6 Insertion of Part 1A
After regulation 9 (abbreviations and general index) insert the following Part—

“PART 1A THE GENUINE DIVERSITY OF OWNERSHIP CONDITION

9A The genuine diversity of ownership condition
1 For the purposes of these Regulations, the genuine diversity of ownership condition is as follows.
2 The genuine diversity of ownership condition is that an authorised investment fund must—
(a) meet conditions A to C throughout the accounting period; or
(b) comply with paragraph (8).
3 Condition A is that the fund documents—
(a) contain a statement that units in the fund will be widely available,
(b) specify the intended categories of investor, and
(c) specify that the manager of the fund must market and make available the units in the fund in accordance with paragraph 9A(6)(a).
4 Condition B is that neither—
(a) the specification of the intended categories of investor, nor
(b) any other terms or conditions governing participation in the fund, whether or not specified in the fund documents,
have a limiting or deterring effect.
5 In paragraph (4) a limiting or deterring effect means an effect which—
(a) limits investors to a limited number of specific persons or specific groups of connected persons, or
(b) deters a reasonable investor within the intended categories of investor from investing in the fund.
6 Condition C is that—
(a) units in the fund must be marketed and made available—
(i) sufficiently widely to reach the intended categories of investors, and
(ii) in a manner appropriate to attract those categories of investors; and
(b) a person who is in an intended category of investor can, upon request to the manager of the fund, obtain information about that fund and acquire units in it.
Condition C is subject to paragraph (7).
7 Condition C shall be treated as being met even if at the relevant time the fund has no capacity to receive additional investments, unless—
(a) the capacity of the fund to receive investments in it is fixed by the fund documents (or otherwise), and
(b) a pre-determined number of specific persons or specific groups of connected persons make investments in the fund which collectively exhausts all, or substantially all, of that capacity.
8 An authorised investment fund which is a Property AIF also meets the genuine diversity of ownership condition if—
(a) an investor in the fund is a unit trust scheme (a “feeder fund”);
(b) conditions A to C are met in relation to the authorised investment fund after taking into account—
(i) the fund documents relating to the feeder fund, and
(ii) the intended investors in the feeder fund; and
(c) the authorised investment fund and the feeder fund have the same manager (or proposed manager).
9 In this Part “fund documents” means—
(a) the instrument constituting the fund, and
(b) the fund’s prospectus in issue for the time being (including any supplements to the prospectus).

9B Clearance in relation to the genuine diversity of ownership condition
1  An application for clearance that an authorised investment fund meets the genuine diversity of ownership condition (see regulation 9A) may be made in writing to the Commissioners by the manager (or proposed manager) of an authorised investment fund.
2 An application for clearance must be accompanied by the fund documents in the form in which it is proposed that those documents will apply at the beginning of the first accounting period of the fund for which clearance is sought.
3 If regulation 9A(2)(b) and (8) applies, an application for clearance by the authorised investment fund must be accompanied by—
(a) the documents specified in paragraph (2), and
(b) the fund documents of the feeder fund in the form in which it is proposed that those documents will apply at the beginning of the first accounting period of the fund for which clearance is sought.
4 The Commissioners may require the manager (or proposed manager) to provide further particulars if they believe that full particulars of the fund have not been provided.
5 The Commissioners must notify the applicant within 28 days of the receipt of the particulars (or, if paragraph (4) applies, of all further particulars required) that they—
(a) give clearance that the fund meets the genuine diversity of ownership condition,
(b) give that clearance subject to conditions, or
(c) refuse to give that clearance.
6 An authorised investment fund (and investors in that fund) may not rely on a clearance given under this regulation if—
(a) at the beginning of the first accounting period of the fund to which the clearance relates (and at the beginning of each subsequent accounting period), a relevant statement in the fund documents in issue for the time being is not in accordance with a relevant statement in the documents considered by the Commissioners before giving clearance,
(b) the fund acts or is operated in contravention of a relevant statement in the fund documents,
(c) the fund documents are materially amended, or
(d) the fund is operated otherwise than in accordance with condition C of the genuine diversity of ownership condition (see regulation 9A(6)).
7 If regulation 9A(2)(b) and (8) applies an authorised investment fund (and investors in that fund) may not rely on a clearance given under this regulation if any of sub-paragraphs (a) to (d) of paragraph (6) apply in relation to either the authorised investment fund or the feeder fund.
8 Paragraph (6)(c) does not apply if the manager of the fund has obtained a clearance given under this regulation which applies to the amendment.
9 For the purposes of paragraph (6)(c), a material amendment is one that may reasonably be construed as causing, or likely to cause, the fund to fail to meet the genuine diversity of ownership condition in relation to any accounting period.”

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