2003 No. 2066
The Collective Investment Schemes (Miscellaneous Amendments) Regulations 2003
Made
Laid before Parliament
Coming into force
Whereas the Treasury are a government department designated1 for the purposes of section 2(2) of the European Communities Act 19722 in relation to collective investment in transferable securities and other liquid assets;
Now therefore the Treasury, in exercise of the powers conferred upon them by section 2(2) of the European Communities Act 1972, and sections 183(2), 188(2), 213(10), 214(5), 224(4), 264(3), 349(1)(b), (2) and (3), 417(1)3 and 428(3) of, and paragraphs 13(1)(b)(iii), 14(1)(b), 17(b) and 22 of Schedule 3 to, the Financial Services and Markets Act 20004, hereby make the following Regulations:
PART 1General
Citation, commencement and interpretation1
1
These Regulations may be cited as the Collective Investment Schemes (Miscellaneous Amendments) Regulations 2003 and come into force on 13th February 2004.
2
In these Regulations—
“the Act” means the Financial Services and Markets Act 2000;
“the Passport Rights Regulations” means the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 20015.
PART 2Passport Rights of Management Companies
General2
1
For paragraph (a) of subsection (1) of section 425 of the Act (definitions in relation to the single market directives)6, substitute—
a
“banking consolidation directive”, “EEA authorisation”, “EEA firm”, “EEA right”, “EEA State”, “first life insurance directive”, “first non-life insurance directive”, “insurance directives”, “insurance mediation directive”, “investment services directive”, “single market directives” and “UCITS directive” have the meaning given in Schedule 3; and
2
In Part 1 of Schedule 3 to the Act (EEA passport rights—defined terms)7—
a
in paragraph 1 (the single market directives)—
i
at the end of sub-paragraph (d), omit “and”; and
ii
at the end of sub-paragraph (e), insert—
; and
f
the UCITS directive.
b
after paragraph 4A, insert—
The UCITS directive
4B
“The UCITS directive” means the Council Directive of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (No.85/611/EEC).
c
in paragraph 5 (EEA firm)—
i
at the end of sub-paragraph (d), omit “or”; and
ii
at the end of sub-paragraph (e), insert—
; or
f
a management company (as defined in Article 1a.2 of the UCITS directive) which is authorised (within the meaning of Article 5) by its home state regulator.
3
In regulation 1(2) (interpretation) of the Passport Rights Regulations, after the definition of the “ISD Regulations”, insert—
“management company” means an EEA firm falling within paragraph 5(f) of Schedule 3;
Passporting by EEA management companies3
1
In Part 2 of Schedule 3 to the Act (exercise of passport rights by EEA firms)9—
a
in paragraph 13 (establishment), in sub-paragraph (1), for “(c) or (d)”, substitute “(c), (d) or (f)”;
b
in paragraph 14 (services), in sub-paragraph (1)(b), for “(d) or (e)”, substitute “(d), (e) or (f)”; and
c
in paragraph 15 (grant of permission), after sub-paragraph (1), insert—
1A
Sub-paragraph (1) is to be read subject to paragraph 15A(3).
d
after paragraph 15, insert—
Power to restrict permission of management companies
15A
1
Sub-paragraph (2) applies if—
a
a firm falling within paragraph 5(f) qualifies for authorisation as a result of paragraph 12(1) (establishment conditions satisfied); but
b
the Authority determines that the way in which the firm intends to invite persons in the United Kingdom to become participants in any collective investment scheme which that firm manages does not comply with the law in force in the United Kingdom.
2
The Authority may give a notice to the firm and the firm’s home state regulator of the Authority’s determination under sub-paragraph (1)(b).
3
Paragraph 15(1) does not give a firm to which the Authority has given (and not withdrawn) a notice under sub-paragraph (2) permission to carry on through the firm’s United Kingdom branch the regulated activity of dealing in units in the collective investment schemes which the firm manages.
4
Any notice given under sub-paragraph (2) must be given before the end of the period of two months beginning with the day on which the Authority received the consent notice.
5
Sections 264(4) and 265(1), (2) and (4) apply to a notice given under sub-paragraph (2) as they apply to a notice given by the Authority under section 264(2).
6
If a decision notice is given to the firm under section 265(4), by virtue of sub-paragraph (5), the firm may refer the matter to the Tribunal.
7
In sub-paragraph (3)—
a
“units” has the meaning given by section 237(2); and
b
the reference to “dealing in” units in a collective investment scheme must be read with—
i
section 22;
ii
any relevant order under that section; and
iii
Schedule 2.
2
In the Passport Rights Regulations—
a
in regulation 2 (establishment of a branch: contents of consent notice), after paragraph (2), insert—
2A
In the case of a management company, the prescribed information is—
a
a statement that the firm is a management company;
b
the requisite details of the branch; and
c
details of any compensation scheme which is intended to protect the branch’s investors.
b
in regulation 3 (provision of services: contents of regulator’s notice), after paragraph (2), insert—
2A
In the case of a management company, the prescribed information is—
a
a statement that the firm is a management company;
b
particulars of the programme of operations to be carried on in the United Kingdom including a description of the particular EEA activities to be carried on; and
c
details of any compensation scheme which is intended to protect investors.
c
in regulation 4 (investment firms, credit institutions and financial institutions: changes to branch details)—
i
in the heading, after “Investment firms”, insert “, management companies”;
ii
in paragraphs (1) and (6), after “investment firm”, insert “, management company”;
d
in regulation 5 (investment firms; changes to services)—
i
in the heading, after “Investment firms”, insert “and management companies”;
ii
after paragraph (1), insert—
1A
A management company which is providing services in the United Kingdom in the exercise of an EEA right must not make a change in any of the matters referred to in regulation 3(2A)(b), unless the relevant requirements have been complied with.
iii
in paragraph (4), after “investment firm”, insert “or a management company”.
Passporting by UK management companies4
1
In Part 3 of Schedule 3 to the Act (exercise of passport rights by UK firms)—
a
in paragraph 19 (exercise of rights to establish a branch)—
i
in sub-paragraph (6), for “the investment services directive or the banking consolidation directive”, substitute “the banking consolidation directive, the investment services directive or the UCITS directive”;
ii
in sub-paragraph (12)(a), for “within three months beginning with the date when it received the notice of intention”, substitute “within the relevant period”;
iii
after sub-paragraph (12), insert—
12A
In sub-paragraph (12), “the relevant period” means—
a
if the firm’s EEA right derives from the UCITS directive, two months beginning with the date on which the Authority received the notice of intention;
b
in any other case, three months beginning with that date.
b
in paragraph 20 (exercise of rights to provide services), in sub-paragraph (3)—
i
for “the investment services directive or the banking consolidation directive”, substitute “the banking consolidation directive, the investment services directive or the UCITS directive”;
ii
after “host state regulator”, insert “with such other information as may be specified”.
2
In the Passport Rights Regulations—
a
in regulation 11 (UK investment firms, credit institutions and financial institutions: changes to branch details)—
i
in the heading, after “investment firms”, insert “, management companies”; and
ii
in paragraph (1), after “investment services directive”, insert “, the UCITS directive”; and
b
in regulation 12 (UK investment firms: changes to services)—
i
in the heading, after “investment firms”, insert “and management companies”; and
ii
in paragraph (1), after “investment services directive”, insert “or the UCITS directive”.
PART 3Authorisation of Unit Trust Schemes and Management Companies
Power to restrict the activities of a management company5
In section 140 of the Act (restriction on managers of authorised unit trust schemes)—
a
in the side note, for “authorised unit trust schemes”, substitute “certain collective investment schemes”;
b
for subsection (1), substitute—
1
The Authority may make rules prohibiting an authorised person who has permission to act as—
a
the manager of an authorised unit trust scheme, or
b
the management company of an authorised UCITS open-ended investment company, from carrying on a specified activity.
c
after subsection (2), insert—
3
In this section—
a
“authorised UCITS open-ended investment company” means an authorised open-ended investment company to which the UCITS directive applies; and
b
“management company” has the meaning given by Article 1a.2 of the UCITS directive.
Control over management companies6
In the Financial Services and Markets Act 2000 (Consultation with Competent Authorities) Regulations 200110—
a
in regulation 2 (interpretation), after the definition of “EEA investment firm”, insert—
“EEA management company” means an EEA firm falling within paragraph 5(f) of Schedule 3 to the Act11;
b
in regulation 3, for “paragraph (1) or (2)”, substitute “paragraph (1), (2) or (3)”;
c
in regulation 4(a), for “paragraph (1) or (2)”, substitute “paragraph (1), (2), or (3)”;
d
in regulation 5, after paragraph (2), insert—
3
This paragraph applies where—
a
a person (“the acquirer”) proposes to acquire or has acquired control, an additional kind of control or an increase in a relevant kind of control over a UK authorised person in circumstances falling within section 178(1) or (2) of the Act;
b
that UK authorised person has permission to operate a collective investment scheme;
c
the acquirer is either—
i
an EEA management company; or
ii
the parent undertaking of an EEA management company; and
d
as a result of the acquisition or proposed acquisition, the acquirer is or would become a parent undertaking of the UK authorised person.
e
in regulation 6, for “or each EEA credit institution that is mentioned in regulation 5(2)(c)(i) or (ii)”, substitute “, each EEA credit institution that is mentioned in regulation 5(2)(c)(i) or (ii) or each EEA management company that is mentioned in regulation 5(3)(c)(i) or (ii)”.
Participation of EEA management companies in the compensation scheme7
In the Financial Services and Markets Act 2000 (Compensation Scheme: Electing Participants) Regulations 200112—
a
in regulation 1(2) (interpretation)—
i
in the definition of “branch”, after paragraph (b), insert—
c
in relation to a relevant management company, has the meaning given by Article 1.5 of the investor-compensation schemes directive (as applied by Article 5f.2 of the UCITS directive);
ii
after the definition of “investor-compensation schemes directive”, insert—
“relevant management company” means an EEA firm falling within paragraph 5(f) of Schedule 3 to the Act which—
- a
is authorised by its home state regulator to provide services of the kind specified by Article 5.3(a) of the UCITS directive (management of portfolios of investments); and
- b
is providing those services in the United Kingdom;
b
in regulation 2 (persons not to be regarded as relevant persons)—
i
at the end of paragraph (b), omit “and”; and
ii
after paragraph (c), insert—
; and
d
any relevant management company.
c
in regulation 3 (persons who may elect to participate), in paragraph (1)(a), after “investment firm”, insert “or relevant management company”;
d
in regulation 4 (persons in respect of whom inspection under section 224 does not apply)—
i
at the end of paragraph (b), omit “and”; and
ii
after paragraph (c), insert—
; and
d
any relevant management company.
Amendment of the Open-Ended Investment Companies Regulations8
In regulation 15(6) of the Open-Ended Investment Companies Regulations 200113 (requirements for authorisation), omit “Part IV of”.
Rules applying to management companies9
In section 266 of the Act (disapplication of rules), after subsection (1), insert—
1A
But subsection (1) does not affect the application of rules to an operator of a scheme if the operator is an EEA firm falling within paragraph 5(f) of Schedule 3 who qualifies for authorisation under that Schedule.
PART 4Miscellaneous
Open-ended investment companies incorporated in Northern Ireland10
In Schedule 5 to the Act—
a
after paragraph 1(3) (authorised open-ended investment company to be an authorised person), insert—
4
A body—
a
incorporated by virtue of regulations made under section 1 of the Open-Ended Investment Companies Act (Northern Ireland) 200214 in respect of which an authorisation order is in force, and
b
to which the UCITS directive applies,
is an authorised person.
5
“Authorisation order” means an order made under (or having effect as made under) any provision of those regulations which is made by virtue of section 1(2)(1) of that Act (provision corresponding to Chapter 3 of Part 17 of the Act).
b
in paragraph 2(2), after “paragraph 1(3)”, insert “or (4)”.
Regulations made under section 264 of the Act11
In the Financial Services and Markets Act 2000 (Collective Investment Schemes Constituted in Other EEA States) Regulations 200115—
a
in regulation 2, omit the definition of “the UCITS Directive”;
b
in regulation 3—
i
for “the UCITS Directive”, substitute “the UCITS directive”;
ii
for “that Directive”, substitute “that directive”;
c
in regulation 4, for paragraph (b), substitute—
b
its full and simplified prospectus (within the meaning of Section VI of the UCITS directive); and
Disclosure of information12
In the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 200116—
a
in regulation 2 (interpretation)—
i
in the definition of “EEA competent authority”, omit “, the UCITS directive”;
ii
omit the definitions of “the UCITS directive” and “UCITS directive information”;
b
in the heading to Part 3, omit “and UCITS directive information”;
c
in regulation 8 (application of Part 3), omit “and UCITS directive information”;
d
in regulation 11 (application of Part 4), omit paragraph (b);
e
in regulation 15 (disclosure of transitional information), in paragraph (4), omit “or the UCITS directive”, and “or UCITS directive information respectively”.
References to the UCITS Directive13
1
In section 199(8) of the Companies Act 198517 (definition of “UCITS”), for the words from “Council Directive 85/611/EEC” to “transferable securities”, substitute “Council Directive 85/611/EEC on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, as last amended by European Parliament and Council Directive 2001/108/EC”.18
2
In regulation 2(1)(b) of the Personal Equity Plan Regulations 198919 (interpretation), in the definition of “UCITS”, for “Council Directive 85/611”, substitute “Council Directive 85/611/EEC, as last amended by European Parliament and Council Directive 2001/108/EC”.
3
In Part 3 of Schedule 1 to the Local Government Pension Scheme (Management and Investment of Funds) Regulations 199820 (interpretation), in the definition of “open-ended investment company”, for the words from “Council Directive No.85/611/EEC” to “as amended” substitute “Council Directive No.85/611/EEC co-ordinating the laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, as last amended by European Parliament and Council Directive No.2001/108/EC”.
4
In regulation 2(1)(b) of the Individual Savings Account Regulations 199821 (interpretation), in the definition of “UCITS”, for “Council Directive 85/611”, substitute “Council Directive 85/611/EEC, as last amended by European Parliament and Council Directive 2001/108/EC”.
5
In the Schedule to the Cross-Border Credit Transfer Regulations 199922, for “Directive 85/611/EEC”, substitute “Directive 85/611/EEC, as last amended by Directive 2001/108/EC”.
6
In regulation 2(1) of the Personal Pension Schemes (Restriction on Discretion to Approve) (Permitted Investments) Regulations 200123 (interpretation), in the definition of “UCITS”, for “Council Directive 85/611”, substitute “Council Directive 85/611/EEC, as last amended by European Parliament and Council Directive 2001/108/EC”.
7
In the Open-Ended Investment Companies Regulations 200124—
a
in regulation 2(1) (interpretation), omit the definition of “the UCITS Directive”; and
b
in regulation 17(1) (certificates), for “the UCITS Directive”, substitute “the UCITS directive”.
(This note is not part of the Regulations)