The Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996

• (7) Nothing in these Regulations shall be taken as preventing the total arrived at under paragraph (5) above being expressed on the certificate as a single entry representing the result derived from the formula set out in that paragraph.

• (8) In England and Wales, a share certificate specifying any shares held by any person which is—

• (a) under the common seal of the company; or

• (b) authenticated in accordance with regulation 53 below;

is prima facie evidence of that person’s title to the shares.

• (9) In Scotland, a share certificate specifying any shares held by any person which is—

• (a) under the common seal of the company; or

• (b) subscribed by the company in accordance with the Requirements of Writing (Scotland) Act 1995[^f00018];

is, unless the contrary is shown, sufficient evidence of that person’s title to the shares.

Exceptions from regulation 40

41

• (1) An investment company with variable capital which is a participating issuer shall not prepare share certificates in respect of any share in the company which is an uncertificated unit of a security.

• (2) Nothing in regulation 40 above requires a company to prepare share certificates in Cases 1 to 4 set out below.

• (3) Case 1 is any case where the company’s instrument of incorporation states that share certificates will not be issued and contains provision as to other procedures for evidencing a person’s entitlement to shares.

• (4) Case 2 is any case where a shareholder has indicated to the company in writing that he does not wish to receive a certificate.

• (5) Case 3 is any case where shares are issued or transferred to the person who is designated in the company’s instrument of incorporation for the purposes of paragraph 4 of Schedule 5 to these Regulations.

• (6) Case 4 is any case where shares are issued or transferred to a nominee of a recognised investment exchange who is designated for the purposes of this paragraph in the rules of the investment exchange in question.

Bearer shares

42

An investment company with variable capital may, if its instrument of incorporation so provides, issue shares (“bearer shares”) evidenced by a share certificate, or by any other documentary evidence of title for which provision is made in the instrument of incorporation, which indicates—

• (a) that the holder of the document is entitled to the shares specified in it; and

• (b) that no entry will be made on the register of shareholders identifying the holder of those shares.

Register of shareholders

43

Schedule 4 to these Regulations (which makes provision with respect to the register of shareholders of an investment company with variable capital) shall have effect.

Power to close register

44

• (1) Subject as mentioned in paragraph (2) below, an investment company with variable capital may, on giving notice by advertisement in a national newspaper circulating in all the countries in which shares in the company are sold, close the register of shareholders for any time or times not exceeding in the whole 30 days in each year.

• (2) Sub-paragraph (1) above has effect—

• (a) in the case of a company which is a participating issuer, subject to regulation 22 of the Uncertificated Securities Regulations 1995[^f00019] (consent of Operator of system required to close register) and to any requirements contained in SIB regulations, in so far as such requirements are not inconsistent with that regulation; and

• (b) in the case of any other company, subject to any requirements contained in SIB regulations.

Power of court to rectify register

45

• (1) An application to the court may be made under this regulation if—

• (a) the name of any person is, without sufficient cause, entered in or omitted from the register of shareholders of an investment company with variable capital;

• (b) default is made as to the details contained in any entry on the register in respect of a person’s holding of shares in the company; or

• (c) default is made or unnecessary delay takes place in amending the register so as to reflect the fact of any person having ceased to be a shareholder.

• (2) An application under this regulation may be made by the person aggrieved, by any shareholder of the company or by the company itself.

• (3) The court may either refuse the application or may order rectification of the register of shareholders and payment by the company of any damages sustained by any party aggrieved.

• (4) On such an application the court may decide any question necessary or expedient to be decided for rectification of the register of shareholders including, in particular, any question relating to the right of a person who is a party to the application to have his name entered in or omitted from the register (whether the question arises as between shareholders and alleged shareholders or as between shareholders or alleged shareholders on the one hand and the company on the other hand).

Share transfers

46

Schedule 5 to these Regulations (which makes provision for the transfer of registered and bearer shares in an investment company with variable capital) shall have effect.

Operation

Power incidental to carrying on business

47

An investment company with variable capital shall have power to do all such things as are incidental or conducive to the carrying on of its business.

Name to appear in correspondence etc

48

• (1) Every investment company with variable capital shall have its name mentioned in legible characters in all letters of the company and in all other documents issued by the company in the course of business.

• (2) If an officer of a company or a person on the company’s behalf signs or authorises to be signed on behalf of the company any cheque or order for money or goods in which the company’s name is not mentioned as required by paragraph (1) above he is personally liable to the holder of the cheque or order for money or goods for the amount of it (unless it is duly paid by the company).

Particulars to appear in correspondence etc

49

• (1) Every investment company with variable capital shall have the following particulars mentioned in legible characters in all letters of the company and in all other documents issued by the company in the course of business, that is to say—

• (a) the company’s place of registration;

• (b) the number with which it is registered;

• (c) the address of its head office; and

• (d) the fact that it is an investment company with variable capital.

• (2) Where, in accordance with section 705 of the 1985 Act[^f00020] (companies' registered numbers) (as that section has effect by virtue of Schedule 1 to these Regulations), the registrar of companies makes any change of existing registered numbers in respect of any investment company with variable capital then, for a period of three years beginning with the date on which the notification of the change is sent to the company by the registrar, the requirement of paragraph (1)(b) above is satisfied by the use of either the old number or the new.

Contracts: England and Wales

50

Under the law of England and Wales a contract may be made—

• (a) by an investment company with variable capital by writing under its common seal; or

• (b) on behalf of such a company, by any person acting under its authority (whether express or implied);

and any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of an investment company with variable capital.

Execution of documents: England and Wales

51

• (1) Under the law of England and Wales the following provisions have effect with respect to the execution of documents by an investment company with variable capital.

• (2) A document is executed by a company by the affixing of its common seal.

• (3) A company need not have a common seal, however, and the following provisions of this regulation apply whether it does or not.

• (4) A document that is signed by at least one director and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company.

• (5) A document executed by a company which makes it clear on its face that it is intended by the person or persons making it to be a deed has effect, upon delivery, as a deed; and it shall be presumed, unless a contrary intention is proved, to be delivered upon its being executed.

• (6) In favour of a purchaser a document shall be deemed to have been duly executed by a company if it purports to be signed by at least one director or, in the case of a director which is a body corporate, it purports to be executed by that director; and, where it makes it clear on its face that it is intended by the person or persons making it to be a deed, it shall be deemed to have been delivered upon its being executed.

• (7) In paragraph (6) above, “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.

Execution of deeds overseas: England and Wales

52

• (1) Under the law of England and Wales an investment company with variable capital may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place elsewhere than in the United Kingdom.

• (2) A deed executed by such an attorney on behalf of the company has the same effect as if it were executed under the company’s common seal.

Authentication of documents: England and Wales

53

A document or proceeding requiring authentication by an investment company with variable capital is sufficiently authenticated for the purposes of the law of England and Wales—

• (a) by the signature of a director or other authorised officer of the company; or

• (b) in the case of a director which is a body corporate, if it is executed by that director.

Official seal for share certificates

54

• (1) An investment company with variable capital which has a common seal may have, for use for sealing shares issued by the company and for sealing documents creating or evidencing shares so issued, an official seal which is a facsimile of its common seal with the addition on its face of the word “securities”.

• (2) The official seal when duly affixed to a document has the same effect as the company’s common seal.

• (3) Nothing in this regulation shall affect the right of an investment company with variable capital registered in Scotland to subscribe such shares and documents in accordance with the Requirements of Writing (Scotland) Act 1995[^f00021].

Personal liability for contracts and deeds

55

• (1) A contract which purports to be made by or on behalf of an investment company with variable capital at a time before the company’s instrument of incorporation has been registered in accordance with regulation 4(2) above shall have effect, subject to any agreement to the contrary, as a contract made with the person purporting to act for the company or as agent for it, and he shall be personally liable on the contract accordingly.

• (2) Paragraph (1) above applies—

• (a) to the making of a deed under the law of England and Wales; and

• (b) to the undertaking of an obligation under the law of Scotland;

as it applies to the making of a contract.

• (3) If a company enters into a transaction at a time after the authorisation order made in respect of the company has been revoked and the company fails to comply with its obligations in respect of that transaction within 21 days from being called upon to do so, the person who authorised the transaction is liable, and where the transaction was authorised by two or more persons they are jointly and severally liable, to indemnify the other party to the transaction in respect of any loss or damage suffered by him by reason of the company’s failure to comply with those obligations.

Exemptions from liability to be void

56

• (1) This regulation applies to any provision, whether contained in the instrument of incorporation of an investment company with variable capital or in any contract with the company or otherwise—

• (a) which exempts any officer of the company or any person (whether or not an officer of the company) employed by the company as auditor from, or indemnifies him against, any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company; or

• (b) which exempts the depositary of the company from, or indemnifies him against, any liability for any failure to exercise due care and diligence in the discharge of his functions in respect of the company.

• (2) Except as provided by the following paragraph, any such provision is void.

• (3) This regulation does not prevent a company—

• (a) from purchasing and maintaining for any such officer, auditor or depositary insurance against any such liability; or

• (b) from indemnifying any such officer, auditor or depositary against any liability incurred by him—

• (i) in defending any proceedings (whether civil or criminal) in which judgment is given in his favour or he is acquitted; or

• (ii) in connection with any application under regulation 57 below in which relief is granted to him by the court.

Power of court to grant relief in certain cases

57

• (1) This regulation applies to—

• (a) any proceedings for negligence, default, breach of duty or breach of trust against an officer of an investment company with variable capital or a person (whether or not an officer of the company) employed by the company as auditor; or

• (b) any proceedings against the depositary of such a company for failure to exercise due care and diligence in the discharge of his functions in respect of the company.

• (2) If in any proceedings to which this regulation applies it appears to the court hearing the case—

• (a) that the officer, auditor or depositary is or may be liable in respect of the cause of action in question;

• (b) that, nevertheless, he has acted honestly and reasonably; and

• (c) that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused from the liability sought to be enforced against him;

the court may relieve him, either wholly or partly, from his liability on such terms as it may think fit.

• (3) If any such officer, auditor or depositary has reason to apprehend that any claim will or might be made against him in proceedings to which this regulation applies, he may apply to the court for relief.

• (4) The court, on an application under paragraph (3) above, has the same power to relieve the applicant as under this regulation it would have had if it had been a court before which the relevant proceedings against the applicant had been brought.

• (5) Where a case to which paragraph (2) above applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if he is satisfied that the defendant or defender ought in pursuance of that paragraph to be relieved either in whole or in part from the liability sought to be enforced against him, withdraw the case in whole or in part from the jury and forthwith direct judgment to be entered for the defendant or defender on such terms as to costs or otherwise as the judge may think proper.

Punishment for fraudulent trading

58

• (1) If any business of an investment company with variable capital is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who was knowingly a party to the carrying on of the business in that manner is guilty of an offence and 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 the statutory maximum or to both.

• (2) This regulation applies whether or not the company has been, or is in the course of being, wound up (whether by the court or otherwise).

Power to provide for employees on cessation or transfer of business

59

• (1) The powers of an investment company with variable capital include power to make the following provision for the benefit of persons employed or formerly employed by the company, that is to say, provision in connection with the cessation or the transfer to any person of the whole or part of the undertaking of the company.

• (2) The power conferred by paragraph (1) above is exercisable notwithstanding that its exercise is not in the best interests of the company.

• (3) The power which a company may exercise by virtue of paragraph (1) above shall only be exercised by the company if sanctioned—

• (a) in a case not falling within sub-paragraph (b) or (c) below, by a resolution of the company in general meeting;

• (b) if so authorised by the instrument of incorporation—

• (i) in the case of a company that has only one director, by a resolution of that director; and

• (ii) in any other case, by such resolution of directors as is required by SIB regulations; or

• (c) if the instrument of incorporation requires the exercise of the power to be sanctioned by a resolution of the company in general meeting for which more than a simple majority of the shareholders voting is necessary, by a resolution of that majority;

and in any case after compliance with any other requirements of the instrument of incorporation applicable to the exercise of the power.

Reports

Reports: preparation

60

• (1) The directors of an investment company with variable capital shall—

• (a) prepare a report (“annual report”) for each annual accounting period of the company; and

• (b) subject to paragraph (2) below, prepare a report (“half-yearly report”) for each half-yearly accounting period.

• (2) Where a company’s first annual accounting period is a period of less than 12 months, a half-yearly report need not be prepared for any part of that period.

• (3) The directors of a company shall lay copies of the annual report before the company in general meeting.

• (4) Nothing in this regulation or in regulation 61 below shall prejudice the generality of regulation 6(1) above.

• (5) In this regulation any reference to annual and half-yearly accounting periods of a company is a reference to those periods as determined in relation to that company in accordance with SIB regulations.

Reports: accounts

61

• (1) The annual report of an investment company with variable capital shall, in respect of the annual accounting period to which it relates, contain accounts of the company.

• (2) The company’s auditors shall make a report to the company’s shareholders in respect of the accounts of the company contained in its annual report.

• (3) A copy of the auditors' report shall form part of the company’s annual report.

Reports: voluntary revision

62

• (1) If it appears to the directors of an investment company with variable capital that any annual report of the company did not comply with the requirements of these Regulations or SIB regulations, they may prepare a revised annual report.

• (2) Where copies of the previous report have been laid before the company in general meeting or delivered to the registrar of companies, the revisions shall be confined to—

• (a) the correction of anything in the previous report which did not comply with the requirements of these Regulations or SIB regulations; and

• (b) the making of any necessary consequential alterations.

Auditors

63

Schedule 6 to these Regulations (which makes provision with respect to the auditors of investment companies with variable capital) shall have effect.

Mergers and divisions

Mergers and divisions

64

Schedule 7 to these Regulations (which makes provision with respect to mergers and divisions involving investment companies with variable capital) shall have effect.

PART IV — MISCELLANEOUS

Notifications to registrar of companies

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 of companies 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 of companies notice of—

• (i) the place where the copies and memoranda required to be kept by regulation 30 above 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 of companies 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 of companies—

• (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 companies of—

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

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

• (c) any change in the depositary of the company; and

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

• (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 of companies—

• (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 above send to the registrar of companies 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 to these Regulations, a company shall not later than 14 days after the holding of the meeting notify the registrar of companies 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 to these Regulations, a company shall not later than 14 days after the deposit of the notice send a copy of the notice to the registrar of companies.

• (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 companies 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 I 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 above or paragraph 3(3) or 19(1) of Schedule 6 to these Regulations shall not be instituted, in England and Wales, except by or with the consent of the Secretary of State or the Director of Public Prosecutions.

• (2) Proceedings in respect of an offence under any other provision of these Regulations shall not be instituted, in England and Wales, except by SIB or by or with the consent of the Secretary of State 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 or other 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) above 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) Any information relating to an offence under these Regulations which is triable by a magistrates' court in England and Wales may be so tried on an information laid 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) Proceedings in Scotland for an offence triable only summarily which is alleged to have been committed under these Regulations may be commenced at any time within 12 months after the date on which evidence sufficient in the Lord Advocate’s opinion to justify the proceedings came to his knowledge or, where such evidence was reported to him by the Secretary of State or SIB, within 12 months after the date on which it came to the knowledge of the Secretary of State or SIB (as the case may be).

• For the purposes of this paragraph proceedings shall be deemed to be commenced on the date on which a warrant to apprehend or to cite the accused is granted, if the warrant is executed without undue delay.

• (3) Paragraph (1) above does not authorise the trial of an information laid, and paragraph (2) does not authorise the commencement of proceedings, more than three years after the commission of the offence.

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

• (5) Nothing in this regulation affects proceedings within the time limits prescribed by section 127(1) of the Magistrates' Courts Act 1980[^f00022] or section 136 of the Criminal Procedure (Scotland) Act 1995[^f00023] (the usual time limits for criminal proceedings).

• (6) 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) above, may not do so without the consent of the Secretary of State or the Director of Public Prosecutions, the Secretary of State or the Director of Public Prosecutions; and

• (b) in any other case where proceedings are instituted in England and Wales, 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 rules of court relating to the service of documents apply as in relation to a body corporate.

• (3) Section 33 of the Criminal Justice Act 1925[^f00024] and Schedule 3 to the Magistrates' Courts Act 1980[^f00025] (procedure on charge of offence against a corporation) apply in a case in which an unincorporated association is charged in England and Wales with an offence under these Regulations as they apply in the case of a corporation.

• (4) In relation to proceedings on indictment in Scotland for an offence alleged to have been committed under these Regulations by an unincorporated association, section 70 of the Criminal Procedure (Scotland) Act 1995[^f00026] (proceedings on indictment against bodies corporate) applies as if the association were a body corporate.

• (5) 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 of companies.

• (2) Any such document may be given to or served on the person in question—

• (a) by delivering it to him;

• (b) by leaving it at his proper address; or

• (c) by sending it by post to him at that address.

• (3) Any such document may—

• (a) in the case of an investment company with variable capital, be given to or served on any director of the company;

• (b) in the case of any other body corporate (including any director referred to in sub-paragraph (a) above which is a body corporate) be given to or served on the secretary or clerk of that body;

• (c) in the case of a partnership, be given to or served on any partner; and

• (d) in the case of an unincorporated association other than a partnership, be given to or served on any member of the governing body of that association.

• (4) For the purposes of this regulation and section 7 of the Interpretation Act 1978[^f00027] (service of documents by post) in its application to this regulation, the proper address of any person is his last known address (whether of his residence or of a place where he carries on business or is employed) and also—

• (a) in the case of an investment company with variable capital or any of its directors, the company’s head office;

• (b) in the case of any other body corporate (including any director referred to in paragraph (3)(a) above which is a body corporate) or its secretary or clerk, the address of its registered or principal office in the United Kingdom.

• (c) in the case of an unincorporated association (other than a partnership) or a member of its governing body, 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[^f00028] 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[^f00029].

• (2) The function 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 above shall be accompanied by such fee as may be prescribed by SIB by virtue of paragraph (3)(a) below; 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) below.

• (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)[^f00030] in respect of managers of authorised unit trust schemes and operators of recognised schemes.

Minor and consequential amendments

75

The enactments mentioned in Schedule 8 to these Regulations (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 1985 ACT

1

Part XXIV of the 1985 Act (the registrar of companies, his functions and offices) shall, subject to the modifications set out in paragraphs 2 to 8 below, apply for the purposes of the registration of, and the functions of the registrar of companies 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 section 735(1) of that Act.

• (2) Except in the expressions “the registrar of companies” and “the Companies Acts”, any reference to companies (including any such reference in section 711 of the 1985 Act as it applies with the modifications set out in paragraph 6 below) shall be taken to be a reference to investment companies with variable capital.

• (3) Any reference to the Companies Acts (including any reference to the 1985 Act, 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 1985 Act 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) Section 711 of the 1985 Act (public notice by registrar of receipt and issue of certain documents) shall apply as if for paragraphs (a) to (z) of subsection (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) above;

• (f) any copy of an order in respect of a company made by virtue of regulation 64 above;

• (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

Section 714 (registrar’s index of company and corporate names) shall have effect as if the bodies listed in subsection (1) of that section 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 Northern Ireland 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 1985 Act shall not apply, that is to say—

• (a) in section 705, the words in subsection (4) from “but for a period” to the end and subsection (5);

• (b) section 705A;

• (c) section 707A(4);

• (d) section 710;

• (e) section 710B(6) and (7);

• (f) section 711(2);

• (g) in section 711A, in subsection (1) the words “or made available by the company for inspection” and subsection (4); and

• (h) section 714(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 above as depositary of the company shall be deemed to be appointed as its first depositary.

2

Subject to regulations 15 and 20 above, 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) above 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 a court order made under regulation 20 above, 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 to these Regulations) 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 paragraph (b) above, 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 each of the registrar of companies 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) above in relation to the statement deposited under sub-paragraph (1) above.

• (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) above 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 each of the registrar of companies 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) above 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 above.

• (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) above 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) above 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 below; and

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

2

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

• (a) the head office of the company is situated in England and Wales, Wales or Scotland (as the case may be);

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

• (c) the shareholders are not liable for the debts of the company;

• (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 or SIB regulations; and

• (c) the currency in which the accounts of the company are to be prepared.

• (2) Subject to sub-paragraph (3) below, the provision referred to in sub-paragraph (1)(a) above 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) above 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;

• (c) the maximum and minimum sizes of the company’s capital;

• (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 above, 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) above, 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 above.

• (2) Subject to paragraph 3(3) above 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 above 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) below, 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 numbers of shares mentioned in paragraphs 5(1)(b) and 7 below 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) below, 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) above has effect subject to regulation 23(7) of the Uncertificated Securities Regulations 1995[^f00031] (purported registration of transfer of title to uncertificated unit other than in accordance with that regulation to be of no effect).

3

In the case of companies registered in England and Wales, no notice of any trust, express, implied or constructive, shall 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.

Contents

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 to these Regulations (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) above—

• (a) for the purposes of paragraph (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 paragraph (c), “uncertificated form” and “certificated form” have the same meaning as in the Uncertificated Securities Regulations 1995[^f00032].

• (3) The statements referred to in paragraphs (b) and (c) of sub-paragraph (1) above 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 to these Regulations 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) above or paragraph 6 of Schedule 5 to these Regulations, the 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) above, “uncertificated form” and “certificated form” have the same meaning as in the Uncertificated Securities Regulations 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 above 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 above, or the number of bearer shares of that class referred to in paragraph 7 above, shall be taken to be the total of—

$N+np$

• (3) In sub-paragraph (2) above—

• (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) above 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 above 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) below apply where, in accordance with paragraph 9(b) above, 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 above; or

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

• (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) above is liable in respect of each default on summary conviction to a fine not exceeding level 1 on the standard scale.

• (4) The power of the court under paragraph 11(3) above 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.

SCHEDULE 5 — SHARE TRANSFERS

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[^f00033] (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 may 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 above, the company may 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) above 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) above 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 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 above, a share certificate relating to the shares in question;

• (c) in a case falling within paragraph (3) of that regulation above, 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 above, 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 value 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) above (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 prima facie title to the shares in the transferor named in the instrument of transfer.

• (2) For the purposes of sub-paragraph (1) above, 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) above 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 above 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 the preceding provisions of this Schedule 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

No person is eligible for appointment as auditor of an investment company with variable capital unless he is also eligible under section 25 of the Companies Act 1989[^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) above, an auditor of a company shall not be regarded as an officer or employee of the company.

• (3) The power of the Secretary of State to make regulations under section 27 of the Companies Act 1989 (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) No person shall 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) above or fails to give notice of vacating his office as required by sub-paragraph (2) above is guilty of an offence and liable—

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

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

• (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) above) 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 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) above, 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 above, 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) below 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) below 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) above, 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) above 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 the statutory maximum 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.