S.I. No. 211/2003 - European Communities (Undertakings For Collective Investment in Transferable Securities) Regulations 2003

ARRANGEMENT OF REGULATIONS

PART I PRELIMINARY	PART I PRELIMINARY
Regulation	Regulation
1.	Citation.
2.	Interpretation.
PART II SCOPE	PART II SCOPE
3.	Scope.
4.	Restriction of Unit Trusts Act 1990.
5.	Prohibition on conversion of UCITS into undertaking not subject to Directive.
PART III COMPETENT AUTHORITY	PART III COMPETENT AUTHORITY
6.	Bank to be competent authority.
7.	Liability of Bank.
8.	Publication of names of authorised UCITS.
PART IV AUTHORISATION OF UCITS	PART IV AUTHORISATION OF UCITS
9.	Situation of UCITS.
10.	Prohibition on UCITS carrying on activities in the State without authorisation.
11.	Requirements for authorisation.
12.	Approval of Bank necessary for subsequent changes.
13.	Applications for authorisation.
14.	Refusal of authorisation and right of appeal.
15.	Right of appeal of UCITS situated in another Member State.
PART V UNIT TRUSTS AND COMMON CONTRACTUAL FUNDS	PART V UNIT TRUSTS AND COMMON CONTRACTUAL FUNDS
16.	Management company.
17.	Prohibition on management company engaging in other activities.
18.	Assets of a unit trust or common contractual fund.
19.	Trustee.
20.	Obligations of trustee.
21.	Liability of trustee.
22.	Prohibition on a single company acting as management company and trustee.
23.	Ownership of assets of UCITS established as unit trust or common contractual fund and liability of unit-holders.
PART VI INVESTMENT COMPANIES	PART VI INVESTMENT COMPANIES
Chapter 1 Investment Companies with Fixed Capital	Chapter 1 Investment Companies with Fixed Capital
24.	Application of chapter 1.
25.	Share capital.
26.	Name.
27.	Issue of redeemable preference shares.
28.	Restriction of Companies Acts.
Chapter 2 Investment Companies with Variable Capital	Chapter 2 Investment Companies with Variable Capital
29.	Application of chapter 2.
30.	Share capital.
31.	Name.
32.	Enabling provision regarding purchase of own shares.
33.	Repurchase of shares at request of shareholder and treatment of repurchased shares.
34.	Legal reserve.
35.	Restriction of Companies Acts.
Chapter 3 General	Chapter 3 General
36.	Modification of Act of 1963.
Chapter 4 Trustee	Chapter 4 Trustee
37.	Assets of investment companies.
38.	Trustee.
39.	Obligations of trustee.
40.	Exemption from requirement to have trustee.
41.	Further exemption.
42.	Requirement on Bank to inform EC Commission regarding exemptions.
43.	Liability of trustee.
44.	Prohibition on a single company acting as investment company and trustee.
PART VII INVESTMENT POLICIES OF UCITS	PART VII INVESTMENT POLICIES OF UCITS
45.	Permitted investments.
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, common contractual fund 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.
56.	Subscription rights.
57.	Derogations for recently authorised UCITS.
58.	Breaches of limits.
PART VIII GENERAL PROVISIONS RELATING TO UCITS	PART VIII GENERAL PROVISIONS RELATING TO UCITS
59.	Obligation on UCITS to redeem or repurchase units.
60.	Issue of units.
61.	Redemption or repurchase of units.
62.	Value of assets.
63.	Suspension of repurchase or redemption of units.
64.	Creation and cancellation of units of a unit trust or common contractual fund.
65.	Issue of registered certificates or bearer securities.
66.	Replacement of management company and trustee.
67.	Winding up of an investment company.
68.	Remuneration and expenditure.
69.	Application of income.
70.	Borrowing.
71.	Loans or guarantees.
72.	Short Sales.
73.	Umbrella funds.
PART IX PROSPECTUS, REPORTS AND PUBLICATION OF OTHER INFORMATION	PART IX PROSPECTUS, REPORTS AND PUBLICATION OF OTHER INFORMATION
74.	Publication of prospectus.
75.	Annexation of trust deed, deed of constitution or articles to prospectus.
76.	Offering of prospectus to investors before contract concluded and transmission of prospectus to Bank.
77.	Publication of annual and half-yearly reports.
78.	Time limits.
79.	Contents of annual report.
80.	Contents of half-yearly report.
81.	Transmission of reports to Bank.
82.	Offering of reports to investors before contract concluded.
83.	Availability to public of reports.
84.	Supply of reports to unit-holders.
85.	Auditing requirements in relation to annual report.
86.	Publication of issue and redemption prices.
87.	Publicity.
PART X SPECIAL PROVISIONS APPLICABLE TO UCITS MARKETING IN A MEMBER STATE OTHER THAN THAT IN WHICH IT IS SITUATED	PART X SPECIAL PROVISIONS APPLICABLE TO UCITS MARKETING IN A MEMBER STATE OTHER THAN THAT IN WHICH IT IS SITUATED
88.	Prior requirements.
89.	Entitlement to market in the State.
90.	Compliance with law, regulations and administrative provisions.
91.	Advertising.
92.	Provision of facilities in relation to unit-holders.
93.	Distribution of documents and other information.
94.	Power of Bank to prohibit marketing.
95.	Generic names.
PART XI SPECIAL PROVISION IN RELATION TO THE BANK	PART XI SPECIAL PROVISION IN RELATION TO THE BANK
96.	Collaboration with competent authorities in other Member States.
PART XII POWERS OF BANK	PART XII POWERS OF BANK
97.	Compliance with additional requirements imposed by Bank.
98.	Keeping of books and records.
99.	Furnishing of information to Bank.
100.	Application by Bank to High Court.
101.	Replacement of Management Company or Trustee.
102.	Revocation of authorisation.
103.	Notice of intention to revoke.
104.	Directions by the Bank.
105.	Review of Bank's decision, etc., by the High Court.
PART XIII OFFENCES	PART XIII OFFENCES
106.	Penalties.
PART XIV VALIDITY OF UCITS ALREADY AUTHORISED AND REVOCATION OF EARLIER STATUTORY INSTRUMENTS	PART XIV VALIDITY OF UCITS ALREADY AUTHORISED AND REVOCATION OF EARLIER STATUTORY INSTRUMENTS
107.	Validity of UCITS already authorised and revocation of earlier statutory instruments.
Schedule 1 A Information Requirements	Schedule 1 A Information Requirements
Schedule 1 B Information to be included in the periodic reports	Schedule 1 B Information to be included in the periodic reports
Schedule 2 Table of cross references to specific UCITS Regulations in legislation	Schedule 2 Table of cross references to specific UCITS Regulations in legislation

European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003

I, Mary Harney, Minister for Enterprise, Trade and Employment, 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 further effect to Council Directive No. 85/611/EEC of 20 December 1985¹ , as amended by Council Directive No. 88/220/EEC of 22 March 1988² and Directive No. 95/26/EC of the Council and of the European Parliament of 29 June 1995³ hereby make the following regulations:

PART I PRELIMINARY

Citation.

1.

Interpretation.

2.

“articles” in relation to a company has the meaning assigned to it by the Companies Act 1963 ;

“Bank” means the Central Bank and Financial Services Authority of Ireland;

“Companies Acts” means the Companies Act 1963 and every enactment which is to be construed with it as one Act;

“common contractual fund” means a collective investment undertaking being an unincorporated body established by a management company under which the participants by contractual arrangement participate and share in the property of the collective investment undertaking as co-owners;

“competent authority” means the Bank 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;

“credit institution” means a credit institution within the meaning of Council Directives 77/780/EEC⁴ and 89/646/EEC⁵ ;

“the court” unless otherwise specified means the High Court;

“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) and Directive No. 95/26/EC of the Council and of the European Parliament of 29 June 1995;

“directors” means those persons who, under the Companies Acts or the trust deed or the deed of constitution or the memorandum 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;

“umbrella fund” means a UCITS which is divided into a number of sub-funds;

“undertaking for collective investment in transferable securities” or “UCITS” 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—

• (i) words and expressions which are also used in the Directive have the same meaning as in the Directive;

• (ii) a reference to any other enactment, EC Directive or Regulation shall be construed as a reference to that enactment, EC Directive or Regulation as amended by any other enactment, EC Directive or Regulation.

PART II SCOPE

Scope.

3.

• (2) For the purposes of these Regulations and subject to paragraph (5), UCITS shall be undertakings—

• (a) 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

• (b) 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 vary significantly from their net asset 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,

or

• (d) common contractual funds,

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, the deed of constitution or the investment company's articles, may be sold only to the public in non-member countries.

Restriction of Unit Trusts Act 1990.

4.

Prohibition on conversion of UCITS into undertaking not subject to Directive.

5.

• (2) A UCITS which is subject to these Regulations and which proposes to convert itself into a collective investment undertaking which would be subject to the Directive shall comply with such conditions as the Bank may consider prudent to specify in relation to the conversion, for the purposes and in the interest of the orderly and proper regulation of UCITS in accordance with these Regulations.

PART III COMPETENT AUTHORITY

Bank to be competent authority.

6.

• (2) The Bank may arrange for its functions as a competent authority to be performed by any constituent part of the Bank or by any officer or employee of the Bank. Nothing in these Regulations precludes the Bank from being assisted in, or advised on, the discharge of those functions by any such constituent part, officer or employee.

Liability of Bank.

7.

Publication of names of authorised UCITS.

8.

• (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 authorised by it and whose authorisation has not been revoked.

PART IV AUTHORISATION OF UCITS

Situation of UCITS.

9.

• (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.

Prohibition on UCITS carrying on activities in the State without authorisation.

10.

• (2) A UCITS which is situated in another Member State and which has received authorisation from the competent authorities in that State pursuant to the Directive may market its units in the State provided it is in compliance with the provisions laid down in Part X of these Regulations.

Requirements for authorisation.

11.

• (2) The Bank shall not authorise 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.

Approval of Bank necessary for subsequent changes.

12.

Applications for authorisation.

13.

Refusal of authorisation and right of appeal.

14.

• (2) The company shall have the same right to apply to the court as in paragraph (1) if a decision on authorisation has not been taken by the Bank within 6 months of the submission of an application for authorisation which includes the information, other than additional information, required under these Regulations.

Right of appeal of UCITS situated in another Member State.

15.

PART V UNIT TRUSTS AND COMMON CONTRACTUAL FUNDS

Management company.

16.

Prohibition on management company engaging in other activities.

17.

Assets of a unit trust or common contractual fund.

18.

• (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.

Trustee.

19.

• (2) A trustee shall—

• (a) be a credit institution authorised in the State with paid-up share capital which is not less than the limit specified in the Bank's Licensing Requirements, or

• (b) be a branch, established in the State, of a credit institution with a paid-up share capital which is not less than the limit specified in the Bank's Licensing Requirements, or

• (c) be a company incorporated in the State which—

• (i) is wholly owned by a credit institution, provided the liabilities of the trustee are guaranteed by the said credit institution and the said credit institution has a paid-up share capital which is not less than the limit specified in the Bank's Licensing Requirements, or

• (ii) is wholly owned by an institution in a non-Member State which is deemed by the Bank to be the equivalent of a credit institution, provided the liabilities of the trustee are guaranteed by the said institution and that institution has a paid-up share capital which is not less than the limit specified in the Bank's Licensing Requirements, 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) or (c)(ii) and provided the liabilities of the company acting as trustee are guaranteed by the said institution or company and that institution or company has a paid-up share capital which is not less than the limit specified in the Bank's Licensing Requirements.

• (3) A trustee shall satisfy the Bank that it has the appropriate expertise and experience to carry out its functions under these Regulations.

• (4) In this Regulation, the Bank's Licensing Requirements means the Bank's Licensing and Supervision Requirements and Standards for Credit Institutions as issued by the Bank from time to time.

Obligations of trustee.

20.

• (a) ensure that the sale, issue, repurchase, redemption and cancellation of units effected on behalf of a unit trust, common contractual fund or by a management company are carried out in accordance with these Regulations and the trust deed or the deed of constitution, as the case may be;

• (b) ensure that the value of units is calculated in accordance with these Regulations and the trust deed in the case of a unit trust or the deed of constitution in the case of a common contractual fund;

• (c) carry out the instructions of the management company unless they conflict with these Regulations or the trust deed in the case of a unit trust or the deed of constitution in the case of a common contractual fund;

• (d) ensure that in transactions involving the assets of a unit trust or of a common contractual fund any consideration is remitted to it within the usual time limits;

• (e) ensure that the income of a unit trust or of a common contractual fund is applied in accordance with these Regulations and, as the case may be, the trust deed or the deed of constitution;

• (f) enquire into the conduct of the management company in the management of the unit trust or common contractual fund, as the case may be, 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 77. The report shall state whether in the trustee's opinion the management has managed the unit trust or the common contractual fund, as the case may be, 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 or deed of constitution, as appropriate, and these Regulations, and

• (ii) otherwise in accordance with the provisions of the trust deed or deed of constitution, as the case may be, and these Regulations,

and if it has not done so, in what respects it has not done so and the steps which the trustee has taken in respect thereof.

Liability of trustee.

21.

Prohibition on a single company acting as management company and trustee.

22.

Ownership of assets of UCITS established as unit trust or common contractual fund and liability of unit-holders.

23.

• (2) Where a UCITS established as either a unit trust or common contractual fund is constituted as an umbrella fund the assets shall belong exclusively to the relevant sub-fund and shall not be used to discharge directly or indirectly the liabilities of or claims against any other sub-fund and shall not be available for any such purpose.

• (3) The liabilities of a unit-holder shall be limited to the amount agreed to be contributed by him or her for the subscription of units. The provisions of the trust deed or the deed of constitution shall be binding on the unit-holders and all persons claiming through the unit-holders as if such persons had been party to the trust deed or to the deed of constitution, as the case may be.

PART VI INVESTMENT COMPANIES

Chapter 1 Investment companies with fixed capital

Application of Chapter 1.

24.

Share capital.

25.

Name.

26.

Issue of redeemable preference shares.

27.

• (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; and

• (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 aggregable difference”)

then a sum equal to, in the case of sub-paragraph (a) of this paragraph, the nominal amount of the shares redeemed and, in the case of sub-paragraph (b) of this paragraph, the aggregable 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.

Restriction of Companies Acts.

28.

• (a) the Companies Act 1963 —

section 53 (minimum subscription and amount payable on application);

section 56 (applications for, and allotment of, shares and debentures);

section 58 (return as to allotments);

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);

section 70 (notice of increase in share capital);

section 72 (power of company to reduce its share capital);

section 119 (inspection of register and index);

section 125 (annual return to be made by a company having a share capital);

• (b) the Companies (Amendment) Act 1983 —

section 5(2) (minimum amount of share capital);

section 6 (restriction on the commencement of business by a public limited company);

section 19 (meaning of “authorised minimum”);

sections 20(3) and 20(4) (duration of authority to allot securities);

section 22 (document containing offer to state whether shares will be allotted where issue not fully subscribed);

sections 23 to 25 (pre-emption rights);

sections 30 to 33 (experts' reports on non-cash consideration before allotment of shares);

section 40 (obligation to convene extraordinary general meeting in event of serious loss of capital);

section 41(1) (restriction on company acquiring its own shares);

Part IV (restrictions on distribution of profits and assets);

• (c) the Companies (Amendment) Act 1986 —

section 14 (information to be included in directors' report regarding acquisition by company of own shares);

• (d) the Companies Act 1990 —

chapters 2 to 4 of Part IV;

section 140 (company may be required to contribute to debt of related company, whether as regards a case in which the investment company is being wound up or a case in which it is a related company within the meaning of that section);

Part XI.

Chapter 2 Investment Companies with Variable capital

Application of Chapter 2.

29.

Share capital.

30.

Name.

31.

Enabling provision regarding purchase of own shares.

32.

• (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 for by the articles of the company.

Repurchase of shares at request of shareholder and treatment of repurchased shares.

33.

• (2) Shares which have been repurchased under Regulation 32 shall be treated as cancelled and the amount of the company's issued share capital shall be reduced accordingly.

Legal reserve.

34.

Restriction of Companies Acts.

35.

• (a) the Companies Act 1963 —

Section 53 (minimum subscription and amount payable on application);

section 56 (applications for, and allotment of, shares and debentures);

section 58 (return as to allotments);

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);

section 70 (notice of increase in share capital);

section 72 (power of company to reduce its share capital);

section 119 (inspection of register and index);

section 125 (annual return to be made by a company having a share capital);

• (b) the Companies (Amendment) Act 1983 —

section 5(2) (minimum amount of share capital);

section 6 (restriction on the commencement of business by a public limited company);

section 19 (meaning of “authorised minimum”);

sections 20(3) and 20(4) (duration of authority to allot securities);

section 22 (document containing offer to state whether shares will be allotted where issue not fully subscribed);

sections 23 to 25 (pre-emption rights);

sections 30 to 33 (experts' reports on non-cash consideration before allotment of shares);

section 40 (obligation to convene extraordinary general meeting in event of serious loss of capital);

section 41 (restriction on company acquiring its own shares);

Part IV (Restrictions on distribution of profits and assets);

• (c) the Companies (Amendment) Act 1986 —

section 14 (information to be included on directors' report regarding acquisition by company of own shares);

• (d) the Companies Act 1990 —

chapters 2 to 4 of Part IV;

section 140 (company may be required to contribute to debt of related company, whether as regards a case in which the investment company is being wound up or a case in which it is a related company within the meaning of that section);

Part XI.

• (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 3 General

Modification of Companies Act 1963.

36.

Chapter 4 Trustee

Assets of investment companies.

37.

• (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.

• (3) The assets of an investment company shall belong exclusively to the investment company. The assets shall be segregated from the assets of either the trustee or its agents or both and shall not be used to discharge directly or indirectly liabilities or claims against any other undertaking or entity and shall not be available for any such purpose.

Trustee.

38.

Obligations of trustee.

39.

• (a) ensure that the sale, issue, repurchase, redemption and cancellation of shares effected by or 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; and

• (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 77. 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.

Exemption from requirement to have trustee.

40.

• (2) Regulations 59 to 63 and Regulation 86 shall not apply to such companies. The rules for the valuation of such companies' assets must be stated in their articles.

Further exemption.

41.

• (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; and

• (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.

Requirement on Bank to inform EC Commission regarding exemptions.

42.

Liability of trustee.

43.

Prohibition on a single company acting as investment company and trustee.

44.

• (2) In carrying out its role as trustee, the trustee must act solely in the interests of the unit-holders.

PART VII INVESTMENT POLICIES OF UCITS

Permitted investments.

45.

• (a) transferable securities admitted to official listing 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, the deed of constitution or in the investment company's articles; and

• (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, the deed of constitution or in the investment company's articles; and

• (ii) such admission is secured within a year of issue.

Limitations on investments.

46.

• (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 86.

• (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.

• (5) For the purposes of this Regulation and of the following Regulations in this Part, ‘assets’, in relation to a UCITS, means the net assets of a UCITS.

Limit of 10 per cent of assets in other investments.

47.

Ancillary liquid assets and investment techniques and instruments.

48.

• (i) hold ancillary liquid assets;

• (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; and

• (iii) employ techniques and instruments intended to provide protection against exchange risks in the context of the management of their assets and liabilities.

Investment in one issuer's securities.

49.

• (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 paragraphs (1) and (2), a UCITS may invest a maximum of 25 per cent of its assets 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, in 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 paragraphs (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 this Regulation.

• (6) The limits provided for in paragraphs (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.

Securities issued or guaranteed by States, local authorities or public international bodies.

50.

• (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, its deed of constitution 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; and

• (c) include a prominent statement in its prospectus and any promotional literature drawing attention to the Bank's authorisation 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.

Investments in other UCITS.

51.

• (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 or common contractual fund 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 or common contractual fund which, in accordance with its trust deed or deed of constitution, has specialised in investment in a specific geographical area or economic sector, and provided that such investment is authorised by the Bank.

• (4) The Bank shall authorise such investment only if the unit trust or common contractual fund has announced its intention of making use of that option and that option has been expressly stated in its trust deed or deed of constitution.

• (5) A management company may not charge any fees or costs on account of transactions relating to a unit trust's or common contractual fund's units where some of a unit trust's or common contractual fund's assets are invested in the units of another unit trust or common contractual fund 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.

Acquisition of securities in a linked unit trust, common contractual fund or investment company.

52.

• (2) The provisions of Regulation 51(3), (4) and (5) shall also apply where an investment company acquires units of a unit trust or common contractual fund to which it is linked, or where a unit trust or common contractual fund acquires units of an investment company to which it is linked.

Acquisition of shares carrying voting rights.

53.

Limits in relation to non-voting shares, debt securities or units of a UCITS.

54.

• (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; and

• (c) 10 per cent of the units of any single UCITS to which Regulation 3(2) (a) and (b) 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.

Exemptions from Regulations 53 and 54.

55.

• (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; and

• (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.

Subscription rights.

56.

Derogations for recently authorised UCITS.

57.

Breaches of limits.

58.

PART VIII GENERAL PROVISIONS RELATING TO UCITS

Obligation on UCITS to redeem or repurchase units.

59.

Issue of units.

60.

• (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.

Redemption or repurchase of units.

61.

Value of assets.

62.

• (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, the deed of constitution or the articles shall determine the frequency of the calculation of the issue and repurchase price.

Suspension of repurchase or redemption of units.

63.

• (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.

Creation and cancellation of units of a unit trust or common contractual fund.

64.

• (2) The trustee or, in the case of a common contractual fund, the management company shall not create or cancel units during any period in which redemption of units is suspended.

Issue of registered certificates or bearer securities.

65.