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Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997

Type Ni-Statutory-Rule

Publication 1997-05-22

State In force

Jurisdiction Northern Ireland

Department Government Printer for Northern Ireland

Source legislation.gov.uk

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65

(1) An investment company with variable capital shall as soon as is reasonably practicable after the coming into effect of an authorisation order in respect of the company send to the registrar a copy of the company’s prospectus.

(2) A company shall—

(a) not later than 14 days after the coming into effect of an authorisation order in respect of the company send to the registrar notice of—

(i) the place where the copies and memoranda required to be kept by regulation 30 are kept; and

(ii) the place where the register of shareholders is kept; and

(b) not later than 14 days after the occurrence of any change in any such place send to the registrar notice of that change.

(3) A company shall not later than 14 days after the making of any alteration to the company’s instrument of incorporation send to the registrar—

(a) any document making or evidencing the alteration; and

(b) a printed copy of the instrument of incorporation as altered.

(4) A company shall not later than 14 days after the occurrence of the change in question notify the registrar of—

(a) any change in the address of the head office of the company;

(b) any change in the directors of the company;

(d) in respect of any director or depositary, any change in the information mentioned in regulation 7(1)(b) or (c).

(5) A company shall before the end of the period allowed by SIB regulations for the publication of the company’s annual report send to the registrar—

(a) a copy of that report; and

(b) a copy of the most recent revision of the company’s prospectus.

(6) A company shall not later than 14 days after the completion of a revised annual report under regulation 62 send to the registrar a copy of that revised report.

(7) Where a resolution removing an auditor is passed at a general meeting of a company under paragraph 12 of Schedule 6, a company shall not later than 14 days after the holding of the meeting notify the registrar of the passing of the resolution.

(8) Where an auditor of a company deposits a notice of his resignation from office under paragraph 15 of Schedule 6, a company shall not later than 14 days after the deposit of the notice send a copy of the notice to the registrar.

(9) Where the affairs of a company are to be wound up otherwise than by the court, the company shall as soon as reasonably practicable after the commencement of the winding up notify the registrar of that fact.

Contraventions

66

Any of the following persons, that is to say—

(a) a person who contravenes any provision of these Regulations; and

(b) an investment company with variable capital, or any director or depositary of such a company, which contravenes any provision of SIB regulations;

shall be treated as having contravened rules made under Chapter V of Part 1 of the 1986 Act or, in the case of a person who is an authorised person by virtue of his membership of a recognised self-regulating organisation or certification by a recognised professional body, the rules of that organisation or body.

Prosecutions

67

(1) Proceedings in respect of an offence under regulation 26 or paragraph 3(3) or 19(1) of Schedule 6 shall not be instituted except by or with the consent of the Department or the Director of Public Prosecutions.

(2) Proceedings in respect of an offence under any other provision of these Regulations shall not be instituted except by SIB or by or with the consent of the Department or the Director of Public Prosecutions.

(3) SIB shall exercise the function conferred by this regulation of instituting proceedings subject to such conditions or restrictions as the Treasury may from time to time impose.

Offences: bodies corporate, partnerships and unincorporated associations

68

(1) Where an offence under these Regulations committed by an investment company with variable capital is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director of the company, or a person purporting to act in any such capacity, he, as well as the company, is guilty of the offence and liable to be proceeded against and punished accordingly.

This paragraph applies to a shadow director of an investment company with variable capital as it applies to a director of such a company.

(2) Where an offence under these Regulations committed by any body corporate other than an investment company with variable capital is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director, manager, secretary orother similar officer of the body, or a person purporting to act in any such capacity, he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.

(3) Where the affairs of any body corporate other than an investment company with variable capital are managed by its members, paragraph (2) applies in relation to the acts and defaults of a member in connection with his functions of management as it applies in relation to the acts and defaults of a director of a body corporate.

(4) Where an offence under these Regulations committed by a partnership is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a partner, he as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.

(5) Where an offence under these Regulations committed by an unincorporated association (other than a partnership), is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the association or any member of its governing body, he as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.

Time limits for prosecution of offences

69

(1) A complaint charging the commission of an offence which is triable summarily under these Regulations may be made at any time within 12 months after the date on which evidence sufficient in the opinion of the relevant authority to justify the proceedings comes to its knowledge.

(2) Paragraph (1) does not authorise a Magistrates' court to hear and determine a complaint charging the commission of a summary offence under these Regulations where the complaint is made more than three years after the commission of the offence.

(3) For the purposes of these Regulations a certificate by the relevant authority as to the date on which such evidence as is referred to above came to its knowledge is conclusive evidence of that fact.

(4) Nothing in this regulation affects proceedings within the time limits prescribed by Article 19(1) of the Magistrates' Courts (Northern Ireland) Order 1981[^f00021] (the usual time limits for criminal proceedings).

(5) In this regulation “relevant authority”, in relation to an offence, means—

(a) in a case where the person instituting proceedings in respect of the offence is a person who, by virtue of regulation 67(1) or (2), may not do so without the consent of the Department or the Director of Public Prosecutions, the Department or the Director of Public Prosecutions; and

(b) in any other case where proceedings are instituted, the person instituting the proceedings.

Jurisdiction and procedure in respect of offences

70

(1) Summary proceedings for an offence under these Regulations may, without prejudice to any jurisdiction exercisable apart from this regulation, be taken against an investment company with variable capital or other body corporate, or an unincorporated association, at any place at which it has a place of business and against an individual at any place where he is for the time being.

(2) Proceedings for an offence alleged to have been committed under these Regulations by an unincorporated association shall be brought in the name of the association (and not in that of any of its members), and for the purposes of any such proceedings any court rules relating to the service of documents apply as in relation to a body corporate.

(3) Section 18 of the Criminal Justice Act (Northern Ireland) 1945[^f00022] and Schedule 4 to the Magistrates' Courts (Northern Ireland) Order 1981 (procedure on charge of offence against a corporation) apply in a case in which an unincorporated association is charged with an offence under these Regulations as they apply in the case of a corporation.

(4) A fine imposed on an unincorporated association on its conviction of such an offence shall be paid out of the funds of the association.

Service of documents

71

(1) This regulation has effect in relation to any notice, direction or other document required or authorised by these Regulations or SIB regulations to be given or served on any person other than the registrar.

(2) Any such document may—

(a) in the case of an investment company with variable capital, be given to or served on the company or any of its directors at the company’s head office;

(b) in the case of any other body corporate (including any director referred to in sub-paragraph (a) which is a body corporate) be given to or served on the body or its secretary or clerk at the address of its registered or principal office in the United Kingdom;

(d) in the case of an unincorporated association (other than a partnership), be given to or served on any member of its governing body at its principal office in the United Kingdom.

Evidence of grant of probate etc.

72

The production to a company of any document which is by law sufficient evidence of probate of the will, or letters of administration of the estate, or confirmation as executor, of a deceased person having been granted to some person shall be accepted by the company as sufficient evidence of the grant.

SIB’s functions under the Regulations

73

(1) The functions of SIB under these Regulations, except its function of instituting proceedings, shall be treated for the purposes of the 1986 Act and the Transfer of Functions (Financial Services) Order 1992[^f00023] as if they were functions to which section 114 of that Act applies which—

(a) had been functions of the Secretary of State; and

(b) had been transferred to SIB by the Financial Services Act 1986 (Delegation) Order 1987[^f00024].

(2) The functions of SIB of instituting proceedings under these Regulations shall be treated for the purposes of the 1986 Act and the Transfer of Functions (Financial Services) Order 1992 as if it were a function to which section 114 of the 1986 Act applies by virtue of the provisions of section 201(4) of that Act which had been transferred to SIB by the Financial Services Act 1986 (Delegation) Order 1987 so as to be exercisable concurrently with the Secretary of State.

Fees

74

(1) Every application under regulation 7 shall be accompanied by such fee as may be prescribed by SIB by virtue of paragraph (3)(a); and no such application shall be regarded as duly made unless this paragraph is complied with.

(2) Each investment company with variable capital shall pay such periodical fees to SIB as may be prescribed by SIB by virtue of paragraph (3)(b).

(3) SIB may, with respect to investment companies with variable capital, make regulations prescribing fees for purposes of the like nature as the purposes for which power is conferred by—

(a) section 112(5) of the 1986 Act (application fees) in respect of applications under section 77 of that Act (applications for authorisation of unit trust scheme);

(b) section 113(8) of that Act (periodical fees)[^f00025] in respect of managers of authorised unit trust schemes and operators of recognised schemes.

Minor and consequential amendments

75

The statutory provisions mentioned in Schedule 8 (being minor amendments and amendments consequential on the provisions of these Regulations) shall have effect subject to the amendments specified in that Schedule.

SCHEDULE 1 — Application of Part XXIV of 1986 Order

1

Part XXIV of the 1986 Order (the registrar of companies, his functions and offices) shall, subject to the modifications set out in paragraphs 2 to 8, apply for the purposes of the registration of, and the functions of the registrar in relation to, investment companies with variable capital under these Regulations as it applies to the registration of, and the functions of the registrar in relation to, companies within the meaning given by Article 3(1) of that Order.

2

Except in the expressions “the registrar of companies” and “the Companies Orders”, any reference to companies (including any such reference in Article 660 of the 1986 Order[^f00026] as it applies with the modifications set out in paragraph (6) shall be taken to be a reference to investment companies with variable capital.

3

Any reference to the Companies Orders (including any reference to the 1986 Order, however expressed) shall be taken to be a reference to these Regulations and SIB regulations.

4

Any reference to the memorandum of a company shall be taken to be a reference to the instrument of incorporation of an investment company with variable capital; and any reference to the registered office of a company shall be taken to be a reference to the head office of an investment company with variable capital.

5

Any power to make regulations under Part XXIV of the 1986 Order in relation to companies shall be exercisable in relation to investment companies with variable capital—

(a) for like purposes; and

(b) subject to the same conditions.

6

Article 660 of the 1986 Order (public notice by registrar of receipt and issue of certain documents) shall apply as if for paragraphs (a) to (z) of paragraph (1) there were substituted the following paragraphs—

(a) any document making or evidencing an alteration in a company’s instrument of incorporation; (b) any notice of a change in the address of a company’s head office; (c) any notice of a change in the directors of a company; (d) any notice of a change in the depositary of a company; (e) any annual report of a company delivered under regulation 65(5) or (6); (f) any copy of an order in respect of a company made by virtue of regulation 64; (g) any copy of a winding up order in respect of a company; and (h) any copy of any instrument providing for the dissolution of a company on a winding up.

7

Article 663 of the 1986 Order[^f00027] (registrar’s index of company and corporate names) shall have effect as if the bodies listed in paragraph (1) of that Article included—

(a) investment companies with variable capital in respect of which an authorisation order has come into effect; and

(b) collective investment schemes which are open-ended investment companies and which have head offices situated in Great Britain and which comply with the conditions necessary for them to enjoy the rights conferred by the UCITS Directive.

8

The following provisions of Part XXIV of the 1986 Order shall not apply, that is to say—

(a) in Article 654[^f00028], the words in paragraph (4) from “but for a period” to the end and paragraph (5);

(b) Article 654A[^f00029];

(d) Article 659[^f00031];

(e) Article 660(2);

(f) in Article 660A[^f00032], in paragraph (1) the words “or made available by the company for inspection” and paragraph (4); and

(g) Article 663(2).

SCHEDULE 2 — Depositaries

Appointment

1

On the coming into effect of an authorisation order in respect of an investment company with variable capital, the person named in the application under regulation 7 as depositary of the company shall be deemed to be appointed as its first depositary.

2

Subject to regulations 15 and 20, any subsequent appointment of the depositary of a company shall be made by the directors of the company.

Retirement

3

The depositary of a company may not retire voluntarily except upon the appointment of a new depositary.

Rights

4

(1) The depositary of a company is entitled—

(a) to receive all such notices of, and other communications relating to, any general meeting of the company as a shareholder of the company is entitled to receive;

(b) to attend any general meeting of the company;

(c) to be heard at any general meeting which it attends on any part of the business of the meeting which concerns it as depositary;

(d) to convene a general meeting of the company when it sees fit;

(e) to require from the company’s officers such information and explanations as it thinks necessary for the performance of its functions as depositary; and

(f) to have access, except in so far as they concern its appointment or removal, to any reports, statements or other papers which are to be considered at any meeting held by the directors of the company (when acting in their capacity as such), at any general meeting of the company or at any meeting of holders of shares of any particular class.

(2) Sub-paragraph (1)(e) applies to a shadow director of an investment company with variable capital as it applies to an officer of such a company.

Statement by depositary ceasing to hold office

5

(1) Where the depositary of a company ceases, for any reason other than by virtue of the court made under regulation 20, to hold office, it may deposit at the head office of the company a statement of any circumstances connected with its ceasing to hold office which it considers should be brought to the attention of the shareholders or creditors of the company or, if it considers that there are no such circumstances, a statement that there are none.

(2) If the statement is of circumstances which the depositary considers should be brought to the attention of the shareholders or creditors of the company, the company shall not later than 14 days after the deposit of the statement either—

(a) send a copy of the statement to each of the shareholders whose name appears on the register of shareholders (other than the person who is designated in the company’s instrument of incorporation for the purposes of paragraph 4 of Schedule 5) and take such steps as SIB regulations may require for the purpose of bringing the fact that the statement has been made to the attention of the holders of any bearer shares; or

(b) apply to the court;

and, where an application is made under head (b), the company shall notify the depositary.

(3) Unless the depositary receives notice of an application to the court before the end of the period of 21 days beginning with the day on which it deposited the statement, it shall not later than seven days after the end of that period send a copy of the statement to the registrar and SIB.

(4) If the court is satisfied that the depositary is using the statement to secure needless publicity for defamatory matter—

(a) it shall direct that copies of the statement need not be sent out and that the steps required by SIB regulations need not be taken; and

(b) it may further order the company’s costs on the application to be paid in whole or in part by the depositary notwithstanding that the depositary is not a party to the application;

and the company shall not later than 14 days after the court’s decision take such steps in relation to a statement setting out the effect of the order as are required by sub-paragraph (2)(a) in relation to the statement deposited under sub-paragraph (1).

(5) If the court is not so satisfied, the company shall not later than 14 days after the court’s decision take the steps required by sub-paragraph (2)(a) and notify the depositary of the court’s decision.

(6) The depositary shall not later than seven days after receiving such a notice send a copy of the statement to the registrar and SIB.

(7) Where a notice of appeal is filed not later than 14 days after the court’s decision, any reference to that decision in sub-paragraphs (4) and (5) shall be construed as a reference to the final determination or withdrawal of that appeal, as the case may be.

6

(1) This paragraph applies where copies of a statement have been sent to shareholders under paragraph 5.

(2) The depositary who made the statement has, notwithstanding that it has ceased to hold office, the rights conferred by paragraph 4(1)(a) to (c) in relation to the general meeting of the company next following the date on which the copies were sent out.

(3) The reference in paragraph 4(1)(c) to business concerning the depositary as depositary shall be construed in relation to a depositary who has ceased to hold office as a reference to business concerning it as former depositary.

SCHEDULE 3 — Instrument of Incorporation

1

The instrument of incorporation of an investment company with variable capital shall—

(a) contain the statements set out in paragraph 2; and

(b) contain provision made in accordance with paragraphs 3 and 4.

2

The statements referred to in paragraph 1(a) are—

(a) the head office of the company is situated in Northern Ireland;

(b) the company is an open-ended investment company with variable share capital;

(d) the scheme property is entrusted to a depositary for safekeeping (subject to any exceptions permitted by SIB regulations); and

(e) charges or expenses of the company may be taken out of the scheme property.

3

(1) The instrument of incorporation shall contain provision as to the following matters—

(a) the object of the company;

(b) any matter relating to the procedure for the appointment, retirement and removal of any director of the company for which provision is not made in these Regulations or SIB regulations; and

(2) Subject to sub-paragraph (3), the provision referred to in sub-paragraph (1)(a) as to the object of an investment company with variable capital shall be a statement that the object of the company is to invest the scheme property in transferable securities with the aim of spreading investment risk and giving its shareholders the benefit of the results of the management of that property.

(3) The object of the company may differ from that set out in sub-paragraph (2) only to the extent that it provides for restriction of the range of transferable securities in which investment may be made.

4

(1) The instrument of incorporation shall also contain provision as to the following matters—

(a) the name of the company;

(b) the category, as specified in SIB regulations, to which the company belongs;

(d) in the case of an umbrella company, the investment objectives applicable to each part of the scheme property that is pooled separately;

(e) the classes of shares that the company may issue indicating, in the case of an umbrella company, which class or classes of shares may be issued in respect of each part of the scheme property that is pooled separately;

(f) the rights attaching to shares of each class (including any provision for the expression in two denominations of such rights);

(g) if the company is to be able to issue bearer shares, a statement to that effect together with details of any limitations on the classes of the company’s shares which are to include bearer shares;

(h) in the case of a company which is a participating issuer, a statement to that effect together with an indication of any class of shares in the company which is a class of participating securities;

(i) if the company is to dispense with the requirements of regulation 40, the details of any substituted procedures for evidencing title to the company’s shares; and

(j) the form, custody and use of the company’s common seal (if any).

(2) For the purposes of sub-paragraph (1)(c), the size at any time of a company’s capital shall be taken to be the value at that time, as determined in accordance with SIB regulations, of the scheme property of the company less the liabilities of the company.

5

(1) Once an authorisation order has been made in respect of a company, no amendment may be made to the statements contained in the company’s instrument of incorporation which are required by paragraph 2.

(2) Subject to paragraph 3(3) and to any restriction imposed by SIB regulations, a company may amend any other provision which is contained in its instrument of incorporation.

(3) No amendment to a provision which is contained in a company’s instrument of incorporation by virtue of paragraph 3 may be made unless it has been approved by the shareholders of the company in general meeting.

6

(1) The provisions of a company’s instrument of incorporation shall be binding on the officers and depositary of the company and on each of its shareholders; and all such persons (but no others) shall be taken to have notice of the provisions of the instrument.

(2) A person is not debarred from obtaining damages or other compensation from a company by reason only of his holding or having held shares in the company.

SCHEDULE 4 — Register of Shareholders

General

1

(1) Subject to sub-paragraph (2), every investment company with variable capital shall keep a register of persons who hold shares in the company.

(2) Except to the extent that the aggregate number of shares mentioned in paragraphs 5(1)(b) and 7 include bearer shares, nothing in this Schedule requires any entry to be made in the register in respect of bearer shares.

2

(1) Subject as mentioned in sub-paragraph (2), the register of shareholders shall be prima facie evidence of any matters which are by these Regulations directed or authorised to be contained in it.

(2) In the case of a register kept by a company which is a participating issuer, sub-paragraph (1) has effect subject to regulation 23(7) of the Uncertificated Securities Regulations 1995[^f00033] (purported registration of transfer of title to uncertificated unit other than in accordance with that regulation to be of no effect).

3

A notice of any trust, express, implied or constructive, shall not be entered on the company’s register or be receivable by the company.

4

A company shall exercise all due diligence and take all reasonable steps to ensure that the information contained in the register is at all times complete and up to date.

5

(1) The register of shareholders shall contain an entry consisting of—

(a) the name of the person who is designated in the company’s instrument of incorporation for the purposes of paragraph 4 of Schedule 5 (in this Schedule referred to as “the designated person”);

(b) a statement of the aggregate number of all shares in the company held by that person; and

(c) in the case of a company which is a participating issuer, a statement in respect of shares of any class that is a class of participating securities of how many shares of that class are held by that person in uncertificated form and certificated form respectively.

(2) In sub-paragraph (1)—

(a) for the purposes of head (b), the designated person shall be taken as holding all shares in the company which are in issue and in respect of which no other person’s name is entered on the register; and

(b) in head (c), “uncertificated form” and “certificated form” have the same meaning as in the Uncertificated Securities Regulations 1995.

(3) The statements referred to in heads (b) and (c) of sub-paragraph (1) shall be up-dated at least once a day.

6

(1) This paragraph shall not apply to any issue of shares to the designated person or to any transfer of shares to the designated person to which paragraph 4 of Schedule 5 applies.

(2) Where a company issues a share to any person and the name of that person is not already entered on the register, the company shall enter his name on the register.

(3) In respect of any person whose name is entered on the register in accordance with sub-paragraph (2) or paragraph 6 of Schedule 5, this register shall contain an entry consisting of—

(a) the address of the shareholder;

(b) the date on which the shareholder’s name was entered on the register;

(c) a statement of the aggregate number of shares held by the shareholder, distinguishing each share by its number (if it has one) and, where the company has more than one class of shares, by its class; and

(d) in the case of a company which is a participating issuer, a statement in respect of shares of any class that is a class of participating securities of how many shares of that class are held by the shareholder in uncertificated form and certificated form respectively.

(4) In sub-paragraph (3)(d), “uncertificated form” and “certificated form” have the same meaning as in the Uncertificated Securities Regulation 1995.

7

The register of shareholders shall contain a monthly statement of the aggregate number of all the bearer shares in issue except for any bearer shares in issue which, at the time when the statement is made, are held by the designated person.

8

(1) This paragraph applies where the aggregate number of shares referred to in paragraphs 5 to 7 includes any shares to which attach rights expressed in two denominations.

(2) In respect of each class of shares to which are attached rights expressed in two denominations, the number of shares of that class held by any person referred to in paragraph 5 or 6, or the number of bearer shares of that class referred to in paragraph 7, shall be taken to be the total of—

$N+np$

(3) In sub-paragraph (2)—

(a) N is the relevant number of larger denomination shares of that class;

(b) n is the relevant number of smaller denomination shares of that class; and

(c) p is the number of smaller denomination shares of that class that are equivalent to one larger denomination share of that class.

(4) Nothing in these Regulations shall be taken as preventing the total arrived at under sub-paragraph (2) being expressed on the register as a single entry representing the result derived from the formula set out in that sub-paragraph.

Location

9

The register of shareholders of a company shall be kept at its head office, except that—

(a) if the work of making it up is done at another office of the company, it may be kept there; and

(b) if the company arranges with some other person for the making up of the register to be undertaken on its behalf by that other person, it may be kept at the office of the other person at which the work is being done.

Index

10

(1) Every company shall keep an index of the names of the holders of its registered shares.

(2) The index shall contain, in respect of each shareholder, a sufficient indication to enable the account of that shareholder in the register to be readily found.

(3) The index shall be at all times kept at the same place as the register of shareholders.

(4) Not later than 14 days after the date on which any alteration is made to the register of shareholders, the company shall make any necessary alteration in the index.

Inspection

11

(1) Subject to regulation 44 and to SIB regulations, the register of shareholders and the index of names shall be open to the inspection of any shareholder (including any holder of bearer shares) without charge.

(2) Any shareholder may require a copy of the entries on the register relating to him and the company shall cause any copy so required by a person to be sent to him free of charge.

(3) If an inspection required under this paragraph is refused, or if a copy so required is not sent, the court may by order compel an immediate inspection of the register and index, or direct that the copy required be sent to the person requiring it.

Agent’s default

12

(1) Sub-paragraphs (2) and (4) apply where in accordance with paragraph 9(b), the register of shareholders is kept at the office of some person other than the company and by reason of any default of his—

(a) the company fails to comply with any of the requirements of paragraph 10 or 11; or

(b) the company fails to comply with any of the requirements of regulation 65(2).

(2) In a case to which this sub-paragraph applies, the person at whose office the register of shareholders is kept is guilty of an offence if he knowingly or recklessly authorises or permits the default in question.

(3) A person guilty of an offence under sub-paragraph (2) is liable in respect of each default on summary conviction to a fine not exceeding £200.

(4) The power of the court under paragraph 11(3) extends to the making of orders directed to the person at whose office the register of shareholders is kept and to any officer or employee of his.

General

1

The instrument of incorporation of a company may contain provision as to share transfers in respect of any matter for which provision is not made in these Regulations or SIB regulations.

2

Where any shares are transferred to the company, the company shall cancel those shares.

3

In the case of a company which is a participating issuer, nothing in this Schedule shall apply—

(a) to any transfer of a share in the company which is an uncertificated unit of a security; or

(b) in any of the circumstances set out in sub-paragraph (b) or (c) of regulation 27(2) of the Uncertificated Securities Regulations 1995 (conversion of securities into uncertificated form).

Transfer of registered shares

4

(1) Where a transfer of shares is made by the person (if any) who is designated in the company’s instrument of incorporation for the purposes of this paragraph, the company shall not register the transfer unless such evidence as the company may require to prove that the transfer has taken place has been delivered to the company.

(2) Where for any reason a person ceases to be designated for the purposes of this paragraph—

(a) any shares held by that person which are not disposed of on or before his ceasing to be so designated shall be deemed to be the subject of a new transfer to him which takes effect immediately after he ceases to be so designated; and

(b) the company shall make such adjustments to the register as are necessary to reflect his change of circumstances.

5

(1) Except in the case of any transfer of shares referred to in paragraph 4, the company shall not register any transfer unless the transfer documents relating to that transfer have been delivered to the company.

(2) No share certificate shall be required to be delivered by virtue of sub-paragraph (1) in any case where shares are transferred by a nominee of a recognised investment exchange who is designated for the purposes of regulation 41(6) in the rules of the investment exchange in question.

(3) In these Regulations “transfer documents”, in relation to any transfer of registered shares, means—

(a) a stock transfer within the meaning of the Stock Transfer Act (Northern Ireland) 1963[^f00034] which complies with the requirements of that Act as to the execution and contents of a stock transfer or such other instrument of transfer as is authorised by, and completed and executed in accordance with any requirements in, the company’s instrument of incorporation;

(b) except in a case falling within paragraph (3) or (4) of regulation 41, a share certificate relating to the shares in question;

(c) in a case falling within paragraph (3) of that regulation, such other evidence of title to those shares as is required by the instrument of incorporation of the company; and

(d) such other evidence (if any) as the company may require to prove the right of the transferor to transfer the shares in question.

6

In the case of any transfer of shares which meets the requirements of paragraph 4 or 5, the company shall—

(a) register the transfer; and

(b) where the name of the transferee is not already entered on the register, enter that name on the register.

7

(1) A company may, before the end of the period of 21 days commencing with the date of receipt of the transfer documents relating to any transfer of shares, refuse to register the transfer if—

(a) there exists a minimum requirement as to the number or values of shares that must be held by any shareholder of the company and the transfer would result in either the transferor or transferee holding less than the required minimum; or

(b) the transfer would result in a contravention of any provision of the company’s instrument of incorporation or would produce a result inconsistent with any provision of the company’s prospectus.

(2) A company shall give the transferee written notice of any refusal to register a transfer of shares.

(3) Nothing in these Regulations shall require a company to register a transfer or give notice to any person of a refusal to register a transfer where registering the transfer or giving the notice would result in a contravention of any provision of law (including any law that is for the time being in force in a country or territory outside the United Kingdom).

8

(1) Where, in respect of any transfer of shares, the company certifies that it has received the transfer documents referred to in paragraph 5(3)(b) or (c) (as the case may be), that certification shall be taken as a representation by the company to any person acting on the faith of the certification that there has been produced to the company such evidence as on its face shows a prime facie title to the shares in the transferor named in the instrument of transfer.

(2) For the purposes of sub-paragraph (1), a certification is made by a company if the instrument of transfer—

(a) bears the words “certificate lodged” (or words to the like effect); and

(b) is signed by a person acting under authority (whether express or implied) given by the company to issue and sign such certifications.

(3) A certification under sub-paragraph (1) shall not be taken as a representation that the transferor has any title to the shares in question.

(4) Where a person acts on the faith of a false certification by a company which is made negligently or fraudulently, the company shall be liable to pay to that person any damages sustained by him.

Transfer of bearer shares

9

A transfer of title to any bearer share in a company is effected by the transfer from one person to another of the instrument mentioned in regulation 42 which relates to that share.

10

Where the holder of bearer shares proposes to transfer to another person a number of shares which is less than the number specified in the instrument relating to those shares, he may only do so if he surrenders the instrument to the company and obtains a new instrument specifying the number of shares to be transferred.

Miscellaneous

11

Nothing in paragraphs 1 to 10 shall prejudice any power of the company to register as shareholder any person to whom the right to any shares in the company has been transmitted by operation of law.

12

A transfer of registered shares that are held by a deceased person at the time of his death which is made by his personal representative is as valid as if the personal representative had been the holder of the shares at the time of the execution of the instrument of transfer.

13

On the death of any one of the joint holders of any shares, the survivor or survivors shall be the only persons recognised by the company as having any title to or any interest in those shares.

SCHEDULE 6 — Auditors

Eligibility

1

A person is not eligible for appointment as auditor of an investment company with variable capital unless he is also eligible under Article 28 of the Companies (Northern Ireland) Order 1990[^f00035] (eligibility for appointment as company auditor) for appointment as a company auditor.

2

(1) A person is ineligible for appointment as auditor of an investment company with variable capital if he is—

(a) an officer or employee of the company; or

(b) a partner or employee of such a person, or a partnership of which such a person is a partner.

(2) For the purposes of sub-paragraph (1), an auditor of a company shall not be regarded as an officer or employee of the company.

(3) The power of the Department to make regulations under Article 30 of the Companies (Northern Ireland) Order 1990 (ineligibility on ground of lack of independence) in relation to the appointment of company auditors shall be exercisable in relation to the appointment of auditors of investment companies with variable capital—

(a) for like purposes; and

(b) subject to the same conditions.

(4) Any reference in this paragraph to an officer of an investment company with variable capital shall include a reference to a shadow director of such a company.

3

(1) A person shall not act as auditor of a company if he is ineligible for appointment to the office.

(2) If during his term of office an auditor of a company becomes ineligible for appointment to the office, he shall thereupon vacate office and shall forthwith give notice in writing to the company concerned that he has vacated it by reason of ineligibility.

(3) A person who acts as auditor of a company in contravention of sub-paragraph (1) or fails to give notice of vacating his office as required by sub-paragraph (2) is guilty of an offence and liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding £5,000.

(4) In the case of continued contravention he is liable on a second or subsequent summary conviction (instead of the fine mentioned in sub-paragraph (3)(b)) to a fine not exceeding £100 in respect of each day on which the contravention is continued.

(5) In proceedings against a person for an offence under this paragraph it is a defence for him to show that he did not know and he had no reason to believe that he was, or had become, ineligible for appointment.

Appointment

4

(1) Every company shall appoint an auditor or auditors in accordance with this paragraph.

(2) A company shall, at each general meeting at which the company’s annual report is laid, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next general meeting at which an annual report is laid.

(3) The first auditors of a company may be appointed by the directors of the company at any time before the first general meeting of the company at which an annual report is laid; and auditors so appointed shall hold office until the conclusion of that meeting.

(4) Where no appointment is made under sub-paragraph (3), the first auditors of any company may be appointed by the company in general meeting.

(5) No rules made under section 107 of the 1986 Act (appointment etc. of auditors) shall apply in relation to investment companies with variable capital.

5

If, in any case, no auditors are appointed as required in paragraph 4, SIB may appoint a person to fill the vacancy.

6

(1) The directors of a company, or the company in general meeting, may fill a casual vacancy in the office of auditor.

(2) While such a vacancy continues, any surviving or continuing auditor or auditors may continue to act.

7

(1) Sub-paragraphs (2) to (5) apply to the appointment as auditor of a company of a partnership constituted under the law of England and Wales or Northern Ireland, or under the law of any other country or territory in which a partnership is not a legal person; and sub-paragraphs (3) to (5) apply to the appointment as such an auditor of a partnership constituted under the law of Scotland, or under the law of any other country or territory in which a partnership is a legal person.

(2) The appointment is, unless the contrary intention appears, an appointment of the partnership as such and not of the partners.

(3) Where the partnership ceases, the appointment shall be treated as extending to—

(a) any partnership which succeeds to the practice of that partnership and is eligible for the appointment; and

(b) any person who succeeds to that practice having previously carried it on in partnership and is eligible for the appointment.

(4) For this purpose a partnership shall be regarded as succeeding to the practice of another partnership only if the members of the successor partnership are substantially the same as those of the former partnership; and a partnership or other person shall be regarded as succeeding to the practice of a partnership only if it or he succeeds to the whole or substantially the whole of the business of the former partnership.

(5) Where the partnership ceases and no person succeeds to the appointment under sub-paragraph (3), the appointment may with the consent of the company be treated as extending to a partnership or other person eligible for the appointment who succeeds to the business of the former partnership or to such part of it as is agreed by the company shall be treated as comprising the appointment.

Rights

8

(1) The auditors of a company shall have a right of access at all times to the company’s books, accounts and vouchers and are entitled to require from the company’s officers such information and explanations as they think necessary for the performance of their duties as auditors.

(2) An officer of a company commits an offence if he knowingly or recklessly makes to the company’s auditors a statement (whether written or oral) which—

(a) conveys or purports to convey any information or explanations which the auditors require, or are entitled to require, as auditors of the company; and

(b) is misleading, false or deceptive in a material particular.

(3) A person guilty of an offence under sub-paragraph (2) is liable—

(a) on conviction on indictment, to imprisonment not exceeding a term of two years or to a fine or to both;

(b) on summary conviction, to imprisonment not exceeding a term of three months or to a fine not exceeding £5,000 or to both.

(4) This paragraph applies to a shadow director of an investment company with variable capital as it applies to an officer of such a company.

9

(1) The auditors of a company are entitled—

(a) to receive all such notices of, and other communications relating to, any general meeting of the company as a shareholder of the company is entitled to receive;

(b) to attend any general meeting of the company; and

(c) to be heard at any general meeting which they attend on any part of the business of the meeting which concerns them as auditors.

(2) The right to attend and be heard at a meeting is exercisable in the case of a body corporate or partnership by an individual authorised by it in writing to act as its representative at the meeting.

Remuneration

10

(1) The remuneration of auditors of a company who are appointed by the company in general meeting shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.

(2) The remuneration of auditors who are appointed by the directors or SIB shall, as the case may be, be fixed by the directors or SIB (and shall be payable by the company even where it is fixed by SIB).

11

(1) Subject to sub-paragraph (2), the power of the Department to make regulations under Article 398B of the 1986 Order[^f00036] (remuneration of auditors and their associates for non-audit work) in relation to company auditors shall be exercisable in relation to auditors of investment companies with variable capital—

(a) for like purposes; and

(b) subject to the same conditions.

(2) For the purposes of the exercise of the power to make regulations under Article 398B of the 1986 Order, as extended by sub-paragraph (1), the reference in Article 398B(3) of that Order to a note to a company’s accounts shall be taken to be a reference to the annual report of an investment company with variable capital.

Removal

12

(1) A company may by resolution remove an auditor from office notwithstanding anything in any agreement between it and him.

(2) Where a resolution removing an auditor is passed at a general meeting of a company, the company shall not later than 14 days after the holding of the meeting notify SIB of the passing of the resolution.

(3) Nothing in this paragraph shall be taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as auditor or of any appointment terminating with that as auditor.

Rights on removal or non-reappointment

13

(1) A resolution at a general meeting of a company—

(a) removing an auditor before the expiration of his period of office; or

(b) appointing as auditor a person other than the retiring auditor;

is not effective unless notice of the intention to remove it has been given to the investment company with variable capital at least 28 days before the meeting at which it is moved.

(2) On receipt of notice of such an intended resolution, the company shall forthwith send a copy to the person proposed to be removed or, as the case may be, to the person proposed to be appointed and to the retiring auditor.

(3) The auditor proposed to be removed or, as the case may be, the retiring auditor may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to the shareholders of the company.

(4) The company shall (unless the representations are received by the company too late for it to do so)—

(a) in any notice of the resolution given to the shareholders of the company, state the fact of the representations having been made;

(b) send a copy of the representations to each of the shareholders whose name appears on the register of shareholders (other than the person who is designated in the company’s instrument of incorporation for the purposes of paragraph 4 of Schedule 5) and to whom notice of the meetings is or has been sent;

(c) take such steps as SIB regulations may require for the purpose of bringing the fact that the representations have been made to the attention of the holders of any bearer shares; and

(d) at the request of any holder of bearer shares, provide a copy of the representations.

(5) If a copy of any such representations is not sent out as required because they were received too late or because of the company’s default or if, for either of those reasons, any steps required by sub-paragraph (4)(c) or (d) are not taken, the auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.

(6) Copies of the representations need not be sent out, the steps required by sub-paragraph (4)(c) or (d) need not be taken and the representations need not be read out at the meeting if, on the application of the company or any other person claiming to be aggrieved, the court is satisfied that the rights conferred by this paragraph are being abused to secure needless publicity for defamatory matter; and the court may order the costs of the company on such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.

14

(1) An auditor who has been removed from office has, notwithstanding his removal, the rights conferred by paragraph 9 in relation to any general meeting of the company at which his term of office would otherwise have expired or at which it is proposed to fill the vacancy caused by his removal.

(2) Any reference in paragraph 9 to business concerning the auditors as auditors shall be construed in relation to an auditor who has been removed from office as a reference to business concerning him as former auditor.

Resignation

15

(1) An auditor of a company may resign his office by depositing a notice in writing to that effect at the company’s head office.

(2) Such a notice is not effective unless it is accompanied by the statement required by paragraph 18.

(3) An effective notice of resignation operates to bring the auditor’s term of office to an end as of the date on which the notice is deposited or on such later date as may be specified in it.

(4) The company shall not later than 14 days after the deposit of a notice of resignation send a copy of the notice to SIB.

16

(1) This paragraph applies where a notice of resignation of an auditor is accompanied by a statement of circumstances which he considers ought to be brought to the attention of the shareholders or creditors of the company.

(2) An auditor may deposit with the notice a signed requisition that a general meeting of the company be convened forthwith for the purpose of receiving and considering such explanation of the circumstances connected with his resignation and he may wish to place before the meeting.

(3) The company shall, not later than 21 days after the date of the deposit of a requisition under this paragraph, proceed to convene a meeting for a day not more than 28 days after the date on which the notice convening the meeting is given.

(4) The auditor may request the company to circulate to the shareholders of the company whose name appears on the register of shareholders (other than the person who is designated in the company’s instrument of incorporation for the purposes of paragraph 4 of Schedule 5)—

(a) before the meeting convened on his requisition; or

(b) before any general meeting at which his term of office would otherwise have expired or at which it is proposed to fill the vacancy caused by his resignation;

a statement in writing (not exceeding a reasonable length) of the circumstances connected with his resignation.

(5) The company shall (unless the statement is received by it too late for it to do so)—

(a) in any notice or advertisement of the meeting given or made to shareholders of the company, state the fact of the statement having been made;

(b) send a copy of the statement to every shareholder of the company to whom notice of the meeting is or has been sent; and

(6) If a copy of the statement is not sent out or provided as required because it was received too late or because of the company’s default the auditor may (without prejudice to his right to be heard orally) require that the statement be read out at the meeting.

(7) Copies of a statement need not be sent out or provided and the statement need not be read out at the meeting if, on the application of the company or any other person claiming to be aggrieved, the court is satisfied that the rights conferred by this paragraph are being abused to secure needless publicity for defamatory matter; and the court may order the costs of the company on such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.

17

(1) An auditor who has resigned has, notwithstanding his removal, the rights conferred by paragraph 9 in relation to any such general meeting of the company as is mentioned in paragraph 16(4)(a) or (b).

(2) The reference in paragraph 9 to business concerning the auditors as auditors shall be construed in relation to an auditor who has resigned as a reference to business concerning him as former auditor.

Statement by auditor ceasing to hold office

18

(1) Where an auditor ceases for any reason to hold office, he shall deposit at the head office of the company a statement of any circumstances connected with his ceasing to hold office which he considers should be brought to the attention of the shareholders or creditors of the company or, if he considers that there are no such circumstances, a statement that there are none.

(2) The statement shall be deposited—

(a) in the case of resignation, along with the notice of resignation;

(b) in the case of failure to seek re-appointment, not less than 14 days before the end of the time allowed for next appointing auditors; and

(c) in any other case, not later than the end of the period of 14 days beginning with the date on which he ceases to hold office.

(3) If the statement is of circumstances which the auditor considers should be brought to the attention of the shareholders or creditors of the company, the company shall not later than 14 days after the deposit of the statement either—

(a) send a copy of the statement to each of the shareholders whose name appears on the register of shareholders (other than the person who is designated in the company’s instrument of incorporation for the purposes of paragraph 4 of Schedule 5) and take such steps as SIB regulations may require for the purpose of bringing the fact that the statement has been made to the attention of the holders of any bearer shares; or

(b) apply to the court;

and, where an application is made under head (b), the company shall notify the auditor.

(4) Unless the auditor receives notice of an application to the court before the end of the period of 21 days beginning with the day on which he deposited the statement, he shall not later than seven days after the end of that period send a copy of the statement to the registrar and SIB.

(5) If the court is satisfied that the auditor is using the statement to secure needless publicity for defamatory matter—

(a) it shall direct that copies of the statement need not be sent out and that the steps required by SIB regulations need not be taken; and

(b) it may further order the company’s costs on the application to be paid in whole or in part by the auditor notwithstanding that he is not a party to the application;

and the company shall not later than 14 days after the court’s decision take such steps in relation to a statement setting out the effect of the order as are required by sub-paragraph (3)(a) in relation to the statement deposited under sub-paragraph (1).

(6) If the court is not so satisfied, the company shall not later than 14 days after the court’s decision send to each of the shareholders a copy of the auditor’s statement and notify the auditor of the court’s decision.

(7) The auditor shall not later than seven days after receiving such a notice send a copy of the statement to the registrar and SIB.

(8) Where notice of appeal is filed not later than 14 days of the court’s decision, any reference to that decision in sub-paragraphs (5) and (6) shall be construed as a reference to the final determination or withdrawal of that appeal, as the case may be.

19

(1) If a person ceasing to hold office as auditor fails to comply with paragraph 18, he is guilty of an offence and liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding £5,000.

(2) In proceedings for an offence under sub-paragraph (1), it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

SCHEDULE 7 — Mergers and Divisions

1

This Schedule applies to any reconstruction or amalgamation involving an investment company with variable capital which takes the form of a scheme described in paragraph 4.

2

An investment company with variable capital may apply to the court under Article 418 of the 1986 Order[^f00037] (power of company to compromise with creditors or members) for an order sanctioning a scheme falling within any of heads (a) to (c) of paragraph 4(1) where—

(a) the scheme in question involves a compromise or arrangement with its shareholders or creditors or any class of its shareholders or creditors; and

(b) the consideration for the transfer or each of the transfers envisaged by the scheme is to be—

(i) shares in the transferee company receivable by shareholders of the transferor company; or

(ii) where there is more than one transferor company and any one or more of them is a public company, shares in the transferee company receivable by shareholders or members of the transferor companies (as the case may be);

in each case with or without any cash payment to shareholders.

3

A public company may apply to the court under Article 418 of the 1986 Order for an order sanctioning a scheme falling within head (b) and (c) of paragraph 4(1) where—

(a) the scheme in question involves a compromise or arrangement with its members or creditors or any class of its members or creditors; and

(b) the consideration for the transfer or each of the transfers envisaged by the scheme is to be—

(i) shares in the transferee company receivable by members of the transferor company; or

(ii) where there is more than one transferor company and any one or more of them is an investment company with variable capital, shares in the transferee company receivable by members or shareholders of the transferor companies (as the case may be);

in each case with or without any cash payment to shareholders.

4

(1) The schemes falling within this paragraph are—

(a) any scheme under which the undertaking, property and liabilities of an investment company with variable capital are to be transferred to another such company, other than one formed for the purpose of, or in connection with, the scheme;

(b) any scheme under which the undertaking, property and liabilities of two or more bodies corporate, each of which is either—

(i) an investment company with variable capital; or

(ii) a public company;

are to be transferred to an investment company with variable capital formed for the purpose of, or in connection with, the scheme;

(c) any scheme under which the undertaking, property and liabilities of an investment company with variable capital or a public company are to be divided among and transferred to two or more investment companies with variable capital whether or not formed for the purpose of, or in connection with, the scheme.

(2) Nothing in this Schedule shall be taken as enabling the court to sanction a scheme under which the whole or any part of the undertaking, property or liabilities of an investment company with variable capital may be transferred to any person other than an investment company with variable capital.

5

For the purposes of this Schedule, Articles 418 to 420 of the 1986 Order shall, subject to paragraph 6, have effect in respect of any application made by virtue of paragraph 2 or 3 as they have effect in respect of applications falling with Article 420A(1) of that Order (that is to say, subject to the provisions of Article 420A of, and Schedule 15B to, that Order (mergers and divisions of public companies))[^f00038].

6

(1) All the provisions of the 1986 Order referred to in paragraph 5 shall have effect with such modifications as are necessary or appropriate for the purposes of this Schedule.

(2) In particular, any reference in those provisions to a Case 1 Scheme, a Case 2 Scheme or a Case 3 Scheme shall be taken to be a reference to a scheme falling within head (a), (b) or (c) of paragraph 4(1).

(3) Without prejudice to the generality of sub-paragraph (1), the following references in those provisions shall have effect as indicated in heads (a) to (j), that is to say—

(a) any reference to a scheme shall be taken to be a reference to a scheme falling within any of heads (a) to (c) of paragraph 4(1);

(b) any reference to a company shall be taken to be a reference to an investment company with variable capital;

(c) any reference to members shall be taken to be a reference to shareholders of an investment company with variable capital;

(d) any reference to the registered office of a company shall be taken to be a reference to the head office of an investment company with variable capital;

(e) any reference to the memorandum and articles of a company shall be taken to be a reference to the instrument of incorporation of an investment company with variable capital;

(f) any reference to a report under Article 113 of the 1986 Order shall be taken to be a reference to any report with respect to the valuation of any non-cash consideration given for shares in an investment company with variable capital which may be required by SIB regulations;

(g) any reference to annual accounts shall be taken to be a reference to the accounts contained in the annual report of an investment company with variable capital;

(h) any reference to a directors' report, in relation to a company’s annual accounts, shall be taken to be a reference to any report of the directors of an investment company with variable capital that is contained in the company’s annual report;

(i) any reference to the requirements of the 1986 Order as to balance sheets forming part of a company’s annual accounts shall be taken to be a reference to any requirements arising by virtue of SIB regulations as to balance sheets drawn up for the purposes of the accounts contained in the annual report of an investment company with variable capital;

(j) any reference to paid up capital shall be taken to be a reference to the share capital of an investment company with variable capital.

SCHEDULE 8 — Minor and Consequential Amendments

Part I — Primary Legislation

Stock Transfer Act (Northern Ireland) 1963 (c. 24 (N.I.))

1

In section 1(4) of the Stock Transfer Act (Northern Ireland) 1963[^f00039] (registered securities to which section 1 applies), after paragraph (e) there shall be inserted the following paragraph—

(f) shares issued by an investment company with variable capital within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.

Data Protection Act 1984 (c. 35)

2

Section 30 of the Data Protection Act 1984[^f00040] (exemption for regulation of financial services etc.) shall have effect as if the reference in subsection (2) to any enactment included these Regulations.

Companies (Northern Ireland) Order 1986 (N.I. 6)

3

In Article 36 of the 1986 Order (prohibition on registration of certain names)—

(a) in paragraph (1) after sub-paragraph (b) there shall be inserted the following sub-paragraph—

(bb) which includes, at any place in the name, the expression “investment company with variable capital”;

(b) in paragraph (3)(b) the word “and” after “ “unlimited” ” shall be omitted and at the end there shall be inserted

and - “investment company with variable capital”;

4

In Article 207(2A)[^f00041] of the 1986 Order (interests to be disregarded in determining whether a person holds a material interest in shares), after sub-paragraph (b) there shall be inserted the following sub-paragraph—

(bb) an interest belonging to an investment company with variable capital;

5

In Article 217(1)(h) of the 1986 Order[^f00042] (interests to be disregarded for purposes of obligation to disclose interests in shares) the word “or” at the end of head (i) shall be omitted and, after head (ii), there shall be inserted

or (iii) by virtue of his being a depositary, within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997, of an investment company with variable capital.

6

In Article 228(1) of the 1986 Order[^f00043] (definitions for Part VII of the Order), after the definition of “designated agency” there shall be inserted the following definition—

“investment company with variable capital” has the same meaning as in the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997;

7

In Article 665(2) of the 1986 Order (exemptions from prohibition on formation of any company, association or partnership with more than 20 members), after sub-paragraph (d)[^f00044] there shall be inserted the following sub-paragraph—

(e) of an investment company with variable capital within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.

8

In Article 667(2) of the 1986 Order (exemptions from application of Order to unregistered companies), after sub-paragraph (c) there shall be inserted the following sub-paragraph—

(d) any investment company with variable capital within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.

Companies (Northern Ireland) Order 1989 (N.I. 18)

9

In Schedule 1 to the Companies (Northern Ireland) Order 1989 (matters for determining unfitness of directors), after paragraph 5[^f00045] there shall be inserted the following paragraph—

(5A) In the application of this Part in relation to any person who is a director of an investment company with variable capital, any reference to a provision of the Companies Order shall be taken to be a reference to the corresponding provision of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997 or of any regulations made under regulation 6 of those Regulations (SIB regulations).

Financial Services Act 1986 (c. 60)

10

In section 47A(4) of the 1986 Act[^f00046] (disciplinary action which may be taken in respect of failure to comply with statements of principle) the word “or” at the end of paragraph (d) shall be omitted and after paragraph (e) there shall be inserted

or (f) the giving of a direction under regulation 18 of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997 (directions) or the making of an application for an order under regulation 20 of those Regulations (application to court to remove director or depositary);

11

In section 87 of the 1986 Act (schemes authorised in designated countries or territories)—

(a) at the end of paragraph (b) of subsection (2A)[^f00047] there shall be inserted “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997”; and

(b) at the end of subsection (2A) there shall be inserted “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997”.

12

In subsection (1A) of section 205A of the 1986 Act[^f00048] (supplementary provisions with respect to subordinate legislation) after the words “regulation 6” there shall be inserted “in each”; and after “1996” there shall be inserted “and the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997”.

13

In section 206(1) of the 1986 Act (publication of information and advice)[^f00049]—

(a) in paragraph (bb) after “1996” there shall be inserted “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997”; and after the words “regulation 6” there shall be inserted “of either”; and

(b) in paragraph (bc) after “regulation 73” there shall be inserted “of either”.

14

In section 207(1) of the 1986 Act[^f00050] (interpretation) at the end of the definition of “investment company with variable capital” there shall be inserted “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.”.

15

In Schedule 8 to the 1986 Act[^f00051] (principles applicable to designated agency’s legislative provisions), at the end of paragraph 1(1) there shall be inserted “or under regulation 6 of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.”.

16

In paragraph 7 of Schedule 9 to the 1986 Act[^f00052] (designated agencies; status and exercise of transferred functions), after “Regulations 1996” there shall be inserted “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997,”.

17

In section 34(6) of the Pension Schemes (Northern Ireland) Act 1993[^f00053] (permitted forms for appropriate schemes), after paragraph (c) there shall be inserted the following paragraph—

(d) an investment company with variable capital within the meaning of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.

Part II — Subordinate Legislation

The Data Protection (Regulation of Financial Services etc.) (Subject Access Exemption) Order 1987 (S.I. 1987/1905)

18

Schedule 1 to the Data Protection (Regulation of Financial Services etc.) (Subject Access Exemption) Order 1987[^f00054] (functions designated for purposes of section 30 of Data Protection Act 1984) shall have effect as if at the end there were inserted the following entry—

Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997	Functions of the Securities and Investments Board under Regulations.

The Uncertificated Securities Regulations 1995 (S.I. 1995/3272)

19

In regulation 3[^f00055] of the Uncertificated Securities Regulations 1995 (interpretation) in the definition of “unit of a security”—

(a) in paragraph (1) after “Regulations 1996” there shall be inserted “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997)”; and

(b) at the end of that definition there shall be inserted “or of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.”.

20

At the end of regulation 19(9)[^f00056] after “Regulations 1996” there shall be “inserted” “or the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997.”.

Signed

Sealed with the Official Seal of the Department of Economic Development on

A. L. Brown — Assistant Secretary — 22nd May 1997.

Explanatory note

(This note is not part of the Regulations.)

The Regulations make provision for the formation in Northern Ireland of a class of body corporate referred to in the Regulations as an investment company with variable capital. The Regulations also make provision for the authorisation of investment companies with variable capital and for their subsequent supervision.

An investment company with variable capital formed under the Regulations will be a collective investment scheme within the meaning of section 75 of the Financial Services Act 1986 (c. 60) the object of which is investment in a limited class of investments (referred to in the Regulations as “transferable securities”). It will also be an open-ended investment company within the meaning of section 75(8) of that Act. In addition an investment company with variable capital will be undertaking for collective investment in transferable securities to which Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (“the UCITS Directive”) applies. As such, it will be able to take advantage of the rights which that Directive confers in relation to the undertakings to which it applies to market their shares in other States of the European Economic Area. At present, the only undertakings formed in Northern Ireland which are able to take advantage of the rights conferred by the UCITS Directive are authorised unit trust schemes the object of which is investment in transferable securities.

Part I of the Regulations is general and contains definitions of certain of the terms used in the Regulations.

Part II of, and Schedules 1 to 3 to, the Regulations are concerned with the formation and the subsequent control and supervision of an investment company with variable capital. Regulations 3 and 4 and Schedule 1 concern the formation of a company and the registration of certain details relating to it with the registrar of companies. Regulation 5 and Schedule 2 are concerned with the custody of the company’s property and with the company’s depositary who is the person to whom the property will be entrusted for safekeeping. Regulation 6 extends certain legislative powers under Financial Services Act 1986 so as to be exercisable in relation to investment companies with variable capital. The powers are vested in the Securities and Investments Board (“SIB”). (Regulation 73 makes provision as to SIB’s functions under the Regulations.)

Regulations 7 to 12 of the Regulations contain provisions as to the authorisation by SIB of an investment company with variable capital. Schedule 3 contains provisions concerning the contents of a company’s instrument of incorporation.

An application for authorisation will be required and SIB must be satisfied that the company will, if formed and authorised, meet certain criteria (set out in regulation 10). There is provision for representations to be made against any refusal to authorise a company and there is also provision for a company to be issued with a certificate which is a necessary pre-requisite to it being able to enjoy the rights conferred by the UCITS Directive. Regulations 13 and 14 contain provisions relating to the name which may be used by an investment company with variable capital and regulation 15 contains provisions requiring a company to seek prior approval from SIB for certain changes, including changes to the company’s instrument of incorporation. Regulations 16 and 20 confer powers on SIB to intervene in the affairs of a company once it has been authorised. The powers in question are powers to revoke authorisation, to give directions and to make applications to the court. Regulations 21 to 24 confer concurrent powers on the Department and SIB to appoint inspectors to investigate the affairs of an investment company with variable capital. Regulations 25 to 27 contain provisions as to the winding up and dissolution of an investment company with variable capital.

Part III of, and Schedules 4 to 7 to, the Regulations set out the corporate framework within which an investment company with variable capital will operate. This framework will be supplemented by regulations made by SIB under the provisions of regulation 6 of the Regulations. Regulations 28 to 30 contain provisions concerning the directors of an investment company with variable capital and the inspection of their service contracts. Regulation 31 makes provisions as to general meetings of the company and regulations 32 to 38 make provision as to the capacity of a company and the validity of certain transactions involving its directors. Regulations 39 to 46 contain provision about the nature of the shares that an investment company with variable capital may issue, about share certificates and (together with Schedule 5) share transfers and about the maintenance, closure and rectification of a register of shareholders which an investment company with variable capital will be required to keep in accordance with Schedule 4. By virtue of regulation 42, an investment company with variable capital will be able to issue bearer shares. Regulations 47 to 59 contain various provisions that are relevant to the operation of an investment company with variable capital. The provisions in question are ones about the powers which a company enjoys incidental to the carrying on of its business (regulation 47), the details which must be included in its correspondence (regulations 48 and 49), the execution and authentication of documents (regulations 50 to 54), liability and exemptions from liability (regulations 55 to 57), fraudulent trading (regulation 58) and the powers which the company has to make provision for its employees on the cessation or transfer of its business (regulation 59). Regulations 60 to 63 and Schedule 6 make provision as to reports containing accounts which must be prepared by an investment company with variable capital, as to the audit of the reports and as to auditors. Regulation 64 of, and Schedule 7 to, the Regulations contain provisions concerning the merger and division of investment companies with variable capital.

Part IV of the Regulations contains miscellaneous provisions about notifications to the registrar of companies, prosecutions and service of documents. Part IV (regulation 74) also contains provisions extending the powers that SIB has under the FSA to raise fees in relation to the authorisation and supervision of authorised unit trust schemes so as to be exercisable for like purposes in relation to the authorisation and supervision of investment companies with variable capital. In addition, Part IV of and Schedule 8 to the Regulations make various minor and consequential amendments to other enactments including an amendment which excludes an investment company with variable capital from the provisions of Article 665 of the Companies (Northern Ireland) Order 1986 (paragraph 7 of Schedule 8).

Footnotes

[^f00001]: See S.I. 1996/266

[^f00002]: 1972 c. 68. By virtue of the amendment of section 1(2) of the European Communities Act 1972 by section 1 of the European Economic Area Act 1993 (c. 51), regulations may be made under section 2(2) of the European Communities Act for the purpose of implementing rights, powers, liabilities, obligations and restrictions of the United Kingdom created or arising by or under the agreement on the European Economic Area signed at Oporto on 2nd May 1992 (Cm 2073) as adjusted by the Protocol signed at Brussels on 17th March 1993 (Cm 2183)

[^f00003]: 1954 c. 33 (N.I.)

[^f00004]: S.I. 1986/1032 (N.I. 6)

[^f00005]: 1986 c. 60; various functions of the Secretary of State under the Financial Services Act 1986 have been transferred to the Treasury by the Transfer of Functions (Financial Services) Order 1992 (S.I. 1992/1315)

[^f00006]: Cm 2073

[^f00007]: Cm 2183

[^f00008]: S.I. 1995/3272

[^f00009]: Various functions under the Financial Services Act 1986 have been transferred to the Securities and Investments Board by the Financial Services Act 1986 (Delegation) Order 1987 (S.I. 1987/942), the Financial Services Act 1986 (Delegation) (No. 2) Order 1988 (S.I. 1988/738), the Companies Act 1989 (Commencement No. 3, Transitional Provisions and Transfer of Functions under the Financial Services Act 1986) Order 1990 (S.I. 1990/354), the Financial Services Act 1986 (Delegation) Order 1991 (S.I. 1991/200) and the Financial Services Act 1986 (Delegation) (No. 2) Order 1991 (S.I. 1991/1256)

[^f00010]: O.J. No. L375, 31.12.1985, pages 3-18, as amended by Council Directive 88/220/EEC (O.J. No. L100, 19.4.1988, pages 31-32)

[^f00011]: Sections 81 and 85 conferred power to make regulations on the Secretary of State. Most of these powers have been transferred to the Securities and Investment Board by the Financial Services Act 1986 (Delegation) (No. 2) Order 1988 and the Financial Services Act 1986 (Delegation) (No. 2) Order 1991. The regulations made by the Board which are currently in force are The Financial Services (Regulated Schemes) Regulation 1991 (Release 148). The remaining functions of the Secretary of State have been transferred to the Treasury by the Transfer of Functions (Financial Services) Order 1992 (S.I. 1992/1315)

[^f00012]: Article 258 was inserted by Article 16 of the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I. 5))

[^f00013]: Section 48 was amended by section 206 of, and paragraph 2 of Schedule 23 to, the Companies Act 1989 (c. 40); there are other amendments not relevant to these Regulations

[^f00014]: S.R. 1989 No. 216. These Regulations were amended by virtue of section 2(1) of the European Economic Area Act 1993 (c. 51) so that, for any limitation in the Regulations that proceeds by reference to the Communities, there is substituted a corresponding limitation relating to the European Economic Area

[^f00015]: Articles 427 and 429 were amended by Article 4 of the Companies (No. 2) (Northern Ireland) Order 1990 S.I. 1990/1504 (N.I. 10)

[^f00016]: Section 205 was substituted by section 206(1) of, and paragraph 18 of Schedule 23 to, the Companies Act 1989 (c. 40) and amended by Article 10(1) of, and paragraph 7 of Schedule 4 to, the Transfer of Functions (Financial Services) Order 1992 (S.I. 1992/1315)

[^f00017]: S.I. 1989/2405 (N.I. 19)

[^f00018]: Article 104A was inserted by Article 8 of the Companies (No. 2) (Northern Ireland) Order 1990 (S.I. 1990/1504 (N.I. 10))

[^f00019]: S.I. 1995/3272

[^f00020]: Article 654 was substituted by Article 78 of, and paragraph 13 of Schedule 5 to, the Companies (No. 2) (Northern Ireland) Order 1990

[^f00021]: S.I. 1981/1675 (N.I. 26)

[^f00022]: 1945 c. 15 (N.I.)

[^f00023]: S.I. 1992/1315

[^f00024]: S.I. 1987/942

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Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997

65

Contraventions

66

Prosecutions

67

Offences: bodies corporate, partnerships and unincorporated associations

68

Time limits for prosecution of offences

69

Jurisdiction and procedure in respect of offences

70

Service of documents

71

Evidence of grant of probate etc.

72

SIB’s functions under the Regulations

73

Fees

74

Minor and consequential amendments

75

SCHEDULE 1 — Application of Part XXIV of 1986 Order

1

2

3

4

5

6

Article 660 of the 1986 Order (public notice by registrar of receipt and issue of certain documents) shall apply as if for paragraphs (*a*) to (*z*) of paragraph (1) there were substituted the following paragraphs—

7

Article 663 of the 1986 Order[^f00027] (registrar’s index of company and corporate names) shall have effect as if the bodies listed in paragraph (1) of that Article included—

8

SCHEDULE 2 — Depositaries

Appointment

1

2

Retirement

3

Rights

4

Statement by depositary ceasing to hold office

5

6

SCHEDULE 3 — Instrument of Incorporation

1

2

3

4

5

6

SCHEDULE 4 — Register of Shareholders

General

1

2

3

4

Contents

5

6

7

8

Location

9

Index

10

Inspection

11

Agent’s default

12

SCHEDULE 5 — Share Transfers

General

1

2

3

Transfer of registered shares

4

5

6

7

Article 660 of the 1986 Order (public notice by registrar of receipt and issue of certain documents) shall apply as if for paragraphs (a) to (z) of paragraph (1) there were substituted the following paragraphs—