The Financial Services Act 1986 (Single Property Schemes) (Exemption) Regulations 1989

Requirements as to form of scheme

6.—(1) A scheme must be either a trust based scheme or a corporate based scheme.

(2) If a scheme is a trust based scheme–

(a) the trustee must be a body corporate incorporated in the United Kingdom or another member State, the affairs of which are administered in the country in which it is incorporated and which has a place of business in the United Kingdom and is independent of the operator; and

(b) the terms of the scheme must provide–

(i) for there to be an authorised person (“the operator”) who is responsible for the management of the scheme;

(ii) that no person may be the operator of the scheme except a body corporate incorporated in the United Kingdom or another member State, the affairs of which are administered in the country in which it is incorporated and which has a place of business in the United Kingdom;

(iii) for units in the scheme to be issued by the operator;

(iv) for any certificates evidencing title to units to be issued in the name of and solely by the operator;

(v) for all units to be issued fully paid;

(vi) for the trustee to hold the land and the building or group of adjacent or contiguous buildings forming part of the property subject to the scheme on trust for sale, or, in Scotland, on trust, for participants in proportion to their respective entitlements as determined by the number of units in respect of which they are registered; and

(vii) that the trustee has power to postpone the sale of the property subject to the scheme except in a case in which the sale of the property has been directed as mentioned in regulation 11(1)(a) or approved as mentioned in regulation 12(1).

(3) If a scheme is a corporate based scheme the terms of the scheme provide that–

(a) the operator must be a body corporate–

(i) incorporated, with limited liability, in the United Kingdom or another member State, the affairs of which are administered in the country in which it is incorporated and which has a place of business in the United Kingdom;

(ii) the main objects of which are to hold a leasehold interest in the whole or a substantial part of the building or group of adjacent or contiguous buildings forming part of the property subject to the scheme and to manage that property or to arrange for it to be managed on its behalf; and

(iii) the documents constituting which provide that all shares in it must be issued fully paid; and

(b) all participants of a kind described in paragraph (4) must be entitled to elect at least such number of directors of the body corporate as bears the same proportion, in relation to the total number of directors, as the number of shares held by those participants bears to the total issued share capital of the body corporate.

(4) A participant falls within this paragraph if he has no freehold interest in the property subject to the scheme and has no leasehold interest in that property which is superior to any interest held by the operator.