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Financial Services and Markets Act 2000

Chapter V: Recognised overseas schemes
Section 264: Schemes constituted in other EEA States

489.This section relates to the ability of collective investment schemes constituted in other EEA States to passport into the United Kingdom. EEA schemes will be recognised if:

  • they satisfy requirements prescribed by Treasury regulations;

  • the operator of the scheme gives notice to the Authority of the proposal to invite UK persons to participate in the scheme; and

  • the Authority does not give notice that the way in which the invitation is to be made does not comply with the relevant UK law.

Section 265: Representations and references to the Tribunal

490.This section sets out the procedure if the Authority gives notice that it does not consider that the proposed invitations will comply with UK law, and representations are made to the Authority in response. The procedures allow for rights of reference to the Tribunal where the Authority issues a decision notice confirming that the way in which the proposed invitations are to be made does not comply with UK law.

Section 266: Disapplication of rules

491.Rules made by the Authority will not generally apply to the operator, trustee or depositary of a recognised scheme under section 264. The exceptions are financial promotion rules, and rules relating to the maintenance of facilities in the United Kingdom (under section 283(1)).

Section 267: Power of authority to suspend promotion of scheme

492.Although it cannot suspend an EEA scheme’s recognition, the Authority can suspend its promotion to the public if it appears that the operator has contravened financial promotion rules. The warning and decision notice procedure will apply and the Authority will be required to notify the scheme’s home State authority if it decides to give a direction under this section. The operator will have a right to refer the decision to the Tribunal.

493.Under this section, the Authority may also revoke, as well as vary, a direction suspending the promotion of an EEA scheme, where specified conditions are met.

Section 268: Procedure in giving directions under section 267 and varying them on Authority’s own initiative

494.This section establishes the procedure the Authority must follow when it proposes to give, or on its own initiative vary, a direction under section 267 suspending the promotion of a scheme which is recognised under section 264.  This is the same written notice procedure as described in relation to section 53 except that the notices in question are to be given to the operator of the scheme concerned. In addition the Authority is required, when giving notice under this section, to inform the competent authorities in the scheme’s home State.

Section 269: Procedure on application for variation or revocation of direction

495.This section sets out the procedure the Authority must follow on receipt of an application under section 267(4) or (5) for variation or revocation of a direction suspending the promotion of a scheme which is recognised under section 264. Where an application is granted in full, simple written notice is to be given under subsection (4).  The same applies where the Authority decides to revoke a direction on its own initiative under subsection (5).  Where the Authority proposes to refuse the application, or proposes to vary the direction in a way other than that requested in the application, the applicant is entitled to receive a warning notice setting out the reasons for the decision, the standard opportunity to make representations, a decision notice and the right to refer the matter to the Tribunal if still aggrieved by the decision.  Notices under this section are to be given to the operator of the scheme concerned, but in addition the Authority is required to inform the competent authorities in the scheme’s home State.

Section 270: Schemes authorised in designated countries or territories

496.Schemes managed in, and authorised under, the law of non-EEA territories can be recognised under this section. In order to be recognised, the relevant territory needs to be designated by an order made by the Treasury, and the Authority must give its approval to the scheme being recognised. The Treasury may not make an order designating a territory unless it is satisfied that the relevant overseas law under which the scheme is authorised and supervised affords at least equivalent protection to that provided by the UK law on collective investment schemes.

497.In considering whether to make an order designating a country or territory under this section, the Treasury must ask the Authority for a report on the law and practice of the country or territory in question and on any arrangements it has made to co-operate with the authorities there.

Section 271: Procedure

498.If the Authority proposes to refuse to approve a scheme under section 270, it must give the operator a warning notice. The decision notice procedure will apply, and the decision may be referred to the Tribunal.

Section 272: Individually recognised overseas schemes

499.This section allows the Authority to recognise schemes which are not managed in an EEA country or a designated territory.

500.In order to be recognised, the Authority must be satisfied as to various matters, including the adequacy of protection for the participants in the place where the scheme is established, the adequacy of the constitution and management and of the powers and duties of the operator, trustee and depositary (if any), and that those persons are either authorised (with appropriate permissions) or, if not authorised, fit and proper persons. In addition, overseas schemes will only be recognised under this section if they are oeics or schemes where the operator is a body corporate.

Section 273: Matters that may be taken into account

501.This section specifies matters which the Authority can take into account when considering whether the operator, trustee or depository of an individually recognised scheme is fit and proper.

Section 274: Applications for recognition of individual schemes

502.The Authority has broad scope to specify the form and content of applications (which must be made by the operator) and to seek additional information before determining an application.

Section 275: Determination of applications

503.This section sets out the time periods which will apply for the determination of an application. Completed applications are to be determined within six months.

Section 276: Procedure when refusing an application

504.The Authority must go through the warning and decision notice procedure if it proposes to refuse an application. The applicant may refer the refusal to the Tribunal.

Section 277: Alteration of schemes and changes of operator, trustee or depository

505.Changes to the scheme itself cannot be made unless the operator has given notice to the Authority, and the Authority has either approved the proposal, or not notified its disapproval. As for the replacement of the operator, trustee or depositary, at least one month’s notice must be given to the Authority either by the person being replaced, or the person proposing to replace him, but there is no express provision for the Authority to approve or disapprove the replacements.

Section 278: Rules as to scheme particulars

506.The Authority may make rules imposing duties on the operators of recognised schemes which are constituted in designated territories under section 270 or which are individually recognised under section 272. These rules broadly correlate to scheme particulars rules for authorised unit trusts.

Section 279: Revocation of recognition

507.Recognition of schemes constituted in designated territories or individually recognised schemes can be revoked in the circumstances set out in this section. These are broadly similar to the grounds for revocation of an authorisation order under section 254.

Section 280: Procedure

508.If the Authority proposes to revoke recognition under section 279, the warning and decision notice procedure will apply. Notice must be given to the operator, and if any, the trustee and depositary. The decision may be referred to the Tribunal.

Section 281: Directions

509.Instead of proposing to revoke recognition under section 279, the Authority can effectively direct that a scheme’s recognition will be suspended.

Section 282: Procedure on giving directions under section 281 and varying them otherwise than as requested

510.This section establishes the procedure the Authority must follow when it proposes to give a direction by virtue of its powers of intervention against schemes recognised under sections 270 and 272.  This is the same written notice procedure as described in relation to section 53, except that in this case separate notices must be given to both the operator and (if there is one) to the trustee or depository of the scheme.

Section 283: Facilities and information in the UK

511.The Authority may make rules requiring operators of all recognised schemes to maintain facilities in the United Kingdom. It may also require the operator of a recognised scheme to include explanatory information in financial promotions which name the scheme.

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