THE AUTHORISED CLOSED-ENDED INVESTMENT SCHEMES RULES 2008 (“the Authorised Closed-Ended Rules”)
THE REGISTERED COLLECTIVE INVESTMENT SCHEME RULES 2008 (“the Registered CIS Rules”)
PROSPECTUS RULES 2008 (“the Prospectus Rules”)
(together “the Rules”)
EXPLANATORY NOTE AND FEEDBACK ON CONSULTATION
Earlier this year the Commission posted on its website drafts of the Rules for consultation. The response to the consultation was notable and a significant percentage of the comments have been incorporated into the Rules as appropriate. Given the volume of the responses submitted it has not been possible to provide a line by line commentary of the changes incorporated into the Rules but rather the purpose of this document is to outline the main themes raised from the consultation and in particular to provide our reasoning where we have not incorporated comments from the consultation. The finalised rules are made with effect from 15 December 2008.
On the whole the comments covered all of the Rules and this, unless specified otherwise is how they are reported here:-
1. Consistency of Drafting between the Rules.
We have endeavoured as far as possible to ensure that the Rules are now consistent in their drafting.
2. Use of terms Designated Manager and Authorised Closed-Ended Investment Schemes.
There were suggestions that in relation to the closed –ended collective investment schemes we should use the term administrator rather than designated manager. We have decided to retain designated manager as this is the term that is used in the POI Law. Similarly since the POI Law provides for the Commission to declare a collective investment scheme as authorised we have used that term rather than regulated and you will have seen that we inserted the term authorised into The Authorised Collective Investment Schemes (Class A) Rules 2008 and include it in future planned revisions of the Class B and Class Q Rules. The guidance sections of both the Authorised Closed-Ended Rules and the Registered CIS Rules have been amended to clarify which types of collective investment schemes they cover.
3. Conflicts of Interests
Comments included that a conflicts of interest section within the Rules is considered misplaced and would be better addressed within the law governing the conduct of the industry service providers i.e. the licensees and that authorised closed-ended collective investment schemes should not be subject to more stringent requirements than existing authorised open-ended collective investment schemes. Whilst we agree that there is potential for conflicts of interest to arise with the licensees in most cases these would be limited to the designated manager and if applicable the designated custodian. We do not necessarily have any regulatory remit over other parties, like for example the investment manager and the investment adviser, where we feel there is a far greater potential for conflicts to occur and thus there is the need for disclosure of conflicts of interest to the level required in the Rules. We would further comment that having completed these Rules it has become apparent that the Class B and Class Q Rules require updating.
4. False or misleading Information Particulars or Omission of information.
There was feedback that this section by treating the directors as responsible for the information particulars would lead to the requirement for verification to be produced for every fund launch. It was felt that this may put Guernsey at a competitive disadvantage. We feel that as Guernsey strives to achieve a reputation for a high standard of corporate governance such measures would only enhance that reputation.
Comments were received that particularly for authorised closed-ended rules that the list of material changes requiring notification was too lengthy however, in our view it simply mirrors the conditions applied under the Control of Borrowing consents. We would also remind licensees that we have the power to exclude or modify the application of any provision of the Rules.
6. Corporate Governance
There was some call for greater consideration of corporate governance requirements in the Rules. Whilst we agree that a review of corporate governance requirements would be a worthwhile exercise it would not have been appropriate to undertake it as part of the drafting of the Rules.
7. Non-Guernsey Schemes
We have received queries as to whether the Non-Guernsey Scheme Rules will now extend to cover closed-ended collective investment schemes as well as open-ended. For the time being we are not considering closed-ended collective investment schemes to fall under the Non-Guernsey Scheme Rules however, it will be a matter for review in the first quarter of 2009.
8. Transitional Provisions and other points of clarification
New sections covering the transitional provisions have been inserted in the Authorised Closed-ended Rules and the Registered CIS Rules.
The Incorrect Pricing of Authorised Collective Investment Schemes – Guidance Note on Correction and Compensation is still only intended to cover open-ended collective investment schemes and not closed-ended collective investment schemes and the Guidance Note will be amended accordingly.
Our turnaround time for processing applications for Registered Collective Investment Schemes is three business days. However, this is as always dependent on the standard of the application and the application process will stop if an application is found to be incomplete.
The updated application forms relevant to the Rules are now on the website.
Guernsey Financial Services Commission
La Plaiderie Chambers
St Peter Port
Enquiries to : Peter Moffatt, Director of Investment Business
Tel : +44 (0) 1481 712706
Fax : +44 (0) 1481 713361
E-mail : [email protected]
12 December 2008