Financial Services and Markets Bill - continued        House of Lords

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  PART XVII
  COLLECTIVE INVESTMENT SCHEMES
  CHAPTER I
  INTERPRETATION
Collective investment schemes.     229. - (1) In this Part "collective investment scheme" means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
 
      (2) The arrangements must be such that the persons who are to participate ("participants") do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions.
 
      (3) The arrangements must also have either or both of the following characteristics-
 
 
    (a) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled;
 
    (b) the property is managed as a whole by or on behalf of the operator of the scheme.
      (4) If arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts of the property, the arrangements are not to be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another.
 
      (5) The Treasury may by order provide that arrangements do not amount to a collective investment scheme-
 
 
    (a) in specified circumstances; or
 
    (b) if the arrangements fall within a specified category of arrangement.
Other definitions.     230. - (1) In this Part "unit trust scheme" means a collective investment scheme under which the property is held on trust for the participants.
 
      (2) In this Part "an open-ended investment company" means a collective investment scheme under which-
 
 
    (a) the property belongs beneficially to, and is managed by or on behalf of, a body corporate having as its purpose the investment of its funds with the aim of-
 
      (i) spreading investment risk; and
 
      (ii) giving its members the benefit of the results of the management of those funds by or on behalf of that body; and
 
    (b) the rights of the participants are represented by shares in or securities of that body which-
 
      (i) the participants are entitled to have redeemed or repurchased, or which (otherwise than under other provisions) are redeemed or repurchased from them by, or out of funds provided by, that body; or
 
      (ii) the body ensures can be sold by the participants on an investment exchange at a price related to the value of the property to which they relate.
      (3) "Other provisions" means-
 
 
    (a) Chapter VII of Part V of the Companies Act 1985;
 
    (b) Chapter VII of Part VI of the Companies (Northern Ireland) Order 1986; or
 
    (c) corresponding provisions in force in another EEA State.
      (4) In this Part-
 
 
    "trustee", in relation to a unit trust scheme, means the person holding the property in question on trust for the participants;
 
    "depositary", in relation to-
 
      (a) a collective investment scheme which is constituted by a body incorporated by virtue of regulations under section 256, or
 
      (b) any other collective investment scheme which is not a unit trust scheme,
 
    means any person to whom the property subject to the scheme is entrusted for safekeeping;
 
    "the operator", in relation to a unit trust scheme with a separate trustee, means the manager and in relation to an open-ended investment company, means that company;
 
    "units" means the rights or interests (however described) of the participants in a collective investment scheme.
      (5) In this Part-
 
 
    "an authorised unit trust scheme" means a unit trust scheme which is authorised for the purposes of this Act by an authorisation order in force under section 236;
 
    "an authorised open-ended investment company" means a body incorporated by virtue of regulations under section 256 in respect of which an authorisation order is in force under any provision made in such regulations by virtue of subsection (2)(l) of that section;
 
    "a recognised scheme" means a scheme recognised under section 258, 262 or 264.
 
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Prepared 11 February 2000