The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019

• Citation: S.I. 2019/325
• Sections: 74

Section 1 Citation and commencement

(1) These Regulations may be cited as the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019.

(2) Subject to paragraph (3), these Regulations come into force on exit day.

(3) Regulations 50(6), 58 and 61 to 71 come into force on the day after the day on which these Regulations are made.

Section 2 Interpretation

In these Regulations “ the 2000 Act ” means the Financial Services and Markets Act 2000 .

Section 3 Introductory provision

The 2000 Act is amended in accordance with this Part.

Section 4 Persons authorised as a result of Schedule 5

For section 36 substitute—

Authorised open-ended investment companies

(36) Schedule 5 makes provision about authorised open-ended investment companies.

Section 5 Open-ended investment companies

In section 236 (open-ended investment companies), in subsection (4)—

(a) omit paragraph (c) (but not the “or” at the end);

(b) in paragraph (d), omit “other than an EEA state”.

Section 6 Meaning of “UCITS”

After section 236 insert—

Meaning of “UCITS”

(236A)

(1) For the purposes of this Act, and subject to subsection (4), “ UCITS ” means an undertaking established in the United Kingdom or an EEA State—

(a) with the sole object of collective investment, operating on the principle of risk-spreading, in transferable securities or other liquid financial assets mentioned in subsection (3), of capital raised from the public; and

(b) with units which are, at the request of holders, repurchased or redeemed, directly or indirectly, out of the undertaking's assets.

(2) A UCITS may consist of several sub-funds (see section 237(4)).

(3) The transferable securities or other liquid financial assets referred to in subsection (1)(a) are—

(a) in the case of an undertaking established in the United Kingdom, those permitted by section 2 of chapter 5 of the Collective Investment Schemes sourcebook ; or

(b) in the case of an undertaking established in an EEA State, those referred to in Article 50(1) of the UCITS directive .

(4) For the purposes of subsection (1)(b), action taken by the undertaking to ensure that the price of its units on an investment exchange does not significantly vary from their net asset value is to be regarded as equivalent to the repurchase or redemption of units at the request of holders.

(5) An undertaking is not a UCITS if it is any of the following—

(a) a collective investment undertaking of the closed-ended type;

(b) a collective investment undertaking which raises capital without promoting the sale of its units to the public within the relevant area or any part of it;

(c) an open-ended investment company, or other collective investment undertaking, the units of which may, under its fund rules or instruments of incorporation, be sold only to the public in countries or territories outside the relevant area.

(6) In subsection (5) “ the relevant area ” means—

(a) in the case of an undertaking established in the United Kingdom, the United Kingdom;

(b) in the case of an undertaking established in an EEA State, the EEA States.

Section 7 Other definitions for Part 17

(1) Section 237 (other definitions for Part 17) is amended as follows.

(2) In subsection (2)—

(a) for the definition of “management company” substitute—

“ management company ” means an undertaking, as defined in section 1161 of the Companies Act 2006 , whose regular business is the management of UK UCITS;

(b) in the definition of “the operator” —

(i) at the end of paragraph (ab), insert “ and ” ;

(ii) omit the “and” at the end of paragraph (b);

(iii) omit paragraph (c).

(3) In subsection (3)—

(a) after the definition of “an authorised open-ended investment company” insert—

“ the Collective Investment Schemes sourcebook ” means the Collective Investment Schemes sourcebook made under this Act by the FCA, as it has effect on IP completion day ;

“ EEA UCITS ” means a UCITS which is authorised pursuant to Article 5 of the UCITS directive in an EEA State;

(b) for the definition of “feeder UCITS” substitute—

“ feeder UCITS ” means—

(a) a UK UCITS which has been approved by the FCA to invest 85% or more of the total property which is subject to the collective investment scheme constituted by the UK UCITS in units of—

(i) another UK UCITS,

(ii) a sub-fund of another UK UCITS,

(iii) an EEA UCITS, or

(iv) a sub-fund of an EEA UCITS, or

(b) a sub-fund of a UK UCITS which has been approved by the FCA to invest 85% or more of the sub-fund's separate pool of the property of the UK UCITS in units of—

(i) another UK UCITS,

(ii) another sub-fund of a UK UCITS,

(iii) an EEA UCITS, or

(iv) a sub-fund of an EEA UCITS;

“ master UCITS ”, in relation to a feeder UCITS, means (as the case may be)—

(a) the other UK UCITS mentioned in paragraph (a)(i) or (b)(i) of the definition of “feeder UCITS”,

(b) the EEA UCITS mentioned in paragraph (a)(iii) or (b)(iii) of that definition, or

(c) the sub-fund mentioned in paragraph (a)(ii) or (iv) or (b)(ii) or (iv) of that definition;

(c) in the definition of “a recognised scheme” , omit “264 or”;

(d) before the definition of “UK UCITS” insert—

“ UCITS-related direct EU legislation ” means—

(a) Commission Regulation (EU) 2010/583 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website, or

(b) Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries;

Section 8 Authorisation orders: unit trust schemes

(1) Section 243 (authorisation orders) is amended as follows.

(2) In subsection (5) —

(a) omit “or another EEA State”;

(b) for “country in which it is incorporated” substitute “ United Kingdom ” .

(3) For subsection (5A) substitute—

(5A) The manager and the trustee must each have a place of business in the United Kingdom.

(4) Omit subsection (6).

Section 9 Certificates: unit trust schemes

In section 246 (certificates), in subsection (1) , for the words from “enjoy” to “instrument” substitute “ be a UK UCITS ” .

Section 10 Proposal to convert to a non-feeder UCITS: unit trust schemes

(1) Section 252A (proposal to convert to a non-feeder UCITS) is amended as follows.

(2) In subsection (1)(b), after “convert into a” insert “ UK ” .

(3) In subsection (7)(a), after “convert into a” insert “ UK ” .

(4) In subsection (9), for paragraphs (a) and (b) substitute—

(a) specified in rule 11.6.3(2) of the Collective Investment Schemes sourcebook, or

(b) specified in UCITS-related direct EU legislation.

Section 11 Requests for revocation of authorisation order: unit trust schemes

In section 256 (requests for revocation of authorisation order), in subsection (3)(b), omit “or would be incompatible with an EU obligation”.

Section 12 Directions: unit trust schemes

In section 257 (directions), in subsection (1)(b)—

(a) in sub-paragraph (ii), for the words from “any” to “UCITS directive” substitute “ UCITS-related direct EU legislation; ” ;

(b) in sub-paragraph (iii), after “that Regulation” insert “ which constitutes retained direct EU legislation ” .

Section 13 Winding up or merger of master UCITS: unit trust schemes

(1) Section 258A (winding up or merger of master UCITS) is amended as follows.

(2) In subsection (2)(b), after “convert into a” insert “ UK ” .

(3) In subsection (4)(b), after “convert into a” insert “ UK ” .

Section 14 Information for home state regulator: unit trust schemes

Omit section 261A (information for home state regulator).

Section 15 Information for feeder UCITS: unit trust schemes

(1) Section 261B (information for feeder UCITS) is amended as follows.

(2) In subsection (1)(a), after “made” insert “ by or under any enactment ” .

(3) Omit subsections (2) and (3).

Section 16 Authorisation orders: contractual schemes

(1) Section 261D (authorisation orders) is amended as follows.

(2) In subsection (5)—

(a) omit “or another EEA State”;

(b) for “country in which it is incorporated” substitute “ United Kingdom ” .

(3) For subsection (6) substitute—

(6) The operator and the depositary must each have a place of business in the United Kingdom.

(4) Omit subsection (7).

Section 17 Authorisation orders: holding of units

In section 261E (authorisation orders: holding of units), in the definition of “professional investor” in subsection (4), for “(1) to (4) of Section I of Annex II to the markets in financial instruments directive (professional clients for the purpose of that directive)” substitute “ (a) to (d) of paragraph 3 of Schedule 1 to the markets in financial instruments regulation ” .

Section 18 Certificates: contractual schemes

In section 261H (certificates), in subsection (1), for “enjoy the rights conferred by any relevant EU instrument” substitute “ be a UK UCITS ” .

Section 19 Proposal to convert to a non-feeder UCITS: contractual schemes

(1) Section 261S (proposal to convert to a non-feeder UCITS) is amended as follows.

(2) In subsection (1)(b), after “convert into a” insert “ UK ” .

(3) In subsection (7)(a), after “convert into a” insert “ UK ” .

(4) In subsection (9), for paragraphs (a) and (b) substitute—

(a) specified in rule 11.6.3(2) of the Collective Investment Schemes sourcebook, or

(b) specified in UCITS-related direct EU legislation.

Section 20 Requests for revocation of authorisation order: contractual schemes

In section 261W (requests for revocation of authorisation order), in subsection (3)(b), omit “or would be incompatible with an EU obligation”.

Section 21 Directions: contractual schemes

In section 261X (directions), in subsection (1)(b)—

(a) in sub-paragraph (ii), for the words from “any” to “UCITS directive” substitute “ UCITS-related direct EU legislation; ” ;

(b) in sub-paragraph (iii), after “that Regulation” insert “ which constitutes retained direct EU legislation ” .

Section 22 Winding up or merger of master UCITS: contractual schemes

(1) Section 261Z (winding up or merger of master UCITS) is amended as follows.

(2) In subsection (2)(b), after “convert into a” insert “ UK ” .

(3) In subsection (4)(b), after “convert into a” insert “ UK ” .

Section 23 Information for home state regulator: contractual schemes

Omit section 261Z4 (information for home state regulator).

Section 24 Information for feeder UCITS: contractual schemes

(1) Section 261Z5 (information for feeder UCITS) is amended as follows.

(2) In subsection (1)(a), after “made” insert “ by or under any enactment ” .

(3) Omit subsections (2) and (3).

Section 25 Schemes constituted in other EEA States

Omit sections 264 to 269 (schemes constituted in other EEA States).

Section 26 Individually recognised overseas schemes

In section 272 (individually recognised overseas schemes), in subsection (1)—

(a) at the end of paragraph (a) insert “ and ” ;

(b) omit paragraph (b) and the “and” immediately following it.

Section 27 Master-feeder structures

(1) Section 283A (master-feeder structures) is amended as follows.

(2) In subsection (1), for the words from “rules made” to “directive” substitute “ rule 5.2.11(9) of the Collective Investment Schemes sourcebook ” .

(3) In subsection (3)(a)—

(a) for “that the UCITS” substitute “ that the UK UCITS ” ;

(b) in sub-paragraph (i) for “Chapter VIII of the UCITS directive,” substitute “ the Chapter 8 provisions, ” .

(4) After subsection (3) insert—

(3A) In subsection (3)(a)(i) “ the Chapter 8 provisions ” means—

(a) in relation to a UK UCITS or its operator, trustee or depositary, or auditor, any provision made by or under an enactment in implementation of Chapter 8 of the UCITS directive, and

(b) in relation to an EEA UCITS or its operator, Chapter 8 of the UCITS directive.

Section 28 Reports on derivative instruments

(1) Section 283B (reports on derivative instruments) is amended as follows.

(2) In subsection (1), after “in relation to a” insert “ UK ” .

(3) In subsection (4), for paragraphs (a) and (b) substitute—

(a) in rules 6.12.3 and 6.12.3A, and annex 2R to chapter 6, of the Collective Investment Schemes sourcebook, or

(b) in UCITS-related direct EU legislation.

Section 29 FCA's and PRA's procedures

In section 395 (procedures of the FCA and PRA), omit subsection (13)(e).

Section 30 Definitions

In section 417 (definitions), in subsection (1), in the definition of “UCITS” , for “Article 1.2 of the UCITS directive” substitute “ section 236A ” .

Section 31 Expressions relating to authorisation elsewhere in the single market

In section 425 (expressions relating to authorisation elsewhere in the single market), in subsection (1), omit paragraph (aa) (but not the “and” at the end).

Section 32 Persons concerned in collective investment schemes

(1) Schedule 5 (persons concerned in collective investment schemes) is amended as follows.

(2) In paragraph 1 —

(a) omit sub-paragraphs (1) and (2), and

(b) in sub-paragraph (4), for paragraph (b) substitute—

(b) which is a UCITS as defined in section 236A,

(3) In paragraph 2, omit sub-paragraph (1).

Section 33 Introductory provision

The Undertakings for Collective Investment in Transferable Securities Regulations 2011 are amended in accordance with this Part.

Section 34 Interpretation of Part 4 (mergers)

(1) Regulation 7 is amended as follows.

(2) In paragraph (1)—

(a) omit the definition of “cross-border merger”;

(b) in the definition of “depositary” —

(i) at the end of sub-paragraph (aa), insert “ and ” ;

(ii) at the end of sub-paragraph (b), omit “and”;

(iii) omit sub-paragraph (c);

(c) omit the definition of “domestic merger”;

(d) omit the definition of “EEA management company” ;

(e) for the definition of “EEA UCITS” substitute—

“ feeder UCITS ” has the meaning given in section 237(3) of the Act;

(f) in the definition of “implementing provision” , in paragraph (b), for “implements” substitute “ implemented ” ;

(g) in the definition of “manager” omit sub-paragraph (c);

(h) after the definition of “manager” insert—

“ master UCITS ” has the meaning given in section 237(3) of the Act;

“ merger ” means an operation whereby one or more UK UCITS, or sub-funds (otherwise referred to as investment compartments) of UK UCITS ((the “merging UCITS”) (which continue to exist until the liabilities have been discharged)) transfer their net assets to—

(a) another sub-fund of the same UK UCITS;

(b) a UK UCITS which they form;

(c) another existing UK UCITS; or

(d) a sub-fund of another existing UK UCITS; (the “receiving UCITS”);

(i) omit the definition of “UK management company” ;

(j) for the definition of “UK UCITS” substitute—

“ UK UCITS ” has the meaning given in section 237(3) of the Act;

(k) in the definition of “unit-holders” in sub-paragraph (b) omit—

(i) “or an EEA UCITS”;

(ii) “or EEA UCITS”;

(l) in the definition of “units” —

(i) at the end of sub-paragraph (a) insert “ and ” ;

(ii) at the end of sub-paragraph (b) omit “and”;

(iii) omit sub-paragraph (c).

(3) In paragraph (2) omit the words from “Expressions used in this Part” to “as in the UCITS directive and,”.

(4) After paragraph (2), insert—

(3) Any reference in these Regulations to the Collective Investment Schemes sourcebook is a reference to the Collective Investment Schemes sourcebook made under the Act by the Authority, as it has effect on IP completion day .

Section 35 Reconstruction or amalgamation

(1) Regulation 8 is amended as follows.

(2) In paragraph (1) , for the words from “involving” to the end substitute “ which is a merger where the UK UCITS involved (or, if two or more are involved, at least one of them) has given notice to the Authority under paragraph 20B of Schedule 3 to the Act , and which takes the form of a merger by scheme of arrangement ” .

(3) Omit paragraphs (2) and (3).

(4) In paragraph (4)—

(a) in sub-paragraph (a)—

(i) after “transferor” insert “ UK ” ;

(ii) after “of a” insert “ UK ” ;

(b) in sub-paragraph (b)—

(i) in paragraph (ii) after “existing” insert “ UK ” ;

(ii) in paragraph (iii) after “a” insert “ UK ” .

Section 36 Application for authorisation

(1) Regulation 9 is amended as follows.

(2) In paragraph (1) omit “UK”.

(3) In paragraph (2)—

(a) omit sub-paragraph (b);

(b) in sub-paragraph (c)—

(i) omit “or by the competent authorities of an EEA UCITS involved in the merger”;

(ii) in paragraph (i) omit “the type of merger and of”.

(4) Omit paragraphs (3) and (5).

(5) In paragraph (8)—

(a) in sub-paragraph (b) for “UK” substitute “ merging ” ;

(b) for sub-paragraph (c) substitute—

(c) the receiving UCITS gave the Authority notice of its intention to market its units in another EEA State and, before IP completion day , that notification was transmitted under Article 93 of the UCITS directive to the competent authorities of those EEA States in which the merging UCITS was able to market its units; and

(c) for sub-paragraph (d), substitute—

(d) the Authority is satisfied with the proposed information to be provided to unit-holders.

(6) Omit paragraph (10).

Section 37 Modification of information

In regulation 10—

(a) in paragraph (1), omit “as the competent authority for a receiving UK UCITS”;

(b) omit paragraphs (4) and (5).

Section 38 Report by depositary or auditor

In regulation 11—

(a) in paragraph (1)—

(i) in the opening words omit “UK”;

(ii) in sub-paragraph (a) omit “referred to in Article 47(1) of the UCITS directive”;

(iii) in sub-paragraph (c) omit “, as referred to in Article 47(1) of the UCITS directive”;

(b) in paragraph (4)(b) omit “and, in relation to a cross-border merger, the competent authorities of the EEA UCITS concerned”.

Section 39 Right of redemption

In regulation 12—

(a) in paragraph (1)(b), in the opening words, after “another” insert “ UK ” ;

(b) in paragraph (2), omit “under Article 47.1 of the directive”;

(c) in paragraph (4) for “within the meaning of section 237(3) of the Act, the master UCITS” substitute “ it ” .

Section 40 Consequences of a merger

(1) Regulation 13 is amended as follows.

(2) Omit paragraphs (1) and (2).

(3) For paragraph (4) substitute—

(4) Subject to paragraph (6) the consequences take effect on the date specified in the order made by the Authority under regulation 9 (application for authorisation).

(4) In paragraph (5) omit “(including by the law of another EEA State)”.

(5) in paragraph (6) for “the competent authorities of each of its feeder UCITS” substitute “ the Authority ” .

Section 41 Division of a master UCITS

(1) Regulation 15 is amended as follows.

(2) In paragraph (2)—

(a) after “a master UCITS” insert “ which is a UK UCITS and ” ;

(b) after “two or more” insert “ UK ” .

(3) In paragraph (3) for “competent authorities of each of its feeder UCITS” substitute “ Authority ” .

(4) In paragraph (5) after “feeder UCITS in the” insert “ UK ” .

Section 42 Depositary liability: general provisions

In regulation 15B —

(a) in paragraph (1) after “depositary of a” insert “ UK ” ;

(b) in paragraph (2)(a) for “Article 22a of the UCITS directive” substitute “ rules 6.6B.25, 6.6B.26 and 6.6B.27 of the Collective Investment Schemes sourcebook ” .

Section 43 Depositary liability for loss of financial instruments held in custody

In regulation 15C, in paragraph (1)—

(a) for “Article 22.5(a) of the UCITS directive” substitute “ rule 6.6B.18 of the Collective Investment Schemes sourcebook ” ;

(b) for “any directly applicable regulation made under Article 26b(f) of the UCITS directive” substitute “ Article 18 of Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries ” .

Section 44 Depositary liability for other losses

In regulation 15D—

(a) after “If a” insert “ UK ” ;

(b) after “unit-holders of a” insert “ UK ” .

Section 45 Omission of Part 5B

Omit Part 5B (regulations 15E to 15I).

Section 46 Amendment of regulation 16

In regulation 16, for “The Schedule” substitute “ Schedule 1 ” .

Section 47 Transfer of UCITS directive functions

(1) After regulation 17, insert—

Transfer of UCITS directive functions

(18) The Authority may make technical standards for the purposes set out in Schedule 2 to this Regulation.

(2) Renumber the Schedule as Schedule 1, and after that Schedule insert—

Directive functions transferred to the Authority

(1) The purposes mentioned in regulation 18 are as follows.

(2) To specify the information to be provided to the Authority in the application for authorisation of a UCITS.

(3) To specify—

(a) the information to be provided to the Authority in the application for the authorisation of the management company, including the programme of activity;

(b) the requirements applicable to the management company in relation to paragraph 2C(1)(f) of Schedule 6 to the Act and the information to be included in the notification by the Authority as to whether or not authorisation has been granted as provided for in sections 55V(1), 55X(1), (2) and (4), 387(1) and 388(1) of the Act; and

(c) the requirements applicable to shareholders and members with qualifying holdings, as well as obstacles which may prevent effective exercise of the supervisory functions of the Authority, as provided for in section 55U(4) of the Act and in paragraph 2C and 3B of Schedule 6 to the Act, in accordance with Part 12 of the Act.

(5) To determine standard forms, templates and procedures for the notification or provision of information provided for in paragraphs 3(a) and (b).

(6) To specify the information to be provided to the Authority in the application for the authorisation of the contractual scheme, unit trust scheme, or open-ended investment company as a UK UCITS, including the programme of operations.

(7) To establish standard forms, templates and procedures for the provision of information referred to in paragraph 6.

(8) To specify the provisions concerning the content of the prospectus, the annual report and the half-yearly report, and the format of those documents.

(9) To specify the conditions which need to be met by the UCITS after the adoption of the temporary suspension of the re-purchase or redemption of the units of the UCITS, once the suspension has been decided.

Section 48 Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975

In the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 , in article 2(1), in the definition of “relevant collective investment scheme” omit “264 (schemes constituted in other EEA States) or”.

Section 49 Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979

In the Rehabilitation of Offenders (Exceptions) Order (Northern Ireland) 1979 , article 1(2), in the definition of “relevant collective investment scheme” omit “264 (schemes constituted in other EEA States),”.

Section 50 Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001

(1) The Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 is amended as follows.

(2) In article 3 omit paragraphs (f), (g) and (h) .

(3) Omit article 5A .

(4) In article 8—

(a) in paragraph (1) , for “paragraphs (2) and (7)” substitute “ paragraph (2) ” .

(b) omit paragraph 7 .

(5) Omit article10A .

(6) In article 16(3) —

(a) after “European venture capital funds” insert “ as it had effect on the day on which the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 were made ” ;

(b) after “European social entrepreneurship funds” insert “ as it had effect on the day on which the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 were made ” .

(7) Omit article 30.