Authorised Collective Investment Schemes
Authorised Collective Investment Schemes ('Authorised CIS') are retail funds authorised by the Isle of Man Financial Services Authority ('the Authority').
- Type A schemes are analogous to undertakings for collective investment in transferable securities “UCITS”; and
- Type B schemes are schemes which are not limited to operating under investment and borrowing powers which are analogous to those under the UCITS directive, including funds of alternative investment funds “FAIFs”.
For forms applicable to Authorised CIS please click on the forms page found under the Regulated Entities tab on the banner above.
1What are the requirements for Authorisation?
To obtain an Authorisation Order, declaring a scheme to be an Authorised CIS, the proposed manager and the proposed fiduciary custodian/trustee must make a joint application to the Authority, using the application form for Authorisation of a Scheme – Open Ended Investment Company or the Application form for Authorisation of a Scheme – Unit Trust (as appropriate). The application form will be submitted via the online portal (https://www.fscreturns.co.im) by the proposed manager and a copy should be printed and signed by the fiduciary custodian/trustee prior to submission to the Authority. This form should be accompanied by -
- a copy of the scheme’s constitutional documents and in the case of a company, the certificate of incorporation;
- a copy of any investment management agreement or other document under which investment management is carried out (including schedule of fees);
- a copy of all material agreements;
- completed personal questionnaires in respect of the chairman, company secretary and all other members of the governing body of the scheme (see vetting guidance and vetting forms for more information);
- a copy of the proposed offer document;
- a plan for the scheme covering three years or such longer period as, in the opinion of the manager, will be necessary to enable the scheme to become of a viable size in particular, the following details should be given:-
- in respect of a new scheme, its proposed launch date;
- how the units will be sold and to whom;
- the countries in which it is proposed that the units shall be marketed;
- any intended insurance link;
- the initial price of the units;
- the initial charges; and
- any minimum transaction size, both initially and subsequently if different.
- in respect of an existing scheme, a copy of the latest annual report and any subsequent half-yearly report;
- the appropriate application fee (calculated using the Collective Investment Schemes (Fees) Order);
- a certificate signed by an advocate to the effect that the contents of the scheme's constitutional documents comply with the requirements of the Authorised Collective Investment Schemes Regulations 2010. It is recommended that when applying for authorisation the application form should be accompanied by a final draft of the scheme's constitutional documents, so that the Authority can raise any comments or queries on them, before the constitutional documents are executed and the advocate's certificate provided.
- Information showing how the fund complies with the requirements of the Authorised Collective Investment Schemes Regulations 2010 in relation to the contents of the offer documents and documents constituting a scheme.
- For FAIFs, a detailed response as to how the fund manager will approach the matters set out in the ‘Additional considerations for FAIFs’ guidance note.
The proposed manager and proposed fiduciary custodian/trustee must hold a licence allowing it to act in this role to an Authorised CIS. The proposed manager must be based in the IOM and hold a financial services licence with the relevant Class 3 permissions. If an application is being made by a manager who does not hold a financial services licence with Class 3(1) permissions covering Authorised CIS, it will need to apply to the Authority for those permissions (see the Authority's licensing policy).
The proposed fiduciary custodian/trustee may be located in the IOM or outside the IOM, subject to it being:
- a body corporate that —
- is incorporated in a jurisdiction with which the Authority has a co-operation agreement that includes provisions in relation to collective investment schemes;
- is authorised to act as a trustee or fiduciary custodian for retail collective investment schemes in its jurisdiction of incorporation; and
- receives the Authority's approval to act as such in relation to Authorised CIS.
If the Authority is satisfied that the scheme's application is in line with paragraph 1 of Schedule 1 to the Collective Investment Schemes Act ("Act") and that all the requirements of paragraph 2 of Schedule 1 to the Act, it may make an Order declaring a scheme to be an Authorised CIS. For a straightforward application, this process normally takes around two months, but in any event the Authority is required to inform the applicants of its decision not later than six months after the date on which the application for authorisation was received.
2How should I notify the Authority of alterations to an Authorised CIS?
Once a scheme has been authorised, any proposed alteration to the scheme, or any proposal to replace either the manager or fiduciary custodian/trustee, must be notified to the Authority via the online portal (https://www.fscreturns.co.im). If an alteration to the documents constituting the scheme is proposed, the request must be accompanied by an advocate’s certificate confirming that the change will not affect compliance of the documents constituting the scheme with the requirements of the Authorised Collective Investment Schemes Regulations 2010. No proposed change or alteration can take effect unless either the Authority has approved the proposal, or one month has elapsed since the date that notice was given.
3What regulations are Authorised CIS subject to?
The Authorised Collective Investment Schemes Regulations 2010, make comprehensive provision for the constitution and operation of Authorised CIS. These include such matters as: the powers and duties of managers and fiduciary custodian/trustees, and in the case of an open-ended investment company scheme its directors; valuation of scheme property, cancellation and creation as well as sale and repurchase of units; investment and borrowing powers and restrictions which differ for type A schemes, type B schemes and type B scheme constituted as FAIFs; contents of reports to holders; meetings and termination of schemes.
Appendix 1 to the Authorised Collective Investment Schemes Regulations 2010 sets out matters which must be provided for in the constitutional documents of a scheme and appendix 2 sets out matters which must be provided for in the offering document.
Paragraph 108(5) of the Schedule to the Authorised Collective Investment Schemes Regulations 2010 states that the duties imposed by the Authorised Collective Investment Schemes Regulations 2010 on the manager and fiduciary custodian/trustee and, where applicable, the company and its directors, are in addition to and not in derogation from the duties which are otherwise imposed upon them by law.
4What is the Authorised Collective Investment Scheme Compensation Scheme?
The Authorised Collective Investment Schemes (Compensation) Regulations 2008 provide for the establishment of a compensation scheme in the event that a manager, trustee or fiduciary custodian of an authorised CIS is unable or likely to be unable to satisfy civil claims incurred in connection with a regulated business. The Regulations allow for contributions from managers, trustees and fiduciary custodians to be levied to create the fund.
Further information for investors regarding the Authorised Collective Investment Scheme Compensation Scheme can be found here.
5What is required to wind up an Authorised CIS?
The Authority expects that the majority of requests it will receive for the winding up of an Authorised CIS or termination of a sub fund will be from Isle of Man managers and fiduciary custodians/trustees who consider that the fund is no longer viable.
It is in the investors interests to minimise, as far as possible, the period between which the Authority receives such requests and responds to them. To assist the process the Authority has issued a guidance note on the information it will require to enable it to reach a decision.