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Financial Services and Markets Bill - continued        House of Commons
PART XVI, COLLECTIVE INVESTMENT SCHEMES - continued
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  CHAPTER V
  RECOGNISED OVERSEAS SCHEMES
 
Schemes constituted in other EEA States
Schemes constituted in other EEA States.     239. - (1) A collective investment scheme constituted in another EEA State is a recognised scheme if-
 
 
    (a) it satisfies such requirements as are prescribed for the purposes of this section; and
 
    (b) not less than two months before inviting persons in the United Kingdom to become participants in the scheme, the operator of the scheme gives notice to the Authority of his intention to do so, specifying the way in which the invitation is to be made.
      (2) But this section does not make the scheme a recognised scheme if within two months of receiving the notice under subsection (1) the Authority notifies-
 
 
    (a) the operator of the scheme, and
 
    (b) the authorities of the State in question who are responsible for the authorisation of collective investment schemes,
  that the way in which the invitation is to be made does not comply with the law in force in the United Kingdom.
 
      (3) The notice to be given to the Authority under subsection (1)-
 
 
    (a) must be accompanied by a certificate from the authorities mentioned in subsection (2)(b) to the effect that the scheme complies with the conditions necessary for it to enjoy the rights conferred by any relevant Community instrument;
 
    (b) must contain the address of a place in the United Kingdom for the service on the operator of notices or other documents required or authorised to be served on him under this Act; and
 
    (c) must contain or be accompanied by such other information and documents as may be prescribed.
      (4) A notice given by the Authority under subsection (2) must-
 
 
    (a) give the reasons for which the Authority considers that the law in force in the United Kingdom will not be complied with; and
 
    (b) specify a reasonable period (which may not be less than 28 days) within which any person to whom it is given may make representations to the Authority.
      (5) For the purposes of this section a collective investment scheme is constituted in another EEA State if-
 
 
    (a) it is constituted under the law of that State by a contract or under a trust and is managed by a body corporate incorporated under that law; or
 
    (b) it takes the form of an open-ended investment company incorporated under that law.
      (6) The operator of a recognised scheme may give written notice to the Authority that he desires the scheme to be no longer recognised by virtue of this section.
 
      (7) On the giving of notice under subsection (6), the scheme ceases to be a recognised scheme.
 
Representations and references to the Tribunal.     240. - (1) This section applies if any representations are made to the Authority, before the period for making representations has ended, by a person to whom a notice was given by the Authority under section 239(2).
 
      (2) The Authority must, within a reasonable period, decide in the light of those representations whether or not to withdraw its notice.
 
      (3) If the Authority withdraws its notice the scheme is a recognised scheme from the date on which the notice is withdrawn.
 
      (4) If the Authority decides not to withdraw its notice, it must give a decision notice to each person to whom the notice under section 239(2) was given.
 
      (5) Section 350(2) does not apply in relation to the reasons given in the decision notice.
 
      (6) A person to whom the decision notice is given may refer the matter to the Tribunal.
 
      (7) Section 108(5) does not apply in relation to a decision referred to the Tribunal under subsection (6).
 
Disapplication of rules.     241. - (1) Apart from-
 
 
    (a) financial promotion rules, and
 
    (b) rules under section 258(1),
  rules made by the Authority under this Act do not apply to the operator, trustee or depositary of a scheme in relation to the carrying on by him of regulated activities for which he has permission in that capacity.
 
      (2) "Scheme" means a scheme which is a recognised scheme by virtue of section 239.
 
Power of Authority to suspend promotion of scheme.     242. - (1) Subsection (2) applies if it appears to the Authority that the operator of a scheme has communicated an invitation or inducement of a kind mentioned in section 212(1) in relation to the scheme in a manner contrary to financial promotion rules.
 
      (2) The Authority may direct that-
 
 
    (a) the exemption from subsection (1) of section 212 provided by subsection (4)(c) of that section is not to apply in relation to the scheme; and
 
    (b) subsection (5) of that section does not apply with respect to things done in relation to the scheme.
      (3) A direction under subsection (2) has effect-
 
 
    (a) for a specified period;
 
    (b) until the occurrence of a specified event; or
 
    (c) until specified conditions are complied with.
      (4) If the Authority proposes to give or vary a direction under this section it must-
 
 
    (a) give the operator of the scheme a warning notice; and
 
    (b) inform the competent authorities in the scheme's home State of its proposal.
      (5) The warning notice must set out the terms of the direction or variation.
 
      (6) If the Authority decides to give or vary a direction under this section-
 
 
    (a) it must give the operator of the scheme a decision notice;
 
    (b) it must inform the competent authorities in the scheme's home State of its decision; and
 
    (c) the operator may refer the matter to the Tribunal.
      (7) If the Authority gives a decision notice it is to be regarded as giving the direction to which the notice relates (with effect from the date specified in the notice), and the notice has effect accordingly.
 
      (8) A direction under this section must be published by the Authority in such a way as it thinks most suitable for bringing it to the attention of those likely to be affected by it.
 
      (9) The Authority may, either on its own initiative or on the application of the operator of the scheme concerned, vary a direction given under subsection (2) if it appears to the Authority that the direction should take effect or continue in force in a different form.
 
      (10) If an event is specified, the direction ceases to have effect on the occurrence of that event.
 
      (11) For the purposes of this section-
 
 
    (a) the scheme's home State is the EEA State in which the scheme is constituted (within the meaning given by section 239);
 
    (b) the competent authorities in the scheme's home State are the authorities in that State who are responsible for the authorisation of collective investment schemes.
      (12) "Scheme" means a scheme which is a recognised scheme by virtue of section 239.
 
      (13) "Specified", in relation to a direction, means specified in it.
 
 
Schemes authorised in designated countries or territories
Schemes authorised in designated countries or territories.     243. - (1) A collective investment scheme which is not a recognised scheme by virtue of section 239 but is managed in, and authorised under the law of, a country or territory outside the United Kingdom is a recognised scheme if-
 
 
    (a) that country or territory is designated for the purposes of this section by an order made by the Treasury;
 
    (b) the scheme is of a class specified by the order;
 
    (c) the operator of the scheme has given written notice to the Authority that he wishes it to be recognised; and
 
    (d) either-
 
      (i) the Authority has given its approval to the scheme's being recognised; or
 
      (ii) two months, beginning with the date on which notice was given under paragraph (c), have expired without the operator receiving a warning notice from the Authority under section 244.
      (2) The Treasury may not make an order designating any country or territory for the purposes of this section unless satisfied-
 
 
    (a) that the law and practice under which relevant collective investment schemes are authorised and supervised in that country or territory affords to investors in the United Kingdom protection at least equivalent to that provided for them by or under this Part in the case of comparable authorised schemes; and
 
    (b) that adequate arrangements exist, or will exist, for co-operation between the authorities of the country or territory responsible for the authorisation and supervision of relevant collective investment schemes and the Authority.
      (3) "Relevant collective investment schemes" means collective investment schemes of the class or classes to be specified by the order.
 
      (4) "Comparable authorised schemes" means whichever of the following the Treasury consider to be the most appropriate, having regard to the class or classes of scheme to be specified by the order-
 
 
    (a) authorised unit trust schemes;
 
    (b) authorised open-ended investment companies;
 
    (c) both such unit trust schemes and such companies.
      (5) If the Treasury are considering whether to make an order designating a country or territory for the purposes of this section-
 
 
    (a) the Treasury must ask the Authority for a report-
 
      (i) on the law and practice of that country or territory in relation to the authorisation and supervision of relevant collective investment schemes,
 
      (ii) on any existing or proposed arrangements for co-operation between it and the authorities responsible in that country or territory for the authorisation and supervision of relevant collective investment schemes,
 
    having regard to the Treasury's need to be satisfied as mentioned in subsection (2);
 
    (b) the Authority must provide the Treasury with such a report; and
 
    (c) the Treasury must have regard to it in deciding whether to make the order.
      (6) The notice to be given by the operator under subsection (1)(c)-
 
 
    (a) must contain the address of a place in the United Kingdom for the service on the operator of notices or other documents required or authorised to be served on him under this Act; and
 
    (b) must contain or be accompanied by such information and documents as may be specified by the Authority.
Procedure.     244. - (1) If the Authority proposes to refuse approval of a scheme's being a recognised scheme by virtue of section 243, it must give the operator of the scheme a warning notice.
 
      (2) To be valid the warning notice must be received by the operator before the end of two months beginning with the date on which notice was given under section 243(1)(c).
 
      (3) If, having given a warning notice, the Authority refuses approval-
 
 
    (a) it must give the operator of the scheme a decision notice; and
 
    (b) the operator may refer the matter to the Tribunal.
      (4) If, having given a warning notice, the Authority decides to approve the scheme's being a recognised scheme by virtue of section 243, it must give the operator of the scheme a decision notice.
 
 
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Prepared 14 December 1999