalf of the scheme
Operating duties and responsibilities—QFC schemes Chapter 8 Dealing—QFC schemes Part 8.1
Rule 8.1.7
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units of an eligible unitholder in accordance with any conditions in
the constitutional document and the latest filed prospectus, unless the
operator has reasonable grounds to refuse the redemption.
Note Redemption is defined in the glossary.
(4) On agreeing to redeem units under subrule (3), the operator must
arrange for the independent entity to pay the appropriate proceeds of
the redemption to the unitholder within any reasonable period
provided in the constitutional document or the latest filed prospectus,
unless the operator or independent entity has reasonable grounds for
withholding payment.
(5) Payment of proceeds on redemption must be made in any way
provided in the latest filed prospectus.
(6) The way provided for in the latest filed prospectus for subrule (5)
must be fair as between redeeming unitholders and continuing
unitholders.
(7) The operator must issue or redeem units at a price calculated at the
next valuation point for dealing purposes after receiving the
instructions to issue or redeem the units.
(8) If a QFC qualified investor scheme is operating limited redemption
arrangements, the arrangements must provide for the operator to
redeem units in the scheme at least once every 6 months.
Note Limited redemption arrangements is defined in the glossary.
Guidance on limited redemption periods
The maximum period between dealing days for a QFC qualified investor scheme
will depend on the reasonable expectations of the target investor group and the
particular investment objectives, strategies and policy of the scheme. For example,
for a scheme aiming to invest in large property developments, the expectation
would be that it is reasonable to have a longer period between dealing days for
liquidity reasons than for a scheme investing predominantly in listed securities.
8.1.7 When instructions for issue and redemption must be given—QFC qualified investor schemes
(1) The latest filed prospectus of a QFC qualified investor schemes must
fix a time before a valuation point (the cut-off point) after which the
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operator must not accept instructions to issue or redeem units on
behalf of the scheme at the valuation point.
(2) The cut-off point must not be earlier than the close of business on the
business day before the valuation point to which it relates.
(3) However, if there are 2 or more valuation points on a day, the cut-off
point for a valuation point must not be earlier than the valuation point
immediately before it.
Examples
If there are 3 valuations points at 10 am, 12 noon and 2 pm on a business day (the
relevant day), the cut-off points for the valuations points must comply with the
following:
(a) the cut-off point for the 10 am valuation point cannot be earlier than the close
of business on the business day before the relevant day;
(b) the cut-off point for the 12 noon valuation point cannot be earlier than 10 am
on the relevant day;
(c) the cut-off point for the 2 pm valuation point cannot be earlier than 12 noon
on the relevant day.
(4) Different cut-off points may be used to differentiate between the
methods of submitting instructions to redeem to the operator but not
to differentiate between unitholders or potential unitholders.
8.1.8 Limited issue—QFC qualified investor schemes
If a QFC qualified investor scheme limits the issue of units in any
class, units in the class can only be issued if the issue—
(a) is in accordance with the constitutional document and the latest
filed prospectus; and
(b) will not materially prejudice any existing unitholders.
Note Issue, class and latest filed prospectus are defined in the glossary.
Constitutional document is defined in r 3.1.1.
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Rule 8.1.9
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8.1.9 Issue only to qualified investors—QFC qualified investor schemes
To remove any doubt, the operator of a QFC qualified investor
scheme must not issue units in the scheme to a person who is not a
qualified investor for the scheme.
Note Issue is defined in the glossary. Qualified investor, for a QFC scheme, is
defined in r 1.2.12 (2).
Division 8.1.B Dealing—QFC retail schemes
Notes for div 8.1.B
1 The operator of a QFC retail scheme is responsible for issuing and redeeming
units on behalf of the scheme. The provisions of this division are intended to
ensure that the operator treats persons fairly if they give instructions to the
operator to issue or redeem units.
2 This division also sets out common standards for how the amounts in relation
to unit transactions are to be paid. These arrangements include the initial offer
of units and the exchange of units for scheme property.
8.1.10 Application of div 8.1.B to umbrella schemes—QFC retail schemes
(1) This division applies to each subscheme of a QFC retail scheme that
is an umbrella scheme as if it were a separate QFC retail scheme.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
(2) The currency of a subscheme may, if appropriate, be used for the
subscheme instead of the base currency of the umbrella scheme.
Note 1 Base currency is defined in the glossary.
Note 2 Details of the initial offer must be provided in any prospectus available
during the initial offer period (see r S4.16 (c) (Dealing)).
8.1.11 Initial offers—QFC retail schemes
(1) During the initial offer period for a QFC retail scheme, units may only
be issued at the initial price.
Note Initial offer and initial price are defined in the glossary.
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(2) The length of the initial offer period must not be unreasonable, taking
into account the characteristics of the scheme.
(3) The period of the initial offer comes to an end if the operator believes
on reasonable grounds that the price that would reflect the current
value of the scheme property would differ from the initial price by
more than 2%.
8.1.12 How units are issued and redeemed etc—QFC retail schemes
(1) Units in a QFC retail scheme are issued or redeemed on behalf of the
scheme by the operator making a record of—
(a) the issue or redemption; and
(b) the number or percentage of the units in each class that are
issued or redeemed.
Note Issue, redemption and class are defined in the glossary.
(2) Units in a QFC retail scheme cannot be issued or redeemed in any
other way.
(3) The time of an issue or redemption under subrule (1) is the time the
record is made.
(4) The operator of a QFC retail scheme may arrange for the independent
entity to issue or redeem units on behalf of the scheme if the operator
would otherwise be obliged to issue or redeem the units on behalf of
the scheme.
8.1.13 Controls over issue and redemption of units—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that at each
valuation point there are at least as many units in issue of any class as
there are units registered to unitholders of that class.
Note Valuation point and class are defined in the glossary.
(2) In issuing or redeeming units, the operator must not do, or fail to do,
anything that would, or might, give the operator, or an associated
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Rule 8.1.13
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person for the operator, a benefit or advantage at the expense of a
unitholder or a potential unitholder.
Note Issue, redemption and associated person are defined in the glossary.
(3) The operator must, as required by these rules and the latest filed
prospectus—
(a) issue and redeem units on behalf of the scheme; and
(b) arrange for the payment of money or transfer of assets to or from
the independent entity for the scheme.
Note Money and latest filed prospectus are defined in the glossary.
(4) The operator must keep a record of the issues and redemptions it
makes.
(5) If the operator breaches subrule (1) or (2), it must—
(a) correct the breach as quickly as possible; and
(b) reimburse the scheme any costs the scheme may have incurred
in correcting the breach, subject to any reasonable level for
reimbursement provided in the latest filed prospectus.
Note Breach is defined in the glossary.
(6) The operator must have systems and controls to ensure compliance
with subrule (1).
Guidance for controls
1 GENE principle 4 requires an authorised firm to have effective systems and
controls. GENE principle 7 requires an authorised firm to have regard to its
customers’ interests and to treat them fairly.
2 The operator should agree a period with the independent entity during which
the operator will issue or redeem units. A period up to the next valuation point,
but in all cases within 24 hours, may be acceptable if the provisions mentioned
in paragraph 1 are complied with.
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8.1.14 Issue and redemption of units in multiple classes—QFC retail schemes
(1) This rule applies to a QFC retail scheme if the scheme has 2 or more
classes of units in issue.
Note Class is defined in the glossary.
(2) The operator may treat all, or any 2 or more, of the classes (the
relevant classes) as a single class in deciding how many units are to
be issued or redeemed by reference to a particular valuation point if—
(a) either—
(i) the relevant classes have the same entitlement to
participate in the scheme property, and the same liability
for charges, expenses, and other payments, that may be
recovered from the scheme property; or
(ii) the relevant classes differ only as to whether income is
distributed or accumulated by periodic credit to capital,
and the price of the units in each class is calculated by
reference to undivided shares in the scheme property; and
(b) the independent entity gives its prior agreement.
8.1.15 Changes to number of units issued or redeemed—QFC retail schemes
(1) Any instructions to the operator of a QFC retail scheme for the issue
or redemption of units may be altered to change the number of units
issued or redeemed if the independent entity, after having taken
reasonable care in considering the matter—
(a) is satisfied that—
(i) the alteration corrects an error in the instruction; and
(ii) the error is an isolated error; and
(b) agrees with the change.
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Rule 8.1.16
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(2) However, the instruction may be altered only within the period within
which payment must be made in relation to the unit under rule 8.1.16
(Payment for issued units—QFC retail schemes) or rule 8.1.19
(Payment for redeemed units—QFC retail schemes).
8.1.16 Payment for issued units—QFC retail schemes
(1) The operator of a QFC retail scheme must not issue units in the
scheme to a person unless the person has paid the independent entity
the price of the units and any payments required under rule 8.2.16
(Dilution—QFC retail schemes).
Note Issue and price are defined in the glossary.
(2) Any payment made to the independent entity under this rule must be
in cash or cleared funds unless rule 8.1.20 (Issue or redemption
otherwise than for cash—QFC retail schemes) applies.
(3) If the operator breaches this rule, the operator must reimburse the
scheme for any lost interest unless the amount involved is not, in the
independent entity’s opinion, material to the scheme.
8.1.17 Issue and redemption generally—QFC retail schemes
(1) The operator of a QFC retail scheme must, at all times during a
dealing day, be willing to issue units on behalf of the scheme to any
person in accordance with any conditions stated in the constitutional
document and the latest filed prospectus, unless the operator has
reasonable grounds to refuse the issue.
Note Dealing day, issue and latest filed prospectus are defined in the glossary.
Constitutional document is defined in r 3.1.1.
(2) Conditions mentioned in subrule (1) must be fair and reasonable as
between all unitholders and potential unitholders.
(3) The operator of a QFC retail scheme must, at all times during a
dealing day, be willing to redeem on behalf of the scheme units of a
unitholder, unless the operator has reasonable grounds to refuse the
redemption.
Note Redemption is defined in the glossary.
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page 192 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(4) Subject to rule 8.1.21 (Deferred redemption—QFC retail schemes),
the operator of a QFC retail scheme must issue or redeem units at a
price calculated at the next valuation point for dealing purposes after
the operator receives instructions to issue or redeem the units.
8.1.18 When instructions for issue or redemption must be given—QFC retail schemes
(1) The latest filed prospectus of a QFC retail scheme must fix a time
before a valuation point (the cut-off point) after which the operator
must not accept instructions to issue or redeem units on behalf of the
scheme at the valuation point.
(2) The cut-off point must not be earlier than the close of business on the
business day before the valuation point to which it relates.
(3) However, if there are 2 or more valuation points on a day, the cut-off
point for a valuation point must not be earlier than the valuation point
immediately before it.
Examples
If there are 3 valuations points at 10 am, 12 noon and 2 pm on a business day (the
relevant day), the cut-off points for the valuations points must comply with the
following:
(a) the cut-off point for the 10 am valuation point cannot be earlier than the close
of business on the business day before the relevant day;
(b) the cut-off point for the 12 noon valuation point cannot be earlier than 10 am
on the relevant day;
(c) the cut-off point for the 2 pm valuation point cannot be earlier than 12 noon
on the relevant day.
Note Rule 8.1.21 (Deferred redemption—QFC retail schemes) allows, in
certain circumstances, redemptions at a valuation point to be deferred to
the next valuation point.
(4) Different cut-off points may be used to differentiate between the
methods of submitting instructions to redeem to the operator but not
to differentiate between unitholders or potential unitholders.
Operating duties and responsibilities—QFC schemes Chapter 8 Dealing—QFC schemes Part 8.1
Rule 8.1.19
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8.1.19 Payment for redeemed units—QFC retail schemes
(1) If the operator of a QFC retail scheme redeems units on behalf of the
scheme, the operator must, before the close of business on the 4th
business day after the day the units are redeemed (or, if later, as soon
as practicable after delivery to the independent entity of the evidence
of title to the units that the independent entity may reasonably
require), request the independent entity to pay the former unitholder
the price of the units less any deduction required under rule 8.2.16
(Dilution—QFC retail schemes).
Note Redemption, business day and price are defined in the glossary.
(2) The independent entity must make the payment to the unitholder
before the close of business on the 6th business day after the day the
independent entity receives the request under subrule (1).
(3) If the scheme property does not, and will not within the period
required by subrule (2), include sufficient cash to make the payment
in the appropriate currency within that period and the scheme cannot
borrow the amount needed to make the payment without breaching
rule 7.7.3 (Borrowing limits—QFC retail schemes)), the period is
extended, for the relevant currency, until the shortage is rectified.
Note Borrowing is defined in the glossary.
(4) If subrule (3) applies, the operator must take reasonable steps to
rectify the currency shortage as quickly as possible.
(5) This rule does not apply if the rule 8.1.20 (Issue or redemption
otherwise than for cash—QFC retail schemes) applies.
(6) This rule does not require the independent entity or operator to pay
an amount or transfer scheme property for a redemption of units if an
amount is owing on the earlier issue of the units.
Note Redemption and issue are defined in the glossary.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.1 Dealing—QFC schemes Rule 8.1.20
page 194 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
8.1.20 Issue or redemption otherwise than for cash—QFC retail schemes
The independent entity of a QFC retail scheme may take into or
transfer out of the scheme property assets other than cash as payment
for the issue or redemption of units, but only if—
(a) it has taken reasonable care to ensure that the assets would not
be likely to result in any material prejudice to the interests of
unitholders; and
(b) the constitutional document and the latest filed prospectus
permit it.
Note Issue and redemption are defined in the glossary. Constitutional
document is defined in r 3.1.1.
8.1.21 Deferred redemption—QFC retail schemes
(1) If a QFC retail schemes has at least 1 valuation point on each business
day, the constitutional document and latest filed prospectus may
permit deferral of redemptions at a valuation point to the next
valuation point if the requested redemptions exceed—
(a) 10% of the scheme’s value; or
(b) if the latest filed prospectus provides another reasonable
percentage—that percentage of the scheme’s value.
Note Constitutional document is defined in r 3.1.1. Latest filed prospectus,
business day, redemption and valuation point are defined in the glossary.
(2) Any deferral of redemptions under subrule (1) must be undertaken in
accordance with the procedures explained in the latest filed
prospectus.
(3) The procedures must ensure—
(a) the consistent treatment of all unitholders who have sought to
redeem units at any valuation point at which redemptions are
deferred; and
Operating duties and responsibilities—QFC schemes Chapter 8 Dealing—QFC schemes Part 8.1
Rule 8.1.21
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(b) that all deals relating to an earlier valuation point are completed
before deals relating to a later valuation point are considered.
Note Deal is defined in the glossary.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.2 Valuation and pricing—QFC schemes Rule 8.2.1
page 196 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 8.2 Valuation and pricing—QFC schemes
Division 8.2.A Valuation and pricing—QFC qualified investor schemes
8.2.1 Application of div 8.2.A to umbrella schemes—QFC qualified investor schemes
(1) This division applies in relation to each subscheme of a QFC qualified
investor scheme that is an umbrella scheme as if it were a separate
QFC qualified investor scheme.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
(2) The currency of a subscheme may, if appropriate, be used for the
subscheme instead of the base currency of the umbrella scheme.
Note Base currency is defined in the glossary.
8.2.2 Valuation—QFC qualified investor schemes
(1) For these rules, the value of the scheme property of a QFC qualified
investor scheme is its net asset value.
Note Net asset value is defined in the glossary.
(2) To calculate the price of units in the scheme, the operator must
conduct a fair and accurate valuation of all scheme property, on a
forward price basis, in accordance with—
(a) these rules; and
(b) the constitutional document and latest filed prospectus.
Note Constitutional document is defined in r 3.1.1. Forward price and latest
filed prospectus are defined in the glossary.
(3) The valuation of investments held as part of the scheme property must
reflect their mid-market value.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.3
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(4) If single prices are quoted for both buying and selling investments,
the latest filed prospectus must explain how the investments must be
valued.
(5) If the scheme invests in approved money-market instruments, the
operator must value an approved money-market instrument on an
amortised cost basis if the instrument has a residual maturity of less
than 3 months and has no specific sensitivity to market parameters,
including credit risk.
Note Approved money-market instrument is defined in r 7.1.5.
(6) Any part of the scheme property that is not an investment must be
valued by the operator at a fair value.
Note Investment is defined in the glossary.
(7) An interest in an immovable must be valued by the scheme’s standing
independent valuer under division 6.2.C.
(8) Any fiscal charges, commissions, professional fees or other charges
that were paid, or would be payable, on acquiring or disposing of an
investment or other part of the scheme property must be excluded
from the value of the investment or other part of the scheme property.
8.2.3 Valuation points—QFC qualified investor schemes
(1) A QFC qualified investor scheme must have a valuation point on each
dealing day, other than a dealing day during the initial offer period.
Note Valuation point, dealing day and initial offer are defined in the glossary.
(2) The operator must prepare a valuation of the scheme property in
accordance with rule 8.2.2 at each valuation point.
8.2.4 Prices of units—QFC qualified investor schemes
(1) The price of the unit at a valuation point must be calculated by the
operator—
(a) on the basis of the valuation under rule 8.2.3 (2) at the valuation
point; and
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page 198 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) in a way that is fair and reasonable as between unitholders; and
(c) in a way that is otherwise in accordance with the constitutional
document and latest filed prospectus.
Note Constitutional document is defined in r 3.1.1. Valuation point and
latest filed prospectus are defined in the glossary.
(2) The operator must publish in an appropriate way the price of each
class of unit in the scheme, based on each valuation under
rule 8.2.3 (2).
Note Price and class are defined in the glossary.
Division 8.2.B Valuation and pricing—QFC retail schemes
Note for div 8.2.B
The operator of a QFC retail scheme is responsible for valuing the scheme
property and for calculating the price of units. This division protects
unitholders and potential unitholders by—
(a) setting out rules to ensure that the price of units is calculated fairly and
regularly; and
(b) allowing the operator to mitigate the effects of any dilution (reduction)
in value of the scheme property caused by buying and selling underlying
investments as a result of the issue or redemption of units; and
(c) ensuring that prices are made public in an appropriate way.
8.2.5 Application of div 8.2.B to umbrella schemes—QFC retail schemes
(1) This division applies in relation to each subscheme of a QFC retail
scheme that is an umbrella scheme as if it were a separate QFC retail
scheme.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
(2) The currency of a subscheme may, if appropriate, be used for the
subscheme instead of the base currency of the umbrella scheme.
Note Base currency is defined in the glossary.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.6
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8.2.6 Duty of operator to rectify breaches of div 8.2.B—QFC retail schemes
(1) The operator of a QFC retail scheme must take immediate action to
rectify any breach of this division.
Note Breach is defined in the glossary.
(2) If the breach relates to the incorrect pricing of units in relation to the
issue of units, the rectification must extend to the reimbursement or
payment of amounts by the operator to unitholders, former
unitholders or the scheme.
Note Issue and money are defined in the glossary.
(3) However, if the independent entity considers that the breach is of
minimal significance or that making the reimbursement or payment
would be inappropriate, the independent entity may direct that
rectification need not extend to reimbursement or payment.
(4) The independent entity may consider the breach to be of minimal
significance if—
(a) the independent entity has reviewed the operator’s controls (and
supporting systems) in accordance with rule 8.2.12 (Review by
independent entity of operator’s pricing controls etc—QFC
retail schemes); and
(b) the independent entity is satisfied, based on the review, that the
operator’s pricing controls comply with rule 8.2.11 (Pricing
controls of operator—QFC retail schemes); and
(c) the error in pricing of a unit is less than 0.5% of the correct price.
(5) If the breach was caused by 1 or more factors or existed over a period,
then, in deciding whether the breach is of minimal significance, the
independent entity must consider each incorrect price separately.
(6) To remove any doubt, even though the independent entity considers
the breach to be of minimal significance, the independent entity may
require reimbursement or payment of amounts by the operator to
unitholders, former unitholders or the scheme.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.2 Valuation and pricing—QFC schemes Rule 8.2.7
page 200 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(7) In deciding under subrule (3) whether reimbursement or payment is
inappropriate, the independent entity must take into account the need
not to prejudice the rights of unitholders or unitholders of a class of
units.
(8) If the independent entity decides that making the reimbursement or
payment would be inappropriate, the independent entity must tell the
Regulatory Authority about the breach and its decision immediately,
but within 1 business day.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
Note See also r 4.2.4 (Duty of independent entity to report certain breaches of
law etc—all QFC schemes).
(9) The independent entity must give the Regulatory Authority any
information about the breach and its decision that the authority
reasonably requires.
(10) The independent entity must satisfy itself that any reimbursement or
payment required under this rule is accurately and promptly
calculated and paid.
(11) This rule does not require reimbursement to unitholders or former
unitholders of amounts that the operator and independent entity
reasonably consider to be immaterial.
8.2.7 Valuation requirement——QFC retail schemes
To calculate the price of units in a QFC retail scheme, the operator
must conduct a fair and accurate valuation of all scheme property, on
a forward price basis, in accordance with—
(a) these rules; and
(b) the constitutional document and latest filed prospectus.
Note Constitutional document is defined in r 3.1.1. Forward price and latest
filed prospectus are defined in the glossary.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.8
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8.2.8 General rules for valuation of scheme property—QFC retail schemes
(1) The operator of a QFC retail scheme must value the scheme’s
investments using a reputable source.
(2) The operator must keep the reliability of the source of prices under
regular review.
(3) For some or all of the investments held as part of the scheme property,
the operator may quote different prices according to whether they are
being bought (offer prices) or sold (bid prices).
(4) The valuation of investments held as part of the scheme property must
reflect their mid-market value.
(5) If single prices are quoted for both buying and selling investments,
the latest filed prospectus must explain how the investments must be
valued.
Note Latest filed prospectus is defined in the glossary.
(6) If the scheme invests in approved money-market instruments, the
operator must value an approved money-market instrument on an
amortised cost basis if the instrument has a residual maturity of less
than 3 months and has no specific sensitivity to market parameters,
including credit risk.
Note Approved money-market instrument is defined in r 7.1.5.
(7) Any part of the scheme property that is not an investment must be
valued at fair value. An interest in an immovable held by a QFC retail
property fund must be valued by the fund’s standing independent
valuer under rule 12.5.6.
Note Under rules 12.3.2 (3) and 12.5.6, an investment in an intermediate
holding vehicle for the purpose of holding an immovable:
(a) must be treated as if it were a direct investment in the immovable;
and
(b) must be valued as an immovable.
(8) Any fiscal charges, commissions, professional fees or other charges
that were paid, or would be payable, on acquiring or disposing of an
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.2 Valuation and pricing—QFC schemes Rule 8.2.9
page 202 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
investment or other part of the scheme property must be excluded
from the value of the investment or other part of the scheme property.
(9) The operator must—
(a) document the basis of valuation of the scheme property
(including any fair value pricing policy for rule 8.2.9) and, if
appropriate, the basis of any methodology; and
(b) act consistently and fairly in making a valuation.
8.2.9 Fair value pricing for securities—QFC retail schemes
(1) If the operator of a QFC retail scheme has reasonable grounds to
believe—
(a) that no reliable price exists for a security at a valuation point; or
(b) that the most recent price available for a security does not reflect
the operator’s best estimate of the value of the security at the
valuation point;
the operator must value the security at a price that, in its opinion,
reflects a fair and reasonable price for the security (the fair value
price).
Note Security and valuation point are defined in the glossary.
(2) Without limiting subrule (1), the operator may use the fair market
price for the security if—
(a) there has been no recent trade in the security; or
(b) a significant event has happened since the most recent closure
of the market where the price of the security is taken.
(3) For subrule (2) (b), an event is significant if, because of the event,
the most recent price of the security (or a basket of securities that
includes the security) is materially different from the price that the
operator believes on reasonable grounds would have existed at the
valuation point had the relevant market been open.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.10
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(4) In deciding whether to use a fair value price for the security, the
operator must consider the following:
(a) the nature of the QFC retail scheme;
(b) the kind of security;
(c) the basis and reliability of the alternative price used;
(d) the operator’s policy on the valuation of scheme property as
disclosed in the latest filed prospectus.
(5) Subrule (4) does not limit the matters the operator may consider.
(6) If the unit price is calculated by the operator using—
(a) properly applied fair value prices in accordance with this rule;
and
(b) a documented fair value pricing policy for the scheme;
any subsequent information that indicates that the price should (or
should perhaps) have been different from the price calculated by the
operator does not, of itself, establish that the price was incorrectly
calculated by the operator.
8.2.10 Valuation points—QFC retail schemes
(1) A QFC retail scheme must not have less than 2 regular valuation
points in any month and, if there are only 2 valuation points in any
month, the regular valuation points must be at least 2 weeks apart.
Note The prospectus of a QFC retail scheme must contain information about
its regular valuation points for the purpose of dealing in units in
accordance with rule S4.15 (Valuation and pricing).
(2) No valuation points are required during the initial offer period.
Note Initial offer is defined in the glossary.
8.2.11 Pricing controls of operator—QFC retail schemes
(1) The operator of a QFC retail scheme must be able to demonstrate that
it has effective controls over its calculations of unit prices.
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(2) Without limiting subrule (1), the controls must be appropriate to
ensure that—
(a) prices of units are calculated in accordance with this division;
and
(b) the likelihood of incorrect prices is minimised.
(3) In particular, the controls must ensure all the following:
(a) asset prices are accurate and up-to-date;
(b) investment transactions are accurately and promptly reflected in
valuations;
(c) the components of the valuation (including stock, cash, and units
in issue) are regularly reconciled to their source or prime records
and any reconciling items resolved promptly and debtors
reviewed for recoverability;
(d) sources of prices not obtained from the main pricing source are
recorded and regularly reviewed;
(e) compliance with investment and borrowing powers is regularly
reviewed;
(f) dividends are accounted for as soon as securities are quoted ex-
dividend (unless it is prudent to account for them on receipt);
(g) fixed interest dividends, interest and expenses are accrued at
each valuation point;
(h) tax positions are regularly reviewed and adjusted, if necessary;
(i) reasonable tolerances are set for movements in the key elements
of a valuation, and movements outside the tolerances are
investigated;
(j) the operator regularly reviews the portfolio valuation for
accuracy;
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.12
V9 Collective Investment Schemes Rules 2010 page 205 Effective: 15/Oct/20
(k) valuation of OTC derivatives is accurate, up-to-date and
complies with methods agreed with the independent entity.
Note OTC derivative is defined in the glossary.
(4) In exercising its pricing controls, the operator may exercise
reasonable discretion in deciding the appropriate frequency of the
operation of the controls and may choose a longer interval, if
appropriate, given the level of activity in the scheme or the materiality
of any effect on the price.
(5) The operator must keep records to demonstrate the exercise of
effective pricing controls.
8.2.12 Review by independent entity of operator’s pricing controls etc—QFC retail schemes
(1) This rule sets out the reviews that the independent entity of a QFC
retail scheme must conduct to be satisfied that the operator has
controls that are appropriate to ensure that—
(a) prices of units are calculated in accordance with this division;
and
(b) the likelihood of incorrect prices is minimised.
(2) A review must extend to pricing functions that the operator has
outsourced to a third party.
(3) In conducting a review, the independent entity must—
(a) thoroughly examine the operator’s controls (and supporting
systems) to confirm that they are appropriate; and
(b) analyse the controls (and supporting systems) to decide the
extent to which reliance can be placed on them.
(4) A review must be conducted when the independent entity is appointed
and afterwards as it considers appropriate given its knowledge of the
robustness and stability of the operator’s controls (and supporting
systems).
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(5) A review must be conducted more frequently if the independent entity
knows or suspects that the operator’s controls (or any supporting
systems) are weak or otherwise unsatisfactory.
(6) In addition, the independent entity must from time to time review
other aspects of the valuation of the scheme property, verifying on a
sample basis, if necessary—
(a) the assets, liabilities, accruals, units in issue and securities prices
(and in particular the prices of securities that are not approved
securities and the basis for the valuation of unquoted securities);
and
Note Approved security is defined in r 7.1.9.
(b) any other relevant matter (for example, an accumulation factor
or a currency conversion factor).
(7) The independent entity must ensure that any issue identified in a
review is properly followed up and resolved.
8.2.13 Recording and reporting incorrect pricing—QFC retail schemes
(1) The operator must make and keep a record of each instance where the
price of a unit is incorrect.
(2) The record must be made as soon as the error is discovered.
(3) The operator must—
(a) report each instance to the independent entity as soon as
practicable; and
(b) give the independent entity details of the action taken, or to be
taken, to avoid repetition of the error.
Note Rule 4.2.4 deals with the duty of the independent entity to report certain
breaches of the law.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.14
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8.2.14 Prices of units—QFC retail schemes
(1) The operator of a QFC retail scheme must ensure that the price of a
unit in any class is calculated—
(a) by reference to the scheme’s net asset value at the relevant time;
and
(b) in accordance with these rules, the constitutional document and
the latest filed prospectus.
Note Class, net asset value and latest filed prospectus are defined in the
glossary. Constitutional document is defined in r 3.1.1.
(2) To remove any doubt and without limiting subrule (1), the
constitutional document or the latest filed prospectus (or both) may
make provision for large deals to be conducted at a higher issue price
or lower redemption price than those published for the scheme, if the
prices do not exceed the relevant maximum and minimum limits
applying under this division.
Note Large deal and redemption are defined in the glossary.
(3) Any unit price calculated in accordance with subrule (1) must be
expressed in a form that is accurate to at least 4 significant figures.
(4) For each class of units, a single price must be calculated at which
units are to be issued and redeemed.
8.2.15 Issue and redemption prices—QFC retail schemes
The operator of a QFC retail scheme must not—
(a) issue a unit for more than the price of a unit in the relevant class
at the relevant valuation point, plus—
(i) any issue charge permitted under rule 8.6.4 (Charges on
buying and selling units—QFC retail schemes); and
(ii) any payments required under rule 8.2.16 (Dilution—QFC
retail schemes); or
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(b) redeem a unit for less than the price of a unit in the relevant class
at the relevant valuation point, less—
(i) any redemption charge permitted under rule 8.6.4; and
(ii) any deductions required under rule 8.2.16.
Note Class, valuation point, issue charge and redemption charge are defined
in the glossary.
8.2.16 Dilution—QFC retail schemes
(1) In issuing or redeeming units in a QFC retail scheme, the operator
must include in the unit price the dilution adjustment the operator
considers necessary to reduce the effect of dilution.
Note 1 Issue, redemption, dilution adjustment and dilution are defined in the
glossary.
Note 2 See the independent entity’s duties under r 8.2.17 (Particular duties of
independent entity in relation to dilution—QFC retail schemes).
(2) In issuing or redeeming units in a QFC retail scheme, the operator
may, in exceptional circumstances, require the payment or deduction
of a dilution levy for the purpose of reducing the effect of dilution if
the independent entity has agreed that the levy should be required.
Note Dilution levy is defined in the glossary.
(3) In applying a dilution adjustment or dilution levy, the operator must
act in a fair way to reduce dilution and solely for that purpose.
Note Dilution is defined in the glossary.
(4) A dilution adjustment is made—
(a) as part of the calculation of the unit price for the purpose of
reducing dilution in the scheme; or
(b) to recover any amount the scheme has paid, or the operator
reasonably expects it to pay, in relation to the issue or
redemption of units.
(5) A dilution levy is payable at the same time as payment or transfer of
property is required for the issue or redemption.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.17
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(6) As soon as practicable after a valuation point, the operator must tell
the independent entity the rate or amount of any dilution adjustment
or dilution levy.
Note Valuation point is defined in the glossary.
8.2.17 Particular duties of independent entity in relation to dilution—QFC retail schemes
(1) The independent entity must take reasonable care to ensure that—
(a) the operator considers whether or not to exercise the power
under rule 8.2.16 (Dilution—QFC retail schemes) to require a
dilution levy and, if applicable, the rate or amount of any
dilution levy that is required; or
Note Dilution levy is defined in the glossary.
(b) the operator has, in considering the matters mentioned in
paragraph (a), taken into account all factors that are material and
relevant to the operator’s decision; and
(c) the operator has, in considering whether to exercise the power
under rule 8.2.16 to require a dilution levy, acted in accordance
with the restrictions of that rule.
Note See r 4.2.3 (2) for other duties of the independent entity in relation to
pricing.
(2) To remove any doubt, the independent entity has no duty in relation
to the operator’s exercise of any discretion mentioned in subrule (1).
8.2.18 Publication of prices—QFC retail schemes
(1) The operator of a QFC retail scheme must make dealing prices public
in an appropriate way.
Note Deal is defined in the glossary.
(2) In deciding the appropriate way of making prices public, the operator
must ensure all the following requirements are met:
(a) that a unitholder or potential unitholder can obtain the prices at
a reasonable cost;
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(b) that prices are available at reasonable times;
(c) that publication is consistent with the way and frequency at
which the units are dealt in;
(d) that the way prices are made public is disclosed in the latest filed
prospectus;
Note Latest filed prospectus is defined in the glossary.
(e) that prices are published in a consistent way.
(3) Without limiting subrule (1), publication in the following ways may
be appropriate:
(a) publication in a national newspaper;
(b) supply through an advertised local rate or freephone telephone
number;
(c) publication on the internet;
(d) inclusion in a database of prices that is publicly available;
(e) communication to all existing unitholders.
(4) The operator must make previous prices available to any unitholder
or potential unitholder on request.
Division 8.2.C Valuation—money-market funds
8.2.19 Maintaining value—all money-market funds
(1) This rule applies to a QFC qualified investor scheme or QFC retail
scheme that is a money-market fund.
Note Money-market fund is defined in r 1.3.12.
(2) The operator must conduct a valuation of the scheme property on a
mark to market basis at least once every week and at the same
valuation point used to value the scheme property on an amortised
cost basis.
Note Valuation point is defined in the glossary.
Operating duties and responsibilities—QFC schemes Chapter 8 Valuation and pricing—QFC schemes Part 8.2
Rule 8.2.19
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(3) The operator must ensure that the value of the scheme property when
valued on a mark to market basis does not differ by more than 0.5%
from the value of the scheme property when valued on an amortised
cost basis.
(4) The operator must tell the independent entity in writing whenever a
valuation discloses that the mark to market value of the money-
market fund differs from its amortised cost basis value by more than
0.1%.
(5) The operator must agree with the independent entity procedures
designed to stabilise the money-market fund if the mark to market
value of the scheme differs from its amortised cost basis value by
0.1%, 0.2% or 0.3%.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.3 Title and register—QFC schemes Rule 8.3.1
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Part 8.3 Title and register—QFC schemes
8.3.1 Unitholder register requirements—all QFC schemes
(1) The operator of a QFC scheme must ensure that the unitholder
register includes—
(a) the name and address of each person (a relevant person) who is
or has been a unitholder (for joint unitholders, no more than 4
persons need to be included); and
(b) the number or percentage of units (including fractions of a unit)
in each class held by each relevant person; and
(c) the date each relevant person was registered for the units in the
person’s name and, if relevant, ceased to be registered for the
units in the person’s name; and
(d) the number or percentage of units in each class currently in
issue.
Note 1 Unitholder register is defined in the glossary. Unitholder and unit are
defined in r 1.2.5 and r 1.2.4 respectively.
Note 2 For the operator’s obligation to keep the register, see r 4.1.6.
(2) The operator must not enter notice of any trust (whether express,
implied or constructive) on the register.
(3) The operator and independent entity are not bound by notice of any
trust.
(4) The operator and independent entity must rely on the unitholder
register as conclusive evidence of the persons entitled to the units
entered on it, unless the units are listed units.
Note Under rule 4.1.6 (3), the records (held in the QCSD or in the relevant
exchange’s registry or system) of transfers or titles to units in the scheme
are taken to be the definitive unitholder register and a record in that
registry or system is conclusive evidence of title to a listed unit.
(5) The operator must take all reasonable steps to ensure that the
information on the register is at all times complete and up to date.
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Rule 8.3.2
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(6) Without limiting subrule (5), the operator must do the following in
relation to the register:
(a) take reasonable steps to update the register on receiving written
notice of a change of name or address of a unitholder;
(b) ensure that the register, or a copy of the register, is available for
inspection in the QFC during ordinary business hours by or on
behalf of any unitholder, the Regulatory Authority, the
independent entity or the auditor of the scheme;
(c) on request by or on behalf of any unitholder, give the unitholder
a copy of the register entries relating to the unitholder free of
charge;
(d) after consultation with the independent entity, carry out the
conversion of units allowed under rule 8.3.4 (Conversion of
units—all QFC schemes).
(7) However, subrule (6) (b) does not prevent the operator from closing
the register for periods of not longer than 30 business days in any
year.
Note Business day and year are defined in the glossary.
(8) If the operator receives written notice of a change of name of a
unitholder and a certificate has been issued for the unitholder’s units,
the operator must also either endorse the existing certificate or issue
an updated one.
8.3.2 Transfer of units by act of parties—all QFC schemes
(1) Every unitholder of a QFC scheme is entitled to transfer units entered
in the unitholder register in the unitholder’s name by an instrument
of transfer in any form that the operator approves, but the operator is
under no duty to accept the transfer unless it is permitted by the
constitutional document and the latest filed prospectus.
Note Constitutional document is defined in r 3.1.1. Latest filed prospectus is
defined in the glossary.
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(2) However, the operator of a QFC qualified investor scheme must not
accept the transfer of units entered in the unitholder register unless
the transferee is a qualified investor for the scheme.
Note Qualified investor, for a QFC scheme, is defined in r 1.2.12 (2).
(3) Every instrument of transfer of units in a QFC scheme must be signed
by, or on behalf of, the unitholder transferring the units (or, if the
unitholder is a corporation, may be signed by 2 members of its
governing body on behalf of the corporation).
Note Corporation and governing body are defined in the glossary.
(4) The transferor must be treated as the unitholder until the transferee’s
name is entered in the unitholder register.
(5) Every instrument of transfer must be left for registration with the
operator accompanied by—
(a) any document required by the law applying in the QFC; and
(b) any other evidence reasonably required by the operator.
(6) The operator must keep an instrument of transfer for at least 6 years
after the day it is registered.
(7) On registration of an instrument of transfer, a record of the transferor,
the transferee and the date of transfer must be made in the unitholder
register.
(8) Despite anything in this rule, the transfer of a listed unit may be made
electronically or in any other way permitted by the rules of the
exchange where it is listed (or by the regulator of that exchange). A
transfer made in such a way is sufficient to transfer title to the unit.
8.3.3 Certificates for units—all QFC schemes
(1) If units in a QFC scheme are issued or rule 8.3.2 (Transfer of units by
act of parties—all QFC schemes) is complied with in relation to the
transfer of units in a QFC scheme, the operator may issue a document
Operating duties and responsibilities—QFC schemes Chapter 8 Title and register—QFC schemes Part 8.3
Rule 8.3.4
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evidencing title to the units in accordance with the constitutional
document.
Note Document evidencing title is defined in the glossary. Constitutional
document is defined in r 3.1.1.
(2) However, the operator must issue a document evidencing title as soon
as practicable if the procedures for redeeming units require
unitholders to surrender the document evidencing title.
(3) For a QFC scheme that is listed in the Qatar Stock Exchange or in any
other regulated exchange, a record (held in the QCSD’s, or relevant
exchange’s, registry or system) of a transfer or title to a unit is taken
to be a document evidencing title to the unit.
8.3.4 Conversion of units—all QFC schemes
(1) This rule applies to a QFC scheme if there are 2 or more classes of
units offered for issue.
Note Class and issue are defined in the glossary.
(2) A unitholder has the right to convert the units from a class to another
class if converting the units does not breach the latest filed
prospectus.
Note Latest filed prospectus and breach are defined in the glossary.
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schemes Rule 8.4.1
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Part 8.4 Operator and independent entity appointment and removal—QFC schemes
8.4.1 Initial appointment of operator and independent entity—all QFC schemes
On the registration of a scheme under these rules—
(a) the person named in the application for registration as the person
who is to become the operator becomes the initial operator of
the scheme; and
(b) the person appointed by the operator, and named in the
application for registration, as the person who is to become the
independent entity becomes the initial independent entity of the
scheme.
8.4.2 Removal of operator—QFC schemes
(1) The independent entity of a QFC scheme may, by written notice given
to the operator, remove the operator if any of the following events
happens:
(a) a meeting is called to consider a resolution for winding up the
operator;
(b) an application is made to dissolve the operator or strike it off the
register of companies;
(c) a petition is presented for winding up the operator;
(d) a composition is made or proposed by the operator with any of
the operator’s creditors;
(e) an administrator is appointed for the operator;
(f) anything equivalent to an event mentioned in paragraphs (a) to
(e) happens in relation to the operator outside the QFC;
Operating duties and responsibilities—QFC schemes Chapter 8 Operator and independent entity appointment and removal—QFC
schemes Part 8.4
Rule 8.4.2
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(g) the independent entity forms the reasonable opinion, and states
in writing, that a change of operator is desirable in the interest
of the unitholders;
(h) a special resolution of the unitholders is passed to remove the
operator;
Note Special resolution is defined in the glossary.
(i) the unitholders of 75% in value of the units in issue make a
written request to the independent entity for the operator’s
removal.
(2) The independent entity must, by written notice given to the operator,
remove the operator if the operator is no longer eligible to be the
operator of the scheme under rule 4.1.1 (Requirements for operator—
all QFC schemes) because of action taken by the Regulatory
Authority under the Financial Services Regulations, whether or not
under article 31 (Own initiative action by the Regulatory Authority).
(3) If the independent entity gives the operator a notice under subrule (1)
or (2), the independent entity must give the Regulatory Authority a
copy of the notice immediately, but within 1 business day after the
day the notice is given to the operator.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(4) On receipt of a notice by the independent entity under subrule (1) or
(2)—
(a) the operator ceases to be the operator of the scheme; and
(b) is released from all further obligations under these rules and the
constitutional document.
Note Constitutional document is defined in r 3.1.1.
(5) Subrule (4) (b) does not affect the rights of the independent entity or
any other person in relation to an act or omission by the operator
before its removal.
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schemes Rule 8.4.3
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(6) The independent entity must appoint another person as the operator
of the scheme.
(7) The person appointed must be eligible to be the operator of the
scheme under rule 4.1.1.
(8) If the name of the scheme contains a reference to the name of the
former operator, the former operator is entitled to require the new
operator and the independent entity to propose a change to the name
of the scheme.
8.4.3 Retirement of operator—all QFC schemes
(1) The operator of a QFC scheme is entitled to retire as operator in
favour of another person if—
(a) the operator appoints the other person as operator and assigns all
its rights and functions as operator to the person; and
(b) the person is eligible to be the operator of the scheme under
rule 4.1.1 (Requirements for operator—all QFC schemes); and
(c) the independent entity approves the appointment of the person
as operator.
(2) On the appointment of the person taking effect, the former operator—
(a) is released from all further obligations under these rules and the
constitutional document; and
Note Constitutional document is defined in r 3.1.1.
(b) may keep any consideration paid to it in relation to the change
without having to account for it to any unitholder.
(3) Subrule (2) (a) does not affect the rights of the independent entity or
any other person in relation to an act or omission by the former
operator before its retirement.
(4) On the retirement of the operator, the replacement operator must
immediately, but within 1 business day after the day the replacement
Operating duties and responsibilities—QFC schemes Chapter 8 Operator and independent entity appointment and removal—QFC
schemes Part 8.4
Rule 8.4.4
V9 Collective Investment Schemes Rules 2010 page 219 Effective: 15/Oct/20
operator’s appointment takes effect, tell the Regulatory Authority
about the retirement and the appointment.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
8.4.4 Consequences of removal or retirement of operator—all QFC schemes
(1) If the operator of a QFC scheme is removed or retires, it is entitled to
continue to be recorded in the unitholder register for the units it holds.
(2) This rule is subject to any restriction in the latest filed prospectus
relating to the permitted categories of unitholders.
Note Latest filed prospectus is defined in the glossary.
8.4.5 Removal of independent entity by unitholders—all QFC schemes
(1) The independent entity of a QFC scheme may be removed by a
special resolution of the unitholders.
Note Special resolution is defined in the glossary.
(2) On the removal of the independent entity, the operator must—
(a) tell the Regulatory Authority about the removal immediately,
but within 1 business day after the day the independent entity is
removed; and
(b) appoint another person as the independent entity.
Examples for r (2) (a) and r (4)
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(3) The person appointed must be eligible to be the independent entity of
the scheme under rule 4.2.1 (Requirements for independent entity—
all QFC schemes).
(4) On the appointment of the person as the independent entity, the
operator must tell the Regulatory Authority about the appointment
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schemes Rule 8.4.6
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immediately, but within 1 business day after the day the appointment
is made.
8.4.6 Removal of independent entity no longer eligible for appointment—all QFC schemes
(1) This rule applies if the independent entity of a QFC scheme that is an
authorised firm is no longer eligible to be the independent entity of
the scheme under rule 4.2.1 (Requirements for independent entity—
all QFC schemes) because of action taken by the Regulatory
Authority under the Financial Services Regulations, whether or not
under article 31 (Own initiative action by the Regulatory Authority).
(2) The operator must, by written notice given to the independent entity,
remove the independent entity.
Note If the independent entity is not an authorised firm, the independent entity
may also be removed under the following rules:
• r 4.2.12 (Non-QFC independent entities—removal by operators)
• r 4.2.13 (Non-QFC independent entities—removal by Regulatory
Authority).
(3) On the removal of the independent entity, the operator must—
(a) tell the Regulatory Authority about the removal immediately,
but within 1 business day after the day the independent entity is
removed; and
(b) appoint another person as the independent entity.
Examples for r (3) (a) and r (5)
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(4) The person appointed must be eligible to be the independent entity of
the scheme under rule 4.2.1.
(5) On the appointment of the person as the independent entity, the
operator must tell the Regulatory Authority about the appointment
immediately, but within 1 business day after the day the appointment
is made.
Operating duties and responsibilities—QFC schemes Chapter 8 Operator and independent entity appointment and removal—QFC
schemes Part 8.4
Rule 8.4.7
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8.4.7 Retirement of independent entity—all QFC schemes
(1) The independent entity of a QFC scheme may retire voluntarily only
if—
(a) the operator has appointed another person (the replacement) as
the independent entity; and
(b) the independent entity has told the Regulatory Authority and the
replacement—
(i) about any matter relating to its retirement that it considers
should be drawn to their attention; and
(ii) if there is no such matter—that there is no matter relating
to its retirement that it considers should be drawn to their
attention.
(2) The replacement must be eligible to be the independent entity of the
scheme under rule 4.2.1 (Requirements for independent entity—all
QFC schemes).
(3) The voluntary retirement of the independent entity takes effect only
when the appointment of another person as independent entity takes
effect.
(4) On the retirement of the independent entity, the operator must
immediately, but within 1 business day after the day the retirement
takes effect, tell the Regulatory Authority about the retirement and
the appointment of the other person as the independent entity.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
8.4.8 Consequences of removal or retirement of independent entity—all QFC schemes
(1) If the independent entity of a QFC scheme is removed or retires, the
independent entity must, without delay, transfer or deliver the scheme
property held by it to the replacement independent entity unless the
QFC Court otherwise orders.
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schemes Rule 8.4.8
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(2) Until all the scheme property has been transferred or delivered, the
independent entity remains accountable for it to the unitholders.
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Rule 8.5.1
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Part 8.5 Outsourcing—QFC schemes
8.5.1 What is outsourcing?
(1) For these rules, outsourcing, for a QFC scheme, is any form of
arrangement that involves the operator or independent entity of the
scheme relying on a third party service provider (including a member
of its group) for the exercise of a function in relation to the scheme
under these rules, any other Rules, the constitutional document or the
latest filed prospectus.
Note Group, exercise, function and latest filed prospectus are defined in the
glossary. Rules is defined in INAP. Constitutional document is defined
in r 3.1.1.
(2) However, outsourcing does not include the following arrangements:
(a) discrete advisory services (including, for example, the provision
of legal advice), audit services, procurement of specialised
training, billing, and physical security;
(b) supply arrangements and functions (including, for example, the
supply of electricity or water and the provision of catering and
cleaning services);
(c) purchase of standardised services (including, for example,
market information services and the provision of prices);
(d) the appointment of a group employee to exercise a controlled
function for an authorised firm.
Note Employee, controlled function and authorised firm are defined in the
glossary.
8.5.2 Outsourcing by operator—all QFC schemes
(1) The operator of a QFC scheme may outsource its functions in relation
to the scheme in accordance with this part, and not otherwise.
Note The outsourcing provisions of CTRL do not apply in relation to an
outsourcing of functions under this part (see CTRL, r 5.1.1).
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(2) However, the operator must not outsource to the independent entity,
or to a related person for the independent entity, any of the functions
of the operator under a provision of these rules, the constitutional
document, or the latest filed prospectus, if rule 4.2.3 (1) (Oversight
functions of independent entity—all QFC schemes) applies to the
provision.
Note Related person is defined in the glossary.
(3) Subrule (2) does not apply to the outsourcing to the independent
entity of the function of providing scheme administration.
Note Providing scheme administration is defined in the glossary.
(4) Also, the operator must not outsource functions if the outsourcing
may adversely impact on the Regulatory Authority’s ability to
supervise the operator’s activities.
8.5.3 Outsourcing by independent entity—all QFC schemes
(1) The independent entity of a QFC scheme may outsource its functions
in relation to the scheme in accordance with this part, and not
otherwise.
Note The outsourcing provisions of CTRL do not apply in relation to an
outsourcing of functions under this part (see CTRL, r 5.1.1).
(2) However, the independent entity must not—
(a) outsource to the operator (or, if the QFC scheme is a CIC or CIP,
to a member (however described) of the governing body of the
CIC or CIP) any of the functions of the independent entity under
rule 4.2.3 (Oversight functions of independent entity—all QFC
schemes) or rule 4.2.6 (Property safeguarding functions of
independent entity— all QFC schemes); or
Note CIC and CIP are defined in r 1.3.7 and r 1.3.8 respectively.
Governing body is defined in the glossary.
(b) outsource to a related person for the operator (or, if the QFC
scheme is a CIC or CIP, to a related person for a member
(however described) of the governing body of the CIC or CIP)
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Rule 8.5.4
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any of the functions of the independent entity mentioned in
paragraph (a); or
Note Related person is defined in the glossary.
(c) outsource to a person the function of holding documents
evidencing title to scheme property unless the person is
prohibited under the outsourcing agreement from giving them to
a third party without the independent entity’s agreement.
Note Document evidencing title is defined in the glossary.
(3) Also, the independent entity must not outsource functions if the
outsourcing may adversely impact on the Regulatory Authority’s
ability to supervise the independent entity’s activities in relation to
the scheme.
8.5.4 Outsourcing notice and information—all QFC schemes
(1) The operator or independent entity of a QFC scheme must give the
Regulatory Authority reasonable notice of its intention to outsource a
function under this part.
(2) The notice must be given at least 10 business days before the day the
operator or independent entity outsources the function.
Note Business day is defined in the glossary.
(3) The operator or independent entity must give the Regulatory
Authority any information about the proposed outsourcing that the
authority reasonably needs.
8.5.5 Provisions applying to outsourcing by operator and independent entity—all QFC schemes
(1) This rule applies in relation to an outsourcing of functions made by
the operator or independent entity (the regulated entity) of a QFC
scheme under this part to another person (the service provider).
(2) The outsourcing must be in writing and in the form of, or part of, an
agreement between the regulated entity and the service provider (the
outsourcing agreement).
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(3) The outsourcing agreement must—
(a) describe in adequate detail the functions (the outsourced
functions) to be exercised by the service provider under the
outsourcing; and
(b) describe in adequate detail the service standards to be applied by
the service provider in exercising the outsourced functions; and
(c) state that it is an outsourcing agreement under these rules; and
(d) ensure that the operator and independent entity can, at all times,
effectively monitor the exercise of the outsourced functions by
the service provider; and
(e) authorise the regulated entity—
(i) to give further instructions to the service provider about
the exercise of the outsourced functions; and
(ii) to withdraw the outsourcing at any time, including with
immediate effect, if this is in the interests of the
unitholders; and
(f) not prevent the operator or independent entity from acting in the
best interests of the unitholders in relation to the outsourced
functions; and
(g) not prevent the scheme from being managed in the best interests
of the unitholders; and
(h) ensure that the scheme’s auditor can effectively exercise its
functions in relation to the scheme; and
(i) require the service provider to comply with these rules, and any
other law applying in the QFC, in relation to the outsourced
functions; and
(j) apply the law of the QFC to the agreement; and
(k) ensure that the regulated entity and its internal and external
auditors have access to books, records and data relating to the
exercise of functions under the outsourcing; and
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Rule 8.5.5
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(l) ensure that the outsourcing provides appropriate protection for
confidential information and personal data; and
Note Personal data is defined in the glossary.
(m) provide appropriate contingency arrangements; and
Note See r 8.5.5 (2) and (3) (Outsourcing management).
(n) require the service provider to deal with the Regulatory
Authority in an open and cooperative way in relation to the
exercise of the outsourced functions; and
(o) require the service provider to give the Regulatory Authority
access to books, records and data relating to the exercise of the
outsourced functions; and
(p) require the service provider to give the Regulatory Authority
any information it reasonably requires about the outsourced
functions; and
(q) require the service provider to keep any records made by the
service provider in relation to the outsourced functions for at
least 6 years after the day they are made; and
(r) prevent the service provider from further outsourcing any of the
outsourced functions to another person without the prior
approval of—
(i) if the regulated entity is the operator—the operator; or
(ii) if the regulated entity is the independent entity—the
independent entity and the operator.
(4) Without limiting subrule (3), the regulated entity must take the steps
necessary to mitigate against any operational risks in relation to the
outsourcing.
(5) The outsourcing agreement may provide that it has effect only in
stated circumstances or subject to stated conditions, limits and
directions.
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(6) The outsourcing of the outsourced functions to the service provider—
(a) does not relieve the regulated entity from any regulatory
obligations in relation to the outsourced functions; and
(b) does not prevent the regulated entity from exercising all or part
of the outsourced functions, despite anything in the outsourcing
agreement or any other agreement.
(7) The regulated entity remains responsible for ensuring—
(a) that all applicable QFC regulatory requirements are complied
with in relation to the outsourced functions; and
(b) that the outsourced functions are otherwise properly exercised.
(8) The service provider must exercise the outsourced functions subject
to the terms of the outsourcing agreement, including any conditions,
limits and directions in the outsourcing agreement.
(9) So far as the outsourcing agreement is expressed to operate as a
delegation, these rules, all other laws applying in the QFC, the
constitutional document and the latest filed prospectus apply to the
service provider in exercising the outsourced functions as if the
service provider were the regulated entity.
Note Constitutional document is defined in r 3.1.1. Latest filed prospectus is
defined in the glossary.
(10) Without limiting subrule (9), a function may be exercised by the
service provider on the service provider’s state of mind if—
(a) the exercise of the function is dependent on the regulated
entity’s state of mind; and
(b) the function is included in the outsourced functions; and
(c) the outsourcing agreement is expressed to operate as a
delegation in relation to the function.
(11) So far as the outsourcing agreement is expressed to operate as a
delegation, anything done by or in relation to the service provider in
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Rule 8.5.6
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relation to the outsourced functions is taken to have been done by or
in relation to the regulated entity.
(12) In this rule:
state of mind includes knowledge, intention, opinion, belief or
purpose.
8.5.6 Outsourcing management—all QFC schemes
(1) The operator and independent entity of a QFC scheme must exercise
appropriate skill, care and diligence in selecting, entering into and
exiting from outsourcings by them under this part.
(2) The operator or independent entity must ensure that—
(a) 1 or more senior managers approve and periodically review its
policy and procedures for functions outsourced under this part,
including its procedures for the following:
(i) the assessment of feasibility;
(ii) the assessment of risk;
(iii) the assessment of impact on its functions;
(iv) the costing of outsourcings;
(v) the criteria for selecting service providers; and
Note Senior manager is defined in the glossary.
(b) every service provider has the ability and capacity to exercise
reliably and professionally the functions to be outsourced to the
service provider, both at the start of the outsourcing and
throughout its life cycle, having regard, for example, to—
(i) whether the service provider is regulated, to what extent
and by whom; and
(ii) whether the exercise of the outsourced functions is subject
to specific regulation or supervision; and
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.5 Outsourcing—QFC schemes Rule 8.5.7
page 230 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(iii) the risk that outsourced functions are not properly
exercised because of the number of other persons using the
service provider; and
(iv) the financial stability and expertise of the service provider;
and
(v) potential conflicts of interest that may arise in relation to
the outsourced functions.
(3) The operator or independent entity must ensure that it has a
comprehensive contingency arrangement to allow business continuity
if there is a significant loss of services from the service provider,
including an exit strategy and, if appropriate, partial exit and step-in
clauses.
(4) The contingency arrangement must cover, among other things, the
following:
(a) a significant loss of resources by the service provider;
(b) financial failure of the service provider;
(c) an unexpected termination of the outsourcing.
8.5.7 Application of pt 8.5 to further outsourcing—all QFC schemes
(1) This part applies to the further outsourcing, whether or not by the
third party service provider, of a function outsourced to the third party
service provider under this part as if—
(a) the further outsourcing of the function were an outsourcing of
the function; and
(b) all necessary changes were made.
(2) To remove any doubt, this rule is subject to rule 8.5.5 (3) (r)
(Provisions applying to outsourcing by operator and independent
entity—all QFC schemes).
Operating duties and responsibilities—QFC schemes Chapter 8 Outsourcing—QFC schemes Part 8.5
Rule 8.5.8
V9 Collective Investment Schemes Rules 2010 page 231 Effective: 15/Oct/20
8.5.8 Systems and controls for outsourcings—all QFC schemes
If the operator or independent entity of a QFC scheme outsources a
function in relation to the scheme under this part, the operator or
independent entity must ensure that, as part of its risk management
framework, it implements and maintains systems and controls to
monitor the exercise of the outsourced function.
Note Function and exercise are defined in the glossary.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.6 Payments—QFC schemes Rule 8.6.1
page 232 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 8.6 Payments—QFC schemes
Division 8.6.A Payments—QFC qualified investor schemes
8.6.1 Payments—QFC qualified investor schemes
(1) The operator of a QFC qualified investor scheme must ensure that the
scheme does not incur any expense in relation to any movable or
immovable property unless—
(a) investing in the property is in accordance with the scheme’s
investment objectives, strategies and policy; or
(b) the property is necessary for the direct pursuit of the scheme’s
business of investing in any investments to which it is dedicated.
(2) Payments made by the independent entity out of the scheme property
may be made from capital property rather than from income if the
basis for this is set out in the latest filed prospectus.
Note Capital property and latest filed prospectus are defined in the glossary.
(3) Subrule (2) does not apply to payments for redemptions of units.
Division 8.6.B Payments—QFC retail schemes
8.6.2 Payments out of scheme property—QFC retail schemes
(1) The only payments that may be made from the scheme property of a
QFC retail scheme are payments in relation to—
(a) remunerating the persons operating the scheme; or
(b) the administration of the scheme; or
(c) the investment or safeguarding of the scheme property; or
(d) any taxes payable by the scheme or on scheme property.
Operating duties and responsibilities—QFC schemes Chapter 8 Payments—QFC schemes Part 8.6
Rule 8.6.3
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(2) A payment under subrule (1) (a) to (c) must not be made from scheme
property if it is unfair to (or materially prejudices the interests of) any
class of unitholders or potential unitholders.
Guidance
The operator should consider whether any payment to an affected person is unfair
because of its amount or because it gives a disproportionate benefit to the affected
person.
(3) To remove any doubt, subrule (2) does not invalidate a payment that
gives rise to a difference between the rights of separate classes of
units if the difference relates solely to the payments that may be taken
out of the scheme property.
(4) If any annual management charge, or performance fee, (however
described) that is payable to the operator in accordance with the latest
filed prospectus is not paid when it is payable, the operator must tell
the Regulatory Authority about the non-payment immediately, but
within 1 business day.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
8.6.3 Performance fees—QFC retail schemes
(1) The latest filed prospectus of a QFC retail scheme may permit a
payment (a performance fee) for the operator’s periodic charges, or
to any investment adviser, to be based on a comparison between
fluctuations in the value or price of—
(a) 1 or more aspects of the scheme property; and
(b) property of any description, an index or another factor designed
for the purpose.
Note Latest filed prospectus and investment adviser are defined in the
glossary.
(2) Any performance fee must be consistent with rule 8.6.2 (Payments
out of scheme property—QFC retail schemes).
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.6 Payments—QFC schemes Rule 8.6.4
page 234 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(3) The following provisions apply in deciding whether a performance
fee is consistent with rule 8.6.2:
(a) a performance fee must be calculated and paid after all other
payments have been considered;
(b) if a performance fee is to be paid on the basis of the performance
of the scheme against an index or another factor—the index or
other factor must be reasonable given the scheme’s investment
objectives, strategies and policy, and must be applied
consistently;
(c) a performance fee may be based on performance above a defined
positive rate of return (the hurdle rate), which may be fixed or
variable;
(d) if paragraph (b) or (c) applies—the index or other factor, or
hurdle rate, may be carried forward to future accrual periods;
(e) the period over which the index or other factor, or hurdle rate,
accrues and the frequency with which it crystallises must be
reasonable;
(f) unless allowed by rule 8.6.2 (1), there must be no arrangements
to adjust the price or value of issue or redemption transactions
in relation to performance fees accrued or paid if the transactions
happen within the accrual period of the charge.
8.6.4 Charges on buying and selling units—QFC retail schemes
(1) Only the operator of a QFC retail scheme may impose charges on
unitholders or potential unitholders when they buy or sell units in the
scheme.
(2) The operator of a QFC retail scheme must not make any charge or
levy in relation to—
(a) the issue of units, except as permitted by subrule (3); or
(b) the redemption of units, except as permitted by subrule (4).
Note Issue and redemption are defined in the glossary.
Operating duties and responsibilities—QFC schemes Chapter 8 Payments—QFC schemes Part 8.6
Rule 8.6.5
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(3) Subrule (2) (a) does not prevent an issue charge made in accordance
with the latest filed prospectus if the charge is a fixed amount or
calculated as a percentage of the price of a unit.
Note Issue charge and latest filed prospectus are defined in the glossary.
(4) Subrule (2) (b) does not prevent a redemption charge made in
accordance with—
(a) the prospectus that was the latest filed prospectus when the units
were purchased by the unitholder; and
(b) rule 8.6.5.
Note Redemption charge is defined in the glossary.
(5) This rule is subject to rule 8.2.16 (Dilution—QFC retail schemes).
8.6.5 Redemption charges—QFC retail schemes
(1) A redemption charge may be expressed as an amount or percentage.
Note Redemption charge is defined in the glossary.
(2) A redemption charge may also be expressed as diminishing over the
time for which the unitholder has held the units or be calculated on
the basis of the unit price performance of the units.
(3) However, any redemption charge must not be such that it could be
reasonably regarded as restricting any right of redemption.
Note For the mandatory content of the prospectus of a QFC retail scheme in
relation to redemption charges, see r S4.19 (Redemption charges).
8.6.6 Charges on exchange of units in umbrella schemes—QFC retail schemes
For a QFC retail scheme that is an umbrella scheme, the operator must
not make a charge of more than the amount stated in the latest filed
prospectus on an exchange of units in a subscheme for units in another
subscheme.
Note Umbrella scheme and subscheme are defined in r 1.2.11. Latest filed
prospectus is defined in the glossary.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.6 Payments—QFC schemes Rule 8.6.7
page 236 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
8.6.7 Allocation of payments to income or capital—QFC retail schemes
(1) The operator of a QFC retail scheme must, in accordance with the
latest filed prospectus, decide whether a payment is to be made from
the income property or capital property of the scheme.
Note Latest filed prospectus, income property and capital property are defined
in the glossary.
(2) In making a decision under subrule (1), the operator must—
(a) have appropriate regard to whether the nature of the cost is
income related or capital related and the scheme’s investment
objectives, strategies and policy; and
(b) agree with the independent entity about how the payment should
be treated.
(3) If, for any class of units for any annual accounting period, the amount
of the income property is less than the income distributed, the
shortfall must, as from the end of that period, be charged to the capital
account and must not later be transferred to the income account.
Guidance
Any payment as a result of effecting transactions for the scheme should be made
from the capital property of the scheme. All other payments should be made from
income property in the first instance, but may be transferred to the capital account
in accordance with rule 8.6.7 (1).
8.6.8 Prohibition of promotional payments—QFC retail schemes
(1) A payment must not be made from the scheme property of a QFC
retail scheme to a person for, or for the promotion of, the issue or
redemption of units in the scheme.
Examples of prohibited payments
1 commission payable to intermediaries
2 payments in relation to the preparation or dissemination of financial
communications (unless subrule (2) applies)
Operating duties and responsibilities—QFC schemes Chapter 8 Payments—QFC schemes Part 8.6
Rule 8.6.9
V9 Collective Investment Schemes Rules 2010 page 237 Effective: 15/Oct/20
(2) This rule does not apply to—
(a) a payment to the operator to reimburse the operator for costs of
preparing and printing the key information document required
under CIPR; or
(b) any other payment to the operator if the payment is permitted
under these rules.
8.6.9 Expenses in relation to property—QFC retail schemes
The operator of a QFC retail scheme must ensure that the scheme
does not incur any expense in relation to any property unless investing
in the property is in accordance with the scheme’s investment
objectives, strategies and policy.
8.6.10 Payment of liabilities on transfer of assets—QFC retail schemes
(1) This rule applies if the scheme property of a QFC retail scheme (the
first scheme) is transferred to another QFC retail scheme (or to the
independent entity of the other scheme for the other scheme) in
consideration of the issue of units in the other scheme to unitholders
of the first scheme.
Note In the circumstance described in subrule (1), the other scheme (or
independent entity of the other scheme) becomes successor in title to the
scheme property transferred.
(2) The other scheme (or independent entity of the other scheme) may
pay out of the scheme property of the other scheme any liability
arising after the transfer if—
(a) the liability could properly have been paid out of the scheme
property transferred had it arisen before the transfer; and
(b) there is nothing in the constitutional document of the other
scheme expressly forbidding the payment; and
Note Constitutional document is defined in r 3.1.1.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.6 Payments—QFC schemes Rule 8.6.11
page 238 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(c) the operator of the other scheme is of the opinion that proper
provision was made for meeting the liabilities that were known
or could reasonably have been anticipated at the time of the
transfer.
8.6.11 Attribution of scheme property to subschemes—QFC retail schemes
(1) For a QFC retail scheme that is an umbrella scheme, any assets to be
received into, or any payments out of, the scheme property that are
not attributable to only a single subscheme must be attributed by the
operator to the respective subschemes.
(2) Any attribution under this rule must be made in a way that is fair to
the unitholders of the QFC retail scheme generally.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
Operating duties and responsibilities—QFC schemes Chapter 8 Accounting periods—QFC schemes Part 8.7
Rule 8.7.1
V9 Collective Investment Schemes Rules 2010 page 239 Effective: 15/Oct/20
Part 8.7 Accounting periods—QFC schemes
8.7.1 Accounting periods—all QFC schemes
(1) A QFC scheme must have—
(a) an annual accounting period; and
(b) a half-yearly accounting period.
(2) A half-yearly accounting period starts on the first day of an annual
accounting period and ends—
(a) on the day 6 months before the last day of the annual accounting
period; or
(b) on another reasonable date stated in the latest filed prospectus.
Note Latest filed prospectus is defined in the glossary.
(3) The first annual accounting period starts—
(a) on the first day of the initial offer period; or
(b) if there is not an initial offer period for the scheme—on the date
the scheme is registered;
and, in either case, ends on the next accounting reference date unless
subrule (4) applies.
Note Initial offer and accounting reference date are defined in the glossary.
(4) If the accounting reference date falls less than 6 months after the start
of the first annual accounting period, the operator may extend the
period to the next accounting reference date.
(5) Each annual accounting period after the first period is for 12 months,
starting on the next day after the accounting reference date and ending
on the next accounting reference date, unless subrule (7) applies.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.7 Accounting periods—QFC schemes Rule 8.7.1
page 240 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(6) Each annual accounting period or half yearly accounting period ends
at the end of the day worked out under this rule or, if the operator so
decides, at the last valuation point on that day.
Note Day and valuation point are defined in the glossary.
(7) If the accounting reference date stated in the scheme’s latest filed
prospectus is changed, the operator may extend or shorten the annual
accounting period by up to 6 months to end on the next accounting
reference date.
(8) Before extending or shortening an annual accounting period under
subrule (4) or (7), the operator must—
(a) consult the independent entity; and
(b) consult the scheme’s auditor; and
(c) give the Regulatory Authority reasonable notice.
(9) If the annual accounting period is extended under subrule (4) or (7)
and this results in a longer than usual period before the publication of
reports to unitholders, the operator must make summary information
about the scheme’s investment activities available to unitholders
during the period.
Operating duties and responsibilities—QFC schemes Chapter 8 Income allocation and distribution—QFC schemes Part 8.8
Rule 8.8.1
V9 Collective Investment Schemes Rules 2010 page 241 Effective: 15/Oct/20
Part 8.8 Income allocation and distribution—QFC schemes
8.8.1 Application of pt 8.8 to umbrella schemes—all QFC schemes
This part (other than rule 8.8.2 (1) and (2)) applies to a QFC scheme
that is an umbrella scheme as if each subscheme were a separate QFC
scheme.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
8.8.2 Income allocation and distribution—all QFC schemes
(1) A QFC scheme must have an annual income allocation date.
Note Annual income allocation date is defined in the glossary.
(2) The annual income allocation date must be within 4 months after the
scheme’s accounting reference date.
Note Month and accounting reference date are defined in the glossary.
(3) A QFC scheme may have an interim income allocation date and
interim accounting periods.
Note Interim income allocation date and interim accounting period are
defined in the glossary.
(4) An interim income allocation date must be within 4 months after the
day the relevant interim accounting period ends.
(5) A QFC scheme must have a distribution account to which the amount
of income allocated to unit classes that distribute income is
transferred at the end of the relevant accounting period.
Note Distribution account and class are defined in the glossary.
(6) The amount available for income allocations must be calculated by—
(a) taking the net revenue after taxation decided in accordance with
appropriate, internationally accepted professional standards
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.8 Income allocation and distribution—QFC schemes Rule 8.8.2
page 242 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
specified in the constitutional document and the latest filed
prospectus; and
Guidance
The constitutional document and latest filed prospectus would be expected to
specify a document such as the Statement of Recommended Practice for
financial statements of authorised funds issued by the United Kingdom
Investment Management Association.
(b) making any transfers, to the extent permitted by the latest filed
prospectus, between the income account and the capital account
so that the amount available for income allocations is calculated
as if the revenue from debt instruments had been decided
without regard to the effect of—
(i) the change in an index of consumer prices during the
period, if the scheme’s investment objectives, strategies
and policy are to invest predominantly in debt instruments
for which cash flows are decided by reference to the index
(or a similar index of consumer prices) and the transfer
relates only to amounts in relation to index-linked, gilt-
edged securities; or
(ii) amortisation, if the amount available for income
allocations is not less than if the transfers had not been
made; and
(c) making any other transfers between the income account and the
capital account that are required in relation to any of the
following:
(i) stock dividends;
(ii) income equalisation included in income allocations from
other collective investment schemes;
(iii) the allocation of payments in accordance with—
(A) for a QFC qualified investor scheme—the latest filed
prospectus; and
Operating duties and responsibilities—QFC schemes Chapter 8 Income allocation and distribution—QFC schemes Part 8.8
Rule 8.8.3
V9 Collective Investment Schemes Rules 2010 page 243 Effective: 15/Oct/20
(B) for a QFC retail scheme—rule 8.6.7 (Allocation of
payments to income or capital—QFC retail
schemes);
(iv) taxation;
(v) the total amount of income property included in units
issued and units redeemed during the period.
Note Income account, capital account, debt instrument, income
equalisation, income property and latest filed prospectus are defined in
the glossary.
(7) If income is allocated during an accounting period—
(a) with effect from the end of the accounting period, the amount of
income allocated to unit classes that accumulate income
becomes part of the capital property and requires an adjustment
to the proportion of the value of the scheme property to which
they relate if other unit classes are in issue during the period;
and
Note Capital property is defined in the glossary.
(b) the adjustment under paragraph (a) must ensure that the price
remains unchanged despite the transfer of income; and
(c) the amount of any interim distribution must not be more than the
amount that, in the operator’s opinion, would be available for
allocation if the interim accounting period and all previous
interim accounting periods in the same annual accounting
period, taken together, were an annual accounting period.
8.8.3 Unclaimed, minimal and joint unitholders distributions—all QFC schemes
(1) Any distribution of a QFC scheme that is unclaimed after 6 years (or,
if the latest filed prospectus provides for a longer period, that period)
becomes part of the capital property.
Note Latest filed prospectus and capital property are defined in the glossary.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.8 Income allocation and distribution—QFC schemes Rule 8.8.3
page 244 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(2) The operator and independent entity of a QFC scheme may agree a
minimal amount in relation to which a distribution of income is not
required, and how any such amounts are to be treated.
(3) A distribution of a QFC scheme made to the joint unitholder named
first on the unitholder register is as effective a discharge to the
operator and independent entity as if that joint unitholder had been
the sole unitholder.
Note Unitholder register is defined in the glossary.
Operating duties and responsibilities—QFC schemes Chapter 8 Names—QFC schemes Part 8.9
Rule 8.9.1
V9 Collective Investment Schemes Rules 2010 page 245 Effective: 15/Oct/20
Part 8.9 Names—QFC schemes
8.9.1 Name of scheme etc—all QFC schemes
(1) The operator of a QFC scheme must ensure that the name of the
scheme, any subscheme of the scheme, or a class of units, is not
undesirable or misleading.
Note Subscheme is 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.
(2) If the Regulatory Authority is of the opinion that the operator is in
breach of subrule (1) in relation to a name, it may direct the operator
to take the steps necessary to have the name changed.
(3) In deciding whether to give a direction under subrule (2) in relation
to a name for a breach of subrule (1), the Regulatory Authority may
consider whether the name—
(a) implies that the scheme (or a part of the scheme) has merits that
might, or might not, be justified; or
(b) implies that the operator has merits that might, or might not, be
justified; or
(c) is inconsistent with the scheme’s investment objectives,
strategies or policy; or
(d) might mislead investors into thinking that a person other than
the operator is responsible for managing the scheme (or part of
the scheme); or
(e) incorrectly implies that the scheme is not a collective investment
scheme, a scheme registered in the QFC or under these rules, or
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.9 Names—QFC schemes Rule 8.9.1
page 246 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
a particular kind of scheme registered under these rules (for
example, a qualified investor scheme); or
(f) is, in the Regulatory Authority’s opinion, likely to offend the
public or a part of the public; or
(g) is substantially similar to the name of—
(i) a scheme registered under PRIV or these rules; or
(ii) a subscheme of an umbrella scheme registered under PRIV
or these rules; or
(iii) a class of units for a scheme registered under PRIV or
these rules; or
(h) implies a degree of security in relation to the capital or income
that is not justified.
Examples of names for para (e)
names that include the word ‘plan’ or ‘account’
Examples of names for para (h)
names that include the word ‘guaranteed’, ‘protected’ or ‘secured’
(4) Subrule (3) does not limit the matters the Regulatory Authority may
consider.
(5) If the name includes the word ‘guaranteed’, ‘protected’ or ‘secured’
(or a similar word), the Regulatory Authority may regard the name as
undesirable or misleading unless the operator satisfies it of the
matters mentioned in subrules (8) and (9).
(6) If the name indicates or implies a guaranteed capital return, income
return or both, the Regulatory Authority may regard the name as
undesirable or misleading unless the operator satisfies it—
(a) that the total amount paid for a unit is guaranteed under a
guarantee; and
(b) of the matters mentioned in subrules (8) and (9).
(7) If the name indicates or implies a degree of capital security (for
example, the words ‘capital protected’ or words with a similar
Operating duties and responsibilities—QFC schemes Chapter 8 Names—QFC schemes Part 8.9
Rule 8.9.1
V9 Collective Investment Schemes Rules 2010 page 247 Effective: 15/Oct/20
meaning), the Regulatory Authority may regard the name as
undesirable or misleading unless the operator satisfies it—
(a) that an amount not materially less than the total amount paid for
a unit is guaranteed under a guarantee; and
(b) that the scheme’s investment objectives, strategies and policy
show a clear intention to provide a material degree of security in
relation to the total amount paid for a unit; and
(c) that the degree of capital security is apparent from the name and
clearly stated in the latest filed prospectus; and
(d) of the matters mentioned in subrules (8) and (9).
(8) For subrule (5), (6) or (7), the operator must satisfy the Regulatory
Authority that the scheme has a guarantee in relation to which all the
following requirements are met:
(a) the guarantee is given by a person other than the operator, the
independent entity or an associated person for the operator or
independent entity;
Note Associated person is defined in the glossary.
(b) the guarantor has the authority and resources to honour the terms
of the guarantee;
(c) the guarantee covers all unitholders of the scheme and is legally
enforceable by each unitholder or by a person acting on the
unitholder’s behalf;
(d) the guarantee relates to the total amount paid for a unit;
(e) the guarantee provides for payment at a stated date or dates and
is unconditional although reasonable commercial exclusions
such as force majeure may be included;
(f) if the guarantee applies to different classes of units—it is
identical in its application to all classes except for differences
attributable to income already received, or charges already
incurred, by the different classes of units.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.9 Names—QFC schemes Rule 8.9.2
page 248 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(9) For subrule (5), (6) or (7), the operator must also satisfy the
Regulatory Authority that the terms of the guarantee and the
credentials of the guarantor are clearly set out in detail in the latest
filed prospectus and that any exclusions such as force majeure are
highlighted.
(10) In deciding whether it is satisfied for subrule (7), the Regulatory
Authority must take into account whether the degree of capital
security implied by the name fairly reflects the nature of the
arrangements for providing the security.
(11) Subrule (10) does not limit the matters the Regulatory Authority may
take into account for subrule (7).
(12) In this rule:
total amount paid, for a unit, includes any charge or other cost paid
or incurred when the unit was bought.
8.9.2 Use of certain names—all QFC schemes
(1) The operator of a QFC scheme must ensure that the name of the
scheme, or of a class of units, does not state or imply that the scheme
is an Islamic fund unless the scheme is an Islamic fund.
Note Islamic fund is defined in r 1.3.11.
(2) The operator of a QFC umbrella scheme must ensure that the name
of a subscheme, or of a class of units of a subscheme, does not state
or imply that the subscheme is an Islamic fund unless the subscheme
is an Islamic fund.
Note Umbrella scheme and subscheme are defined in r 1.2.11.
(3) The operator of a QFC scheme must ensure that the name of the
scheme, or of a class of units, does not state or imply that the scheme
is a money-market fund unless the scheme is a money-market fund.
Note Money-market fund is defined in r 1.3.12.
(4) The operator of a QFC umbrella scheme must ensure that the name
of a subscheme, or of a class of units of a subscheme, does not state
Operating duties and responsibilities—QFC schemes Chapter 8 Names—QFC schemes Part 8.9
Rule 8.9.2
V9 Collective Investment Schemes Rules 2010 page 249 Effective: 15/Oct/20
or imply that the subscheme is a money-market fund unless the
subscheme is a money-market fund.
Chapter 8 Operating duties and responsibilities—QFC schemes Part 8.10 Shari’a Supervisory Board—all Islamic funds Rule 8.10.1
page 250 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 8.10 Shari’a Supervisory Board—all Islamic funds
8.10.1 Islamic fund must have a supervisory board—all Islamic funds
(1) The operator of a QFC scheme that is an Islamic fund, or is an
umbrella scheme that has a subscheme that is an Islamic fund, must
ensure that there is at all times a Shari’a Supervisory Board for the
fund (or subscheme).
Note Islamic fund is defined in r 1.3.11. Umbrella scheme and subscheme are
defined in r 1.2.11.
(2) Any decision relating to the appointment or dismissal of a member of
the Shari’a Supervisory Board, or to a change affecting the board,
must be made by the operator and approved by the independent entity.
(3) ISFI, chapter 6 applies to a QFC scheme that is an Islamic fund, or is
an umbrella scheme that has a subscheme that is an Islamic fund, as
if—
(a) the scheme (or subscheme) were an authorised firm to which the
chapter applies; and
Note Authorised firm is defined in the glossary.
(b) a reference to the authorised firm or its governing body were,
subject to subrule (2), a reference to the scheme (or subscheme)
or the operator, as the context requires; and
(c) all other necessary changes were made.
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Rule 9.1.1
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Chapter 9 Suspension, winding up and transfer schemes—QFC schemes
Part 9.1 Suspension and restart of dealings—QFC schemes
Note for Part 9.1
Nothing in this Part diminishes the power of the exchange where units are listed (or
the power of the regulator of that exchange) to suspend, in accordance with its rules,
trading in the listed units.
9.1.1 Suspension and restart of dealings—all QFC schemes
(1) The operator of a QFC scheme may, with the prior agreement of the
independent entity, temporarily suspend dealings in all units or a class
of units if, because of exceptional circumstances, it is in the interests
of all the unitholders of the scheme to do so.
Note Deal and class are defined in the glossary.
(2) If the independent entity requires the operator to suspend dealings in
all units or a class of units, the operator must do so without delay.
(3) The independent entity may make a requirement under subrule (2) if,
because of exceptional circumstances, it is in the interest of all the
unitholders of the scheme to do so.
(4) The operator and independent entity must ensure that the suspension
continues only for as long as it is justified having regard to the
interests of all the unitholders in the scheme.
(5) If the operator suspends dealings under subrule (1) otherwise than
because of a requirement of the independent entity under subrule (2),
the operator must—
(a) immediately tell the Regulatory Authority orally, giving its
reasons for the suspension; and
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(b) give written confirmation to the authority of the suspension and
its reasons for the suspension within 1 business day.
Examples for this rule on ‘within 1 business day’
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(6) If the operator suspends dealings under subrule (1) because of a
requirement of the independent entity under subrule (2), the
independent entity must—
(a) immediately tell the Regulatory Authority orally, giving the
reasons for its action; and
(b) give written confirmation to the authority of the suspension, and
its reasons for its action, within 1 business day.
(7) If the operator suspends dealings under subrule (1) or (2), the operator
must—
(a) notify the unitholders about the suspension immediately but
within 1 business day after the day dealing is suspended; and
(b) from time to time publish (on its website or by other general
means) sufficient information to keep unitholders appropriately
informed about the suspension, including, if known, its likely
duration.
(8) Notification under subrule (7) (a) must—
(a) tell the unitholders about the exceptional circumstances that
resulted in the suspension; and
(b) be clear, fair and not misleading; and
(c) tell the unitholders how to obtain the information it is required
to publish under subrule (7) (b).
(9) During the suspension—
(a) none of the obligations under part 8.1 (Dealing—QFC schemes)
apply; but
(b) the operator must as far as practicable comply with all relevant
provisions of part 8.2 (Valuation and pricing—QFC schemes).
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Rule 9.1.1
V9 Collective Investment Schemes Rules 2010 page 253 Effective: 15/Oct/20
(10) The suspension of dealings must end as soon as practicable after the
exceptional circumstances mentioned in subrule (1) or (3) cease.
(11) The operator or independent entity must—
(a) review the suspension at least every 28 days; and
(b) tell the Regulatory Authority about the results of the review
immediately, but within 1 business day after conducting the
review.
(12) If the operator or independent entity becomes aware of any material
change in circumstances that may affect the continuation of the
suspension, the operator or independent entity must tell the
Regulatory Authority immediately, but within 1 business day.
(13) The Regulatory Authority may, at any time, direct the operator to end
the suspension.
(14) The operator must immediately comply with the direction.
(15) If the operator decides to restart dealings, the operator must—
(a) immediately tell the Regulatory Authority about the decision
orally; and
(b) give written confirmation to the authority of its decision within
1 business day.
(16) The operator may agree, during the suspension, to deal in units at a
price calculated by reference to the first valuation point after
restarting dealings.
(17) However, if the scheme is a QFC qualified investor scheme that
operates limited redemption arrangements, and the exceptional
circumstances have affected a valuation point, the operator must fix
an additional valuation point as soon as possible after restarting
dealings.
Note 1 Limited redemption arrangements and valuation point are defined in the
glossary.
Note 2 The Regulatory Authority has power under the Financial Services
Regulations, art 105 to give certain directions in relation to collective
Chapter 9 Suspension, winding up and transfer schemes—QFC schemes Part 9.1 Suspension and restart of dealings—QFC schemes Rule 9.1.1
page 254 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
investment schemes (which are called collective investment funds in
those regulations), including a direction to cease the issue or redemption
of units in the scheme and to wind up the scheme.
Suspension, winding up and transfer schemes—QFC schemes Chapter 9 Winding up—QFC schemes Part 9.2
Rule 9.2.1
V9 Collective Investment Schemes Rules 2010 page 255 Effective: 15/Oct/20
Part 9.2 Winding up—QFC schemes
9.2.1 Application of pt 9.2 to subschemes of QFC umbrella schemes—all QFC schemes
This part applies to a subscheme of a QFC umbrella scheme as if—
(a) a reference to a QFC scheme were a reference to the subscheme;
and
(b) a reference to units were a reference to units in the class or
classes related to the subscheme; and
(c) a reference to a meeting of unitholders were a reference to a
meeting of unitholders of the class or classes mentioned in
paragraph (b); and
(d) a reference to a special resolution were a reference to a special
resolution passed at a meeting of unitholders mentioned in
paragraph (c); and
(e) a reference to the scheme property were a reference to the
scheme property attributed to the subscheme; and
(f) a reference to liabilities were a reference to liabilities of the
scheme attributable to the subscheme; and
(g) all other necessary changes were made.
Note Subscheme and umbrella scheme are defined in r 1.2.11.
9.2.2 When scheme may be wound up—all QFC schemes
A QFC scheme may be wound up—
(a) by order of the QFC Court under the Insolvency Regulations
2005 or any other regulations in force in the QFC; or
(b) if not inconsistent with any regulations in force in the QFC or
these rules—in the way and circumstances provided in the
constitutional document; or
Note Constitutional document is defined r 3.1.1.
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page 256 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(c) in the way and in any other circumstances provided by these
rules or any other rules made by the Regulatory Authority.
9.2.3 Winding-up required by constitutional document—all QFC schemes
(1) The constitutional document of a QFC scheme may provide that the
scheme is to be wound up—
(a) at a stated time; or
(b) in stated circumstances or on the happening of a stated event.
Note Constitutional document is defined r 3.1.1.
(2) However, a provision of the constitutional document that purports to
provide that the scheme is to be wound up if a particular person ceases
to be the operator or independent entity is of no effect.
9.2.4 Winding-up at direction of unitholders—all QFC schemes
The unitholders of a QFC scheme may, by special resolution, direct
the operator or independent entity to wind up the scheme.
Note Special resolution is defined in the glossary.
9.2.5 Notification to Regulatory Authority that scheme not commercially viable etc—all QFC schemes
(1) If the operator of a QFC scheme believes, on reasonable grounds, that
the scheme is not commercially viable or the scheme’s purpose
cannot be accomplished, the operator must give the Regulatory
Authority notice about the matter immediately, but within 1 business
day after the day the operator forms the belief.
Examples
See examples to rule 4.1.4 (2) on the meaning of ‘within 1 business day’.
(2) The notice must include the following information:
(a) the name of the scheme and its registration number given by the
Regulatory Authority;
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Rule 9.2.5
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(b) the size and type of scheme;
(c) the number of unitholders;
(d) whether dealing in the scheme’s units has been suspended;
(e) why the operator believes that the scheme is not commercially
viable or the scheme’s purpose cannot be accomplished;
(f) what consideration has been given to the scheme entering into a
transfer scheme under part 9.3 (Transfer schemes—QFC
schemes) with another scheme registered in the QFC or a
subscheme of an umbrella scheme registered in the QFC and the
reasons why a transfer scheme is not possible;
(g) whether unitholders have been told of the intention to seek
winding-up and, if not, whether and when they will be told of
the intention;
(h) details of any proposed rebate of charges to be made to
unitholders who recently purchased units;
(i) the preferred date for the start of the winding-up.
(3) The notice must be accompanied by a notice given by the independent
entity that includes the following:
(a) a statement that the independent entity, having taken reasonable
care in considering the matter, believes that a transfer scheme
under part 9.3 is not practicable;
(b) an explanation of the other steps that have been considered that
would result in the scheme not needing to be wound up;
(c) confirmation that the operator has exercised its functions in
accordance with these rules;
Note Exercise and function are defined in the glossary.
(d) whether the scheme’s investment and borrowing powers have
been exceeded.
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page 258 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(4) The Regulatory Authority may, in writing, require the operator or
independent entity to provide any further information or documents
that the authority reasonably needs in relation to the scheme.
9.2.6 Winding-up by operator or independent entity—all QFC schemes
(1) This rule applies if any of the following circumstances (the
prescribed circumstances) exist in relation to a QFC scheme:
(a) on a request by the operator or independent entity for the
cancellation of the scheme’s registration, the Regulatory
Authority agrees in principle that it will cancel the scheme’s
registration on the completion of the winding-up of the scheme;
(b) the operator believes, on reasonable grounds, that the scheme is
not commercially viable or the scheme’s purpose cannot be
accomplished;
(c) if the constitutional document states that the duration of the
scheme is limited—the stated duration of the scheme ends;
(d) the unitholders of the scheme direct the operator or independent
entity under rule 9.2.4 (Winding-up at direction of unitholders—
all QFC schemes) to wind up the scheme;
(e) if the scheme is subject to a transfer scheme approved under part
9.3 (Transfer schemes—QFC schemes) under which it is to be
left with no property—the transfer scheme commences.
(2) If any of the prescribed circumstances apply in relation to the QFC
scheme—
(a) the operator and independent entity must cease—
(i) dealing in the scheme’s units; and
(ii) investing or borrowing for the scheme; and
Note Dealing and borrowing is defined in the glossary.
(b) the operator or independent entity (or both) must take the steps
necessary to wind up the scheme in accordance with any
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Rule 9.2.6
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regulations in force in the QFC that apply to the winding-up,
these rules, and any other rules made by the Regulatory
Authority that apply to the winding-up.
(3) If any of the prescribed circumstances mentioned in subrule (1) (a) to
(d) apply in relation to the scheme—
(a) the operator or independent entity must realise the scheme
property as soon as practicable; and
(b) after meeting or making provision for all the scheme’s liabilities
and the costs of the winding-up, the operator or independent
entity must distribute the proceeds of the realisation to the
unitholders in proportion to their respective interests in the
scheme as at the date the relevant prescribed circumstances
happened; and
(c) any unclaimed net proceeds or other cash (including unclaimed
distribution payments) held by the operator or independent
entity after the end of 12 months from the day they became
payable must be paid into the QFC Court, after meeting or
making provision for the costs of paying them into the QFC
Court under this paragraph.
(4) If the operator or independent entity and 1 or more unitholders agree,
the requirement to realise the scheme property does not apply to the
part of the scheme property proportionate to their entitlement.
(5) The operator and the independent entity may distribute the part of the
scheme property mentioned in subrule (4) to the unitholders
mentioned in that subrule, after making the adjustments or provisions
that appear appropriate to ensure that the unitholders bear a
proportionate share of the liabilities of the scheme and the costs of
the winding-up.
(6) If the prescribed circumstances mentioned in subrule (1) (e) apply in
relation to the scheme, the operator or independent entity must wind
up the scheme in accordance with the approved transfer scheme.
Chapter 9 Suspension, winding up and transfer schemes—QFC schemes Part 9.2 Winding up—QFC schemes Rule 9.2.7
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(7) As soon as practicable after starting the winding-up, the operator or
independent entity must—
(a) if rule 9.2.4 (Winding-up at direction of unitholders—all QFC
schemes) does not apply—tell the unitholders about the
winding-up; and
(b) publish notice of the winding-up in an English and an Arabic
language national newspaper and, if the scheme has a website,
on the scheme’s website.
(8) If the winding-up is conducted by the operator, the independent entity
must approve the terms of the winding-up.
(9) Not later than 5 business days after the day the winding-up of the
QFC scheme is completed, the operator or independent entity must—
(a) tell the Regulatory Authority about the completion of the
winding-up; and
(b) ask the authority to cancel the scheme’s registration.
Note Business day is defined in the glossary.
(10) This rule is subject to any order of the QFC Court.
9.2.7 Accounting and reports during winding-up—all QFC schemes
(1) While a QFC scheme is being wound up, whether under rule 9.2.6
(Winding-up by operator or independent entity—all QFC schemes)
or otherwise—
(a) the annual accounting periods and half-yearly accounting
periods of the scheme continue to run; and
(b) the provisions of these rules about annual and interim allocation
of income continue to apply to the scheme; and
(c) reports to unitholders and the Regulatory Authority continue to
be required in relation to the scheme.
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Rule 9.2.7
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(2) However, if the operator, after consulting the scheme’s auditor and
the Regulatory Authority, decides on reasonable grounds that timely
preparation of a report under these rules is not required in the interest
of unitholders or the Regulatory Authority, the operator may dispense
with preparation of the report within the time otherwise required by
these rules.
(3) A period to which subrule (2) applies must be covered in the next
relevant report required under these rules.
(4) At the completion of the winding-up, the accounting period then
running is regarded as the final annual accounting period.
(5) Within 2 months after the end of the final annual accounting period,
the final report of the operator must be sent to the Regulatory
Authority and each person who was a unitholder immediately before
the end of the final annual accounting period.
(6) This rule is subject to any order of the QFC Court.
Chapter 9 Suspension, winding up and transfer schemes—QFC schemes Part 9.3 Transfer schemes—QFC schemes Rule 9.3.1
page 262 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 9.3 Transfer schemes—QFC schemes
9.3.1 Purpose—pt 9.3
The purpose of this part is to make rules under the Financial Services
Regulations, article 103 modifying those regulations, part 16 (Control
of Business Transfers) in relation to QFC schemes.
9.3.2 Transfer schemes—all QFC schemes
(1) Financial Services Regulations, part 16 is modified in accordance
with the following provisions of this rule.
(2) If, for the purpose of a relevant scheme, it is proposed that scheme
property of a QFC scheme should become the property of another
scheme registered in the QFC or the property of a subscheme of a
QFC umbrella scheme registered in the QFC, the proposal must not
be implemented without the approval of a special resolution of the
unitholders of the first scheme, unless subrule (3) applies.
Note Subscheme and umbrella scheme are defined in r 1.2.11. Special
resolution is defined in the glossary.
(3) If, for the purpose of a relevant scheme, it is proposed that scheme
property attributable to a subscheme (the first subscheme) of a QFC
umbrella scheme (the first umbrella scheme) should become the
property of another scheme registered in the QFC or another
subscheme of a QFC umbrella scheme registered in the QFC (whether
or not of the first umbrella scheme), the proposal must not be
implemented without the approval of—
(a) a special resolution of the unitholders in the first subscheme; and
(b) a special resolution of the unitholders of units in the first
umbrella scheme, unless implementation of the scheme is not
likely to result in any material prejudice to the interests of the
unitholders in any other subscheme of the first umbrella scheme.
Suspension, winding up and transfer schemes—QFC schemes Chapter 9 Transfer schemes—QFC schemes Part 9.3
Rule 9.3.2
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(4) If it is proposed that a QFC scheme or a subscheme of a QFC umbrella
scheme should receive property (other than its first property) under a
relevant scheme, or an arrangement equivalent to a scheme of
arrangement, that is entered into by another scheme registered in the
QFC, by a subscheme of an umbrella scheme registered in the QFC
or by corporation, the proposal must not be implemented without the
approval of a special resolution of the unitholders of the first scheme
or of the class or classes of units related to the first subscheme (as
appropriate).
Note Corporation is defined in the glossary.
(5) However, if the operator and either the independent entity or auditor
of the scheme agree that the receipt of the property by the scheme or
subscheme as mentioned in subrule (4)—
(a) is not likely to result in any material prejudice to the interests of
the unitholders of the scheme; and
(b) is consistent with the investment objectives, strategies and
policy of the scheme or subscheme; and
(c) could be effected without breaching chapter 6 (Investment and
borrowing—QFC qualified investor schemes) or chapter 7
(Investment and borrowing—QFC retail schemes);
the property may be transferred to the scheme or subscheme, and
units may be issued in exchange for the property, as part of the
relevant scheme without the approval of a special resolution.
(6) To remove any doubt, relevant scheme has the meaning given by the
Financial Services Regulations, article 94 (4).
Chapter 10 Financial promotions and investment activities—all schemes Part 10.1 Financial promotions generally—all schemes Rule 10.1.1
page 264 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Chapter 10 Financial promotions and investment activities—all schemes
Part 10.1 Financial promotions generally—all schemes
10.1.1 Declaration of non-QFC retail customer schemes
(1) The Regulatory Authority may, by written notice published on an
approved website, declare that a non-QFC scheme established in a
stated jurisdiction that is of a stated type is a retail customer scheme.
Note Approved website is defined in INAP.
(2) The Regulatory Authority must not specify a type of scheme under
subrule (1) unless satisfied that—
(a) all schemes of that type are—
(i) required to be registered, approved or licensed (however
described) under the law of the jurisdiction in which they
are established; and
(ii) subject to appropriate regulation by a regulatory or
governmental entity of that jurisdiction for the purpose of
consumer protection; and
(b) the operators of all schemes of that type are—
(i) required to be authorised or licensed (however described)
under the law of that jurisdiction; and
(ii) subject to appropriate regulation by a regulatory or
governmental entity of that jurisdiction for the purpose of
consumer protection.
Financial promotions and investment activities—all schemes Chapter 10 Financial promotions generally—all schemes Part 10.1
Rule 10.1.2
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10.1.2 Certain financial promotions only to qualified investors etc—QFC qualified investor schemes
(1) An authorised firm must not make or approve a financial promotion
in relation to a QFC qualified investor scheme if the financial
promotion is addressed to, or disseminated in such a way that it is
likely to be received by, a person who is not a qualified investor for
the firm.
Note Qualified investor, for an authorised firm, is defined in r 1.2.12 (3).
(2) An authorised firm must not conduct a relevant investment activity
for a customer in or from the QFC in relation to units in a QFC
qualified investor scheme unless the customer is a qualified investor
for the firm.
Note Relevant investment activity is defined in the Glossary.
(3) For this rule, qualified investor includes a person who is a retail
customer for the authorised firm if the firm believes, on reasonable
grounds, that the firm could classify the person under CIPR as a
business customer for the firm.
Note 1 Retail customer, for an authorised firm, is defined in r 1.2.12 (5).
Note 2 Business customer is defined in the Glossary.
10.1.3 Certain financial promotions only to qualified investors etc—non-QFC qualified client schemes
(1) An authorised firm must not make or approve a financial promotion
in relation to a non-QFC qualified client scheme if the financial
promotion is addressed to, or disseminated in such a way that it is
likely to be received by, a person who is not a qualified investor for
the firm.
Note 1 Non-QFC qualified client scheme is defined in r 1.4.2.
Note 2 Qualified investor, for an authorised firm, is defined in r 1.2.12 (3).
Chapter 10 Financial promotions and investment activities—all schemes Part 10.1 Financial promotions generally—all schemes Rule 10.1.4
page 266 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(2) An authorised firm must not conduct a relevant investment activity
for a customer in or from the QFC in relation to units in a non-QFC
scheme unless:
(a) the scheme is a non-QFC retail customer scheme; or
(b) the customer is a qualified investor for the firm.
Note Relevant investment activity is defined in the Glossary and non-QFC
retail customer scheme is defined in rule 1.4.1.
(3) For this rule, qualified investor includes a person who is a retail
customer for the authorised firm if the firm believes, on reasonable
grounds, that the firm could classify the person under CIPR as a
business customer for the firm.
Note 1 Retail customer, for an authorised firm, is defined in r 1.2.12 (5).
Note 2 Business customer is defined in the Glossary.
10.1.4 Part 10.1 additional to CIPR
This Part is additional to, and does not limit, CIPR.
Financial promotions and investment activities—all schemes Chapter 10 Financial promotions—non-QFC schemes Part 10.2
Rule 10.2.1
V9 Collective Investment Schemes Rules 2010 page 267 Effective: 15/Oct/20
Part 10.2 Financial promotions—non-QFC schemes
10.2.1 What is a complying disclaimer for a non-QFC scheme?
A complying disclaimer for a non-QFC scheme is a written notice
that contains statements to the effect of the following:
(a) the scheme is a collective investment scheme that is not
registered in the QFC or regulated by the Regulatory Authority;
(b) any prospectus for the scheme, and any related documents, have
not been reviewed or approved by the Regulatory Authority;
(c) investors in the scheme may not have the same access to
information about the scheme that they would have to
information about a collective investment scheme registered in
the QFC;
(d) recourse against the scheme, and those involved with it, may be
limited or difficult and may have to be pursued in a jurisdiction
outside the QFC.
10.2.2 Restrictions generally on financial promotions—all non-QFC schemes
(1) An authorised firm must not make or approve a financial promotion
in relation to a non-QFC scheme unless the scheme has a written
constitution (however described) and written prospectus.
Note Writing and prospectus are defined in the glossary.
(2) An authorised firm must not conduct relevant investment activities in
or from the QFC in relation to units in a non-QFC scheme unless the
scheme has a written constitution (however described) and written
prospectus.
(3) Subrule (2) does not apply in relation to an own account transaction
of an authorised firm.
Note Own account transaction is defined in the glossary.
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10.2.3 Prospectus and disclaimer must be provided etc—all non-QFC schemes
(1) An authorised firm must not sell, or arrange for the sale of, a unit in
a non-QFC scheme to a customer unless it has given the customer,
not later than a reasonable time before the customer becomes
contractually bound in relation to the sale of the unit:
(a) a prospectus for the scheme; and
(b) a complying disclaimer for the scheme.
Note Customer and prospectus are defined in the Glossary and complying
disclaimer is defined in rule 10.2.1.
(2) If an authorised firm in the exercise of its discretion buys a unit in a
non-QFC scheme for a customer, the firm must:
(a) tell the customer that the customer may request a prospectus for
the scheme; and
(b) give the customer a prospectus for the scheme on request.
(3) If an authorised firm gives a prospectus for a non-QFC scheme to a
customer under subrule (2), the firm must also give the customer a
complying disclaimer for the scheme.
(4) Subrule (2) (a) does not apply in relation to the purchase by an
authorised firm of a unit in a non-QFC scheme for a customer if:
(a) the firm has told the customer, in its terms of business, or in
periodic statements, given to the customer under CIPR, that the
customer may request a prospectus for any non-QFC scheme in
which the firm buys units for the customer under a discretionary
management agreement; and
(b) the firm has given the customer a complying disclaimer for the
scheme, all non-QFC schemes or a class of non-QFC schemes
in which the scheme is included.
Financial promotions and investment activities—all schemes Chapter 10 Financial promotions—non-QFC schemes Part 10.2
Rule 10.2.4
V9 Collective Investment Schemes Rules 2010 page 269 Effective: 15/Oct/20
10.2.4 Complying disclaimer must be given with other documents under CIPR—all non-QFC schemes
(1) This rule applies if an authorised firm is required under CIPR to give
a key information document to a customer in relation to a non-QFC
scheme.
(2) The authorised firm must, at the same time as it gives the document
to the customer, give the customer a complying disclaimer.
Note Complying disclaimer is defined in rule 10.2.1.
10.2.5 Authorised firms must pass on documents etc—all non-QFC schemes
(1) This rule applies if:
(a) an authorised firm either:
(i) sells, or arranges for the sale of, a unit in a non-QFC
scheme to a customer; or
(ii) buys, or arranges to buy, a unit in a non-QFC scheme for
a customer; and
(b) the firm later receives a document or information about the
scheme from its operator.
(2) The authorised firm must give the document or information to the
customer.
10.2.6 Quarterly returns for financial promotions etc—all non-QFC schemes
(1) This rule applies to an authorised firm in relation to a quarter if,
during the quarter, the firm—
(a) makes or approves a financial promotion in relation to a non-
QFC scheme; or
(b) conducts relevant investment activities in or from the QFC in
relation to units in a non-QFC scheme.
Note Relevant investment activity is defined in the glossary.
Chapter 10 Financial promotions and investment activities—all schemes Part 10.2 Financial promotions—non-QFC schemes Rule 10.2.6
page 270 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(2) The authorised firm must give the Regulatory Authority a return
under this rule for the quarter within 1 month after the day the quarter
ends.
(3) The return must include the following information in relation to each
non-QFC scheme in relation to which the firm made or approved a
financial promotion, or conducted relevant investment activities in or
from the QFC, during the quarter:
(a) the scheme’s name;
(b) the jurisdiction in which the scheme was established;
(c) whether the scheme is a non-QFC qualified client scheme or
non-QFC retail customer scheme;
Note Non-QFC retail customer scheme is defined in r 1.4.1 and non-
QFC qualified client scheme is defined in r 1.4.2.
(d) if the scheme is a non-QFC qualified client scheme—whether
the scheme or its operator is subject to regulation by a regulatory
or governmental entity of the jurisdiction in which it is
established or any other jurisdiction and, if so, the jurisdiction,
the name of the regulating entity and the nature of the regulation;
(e) whether the following rules were complied with in relation to
the scheme during the quarter:
• rule 10.2.3 (Prospectus and disclaimer must be provided
etc—all non-QFC schemes)
• rule 10.2.4 (Complying disclaimer must be given with other
documents under CIPR—all non-QFC schemes)
• rule 10.2.5 (Authorised firms must pass on documents etc—
all non-QFC schemes).
(4) In this rule:
quarter means a 3-month period ending on 31 March, 30 June, 30
September or 31 December.
Financial promotions and investment activities—all schemes Chapter 10 Financial promotions—non-QFC schemes Part 10.2
Rule 10.2.7
V9 Collective Investment Schemes Rules 2010 page 271 Effective: 15/Oct/20
10.2.7 Recordkeeping by authorised firms—all non-QFC schemes
An authorised firm must keep:
(a) a copy of each prospectus for a non-QFC scheme that it gives to
customers for at least 6 years after the day it is last given to a
customer;
(b) a copy of each complying disclaimer for a non-QFC scheme that
it gives to customers for at least 6 years after the day it is last
given to a customer;
(c) a record of the version of each prospectus for a non-QFC scheme
that it gives to each customer, and the day it is given to the
customer, for at least 6 years after the day it is given to the
customer; and
(d) a record of the version of each complying disclaimer for a non-
QFC scheme that it gives to each customer, and the day it is
given to the customer, for at least 6 years after the day it is given
to the customer.
Note Customer and prospectus are defined in the Glossary and complying
disclaimer is defined in rule 10.2.1.
10.2.8 Part 10.2 additional to CIPR
This Part is additional to, and does not limit, CIPR.
Chapter 10 Financial promotions and investment activities—all schemes Part 10.3 Additional retail customer requirements—non-QFC retail customer
schemes Rule 10.3.1
page 272 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part 10.3 Additional retail customer requirements—non-QFC retail customer schemes
10.3.1 Application—pt 10.3
(1) This part applies to an authorised firm in relation to a retail customer
of the firm if the firm conducts a relevant investment activity for the
retail customer in or from the QFC in relation to units in a non-QFC
retail customer scheme.
Note 1 Retail customer, for an authorised firm, is defined in r 1.2.12 (5).
Note 2 Relevant investment activity is defined in the glossary.
Note 3 Non-QFC retail customer scheme is defined in r 1.4.1. An authorised
firm must not conduct a relevant business activity for a retail customer in
relation to units in a non-QFC scheme that is not a retail customer scheme
(see r 10.1.3 (2)).
(2) However, this part ceases to apply to the authorised firm in relation
to the retail customer if the retail customer does not become, or ceases
to be, a unitholder of the non-QFC retail customer scheme.
10.3.2 Facilities to be maintained in QFC—non-QFC retail customer schemes
(1) The authorised firm must maintain facilities that satisfy the
requirements of this part.
(2) The authorised firm must take reasonable steps to ensure that the
facilities are available during ordinary business hours on each
business day.
(3) For this part, a facility is a place of business.
(4) For this part, it is sufficient if a facility is maintained by a person other
than the authorised firm if the facility is maintained under
arrangements with the firm.
Financial promotions and investment activities—all schemes Chapter 10 Additional retail customer requirements—non-QFC retail customer
schemes Part 10.3
Rule 10.3.3
V9 Collective Investment Schemes Rules 2010 page 273 Effective: 15/Oct/20
10.3.3 Retail customer to be informed about availability of facilities—non-QFC retail customer schemes
Before conducting relevant investment activities in relation to units
in the non-QFC retail customer scheme for the retail customer, the
authorised firm must give the retail customer a written notice that tells
the retail customer about—
(a) the facilities available under this part; and
(b) the address of the facilities and when the facilities are available.
10.3.4 Documents to be available in QFC—non-QFC retail customer schemes
(1) The authorised firm must maintain facilities in the QFC to allow the
retail customer to inspect, and obtain copies of, the following
documents:
(a) the constitution (however described) of the scheme;
(b) any instrument amending that constitution;
(c) the latest prospectus of the scheme;
(d) the latest annual and interim reports for the scheme.
(2) If a document mentioned in subrule (1) is not in a required language,
a translation of the document in that language must also be available
for inspection and copies of the translation must also be available to
be obtained.
(3) The documents mentioned in subrule (1) (including any translation in
a required language) must be available for inspection free of charge.
(4) Copies of the latest prospectus (including any translation in a required
language) must be available free of charge.
(5) Copies of other documents mentioned in subrule (1) (including any
translation in a required language) must be available for no more than
the reasonable cost of producing the copy.
Chapter 10 Financial promotions and investment activities—all schemes Part 10.3 Additional retail customer requirements—non-QFC retail customer
schemes Rule 10.3.5
page 274 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(6) A translation of a document available under this rule must clearly
state—
(a) the name and address of the person who made the translation;
and
(b) the person’s qualifications for making the translation.
(7) In this rule:
required language, for a document, means—
(a) English; or
(b) any other language if the Regulatory Authority, by written
notice published on an approved website, requires the document
to be available in that language for this rule.
Note Approved website is defined in INAP.
10.3.5 Pricing and redemption facilities to be available in QFC—non-QFC retail customer schemes
(1) The authorised firm must maintain facilities in the QFC—
(a) where the retail customer may obtain information in a required
language about prices of units in the scheme; and
(b) if the retail customer is a unitholder of the scheme—where or
through which the retail customer may redeem units and obtain
payment.
(2) The authorised firm is taken to comply with subrule (1) (b) if—
(a) unitholders can sell their units on an exchange at a price not
significantly different from the net asset value of the property to
which the units relates; and
(b) it tells the retail customer about the availability of the exchange.
(3) Subrule (1) (b) does not entitle the retail customer to have units
redeemed (or sold as mentioned in subrule (2)) immediately after
making a demand to that effect.
Financial promotions and investment activities—all schemes Chapter 10 Additional retail customer requirements—non-QFC retail customer
schemes Part 10.3
Rule 10.3.6
V9 Collective Investment Schemes Rules 2010 page 275 Effective: 15/Oct/20
(4) In this rule:
required language, for information, means—
(a) English; or
(b) any other language if the Regulatory Authority, by written
notice published on an approved website, requires the
information to be available in that language for this rule.
10.3.6 Other information facilities to be available in QFC—non-QFC retail customer schemes
(1) The authorised firm must maintain facilities in the QFC to tell the
retail customer, on request and in a required language—
(a) the nature of the rights represented by the units in the scheme;
and
(b) whether persons other than the unitholders can vote at meetings
of unitholders and, if so, who those persons are.
(2) In this rule:
required language, for information, means—
(a) English; or
(b) any other language if the Regulatory Authority, by written
notice published on an approved website, requires information
to be available in that language for this rule.
10.3.7 Complaint facilities to be available in QFC—non-QFC retail customer schemes
The authorised firm must maintain facilities in the QFC to allow the
retail customer to make complaints to the operator about the operation
of the scheme.
Chapter 11 Other provisions Part 11.1 General Rule 11.1.1
page 276 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Chapter 11 Other provisions
Part 11.1 General
11.1.1 Restitution orders for breach of relevant requirements—all schemes
(1) A private person may apply to the QFC Court for a restitution order
if the person suffers loss or damage as a result of a breach of a relevant
requirement in relation to a scheme.
Note 1 This rule is made under Financial Services Regulations, art 65.
Note 2 Person, QFC Court, breach and relevant requirement are defined in the
glossary.
(2) In this rule:
private person means—
(a) an individual, except when acting in the course of conducting
any regulated activity; or
(b) any other person, except when acting in the course of conducting
business of any kind.
Note Regulated activity is defined in the glossary.
11.1.2 Service of notices and other documents on unitholders—all QFC schemes
(1) If a provision of these rules authorises or requires any notice or other
document to be served on a unitholder of a QFC scheme (whether the
word ‘serve’, ‘give’, ‘notify’, ‘send’ or ‘tell’, or some other word, is
used), the notice or other document may be served—
(a) by sending it by prepaid post to the unitholder’s postal address
shown in the unitholder register; or
(b) by leaving it at the unitholder’s business or residential address
shown in the unitholder register; or
Other provisions Chapter 11 General Part 11.1
Rule 11.1.3
V9 Collective Investment Schemes Rules 2010 page 277 Effective: 15/Oct/20
(c) by sending it to the unitholder using an electronic medium in
accordance with rule 11.1.3 (Notices and other documents to be
in legible form etc—all schemes).
Note Unitholder is defined in r 1.2.5. Document and unitholder register are
defined in the glossary.
(2) Any notice or other document served by post under this rule is taken
to have been served when it would have been received in the ordinary
course of post.
(3) For subrule (2), it is presumed (unless evidence sufficient to raise
doubt about the presumption is presented) that a postal article sent by
prepaid post is received on the 5th business day after the day it is
posted.
Note Business day is defined in the glossary.
(4) Any document left at an address, or served otherwise than by post,
under this rule is taken to have been served on that day.
11.1.3 Notices and other documents to be in legible form etc—all schemes
(1) If a provision of these rules authorises or requires any notice or other
document to be served on, or information to be given to any person
(other than the Regulatory Authority), (whether the word ‘serve’,
‘give’, ‘notify’, ‘send’ or ‘tell’, or some other word, is used), the
document or information must be served or given in a legible form.
Note Document is defined in the glossary.
(2) For subrule (1), any form is a legible form if the form—
(a) is consistent with the knowledge that the person serving the
document, or giving the information, has about how the
recipient of the document or information wishes or expects to
receive it; and
(b) can be provided in a durable medium by the person serving the
document or giving the information; and
(c) enables the recipient to know or record the time of receipt; and
Chapter 11 Other provisions Part 11.1 General Rule 11.1.3
page 278 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(d) is reasonable in the context.
(3) In these rules, any requirement that a document be signed may be
satisfied by an electronic signature or electronic evidence of assent.
Other provisions Chapter 11 Fees—QFC schemes Part 11.2
Rule 11.2.1
V9 Collective Investment Schemes Rules 2010 page 279 Effective: 15/Oct/20
Part 11.2 Fees—QFC schemes
11.2.1 Application fees—all QFC schemes
(1) An applicant under these rules for registration of a scheme established
in the QFC must pay the Regulatory Authority an application fee of
the relevant amount.
(2) The fee must be paid when the application is filed with the Regulatory
Authority.
(3) The Regulatory Authority may also, by written notice given to the
applicant, require the applicant to pay a supplementary fee to the
authority not later than the time stated in the notice if it expects to
incur substantial costs in dealing with the application.
(4) If subrule (2), or a notice under subrule (3), is not complied with, the
application is taken not to have been made until the fee is paid.
(5) The fee is non-refundable, whether or not the application is
successful.
(6) In this rule:
relevant amount, for a scheme, means—
(a) if the scheme is not an umbrella scheme or is an umbrella
scheme with only 1 subscheme—US$ 2 000; or
(b) if the scheme is an umbrella scheme with 2 or more
subschemes—whichever is the lesser of the following:
(i) US$ 1 000 x number of subschemes;
(ii) US$ 10 000.
11.2.2 Annual fees—all QFC schemes
(1) The operator of a QFC scheme must pay the Regulatory Authority an
annual fee for each year that the scheme is registered.
Note Year is defined in the glossary.
Chapter 11 Other provisions Part 11.2 Fees—QFC schemes Rule 11.2.3
page 280 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(2) The annual fee for the first year of registration is the amount
calculated as follows:
relevant amount x whole months in year after registration day
12
Note Month is defined in the glossary.
(3) The annual fee for the first year of registration must be paid within
21 days after the day the scheme is registered.
(4) The annual fee for a subsequent year of registration is the relevant
amount.
(5) The annual fee for a subsequent year of registration must be paid on
or before 1 January in the year.
(6) If an annual fee is not paid in accordance with this rule, the amount
of the fee is increased by 1% for each month, or part of a month, that
it remains unpaid after the date it became payable.
(7) Subrule (6) does not limit any action that the Regulatory Authority
may take if an annual fee is not paid in accordance with this rule.
(8) In this rule:
relevant amount, for a QFC scheme, means—
(a) if the scheme is not an umbrella scheme or is an umbrella
scheme with only 1 subscheme—US$ 2 000; or
(b) if the scheme is an umbrella scheme with 2 or more
subschemes—whichever is the lesser of the following:
(i) US$ 1 000 x number of subschemes;
(ii) US$ 10 000.
11.2.3 Waiver etc of fees—all QFC schemes
The Regulatory Authority may, if it considers it equitable to do so,
reduce, waive or refund all or part of a fee payable under this part.
Other provisions Chapter 11 Providing scheme administration—non-QFC schemes Part 11.3
Rule 11.3.1
V9 Collective Investment Schemes Rules 2010 page 281 Effective: 15/Oct/20
Part 11.3 Providing scheme administration—non-QFC schemes
11.3.1 Client money and assets—all non-QFC schemes
(1) An authorised firm that is providing scheme administration for a non-
QFC scheme must not hold or control money or assets belonging to
third parties in relation to providing scheme administration for the
scheme.
Note Providing scheme administration and money are defined in the glossary.
(2) However, subrule (1) does not apply to the holding of a cheque to the
order of the non-QFC scheme’s bank account if the cheque is securely
held for a maximum of 3 business days before being deposited into
the bank account or returned to the drawer of the cheque.
Chapter 12 QFC retail property funds Part 12.1 General Rule 12.1.1
page 282 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Chapter 12 QFC retail property funds
Part 12.1 General
12.1.1 Introduction
(1) In addition to UCITS type schemes, Islamic funds and money-market
funds, QFC schemes may be property funds, feeder funds and funds
of funds.
(2) This Chapter sets out specific requirements that apply to QFC retail
property funds, including real estate investment trusts or REITs.
12.1.2 Concepts relating to property funds
(1) A property fund may be a qualified investor scheme or a retail
scheme. A property fund may or may not be listed in the Qatar Stock
Exchange or in any other regulated exchange.
Note Qualified investor scheme and retail scheme are defined in rules 1.3.2
and 1.3.3 respectively. A REIT must be listed in the Qatar Stock
Exchange or another regulated exchange (see rule 12.6.2 (2) (b)).
(2) A property fund that is a qualified investor scheme must be open-
ended so as to allow redemption of units. A property fund that is a
retail scheme may be closed-ended or open-ended.
Note For open-ended scheme and closed-ended scheme, see rule 1.2.10. A
REIT must be closed-ended (see rule 12.6.2 (2) (a)).
12.1.3 Application of Chapter 12
(1) This Chapter applies only to a QFC retail scheme that is a property
fund (QFC retail property fund). REITs are a subset of QFC retail
property funds.
(2) This Chapter applies to each subscheme of a QFC retail property fund
that is an umbrella scheme as if each subscheme were a separate retail
property fund. However, a REIT cannot be an umbrella scheme.
QFC retail property funds Chapter 12 General 12.1.2
Rule 12.1.4
V9 Collective Investment Schemes Rules 2010 page 283 Effective: 15/Oct/20
12.1.4 Permissible investments—QFC retail property funds
(1) At least 75% of the gross asset value of a QFC retail property fund
must at all times be invested in at least 3 immovables that generate
recurrent rental income.
Guidance
The Regulatory Authority expects the choice of immovables to be appropriate for,
and consistent with, fund diversification and risk-spreading.
(2) Subject to subrule (3), the remaining 25% of the gross asset value of
the fund may be invested (for purposes of liquidity and
diversification) in a combination of the following investments:
(a) immovables (whether or not the immovables generate recurrent
rental income);
(b) property-related assets;
(c) units in other property funds;
(d) cash;
(e) government or public securities.
(3) For subrule (2):
(a) no more than 5% of the remaining 25% may be invested in a
combination of property-related assets and units in other
property funds (but only if the investment or investments do not
result in a fundamental change in the fund’s overall risk profile);
and
(b) no more than 5% of the remaining 25% may be invested in
assets, units, government or public securities issued by a single
issuer.
(4) Subrules (1) to (3) do not apply:
(a) during the initial 6-month period of the fund’s operation;
(b) during any period specified for the purpose in the fund’s
prospectus; or
Chapter 12 QFC retail property funds 12.1.2 General Rule 12.1.5
page 284 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(c) during any period approved for the purpose by special resolution
of the unitholders.
(5) If a REIT invests in property-related assets, units in other property
funds, government or public securities under subrule (2), the assets,
units or securities must be listed and traded on a recognised exchange
(within the meaning of the Banking Business Prudential Rules 2014).
Note In the Banking Business Prudential Rules 2014 recognised exchange
means:
(a) one of over 100 exchanges listed in Schedule 1 of those rules
(including the major exchanges in the Gulf region); or
(b) an exchange listed in a notice published by the Regulatory
Authority on an approved website.
12.1.5 Use of certain names—QFC retail property funds
(1) The operator of a QFC scheme must ensure that the name of the
scheme, or of a class of units, does not state or imply that the scheme
is a property fund unless the scheme is a property fund.
(2) The operator of a QFC umbrella scheme must ensure that the name
of a subscheme, or of a class of units in a subscheme, does not state
or imply that the subscheme is a property fund unless the subscheme
is a property fund.
Note 1 Other restrictions on the use of the term “real estate investment trust” or
REIT may apply (see rule 12.6.2 (1)).
Note 2 A REIT cannot be an umbrella scheme (see rule 12.1.3 (2)).
12.1.6 Other provisions continue to apply to QFC retail property funds that are not REITs
(1) Except as set out in column 3 of table 12.1.6A, the provisions of these
rules described in columns 1 and 2 continue to apply to a QFC retail
property fund that is not a REIT.
Note For the provisions of these rules that apply to REITs, see rule 12.6.4 and
table 12.6.4A.
QFC retail property funds Chapter 12 General 12.1.2
Rule 12.1.6
V9 Collective Investment Schemes Rules 2010 page 285 Effective: 15/Oct/20
(2) Neither table 12.1.6A nor 12.1.6B is exhaustive. Each table is a guide
for those who intend to establish and register a QFC retail property
fund that is not a REIT.
Table 12.1.6A Application of provisions to QFC retail property funds
column 1
applicable provisions
column 2
description of contents of provisions
column 3
provisions that do not apply
Chapter 1 general provisions, basic
concepts and key terms
Chapter 2 registration of scheme
Chapter 3 constitutional
requirements and units
Division 3.2.B
rules 3.1.1 (b) and
3.2.12
Chapter 4 operator and independent
entity
Chapter 5 investor relations,
affected persons,
prospectus, approvals,
meetings, reports,
accounts and auditors
Divisions 5.4.A, 5.5.A
and 5.6.B
Chapter 7 investment and
borrowing
Parts 7.2, 7.3, 7.4, 7.5
and 7.6
rules 7.7.2, 7.7.3 and
7.7.6
Chapter 12 QFC retail property funds 12.1.2 General Rule 12.1.6
page 286 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
column 1
applicable provisions
column 2
description of contents of provisions
column 3
provisions that do not apply
Chapter 8 operating duties and
responsibilities, dealing,
valuation pricing,
register, outsourcing,
payments, accounting
and income distribution
Divisions 8.1.A,
8.2.A, 8.2.C and 8.6.A
Chapter 9 suspension, winding up
and transfer schemes
Chapter 10 financial promotions and
investment activities
Parts 10.2 and 10.3
Chapter11 other provisions and fees Part 11.3
Schedule 1 arrangements that are not
collective investment
schemes
Schedule 2 contents of constitutional
document
Parts S2.2, S2.3 and
S2.4
Schedule 4 contents of prospectus rules S4.23 and S4.24
(3) CIPR also deals with collective investment schemes, and the
definitions of packaged investment product and issuer in those rules
include a unit in a collective investment scheme and the operator of a
collective investment scheme, respectively. The provisions of CIPR
described in table 12.1.6B may, among others, apply to QFC retail
property funds.
QFC retail property funds Chapter 12 Constitutional document and prospectus—QFC retail property funds Part 12.2
Rule 12.1.7
V9 Collective Investment Schemes Rules 2010 page 287 Effective: 15/Oct/20
Table 12.1.6B CIPR provisions that may apply to QFC retail property funds
column 1
provisions
column 2
description of contents of provisions
rules 3.5.7 to 3.5.9 inducements
Part 3.6 personal account transactions
Parts 4.2 and 4.3 advertisements, personal contacts and
telephone contacts
Part 4.4 initial disclosure document/terms of
business
rule 5.3.4 independent investment advice
Part 5.4 and Schedule 1 key information document—form
and contents
12.1.7 Offer of QFC retail property funds
An offer of units in a listed QFC retail property fund (including a
REIT) must be in accordance with the IOSCO principles and the
practices and procedures of the Qatar Stock Exchange or other
regulated exchange where it is listed.
Part 12.2 Constitutional document and prospectus—QFC retail property funds
12.2.1 Extra constitution requirements—QFC retail property funds
In addition to the matters required under Schedule 2 (Constitutional
document content—QFC schemes), the constitutional document of a
QFC retail property fund must include the following:
(a) a statement that the fund is a QFC retail property fund;
Chapter 12 QFC retail property funds Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Rule 12.2.2
page 288 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) a statement whether the fund is a closed-ended scheme or an
open-ended scheme;
(c) a statement whether the aim of the fund is to spread investment
risks.
(d) a statement that the fund invests in at least 3 immovables that
generate recurrent rental income.
Note For statements on restrictions on investment and borrowing, see
rule S2.11. See also rule 12.1.4 on permissible investments and
rule 12.5.9 for borrowing limits.
12.2.2 Prohibited amendments of constitutional document—QFC retail property funds
The constitutional document of a QFC retail property fund must not
be amended in such a way that the fund ceases to be a property fund.
Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC retail property funds
12.3.1 Operator may make alternative custody arrangements for immovables in certain jurisdictions—QFC retail property funds
(1) For the purpose of meeting legal requirements in relation to the
ownership of an immovable in the jurisdiction where the immovable
is located, the operator of a QFC retail property fund may make
alternative arrangements for the custody of the immovable.
Example
This rule may apply if legal title to an immovable cannot be held in Qatar or another
GCC country because of the law of another jurisdiction. In such a situation, custody
of the immovable by the independent entity may not be possible, and arrangements
for declarations of trust, indemnities and resolutions relating to the transfer of
custody may have to be made.
QFC retail property funds Chapter 12 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Part 12.3
Rule 12.3.2
V9 Collective Investment Schemes Rules 2010 page 289 Effective: 15/Oct/20
(2) The arrangements must not give the operator unfettered control over
the scheme property. If the arrangements involve joint ownership or
the use of intermediate holding vehicles, the arrangements must be in
accordance with whichever of rules 12.3.2 to 12.3.6 apply.
(3) The operator must satisfy the Regulatory Authority that the
arrangements:
(a) are for the purpose stated in subrule (1);
(b) comply with subrule (2); and
(c) are legally effective in the QFC and in the jurisdiction where the
immovable is located.
Note Under rule 4.2.6 (6) (a), the independent entity of a property fund is not
responsible in relation to an immovable that is subject to alternative
arrangements in accordance with this rule.
12.3.2 Joint ownership arrangements—QFC retail property funds
(1) A QFC retail property fund may enter into an arrangement for the
joint ownership of an immovable in accordance with this rule (joint
ownership arrangement).
(2) Before a QFC retail property fund enters into a joint ownership
arrangement, the operator of the fund:
(a) must be able to demonstrate that the arrangement is in the
interests of the unitholders;
(b) must ensure that, under the arrangement:
(i) the fund has a majority stake or holding in relation to the
arrangement;
(ii) the fund has, at all times, more than 50% ownership and
control of each immovable subject to the arrangement;
(iii) the fund has the freedom to dispose of its interest in each
immovable; and
Chapter 12 QFC retail property funds Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Rule 12.3.2
page 290 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(iv) the liability of the fund does not exceed the percentage of
its interest in the arrangement;
(c) must ensure that due diligence is conducted to identify
restrictions and constraints that may limit the fund’s direct
ownership of a 100% interest in any immovable subject to the
arrangement; and
(d) must obtain a legal opinion about the arrangement.
(3) An investment in an intermediate holding vehicle for the purpose of
holding an immovable (whether wholly or through a joint ownership
arrangement) must be treated as if it were a direct investment in the
immovable. The investment must be valued as an immovable under
rule 12.5.6.
(4) Despite subrule (2) (b) (i), the Regulatory Authority may permit a
QFC retail property fund to enter into a joint ownership arrangement
in which the fund does not have a majority stake or holding if:
(a) the authority is satisfied that the interests of the unitholders are
adequately protected (for example, the other joint owner of the
property is a public sector entity in Qatar); or
(b) the law of the jurisdiction where the immovable is located
requires local ownership or control of 51% or more.
(5) Despite subrule (2) (b) (ii), the Regulatory Authority may permit a
QFC retail property fund to hold title to an immovable under a joint
ownership arrangement, but without holding more than 50%
ownership and control of the immovable, if the authority is satisfied
that the interests of the unitholders are adequately protected.
(6) For subrule (2) (d), the legal opinion must include:
(a) a description of the significant terms of the arrangement;
(b) a statement whether the fund will have good marketable legal
and beneficial title in each immovable subject to the
arrangement;
QFC retail property funds Chapter 12 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Part 12.3
Rule 12.3.3
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(c) a description of the equity and profit-sharing arrangements of
the parties to the contract;
(d) a statement that the contract and joint ownership arrangements
are legal, valid, binding and enforceable under applicable law;
(e) a statement that all necessary licences and consents required in
the jurisdiction where the immovable is located have been
obtained;
(f) any restriction on the fund disposing of its interest, in whole or
in part, in the immovable; and
(g) if relevant, the implication of any foreign law that may limit the
fund’s direct ownership of a 100% interest in the immovable.
12.3.3 Information about joint ownership arrangements—QFC retail property funds
The operator of a QFC retail property fund that has entered into a joint
ownership arrangement in an immovable must include in the next
operator’s report under rule 5.6.13:
(a) the ownership structure of the fund’s interest and the material
terms of the arrangements, including:
(i) restrictions on the fund disposing of its interest; and
(ii) the effect of the restrictions on the value of the interest;
(b) the identity, background and ownership of the other legal and
beneficial owners of the immovable;
(c) any previous transactions by the other owners with the fund in
relation to the immovable;
(d) agreements for remuneration, fee-sharing and other financial
matters that have been, or will be, entered into between the fund
and the other owners or their associates;
(e) a summary of the legal opinion required by rule 12.3.2 (2) (d) in
relation to the immovable;
Chapter 12 QFC retail property funds Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Rule 12.3.4
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(f) if there are any restrictions on foreign ownership of the
immovable subject to the arrangement:
(i) the nature and duration of the restrictions;
(ii) the effect of the restrictions on the operations and financial
position of the fund as a whole; and
(iii) the standing independent valuer’s opinion and evaluation
of the effect of the restrictions on the value of the
immovable; and
(g) any other information that the unitholders may reasonably
require to make an informed judgment about the arrangements.
12.3.4 Use of intermediate holding vehicles to hold immovables—QFC retail property funds
(1) Subject to subrule (2), an immovable may be held by a QFC retail
property fund through 1 or 2 intermediate holding vehicles, if:
(a) the purpose of each vehicle is to enable the fund to hold
immovables; and
(b) either:
(i) the vehicle or each vehicle is majority-owned or majority-
held by the fund; or
(ii) an intermediate holding vehicle that is majority-owned or
majority-held by the fund (the first vehicle) holds the
immovable through another intermediate holding vehicle
(the second vehicle) for the sole purpose of directly
holding the immovable for the fund (or arranging
financing for the fund) and the second vehicle is majority-
owned or majority-held by the first.
Note An investment in an intermediate holding vehicle for the purpose
of holding an immovable must be treated as if were a direct
investment in the immovable, see rule 12.3.2 (3).
(2) The Regulatory Authority may permit a QFC retail property fund to
hold an immovable through a series of more than 2 intermediate
QFC retail property funds Chapter 12 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Part 12.3
Rule 12.3.5
V9 Collective Investment Schemes Rules 2010 page 293 Effective: 15/Oct/20
holding vehicles if the operator of the fund satisfies the authority that
it is necessary to do so (for example when it is necessary for the fund
to meet a legal or regulatory requirement in another jurisdiction).
Guidance
In giving permission for a fund to have more than 2 intermediate holding vehicles,
the Regulatory Authority would be guided by, among others, the structure of the
fund and whether the structure is clear, easily understood and transparent to retail
investors.
(3) If practicable, an intermediate holding vehicle of a QFC retail
property fund must have the same auditor and accounting reference
date as the fund.
(4) The accounts of any intermediate holding vehicle of a QFC retail
property fund must be consolidated into the annual and half-yearly
reports of the fund.
(5) Despite subrule (1) (b), the Regulatory Authority may permit a QFC
retail property fund (or the first intermediate holding vehicle) to hold
an immovable through an intermediate holding vehicle even if the
fund or vehicle does not have a majority ownership or holding if the
authority is satisfied that less than majority ownership or holding is
reasonable in the circumstances and the interests of the unitholders
are adequately protected.
12.3.5 Duty of operator in relation to intermediate holding vehicles
(1) The operator of a QFC retail property fund that uses an intermediate
holding vehicle or vehicles to hold immovables must ensure that:
(a) neither the constitution of the intermediate holding vehicle or
vehicles nor the organisation, transactions or activities of any of
the vehicles contravenes a requirement of this Chapter;
(b) subject to subrule (3), the governing body of each of the vehicles
is appointed by the operator with the approval of the fund’s
independent entity and investment committee (if any);
Chapter 12 QFC retail property funds Part 12.3 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Rule 12.3.6
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(c) each of the vehicles undertakes the purchase, sale and
management of immovables on behalf of the fund in accordance
with the fund’s investment objectives, strategies and policy; and
(d) the interests of the unitholders are otherwise adequately
protected.
(2) The operator of a QFC retail property fund may, by the use of inter-
company debt, transfer capital and income between the fund and an
intermediate holding vehicle of the fund if:
(a) the purpose of the transfer is for investment in immovables or
the repatriation of income generated by such an investment;
(b) a record of inter-company debt is kept to provide an accurate
audit trail; and
(c) interest paid out on the debt instruments that gave rise to the
inter-company debt is equivalent to the net rental income earned
from the immovables less the intermediate holding vehicle’s
reasonable running costs (including tax).
(3) Subrule (1) (b) does not apply to an intermediate holding vehicle if:
(a) the vehicle does not have a majority stake or holding in relation
to a joint ownership arrangement over the immovable; or
(b) the vehicle, at the time the immovable was acquired, was already
established in another jurisdiction.
12.3.6 Report on use of intermediate holding vehicles to purchase immovables—QFC retail property funds
(1) If a QFC retail property fund purchases an immovable through the
acquisition of an intermediate holding vehicle, the operator of the
fund must ensure that a report is prepared on:
(a) the profit and loss of the vehicle for each of the 3 years preceding
the transaction (or any shorter period for which the intermediate
holding vehicle was in existence); and
QFC retail property funds Chapter 12 Custody, joint ownership and intermediate holding vehicles—QFC
retail property funds Part 12.3
Rule 12.3.6
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(b) the assets and liabilities of the vehicle as at a date that is not
earlier than 6 months from the date of the report.
(2) Despite subrule (1) (b), the Regulatory Authority may require that the
report on the assets and liabilities of the vehicle be as at a date closer
to the date of the report.
Example
The Regulatory Authority may require (generally or for a particular case) a different
date if an intervening event has made the date used, or proposed to be used,
unreliable.
(3) The report may be prepared by the fund’s auditor or another QFC
approved auditor. The report may also be prepared by an auditor from
a jurisdiction which registers and regulates auditors in a way
comparable to QFC approved auditors, but only if the operator of the
fund notifies the Regulatory Authority of the auditor’s name and
address before the report is prepared.
(4) The report:
(a) must state how the profits and losses of the vehicle would have
affected the fund if the fund had, at all material times, held the
shares proposed to be acquired; and
(b) if the intermediate holding vehicle has subsidiaries—must deal
with the profits or losses and the assets and liabilities of the
vehicle and its subsidiaries (whether jointly or separately).
(5) The operator must also ensure that a valuation report for the
intermediate holding vehicle’s interest in immovables is prepared in
accordance with rules 12.4.3, 12.5.6 and 12.5.7.
Chapter 12 QFC retail property funds Part 12.4 Standing independent valuer—QFC retail property funds Rule 12.4.1
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Part 12.4 Standing independent valuer—QFC retail property funds
12.4.1 Appointment of standing independent valuer—QFC retail property funds
(1) A QFC retail property fund must at all times have a valuer for the
fund (standing independent valuer).
(2) The operator of a QFC retail property fund must, with the
independent entity’s approval, appoint a person as standing
independent valuer.
Note As a general rule, a person cannot be the standing independent valuer for
the same fund for more than 5 continuous years (see rule 12.4.4).
(3) A person must not be appointed as the standing independent valuer
unless:
(a) the person carries on the business of valuing immovables;
(b) the operator and the independent entity are satisfied that the
person has the skills, experience, qualifications and attributes to
be the standing independent valuer of the fund, having regard to
the fund’s investment objectives, strategies and policy; and
(c) the person is independent of:
(i) the operator and independent entity;
(ii) if the fund is a CIC—the fund; and
(iii) a member (however described) of the governing body of
the operator, the independent entity or, for a CIC, the fund.
Guidance for para (3) (b)
The operator and independent entity should be satisfied that:
(a) the person is a fellow or associate (however described), or has key personnel
who are fellows or associates (however described), of a relevant recognised
professional body of surveyors or property valuers (for example, a member of
the Royal Institute of Chartered Surveyors (MRICS), a RICS registered valuer
or a body recognised by RICS);
QFC retail property funds Chapter 12 Standing independent valuer—QFC retail property funds Part 12.4
Rule 12.4.2
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(b) the person has, or has access to, expertise relevant to the fund and, in
particular, knowledge and experience in the valuation of immovables of the
relevant kind in the relevant area;
(c) the person has robust internal controls and checks and balances to ensure:
(i) the integrity of valuation reports; and
(ii) that valuation reports are properly and professionally prepared in
accordance with international best practice;
(d) the person has adequate professional indemnity insurance; and
(e) the person does not have ownership or other commercial links with other
persons providing services to the fund (for example, investment advisers) that
could impair the person’s ability to provide independent and objective
valuation services to the fund.
(4) Without limiting subrule (3) (c), a person (A) is not independent of
another person (B) if:
(a) A has, at any time during the last 2 years, been involved in
material business dealings with B (otherwise than in the exercise
of their respective functions as the holders of positions in
relation to any scheme); or
(b) B has a material interest in A or A has a material interest in B.
12.4.2 Standing independent valuer not to deal in immovables—QFC retail property funds
The standing independent valuer of a QFC retail property fund must
not be personally engaged, and must not have an associated person
who is engaged, in finding immovables for the fund or finding the
fund for immovables.
12.4.3 Basis of valuation by standing independent valuer—QFC retail property funds
(1) A valuation of an interest in an immovable by the standing
independent valuer of a QFC retail property fund must be:
(a) on the basis of ‘open market value’ (as defined in the
constitutional document and the latest filed prospectus); or
Chapter 12 QFC retail property funds Part 12.4 Standing independent valuer—QFC retail property funds Rule 12.4.4
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(b) on another appropriate basis.
Guidance
1 The constitutional document and latest filed prospectus would be expected to
define “open market value” using an authoritative text such as the latest edition
of the Royal Institute of Chartered Surveyors’ publication called “RICS
Valuation - Professional Standards (the Red Book)”.
2 In considering whether valuation of an interest in an immovable by the
standing independent valuer is made on an appropriate basis, the operator
should consider whether the valuation was made in accordance with
internationally accepted valuation principles, procedures and definitions as set
out in the International Valuations Standards published by the International
Valuation Standards Committee.
(2) The basis on which the standing independent valuer makes a
valuation is subject to the constitutional document and the latest filed
prospectus.
(3) In making a valuation, the standing independent valuer:
(a) may treat the contents of a building as part of the building; and
(b) must disregard any arrangement to dispose of an interest in an
immovable held as part of the scheme property unless the valuer
is satisfied on reasonable grounds that the arrangement is legally
enforceable.
Note For the valuations that a standing independent valuer is required to do,
see:
• rule 12.5.2 (1) (c) (valuation before acquisition of immovables)
• rule 12.5.4 (1) (b) (valuation before disposal of immovables)
• rule 12.5.6 (annual and periodic valuations of immovables)
12.4.4 Reappointment of standing independent valuer—QFC retail property funds
(1) No person may be a standing independent valuer of a QFC retail
property fund for a continuous period of 5 years, unless the person is
reappointed in accordance with this rule.
QFC retail property funds Chapter 12 Standing independent valuer—QFC retail property funds Part 12.4
Rule 12.4.5
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(2) If the operator of a QFC retail property fund wishes to reappoint a
person after the person has served 5 continuous years, the operator
must put the position to tender before the end of the 5 years.
(3) If the operator decides (with the approval of the independent entity)
to reappoint the same person following the tender process, the
operator must state the reasons, and summarise the evidence, for the
reappointment in the next operator’s report under rule 5.6.13.
(4) A reappointment under this rule must not exceed 5 years and cannot
be further extended.
12.4.5 Removal of standing independent valuer—QFC retail property funds
(1) The operator of a QFC retail property fund may, with the independent
entity’s approval, remove the standing independent valuer at any
time.
(2) The operator of a QFC retail property fund must remove a person as
the standing independent valuer if:
(a) a special resolution of the unitholders is passed to remove the
person;
(b) the person breaches the prohibition against dealing in
immovables under rule 12.4.2;
(c) the person:
(i) becomes insolvent;
(ii) is wound up or put into liquidation; or
(iii) is placed in receivership or administration; or
(d) the person ceases to be eligible to be appointed as the standing
independent valuer.
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(3) The power to remove the standing independent valuer has effect
despite anything in any agreement between the valuer and all or any
of the following:
(a) the operator;
(b) the independent entity;
(c) the fund.
QFC retail property funds Chapter 12 Investments—QFC retail property funds Part 12.5
Rule 12.5.1
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Part 12.5 Investments—QFC retail property funds
12.5.1 Investment committee—QFC retail property funds
(1) This rule applies to a QFC retail property fund that is not a CIT.
Note Rule 12.5.1 does not apply to a REIT (see table 12.6.4A).
(2) The fund must have an investment committee of at least 3 members.
The operator must make arrangements for the unitholders to elect the
members of the committee after the fund starts operations, and
thereafter:
(a) at least once every 5 years; and
(b) each time there is a vacancy.
(3) A person is not eligible for election as a member unless the operator
and independent entity are satisfied that the person has the skills,
experience and qualifications to review investment opportunities for
the fund.
(4) The members of the committee must be independent of the operator
and must not be involved in the fund’s day to day management. No
person may be a member for more than 5 continuous years.
12.5.2 Requirements for making investments in immovables—QFC retail property funds
(1) The operator of a QFC retail property fund must ensure that the fund
does not invest in an immovable to be held as part of the scheme
property unless all the following requirements are complied with:
(a) the immovable must be located in a jurisdiction specified in the
latest filed prospectus;
(b) the operator must have taken reasonable care to determine that
the title to the interest to be acquired in the immovable is a good
marketable legal and beneficial title;
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(c) the standing independent valuer has valued the interest and the
operator and independent entity have received a report on the
valuation.
Note See rule 12.5.5 (Reports on valuation of immovables before acquisition
or disposal—QFC retail property funds).
(2) However, the report of the standing independent valuer must not be
relied on to acquire the interest in an immovable if:
(a) the interest is not acquired, or agreed by enforceable contract to
be acquired, within 6 months after the date of the report;
(b) it is (or should reasonably be) apparent to the operator that the
valuer’s report cannot, or can no longer, reasonably be relied on;
or
(c) the price of the interest is, or becomes, more than 105% of the
valuation of the interest stated in the report.
12.5.3 Operator’s duties in relation to title and insurance of immovables—QFC retail property funds
(1) The operator of a QFC retail property fund must ensure that the fund
holds good marketable legal and beneficial title in all its immovables
(whether directly or through an intermediate holding vehicle or
vehicles).
(2) An arrangement entered into in relation to scheme property for the
purposes of Islamic finance arrangements where the legal title to the
property is held by a financial institution complies with subrule (1) if:
(a) there is a statement in the fund’s prospectus that the fund may
enter into such arrangements; or
(b) the unitholders have by special resolution approved the fund’s
entry into such arrangements.
Guidance
Under rule 12.5.3 (2) operators can use certain Islamic structures such as ijara for
transactions that require the financial institution providing the financing to be the
legal owner of the immovable.
QFC retail property funds Chapter 12 Investments—QFC retail property funds Part 12.5
Rule 12.5.4
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(3) The operator must ensure that the fund does not grant any person an
option to acquire any scheme property.
(4) The operator must take all reasonable care to arrange adequate
property insurance and public liability insurance for immovables held
as part of the scheme property.
12.5.4 Operator’s duties in relation to option premiums and disposal of immovables—QFC retail property funds
(1) The operator of a QFC retail property fund must ensure that the
following requirements are complied with in relation to interests in
immovables held as part of the fund’s scheme property:
(a) the total of all premiums paid in any 12-month period for options
to purchase interests in immovables must not exceed 10% of the
fund’s gross asset value, calculated at the date of the granting of
the option;
(b) an interest in an immovable must not be disposed of unless:
(i) the standing independent valuer has valued the interest;
and
(ii) the operator and independent entity have received a report
on the valuation.
Note See rule 12.5.5 (Reports on valuation of immovables before
acquisition or disposal—QFC retail property funds).
(2) However, a report of the standing independent valuer must not be
relied on under subrule (1) (b) to dispose of an interest in an
immovable if the interest is not disposed of, or agreed by enforceable
contract to be disposed of, within 6 months after the date of the report.
Chapter 12 QFC retail property funds Part 12.5 Investments—QFC retail property funds Rule 12.5.5
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12.5.5 Reports on valuation of immovables before acquisition or disposal—QFC retail property funds
(1) This rule applies to a report by a standing independent valuer in
relation to a proposed acquisition or disposal of an interest in an
immovable.
Note For the valuation in relation to proposed acquisition of an immovable, see
rule 12.5.2 (1) (c). For the valuation in relation to proposed disposal of
an immovable, see rule 12.5.4 (1) (b).
(2) The report:
(a) must include a brief description of the immovable, including:
(i) its location and existing use;
(ii) the nature of the interest the fund is proposing to acquire,
or dispose of, in the immovable;
(iii) any encumbrances affecting the immovable;
(iv) whether the immovable is leased and, if leased, the terms
of the lease and its expiry;
(v) the capital value of the immovable at the date of valuation;
(vi) the net monthly income (if any) from the immovable; and
(vii) any other matter that may affect the immovable or the
value of the interest;
(b) must include all material details about the basis of valuation and
the assumptions used;
(c) must describe and explain the valuation methods used;
(d) if more than 1 valuation method is available—must explain the
reasons for choosing a particular method;
(e) must outline the structure and condition of the relevant market,
including an analysis of the supply and demand situation, the
market trend, and investment activities;
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Rule 12.5.6
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(f) must confirm that the valuer continues to be eligible to be the
standing independent valuer for the firm and that the report is
prepared on a fair and unbiased basis; and
(g) must be dated as at the date the valuation is made.
12.5.6 Annual and periodic valuation of immovables—QFC retail property funds
(1) The following provisions apply in relation to the valuation of interests
in immovables (including investments in intermediate holding
vehicles for the purpose of holding immovables) held as part of the
scheme property of a QFC retail property fund:
(a) the operator must ensure that the standing independent valuer:
(i) values, at least once a year, all the interests in immovables
held as part of the scheme property, on the basis of a full
valuation with physical inspection (including, if the
immovable is or includes a building, internal inspection of
the building); and
(ii) gives the operator and independent entity a report on the
valuation;
(b) for paragraph (a), any inspection in relation to adjacent
properties of a similar nature and value may be limited to the
inspection of only a single representative property;
(c) the operator must ensure that the standing independent valuer:
(i) values, at least once a month, all the interests in
immovables held as part of the scheme property, on the
basis of a review of the last full valuation (unless the valuer
decides that the valuation of an interest in an immovable
should be made on the basis mentioned in paragraph (a));
and
(ii) gives the operator and independent entity a report on the
valuation;
Note Subrule (1) (c) does not apply to a REIT (see table 12.6.4A).
Chapter 12 QFC retail property funds Part 12.5 Investments—QFC retail property funds Rule 12.5.7
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(d) if the operator or independent entity becomes aware of any
matter that appears likely:
(i) to affect the valuation of an interest in an immovable; or
(ii) to cause the standing independent valuer to decide to value
on the basis mentioned in paragraph (a) instead of on the
basis mentioned in paragraph (c);
it must immediately notify the standing independent valuer
about the matter;
(e) the operator must use its best endeavours to ensure that any other
affected person immediately notifies the standing independent
valuer if the affected person becomes aware of a matter
mentioned in paragraph (d).
(2) The valuation of an interest in an immovable under this rule has effect
for these rules until the next valuation of the interest under this rule.
12.5.7 Annual and other periodic valuation reports—QFC retail property funds
(1) This rule applies to a report by a standing independent valuer in
relation to a valuation of interests in immovables under rule 12.5.6.
(2) The report:
(a) must include a brief description of each immovable in which the
fund holds an interest, including:
(i) its location and existing use;
(ii) the nature of the interest the fund holds in the immovable;
(iii) any encumbrances affecting the immovable;
(iv) whether the immovable is leased and, if leased, the terms
of the lease and its expiry;
(v) the capital value of the immovable at the date of valuation;
(vi) the net monthly income (if any) from the immovable; and
QFC retail property funds Chapter 12 Investments—QFC retail property funds Part 12.5
Rule 12.5.8
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(vii) any other matter that may affect the immovable or the
value of the interest;
(b) must include all material details about the basis of valuation and
the assumptions used;
(c) must describe and explain the valuation methods used;
(d) if more than 1 valuation method is available—must explain the
reasons for choosing a particular method;
(e) must outline the structure and condition of the relevant market,
including an analysis of the supply and demand situation, the
market trend, and investment activities;
(f) must confirm that the valuer continues to be eligible to be the
standing independent valuer for the firm and that the report is
prepared on a fair and unbiased basis; and
(g) must be dated as at the date the valuation is made.
12.5.8 Valuation of financial instruments—QFC retail property funds
(1) This rule applies in relation to the valuation of financial instruments
of the following kinds held as part of the scheme property of a QFC
retail property fund:
(a) securities listed on the Qatar Stock Exchange or another
regulated exchange;
(b) unlisted debt securities;
(c) government or public securities;
(d) instruments issued by other property funds.
(2) The instruments must be valued independently and fairly, on a regular
basis, in accordance with the fund’s constitutional document. The
valuation must be done in accordance with the accounting standards
adopted for preparing the fund’s financial statements and with
industry standards and best practices.
Chapter 12 QFC retail property funds Part 12.5 Investments—QFC retail property funds Rule 12.5.9
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12.5.9 Borrowing by QFC retail property funds
(1) A QFC retail property fund may borrow money (directly or through
any intermediate holding vehicle) for the use of the fund to finance
an investment or for operating purposes. The loan must be repaid out
of the scheme property.
(2) Money may be borrowed under subrule (1) only from an eligible
bank.
(3) The operator of the fund must ensure that any borrowing is entered
into, maintained and monitored in accordance with the borrowing
policy as stated in the fund’s prospectus. The operator must have
regard in particular to:
(a) the duration of any borrowing; and
(b) the number of times the fund borrows in any period.
(4) The operator of the fund must also ensure that the fund’s total
borrowing does not, on any day, exceed 50% of its gross asset value.
(5) All borrowing by the fund must be at arm’s length. The operator may
pledge the fund’s assets to secure the borrowing.
(6) If the borrowing limit is exceeded, the operator must use its best
endeavours to reduce the excess borrowing as soon as practicable.
The operator must notify the unitholders and the Regulatory
Authority of:
(a) the breach;
(b) the cause of the breach; and
(c) any action that has been, or will be, taken to correct the breach.
(7) For this rule, borrowing by intermediate holding vehicles of the fund
must be aggregated in calculating the total of the fund’s borrowing.
(8) This rule is subject to the obligation of the fund to comply with any
restriction in the constitutional document. This rule does not apply to
back-to-back borrowing.
QFC retail property funds Chapter 12 Real estate investment trusts Part 12.6
Rule 12.6.1
V9 Collective Investment Schemes Rules 2010 page 309 Effective: 15/Oct/20
Part 12.6 Real estate investment trusts
12.6.1 Application of Part 12.6
This Part applies to real estate investment trusts. The operator of a
retail property fund that is, or is held out as, a REIT must (subject to
rule 12.6.4) comply with this Part in addition to the other Parts of this
Chapter.
12.6.2 Real estate investment trusts or REITs
(1) An operator, or a person marketing a fund, must not use the term
“Real Estate Investment Trust” or “REIT”, or refer to a fund or
otherwise hold out a fund as being a real estate investment trust,
unless the fund is a QFC retail property fund that satisfies subrule (2).
(2) A QFC retail property fund is a real estate investment trust (REIT)
if:
(a) the fund is a closed-ended scheme;
(b) the fund is listed in the Qatar Stock Exchange or another
regulated exchange;
(c) the fund’s constitutional document and prospectus state that:
(i) if the fund invests in vacant land for the purpose of
development, the total value of those investments in vacant
land must not exceed 20% of the value of the fund’s net
assets;
(ii) except to enable the fund to meet with its liquidity
requirements, the fund will not borrow, or enter into any
other transaction that will result in a financial obligation,
if the fund’s total borrowings or obligations will exceed
50% of the value of its net assets;
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(iii) the fund will distribute to unitholders at least 80% of its
audited annual net income (adjusted to exclude any fair
value capital gains).
Guidance
1 For a REIT that holds an immovable through an intermediate holding vehicle
or vehicles, the timing of distributions of income may depend on the law of
the jurisdiction where the vehicle or vehicles are established.
2 Nothing in this rule prevents a REIT from distributing more than the
percentage stated in its constitutional document and prospectus. If the REIT
proposes to distribute less than that percentage, rule 12.6.6 would apply and
prior approval from unitholders would be required.
Note A REIT must be a QFC collective investment company or a QFC
collective investment trust (see rule 12.6.3). A REIT must be primarily
aimed at investments in income-generating immovables (see definition
of property fund).
(3) If a REIT fails to satisfy a requirement in subrule (2) or in its
constitutional document and prospectus, the operator and the
independent entity of the REIT must notify the Regulatory Authority
and the relevant exchange immediately, but within 1 business day.
The notice must state any action that has been, or will be, taken to
correct the breach.
12.6.3 Legal forms—REITs
A real estate investment trust must take the form of a QFC collective
investment company or a QFC collective investment trust.
Note QFC collective investment company (CIC) and QFC collective
investment trust (CIT) are defined in rules 1.3.7 and 1.3.9 respectively.
12.6.4 Other provisions continue to apply to REITs
(1) Except as set out in column 3 of table 12.6.4A, the provisions of these
rules described in columns 1 and 2 continue to apply to a REIT.
(2) Neither table 12.6.4A nor 12.6.4B is exhaustive. Each table is a guide
for those who intend to establish and register a REIT.
(3) Because a REIT cannot take the form of a partnership, provisions that
require a QFC retail property fund to be a QFC collective investment
QFC retail property funds Chapter 12 Real estate investment trusts Part 12.6
Rule 12.6.4
V9 Collective Investment Schemes Rules 2010 page 311 Effective: 15/Oct/20
partnership or CIP do not apply. As a general rule, provisions that
deal with umbrella schemes or the redemption of units do not apply
to REITs since REITs must be closed-ended.
Table 12.6.4A Application of provisions to REITs
column 1
applicable provisions
column 2
description of contents of provisions
column 3
provisions that do not apply
Chapter 1 general
provisions,
basic concepts
and key terms
rules 1.3.6 (b) and 1.3.8
Chapter 2 registration of
scheme
Chapter 3 constitutional
requirements
and units
Division 3.2.B
rules 3.1.1 (b) and 3.2.12
Chapter 4 operator and
independent
entity
Chapter 5 investor
relations,
affected
persons,
prospectus,
approvals,
meetings,
reports,
accounts and
auditors
Divisions 5.4.A, 5.5.A and 5.6.B
rules 5.6.1 (3), 5.6.9 (3), 5.6.11 (2) to
(4), 5.6.12 (2) to (4), 5.6.13 (c), (l) and
(m) and 5.6.17 (2) and (3),
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column 1
applicable provisions
column 2
description of contents of provisions
column 3
provisions that do not apply
Chapter 7 investment and
borrowing
Parts 7.2, 7.3, 7.4, 7.5 and 7.6
rules 7.1.10, 7.7.2 , 7.7.3 and 7.7.6
Chapter 8 operating duties
and
responsibilities,
dealing,
valuation
pricing,
register,
outsourcing,
payments,
accounting and
income
distribution
Divisions 8.1.A, 8.2.A, 8.2.C and 8.6.A
rules 8.1.10, 8.2.5, 8.2.14, 8.3.1,
8.3.3 (2), 8.3.4, 8.6.6, 8.6.11, 8.8.1,
8.8.2 and 8.9.2 (2) and (4)
Divisions 8.1.B, 8.2.B and 8.6.B in so
far as they mention or allow redemption
Chapter 9 suspension,
winding up and
transfer
schemes
rules 9.1.1 and 9.2.1
Chapter 10 financial
promotions and
investment
activities
Parts 10.2 and 10.3
Chapter 11 other provisions
and fees
Part 11.3
Chapter 12 QFC retail
property funds
rules 12.5.1 and 12.5.6 (1) (c)
QFC retail property funds Chapter 12 Real estate investment trusts Part 12.6
Rule 12.6.4
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column 1
applicable provisions
column 2
description of contents of provisions
column 3
provisions that do not apply
Schedule 1 arrangements
that are not
collective
investment
schemes
rules S1.14 (1) (b) and S1.15
Schedule 2 contents of
constitutional
document
Parts S2.2, S2.3 and S2.4
rules S2.9 (b), S2.18 and S2.19
Schedule 5 contents of
prospectus
(4) CIPR also deal with collective investment schemes, and the
definitions of packaged investment product and issuer in those rules
include a unit in a collective investment scheme and the operator of a
collective investment scheme, respectively. The provisions of CIPR
described in table 12.6.4B may, among others, apply to REITs.
Table 12.6.4B CIPR provisions that may apply to REITs
column 1
provisions
column 2
description of contents of provisions
rules 3.5.7 to 3.5.9 inducements
Part 3.6 personal account transactions
Parts 4.2 and 4.3 advertisements, personal contacts and
telephone contacts
Part 4.4 initial disclosure document/terms of
business
rule 5.3.4 independent investment advice
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Part 5.4 and Schedule 1 key information document—form
and contents
12.6.5 Extra constitution requirements—REITs
(1) The constitutional document of a REIT must state:
(a) that the fund is a real estate investment trust;
(b) the exchange where the fund is listed;
(c) the percentage (at least 80%) of its audited annual net income
(adjusted to exclude any fair value capital gains) that the fund
intends to distribute to unitholders; and
(d) whether the fund is a collective investment company or a
collective investment trust.
Note Because a REIT is a QFC retail property fund, its constitutional document
must also include the matters set out in rule 12.2.1, such as a statement
that the fund invests in at least 3 immovables that generate recurrent
rental income.
(2) The income distribution policy required to be stated in the REIT’s
constitutional document must include:
(a) the REIT’s proposed distribution date or dates;
(b) the person responsible for determining any adjustments (such as
evaluation surplus and gains on disposal of immovables) to
distributable income;
(c) the basis for any adjustments mentioned in paragraph (b); and
(d) if relevant, the procedures for calculating, paying and
accounting for income equalisation.
Note For the other statements about income distribution that the constitutional
document of a REIT must contain, see rule S2.10.
12.6.6 Proposal to distribute less than stated percentage
If, for a particular annual distribution, the operator of a REIT
proposes not to distribute the percentage (at least 80%) of its audited
QFC retail property funds Chapter 12 Real estate investment trusts Part 12.6
Rule 12.6.7
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annual net income (adjusted to exclude any fair value capital gains)
as stated in its constitutional document and prospectus, the proposal
is taken to be a fundamental change for purposes of rule 5.4.2.
Note Under rule 5.4.2, any fundamental change must have prior approval from
the unitholders.
12.6.7 REITs and intermediate holding vehicles
If a REIT holds an immovable (whether located in or outside Qatar)
through an intermediate holding vehicle, or a series of intermediate
holding vehicles, the operator of the REIT must ensure that the
vehicle, or each of the vehicles, distributes its income to the REIT.
The income is to be distributed to the extent permitted by the law of
the jurisdiction where the vehicle is established.
12.6.8 Investments by REITs in immovables under development
(1) Subject to subrule (2), the operator of a REIT must ensure that any
investment in an immovable that is in the course of development
(whether by the REIT on its own or in joint venture) is undertaken
only if the REIT intends to hold the immovable on completion.
(2) The total contract value of the immovable under development or
redevelopment must not exceed 30% of the gross asset value of the
REIT.
(3) For this rule, development includes redevelopment but does not
include refurbishment, retrofitting and renovation.
12.6.9 Custody of immovables by REIT operator
(1) The operator of a REIT may act as custodian of an immovable that is
part of the fund’s scheme property if the operator has:
(a) adequate systems and controls to segregate and protect the
immovable; and
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(b) effective arrangements to ensure that the immovable is not
available to creditors of the operator if the operator becomes
insolvent.
Note Under rule 4.2.6 (6) (b), the independent entity of a REIT is not
responsible in relation to an immovable held by the operator of the REIT
as custodian in accordance with this rule. If the REIT operator acts as
custodian, the fund’s prospectus must state that fact (see rule S5.20 (1)).
(2) The systems and controls to segregate and protect the immovable
must ensure that:
(a) legal title to the immovable is registered in the name of the fund;
(b) the operator identifies, manages and monitors any conflicts of
interest as a result of it acting as custodian; and
(c) the operator designates by name or position the employees who
are responsible for safeguarding the ownership rights of the fund
over the immovable, including safekeeping documents
evidencing title to the immovable.
(3) In designating an employee under subrule (2) (c), the operator must
have regard to conflicts of interest that may arise between the
employee’s function of safeguarding ownership rights and the
employee’s other functions.
Guidance
In identifying, managing and monitoring conflicts of interest that may arise from
acting as custodian, the operator must take into account that it is required to give
priority to unitholders’ interests if there is a conflict between its own interests and
those of unitholders.
12.6.10 Transactions with affected persons—REITs
(1) The operator of a REIT need not comply with rules 5.1.3 and 5.1.4
(relating to notice and approval) for a transaction with an affected
person if:
(a) the transaction is for the acquisition or sale of an immovable in
Qatar;
QFC retail property funds Chapter 12 Real estate investment trusts Part 12.6
Rule 12.6.10
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(b) the operator has general unitholder approval to enter into such a
transaction; and
(c) the fund’s independent entity has confirmed in writing, before
the transaction is entered into:
(i) that the transaction is on terms that comply with the
requirement to negotiate at arm’s length in
rule 5.1.2 (2) (a); and
(ii) that all other requirements have been complied with.
(2) For subrule (1) (b), the unitholder approval must be by ordinary
resolution passed at the previous annual general meeting of the fund.
A unitholder who is an affected person proposing to enter into an
affected person transaction, or a unitholder who is an associate of the
affected person, must not vote on the resolution.
(3) The resolution must authorise the operator to enter into transactions
with affected persons for the acquisition or sale of immovables in
Qatar without obtaining prior unitholder approval in each case during
the period for which the resolution is valid. The resolution is valid
only until the date of the next annual general meeting of the fund
(when it may be renewed).
Note The operator of a REIT must disclose the existence of such an approval
in the fund’s prospectus (see rule S5.20 (2)).
(4) If the operator of a REIT enters into a transaction with an affected
person under this rule, the operator must notify unitholders of the
details of the transaction, including the identity of the affected person
and the nature and extent of the person’s interest. The notice must be
given as soon as practicable after entering into the transaction.
Note For service and form of notices to unitholders, see rules 11.1.2 and 11.1.3.
Notice may be given in the fund’s latest filed prospectus.
(5) If the operator operates more than 1 fund and a transaction involves
2 or more of them, the transaction is taken to be a transaction with an
affected person for each fund.
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12.6.11 Depositing cash with, and borrowing money from, affected persons—REITs
(1) The operator of a REIT must not deposit, with an affected person,
cash that is part of the REIT’s assets unless:
(a) the affected person is a regulated financial institution licensed to
accept deposits; and
(b) the rate of interest that is to be paid on the deposit is not lower
than the prevailing commercial rate for a deposit of that size and
term.
(2) The operator of a REIT must not borrow money from an affected
person unless:
(a) the affected person is a regulated financial institution licensed to
lend money; and
(b) the rate of interest to be charged on the borrowing is not higher
than the prevailing commercial rate for a borrowing of that size
and term.
12.6.12 Changes to disclosure about business with affected persons—REITs
If after the initial disclosure there is a significant change in the
information and statements required under rule S5.18 relating to the
competing business of an affected person, the operator must notify
the unitholders of the change.
Note For service and form of notices to unitholders, see rules 11.1.2 and 11.1.3.
Notice may be given in the fund’s latest filed prospectus.
QFC retail property funds Chapter 12 Real estate investment trusts Part 12.6
Rule 12.6.13
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12.6.13 When additional approval required from independent entity—REITs
(1) This rule applies to a transaction between a REIT and an affected
person if:
(a) the transaction is in relation to:
(i) services provided in the ordinary course of estate
management of an immovable of the fund (for example,
renovation and maintenance work); or
(ii) engaging a property agent to provide services to the fund
(for example, advisory services in transactions involving
immovables); and
(b) the value of the transaction is 5% or more of the fund’s gross
asset value, as disclosed in its latest audited accounts.
(2) The operator must ensure that such a transaction is entered into only
with the approval of the fund’s independent entity.
12.6.14 Duty to notify relevant exchange—REITs
(1) The operator and the independent entity of a REIT must notify the
exchange in which the REIT is listed if a material event occurs in
relation to the REIT. The notice must be given immediately, but
within 1 business day.
(2) In this rule, material event includes:
(a) an event, or change in circumstances, that is likely to have a
significant adverse effect on the REIT or its unitholders;
(b) an event, or change in circumstances, that is likely to result in
material prejudice or damage to the REIT or its unitholders;
(c) a failure, in a material respect, to comply with the operator’s or
independent entity’s functions under these rules;
(d) a major breach of the restrictions on the fund’s investment and
borrowing;
Chapter 12 QFC retail property funds Part 12.6 Real estate investment trusts Rule 12.6.15
page 320 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(e) a material change in the fund’s risk management process;
(f) any matter (other than the issue or redemption of units in the
ordinary course of business) that has a material effect on the size
of the fund or the price of its units; and
(g) any other matter that is likely to result in (or that is, under the
exchange’s rules, ground for) the suspension by the exchange of
trading in listed units.
12.6.15 Duty to notify Regulatory Authority of trading suspension
(1) If an exchange on which a REIT is listed suspends trading in the
REIT’s units, the operator of the REIT:
(a) must immediately notify the Regulatory Authority orally about
the suspension, giving the reasons (so far as the operator is
aware of them) for the suspension; and
(b) must give the authority written confirmation of the suspension
and those reasons within 1 business day.
(2) If the exchange permits trading in the units to re-start, the operator:
(a) must immediately notify the Regulatory Authority about the
exchange’s decision orally; and
(b) must give the authority written confirmation of the decision
within 1 business day.
Arrangements not collective investment schemes Schedule 1
Rule S1.1
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Schedule 1 Arrangements not collective investment schemes
(see r 1.2.1)
S1.1 Individual investment management arrangements
An arrangement is not a scheme if—
(a) the property to which the arrangement relates (other than
cash awaiting investment) consists of investments of 1 or
more of the following kinds:
(i) shares;
(ii) debt instruments;
(iii) warrants;
(iv) options;
(v) units in a collective investment scheme;
(vi) long term insurance contracts; and
Note Investment, share, debt instrument, warrant, option and
long term insurance contract are defined in the glossary.
Unit is defined in r 1.2.4.
(b) each participant in the arrangement is entitled to a part of
the property and to withdraw the part at any time; and
(c) each of the following provisions applies to the arrangement:
(i) the contributions of the participants are not pooled;
(ii) the profits or income out of which payments are to be
made are not pooled;
(iii) the parts of the property to which the different
participants are entitled are bought and sold separately
Schedule 1 Arrangements not collective investment schemes
Rule S1.2
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only when a person becomes or ceases to be a
participant.
S1.2 Pure deposit-based arrangements
An arrangement is not a scheme if the whole amount of the
contribution of each participant in the arrangement is a deposit
accepted by an authorised firm with an authorisation for deposit
taking.
Note Authorised firm, authorisation and deposit taking are defined in
the glossary.
S1.3 Arrangements not operated by way of business
An arrangement is not a scheme if it is operated otherwise than
by way of business.
S1.4 Debt issues
(1) An arrangement is not a scheme if it is an arrangement under
which the rights or interests of participants in the arrangement are
represented by investments of 1, and only 1, of the following
kinds:
(a) debt instruments if they are—
(i) issued by—
(A) a single corporation that is not a CIC; or
(B) a single issuer that is not a corporation; and
(ii) for instruments mentioned in subparagraph (i) (B)—
issued or guaranteed by—
(A) the government of any jurisdiction; or
(B) a public or local authority of any jurisdiction; and
Arrangements not collective investment schemes Schedule 1
Rule S1.4
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(iii) not convertible or exchangeable for investments of any
other kind;
Note Debt instrument, corporation, jurisdiction and investment
are defined in the glossary. CIC is defined in r 1.3.7.
(b) debt instruments if—
(i) they are instruments to which paragraph (a) (other than
subparagraph (iii)) applies; and
(ii) they are convertible or exchangeable for shares; and
(iii) the shares are issued by—
(A) the same person that issued the debt instruments;
or
(B) a single other issuer;
Note Share is defined in the glossary.
(c) warrants if—
(i) they are issued otherwise than by a CIC; and
(ii) they give rights to investments that—
(A) are issued by the same issuer; and
(B) are debt instruments mentioned in paragraph (a)
or (b) or shares.
Note Warrant is defined in the glossary.
(2) An arrangement must not be taken not to be an arrangement to
which subrule (1) applies only because 1 or more of the
participants is a person (the counterparty)—
(a) whose ordinary business—
(i) involves the person in conducting 1 or more relevant
activities; or
(ii) would, apart from any exclusions under the Financial
Services Regulations, schedule 3 (Regulated Activities
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Rule S1.4
page 324 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
and Permitted Activities), part 2 (Specified Activities),
involve the person in conducting 1 or more relevant
activities; and
(b) whose rights or interests in the arrangement are or include
rights or interests under a swap arrangement.
(3) In this rule:
relevant activities means regulated activities of any of the
following kinds:
(a) dealing in investments;
(b) arranging deals in investments;
(c) providing custody services;
(d) arranging the provision of custody services;
(e) managing investments;
(f) advising on investments;
(g) providing credit facilities;
(h) arranging credit facilities;
(i) operating collective investment schemes.
Note Regulated activity and the regulated activities mentioned in para (a)
to (i) are defined in the glossary.
swap arrangement means an arrangement—
(a) the purpose of which is to facilitate the making of payments
to participants, whether or not of a particular amount, in a
particular currency or at a particular time or rate of interest;
and
(b) under which the counterparty—
(i) is entitled to receive amounts, whether representing
principal or interest, payable in relation to any property
Arrangements not collective investment schemes Schedule 1
Rule S1.5
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subject to the arrangement or amounts worked out by
reference to those amounts; and
(ii) makes payments, whether or not of the same amount
or in the same currency as amounts mentioned in
subparagraph (i), that are worked out in accordance
with an agreed formula by reference to those amounts.
S1.5 Common accounts
An arrangement is not a scheme if—
(a) it is an arrangement under which the rights or interests of
participants are rights to or interests in money held in a
common account; and
(b) that money is held in the account on the understanding that
an amount representing the contribution of each participant
is to be applied—
(i) in making payments to the participant; or
(ii) in satisfaction of amounts owed by the participant; or
(iii) in the acquisition of property for the participant or the
provision of services to the participant.
S1.6 Arrangements entered into for commercial purposes related to existing businesses
(1) An arrangement is not a scheme if each of the participants in the
arrangement—
(a) conducts a business activity other than an excluded activity;
and
(b) enters into the arrangement for commercial purposes related
to the business activity.
(2) However, subrule (1) does not apply if the participant will
conduct the business activity only because the participant is a
participant in the arrangement.
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Rule S1.7
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(3) In this rule:
excluded activity means regulated activities of any of the
following kinds:
(a) dealing in investments;
(b) arranging deals in investments;
(c) providing custody services;
(d) arranging the provision of custody services;
(e) managing investments;
(f) advising on investments;
(g) providing credit facilities;
(h) arranging credit facilities;
(i) operating collective investment schemes.
Note Regulated activity and the regulated activities mentioned in para (a)
to (i) are defined in the glossary.
S1.7 Group arrangements
An arrangement is not a scheme if each of the participants is a
corporation in the same group as the person responsible for
managing the property held for or in the arrangement.
Note Corporation, group and property are defined in the glossary.
S1.8 Franchise arrangements
(1) A franchise arrangement is not a scheme.
(2) In this rule:
franchise arrangement means an arrangement under which a
person earns profits or income by exploiting a right given by the
arrangement to use—
(a) a trade mark or design or other intellectual property; or
Arrangements not collective investment schemes Schedule 1
Rule S1.9
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(b) the goodwill attached to it.
S1.9 Timeshare arrangements
An arrangement is not a scheme if the rights or interests of the
participants are timeshare rights.
S1.10 Other arrangements relating to use or enjoyment of property
An arrangement is not a scheme if—
(a) the predominant purpose of the arrangement is to enable the
participants in the arrangement to share in the use or
enjoyment of property or to make its use or enjoyment
available free of charge to others; and
(b) the property to which the arrangement relates—
(i) does not consist of the currency of any jurisdiction;
and
(ii) does not consist of or include—
(A) a specified product; or
(B) a product that would be a specified product apart
from any exclusion in Financial Services
Regulations, schedule 3 (Regulated Activities
and Permitted Activities), part 3 (Specified
Products).
Note Property, jurisdiction and specified product are defined in the
glossary.
S1.11 Arrangements involving issue of certificates representing investments
An arrangement is not a scheme if the rights or interests of the
participants in the arrangement are securities receipts in relation
to securities of a single issuer.
Note Securities receipt and security are defined in the glossary.
Schedule 1 Arrangements not collective investment schemes
Rule S1.12
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S1.12 Clearing services
An arrangement is not a scheme if its purpose is the provision of
clearing services and the services are provided by an authorised
firm.
Note Authorised firm is defined in the glossary.
S1.13 Contracts of insurance
A contract of insurance is not an arrangement that is a scheme.
Note Contract of insurance is defined in the glossary.
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
Arrangements not collective investment schemes Schedule 1
Rule S1.14
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(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.
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Rule S1.15
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(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.
S1.15 Partnerships
(1) A partnership incorporated or otherwise established in the QFC
as a partnership (and not a branch) is not an arrangement that is a
scheme unless it is—
(a) a CIP; or
(b) another permitted form of QFC scheme.
Note CIP and another permitted form of QFC scheme are defined in
div 1.3.B.
(2) A partnership incorporated or otherwise established 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 partnership; and
(b) the partnership 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.
Arrangements not collective investment schemes Schedule 1
Rule S1.15
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(4) For subrule (2), an arrangement meets the investment condition
if, in relation to the partnership, 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 (whether or not
represented, at any time, by the value of the investor’s
percentage interest in, or securities of, the partnership 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
partnership makes arrangements.
(5) However, the Regulatory Authority may, by written notice given
to the partnership, declare that subrule (1) or (2) does not apply
in relation to the partnership.
(6) The Regulatory Authority may make a declaration under subrule
(5) if it considers that making the declaration is desirable to
protect—
(a) the interests of participants or potential participants in the
partnership; or
(b) the financial system operating in or from the QFC.
(7) If the Regulatory Authority gives the partnership a notice under
subrule (5), the notice must—
(a) give reasons for the decision to make the declaration; and
(b) tell the partnership that it may appeal to the Regulatory
Tribunal against the decision.
Schedule 1 Arrangements not collective investment schemes
Rule S1.16
page 332 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
S1.16 Profit sharing investment accounts
(1) A profit sharing investment account is not an arrangement that is
a scheme.
(2) In this rule:
profit-sharing investment account (or PSIA) is an account,
portfolio or fund that satisfies the following conditions:
(a) it is managed by an authorised firm in accordance with
Shari’a and is held out as such;
(b) under the management agreement with the firm, the
investment account holder concerned and the firm agree to
share any profit in a specified ratio, and the holder agrees to
bear any loss not caused by the firm’s negligence or breach
of contract.
Constitutional document content—QFC schemes Schedule 2 Constitution requirements—all QFC schemes Part S2.1
Rule S2.1
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Schedule 2 Constitutional document content—QFC schemes
(see r 3.1.2)
Part S2.1 Constitution requirements—all QFC schemes
S2.1 Name of scheme
A statement of the name of the scheme.
S2.2 Scheme is established in QFC etc
A statement that—
(a) the scheme is a collective investment scheme established in
the QFC; and
(b) the constitutional document is governed by the law applying
in the QFC in relation to collective investment schemes.
S2.3 Legal form of scheme etc
A statement of the legal form of the scheme.
Note For the permitted legal forms of QFC schemes, see r 1.3.6.
S2.4 Islamic funds
For an Islamic fund—
(a) a statement that the scheme (or subscheme) is an Islamic
fund and consequently that its entire business operations are
conducted in accordance with Shari’a; and
(b) a statement providing details of its Shari’a Supervisory
Board.
Note Islamic fund is defined in r 1.3.11. Shari’a Supervisory Board is
defined in the glossary.
Schedule 2 Constitutional document content—QFC schemes Part S2.1 Constitution requirements—all QFC schemes
Rule S2.5
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S2.5 Investment objectives and policy etc
The following statements:
(a) a statement of the scheme’s investment objectives
(including its financial objectives) and, in particular—
(i) the types of investments in which it (and, if applicable,
each subscheme) may invest; and
(ii) the scheme’s investment strategies, including its
approach to borrowing and gearing;
(b) that the object of the scheme is to invest in investments of
those types with the aim of spreading investment risk and
giving unitholders the benefits of the investments;
(c) a statement of the scheme’s policy for achieving its
investment objectives.
Note Investment and borrowing are defined in the glossary. Subscheme
is defined in r 1.2.11.
S2.6 Duration of limited schemes
If the duration of the scheme is limited, a statement to that effect,
of the duration of the scheme and, if appropriate, of any
conditions for extending the duration of the scheme.
S2.7 Unitholder’s liability to pay
(1) A provision that—
(a) a unitholder is not liable to make any further payment for a
unit after paying the price for the unit; and
(b) no further liability can be imposed on the unitholder in
relation to the unit.
Note Unit and unitholder are defined in r 1.2.4 and r 1.2.5 respectively.
Price is defined in the glossary.
(2) A provision that the unitholders are not liable for—
(a) the debts or other liabilities of the scheme; or
Constitutional document content—QFC schemes Schedule 2 Constitution requirements—all QFC schemes Part S2.1
Rule S2.8
V9 Collective Investment Schemes Rules 2010 page 335 Effective: 15/Oct/20
(b) acts or omissions of the operator; or
(c) acts or omissions of the independent entity.
S2.8 Fees, charges and other expenses of scheme
Each of the following statements:
(a) that fees, charges and other expenses in relation to the
scheme may be taken out of scheme property;
(b) a statement of how the amounts of fees, charges and other
expenses are to be calculated.
Note Scheme property is defined r 1.2.3.
S2.9 Classes of units
A statement of—
(a) the classes of units that may be issued for the scheme; and
(b) for an umbrella scheme—the classes of units that may be
issued for each subscheme of the scheme; and
(c) the rights attaching to units in each class, including any
provision for the expression of the rights in 2 or more
denominations.
Note Class and issue are defined in the glossary. Umbrella scheme and
subscheme are defined in r 1.2.11.
S2.10 Income and capital distribution
(1) A statement providing details of—
(a) the distribution policy of the scheme; and
(b) the person responsible for calculating, transferring,
allocating and distributing income or capital for any class of
unit in issue during an accounting period; and
(c) any provision for payment of income or capital and when
income or capital must be distributed.
Schedule 2 Constitutional document content—QFC schemes Part S2.1 Constitution requirements—all QFC schemes
Rule S2.11
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(2) If relevant, a provision for income equalisation.
Note Income equalisation is defined in the glossary.
S2.11 Investment and borrowing restrictions
(1) A statement providing details of all investment restrictions
applying to the scheme.
(2) A statement providing details of all borrowing restrictions
applying to the scheme, including, for a qualified investor
scheme, the scheme’s permitted percentage under rule 6.4.1
(Borrowing—QFC qualified investor schemes).
Note Investment and borrowing are defined in the glossary.
S2.12 Management of borrowing risks
A statement providing details of how any risks posed by
borrowings of the scheme are to be managed.
Note Borrowing is defined in the glossary.
S2.13 Valuation and pricing
(1) A statement setting out the basis for, and frequency of, valuation
of the scheme.
(2) A statement setting out the basis for, and frequency of, pricing of
each class of units in the scheme.
Note Class is defined in the glossary.
S2.14 Base currency
A statement of the base currency of the scheme.
Note Base currency is defined in the glossary.
S2.15 Functions of operator and independent entity
(1) A statement providing details of the functions of the operator
under these rules in relation to the scheme.
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Rule S2.16
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(2) A statement providing details of the functions of the independent
entity under these rules in relation to the scheme.
S2.16 Responsibility statement
A provision stating that nothing in the constitutional document
has the effect of exempting the operator or independent entity
from, or indemnifying the operator or independent entity against,
any liability of the operator or independent entity to a participant
under the law applying in the QFC.
Note Operator is defined in r 1.2.8. Independent entity is defined in
r 1.2.9. Participant is defined in r 1.2.2.
S2.17 Meetings
A statement providing details of the following:
(a) the procedures for calling meetings of unitholders;
(b) resolutions and voting at meetings of unitholders;
(c) the voting rights of unitholders;
(d) the matters that require the approval of unitholders;
(e) the matters that require the approval of an ordinary
resolution;
(f) the matters that require the approval of a special resolution.
Note Ordinary resolution and special resolution are defined in the
glossary.
S2.18 Other statements and provisions for CIC
(1) For a CIC, the following statements:
(a) the scheme is a closed-ended company, or an open-ended
company with variable share capital;
(b) a statement providing particulars of the scheme’s capital
structure, including the maximum and minimum sizes of the
scheme’s capital;
Schedule 2 Constitutional document content—QFC schemes Part S2.1 Constitution requirements—all QFC schemes
Rule S2.19
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(c) a statement of the proportion of a larger denomination share
represented by a smaller denomination share for any
relevant class of units.
Note CIC is defined in r 1.3.7. Larger denomination share and smaller
denomination share are defined in r 3.2.2 (2).
(2) For a CIC that is open-ended, a provision authorising the
allocation of redeemable shares without limit by reference to the
CIC’s net asset value at the relevant time.
Note Net asset value is defined in the glossary.
S2.19 CIP partnership agreement binding etc
For a CIP, a statement that the partnership agreement—
(a) is binding on each unitholder as if the unitholder had been a
party to it; and
(b) authorises and requires the operator and independent entity
to do everything required or permitted of them by its terms.
Note CIP is defined in r 1.3.8. Partnership agreement is defined in the
glossary.
S2.20 CIT trust deed binding etc
For a CIT, a statement that the trust instrument—
(a) is binding on each unitholder as if the unitholder had been a
party to it; and
(b) authorises and requires the operator and independent entity
to do everything required or permitted of them by its terms.
Note CIT is defined in r 1.3.9. Trust instrument is defined in the glossary.
Constitutional document content—QFC schemes Schedule 2 Constitution requirements—all QFC schemes Part S2.1
Rule S2.21
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S2.21 CIT declaration of trust
For a CIT, a statement that, subject to the trust instrument and the
Collective Investment Schemes Rules 2010—
(a) the scheme property (other than amounts in any distribution
account) is held by the independent entity on trust for the
unitholders—
(i) according to the number of units held by each
unitholder; or
(ii) if relevant, according to the number of individual
shares in the scheme property represented by the units
held by each unitholder; and
(b) the amounts in any distribution account are held by the
independent entity on trust to distribute or apply in
accordance with the trust instrument and those rules.
Note CIT is defined in r 1.3.9. Trust instrument and distribution account
are defined in the glossary. Scheme property is defined in r 1.2.3.
S2.22 Assets other than cash for issue or redemption
If relevant, a statement authorising payment for the issue or
redemption of units in the scheme to be made by the transfer of
assets other than cash.
Note Issue and redemption are defined in the glossary.
S2.23 Suspension and winding-up
A statement providing details of—
(a) the grounds on which the operator may initiate a suspension
of the scheme; and
(b) the methodology for working out the rights of unitholders
to participate in the scheme property on winding-up.
Schedule 2 Constitutional document content—QFC schemes Part S2.1 Constitution requirements—all QFC schemes
Rule S2.24
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S2.24 Amendment of constitutional document
A statement providing details of how the constitutional document
may be amended.
S2.25 Redemption of units held in breach of QFC law
A statement that, if the holding of units by a unitholder is (or is
reasonably considered by the operator to be) in breach of the
Collective Investment Schemes Rules 2010, any other law
applying in the QFC or the constitutional document, the units
must be redeemed.
Note Redemption is defined in the glossary.
S2.26 Documents evidencing title to units
A statement providing details of any documents evidencing title
to units.
Note Document evidencing title is defined in the glossary.
S2.27 Other relevant matters
A statement providing details of the matters—
(a) necessary to enable the scheme, the operator and
independent entity to obtain any privilege or power
provided in these rules that is not otherwise provided in the
constitutional document; and
(b) otherwise required by these rules to be provided in the
constitutional document.
Constitutional document content—QFC schemes Schedule 2 Extra constitution requirements—qualified investor schemes Part S2.2
Rule S2.28
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Part S2.2 Extra constitution requirements—qualified investor schemes
S2.28 Qualified investor scheme statement—QFC qualified investor schemes
A statement that the scheme is a qualified investor scheme.
S2.29 Only qualified investors can be unitholders in qualified investor schemes—QFC qualified investor schemes
A statement that units in the scheme can only be recorded in the
unitholder register in the name of a person who is a qualified
investor.
Note Qualified investor, for a QFC scheme, is defined in r 1.2.12 (2).
S2.30 Limits on unit issue and redemption—QFC qualified investor schemes
A statement providing details of—
(a) when the issue of units of any particular class may be
limited; and
(b) the provisions relating to any restrictions on the right to
redeem units of any class.
Note Issue, class and redemption are defined in the glossary.
Part S2.3 Extra constitution requirement—UCITS type schemes
S2.31 UCITS type scheme statement—QFC UCITS type schemes
A statement that the scheme is a UCITS type scheme.
Schedule 2 Constitutional document content—QFC schemes Part S2.4 Extra constitution requirements—money-market funds
Rule S2.32
page 342 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Part S2.4 Extra constitution requirements—money-market funds
S2.32 Money-market fund statement—QFC money-market funds
A statement that the scheme is a money-market fund.
S2.33 Primary investment objective etc—QFC money-market funds
(1) A statement that the scheme’s primary investment objective is to
maintain the scheme’s net asset value.
Note Net asset value is defined in the glossary.
(2) The statement mentioned in subrule (1) must specify whether the
scheme’s net asset value is to be maintained—
(a) constant at par (net of earnings); or
(b) at the value of a participant’s initial capital plus earnings.
(3) A statement that, with a view to achieving the scheme’s primary
investment objective, the scheme may invest only in—
(a) high quality approved money-market instruments; and
(b) on an ancillary basis, deposits with eligible banks.
Note 1 Approved money market instrument is defined in r 7.1.5.
Note 2 For the meaning of high quality approved money-market
instrument, see the following: .
• r 6.1.5 (2) (Investments by money-market funds—QFC
qualified investor schemes)
• r 7.2.4 (2) (Investments by money-market funds—QFC
retail schemes).
Note 3 Deposit and eligible bank are defined in the glossary.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.1
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Schedule 3 Prospectus content—QFC qualified investor schemes
(see r 5.2.3)
S3.1 Document status
A statement that the document is the prospectus of the QFC
qualified investor scheme as at a particular date.
S3.2 Description of scheme etc
The following information and statements:
(a) the name of the scheme;
(b) that the scheme is registered as a qualified investor scheme
under the Collective Investment Schemes Rules 2010;
(c) the registration number given to the scheme by the
Regulatory Authority;
(d) the legal form of the scheme and that it is an open-ended
scheme;
(e) if the scheme (or a subscheme) is an Islamic fund—that the
scheme (or subscheme) is an Islamic fund;
(f) if the scheme (or a subscheme) is a money-market fund—
that the scheme (or subscheme) is a money-market fund;
(g) that the unitholders are not liable for—
(i) the debts and other liabilities of the scheme; or
(ii) acts or omissions of the operator; or
(iii) acts or omissions of the independent entity;
(h) if the scheme has not started to operate—when the scheme
is expected to start to operate;
(i) whether it is a listed scheme or intended to become a listed
scheme;
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.3
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(j) if the duration of the scheme is limited—a statement to that
effect, an indication of the duration of the scheme and, if
appropriate, of any conditions for extending the duration of
the scheme;
(k) the base currency of the scheme;
(l) if the scheme is a CIC—its capital structure, including the
maximum and minimum sizes of its capital;
(m) if applicable, any minimum initial investment in the
scheme;
(n) that any notice or other document may be served on the
operator or independent entity at its registered address in the
QFC or, if the independent entity is not an authorised firm,
at its address for service;
(o) the circumstances in which the scheme may be wound up
and a summary of the procedure for, and the rights of the
unitholders under, a winding-up;
(p) the governing law for the scheme.
S3.3 Islamic funds
If the scheme (or a subscheme) is an Islamic fund, the following
information:
(a) that all operations of the scheme (or subscheme) must be
conducted in accordance with Shari’a;
(b) the names of the members of the Shari’a Supervisory Board
and their qualifications and education;
(c) the manner and frequency of Shari’a reviews;
(d) the disclosure required by AAOIFI FAS 14.
Note Shari’a Supervisory Board and AAOIFI are defined in the glossary.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.4
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S3.4 Investment objectives and policy etc
(1) Sufficient information to enable a unitholder to ascertain the
following:
(a) the scheme’s investment objectives (including its financial
objectives) and, in particular—
(i) the types of investments in which it (and, if applicable,
each subscheme) may invest; and
(ii) the scheme’s investment strategies, including its
approach to borrowing and gearing;
(b) the scheme’s policy for achieving its investment objectives,
including—
(i) the general nature of the portfolio and any intended
specialisation; and
(ii) any policy for the spreading of risk in the scheme
property; and
(iii) its policy in relation to the exercise of borrowing
powers;
(c) a description of any restrictions in the assets in which
investments may be made;
(d) the extent (if any) to which the investment policy does not
envisage the scheme property remaining fully invested at all
times;
(e) the scheme’s policy for managing any risks posed by
borrowings of the scheme.
Note Rule 5.2.3 (1) (General information requirements for prospectus—
all QFC schemes) requires the prospectus to contain information in
relation to—
(a) the merits and risks of participating in the scheme; and
(b) the extent and characteristics of the risks accepted by
participating in the scheme.
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.4
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(2) Details of all borrowing restrictions applying to the scheme,
including the scheme’s permitted percentage under rule 6.4.1
(Borrowing—QFC qualified investor schemes).
(3) For investments in immovables, the following information:
(a) the jurisdictions where immovables in which the scheme
may invest are located;
(b) the scheme’s policy in relation to insurance of immovables
forming part of the scheme property;
(c) the scheme’s policy in relation to granting options over
immovables in the scheme property and the purchase of
options on immovables;
(d) if investment in a non-Qatari immovable has been, or is to
be, made through an intermediate holding vehicle or a series
of intermediate holding vehicles—a statement disclosing
the existence of the intermediate holding vehicle or series of
intermediate holding vehicles and confirming that the
purpose of the vehicle, or each of the vehicles, is to enable
the scheme to hold immovables located outside Qatar.
(4) If intended, a statement that the scheme property may consist of
units in a scheme (the second scheme) that is managed or
operated by the operator or a person in the same group as the
operator, and a statement about—
(a) the basis of the maximum amount of the charges in relation
to transactions in the second scheme; and
(b) the extent to which the charges must be reimbursed to the
scheme.
(5) If intended, a statement that stock lending arrangements or repo
agreements may be entered into for the scheme, the procedures
that must be applied in relation to them and the collateral that
must be required.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.5
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S3.5 Distributions, accounting dates etc
(1) Relevant details of accounting and distribution dates (including
the accounting reference date), and a description of the
procedures—
(a) for calculating and applying income and capital (including
how any distributable income and capital is to be paid); and
(b) relating to unclaimed distributions.
(2) Details of the main taxes levied on the scheme’s income and
capital, including tax (if any) deducted on distributions to
unitholders.
S3.6 Characteristics of units in the scheme
Information about the following:
(a) if there are 2 or more classes of units in issue or available
for issue—the name of each class and the rights attached to
each class so far as they differ from the rights attached to
other classes;
(b) how unitholders may exercise their voting rights and what
these are;
(c) if mandatory redemption or conversion of units from one
class to another may be required—in what circumstances
that may be required;
(d) for a CIT—the fact that the nature of the right represented
by units is that of a beneficial interest under a trust;
(e) if applicable, the circumstances where conversion from one
class of units to another is not permitted;
(f) if applicable, the terms on which a unit in one class may be
converted to a unit in another class.
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.7
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S3.7 Operator
The following information about the operator:
(a) its name;
(b) the nature of its legal status;
(c) the date and place of its incorporation;
(d) the address of its registered office in the QFC;
(e) if it is a subsidiary—the name of its ultimate parent entity
and the jurisdiction where the parent entity is incorporated;
(f) if the duration of its legal status is limited—when its legal
status will or may cease;
(g) if it has share capital—the amount of its issued share capital
and how much is paid up;
(h) a summary of its functions under these rules in relation to
the scheme;
(i) a summary of the material provisions of the contracts to
which it is a party in relation to the scheme that may be
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity;
(j) a summary of any outsourcings entered into by it under
these rules in relation to the scheme;
(k) the operator’s policy in relation to the operator holding units
in the scheme.
S3.8 Independent entity
(1) The following information about the independent entity:
(a) its name;
(b) the nature of its legal status;
(c) the date and place of its incorporation;
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.8
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(d) whether it is an authorised firm;
(e) if it is an authorised firm—the address of its registered
office in the QFC;
(f) if it is not an authorised firm—the following:
(i) its contact details and address for service;
(ii) the regulatory regimes and legal systems (including
insolvency laws) to which it is subject;
(iii) the regulatory authorisations (however described) held
by it;
(iv) its arrangements for safeguarding the scheme property
and its use of agents and service providers;
(v) the obligations applying to it, and the recourse
available against it by the operator, the Regulatory
Authority and unitholders, under those regulatory
regimes and legal systems in relation to anything done
or not done by it in relation to the scheme;
(vi) whether it has submitted to the jurisdiction of the
Regulatory Authority, the QFC Court or both;
(g) if it is a subsidiary—the name of its ultimate parent entity
and the jurisdiction where that parent entity is incorporated;
(h) if the duration of its legal status is limited—when its legal
status will or may cease;
(i) if it has share capital—the amount of its issued share capital
and the amount paid up;
(j) a summary of its functions under these rules in relation to
the scheme;
(k) a summary of the material provisions of the contracts to
which it is a party in relation to the scheme that may be
relevant to unitholders, including provisions (if any)
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.9
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relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity;
(l) a description of its main business activity;
(m) a summary of any outsourcings entered into by it under
these rules in relation to the scheme.
(2) If the independent entity is not an authorised firm, a statement
that the scheme property may be held in a jurisdiction outside the
QFC and that the market practices, insolvency law and legal
system applying in that jurisdiction may differ from those
applying in the QFC.
S3.9 Investment adviser and standing independent valuer
(1) If an investment adviser is retained in relation to the business of
the scheme—
(a) its name; and
(b) whether it is an authorised firm; and
(c) if it conducts a significant activity other than providing
services to the scheme as an investment adviser—what the
significant activity is; and
(d) a summary of the material provisions of the contracts to
which it is a party in relation to the scheme that may be
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity.
(2) If the scheme has a standing independent valuer—
(a) its name; and
(b) a summary of the material provisions of the contracts to
which it is a party in relation to the scheme that may be
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.10
V9 Collective Investment Schemes Rules 2010 page 351 Effective: 15/Oct/20
S3.10 Auditor
The name and address of the auditor of the scheme.
S3.11 Register of unitholders
(1) The address in the QFC where the unitholder register, or a copy
of the register, is available for inspection by unitholders and when
it can be inspected.
(2) For a QFC scheme that is listed in the Qatar Stock Exchange or
in any other regulated exchange, how and when unitholders can
obtain information about their holdings of the listed units and
substantial holders of such units.
S3.12 Payments out of scheme property
(1) The payments that may be made out of the scheme property to
any person, whether by way of remuneration or charges for
services, or reimbursement of expenses.
(2) For each category of remuneration, charges or expenses, the
following information:
(a) the current rates or amounts of the remuneration, charges or
expenses;
(b) how the remuneration, charges or expenses must be
calculated and accrue and when they must be paid;
(c) if notice has been given to unitholders of the operator’s
intention to—
(i) introduce a new category of remuneration for its
services; or
(ii) increase the basis of any current charge; or
(iii) change the basis of the treatment of a payment from
the capital property;
particulars of that introduction, increase or change and when
it will take place;
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.12
page 352 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(d) the types of any other charges and expenses that may be
taken out of the scheme property;
(e) if all or part of the remuneration or expenses is to be treated
as a charge to capital—
(i) that fact; and
(ii) the basis of the charge that may be treated as a capital
charge.
(3) A table substantially in the form of table S3.12 illustrating the
effect of charges and expenses, together with the notes and
statements following the table.
Table S3.12 Charges and expenses for the scheme
One-off charges taken before or after you invest
Entry charge [insert percentage]%1
Exit charge [insert percentage]%1
This is the maximum that might be taken out of your money [insert as applicable before
it is invested or before the proceeds of your investment are paid out].
Charges taken from the fund over a year
Ongoing charges [insert percentage]%2
Charges taken from the fund under certain specific conditions
Performance fees [insert percentage]% a year of any returns the
fund achieves above the [insert name of benchmark].
Note 1 The percentages shown in the entry and exit charges are the
maximum figures. In some cases you might pay less.
Note 2 The percentage for the ongoing charges is based on expenses for the
year ending [insert year]. This figure may vary from year to year.
Ongoing charges excludes—
• performance fees
• portfolio transaction costs, other than entry and exit charges
incurred when buying or selling units in another collective
investment scheme.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.13
V9 Collective Investment Schemes Rules 2010 page 353 Effective: 15/Oct/20
Statements about charges and expenses
The charges you pay are used to pay the costs of running the scheme, including
the costs of marketing and distributing it. These charges reduce the potential
growth, and rate of return, of your investment.
S3.13 Dealing
(1) Details of the following:
(a) the dealing days, and times on a dealing day, when the
operator must receive instructions to issue or redeem units;
(b) the procedures for—
(i) the issue and redemption of units; and
(ii) the settlement of transactions;
(c) the initial offer period and how it ends;
(d) the steps that must be taken by a unitholder in redeeming
units before the unitholder can receive the proceeds in the
redemption, including any relevant notice periods and the
circumstances in which, and periods for which, payment
may be deferred;
(e) the circumstances in which the redemption of units may be
deferred, limited or suspended and how unitholders must be
notified if this happens;
(f) how unitholders must be notified when the redemption of
units is no longer deferred, limited or suspended;
(g) details of the minimum number, percentage or value of each
class of unit in the scheme that—
(i) any single person may hold; and
(ii) may be the subject of any single transaction of issue or
redemption;
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.14
page 354 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(h) if relevant, the circumstances in which the operator may
arrange for, and the procedure for, the issue or redemption
of units otherwise than in cash;
(i) the circumstances in which the issue of units in any class
may be limited and the procedures relating to this, including
the conditions to be met for the issue of units in the class;
(j) if the scheme is operating limited issue arrangements or
limited redemption arrangements—details of the
arrangements.
Note Limited issue arrangements and limited redemption
arrangements are defined in the glossary.
S3.14 Valuation and pricing
(1) A provision stating that there must be only a single forward price
for any unit calculated from time to time by reference to a
particular valuation point.
(2) Details about the following:
(a) how frequently, and at what times of the day, the scheme
property must be regularly valued to calculate the price at
which units in the scheme may be issued or redeemed, and
a description of any circumstances in which the scheme
property may be specially valued;
(b) how the value of the scheme property must be calculated in
relation to each purpose for which it must be valued;
(c) how the price of units in each class must be calculated.
S3.15 Issue and redemption charges
If the operator makes any charges on the issue and redemption of
units, details of the charging structure and how notice must be
provided to unitholders of any increase.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.16
V9 Collective Investment Schemes Rules 2010 page 355 Effective: 15/Oct/20
S3.16 General information
Details of the following:
(a) when annual and half-yearly reports must be published;
(b) the scheme’s accounting standard;
(c) the address in the QFC where copies of the constitutional
document, any amending or supplemental instruments, and
the most recent annual and half-yearly reports, may be
inspected and copies may be obtained.
S3.17 Mandatory statement about prospectus
The following statement prominently displayed on the first page
(not including any cover page) of the prospectus:
‘This prospectus relates to a collective investment scheme
established in the Qatar Financial Centre and registered by the
Qatar Financial Centre Regulatory Authority (the Regulatory
Authority) as a qualified investor scheme.
The Regulatory Authority is not responsible for reviewing or
verifying this prospectus or any related documents. The
Regulatory Authority has not approved this prospectus or any
related documents nor has the Regulatory Authority taken any
steps to verify the statements, information or provisions in the
prospectus or any related documents. The Regulatory Authority
takes no responsibility for the accuracy of statements,
information or provisions in this prospectus or any related
documents.
The units to which this prospectus relates may be difficult, and
take some time, to sell. Payments of redemption proceeds may
also be delayed.
Returns from units can go down as well as up and you may also
lose all or part of your investment.
Past performance of units is not a reliable indication of the future
performance.
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.18
page 356 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Prospective purchasers of the units offered should conduct their
own due diligence and consider seeking independent legal and
financial advice before deciding to invest in the scheme.
This prospectus is intended for distribution only to a limited type
of investor (a ‘qualified investor’ as defined in the Regulatory
Authority’s Collective Investment Schemes Rules 2010) and must
not be given to, or relied on, by anyone else’.
S3.18 Additional information for feeder funds
For a feeder fund, the following information:
(a) a prominent risk warning to alert participants to the fact that
they may be subject to higher fees arising from the layered
investment structure;
(b) details of the fees arising at the level of the feeder fund itself
and the scheme (or subscheme) to which its investments are
dedicated.
S3.19 Additional information for fund of funds
For a fund of funds, the following information:
(a) a prominent risk warning to alert participants to the fact that
they may be subject to higher fees arising from the layered
investment structure;
(b) details of the fees arising at the level of the fund of funds
itself and, to the extent known, the schemes (and
subschemes of umbrella schemes) to which its investments
are dedicated.
S3.20 Additional statements and information for property funds
For a property fund, the following statements and information:
(a) the nature of the commitment that participants will enter
into;
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.20
V9 Collective Investment Schemes Rules 2010 page 357 Effective: 15/Oct/20
(b) a prominent risk warning that refers to the particular
circumstances in property markets that can cause difficulties
in meeting redemptions;
(c) details of transactions or agreements entered into, or
proposed to be entered into, with affected persons;
(d) full particulars of the nature and extent of the interest (if
any) of affected persons in the immovables owned, or
proposed to be acquired, by the scheme;
(e) details of significant participants and the number or
percentage of units held, or proposed to be held, by each of
them;
(f) a statement to explain the standards according to which
property valuations are conducted for the scheme;
(g) the maximum percentage of the scheme’s net asset value at
any time that may consist of property-related assets that are
not traded or dealt in on markets provided for in the
constitutional document;
(h) the maximum percentage of the scheme’s net asset value at
any time that may be invested in any single immovable and,
if applicable, the conditions under which the scheme may
depart from this restriction;
(i) the maximum percentage of the scheme’s net asset value at
any time that may consist of immovables that are
unoccupied and non-income producing or in the course of
substantial development, redevelopment or refurbishment;
(j) the maximum percentage of the scheme’s net asset value at
any time that may be invested in immovables that are
subject to a security interest held otherwise than by the
independent entity or its nominee or delegate.
Schedule 3 Prospectus content—QFC qualified investor schemes
Rule S3.21
page 358 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
S3.21 Information on umbrella schemes
For an umbrella scheme, the following information:
(a) that a unitholder may exchange units in a subscheme for
units in any other subscheme (other than a subscheme that
has limited the issue of units);
(b) that an exchange of units in a subscheme for units in another
subscheme is treated as a redemption and issue;
(c) that a unitholder who exchanges units in a subscheme for
units in any other subscheme does not have the right to
withdraw from or cancel the transaction;
(d) the operator’s policy for allocating between subschemes any
assets of, or costs, charges and expenses payable out of,
scheme property that are not attributable to any particular
subscheme;
(e) what charges (if any) may be made on exchanging units in
a subscheme for units in another subscheme;
(f) for each subscheme—the currency in which the scheme
property attributed to it must be valued, and the price of
units calculated and payments made, if this currency is not
the base currency of the umbrella scheme;
(g) for an umbrella scheme constituted by a CIC—that the
subschemes are not ‘ring-fenced’ and, if the umbrella
scheme cannot meet liabilities attributable to any particular
subscheme out of the assets attributable to that subscheme,
the remaining liabilities may have to be met out of the assets
attributable to other subschemes.
Prospectus content—QFC qualified investor schemes Schedule 3
Rule S3.22
V9 Collective Investment Schemes Rules 2010 page 359 Effective: 15/Oct/20
S3.22 Application of prospectus contents to umbrella scheme
For an umbrella scheme, information, statements and provisions
required must be provided—
(a) for each subscheme if the information, statements or
provisions for any subscheme differ from those for any
other; and
(b) for the umbrella scheme as a whole, but only if the
information, statements or provisions are relevant to the
umbrella scheme as a whole.
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.1
page 360 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Schedule 4 Prospectus content—QFC retail schemes
(see r 5.2.3)
S4.1 Document status
A statement that the document is the prospectus of the QFC retail
scheme as at a particular date.
S4.2 Description of scheme etc
The following information and statements:
(a) the name of the scheme;
(b) that the scheme is registered as a retail scheme under the
Collective Investment Schemes Rules 2010;
(c) the registration number given to the scheme by the
Regulatory Authority;
(d) the legal form of the scheme;
(e) whether the scheme is a UCITS type scheme or a property
fund;
(ea) if the scheme (or a subscheme) is a property fund—whether
the scheme (or subscheme) is closed-ended or open-ended;
(f) if the scheme (or a subscheme) is an Islamic fund—that the
scheme (or subscheme) is an Islamic fund;
(g) if the scheme (or subscheme) is a money-market fund—that
the scheme (or subscheme) is a money-market fund;
(h) that the unitholders are not liable for—
(i) the debts and other liabilities of the scheme; or
(ii) acts or omissions of the operator or independent entity;
(i) if the scheme has not started to operate—when the scheme
is expected to start to operate;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.2A
V9 Collective Investment Schemes Rules 2010 page 361 Effective: 15/Oct/20
(j) whether it is a listed scheme or intended to become a listed
scheme;
(k) if the duration of the scheme is limited—a statement to that
effect, an indication of the duration of the scheme and, if
appropriate, of any conditions for extending the duration of
the scheme;
(l) the base currency of the scheme;
(m) if the scheme is a CIC—its capital structure, including the
maximum and minimum sizes of its capital;
(n) if applicable, any minimum initial investment;
(o) that any notice or other document may be served on the
operator or independent entity at its registered address in the
QFC or, if the independent entity is not an authorised firm,
at its address for service;
(p) the circumstances in which the scheme may be wound up
and a summary of the procedure for, and the rights of the
unitholders under, a winding-up;
(q) the governing law for the scheme.
S4.2A Additional information—QFC retail property funds
If the scheme is a QFC retail property fund, the following
information and statements:
(a) the nature of the commitment that participants will enter
into;
(b) details of any transactions entered into, or proposed to be
entered into, with affected persons;
(c) full particulars of the nature and extent of the interest (if
any) of affected persons in the immovables owned, or
proposed to be acquired, by the fund;
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.3
page 362 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(d) details of significant participants and the number or
percentage of units held, or proposed to be held, by each of
them;
(e) a statement to explain the standards according to which
property valuations are made;
(f) the insurance arrangement for the fund;
(g) a statement of any material policy regarding immovables;
(h) any other matter that the Regulatory Authority directs the
operator to include in the prospectus.
S4.3 Islamic funds
If the scheme (or a subscheme) is an Islamic fund, the following
information:
(a) that all operations of the scheme (or subscheme) must be
conducted in accordance with Shari’a;
(b) the names of the members of the Shari’a Supervisory Board
and their qualifications and education;
(c) the manner and frequency of Shari’a reviews;
(d) the disclosure required by AAOIFI FSA 14.
Note Shari’a Supervisory Board and AAOIFI are defined in the glossary.
S4.4 Investment objectives and policy etc
The following information in relation to the scheme’s investment
objectives, strategies and policy:
(a) the scheme’s investment objectives (including its financial
objectives) and, in particular—
(i) the types of investments in which it (and, if applicable
each subscheme) may invest; and
(ii) the scheme’s investment strategies, including its
approach to borrowing and gearing;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.4
V9 Collective Investment Schemes Rules 2010 page 363 Effective: 15/Oct/20
(b) the scheme’s policy for achieving its investment objectives,
including—
(i) the general nature of the portfolio and any intended
specialisation; and
(ii) the policy for the spreading of risk in the scheme
property; and
(iii) the policy in relation to the exercise of borrowing
powers;
(c) an indication of any limits on the investment policy;
(d) the types of assets that the capital property may consist of;
(e) the proportion of the capital property that may consist of an
asset of any description;
(ea) if the scheme is a QFC retail property fund:
(i) a list of the jurisdictions where immovables in which
the fund may invest are located; and
(ii) if investment in an immovable has been, or is to be,
made through an intermediate holding vehicle or
vehicles—a statement disclosing the existence of the
intermediate holding vehicle or vehicles and
confirming that the purpose of each vehicle is to
enable the fund to hold immovables;
(f) the kind of transactions that may be effected for the scheme
and an indication of any techniques and instruments or
borrowing powers that may be used in the scheme’s
management;
(g) for rule 7.1.7 (1) (b) (What is an eligible market?), a list of
the markets through which the scheme may invest or deal in
investments in accordance with these rules;
(h) any restrictions in the assets in which scheme property may
be invested, including restrictions in the extent to which the
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.4
page 364 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
scheme may invest in any type of asset and an indication of
whether the restrictions are more onerous than those
otherwise applying under these rules;
(i) the borrowing restrictions applying to the scheme;
(j) if the scheme may invest in other schemes—the extent to
which the scheme property may be invested in units in
schemes that are managed by the operator or any associate
of the operator;
(k) if the scheme is a feeder fund that (in relation to investment
in units in schemes) is dedicated to units in a single
scheme—details of the master scheme and the minimum
(and, if relevant, maximum) investment that the feeder fund
may make in it;
(l) if the scheme invests mainly in units in schemes, deposits or
derivatives, or replicates an index—a prominent statement
about this investment policy;
(m) if derivatives transactions may be used in the scheme—a
prominent statement about whether the transactions are for
the purpose of efficient portfolio management (including
hedging) or meeting the investment objectives (or both), and
the possible outcome of the use of derivatives on the
scheme’s risk profile;
(n) the profile of the typical investor for whom the scheme is
designed;
(o) the historical performance (if any) of the scheme;
(p) if the scheme invests a substantial part of the scheme
property in other schemes—a statement of the maximum
level of management fees that may be charged to the scheme
and to the schemes in which it invests;
(q) if the scheme’s net asset value is likely to have high
volatility because of its portfolio composition or the
Prospectus content—QFC retail schemes Schedule 4
Rule S4.5
V9 Collective Investment Schemes Rules 2010 page 365 Effective: 15/Oct/20
portfolio management techniques that may be used—a
prominent statement to that effect;
(r) if the scheme may invest substantially in deposits or money-
market instruments—a risk warning drawing attention to the
difference between the nature of a deposit and the nature of
an investment in the scheme, with particular reference to the
risk that the principal invested in the scheme may fluctuate;
(s) a statement that any unitholder may obtain on request the
information listed in COLL, rule 5.2.2 (2) (Prospectus etc
to be made available).
S4.5 Distributions, accounting and reporting dates etc
(1) Information about reporting, accounting and distribution,
including the following:
(a) the accounting and distribution dates;
(b) a description of procedures—
(i) for calculating and applying income (including how
any distributable income must be paid); and
(ii) relating to unclaimed distributions; and
(iii) if relevant, for calculating, paying and accounting for
income equalisation;
(c) the accounting reference date and when annual and half-
yearly long reports must be published;
(d) when annual and half-yearly short reports must be sent to
unitholders.
(2) Details of the main taxes levied on the scheme’s income and
capital, including tax (if any) deducted on distributions to
unitholders.
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.6
page 366 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
S4.6 Characteristics of units in the scheme
Information about the following:
(a) if there are 2 or more classes of units in issue or available
for issue—the name of each class and the rights attached to
each class so far as they differ from the rights attached to
other classes;
(b) how unitholders may exercise their voting rights and what
these are;
(c) if mandatory redemption or conversion of units from a class
to another class may be required—in what circumstances
that may be required;
(d) for CIT—the fact that the nature of the right represented by
units is that of a beneficial interest under a trust;
(e) documents evidencing title to units.
S4.7 Operator
The following information about the operator;
(a) its name;
(b) the nature of its legal status;
(c) the date and place of its incorporation;
(d) the address of its registered office in the QFC;
(e) if it is a subsidiary—the name of its ultimate parent entity
and the jurisdiction where the parent entity is incorporated;
(f) if the duration of its legal status is limited—when its legal
status will or may cease;
(g) if it has share capital—the amount of its issued share capital
and the amount paid up;
(h) a summary of its functions under these rules in relation to
the scheme;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.8
V9 Collective Investment Schemes Rules 2010 page 367 Effective: 15/Oct/20
(i) a summary of the material provisions of the contracts to
which it is a party in relation to the scheme that may be
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity;
(j) a summary of any outsourcings entered into by it under
these rules in relation to the scheme;
(k) the operator’s policy in relation to the operator holding units
in the scheme.
S4.8 Independent entity
(1) The following information about the independent entity:
(a) its name;
(b) the nature of its legal status;
(c) the date and place of its incorporation;
(d) whether it is an authorised firm;
(e) if it is an authorised firm—the address of its registered
office in the QFC;
(f) if it is not an authorised firm—the following:
(i) its contact details and address for service;
(ii) the regulatory regimes and legal systems (including
insolvency laws) to which it is subject;
(iii) the regulatory authorisations (however described) held
by it;
(iv) its arrangements for safeguarding the scheme property
and its use of agents and service providers;
(v) the obligations applying to it, and the recourse
available against it by the operator, the Regulatory
Authority and unitholders, under those regulatory
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.9
page 368 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
regimes and legal systems in relation to anything done
or not done by it in relation to the scheme;
(vi) whether it has submitted to the jurisdiction of the
Regulatory Authority, the QFC Court or both;
(g) if it is a subsidiary—the name of its ultimate parent entity
and the jurisdiction where the parent company is
incorporated;
(h) if the duration of its legal status is limited—when its legal
status will or may cease;
(i) if it has share capital—the amount of its issued share capital
and the amount paid up;
(j) a summary of its functions under these rules in relation to
the scheme;
(k) a summary of the material provisions of the contracts to
which it is a party in relation to the scheme that may be
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity;
(l) a description of its main business activity;
(m) a summary of any outsourcings entered into by it under
these rules in relation to the scheme.
(2) If the independent entity is not an authorised firm, a statement
that the scheme property may be held in a jurisdiction outside the
QFC and that the market practices, insolvency law and legal
system applying in that jurisdiction may differ from those
applying in the QFC.
S4.9 Investment adviser and independent valuer
(1) If an investment adviser is retained in relation to the business of
the scheme:
(a) the adviser’s name;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.10
V9 Collective Investment Schemes Rules 2010 page 369 Effective: 15/Oct/20
(b) whether the adviser is an authorised firm;
(c) if it conducts a significant activity other than providing
services to the scheme as an investment adviser—what the
significant activity is; and
(d) a summary of the material provisions of the contracts to
which the adviser is a party in relation to the scheme that
may be relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity.
(2) If the scheme has a standing independent valuer:
(a) the valuer’s name; and
(b) a summary of the material provisions of the contracts to
which the valuer is a party in relation to the scheme that may
be relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity.
S4.10 Auditor
The name and address of the auditor of the scheme.
S4.11 Relationships with other parties
The relevant details of the following:
(a) the names of each member (however described) of the
governing body of the operator, the independent entity or,
for a CIC or CIP, the CIC or CIP;
(b) the business activities of each person named under
paragraph (a) if these activities are of significance to the
scheme’s business;
(c) if any person named under paragraph (a) is a corporation in
a group of which any other corporation member (however
described) of the governing body is a member—that fact;
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.12
page 370 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(d) if an investment adviser retained in relation to the business
of the scheme is a corporation in a group of which any
corporation member (however described) of the governing
body of the operator, the independent entity or, for a CIC or
CIP, the CIC or CIP is also a member—that fact;
(e) if an investment adviser retained in relation to the business
of the scheme has the operator’s authority to make decisions
for the operator—that fact and a description of the matters
in relation to which it has authority;
(f) what functions (if any) the operator or independent entity
has outsourced and to whom;
(g) in what capacity (if any) the operator acts in relation to any
other schemes and the name of each of those schemes.
S4.12 Register of unitholders
(1) The address in the QFC where the unitholder register, or a copy
of the register, is available for inspection by unitholders and when
it can be inspected.
(2) For a QFC scheme that is listed in the Qatar Stock Exchange or
in any other regulated exchange, how and when unitholders can
obtain information about their holdings of the listed units and
substantial holders of such units.
S4.13 Payments out of scheme property
(1) In relation to each type of payment from the scheme property,
details of the following:
(a) who the payment is made to;
(b) what the payment is for;
(c) if available, the rate or amount;
(d) if the rate or amount is not available—how it must be
calculated and accrued;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.13
V9 Collective Investment Schemes Rules 2010 page 371 Effective: 15/Oct/20
(e) when must it be paid;
(f) if a performance fee is taken—a plain English statement of
the maximum amount or percentage of the scheme property
that the performance fee might represent in an annual
accounting period together with examples of the operation
of the performance fee.
(2) How notice must be given to unitholders of the operator’s
intention to do any of the following:
(a) introduce a new category of remuneration for its services;
(b) increase the basis of any current charge;
(c) change the basis of the treatment of a payment from the
capital property.
(3) A table substantially in the form of table S4.13 illustrating the
effect of charges and expenses, together with the notes and
statements following the table.
Table S4.13 Charges and expenses for the scheme
One-off charges taken before or after you invest
Entry charge [insert percentage]%1
Exit charge [insert percentage]%1
This is the maximum that might be taken out of your money [insert as applicable before
it is invested or before the proceeds of your investment are paid out].
Charges taken from the fund over a year
Ongoing charges [insert percentage]%2
Charges taken from the fund under certain specific conditions
Performance fees [insert percentage]% a year of any returns the
fund achieves above [insert name of benchmark].
Note 1 The percentages shown in the entry and exit charges are the
maximum figures. In some cases you might pay less.
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.14
page 372 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Note 2 The percentage for the ongoing charges is based on expenses for the
year ending [insert year]. This figure may vary from year to year.
Ongoing charges excludes—
• performance fees
• portfolio transaction costs, other than entry and exit charges
incurred when buying or selling units in another collective
investment scheme.
Statements about charges and expenses
The charges you pay are used to pay the costs of running the scheme, including
the costs of marketing and distributing it. These charges reduce the potential
growth, and rate of return, of your investment.
S4.14 Allocation of payments
If, in accordance with these rules, any income expense payments
may be treated as a capital expense—
(a) that fact; and
(b) the operator’s policy for treating any income expense as a
capital expense; and
(c) a statement that this policy may result in capital erosion or
constrain capital growth.
S4.15 Valuation and pricing
(1) A provision stating that there must be only a single forward price
for any unit calculated from time to time by reference to a
particular valuation point.
(2) Details of the following:
(a) how frequently, and at what times of the day, the scheme
property must be regularly valued to calculate the price at
which units in the scheme may be issued or redeemed, and
a description of any circumstances in which the scheme
property may be specially valued;
(b) how the value of the scheme property must be calculated in
relation to each purpose for which it must be valued;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.16
V9 Collective Investment Schemes Rules 2010 page 373 Effective: 15/Oct/20
(c) how the price of units in each class must be calculated;
(d) where, and at what frequency, the most recent prices must
be published.
S4.16 Dealing
Details of the following:
(a) the dealing days, and times on a dealing day, when the
operator must receive instructions to issue or redeem units;
(b) the procedures for—
(i) the issue and redemption of units; and
(ii) the settlement of transactions;
(c) for a prospectus available during the initial offer period—
(i) the initial offer period; and
(ii) the initial price of a unit (in the base currency); and
(iii) the arrangements for issuing units during the initial
offer period, including the operator’s intentions on
investing the subscriptions received during the initial
offer period; and
(iv) the circumstances when the initial offer must end; and
(v) whether units may be issued in a currency other than
the base currency; and
(vi) any other relevant details of the initial offer;
(d) the steps that must to be taken by a unitholder in redeeming
units before the unitholder can receive the proceeds of the
redemption, including any relevant notice periods and the
circumstances in which, and periods for which, a payment
may be deferred;
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.17
page 374 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(e) the circumstances in which the redemption of units may be
deferred or suspended and how unitholders must be notified
if this happens;
(f) how unitholders must be notified when the redemption of
units is no longer deferred or suspended;
(g) details of the minimum number, percentage or value of each
class of unit in the scheme that—
(i) any single person may hold; and
(ii) may be the subject of any single transaction of issue or
sale;
(h) whether certificates may be issued in relation to registered
units;
(i) if relevant, the circumstances in which the operator may
arrange for, and the procedure for, the issue or redemption
of units otherwise than for cash;
(j) the investment exchanges (if any) on which units in the
scheme are or will be listed or dealt.
S4.17 Dilution
Details of what is meant by dilution, including—
(a) a statement explaining—
(i) that is not possible to predict accurately whether
dilution is likely to happen; and
(ii) that a dilution adjustment is required to reduce the
effect of dilution; and
(iii) the operator’s policy in relation to requiring a dilution
levy together with an explanation of how this policy
may affect the future growth of the scheme; and
Prospectus content—QFC retail schemes Schedule 4
Rule S4.18
V9 Collective Investment Schemes Rules 2010 page 375 Effective: 15/Oct/20
(b) a statement of the following:
(i) the operator’s policy in deciding when to require a
dilution levy, including the operator’s policy on large
deals;
(ii) the estimated rate or amount of any dilution levy or
dilution adjustment based either on historical data or
future projections;
(iii) the likelihood that the operator may require a dilution
levy or make a dilution adjustment and the basis
(historical or projected) on which the statement is
made.
S4.18 Issue charges
If relevant, a statement authorising the operator to make an issue
charge and specifying the basis for, and current amount or rate
of, the charge.
S4.19 Redemption charges
If relevant—
(a) a statement authorising the operator to deduct a redemption
charge out of the proceeds of redemption; and
(b) if the operator makes a redemption charge—
(i) the current amount of the charge or, if it is variable, the
rate or method of calculating it; and
(ii) if the amount, rate or method has been changed—that
details of any previous amount, rate or method may be
obtained from the operator on request; and
(iii) the order in which the units acquired at different times
by a unitholder are taken to be redeemed for the
imposition of the redemption charge.
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.20
page 376 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
S4.20 Meeting of unitholders
Details of the following:
(a) the procedures for calling meetings of unitholders;
(b) resolutions and voting at meetings of unitholders;
(c) voting rights of unitholders;
(d) the matters that require the approval of unitholders;
(e) for a CIC—whether annual general meetings must be held.
S4.21 General information
Details of the following:
(a) the scheme’s accounting standard;
(b) the address in the QFC where copies of the constitutional
document, any amending or supplemental instrument, and
the most recent annual and half-yearly reports, may be
inspected and copies may be obtained;
(c) how any notice or other document must or may be served
on unitholders;
(d) the extent to which and the circumstances in which—
(i) the scheme is liable to pay or incur tax on any
appreciation in the value of the scheme property or on
the income derived from the scheme property; and
(ii) deductions by way of withholding tax may be made
from distributions of income to unitholders and
payments made to unitholders on the redemption of
units;
(e) any possible fees or expenses not otherwise mentioned in
this schedule, distinguishing between those to be paid by a
unitholder and those to be paid out of the scheme property;
Prospectus content—QFC retail schemes Schedule 4
Rule S4.22
V9 Collective Investment Schemes Rules 2010 page 377 Effective: 15/Oct/20
(f) if applicable, the names and addresses of any banker,
lawyer, registrar, and any other person, conducting any
significant activities in relation to the scheme.
S4.22 Mandatory statement about prospectus
The following statement prominently displayed on the first page
(not including any cover page) of the prospectus:
‘This prospectus relates to a collective investment scheme
established in the Qatar Financial Centre and registered by the
Qatar Financial Centre Regulatory Authority (the Regulatory
Authority) as a retail scheme.
The Regulatory Authority is not responsible for reviewing or
verifying this prospectus or any related documents. The
Regulatory Authority has not approved this prospectus or any
related documents nor has the Regulatory Authority taken any
steps to verify the statements, information or provisions in the
prospectus or any related documents. The Regulatory Authority
takes no responsibility for the accuracy of statements,
information or provisions in this prospectus or any related
documents.
Returns from units go down as well as up and you may also lose
all or part of your investment.
Past performance of units is not a reliable indicator of future
performance.
Prospective purchasers of the units offered should conduct their
own due diligence and consider seeking independent legal and
financial advice before deciding to invest in the scheme.’
S4.23 Additional information for feeder funds
For a feeder fund, the following information:
(a) a prominent risk warning to alert participants to the fact that
they may be subject to higher fees arising from the layered
investment structure;
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.24
page 378 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) details of the fees arising at the level of the feeder fund itself
and the scheme (or subscheme) to which its investments are
dedicated.
S4.24 Additional information for fund of funds
For a fund of funds, the following information:
(a) a prominent risk warning to alert participants to the fact that
they may be subject to higher fees arising from the layered
investment structure;
(b) details of the fees arising at the level of the fund of funds
itself and, to the extent known, the schemes (and
subschemes of umbrella schemes) to which its investments
are dedicated.
S4.25 Information on umbrella schemes
For an umbrella scheme, the following information:
(a) that a unitholder may exchange units in a subscheme for
units in any other subscheme;
(b) that an exchange of units in a subscheme for units in another
subscheme is treated as a redemption and issue;
(c) that a unitholder who exchanges units in a subscheme for
units in any other subscheme does not have the right to
withdraw from or cancel the transaction;
(d) the policy for allocating between subschemes any assets of,
or costs, charges and expenses payable out of, scheme
property that are not attributable to any particular
subscheme;
(e) what charges (if any) may be made on exchanging units in
a subscheme for units in another subscheme;
(f) for each subscheme—the currency in which the scheme
property allocated to it must be valued, and the price of units
Prospectus content—QFC retail schemes Schedule 4
Rule S4.26
V9 Collective Investment Schemes Rules 2010 page 379 Effective: 15/Oct/20
calculated and payments made, if this currency is not the
base currency of the umbrella scheme;
(g) for an umbrella scheme constituted by a CIC—that the
subschemes are not ‘ring-fenced’ and, if the umbrella
scheme cannot meet liabilities attributable to any particular
subscheme out of the assets attributable to that subscheme,
the remaining liabilities may have to be met out of the assets
attributable to other subschemes.
S4.26 Application of prospectus contents to umbrella scheme
For an umbrella scheme, information, statements and provisions
required must be provided—
(a) in relation to each subscheme if the information, statements
or provisions for any subscheme differ from those for any
other; and
(b) for the umbrella scheme as a whole, but only if the
information, statements or provisions are relevant to the
umbrella scheme as a whole.
S4.27 Additional information
The following information:
(a) if there is any arrangement intended to result in a particular
capital or income return from a holding of units in the
scheme or any investment objective of giving protection to
the capital value of, or income return from, such a holding—
(i) details of the arrangement or protection; and
(ii) for any related guarantee—sufficient details of the
guarantor and the guarantee to enable a fair assessment
of the value of the guarantee; and
(iii) a description of the risks that could affect achieving the
return or protection; and
Schedule 4 Prospectus content—QFC retail schemes
Rule S4.27
page 380 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(iv) details of the arrangements by which the operator must
give the unitholders notice of any action required by
the unitholders to obtain the benefit of any related
guarantee;
(b) whether notice has been given to unitholders of the
operator’s intention to propose a change to the scheme and,
if so, particulars of the notice.
Prospectus content—REITs Schedule 5
Rule S5.1
V9 Collective Investment Schemes Rules 2010 page 381 Effective: 15/Oct/20
Schedule 5 Prospectus content—REITs (see rule 5.2.3)
S5.1 Document status
A statement that the document is the prospectus of the REIT as
at a particular date.
S5.2 Description of scheme etc
The following information and statements:
(a) the name of the REIT;
(b) that the REIT is a real estate investment trust and is
registered as a REIT under the Collective Investment
Schemes Rules 2010;
(c) the registration number given to the REIT by the Regulatory
Authority;
(d) whether the REIT is a collective investment company or a
collective investment trust;
(e) the exchange where the REIT is listed;
(f) the nature of the commitment that participants will enter
into;
(g) details of any transactions entered into, or proposed to be
entered into, with affected persons;
Note For the meaning of affected person, see rule 5.1.1.
(h) full particulars of the nature and extent of the interest (if
any) of affected persons in the immovables owned, or
proposed to be acquired, by the REIT;
(i) details of significant participants and the number or
percentage of units held, or proposed to be held, by each of
them;
Schedule 5 Prospectus content—REITs
Rule S5.2
page 382 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(j) a statement to explain the standards according to which
property valuations are made;
(k) the insurance arrangement for the REIT;
(l) a statement of any material policy regarding immovables;
(m) the percentage (at least 80%) of its audited annual net
income (adjusted to exclude any fair value capital gains)
that the REIT intends to distribute to unitholders;
(n) the maximum percentage of the REIT’s gross asset value at
any time that may consist of property-related assets that are
not traded or dealt in on the markets specified in the
constitutional document;
(o) the maximum percentage of the REIT’s gross asset value at
any time that may consist of immovables that are
unoccupied and non-income-producing, or are in the course
of substantial development, redevelopment or
refurbishment;
(p) the maximum percentage of the REIT’s gross asset value at
any time that may be invested in immovables that are
subject to a security interest held otherwise than by the
independent entity or its nominee or delegate;
(q) if the REIT is an Islamic fund—that the REIT is an Islamic
fund;
(r) that the unitholders are not liable for:
(i) the debts and other liabilities of the REIT; or
(ii) acts or omissions of the operator or independent
entity;
(s) if the REIT has not started to operate—when it is expected
to start to operate;
Prospectus content—REITs Schedule 5
Rule S5.3
V9 Collective Investment Schemes Rules 2010 page 383 Effective: 15/Oct/20
(t) if the duration of the REIT is limited—a statement to that
effect, an indication of the duration and, if appropriate, of
any conditions for extending the duration;
(u) the base currency of the REIT;
(v) if the REIT is a CIC—its capital structure, including the
maximum and minimum sizes of its capital;
(w) if applicable, any minimum initial investment;
(x) that any notice or other document may be served on the
operator or independent entity at its registered address in the
QFC or, if the independent entity is not an authorised firm,
at its address for service;
(y) the circumstances in which the REIT may be wound up, and
a summary of the procedure for, and the rights of the
unitholders under, a winding-up;
(z) the governing law for the REIT.
S5.3 Islamic funds
If the REIT is an Islamic fund, the following information:
(a) that all operations of the REIT must be conducted in
accordance with Shari’a;
(b) the names of the members of the Shari’a Supervisory Board
and their qualifications and education;
(c) the manner and frequency of Shari’a reviews;
(d) the disclosure required by AAOIFI FSA 14.
Schedule 5 Prospectus content—REITs
Rule S5.4
page 384 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
S5.4 Investment objectives and policy etc
The following information in relation to the REIT’s investment
objectives, strategies and policy:
(a) the REIT’s investment objectives (including its financial
objectives) and, in particular:
(i) the types of investments in which it may invest; and
(ii) the REIT’s investment strategies, including its
approach to borrowing and gearing;
(b) the REIT’s policy for achieving its investment objectives,
including:
(i) the general nature of the portfolio and any intended
specialisation;
(ii) the policy for the spreading of risk in the scheme
property; and
(iii) the policy in relation to the exercise of borrowing
powers;
(c) a list of the jurisdictions where immovables in which the
REIT may invest are located;
(d) if investment in an immovable has been, or is to be, made
through an intermediate holding vehicle or vehicles—a
statement disclosing the existence of the vehicle or vehicles
and confirming that the purpose of each vehicle is to enable
the REIT to hold immovables;
(e) an indication of any limits on the investment policy;
(f) the types of assets that the scheme property may consist of;
(g) the proportion of the scheme property that may consist of an
asset of any description;
(h) the kind of transactions that may be effected for the REIT
and an indication of any techniques and instruments or
Prospectus content—REITs Schedule 5
Rule S5.5
V9 Collective Investment Schemes Rules 2010 page 385 Effective: 15/Oct/20
borrowing powers that may be used in the REIT’s
management;
(i) for rule 7.1.7 (1) (b) (What is an eligible market?), a list of
the markets through which the REIT may invest or deal in
investments;
(j) any restrictions on the assets in which scheme property may
be invested, including restrictions on the extent to which the
REIT may invest in any type of asset and an indication of
whether the restrictions are more onerous than those
otherwise applying under COLL;
(k) the borrowing restrictions applying to the REIT;
(l) if the REIT may invest in other schemes—the extent to
which the scheme property may be invested in units in
schemes that are managed by the operator or any associate
of the operator;
(m) the profile of the typical investor for whom the REIT is
designed;
(n) the historical performance (if any) of the REIT;
(o) if the REIT’s net asset value is likely to have high volatility
because of its portfolio composition or the portfolio
management techniques that may be used—a prominent
statement to that effect;
(p) a statement that any unitholder may obtain on request the
information listed in COLL, rule 5.2.2 (2) (Prospectus etc
to be made available).
S5.5 Distributions, accounting and reporting dates etc
(1) Information about reporting, accounting and distribution,
including the following:
(a) the accounting and distribution dates;
Schedule 5 Prospectus content—REITs
Rule S5.6
page 386 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) a description of procedures:
(i) for calculating and applying income (including how
any distributable income must be paid);
(ii) relating to unclaimed distributions; and
(iii) if relevant, for calculating, paying and accounting for
income equalisation;
(c) the accounting reference date and when annual and half-
yearly long reports must be published;
(d) when annual and half-yearly short reports must be sent to
unitholders.
(2) Details of the main taxes levied on the REIT’s income and
capital, including tax (if any) deducted on distributions to
unitholders.
S5.6 Characteristics of units in the REIT
Information about the following:
(a) if there are 2 or more classes of units in issue or available
for issue—the name of each class and the rights attached to
each class so far as they differ from the rights attached to
other classes;
(b) how unitholders may exercise their voting rights and what
these are;
(c) if mandatory conversion of units from a class to another
class may be required—in what circumstances that may be
required;
(d) for a REIT that is a CIT—the fact that the nature of the right
represented by units is that of a beneficial interest under a
trust;
(e) documents evidencing title to units.
Prospectus content—REITs Schedule 5
Rule S5.7
V9 Collective Investment Schemes Rules 2010 page 387 Effective: 15/Oct/20
S5.7 Operator
The following information about the operator:
(a) its name;
(b) the nature of its legal status;
(c) the date and place of its incorporation;
(d) the address of its registered office in the QFC;
(e) if it is a subsidiary—the name of its ultimate parent entity
and the jurisdiction where the parent entity is incorporated;
(f) if the duration of its legal status is limited—when its legal
status will or may cease;
(g) if it has share capital—the amount of its issued share capital
and the amount paid up;
(h) a summary of its functions under COLL in relation to the
REIT;
(i) a summary of the material provisions of the contracts to
which it is a party in relation to the REIT that may be
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity;
(j) a summary of any outsourcings it has entered into in relation
to the REIT;
(k) the operator’s policy in relation to the operator holding units
in the REIT.
S5.8 Independent entity
(1) The following information about the independent entity:
(a) its name;
(b) the nature of its legal status;
(c) the date and place of its incorporation;
Schedule 5 Prospectus content—REITs
Rule S5.8
page 388 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(d) whether it is an authorised firm;
(e) if it is an authorised firm—the address of its registered
office in the QFC;
(f) if it is not an authorised firm—the following:
(i) its contact details and address for service;
(ii) the regulatory regimes and legal systems (including
insolvency laws) to which it is subject;
(iii) the regulatory authorisations (however described)
held by it;
(iv) its arrangements for safeguarding the scheme property
and its use of agents and service providers;
(v) the obligations applying to it, and the recourse
available against it by the operator, the Regulatory
Authority and unitholders, under those regulatory
regimes and legal systems in relation to anything done
or not done by it in relation to the REIT;
(vi) whether it has submitted to the jurisdiction of the
Regulatory Authority, the QFC Court or both;
(g) if it is a subsidiary—the name of its ultimate parent entity
and the jurisdiction where the parent company is
incorporated;
(h) if the duration of its legal status is limited—when its legal
status will or may cease;
(i) if it has share capital—the amount of its issued share capital
and the amount paid up;
(j) a summary of its functions under COLL in relation to the
REIT;
(k) a summary of the material provisions of the contracts to
which it is a party in relation to the REIT that may be
Prospectus content—REITs Schedule 5
Rule S5.9
V9 Collective Investment Schemes Rules 2010 page 389 Effective: 15/Oct/20
relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity;
(l) a description of its main business activity;
(m) a summary of any outsourcings it has entered into in relation
to the REIT.
(2) If the independent entity is not an authorised firm, a statement
that the scheme property may be held in a jurisdiction outside the
QFC and that the market practices, insolvency law and legal
system applying in that jurisdiction may differ from those
applying in the QFC.
S5.9 Investment adviser and independent valuer
If an investment adviser is retained in relation to the business of
the REIT:
(a) the adviser’s name;
(b) whether the adviser is an authorised firm;
(c) if it conducts a significant activity other than providing
services to the REIT as an investment adviser—what the
significant activity is; and
(d) a summary of the material provisions of the contracts to
which the adviser is a party in relation to the REIT that may
be relevant to unitholders, including provisions (if any)
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity.
(2) The following information about the standing independent
valuer:
(a) the valuer’s name;
(b) a summary of the material provisions of the contracts to
which the valuer is a party in relation to the REIT that may
be relevant to unitholders, including provisions (if any)
Schedule 5 Prospectus content—REITs
Rule S5.10
page 390 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
relating to remuneration, remuneration sharing, termination,
compensation on termination, and indemnity.
S5.10 Auditor
The name and address of the auditor of the REIT.
S5.11 Relationships with other parties
The relevant details of the following:
(a) the names of each member (however described) of the
governing body of the operator, the independent entity or,
for a CIC, the CIC;
(b) the business activities of each person named under
paragraph (a) if these activities are of significance to the
REIT’s business;
(c) if any person named under paragraph (a) is a corporation in
a group of which any other corporation member (however
described) of the governing body is a member—that fact;
(d) if an investment adviser retained in relation to the REIT’s
business is a corporation in a group of which any
corporation member (however described) of the governing
body of the operator, the independent entity or, for a CIC,
the CIC is also a member—that fact;
(e) if an investment adviser retained in relation to the business
of the REIT has the operator’s authority to make decisions
for the operator—that fact and a description of the matters
in relation to which it has authority;
(f) what functions (if any) the operator or independent entity
has outsourced and to whom;
(g) in what capacity (if any) the operator acts in relation to any
other schemes and the name of each of those schemes.
Prospectus content—REITs Schedule 5
Rule S5.12
V9 Collective Investment Schemes Rules 2010 page 391 Effective: 15/Oct/20
S5.12 Register of unitholders
(1) The address in the QFC where the unitholder register, or a copy
of the register, is available for inspection by unitholders and when
it can be inspected.
(2) How and when unitholders can obtain information about their
holdings of units and substantial holders of units.
S5.13 Payments out of scheme property
(1) In relation to each type of payment from the scheme property,
details of the following:
(a) who the payment is made to;
(b) what the payment is for;
(c) if available, the rate or amount;
(d) if the rate or amount is not available—how it must be
calculated and accrued;
(e) when must it be paid;
(f) if a performance fee is taken—a plain English statement of
the maximum amount or percentage of the scheme property
that the performance fee might represent in an annual
accounting period together with examples of the operation
of the performance fee.
(2) How notice must be given to unitholders of the operator’s
intention to do any of the following:
(a) introduce a new category of remuneration for its services;
(b) increase the basis of any current charge;
(c) change the basis of the treatment of a payment from the
capital property.
(3) A table substantially in the form of table S5.13 illustrating the
effect of charges and expenses, together with the notes and
statements following the table.
Schedule 5 Prospectus content—REITs
Rule S5.13
page 392 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Table S5.13 Charges and expenses for the REIT
One-off charges taken before or after you invest
Entry charge [insert percentage]%1
Exit charge [insert percentage]%1
This is the maximum that might be taken out of your money [insert as
applicable before it is invested or before the proceeds of your investment are
paid out].
Charges taken from the REIT over a year
Ongoing charges [insert percentage]%2
Charges taken from the REIT under certain specific conditions
Performance fees [insert percentage]% a year of any returns the REIT
achieves above [insert name of benchmark].
Note 1 The percentages shown in the entry and exit charges are the
maximum figures. In some cases you might pay less.
Note 2 The percentage for the ongoing charges is based on expenses for the
year ending [insert year]. This figure may vary from year to year.
Ongoing charges excludes:
• performance fees
• portfolio transaction costs, other than entry and exit charges
incurred when buying or selling units in another collective
investment scheme.
Statements about charges and expenses
The charges you pay are used to pay the costs of running the scheme, including
the costs of marketing and distributing it. These charges reduce the potential
growth, and rate of return, of your investment.
(4) For a REIT that holds an immovable through an intermediate
holding vehicle or vehicles—a warning that the timing of
distributions of income may depend on the law of the jurisdiction
where the vehicle or vehicles are established.
Prospectus content—REITs Schedule 5
Rule S5.14
V9 Collective Investment Schemes Rules 2010 page 393 Effective: 15/Oct/20
S5.14 Allocation of payments
If, in accordance with COLL, any income expense payments may
be treated as a capital expense:
(a) that fact;
(b) the operator’s policy for treating any income expense as a
capital expense; and
(c) a statement that this policy may result in capital erosion or
constrain capital growth.
S5.15 Valuation and pricing
(1) A provision stating that there must be only a single forward price
for any unit calculated from time to time by reference to a
particular valuation point.
(2) Details of the following:
(a) how frequently, and at what times of the day, the scheme
property must be regularly valued to calculate the price at
which units in the REIT may be issued, and a description of
any circumstances in which the scheme property may be
specially valued;
(b) how the value of the scheme property must be calculated in
relation to each purpose for which it must be valued;
(c) how the price of units in each class must be calculated;
(d) where, and at what frequency, the most recent prices must
be published.
S5.16 Dealing
Details of the following:
(a) the dealing days, and times on a dealing day, when the
operator must receive instructions to issue units;
Schedule 5 Prospectus content—REITs
Rule S5.16
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(b) the procedures for:
(i) the issue of units; and
(ii) the settlement of transactions;
(c) for a prospectus available during the initial offer period:
(i) the initial offer period;
(ii) the initial price of a unit (in the base currency);
(iii) the arrangements for issuing units during the initial
offer period, including the operator’s intentions on
investing the subscriptions received during the initial
offer period;
(iv) the circumstances when the initial offer must end;
(v) whether units may be issued in a currency other than
the base currency; and
(vi) any other relevant details of the initial offer;
(d) details of the minimum number, percentage or value of each
class of unit in the REIT that:
(i) any single person may hold; and
(ii) may be the subject of any single transaction of issue
or sale;
(e) whether certificates may be issued in relation to registered
units;
(f) if relevant, the circumstances in which the operator may
arrange for, and the procedure for, the issue of units
otherwise than for cash;
(g) the exchange or exchanges on which units in the REIT are
or will be listed or dealt.
Prospectus content—REITs Schedule 5
Rule S5.17
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S5.17 Disclosure about transactions with affected persons
The following information about any transaction with an affected
person:
(a) any beneficial interests of the affected person, and any
changes to those interests, in the REIT;
(b) any conflict of interest involving the affected person;
(c) the measures to identify, manage and monitor conflicts of
interest involving the affected person.
Note If the operator operates more than 1 scheme and a transaction
involves 2 or more of them, the transaction is taken to be a
transaction with an affected person for each scheme, see rule 12.6.10
(5).
S5.18 Disclosure about competing business of affected persons
(1) If an affected person has an interest in a business that competes,
or is likely to compete, with the REIT (whether directly or
indirectly), the following information and statements:
(a) the business and its management;
(b) the nature, scope and size of the business;
(c) how the business competes, or is likely to compete, with the
REIT.
(2) If relevant, the following must be included in the disclosure:
(a) a statement from the affected person that:
(i) it is capable of performing its duty to the REIT
independently of the business; and
(ii) it will perform its duty independently and in the best
interests of the REIT and the unitholders;
Schedule 5 Prospectus content—REITs
Rule S5.19
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(b) a statement that the REIT may acquire any of the business
or assets of the affected person.
Note For the obligation of the operator to notify unitholders of any
significant change to the information required to be disclosed under
this rule, see rule 12.6.12.
S5.19 Disclosure about sale of immovable by affected persons
If an affected person has, for the purpose of the establishment of
the REIT, agreed to sell an immovable to the REIT, the following
information and statements:
(a) the results of the valuation made by an independent valuer;
(b) the price to be paid for the immovable;
(c) the terms of the transaction.
S5.20 Disclosure about custodianship by operator and transactions of operator with affected persons
(1) If the operator itself acts as custodian of an immovable, the
following information and statements:
(a) a statement that the operator acts as custodian of the
immovable;
(b) a description of the risks that may arise as a result of it acting
as custodian;
(c) a description of the systems and controls that it has in place
to ensure that the immovable is properly segregated and
protected.
(2) If the operator has approval to enter into transactions with
affected persons for the acquisition or sale of immovables in
Qatar without obtaining prior unitholder approval in each case, a
statement of that fact.
Prospectus content—REITs Schedule 5
Rule S5.21
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S5.21 Dilution
Details of what is meant by dilution, including:
(a) a statement explaining:
(i) that is not possible to predict accurately whether
dilution is likely to happen;
(ii) that a dilution adjustment is required to reduce the
effect of dilution; and
(iii) the operator’s policy in relation to requiring a dilution
levy together with an explanation of how this policy
may affect the future growth of the REIT; and
(b) a statement of the following:
(i) the operator’s policy in deciding when to require a
dilution levy, including the operator’s policy on large
deals;
(ii) the estimated rate or amount of any dilution levy or
dilution adjustment based on historical data or future
projections;
(iii) the likelihood that the operator may require a dilution
levy or make a dilution adjustment and the basis
(historical or projected) on which the statement is
made.
S5.22 Issue charges
If relevant, a statement authorising the operator to make an issue
charge and specifying the basis for, and current amount or rate
of, the charge.
S5.23 Meeting of unitholders
Details of the following:
(a) the procedures for calling meetings of unitholders;
Schedule 5 Prospectus content—REITs
Rule S5.24
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(b) resolutions and voting at meetings of unitholders;
(c) voting rights of unitholders;
(d) the matters that require the approval of unitholders;
(e) for a CIC—whether annual general meetings must be held.
S5.24 General information
Details of the following:
(a) the REIT’s accounting standard;
(b) the address in the QFC where copies of the constitutional
document, any amending or supplemental instrument, and
the most recent annual and half-yearly reports, may be
inspected and copies may be obtained;
(c) how any notice or other document must or may be served
on unitholders;
(d) the extent to which and the circumstances in which:
(i) the REIT is liable to pay or incur tax on any
appreciation in the value of the scheme property or on
the income derived from the scheme property; and
(ii) deductions by way of withholding tax may be made
from distributions of income to unitholders;
(e) any possible fees or expenses not otherwise mentioned in
this Schedule, distinguishing between those to be paid by a
unitholder and those to be paid out of the scheme property;
(f) if applicable, the names and addresses of any banker,
lawyer, registrar, and any other person, conducting any
significant activities in relation to the REIT.
Prospectus content—REITs Schedule 5
Rule S5.25
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S5.25 Mandatory statement about prospectus
The following statement prominently displayed on the first page
(not including any cover page) of the prospectus:
‘This prospectus relates to a collective investment scheme
established in the Qatar Financial Centre and registered by the
Qatar Financial Centre Regulatory Authority (the Regulatory
Authority) as a real estate investment trust.
The Regulatory Authority is not responsible for reviewing or
verifying this prospectus or any related documents. The
Regulatory Authority has not approved this prospectus or any
related documents nor has the Regulatory Authority taken any
steps to verify the statements, information or provisions in the
prospectus or any related documents. The Regulatory Authority
takes no responsibility for the accuracy of statements,
information or provisions in this prospectus or any related
documents.
Returns from units go down as well as up and you may also lose
all or part of your investment.
Past performance of units is not a reliable indicator of future
performance.
Prospective purchasers of the units offered should conduct their
own due diligence and consider seeking independent legal and
financial advice before deciding to invest in the scheme.’
S5.26 Other additional information
The following information:
(a) if there is any arrangement intended to result in a particular
capital or income return from a holding of units in the REIT
or any investment objective of giving protection to the
capital value of, or income return from, such a holding:
(i) details of the arrangement or protection;
Schedule 5 Prospectus content—REITs
Rule S5.26
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(ii) for any related guarantee—sufficient details of the
guarantor and the guarantee to enable a fair
assessment of the value of the guarantee;
(iii) a description of the risks that could affect achieving
the return or protection; and
(iv) details of the arrangements by which the operator must
give the unitholders notice of any action required by
the unitholders to obtain the benefit of any related
guarantee;
(b) whether notice has been given to unitholders of the
operator’s intention to propose a change to the REIT and, if
so, particulars of the notice;
(c) any other matter that the Regulatory Authority directs the
operator to state in the prospectus.
Glossary
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Glossary (see r 1.1.4)
AAOIFI means the Accounting and Auditing Organisation for
Islamic Financial Institutions.
accounting reference date, for a QFC scheme, means the date stated
in the scheme’s latest filed prospectus as the date when the scheme’s
annual accounting period ends.
Note Latest filed prospectus and annual accounting period are defined in this
glossary.
accumulation unit means a unit in a QFC retail scheme in relation to
which income is credited periodically to capital property under rule
8.8.2 (Income allocation and distribution—all QFC schemes).
Note Capital property is defined in this glossary.
advising on investments means the regulated activity described in the
Financial Services Regulations, schedule 3, part 2, paragraph 11.
Note Regulated activity is defined in this glossary.
affected person, for a QFC scheme, has the meaning given by
rule 5.1.1.
annual accounting period, for a QFC scheme, means an annual
accounting period of the scheme under these rules.
annual income allocation date, for a QFC scheme, means the date in
any year stated in the scheme’s latest filed prospectus as the date on
or before which an allocation of income is to be made in relation to
each annual accounting period.
Note Year, latest filed prospectus and annual accounting period are defined
in this glossary.
another permitted form of QFC scheme has the meaning given by
rule 1.3.10.
approved derivative has the meaning given by rule 7.1.8.
Glossary
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approved money-market instrument has the meaning given by
rule 7.1.5.
approved security has the meaning given by rule 7.1.9.
arranging credit facilities means the regulated activity described in
the Financial Services Regulations, schedule 3, part 2, paragraph 7.
Note Regulated activity is defined in this glossary.
arranging deals in investments means the regulated activity
described in the Financial Services Regulations, schedule 3, part 2,
paragraph 5.
Note Regulated activity is defined in this glossary.
arranging the provision of custody services means the regulated
activity described in the Financial Services Regulations, schedule 3,
part 2, paragraph 9.
Note Regulated activity is defined in this glossary.
articles of association, for a CIC, means the CIC’s articles of
association as amended from time to time.
Note CIC is defined in r 1.3.7 and in this glossary.
associate, for a legal person (A), means any legal person in the same
group as A.
Note Legal person and group are defined in this glossary.
associated person, for a person (A), means any of the following:
(a) if A is a legal person—a legal person in the same group as A;
Note Legal person and group are defined in this glossary.
(b) any other person whose business or domestic relationship with
A might reasonably be expected to give rise to a community of
interest between them that may involve a conflict of interest in
dealing with third parties.
Note Legal person, group and person are defined in this glossary.
authorisation means an authorisation granted under the Financial
Services Regulations, part 5.
Glossary
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authorised firm means a person that has an authorisation.
Note Person and authorisation are defined in this glossary.
back-to-back borrowing means a borrowing under which a QFC
scheme, or the independent entity of a QFC scheme on the operator’s
instructions—
(a) borrows an amount of currency from an eligible bank; and
(b) keeps an amount in another currency, at least equal to that
borrowing for the time being, on deposit with the eligible bank
(or its agent or nominee).
Note Borrowing and eligible bank is defined in this glossary.
BANK means the Banking Business Prudential Rules 2014.
base currency, for a QFC scheme, means the currency stated in the
constitutional document as the base currency of the scheme.
Note Constitutional document is defined in r 3.1.1.
borrowing, for a scheme, includes any arrangement (including a
combination of derivatives) designed to achieve a temporary injection
of money into the scheme property in the expectation that the amount
will be repaid.
Note Derivative is defined in this glossary.
breach includes fail or refuse to comply with.
business customer has the same meaning as in CIPR.
business day means a day that is not a Friday, Saturday, or a public
or bank holiday in Qatar.
capital property, for a QFC scheme, means the scheme property,
other than income property and any amount in the distribution
account.
Note Scheme property is defined in r 1.2.3. Income property and distribution
account are defined in this glossary.
CIC means a QFC collective investment company.
Note QFC collective investment company is defined in r 1.3.7.
Glossary
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CIP means a QFC collective investment partnership.
Note QFC collective investment partnership is defined in r 1.3.8.
CIPR means Customer and Investor Protection Rules 2019.
CIT means a QFC collective investment trust.
Note QFC collective investment trust is defined in r 1.3.9.
class, for a QFC scheme, means—
(a) a particular class of units in the scheme; or
(b) if the scheme is an umbrella scheme—
(i) all the units relating to a single subscheme of the scheme;
or
(ii) a particular class of units relating to single subscheme of
the scheme.
Note Unit is defined in r 1.2.4. Umbrella scheme and subscheme are defined
in r 1.2.11.
closed-ended scheme has the meaning given by rule 1.2.10 (2).
close out a transaction (the original transaction) means enter into a
further transaction under which the obligation to deliver or receive
property that arises (or, at the option of the other party to the
transaction, may arise) under the original transaction is offset by an
equivalent and opposite obligation or right to receive or deliver
property.
Note Property is defined this glossary.
COLL means these rules.
collateral—
(a) in relation to a stock lending arrangement, repo agreement or
derivative transaction, means—
(i) a transfer of assets (otherwise than by way of a sale) subject
to a right of the transferor to have transferred back to it the
same, or equivalent, assets; or
Glossary
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(ii) a letter of credit;
if the assets are transferred, or the letter of credit is issued, to
secure the performance of a party to the transaction; and
(b) in any other case—means any form of security, guarantee or
indemnity provided by way of security for the discharge of any
liability arising from a transaction.
Note Stock lending arrangement, repo agreement and derivative are defined
in this glossary.
collective investment scheme has the meaning given by rule 1.2.1.
commodity means a physical asset (other than a financial instrument
or cash) that is capable of delivery.
complying disclaimer, for a non-QFC scheme, has the meaning given
by rule 10.2.1.
constitutional document, for a QFC scheme, has the meaning given
by rule 3.1.1.
contract for differences means the specified product described in the
Financial Services Regulations, schedule 3, part 3, paragraph 9.
Note Specified product is defined in this glossary.
contract of insurance means the specified product described in the
Financial Services Regulations, schedule 3, part 3, paragraph 10.
Note Specified product is defined in this glossary.
controlled function has the meaning given by the Financial Services
Regulations, article 41 (2).
Note See CTRL, ch 3, for the functions that are controlled functions.
corporation—to remove any doubt, a corporation includes, but is not
limited to—
(a) a company; and
(b) a limited partnership; and
(c) a limited liability partnership.
Glossary
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covered bond means a bond that—
(a) is issued by an eligible bank; and
(b) is subject by law to special public supervision designed to
protect bondholders, and in particular protection under which
amounts deriving from the issue of the bond must be invested in
accordance with the law in assets—
(i) that, during the entire period of the bond, can cover claims
attaching to the bond; and
(ii) that, if the issuer fails, would be used on a priority basis for
the reimbursement of the principal and payment of the
accrued interest.
Note Eligible bank is defined in this glossary.
CTRL means the Governance and Controlled Functions Rules 2012.
currency class unit, for a QFC retail scheme, means a class of unit
denominated in a currency that is not the base currency or, if allowed
under rule 3.2.7 (3) (Currency class units—QFC retail schemes),
denominated in the base currency.
Note Base currency is defined in this glossary.
customer means a person to whom an authorised firm provides, has
provided or offers to provide a service or product.
day means a period of 24 hours starting at midnight.
deal—
(a) for units in a QFC scheme—means issue or redeem the units; or
Note Issue and redemption are defined in this glossary.
(b) for any other investment or other property—means buy, sell,
otherwise acquire, subscribe for or underwrite the investment or
other property or offer or agree to do so, either as principal or
agent, and includes, for an investment that is a contract of
insurance, carry out the contract.
Note Investment and contract of insurance are defined in this glossary.
Glossary
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dealing day, for a QFC scheme, means the period in a business day
during which, in accordance with the latest filed prospectus, the
operator must receive instructions to issue or redeem units in the
scheme.
Note Business day, latest filed prospectus, issue and redemption are defined
in this glossary.
dealing in investments means the regulated activity described in the
Financial Services Regulations, schedule 3, part 2, paragraph 4.
Note Regulated activity is defined in this glossary.
dealing period, for a QFC scheme, means the period between a
valuation point and the next.
Note Valuation point is defined in this glossary.
debt instrument means the specified product described in the
Financial Services Regulations, schedule 3, part 3, paragraph 2.
Note Specified product is defined in this glossary.
dedicated, for investments of a scheme, means intended that the
unitholders of units in the scheme should participate or receive—
(a) profits or income arising from the acquisition, holding,
management or disposal of investments of that kind; or
(b) amounts paid out of profits or income mentioned in
paragraph (a).
Note Investment is defined in this glossary.
deposit means the specified product described in the Financial
Services Regulations, schedule 3, part 3, paragraph 11.
Note Specified product is defined in this glossary.
deposit taking means the regulated activity described in the Financial
Services Regulations, schedule 3, part 2, paragraph 1.
Note Regulated activity is defined in this glossary.
derivative means a future, option or contract for differences.
Note Future, option and contract for differences are defined in this glossary.
Glossary
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dilution, for a QFC scheme, means the amount of costs for dealing in
investments incurred, or expected to be incurred, by the operator to
the extent that these costs may reasonably be expected to result, or
have resulted, from the acquisition, holding, management or disposal
of investments by the operator as a consequence (whether or not
immediate) of the increase or decrease of the cash resources of the
scheme resulting from the issue or redemption of units over a period,
including—
(a) the costs of dealing in investments, and professional fees
incurred, or expected to be incurred, in relation to the acquisition
or disposal of an immovable; and
(b) if there is a spread between the buying and selling prices of the
investment—the indirect cost resulting from the difference
between the prices.
Note Investment, issue and redemption are defined in this glossary.
dilution adjustment, for a QFC scheme, means an adjustment to the
price of a unit required under these rules for the purpose of reducing
the effect of dilution.
Note Price and dilution are defined in this glossary.
dilution levy, for a QFC scheme, means a charge at the rate, or of the
amount, required by the operator under these rules for the purpose of
reducing the effect of dilution.
Note Dilution is defined in this glossary.
director, for an entity, includes any person named as director of the
entity and any person in accordance with whose instructions the entity
is accustomed to act.
Note Entity and person are defined in this glossary.
distribution account, for a QFC scheme, means the account (if any)
to which the income property must be transferred as at the end of each
annual accounting period.
Note Income property and annual accounting period are defined in this
glossary.
Glossary
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document means a record of information in any form (including
electronic form), and includes, for example—
(a) anything in writing or on which there is writing; and
(b) anything on which there are figures, marks, numbers,
perforations, symbols or anything else having a meaning for
individuals qualified to interpret them; and
(c) a drawing, map, photograph or plan; and
(d) any other item or matter (in whatever form) that is, or could
reasonably be considered to be, a record of information.
Note Writing is defined in this glossary.
document evidencing title means any means of evidencing title,
whether or not in documentary form.
efficient portfolio management, for a scheme, means the use of
techniques and instruments that—
(a) relate to transferable securities and money-market instruments;
and
(b) are economically appropriate in that they are realised in a cost-
effective way; and
(c) are entered into for 1 or more of the following specific aims:
(i) reduction of risk;
(ii) reduction of costs;
(iii) generation of additional capital or income for the scheme
with a risk level consistent with the risk profile of the
scheme and the risk diversification required by these rules.
Note Transferable security is defined in r 7.1.6.
eligible bank means—
(a) an eligible bank as defined in INAP, glossary; or
(b) a person that would be an eligible bank as so defined if it
accepted deposits.
Glossary
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eligible exchange means a regulated exchange for which the
Regulatory Authority has not, by notice published on an approved
website, declared that this definition does not apply to the jurisdiction
in which the exchange is incorporated or established.
Note Regulated exchange is defined in this glossary.
eligible market has the meaning given by rule 7.1.7.
eligible money-market fund means—
(a) a QFC scheme that is a money-market fund; or
Note Money-market fund is defined in r 1.3.12.
(b) a non-QFC scheme with investment objectives and powers that
are the same as, or the same in all significant respects as, the
investment objectives and powers of a QFC scheme that is a
money-market fund.
employee, of a person (A), means an individual—
(a) who is employed or appointed by A, whether under a contract of
service or services or otherwise; or
(b) whose services are, under an arrangement between A and a third
party, placed at the disposal and under the control of A.
entity means any kind of entity, and includes, for example, any
person.
Note Person is defined in this glossary.
execute a transaction means carry into effect or perform the
transaction, whether as principal or agent, and includes instructing
another person to effect or perform the transaction.
exercise a function means exercise or perform the function.
Note Function is defined in this glossary.
feeder fund means a scheme dedicated to investments in a single
other scheme.
Note Dedicated and investment are defined in this glossary.
Glossary
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financial promotion means a communication made using any
medium (for example, brochures, telephone calls, the internet, emails
and presentations) if the purpose or effect of the communication is—
(a) to promote or advertise—
(i) a specified product; or
(ii) a regulated activity (or any activity that would be a
regulated activity if it were conducted in or from the QFC);
or
(b) to invite or induce any person—
(i) to enter into an agreement with any person in relation to a
specified product; or
(ii) to engage in a regulated activity (or an activity that would
be a regulated activity if it were conducted in or from the
QFC).
Note Specified product, regulated activity and person are defined in the
glossary.
forward price, for units in a QFC scheme, means a price calculated
by reference to the next valuation point after the operator receives
instructions to issue or redeem the units.
Note Issue, redemption, price and valuation point are defined in this glossary.
function means any function, authority, duty or power.
fund of funds means a scheme dedicated to investments in 2 or more
of the following:
(a) schemes;
(b) subschemes of umbrella schemes.
Note Subscheme and umbrella scheme are defined in r 1.2.11.
future means the specified product described in the Financial
Services Regulations, schedule 3, part 3, paragraph 8.
Note Specified product is defined in this glossary.
GENE means the General Rules 2005.
Glossary
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governing body, of an entity, means its board of directors, committee
of management or other governing body (whatever it is called).
Note Entity is defined in this glossary.
government or public security means a debt instrument issued by or
for—
(a) a jurisdiction; or
(b) a public, regional or local authority of a jurisdiction.
Note Debt instrument and jurisdiction are defined in this glossary.
group means the following:
(a) a legal person (A);
(b) any parent entity of A;
(c) any subsidiary (direct or indirect) of A or of any parent entity of
A.
Note Legal person, parent entity and subsidiary are defined in this glossary.
half-yearly accounting period, for a QFC scheme, means a half-
yearly accounting period of the scheme under these rules.
INAP means the Interpretation and Application Rules 2005.
income equalisation, for a QFC scheme, means a capital amount that,
in accordance with a power in the constitutional document, is
included in an allocation of income for a unit issued during the
accounting period in relation to which the income allocation is made.
Note Constitutional document is defined in r 3.1.1. Issue is defined in this
glossary.
income property, for a QFC scheme, means all amounts considered
by the operator, after consultation with the scheme’s auditor, to be of
the nature of income received or receivable in relation to the scheme
property, other than any amount in the distribution account.
Note Scheme property is defined in r 1.2.3. Distribution account is defined in
this glossary.
independent entity, of a scheme, has the meaning given by rule 1.2.9.
Glossary
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initial offer means—
(a) for a QFC scheme—an offer for the issue of units in the scheme
if all or part of the consideration paid to the scheme for the units
is to be used to acquire the initial scheme property; and
(b) for a subscheme of a QFC umbrella scheme—an offer for the
issue of units in the subscheme if all or part of the consideration
paid to the subscheme for the units is to be used to acquire the
initial scheme property to be attributable to the subscheme.
Note Scheme property is defined in r 1.2.3. Umbrella scheme and subscheme
are defined in r 1.2.11. Issue is defined in this glossary.
initial outlay, for a QFC scheme, means the amount that the scheme
is required to provide to obtain rights in a transaction in derivatives,
excluding any payment or transfer on exercise of rights.
Note Derivative is defined in this glossary.
initial price, of a unit in any class in a QFC retail scheme, means the
price to be paid during the initial offer period.
Note Class and initial offer are defined in this glossary.
instrument means an instrument of any kind, and includes, for
example, any writing or other document.
Note Writing and document are defined in this glossary.
interim accounting period, for a QFC scheme, means a period in an
annual accounting period of the scheme in relation to which an
allocation of income is to be made.
Note Annual accounting period is defined in this glossary.
interim income allocation date, for a QFC scheme, means any date
stated in the scheme’s latest filed prospectus as the date on or before
which an allocation of income is to be made.
Note Latest filed prospectus is defined in this glossary.
intermediate holding vehicle, for a QFC scheme, means an entity
(other than a scheme) if the purpose of the entity is to enable the
holding of immovables for the scheme.
Glossary
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investment means any investment, including any asset, right or
interest.
investment adviser, for a QFC scheme, means a person who is
retained by the operator, under a commercial arrangement that is not
a contract of service, to provide the operator with advice about—
(a) the merits of investment opportunities for the scheme; or
(b) information relevant to the making of judgments about the
merits of investment opportunities for the scheme.
ISFI means the Islamic Finance Rules 2005.
Islamic fund has the meaning given by rule 1.3.11.
issue, of a unit in a QFC scheme, means the issue of a new unit in the
scheme by the operator on behalf of the scheme.
issue charge, for a QFC scheme, means an amount levied by the
operator under these rules on the issue of units.
Note Issue is defined in this glossary.
joint ownership arrangement, in relation to an immovable, means an
arrangement for the joint ownership of the immovable under
rule 12.3.2.
jurisdiction means any kind of legal jurisdiction, and includes, for
example—
(a) the State; and
(b) a foreign country (whether or not an independent sovereign
jurisdiction), or a state, province or other territory of such a
foreign country; and
(c) the Qatar Financial Centre or a similar jurisdiction.
Note The State is defined in this glossary.
Glossary
V9 Collective Investment Schemes Rules 2010 page 415 Effective: 15/Oct/20
large deal, for a QFC scheme, means a transaction (or series of
transactions in a single dealing period) by any person for the issue or
redemption of units in the scheme if—
(a) the transaction (or series of transactions) is executed for the
purpose of—
(i) a dilution adjustment; or
(ii) a dilution levy; and
(b) the transaction (or series of transactions) is a large deal under
the latest filed prospectus.
Note Series of transactions, issue, dealing period, dilution levy, dilution
adjustment, redemption and latest filed prospectus are defined in this
glossary.
larger denomination share has the meaning given by rule 3.2.2 (2).
latest filed prospectus, of a QFC scheme, means the prospectus
(including any revised or supplementary prospectus) of the scheme
most recently filed with the Regulatory Authority under these rules.
Note Prospectus is defined in this glossary.
latest filed translation, of a prospectus of a QFC scheme in relation
to a language, means the translation of the prospectus in that language
most recently filed with the Regulatory Authority under these rules.
Note Prospectus is defined in this glossary.
legal person means an entity (other than an individual) on which the
legal system of a jurisdiction confers rights and imposes duties, and
includes, for example, any entity that can own, deal with or dispose
of property.
Examples
1 a company
2 any other corporation
3 a partnership, whether or not incorporated
4 an association or other undertaking, whether or not incorporated
Note Entity, jurisdiction and property are defined in this glossary.
Glossary
page 416 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
limited issue arrangements, for a QFC qualified investor scheme,
means arrangements for the issue of units in the scheme under which
the operator limits the issue of units in the scheme in accordance with
the latest filed prospectus.
Note Issue and latest filed prospectus are defined in this glossary.
limited redemption arrangements, for a QFC qualified investor
scheme, means arrangements for the redemption of units in the
scheme under which the operator redeems units in the scheme less
frequently than twice in the month.
Note Redemption and month are defined in this glossary.
listed unit means a unit that is listed in the Qatar Stock Exchange or
in any other regulated exchange.
long term insurance contract means a contract of insurance of the
type described in the Financial Services Regulations, schedule 3, part
3, paragraph 10.4.
Note Contract of insurance is defined in this glossary.
managing investments means the regulated activity described in the
Financial Services Regulations, schedule 3, part 2, paragraph 10.
Note Regulated activity is defined in this glossary.
margin means cash or other property—
(a) paid, transferred or deposited under the terms of a derivative; or
(b) required to be paid, transferred or deposited in relation to a
derivative to comply with a requirement imposed by a market
on which it is made or traded.
Note Property and derivative are defined in this glossary.
money means any form of money, including cheques and other
payable orders.
money-market fund has the meaning given by rule 1.3.12.
month means calendar month.
Glossary
V9 Collective Investment Schemes Rules 2010 page 417 Effective: 15/Oct/20
near cash means any of the following:
(a) money that is deposited with an eligible bank in—
(i) a current account; or
(ii) a deposit account, if the money can be withdrawn
immediately and without payment of a penalty exceeding
7 days interest calculated at ordinary commercial rates;
(b) certificates of deposit issued by an eligible bank, if immediately
redeemable at the holder’s option;
(c) government or public securities, if redeemable at the holder’s
option or bound to be redeemed within 2 years;
(d) bills of exchange that are government or public securities.
Note Money, eligible bank and government or public security are defined in
this glossary.
net asset value, of a QFC scheme at any time, means the value of the
assets (including current assets) of the scheme at that time after
deducting—
(a) the current liabilities (including accrued expenses) of the
scheme at that time; and
(b) the longer-term liabilities of the scheme.
net asset value per unit, for a QFC scheme at any time, means the net
asset value of the scheme at that time divided by the number of units
in issue at that time.
Note Net asset value is defined in this glossary. Unit is defined in r 1.2.4.
non-QFC qualified client scheme means a non-QFC scheme that is
a qualified client scheme.
Note Qualified client scheme is defined in r 1.4.2.
non-QFC retail customer scheme means a non-QFC scheme that is
a retail customer scheme.
Note Retail customer scheme is defined in r 1.4.1.
non-QFC scheme has the meaning given by rule 1.2.7.
Glossary
page 418 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
notional principal, for a contract for differences, means—
(a) if the contract is an index derivative that resembles a future—
the current mark-to-market valuation of the derivative; or
(b) if the contact is an index derivative that resembles an option—
the exercise value of the derivative; or
(c) in any other case—the notional lot size of the contract.
Note Contract for differences, derivative, future and option are defined in this
glossary.
office includes position.
open-ended scheme has the meaning given by rule 1.2.10 (1).
operating collective investment schemes means the regulated activity
described in the Financial Services Regulations, schedule 3, part 2,
paragraph 12 as Operating a Collective Investment Fund.
Note Regulated activity is defined in this glossary.
operator, of a scheme, has the meaning given by rule 1.2.8.
option means the specified product described in the Financial
Services Regulations, schedule 3, part 3, paragraph 7.
Note Specified product is defined in this glossary.
ordinary resolution, for a QFC scheme or a class of units in a QFC
scheme, means a resolution passed at a general meeting of the scheme
or a separate meeting of unitholders of that class of units if—
(a) notice indicating the intention to propose the resolution was
properly given; and
(b) the resolution passed by a simple majority of the votes validly
cast (whether as a show of hands or on a poll) for or against the
resolution at the meeting.
Note Class is defined in this glossary.
OTC derivative means a derivative traded solely in transactions over
the counter.
Note Derivative and over the counter are defined in this glossary.
Glossary
V9 Collective Investment Schemes Rules 2010 page 419 Effective: 15/Oct/20
outsourcing has the meaning given by rule 8.5.1.
over the counter, for a transaction, means
(a) not effected by means of the facilities and services of an
exchange; and
(b) not governed by the rules of an exchange.
own account transaction, for an authorised firm, means a transaction
executed by the firm for its own benefit or the benefit of an associate.
Note Execute and associate are defined in this glossary.
parent entity, for a legal person (A), means any of the following:
(a) a legal person that holds a majority of the voting power in A;
(b) a legal person that is a member of A (whether direct or indirect,
or though legal or beneficial entitlement) and alone, or together
with 1 or more legal persons in the same group, holds a majority
of the voting power in A;
(c) a parent entity of any legal person that is a parent entity of A.
Note Legal person and group are defined in this glossary.
participant in a scheme has the meaning given by rule 1.2.2.
partnership agreement, for a CIP, means the CIP’s partnership
agreement as amended from time to time.
Note CIP is defined in r 1.3.8 and this glossary.
person means—
(a) an individual (including an individual occupying an office from
time to time); or
(b) a legal person.
Note Office and legal person are defined in this glossary.
personal data means any information relating to an individual who
can be identified, directly or indirectly, in particular by reference to
an identification number or to 1 or more factors specific to the
Glossary
page 420 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
individual’s physical, physiological, mental, economic, cultural or
social identity.
price, of a unit in a QFC scheme, means the price of the unit
calculated in accordance with these rules.
Note Unit is defined in r 1.2.4.
principal, in relation to an option, future or forward contract,
means—
(a) if the contract is an option on a future—the amount or value of
the property that must be delivered to satisfy settlement of the
future; or
(b) in any other case—the amount or value of the property that must
be delivered to satisfy settlement of the contract.
Note Option, future, and property are defined in this glossary.
property means any estate or interest (whether present or future,
vested or contingent, or tangible or intangible) in immovables or
property of any other kind, and includes, for example—
(a) money of any currency; and
(b) bonds, securities, shares, and other negotiable or non-negotiable
instruments of any kind; and
(c) any right to interest, dividends, or other income, on or accruing
from or generated by immovables or property of any other kind;
and
(d) any other things in action; and
(e) any other charge, claim, demand, easement, encumbrance, lien,
power, privilege, right, or title, recognised or protected by the
law of any jurisdiction over, or in relation to, immovables or
property of any other kind; and
(f) any other documents evidencing title to, or to any interest in,
immovables or property of any other kind.
Note Money, jurisdiction and document are defined in this glossary.
Glossary
V9 Collective Investment Schemes Rules 2010 page 421 Effective: 15/Oct/20
property fund—a QFC scheme, or a subscheme of a QFC umbrella
scheme, is a property fund if the scheme or subscheme is dedicated
to investments in immovables and in securities issued by corporations
whose main activities are investing in, dealing in, developing or
redeveloping immovables.
property-related assets means any of the following:
(a) shares, debt instruments or warrants issued by an entity if a
substantial activity of the entity relates to investment in
immovables;
(b) securities receipts that give rights in relation to an investment
mentioned in paragraph (a).
Note Share, debt instrument, warrant, entity, investment and securities
receipt are defined in this glossary.
prospectus, of a scheme, means a document (whatever called)
containing information about the scheme, and includes a revised or
supplementary prospectus.
Note Document is defined in this glossary.
providing credit services means the regulated activity described in the
Financial Services Regulations, schedule 3, part 2, paragraph 6.
Note Regulated activity is defined in this glossary.
providing custody services means the regulated activity described in
the Financial Services Regulations, schedule 3, part 2, paragraph 8.
Note Regulated activity is defined in this glossary.
providing scheme administration means providing 1 or more of the
following services in relation to a scheme:
(a) processing dealing instructions, including effecting issues,
redemptions and stock transfers, and arranging settlements;
(b) portfolio accounting;
(c) valuing assets and performing net asset value, and net asset
value per unit, calculations;
(d) unit pricing;
Glossary
page 422 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(e) dividend calculation and distribution;
(f) keeping the register of unitholders and unitholder registration
details;
(g) performing any regulatory requirements;
Examples of requirements
anti-money laundering or combating terrorist financing requirements
(h) undertaking transaction monitoring and reconciliation
functions;
(i) producing financial statements, otherwise than as the scheme’s
auditor;
(j) communicating with, and providing information to, the
participants, the scheme, the operator, the independent entity,
the Regulatory Authority and other persons in relation to the
scheme.
QCSD means the Qatar Central Securities Depository.
QFC means the Qatar Financial Centre.
QFC approved auditor means a person:
(a) who is approved by the QFC Authority to act as an auditor; and
(b) whose name is entered in the register of auditors maintained by
the QFC Companies Registration Office.
QFC collective investment company (or CIC) has the meaning given
by rule 1.3.7.
QFC collective investment partnership (or CIP) has the meaning
given rule 1.3.8.
QFC collective investment trust (or CIT) has the meaning given by
rule 1.3.9.
QFC Court means the Qatar Financial Centre Civil and Commercial
Court.
QFC Law means Law No. (7) of 2005 of the State.
Note The State is defined in this glossary.
Glossary
V9 Collective Investment Schemes Rules 2010 page 423 Effective: 15/Oct/20
QFC licensed firm means an entity that has a licence granted by the
QFC Authority.
QFC qualified investor scheme means a QFC scheme that is a
qualified investor scheme.
Note Qualified investor scheme is defined in r 1.3.2.
QFC retail property fund means a QFC retail scheme that is a
property fund.
QFC retail scheme means a QFC scheme that is a retail scheme.
Note Retail scheme is defined in r 1.3.3.
QFC scheme has the meaning given by rule 1.2.6.
QFC UCITS type scheme means a QFC retail scheme that is a UCITS
type scheme.
Note Retail scheme is defined in r 1.3.3. UCITS type scheme is defined in
r 1.3.5.
QFC umbrella scheme means a QFC scheme that is an umbrella
scheme.
Note Umbrella scheme is defined in r 1.2.11.
qualified client scheme has the meaning given by rule 1.4.2 (What is
a non-QFC qualified client scheme?).
qualified investor has the meaning given by rule 1.2.12.
qualified investor scheme has the meaning given by rule 1.3.2 (What
is a QFC qualified investor scheme?).
readily realisable investment means any of the following:
(a) a government or public security denominated in the currency of
the jurisdiction of its issuer;
(b) any other security that is admitted to official listing on, or
regularly traded on or under the rules of, a regulated exchange;
Glossary
page 424 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(c) a newly issued security that can reasonably be expected to fall
within paragraph (b) when trading in it starts.
Note Government or public security, jurisdiction, security and regulated
exchange are defined in this glossary.
real estate investment trust (or REIT) has the meaning given by
rule 12.6.2 (2).
redemption, of a unit in a QFC scheme, means the redemption of an
existing unit in the scheme by the operator on behalf of the scheme.
redemption charge, for a QFC scheme, means an amount levied by
the operator under these rules on the redemption of units.
Note Redemption is defined in this glossary.
regulated activity means an activity that is a regulated activity under
the Financial Services Regulations.
regulated exchange means an exchange that is—
(a) incorporated or otherwise established in a jurisdiction outside
the QFC; and
(b) regulated as an exchange by a regulatory or governmental entity
in that jurisdiction.
Note Jurisdiction, QFC and entity are defined in this glossary.
regulated financial institution means a person that is not an
authorised firm but is authorised or licensed (however described) to
conduct any financial service by a regulatory or governmental
authority, body or agency in a jurisdiction other than the QFC.
Note Authorised firm and jurisdiction are defined in this glossary.
Regulatory Authority means the Regulatory Authority of the QFC.
Regulatory Tribunal means the QFC Regulatory Tribunal.
REIT means real estate investment trust.
Glossary
V9 Collective Investment Schemes Rules 2010 page 425 Effective: 15/Oct/20
related person—a person (A) is a related person for another person
(B) if—
(a) A and B are legal persons and members of the same group; or
Note Legal person and group are defined in this glossary.
(b) A is a director or officer of B or of a member of the same group
as B; or
Note Director is defined in this glossary.
(c) A is an individual, B is a legal person and A is able to exercise
significant influence over B; or
(d) A is a spouse or minor child of an individual (C) and C is a
related person for B under paragraph (b) or (c).
relevant investment activities means all or any of the following
regulated activities:
(a) dealing in investments;
(b) arranging deals in investments;
(c) advising on investments.
Note Regulated activity and the regulated activities mentioned in this
definition are defined in this glossary.
relevant requirement—a person breaches a relevant requirement in
the circumstances described in the Financial Services Regulations,
article 84.
Note Breach is defined in this glossary.
remuneration means any form of remuneration, and includes benefits
of any kind.
repo agreement means an agreement—
(a) between a seller and buyer for the sale of securities, under which
the seller agrees to repurchase the securities, or equivalent
securities, from the buyer on an agreed date and, usually, for a
stated price; or
Glossary
page 426 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(b) between a buyer and seller for the purchase of securities, under
which the buyer agrees to resell the securities, or equivalent
securities, to the seller on an agreed date and, usually, for a
stated price.
Note Security is defined in this glossary.
retail customer has the meaning given by rule 1.2.12.
retail customer scheme has the meaning given by rule 1.4.1 (What is
a non-QFC retail customer scheme?).
retail scheme has the meaning given by rule 1.3.3 (What is a QFC
retail scheme?).
scheme means a collective investment scheme.
Note Collective investment scheme (or scheme) is defined in r 1.2.1.
scheme of arrangement means an arrangement relating to a QFC
scheme (the transferor scheme), or to a subscheme of a QFC
umbrella scheme (the transferor subscheme), under which—
(a) either—
(i) all or part of the property of the transferor scheme, or all or
part of the property attributed to the transferor subscheme,
is to become property of 1 or more schemes registered in
the QFC (the transferee scheme or transferee schemes);
or
(ii) all or part of the property attributed to the transferor
subscheme is to become property attributed to 1 or more
other subschemes of the same umbrella scheme registered
in the QFC (the transferee subscheme or transferee
subschemes); and
(b) holders of units in the transferor scheme or transferor subscheme
are to receive, in exchange for their respective interests in the
property being transferred or reattributed, either—
(i) units in the transferee scheme, or 1 or more of the
transferee schemes, to which the property is transferred; or
Glossary
V9 Collective Investment Schemes Rules 2010 page 427 Effective: 15/Oct/20
(ii) units in the transferee subscheme, or 1 or more of the
transferee subschemes, to which the property is
reattributed.
Note Property is defined in this glossary.
scheme property, of a scheme, has the meaning given by rule 1.2.3.
securities receipt means the specified product described in the
Financial Services Regulations, schedule 3, part 3, paragraph 5.
Note Specified product is defined in this glossary.
security means any of the following:
(a) a share;
(b) a debt instrument;
(c) a warrant;
(d) a securities receipt;
(e) a unit in a collective investment scheme.
Note Share, debt instrument, warrant and securities receipt are defined in this
glossary.
sell an investment means sell the investment in any way, and includes
the following:
(a) dispose of the investment for valuable consideration;
(b) for an investment consisting of rights under a contract—
(i) surrender, assign or convert the rights for valuable
consideration;
(ii) assume the corresponding rights under the contract for
valuable consideration;
(c) for an investment consisting of rights under an arrangement—
assume the corresponding liabilities under the arrangement for
valuable consideration;
Glossary
page 428 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
(d) for any other investment—issue or create the investment or
grant the rights or interests of which it consists.
Note Investment is defined in this glossary.
senior manager, of the operator or independent entity of a QFC
scheme, means an individual employed by the operator or
independent entity, or by a member of the operator’s or independent
entity’s group, who has responsibility either alone or with others for
the management or supervision of 1 or more elements of the
operator’s or independent entity’s business relevant to its functions in
relation to the scheme.
Note Group and function are defined in this glossary.
series of transactions means a series of transactions executed to
achieve a single investment decision or objective.
Note Execute is defined in this glossary.
share means the specified product described in the Financial Services
Regulations, schedule 3, part 3, paragraph 1.
Note Specified product is defined in this glossary.
Shari’a Supervisory Board, of an Islamic fund, means the board
constituted for the Islamic fund under rule 8.10.1.
Note Islamic fund is defined in r 1.3.11.
smaller denomination share has the meaning given by rule 3.2.2 (2).
special resolution, for a QFC scheme or a class of units in a QFC
scheme, means a resolution passed at a general meeting of the scheme
or a separate meeting of unitholders of that class of units if—
(a) notice indicating the intention to propose the resolution as a
special resolution was properly given; and
(b) the resolution was passed by a majority of at least 75% of the
votes validly cast (whether as a show of hands or on a poll) for
or against the resolution at the meeting.
Note Class is defined in this glossary.
Glossary
V9 Collective Investment Schemes Rules 2010 page 429 Effective: 15/Oct/20
specified product means an investment or other type of product that
is a specified product under the Financial Services Regulations.
standing independent valuer, of a QFC scheme, means the person
who is appointed under these rules as the standing independent valuer
for the scheme.
stock lending arrangement means an arrangement between a person
(the borrower) and another person (the lender) under which—
(a) the lender transfers securities to the borrower otherwise than by
way of sale; and
(b) a requirement is imposed on the borrower to transfer back to the
lender, otherwise than by way of sale, securities in the same
quantity, with the same rights, and of the same type and nominal
value, as the transferred securities (or, if agreed between the
borrower and lender, assets into which the transferred securities
have been transformed following a stock split, consolidation,
conversion, merger, takeover, redemption or similar event).
Note Security is defined in this glossary.
subscheme, of an umbrella scheme, has the meaning given by
rule 1.2.11 (2).
subsidiary—a legal person (A) is a subsidiary of another legal person
(B) if B is a parent entity of A.
Note Legal person and parent entity are defined in this glossary.
the State means the State of Qatar.
transferable security has the meaning given by rule 7.1.6.
trust instrument, for a CIT, means the CIT’s trust instrument as
amended from time to time, and includes any instrument expressed to
be supplemental to it (as amended from time to time).
Note CIT is defined in r 1.3.9 and this glossary. Instrument is defined in this
glossary.
UCITS type scheme has the meaning given by rule 1.3.5.
umbrella scheme has the meaning given by rule 1.2.11 (1).
Glossary
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unit in a scheme has the meaning given by rule 1.2.4.
unitholder, of a unit in a scheme, has the meaning given by rule 1.2.5.
Note Unitholder has a special meaning in div 5.5.B (Unitholder meetings—
QFC retail schemes) (see r 5.5.2).
unitholder register, for a QFC scheme, means the register of
unitholders kept under these rules for the scheme.
unitisation means arrangements for a newly formed CIT under
which—
(a) all or part of the property of a corporation or scheme becomes
the first property to be held on the trusts of the CIT; and
(b) the holders of shares in the corporation, or units in the scheme,
become the first unitholders in the CIT.
Note CIT is defined in r 1.3.9. Property and corporation are defined in this
glossary.
valuation point, for a QFC scheme, means a valuation point fixed by
the operator in accordance with these rules and stated in the latest
filed prospectus.
Note Latest filed prospectus is defined in this glossary.
warrant means the specified product described in the Financial
Services Regulations, schedule 3, part 3, paragraph 4.
Note Specified product is defined in this glossary.
writing means any form of writing, and includes, for example, any
way of representing or reproducing words, numbers, symbols or
anything else in legible form (for example, by printing or
photocopying).
year means calendar year.
Endnotes
V9 Collective Investment Schemes Rules 2010 page 431 Effective: 15/Oct/20
Endnotes 1 Abbreviation key
a = after ins = inserted/added
am = amended om = omitted/repealed
amdt = amendment orig = original
app = appendix par = paragraph/subparagraph
art = article prev = previously
att = attachment pt = part
b = before r = rule/subrule
ch = chapter renum = renumbered
def = definition reloc = relocated
div = division s = section
g = guidance sch = schedule
glos = glossary
sdiv = subdivision
hdg = heading sub = substituted
2 Rules history
Collective Investment Schemes Rules 2010
made by
Collective Investment Schemes Rules 2010 (QFCRA Rules 2010-5)
Made 5 December 2010
Commenced 1 January 2011
Version No. 1
as amended by
Insurance Mediation Business (Consequential Amendments) Rules 2011 (QFCRA Rules 2011-4 sch 1, pt 1.2)
Made 20 June 2011
Commenced 1 July 2011
Version No. 2
Islamic Finance Amendments Rules 2012 (QFCRA Rules 2012-3 sch 2, pt 2.1)
Made 19 December 2012
Commenced 1 February 2013
Version No. 3
Endnotes
page 432 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Governance and Controlled Functions (Consequential and Miscellaneous) Amendment Rules 2012 (QFCRA Rules 2012-5 sch 4, pt 4.2)
Made 19 December 2012
Commenced 1 July 2013
Version No. 4
PIIB, PRIN and ASET Repeal and Consequential Amendments Rules 2014 (QFCRA Rules 2014-3 sch 1, pt 1.2 and sch 2, pt 2.1)
Made 17 December 2014
Commenced 1 January 2015
and
Individuals (Assessment, Training and Competency) (Consequential) and Miscellaneous Amendments Rules 2014 (QFCRA Rules 2014-6, sch 2, pt 2.1) Made 7 December 2014
Commenced 1 January 2015
Version No. 5
Collective Investment Schemes (Property Funds and Miscellaneous) Amendments Rules 2016 (QFCRA Rules 2016-1, sch 1) Made 6 September 2016
Commenced 19 September 2016
Version No. 6
Collective Investments Amendments Rules 2019 (QFCRA Rules 2019-5,
sch 1) Made 26 Jun 2019
Commenced 1 July 2019
Version No. 7
COND Repeal and Miscellaneous Amendments Rules 2019 (QFCRA Rules
20194, sch 2, part 2.7) Made 26 March 2019
Commenced 1 January 2020
Version No. 8
Miscellaneous Amendments Rules 2020 (QFCRA Rules 2020-6, sch 3) Made 16 September 2020
Commenced 15 October 2020
Version No. 9
3 Amendment history
Effect of definitions, notes and examples r 1.1.4 sub Rules 2020-6
References to particular currencies r 1.1.5 ins Rules 2020-6
Endnotes
V9 Collective Investment Schemes Rules 2010 page 433 Effective: 15/Oct/20
Who is the unitholder? r 1.2.5 am Rules 2016-1
Who is the independent entity? r 1.2.9 am Rules 2016-1
What are open-ended and closed-ended schemes? r 1.2.10 am Rules 2016-1
Who is a qualified investor or retail customer? r 1.2.12 sub Rules 2019-4
Types of QFC retail schemes? r 1.3.4 sub Rules 2016-1
What is a QFC retail property fund? r 1.3.5A ins Rules 2016-1
What is a QFC collective investment company (or CIC)? r 1.3.7 sub Rules 2016-1
Prohibited amendments of constitutional document—QFC UCITS type schemes r 3.1.6 am Rules 2016-1
Bearer certificates must not be issued—all QFC schemes r 3.2.3, hdg am Rules 2016-1 r 3.2.3 am Rules 2016-1
Functions of operator generally—all QFC schemes r 4.1.3 am Rules 2016-1
Duty of operator to report certain breaches of law—all QFC schemes r 4.1.4 am Rules 2019-5
Register of unitholders—all QFC schemes r 4.1.6 am Rules 2016-1
Requirements for independent entity—all QFC schemes r 4.2.1 am 2014-6
Property safeguarding functions of independent entity—all QFC schemes r 4.2.6 am Rules 2016-1
Non-QFC independent entities—annual compliance certificate r 4.2.10 am Rules 2016-1
Who is an affected person for a QFC scheme? r 5.1.1 am Rules 2016-1
Transactions with affected persons—prior notice to unitholders of QFC schemes r 5.1.3 am Rules 2016-1
Transactions with affected persons—transactions involving 5% or more of QFC scheme’s net asset value r 5.1.4 am Rules 2016-1
Endnotes
page 434 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Transactions with affected persons—details required for QFC scheme’s annual reports r 5.1.5 am Rules 2016-1
General information requirements for prospectus—all QFC schemes r 5.2.3 am Rules 2016-1
Revisions of prospectus etc—all QFC schemes r 5.2.6 am Rules 2016-1
Changes requiring unitholder approval or notice—QFC qualified investor schemes r 5.4.1 am Rules 2016-1
Accounting standards—all QFC schemes r 5.6.1 am Rules 2016-1
Appointment and removal of auditors etc—all QFC schemes r 5.6.2 am Rules 2016-1
Preparation of long and short reports—QFC retail schemes r 5.6.9 am Rules 2016-1
Permissible investments generally—QFC qualified investor schemes r 6.1.3 am Rules 2019-4
Requirements for making investments in immovables—QFC qualified investor schemes r 6.2.7 am Rules 2016-1
Additional requirements for immovables—QFC qualified investor schemes r 6.2.9 am Rules 2016-1
Appointment of standing independent valuer—QFC qualified investor schemes r 6.2.14 am Rules 2016-1
Removal of standing independent valuer—QFC qualified investor schemes r 6.2.16 am Rules 2016-1
Permissible investments generally—QFC retail schemes r 7.2.2 am Rules 2016-1
Spread for certain transferable securities and money-market instruments—QFC retail schemes r 7.3.2 am Rules 2016-1
Spread for OTC derivatives—QFC retail schemes r 7.3.7 am Rules 2014-3
Derivatives and forward transactions—QFC retails schemes Div 7.4.E, hdg sub Rules 2012-5
Permitted transactions in derivatives and forward transactions—QFC retail schemes r 7.4.9 am Rules 2016-1
Endnotes
V9 Collective Investment Schemes Rules 2010 page 435 Effective: 15/Oct/20
Exposure for derivatives and forward transactions—QFC retail schemes Pt 7.5, hdg sub Rules 2012-5
Borrowing limits—QFC retail schemes r 7.7.3 am Rules 2016-1
Controls over issue and redemption of units—QFC retail schemes r 8.1.13 am Rules 2012-5; Rules 2014-3
Valuation—QFC qualified investor schemes r 8.2.2 am Rules 2016-1
General rules for valuation of scheme property—QFC retail schemes r 8.2.8 am Rules 2016-1
Unitholder register requirements—all QFC schemes r 8.3.1 am Rules 2016-1
Transfer of units by act of parties—all QFC schemes r 8.3.2 am Rules 2016-1
Certificates for units—all QFC schemes r 8.3.3 am Rules 2016-1
Outsourcing by operator—all QFC schemes r 8.5.2 am Rules 2012-5
Outsourcing by independent entity—all QFC schemes r 8.5.3 am Rules 2012-5
Prohibition of promotional payments—QFC retail schemes r 8.6.8 am Rules 2019-4
Accounting periods—all QFC schemes r 8.7.1 am Rules 2014-3
Suspension and restart of dealings—QFC schemes Pt 9.1, hdg am Rules 2016-1
Suspension and restart of dealings—all QFC schemes r 9.1.1 am Rules 2016-1
Certain financial promotions only to qualified investors etc—QFC qualified investor schemes r 10.1.2 am Rules 2019-4
Certain financial promotions only to qualified investors etc—non-QFC qualified client schemes r 10.1.3 am Rules 2019-4
Pt 10.1 additional to CIPR r 10.1.4 sub Rules 2019-4
Prospectus and disclaimer must be provided etc—all non-QFC schemes r 10.2.3 sub Rules 2019-4
Endnotes
page 436 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
Complying disclaimer must be given with other documents under CIPR—all non-QFC schemes r 10.2.4 sub Rules 2019-4
Authorised firms must pass on documents etc—all non-QFC schemes r 10.2.5 sub Rules 2019-4
Quarterly returns for financial promotions etc—all non-QFC schemes r 10.2.6 am Rules 2019-4
Recordkeeping by authorised firms—all non-QFC schemes r 10.2.7 sub Rules 2019-4
Part 10.2 additional to CIPR r 10.2.8 sub Rules 2019-4
Application—pt 10.3 r 10.3.1 am Rules 2016-1
QFC retail property funds Ch 12 sub Rules 2016-1
Other provisions continue to apply to QFC retail property funds that are not REITs r 12.1.6 am Rules 2019-4
Real estate investment trusts or REITs r 12.6.2 am Rules 2019-5 sub Rules 2020-6
Other provisions continue to apply to REITs r 12.6.4 am Rules 2019-4
Profit sharing investment accounts r S1.16 am Rules 2012-3; Rules 2014-3
Other statements and provisions for CIC S2.18 am Rules 2016-1
Register of unitholders S3.11 sub Rules 2016-1
Description of scheme etc S4.2 am Rules 2016-1
Additional information—QFC retail property funds S4.2A ins Rules 2016-1
Investment objectives and policy etc S4.4 am Rules 2016-1
Investment adviser and independent valuer S4.9 sub Rules 2016-1
Register of unitholders S4.12 sub Rules 2016-1
Endnotes
V9 Collective Investment Schemes Rules 2010 page 437 Effective: 15/Oct/20
Prospectus content—REITs Sch 5 ins Rules 2016-1
Glossary
def BANK ins Rules 2014-3 def business customer ins Rules 2019-4 def CIPR ins Rules 2019-4
def COND sub Rules 2014-6 om Rules 2019-4
def controlled function am Rules 2012-5
def CTRL sub Rules 2012-5 def customer ins Rules 2019-4 def eligible exchange ins Rules 2019-4
def GENE sub Rules 2014-3
def INAP sub Rules 2014-3
def INDI sub Rules 2012-5 om Rules 2014-6
def intermediate holding vehicle sub Rules 2016-1
def ISFI sub Rules 2014-3
def joint ownership arrangement ins Rules 2016-1
def listed unit ins Rules 2016-1
def PIIB sub Rules 2011-4 om Rules 2014-3
def PRIN om Rules 2014-3
Endnotes
page 438 Collective Investment Schemes Rules 2010 V9 Effective: 15/Oct/20
def property fund sub Rules 2016-1
def providing custody services am Rules 2014-3
def QCSD ins Rules 2016-1
def QFC approved auditor ins Rules 2016-1
def QFC retail property fund ins Rules 2016-1
def real estate investment trust ins Rules 2016-1
def REIT ins Rules 2016-1
def standing independent valuer sub Rules 2016-1