LegalizeS.I. No. 78/1989 - European Communities (Undertakings For Collective Investment in Transferable Securities) Regulations, 1989
This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.
6 amending acts · 2003-05-29, S.I. No. 211/2003 - European Communities (Undertakings For Collective Investment in Trans…
S.I. No. 78 of 1989.
EUROPEAN COMMUNITIES (UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES) REGULATIONS, 1989
ARRANGEMENT OF REGULATIONS
PART I PRELIMINARY
Regulation
PART II SCOPE
4. Restriction of Unit Trusts Act, 1972.
5. Prohibition on conversion of UCITS into undertaking not subject to Regulations.
PART III COMPETENT AUTHORITY
6. Establishment of Central Bank as a competent authority.
8. Publication of names of authorized UCITS.
PART IV AUTHORIZATION OF UCITS
10. Prohibition on UCITS carrying on activities in the State without authorization.
11. Requirements for authorization.
12. Approval of Bank necessary for subsequent changes.
13. Applications for authorization.
14. Refusal of authorization and right of appeal.
15. Right of appeal of UCITS situated in an other Member State.
PART V UNIT TRUSTS
17. Prohibition on management company engaging in other activities.
22. Prohibition on a single company acting as management company and trustee.
PART VI INVESTMENT COMPANIES
Chapter 1 Investment Companies with Fixed Capital
26. Issue of redeemable preference shares.
27. Restriction of Companies Acts.
Chapter 2 Investment Companies with Variable Capital
31. Enabling provision regarding purchase of own shares.
32. Purchase of shares at request of shareholder and treatment of purchased shares.
34. Restriction of Companies Acts.
Chapter 3 General
35. Modification of Act of 1983.
36. Modification of Act of 1986.
Chapter 4 Trustee
37. Assets of investment companies.
40. Exemption from requirement to have trustee.
42. Requirement on Bank to inform EC Commission regarding exemptions.
44. Prohibition on a single company acting as management company and trustee.
PART VII INVESTMENT POLICIES OF UCITS
46. Limitations on investments.
47. Limit of 10 per cent of assets in other investments.
48. Ancillary liquid assets and investment techniques and instruments.
49. Investments in one issuer's securities.
50. Securities issued or guaranteed by States, local authorities or public international bodies.
51. Investments in other UCITS.
52 Acquisition of securities in a linked unit trust or investment company.
53. Acquisition of shares carrying voting rights.
54. Limits in relation to non-voting shares, debt securities or units of a UCITS.
55. Exemptions from Regulations 53 and 54.
57. Derogations for recently authorised UCITS.
PART VIII GENERAL PROVISIONS RELATING TO UCITS
59. Obligation on UCITS to redeem or repurchase units.
61. Redemption or repurchase of units.
63. Suspension of repurchase or redemption of units.
64. Creation and cancellation of units of a unit trust.
65. Issue of registered certificates or bearer securities.
66. Replacement of management company and trustee.
67. Remuneration and expenditure.
PART IX PROSPECTUS, REPORTS AND PUBLICATION OF OTHER INFORMATION
72. Publication of prospectus.
73. Annexation of trust deed or articles to prospectus.
75. Publication of annual and half-yearly reports.
77. Contents of annual report.
78. Contents of half-yearly report.
79. Transmission of reports to Bank.
80. Offering of reports to investors before contract concluded.
81. Availability to public of reports.
82. Supply of reports to unit-holders.
83. Auditing requirements in relation to annual report.
84. Publication of issue and redemption prices.
PART X SPECIAL PROVISIONS APPLICABLE TO UCITS MARKETING IN A MEMBER STATE OTHER THAN THAT IN WHICH IT IS SITUATED
87. Entitlement to market in the State.
88. Compliance with law, regulations and administrative provisions.
90. Provision of facilities in relation to unit-holders.
91. Distribution of documents and other information.
92. Power of Bank to prohibit marketing.
PART XI SPECIAL PROVISION IN RELATION TO THE CENTRAL BANK OF IRELAND
94. Collaboration with competent authorities in other Member States.
96. Application of professional secrecy to information exchanged with other competent authorities.
97. Restriction on use of information received from other Member States.
PART XII INSPECTION AND ENFORCEMENT POWERS OF CENTRAL BANK
98. Compliance with additional requirements imposed by Bank.
99. Keeping of books and records.
100. Furnishing of information to Bank.
101. Application by Bank to High Court.
102. Revocation of authorization.
103. Notice of intention to revoke.
104. Bank's powers of intervention.
105. Review of Bank's decision, etc., by High Court.
PART XIII OFFENCES
PART XIV TRANSITIONAL PROVISION
S.I. No. 78 of 1989.
EUROPEAN COMMUNITIES (UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES) REGULATIONS, 1989
I, RAY BURKE, Minister for Industry and Commerce, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972) and for the purpose of giving effect to Council Directive No. 85/611/EEC of 20 December, 1985^(1) as amended by Council Directive No. 88/220/EEC of 22 March, 1988^(2) hereby make the following Regulations:
^(1) O.J. No. L375/3 of 31/12/85
^(2) O.J. No. L100/31 of 19/4/88
PART IPRELIMINARY
1 Citation and commencement.
1.
1. These Regulations may be cited as the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 and shall come into operation on 1 June, 1989.
2 Interpretation
2.
2. (1) In these Regulations:
"articles" in relation to a company has the meaning assigned to it by the Companies Act, 1963 ;
"Companies Acts" means the Companies Act, 1963 , and every enactment which is to be construed with it as one Act;
"competent authority" means the Central Bank of Ireland or, in the case of another Member State, the body or bodies designated by that State to act as a competent authority for the purposes of the Directive;
"the Directive" means the Council Directive of 20 December, 1985 (85/611/EEC) on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as amended by Council Directive of 22 March, 1988 (88/220/EEC);
"directors" means those persons who, under the Companies Acts or the trust deed or the memoradnum and articles of association, represent the management company, the investment company or the trustee, or who effectively determine the policy of the management company, the investment company or the trustee;
"issue" means the sale of units or shares by a management company or investment company;
"investment company with fixed capital" means a company so referred to in Regulation 3 (3);
"investment company with variable capital" means a company so referred to in Regulation 3 (3);
"Member State" means a Member State of the European Community;
"repurchase" means the purchase of shares by a management company or investment company;
"redemption" means the purchase of units or shares from a holder by a management company or investment company;
"transferable securities" means securities in respect of which the right of transfer is unrestricted;
"trustee" in relation to a UCITS means an institution referred to as a depository in the Directive;
"UCITS" has the meaning assigned to it by Regulation 3 (1);
"umbrella fund" means a UCITS which is divided into a number of sub-funds and in which the shareholders are entitled to exchange rights in one sub-fund for rights in another;
"undertaking for collective investment in transferrable securities" has the meaning assigned to it by Regulation 3 (2);
"unit" includes a share and any other instrument granting an entitlement to share in the investments or relevant income of a collective investment undertaking;
"unit-holder" means, in relation to a collective investment undertaking, any person who by reason of the holding of units in the undertaking or by reason of having invested capital in the undertaking is entitled to any of the investments or relevant income of the undertaking:
"unit trust" means a collective investment undertaking under which the property in question is held on trust for the participants;
"usual time limits" means those time limits which are acceptable market practice in the context of a particular transaction.
- (2) In these Regulations, except where the context otherwise requires, words and expressions which are also used in the Directive have the same meaning as in the Directive.
PART IISCOPE
3 Scope.
3.
3. (1) Subject to paragraph (5), these Regulations apply to undertakings for collective investment in transferable securities (hereinafter referred to as UCITS) situated in the State within the meaning of Regulation 9(1).
- (2) For the purposes of these Regulations, UCITS shall be undertakings:
—the sole object of which is the collective investment in transferable securities of capital raised from the public and which operate on the principle of risk-spreading.
and
—the units of which are, at the request of holders, repurchased or redeemed, directly or indirectly, out of those undertakings' assets. Action taken by a UCITS to ensure that the stock exchange value of its units does not significantly vary from their net value shall be regarded as equivalent to such repurchase or redemption.
- (3) Such undertakings may be constituted as—
( a ) unit trusts or
( b ) investment companies with fixed capital or
( c ) investment companies with variable capital whose articles provide that
- (i) the amount of the paid up share capital of the company shall at all times be equal to the net asset value of the company, and
- (ii) the shares of the company shall have no par value,
provided however that in the cases of (b) and (c) above the companies must be registered as public limited companies.
- (4) These Regulations do not apply to investment companies whose assets are invested through the intermediary of subsidiary companies wholly or mainly otherwise than in transferable securities.
- (5) These Regulations do not apply to:
( a ) UCITS of the closed-ended type;
( b ) UCITS which raise capital without promoting the sale of their units to the public within the Community or any part of it;
( c ) UCITS the units of which, under the trust deed or the investment company's articles, may be sold only to the public in non-member countries;
( d ) categories of UCITS specified in Annex C to these Regulations.
4 Restriction of Unit Trusts Act, 1972 .
4.
4. The provisions of the Unit Trusts Act, 1972 , shall not apply to undertakings for collective investment in transferable securities authorized under these Regulations or authorized by a competent authority in another Member State in accordance with Council Directive 85/611/EEC.
5 Prohibition on conversion of UCITS into undertaking not subject to Regulations.
5.
5. A UCITS which is subject to these Regulations shall not convert itself into a collective investment undertaking which would not be subject to these Regulations and any purported conversion shall be null and void.
PART IIICOMPETENT AUTHORITY
6 Establishment of Central Bank as a competent authority.
6.
6. (1) The Central Bank of Ireland, hereinafter referred to as the Bank, is hereby designated as a competent authority to carry out the duties provided for in the Directive and shall have all the powers necessary for that purpose.
- (2) The Bank may arrange for the discharge of its functions as a competent authority by any committee, sub-committee, officer or employee of the Bank and nothing in these Regulations shall prevent the Bank from being assisted in, or advised on, the discharge of these functions by any committee, sub-committee, officer or employee of the Bank.
7 Liability of Bank.
7.
7. The authorisation of a UCITS by the Bank shall not constitute a warranty as to the performance of a UCITS and the Bank shall not be liable for the performance or default of a UCITS.
8 Publication of names of authorized UCITS.
8.
8. (1) The Bank shall, within twenty-one days after the date of the authorization of a UCITS, publish a notice to that effect in Iris Oifigiúil.
- (2) The Bank shall publish from time to time, but not less frequently than once a year, in such manner as it thinks fit, the names of all UCITS which have been authorized by it and whose authorization has not been revoked.
PART IVAUTHORIZATION OF UCITS
9 Situation of UCITS.
9.
9. (1) For the purposes of these Regulations, a UCITS shall be deemed to be situated in the State if the investment company or the management company of a unit trust, hereinafter known as the management company, has its head office and its registered office in the State.
- (2) A UCITS not situated in the State shall be deemed, for the purposes of these Regulations, to be situated in the Member State in which the investment company or the management company has its registered office.
10 Prohibition on UCITS carrying on activities in the State without authorization.
10.
10. (1) Subject to Regulation 11 and to paragraph (2) of this Regulation, a UCITS shall not carry on activities as such in the State unless it had been authorized under these Regulations by the Bank.
- (2) A UCITS which is situated in another Member State and which has received authorization from the competent authorities in that State may market its units in the State provided it is in compliance with the provisions laid down in Part X of these Regulations.
11 Requirements for authorization.
11.
11. (1) A unit trust shall be authorized only if the Bank has approved the management company, the trust deed, choice of trustee and the name. An investment company shall be authorised only if the Bank has approved its memorandum and articles and its choice of depositary, hereinafter known as the trustee.
- (2) The Bank shall not authorize a UCITS if the directors of the management company or of the investment company or of the trustee are not of sufficiently good repute or lack the experience required for the performance of their duties. Appointments to the office of director of the management company or of the investment company must be approved by the Bank.
12 Approval of Bank necessary for subsequent changes.
12.
12. Neither the management company nor the trustee may be replaced, nor may the trust deed or the investment company's articles be amended, without the approval of the Bank.
13 Applications for authorization.
13.
13. An application for authorization shall be made in writing by the management company or the investment company and shall contain such information, including additional information, as the Bank may reasonably specify for the purpose of determining the application.
14 Refusal of authorization and right of appeal.
14.
14. (1) Whenever the Bank decides to refuse authorization it must notify the company of its decision and of the reasons therefor. The company may apply to the High Court in accordance with Regulation 105.
- (2) The company shall have the same right to apply to the Court as in paragraph (1) if a decision on authorization has not been taken by the Bank within 6 months of the submission of an application for authorization which includes the information, other than additional information, required under these Regulations.
15 Right of appeal of UCITS situated in another Member State.
15.
15. The right of application under Regulation 105 shall apply to an authorized UCITS situated in another Member State in respect of a decision by the Bank to refuse it permission to market its units in the State or to prohibit further marketing in the State.
PART VUNIT TRUSTS
16 Management company.
16.
16. A management company shall be a body corporate that has its registered office and its head office in the State. It must have, in the opinion of the Bank, sufficient financial resources at its disposal to enable it to conduct its business effectively and meet its liabilities.
17 Prohibition on management company engaging in other activities.
17.
17. A management company may not engage in activities other than the management of unit trusts and investment companies and such ancillary activities as would enable it to administer its own assets.
18 Assets of a unit trust.
18.
18. (1) The assets of a unit trust shall be entrusted to a trustee for safe-keeping in accordance with these Regulations.
- (2) A trustee's liability as referred to in Regulation 21 shall not be affected by the fact that it has entrusted to a third party some or all of the assets in its safe-keeping.
19 Trustee.
19.
19. (1) A trustee shall either have its registered office in the State or have established a place of business in the State if its registered office is in another Member State.
- (2) A trustee shall—
( a ) be a licensed bank as defined by the Central Bank Act, 1971 , with a minimum paid-up share capital of £5 million or its equivalent in foreign currency, or
( b ) be a company which is wholly-owned by such a licensed bank, the liabilities of which are guaranteed by the licensed bank, or
( c ) be a company which has been granted a certificate by the Minister for Finance under section 39B of the Finance Act, 1980 (inserted by section 30 of the Finance Act, 1987 ), and which—
- (i) is wholly owned by a credit institution to which the First Council Directive of 12 December, 1977 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions* applies provided the liabilities of the trustee are guaranteed by the credit institution and the credit institution has paid-up capital of £5 million or its equivalent in a foreign currency, or
*77/780/EEC O.J. No. L322/30 17/12/1977
- (ii) is wholly owned by an institution in a non-Member State which is deemed by the Bank to be the equivalent of such a credit institution, provided the liabilities of the trustee are guaranteed by the parent institution and the parent institution has a paid-up capital of £5 million or its equivalent in a foreign currency or
- (iii) is wholly owned by an institution or company either in a Member State or in a non-Member State which is deemed by the Bank to be an institution or company which provides unit-holders with protection equivalent to that provided by a trustee under Regulation 19 (2) (a), (b), (c) (i) and (c) (ii) and provided the liabilities of the company acting as trustee are guaranteed by the parent company or institution and the parent company or institution has a paid-up capital of £5 million or its equivalent in a foreign currency.
- (3) A trustee shall satisfy the Bank that it has the appropriate expertise and experience to carry out its functions under these Regulations.
20 Obligations of trustee.
20.
20. The trustee must—
( a ) ensure that the sale, issue, repurchase, redemption and cancellation of units effected on behalf of a unit trust or by a management company are carried out in accordance with these Regulations and the trust deed;
( b ) ensure that the value of units is calculated in accordance with these Regulations and the trust deed;
( c ) carry out the instruction of the management company unless they conflict with these Regulations or the trust deed;
( d ) ensure that in transactions involving a unit trust's assets any consideration is remitted to it within the usual time limits;
( e ) ensure that a unit trust's income is applied in accordance with these Regulations and the trust deed;
( f ) enquire into the conduct of the management company in the management of the unit trust in each annual accounting period and report thereon to the unit holders. The trustee's report shall be delivered to the management company in good time to enable it to include a copy of the report in the Annual Report required under Regulation 75. The Report shall state whether in the trustee's opinion the management has managed the unit trust in that period—
- (i) in accordance with the limitations imposed on the investment and borrowing powers of the manager and trustee by the trust deed and these Regulations, and
- (ii) otherwise in accordance with the provisions of the trust deed and these Regulations, and
if it has not done so, in what respects in which it has not done so and the steps which the trustee has taken in respect thereof.
21 Liability of trustee.
21.
21. The trustee shall be liable to the management company and the unit-holders for any loss suffered by them as a result of its unjustifiable failure to perform its obligations or its improper performance of them. Liability to unit-holders may be invoked either directly or indirectly through the management company, depending on the legal nature of the relationship between the trustee, the management company and the unit-holders.
22 Prohibition on a single company acting as management company and trustee.
22.
22. No single company shall act as both management company and trustee and in the context of their respective roles the management company and the trustee must act independently and solely in the interest of the unit-holders.
PART VIINVESTMENT COMPANIES
Chapter 1 Investment companies with fixed capital
23 Application of Chapter 1.
23.
23. This chapter applies to an investment company with fixed capital authorized under these Regulations.
24 Share capital.
24.
24. Notwithstanding anything contained in section 5 , 6 or 19 of the Companies (Amendment) Act, 1983 , a company to which this chapter applies must have paid up share capital which, in the opinion of the Bank, will be sufficient to enable it to conduct its business effectively and meet its liabilities.
25 Name.
25.
25. A company to which this chapter applies shall include the words "investment company" or "cuideachta infheistíochta" on all its deeds, announcements, publications, letters and other documents.
26 Issue of redeemable preference shares.
26.
26. (1) Without prejudice to Section 64 of the Companies Act, 1963 and subject to the provisions of this chapter, a company to which this chapter applies may, if so authorized by its articles, issue redeemable preference shares which are liable at the option of the shareholder to be redeemed, and redeem them accordingly.
- (2) The issue and redemption of shares by a company pursuant to paragraph (1) shall be subject to the following conditions—
( a ) no redeemable shares shall be redeemed unless they are fully paid;
( b ) no such shares shall be redeemed except out of profits available for distribution or out of the proceeds of a fresh issue of shares made for the purposes of redemption;
( c ) the premium, if any, payable on redemption must have been provided for out of the profits of the company or out of the company's share premium account before the shares are redeemed.
- (3) Shares redeemed under this Regulation shall be treated as cancelled on redemption and the amount of the company's issued share capital shall be reduced by the nominal value of those shares accordingly but no such cancellation shall be taken as reducing the amount of the company's authorised share capital.
- (4) Where redeemable shares are—
( a ) redeemed wholly out of profits available for distribution, or
( b ) redeemed wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds is less than the aggregate nominal value of the shares redeemed ("the aggreable difference") then a sum equal to, in the case of paragraph (a), the nominal amount of the shares redeemed and, in the case of paragraph (b), the aggreable difference shall be transferred to a reserve fund ("the capital redemption reserve fund") and the provisions of the Companies Acts relating to the reduction of the share capital of a company shall, except as provided in this chapter, apply as if the capital redemption reserve fund were paid-up share capital of the company.
- (5) Subject to the provisions of this Regulation and of Regulation 59, the redemption of shares may be effected on such terms and in such manner as may be provided by the articles of the company.
27 Restriction of Companies Acts.
27.
27. The following provisions of the Companies Acts shall, insofar as the redemption of shares is made in accordance with these Regulations, not apply to a company to which this chapter applies—
( a ) the Companies Act, 1963 —
Section 60 (giving of financial assistance by a company for the purchase of its shares);
Section 69 (notice to registrar of certain alterations in share capital);
( b ) the Companies Act, 1983—
Sections 23 to 25 (Pre-emption rights).
Chapter 2 Investment Companies with Variable capital
28 Application of Chapter 2.
28.
28. This chapter applies to an investment company with variable capital authorized under these Regulations.
29 Share capital.
29.
29. Notwithstanding anything contained in Section 5, 6 or 19 of the Companies Act, 1983 a company to which this chapter applies must have paid up share capital which, in the opinion of the Bank, will be sufficient to enable it to conduct its business effectively and meet its liabilities.
30 Name.
30.
30. A company to which this section applies shall include the words "Investment Company with Variable Capital" or "cuideachta infheistíochta le caipiteal athraitheach" on all its deeds, announcements, publications, letters and other documents.
31 Enabling provision regarding purchase of own shares.
31.
31. (1) Subject to the provisions of this chapter, a company may, if so authorized by its articles, repurchase its own shares provided that no such shares shall be repurchased unless they are fully paid.
- (2) Subject to the provisions of this chapter, the repurchase of shares may be effected on such terms and in such a manner as may be provided by the articles of the company.
32 Repurchase of shares at request of shareholder and treatment of repurchased shares.
32.
32. (1) Subject to the provisions of this Regulation and of Regulation 59, a company shall, if requested to do so by a shareholder, repurchase such of the shareholder's shares as may be requested by the shareholder.
- (2) Shares which have been repurchased under Regulation 31 shall be treated as cancelled and the amount of the company's issued share capital shall be reduced accordingly.
33 Legal reserve.
33.
33. For the avoidance of doubt, nothing in the Companies Acts or in these Regulations shall require a company to which this chapter applies to create a legal reserve.
34 Restriction of Companies Acts.
34.
34. (1) The following provisions of the Companies Acts shall not apply to a company to which this chapter applies—
( a ) Companies Act, 1963 —
Section 60 (giving of financial assistance by a company for the repurchase of its shares);
Section 69 (notice to registrar of certain alterations in share capital);
Section 70 (notice of increase of share capital);
Section 72 (power of company to reduce its share capital).
( b ) Companies (Amendment) Act, 1983 —
Sections 23 to 25 (pre-emption rights);
Section 40 (Maintenance of capital);
Part IV (Restrictions on distribution of profits and assets).
- (2) Section 6 (4) (a) of the Companies Act, 1963 , shall have effect in relation to a company to which this chapter applies as if the words "and the division thereof into shares of a fixed amount" were omitted.
Chapter 3General
35 Modification of Act of 1983.
35.
35. Section 41 (1) of the Companies (Amendment) Act, 1983 (restriction on company acquiring its own shares) shall not apply in relation to the redemption or purchase of shares in pursuance of these Regulations.
36 Modification of Act of 1986.
36.
36. The Companies (Amendment) Act, 1986 shall have effect in relation to a company to which Chapter 1 or 2 applies with the following modifications—
( a ) in paragraph (vi) of section 14, the substitution "acquisition or disposal" for "disposal";
( b ) in section 14, the insertion of the following paragraph after paragraph (vi):
- (vii) the reasons for the acquisition, lien or charge, as the case may be"; and
( c ) in the Schedule, the substitution of the following subparagraph for subparagraph (3) of paragraph 39:
- "(3) The amounts respectively provided for the purchase of the company's share capital, for redemption of share capital and for redemption of loans".
Chapter 4 Trustee
37 Assets of investment companies.
37.
37. (1) The assets of an investment company shall be entrusted to a trustee for safe-keeping in accordance with these Regulations.
- (2) A trustee's liability as referred to in Regulation 43 shall not be affected by the fact that it has entrusted to a third party some or all of the assets in its safekeeping.
38 Trustee.
38.
38. The provisions of Regulation 19 in relation to a trustee of a unit trust shall also be applicable to a trustee in this section.
39 Obligations of trustee.
39.
39. The Trustee must—
( a ) ensure that the sale, issue, repurchase, redemption and cancellation of shares effected by on behalf of a company are carried out in accordance with these Regulations and with the company's memorandum and articles.
( b ) ensure that in transactions involving a company's assets any consideration is remitted to it within the usual time limits.
( c ) ensure that a company's income is applied in accordance with these Regulations and with its memorandum and articles.
( d ) enquire into the conduct of the investment company in each annual accounting period and report thereon to the shareholders. The trustee's report shall be delivered to the investment company in good time to enable it to include a copy of the report in the Annual Report to the shareholders required under Regulation 75. The Report shall state whether in the trustee's opinion the investment company has been managed in that period:
- (i) in accordance with the limitations imposed on the investment and borrowing powers of the investment company and trustee by the memorandum and articles and these Regulations, and
- (ii) otherwise in accordance with the provisions of the memorandum and articles and these Regulations, and if it has not been so managed, in what respects it has not been so managed and the steps which the trustee has taken in respect thereof.
40 Exemption from requirement to have trustee.
40.
40. (1) Authorized investment companies which market their shares exclusively through one or more stock exchanges on which their shares are admitted to official listing may, at the discretion of the Bank, be exempted from the requirement to have trustees within the meaning of these Regulations.
- (2) Regulations 59 to 63 and Regulation 84 shall not apply to such companies. The rules for the valuation of such companies assets must be stated in their articles.
41 Further exemption.
41.
41. (1) The Bank may, at its discretion, exempt authorized investment companies which market at least 80 per cent of their shares through one or more stock exchanges designated in their articles of association from the requirement to have trustees within the meaning of these Regulations provided that their shares are admitted to official listing on the stock exchanges of those Member States within the territories of which the shares are marketed, and provided that any transactions which such a company may effect outside stock exchanges are effected at stock exchange prices only. A company's articles must specify the stock exchange in the country of marketing, the prices on which shall determine the prices at which that company will effect any transactions outside stock exchanges in that country.
- (2) In exercising this discretion the Bank must be satisfied that shareholders in the investment companies referred to in paragraph (1) have equivalent protection to that of shareholders of UCITS which have a trustee within the meaning of these Regulations. In particular, such investment companies and the companies referred to in Regulation 40 must;
( a ) state in their articles the methods of calculation of the net asset value of their shares;
( b ) intervene on the market to prevent the stock exchange value of their shares from deviating by more than 5 per cent from their net asset value;
( c ) establish the net asset values of their shares and communicate them to the Bank at least twice a week and publish them at least twice a month.
- (3) At least twice a month, an independent auditor, being a person empowered to audit accounts in accordance with the Companies Acts must ensure that the calculation of the value of the shares is effected in accordance with the investment company's articles. On such occasions, the auditor must ensure that the company's assets are invested in accordance with the provisions in these Regulations and in the company's articles.
42 Requirement on Bank to inform EC Commission regarding excemptions.
42.
42. The Bank shall inform the Commission of the identities of the companies benefitting from the exemptions provided for in Regulations 40 and 41.
43 Liability of trustee.
43.
43. The trustee shall be liable to the investment company and the unit-holders for any loss suffered by them as a result of its unjustifiable failure to perform its obligations, or its improper performance of them.
44 Prohibition on a single company acting as mangement company and trustee.
44.
44. (1) No single company shall act as both investment company and trustee.
- (2) In carrying out its role as trustee, the trustee must act solely in the interests of the unit-holders.
PART VIIINVESTMENT POLICIES OF UCITS
45 Permitted investments.
45.
45. The investments of a UCITS must consist solely of any one or more of the following:
( a ) transferable securities admitted to official listng on a stock exchange in a Member State;
( b ) transferable securities dealt in on another regulated market in a Member State which operates regularly and is recognised and open to the public;
( c ) transferable securities admitted to official listing on a stock exchange in a non-Member State or dealt in on another regulated market in a non-Member State which operates regularly and is recognised and open to the public provided that the choice of stock exchange or market has been approved by the Bank or is provided for in the trust deed or in the investment company's articles;
( d ) recently issued transferable securities, provided—
- (i) the terms of issue include an undertaking that application will be made for admission to official listing on a stock exchange or to another regulated market which operates regularly and is recognised and open to the public, provided that the choice of stock exchange or market has been approved by the Bank or is provided for in the trust deed or in the investment company's articles;
- (ii) such admission is secured within a year of issue.
46 Limitations on investments.
46.
46. (1) A UCITS may invest no more than 10 per cent of its assets in transferable securities other than those referred to in Regulation 45.
- (2) ( a ) A UCITS may invest no more than 10 per cent of its assets in debt instruments which, for the purpose of these Regulations, shall be treated, because of their characteristics, as equivalent to transferable securities and which are, inter alia, transferable, liquid and have a value which can be accurately determined at any time or at least with the frequency stipulated in Regulation 84.
( b ) The Bank shall determine the debt instruments which, in accordance with this paragraph, it plans to treat as equivalent to transferable securities and shall, no later than the date on which these Regulations come into operation, send to the Commission a list of such debt instruments, stating the characteristics of the instruments and the reasons for treating them as equivalent to transferable securities.
( c ) The Bank shall also send to the Commission details of any amendments which it proposes making to the lists of instruments referred to above or any further instruments which it proposes treating as equivalent to transferable securities, together with its reasons for so doing.
- (3) An investment company may acquire real and personal property which is required for the purpose of its business.
- (4) A UCITS may not acquire either precious metals or certificates representing them.
47 Limit of 10 per cent of assets in other investments.
47.
47. The total of the investments referred to in Regulation 46 (a) and (b) may not under any circumstances amount to more than 10 per cent of the assets of a UCITS.
48 Ancillary liquid assets and investment techniques and instruments.
48.
48. UCITS may—
- (i) hold ancillary liquid asets.
- (ii) employ techniques and instruments relating to transferable securities under the conditions and within the limits laid down by the Bank provided that such techniques and instruments are used for efficient portfolio management.
- (iii) employ techniques and instruments intended to provide protection against exchange risks in the context of the management of their assets and liabilities.
49 Investment in one issuer's securities.
49.
49. (1) A UCITS may invest no more than 10 per cent of its assets in transferable securities issued by the same body provided that the total value of the transferable securities held by a UCITS in the issuing bodies in each of which it invests more than 5 per cent of its assets does not exceed 40 per cent of the value of its assets.
- (2) Notwithstanding paragraph (1), a UCITS may invest up to 35 per cent of its assets in transferable securities which are issued or guaranteed by a Member State, by its local authorities, by a non-Member State or by public international bodies of which one or more Member States are members.
- (3) Notwithstanding pragraph (1) and (2), a UCITS may invest a maximum of 25 per cent in bonds issued by a credit institution which has its registered office in a Member State and is subject by law to special public supervision designed to protect bondholders. Sums deriving from the issue of these bonds must be invested in conformity with the law on assets which, during the whole period of validity of the bonds, are capable of covering claims attaching to the bonds and which, in the event of failure of the issuer, would be used on a priority basis for the reimbursement of the principal and payment of the accrued interest.
- (4) When a UCITS invests more than 5 per cent of its assets in the bonds referred to in paragraph (3) and issued by one issuer, the total value of these investments may not exceed 80 per cent of the value of the assets of the UCITS.
- (5) The transferable securities referred to in paragraph (2) and (3) shall not be taken into account for the purpose of applying the limit of 40 per cent referred to in paragraph (1) of these Regulations.
- (6) The limits provided for in paragraph (1), (2) and (3) may not be combined.
- (7) Investments in transferable securities issued by the same body and carried out in accordance with these Regulations shall under no circumstances exceed in total 35 per cent of the assets of a UCITS.
50 Securities issued or guaranteed by States, local authorities or public international bodies.
50.
50. (1) Provided the Bank is satisfied that unit-holders have protection equivalent to that of unit-holders in UCITS complying with the limits laid down in Regulation 49 it may authorize a UCITS to invest, in accordance with the principle of risk-spreading, up to 100 per cent of its assets in different transferable securities issued or guaranteed by any Member State, its local authorities, non-member State or public international bodies of which one or more Member States are members.
- (2) Such a UCITS shall be required to:
( a ) hold securities from at least six different issues, but securities from any one issue may not account for more than 30 per cent of its total assets;
( b ) specify in its trust deed or in its articles the names of the States, local authorities or public international bodies issuing or guaranteeing securities in which it intends to invest more than 35 per cent of its assets;
( c ) include a prominent statement in its prospectus and any promotional literature drawing attention to the Bank's authorization and indicating the States, local authorities and public international bodies in the securities of which it intends to invest or has invested more than 35 per cent of its assets.
51 Investments in other UCITS.
51.
51. (1) A UCITS may not acquire the units of other collective investment undertakings of the open-ended type unless they are collective investment undertakings within the meaning of Regulation 3 (2).
- (2) A UCITS may invest no more than 5 per cent of its assets in the units of such collective investment undertakings.
- (3) Investment in the units of a unit trust managed by the same management company or by any other company with which the management company is linked by common management or control, or by a substantial direct or indirect holding, shall be permitted only in the case of a unit trust which, in accordance with its trust deed, has specialized in investment in a specific geographical area or economic sector, and provided that such investment is authorized by the Bank.
- (4) The Bank shall authorize such investment only if the unit trust has announced its intention of making use of that option and that option has been expressly stated in its trust deed.
- (5) A management company may not charge any fees or costs on account of transactions relating to a unit trusts's units where some of a unit trust's assets are invested in the units of an other unit trust managed by the same mangement company or by any other company with which the management company is linked by common management or control, or by a substantial direct or indirect holding.
52 Acqusition of securities in a linked unit trust or investment company.
52.
52. (1) The provisions of Regulation 51 (3), (4) and (5) shall also apply where an investment company acquires units in another investment company to which it is linked within the meaning of that Regulation.
- (2) The provisions of Regulation 51 (3), (4) and (5) shall also apply where an investment company acquires units of a unit trust to which it is linked, or where a unit trust acquires units of an investment company to which it is linked.
53 Acquisition of shares carrying voting rights.
53.
53. An investment company or a mangement company acting in connection with all of the unit trusts which it manages and which fall within the scope of these Regulations may not acquire any shares carrying voting rights which would enable it to exercise significant influence over the management of an issuing body.
54 Limits in relation to non-voting shares, debt securities or units of a UCITS.
54.
54. (1) A UCITS may acquire not more than:
- (a) 10 per cent of the non-voting shares of any single issuing body;
- (b) 10 per cent of the debt securities of any single issuing body;
- (c) 10 per cent of the units of any single UCITS to which Regulation 3 (2) applies.
- (2) The limits laid down in paragraph (1) (b) and (c) may be disregarded at the time of acquisition if at that time the gross amount of the debt securities or the net amount of the securities in issue cannot be calculated.
55 Exemptions from Regulations 53 and 54.
55.
55. The provisions of Regulations 53 and 54 shall not apply to—
- (a) transferable securities issued or guaranteed by a Member State or its local authorities;
- (b) transferable securities issued or guaranteed by a non-Member State;
- (c) transferable securities issued by public international bodies of which one or more Member States are members;
- (d) shares held by a UCITS in the capital of a company incorporated in a non-member State investing its assets mainly in the securities of issuing bodies having their registered offices in that State, where under the legislation of that State such a holding represents the only way in which the UCITS can invest in the securities of issuing bodies of that State. This derogation, however, shall apply only if in its investment policy the company from the non-Member State complies with the limits laid down in Regulations 49, 51, 52, 53, 54, 56, 57 and 58. Where the limits set down in Regulations 49, 51 and 52 are exceeded, Regulations 56, 57 and 58 shall apply with necessary modifications.
- (e) shares held by an investment company in the capital of subsidiary companies carrying on the business of management, advice or marketing exclusively on its behalf.
56 Subscription rights.
56.
56. UCITS need not comply with the limits laid down in this Part when exercising subscription rights attaching to transferrable securities which form part of their assets.
57 Derogations for recently authorized UCITS.
57.
57. The Bank may allow recently authorized UCITS to derogate from Regulations 49 and 50 for six months following the date of their authorization, provided they observe the principle of risk-spreading.
58 Breaches of limits.
58.
58. If the limits in this Part are exceeded for reasons beyond the control of a UCITS or as a result of the exercise of subscription rights, the UCITS must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of its unit-holers.
PART VIIIGENERAL PROVISIONS RELATING TO UCITS
59 Obligation on UCITS to redeem or repurchase units.
59.
59. Subject to Regulation 63 (1), (2) and (3), a UCITS must redeem or repurchase units at the request of the unit-holder.
60 Issue of units.
60.
60. (1) The units shall be issued or sold at a price arrived at by dividing the net asset value of the UCITS by the number of units outstanding; such price may be increased by duties and charges.
- (2) Units may not be issued unless the equivalent of the net issue price is paid into the assets of the UCITS within the usual time limits. This shall not preclude the distribution of bonus units.
61 Redemption or repurchase of units.
61.
61. Units shall be redeemed or repurchased at a price arrived at by dividing the net asset value of the UCITS by the number of units outstanding; such price may be decreased by duties and charges.
62 Value of assets.
62.
62. (1) In the case of a unit trust and unless otherwise stated in an investment company's articles, the value of the assets of a UCITS shall be based in the case of officially quoted securities, on the last known stock exchange quotation unless such quotation is not representative. For securities not so quoted, and for securities which are so quoted but for which the latest quotation is not representative, the value shall be based on the probable realisation value which must be estimated with care and in good faith.
- (2) The assets of a UCITS may only be purchased and sold at prices which are in conformity with the criteria set out in paragraph (1).
- (3) The trust deed or the articles shall determine the frequency of the calculation of the issue and repurchase price.
63 Suspension of repurchase or redemption of units.
63.
63. (1) Notwithstanding Regulation 59, a UCITS may in the cases and according to the procedure provided in its trust deed or articles temporarily suspend the repurchase or redemption of its units. Suspension may be provided for only in exceptional cases where circumstances so require, and suspension is justified having regard to the interest of the unit-holders.
- (2) The Bank may require the suspension of the repurchase or redemption of units in the interests of the unit-holder or the public.
- (3) A UCITS which acts in accordance with paragraph (1) must without delay communicate its decision to the Bank and to the competent authorities in the Member States in which it markets its units.
64 Creation and cancellation of units of a unit trust.
64.
64. (1) The trustee of a unit trust shall create or cancel units in accordance with the conditions laid down in the trust deed and on receipt of a written instruction from the management company. The trustee may refuse to create or cancel some or all of such units if he is of the opinion that it is not in the interests of participants for such units to be created or cancelled, as the case may be.
- (2) The trustee shall not create or cancel units during any period in which redemption of units is suspended.
65 Issue of registered certificates or bearer securities.
65.
65. (1) The management company or the investment company or the trustee shall issue registered certificates or bearer securities, representing one or more portions of the UCITS which it manages, or alternatively, in accordance with the provisions of the trust dead or articles, written confirmations of entry in the register of units or fractions of units without limitation as to the splitting up of units.
- (2) Rights attaching to fractions of units are exercised in proportion to the fraction of a unit held except for possible voting rights which can only be exercised by whole units.
- (3) The certificates and bearer securities shall be signed by the management company or the investment company and by the trustee.
- (4) Such signatures may be reproduced mechanically.
66 Replacement of management company and trustee.
66.
66. (1) In relation to unit trusts, the trust deed shall lay down the conditions for the replacement of the management company and the trustee and rules to ensure the protection of unit-holders in the event of such replacement.
- (2) In relation to investment companies, the articles shall lay down the conditions for the replacement of the trustee and rules to ensure the protection of share-holders in the event of such replacement.
67 Remuneration and expenditure.
67.
67. (1) The trust deed shall prescribe the remuneration and the expenditure which the management company is empowered to charge to a unit trust and the method of calculation of such remuneration.
- (2) The articles shall prescribe the nature of the cost to be borne by the company.
68 Application of income.
68.
68. The trust deed or the articles shall lay down the conditions and manner of application of income.
69 Borrowing.
69.
69. (1) Subject to paragraphs (2) and (3) neither—
- (a) an investment company, nor
- (b) a management company or a trustee acting on behalf of a unit trust
may borrow money.
- (2) A UCITS may acquire foreign currency by means of a "back-to-back" loan.
- (3) A UCITS may borrow—
- (a) up to 10 per cent of its assets, in the case of an investment company, or 10 per cent of the value of the fund, in the case of a unit trust, provided that such borrowing is on a temporary basis; and
- (b) up to 10 per cent of its assets, in the case of an investment company, provided that the borrowing is to make possible the acquisition of real property required for the purpose of its business; in this case, the borrowing and that referred to in paragraph (a) may not in total exceed 15 per cent of the borrower's assets.
70 Loans or guarantees.
70.
70. (1) Without prejudice to Regulations 45, 46, 47 and 48 neither—
- (a) an investment company, nor
- (b) a management company or trustee acting on behalf of a unit trust,
may grant loans or act as a guarantor on behalf of third parties.
- (2) Paragraph (1) shall not prevent such undertakings from acquiring transferable securities which are not fully paid.
71 Sales of securities
71.
71. Neither—
- (a) an investment company, nor
- (b) a management company or trustee acting on behalf of a unit trust
may carry out sales of transferable securities when such securities are not in the ownership of the investment company or the unit trust respectively.
PART IXPROSPECTUS, REPORTS AND PUBLICATION OF OTHER INFORMATION
72 Publication of prospectus.
72.
72. (1) An investment company and, for each of the trusts it manages, a management company must publish a prospectus, which must be dated and the essential elements of which must be kept up to date.
- (2) A prospectus issued by a management company or investment company shall include the information necessary for investors to be able to make an informed judgement of the investment proposed to them and shall contain at least the information provided for in Annex A to these Regulations, insofar as that information does not already appear in the documents annexed to the prospectus in accordance with Regulation 73.
- (3) The Companies Acts shall not apply in relation to a prospectus published by an investment company.
- (4) In the case of umbrella funds, the prospectus shall clearly state the charges applicable to switching of investments from one sub-fund to another.
73 Annexation of trust deed or articles to prospectus
73.
73. The trust deed or the articles shall form an integral part of the prospectus and must be annexed thereto unless the unit-holder is informed in the prospectus that on request he will be sent the trust deed or articles or be appraised of the place where, in each Member State in which the units or shares are placed on the market, he may consult them.
74 Offering of prospectus to investors before contract concluded and transmission of prospectus to Bank.
74.
74. (1) The prospectus must be offered to investors free of charge before the conclusion of a contract.
- (2) A UCITS must send its prospectus and any amendments thereto to the Bank.
75 Publication of annual and half-yearly reports.
75.
75. An investment company and, for each of the trusts it manages, a management company must publish an annual report for each financial year and a half-yearly report covering the first six months of the financial year.
76 Time limits.
76.
76. The annual and half-yearly reports must be published within the following time limits, with effect from the the ends of the periods to which they relate:
- (a) four months in the case of the annual report,
- (b) two months in the case of the half-yearly report.
77 Contents of annual report.
77.
77. The annual report must include a balance-sheet or a statement of assets and liabilities,a detailed income and expenditure account for the financial year, a report on the activities of the financial year and the other information provided for in Annex B to these Regulations, as well as any significant information which will enable investors to make an informed judgement on the development of the activities of the UCITS and its results.
78 Contents of half-yearly report
78.
78. The half-yearly report must include at least the information provided for in Chapters I to IV of Annex B to these Regulations. Where a UCITS has paid or proposes to pay an interim dividend, the figures must indicate the results after tax for the half-year concerned and the interim dividend paid or proposed.
79 Transmission of reports to Bank.
79.
79. The annual and half-yearly reports and any other reports requested by the Bank, must be sent to the Bank by the UCITS.
80 Offering of reports to investors before contract concluded.
80.
80. The latest annual report and any subsequent half-yearly report published must be offered to investors free of charge before the conclusion of a contract.
81 Availability to public of reports.
81.
81. The annual and half-yearly reports must be available to the public at the places specified in the prospectus.
82 Supply of reports to unit-holders.
82.
82. The annual and half-yearly reports shall be supplied to unit-holders free of charge on request.
83 Auditing requirements in relation to annual report.
83.
83. (1) The accounting information given in the annual report must be audited by one or more persons empowered in to audit accounts in accordance with the Companies Acts. The auditor's report, including any qualifications, shall be reproduced in full in the annual report.
- (2) If the auditor of a UCITS which has been authorized by the Bank—
- (a) has reason to believe that the information provided to investors or to the Bank in the reports or other documents of the UCITS does not truly describe the financial situation and the assets and liabilities of the UCITS, or
- (b) has reason to believe that the assets of the UCITS are not or have not been invested in accordance with these Regulations or the prospectus or the trust deed or the articles, or
- (c) has reason to believe that there exist circumstances which are likely to affect materially the ability of the UCITS to fulfil its obligations to unit-holders or meet any of its financial obligations under these Regulations, or
- (d) has reason to believe that there are material defects in the financial systems and controls or accounting records of the UCITS, or
- (e) has reason to believe that there are material inaccuracies in or omissions from any returns of a financial nature made by the UCITS to the Bank, or
- (f) proposes to qualify any certificate which he is to provide in relation to financial statements or returns of the UCITS under the Companies Acts or these Regulations,
he shall report the matter to the Bank in writing without delay.
- (3) The auditor of an authorized UCITS shall, if requested by the Bank, furnish to the Bank a report stating whether in his opinion and to the best of his knowledge the UCITS has or has not complied with a specified obligation of a financial nature under these Regulations.
- (4) Where the auditor of an authorized UCITS so requests, the Bank shall provide to the auditor in writing details of such returns of a financial nature to the Bank by the UCITS as the auditor requests for the purpose of enabling him to exercise his functions under these Regulations.
- (5) The auditor of an authorized UCITS shall send to the UCITS a copy of any report made by him to the Bank under paragraph (2) and (3).
- (6)
- (a) Whenever the bank is of the opinion that the exercise of its functions under these Regulations or the protection of the interests of unit-holders or shareholders so requires, it may require the auditor of an authorized UCITS to supply it with such information as it may specify in relation to the audit of the business of the UCITS and the auditor shall comply with the requirement.
- (b) The Bank may require that, in supplying information for the purposes of this paragraph, the auditor shall act independently of the authorized UCITS.
- (7) No duty to which the auditor to an authorized UCITS may be subject shall be regarded as contravened, and no liability to the UCITS, or its unit-holders, creditors or other interested parties, shall attach to the auditor, by reason of his compliance with any obligation imposed on him by or under these Regulations.
84 Publication of issue and redemption prices.
84.
84. A UCITS must make public in an appropriate manner the issue, sale, repurchase or redemption price of its units each time it issues, sells, repurchases or redeems them, and at least twice a month. The Bank may, however, permit a UCITS to reduce the frequency to once a month on condition that such a derogation does not prejudice the interests of the unit-holders.
85 Publicity.
85.
85. All publicity comprising an invitation to purchase the units of a UCITS must indicate that a prospectus exists and the places where it may be obtained by the public.
PART XSPECIAL PROVISIONS APPLICABLE TO UCITS MARKETING IN A MEMBER STATE OTHER THAN THAT IN WHICH IT IS SITUATED
86 Prior requirements.
86.
86. (1) Where a UCITS situated in the State proposes to market its units in another Member State or a UCITS situated in another Member State proposes to market its units in the State it shall, prior to commencement of marketing, send written notification of its intention to the Bank.
- (2) A UCITS situated in another Member State shall send to the Bank, together with the notification under paragraph (1)—
- (a) an attestation by the competent authority of the Member State in which it is situated to the effect that if fulfils the conditions imposed by the Directive,
- (b) its fund rules, in the case of a unit trust, and its memorandum and articles in the case of an investment company,
- (c) its prospectus including any amendments thereto,
- (d) where appropriate its latest Annual Report and any subsequent half yearly report,
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